INTRODUCTION:World Bank Environmental andSocial Safeguard Policies

Training Workshop for

Financial Intermediaries and

Implementing Agencies

May, 2011

Agi KissRegional Safeguards Coordinator

Europe and Central Asia

Presentation Outline Safeguards and Risk Management

Overview of the Policies (10+1)

A Closer Look:◦ OP 4.01 (Environmental Assessment)◦ OP 4.12 (Involuntary Resettlement)◦ OP 4.04 (Natural Habitats)◦ OP 4.37 (Dam Safety)

Environmental and Social Safeguards and Risk Management

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Safeguard Policies are intended to:Protect people and environment from adverse impacts (“Do No Harm”)

Enhance environmental sustainability and social equity (“Do Some Good”)

Integrate environmental and social aspects into decisions on project selection, design and implementation (quality and risk management)

Provide a mechanism for information disclosure, stakeholder consultation and participation, accountability

Respond to local and global constituencies

Sustainable Finance

Build borrower capacity for environmental and social management

Increasingly enterprises (and those who finance them) seek to be good “corporate citizens” and apply “Triple Bottom Line” (Economic, Environmental, Social)

Sustainable Finance

a voluntary set of standards for determining, assessing and managing social and environmental risk in project financing

based on the International Finance Corporation (IFC) Performance Standards and World Bank Group’s Environmental Health and Safety Guidelines

currently 71 adopting institutions (mostly commercial banks

Principles:• Risk review & categorization (A,B,C)• Do Environmental & Social assessment• Apply relevant Env & Social standards• Management System/Action Plan based on assessments/standards• Consultation and disclosure• Grievance mechanism• Independent review of assessment, Action Plan and consultation• Covenants for compliance• Independent monitoring & reporting of loan• Financial Institution annual public reporting

Almost every development or business activity has the potential to cause damage to people, property, environment. If they (and those who finance them) don’t identify and manage these risks, can suffer:◦ Costly financial and legal liabilities ◦ Damage to reputation and reduced public and political support◦ Reduced access to capital◦ Loss of access to markets and value chains

For Financing Institutions, E & S risk management involves:◦ Assessing the potential environmental and social risks of projects and the extent to which

they can be avoided, reduced or mitigated◦ Assessing the borrower’s capacity to manage these risks◦ Building realistic measures to avoid/control/mitigate risks into the financing transaction –

incorporating into loan documents◦ Monitoring compliance with loan documents and national requirements

Environmental and Social Risk Management

OVERVIEW of WORLD BANK SAFEGUARD POLICIES

Legal Policies• OP 7.50 International Waterways• OP 7.60 Disputed Areas

Environmental Policies• OP 4.01 Environmental Assessment• OP 4.04 Natural Habitats• OP 4.09 Pest Management• OP 4.11 Physical Cultural Resources• OP 4.36 Forests• OP 4.37 Safety of Dams

Social Policies• OP 4.12 Involuntary Resettlement• OP 4.10 Indigenous Peoples

WB “Safeguard” Policies (10+1)

+ Access to Information Policy

Not all environmental/social issues of concern are covered by Safeguard OPs (e.g.: gender, poverty alleviation, climate change…)

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Cross-cutting Principles of SG Policies

OBJECTIVES:

Avoid negative impacts where possible; otherwise minimize, reduce, mitigate, compensate (in that order)

Match level of review, mitigation and oversight to level of risk and impacts

Inform the public and enable people to participate in decisions which effect them

Integrate environmental and social issues into project identification, design and implementation

Strengthen Borrower capacity

Application: to all activities of any project receiving funding from WB, even if financed from another source

Who are the Stakeholders?

WB BoardWB

Board

Project Beneficiaries

Project Beneficiaries

CivilSocietyCivil

Society

NGOsNGOs Affected Persons

Affected Persons

BorrowersBorrowers

MediaMedia

Private Investors

Private Investors

WB Management

WB Management

International Financial Institutions

International Financial Institutions

OP 4.01 (EA): Need to prepare EA &/or EMP Triggers: direct or indirect physical investments (civil works;

provision of goods with “issues”); TA linked to physical investments; any other OP triggered

OP 4.04 (Natural Habitats): Protect biodiversity and ecosystems

Triggers: investments in, near or likely to affect natural ecosystems (terrestrial, riverine, coastal, marine, aerial); Protected Areas

OP 4.09 (Pest Management): Reduce human & environment exposure to hazardous pesticides; promote Integrated Pest Management

Triggers: financing purchase of pesticides; investments likely to introduce or increase pesticide use (expansion or diversification of agricultural production)

SG OPs: Essence and Triggers

Documents: SEA, EIA/EA, EMF, EMP, Env. Guidelines, Env. Audit, etc.

Documents: Pest Management Plan (or section in EA)

Documents: Incorporated in EA/EMP

OP 4.10 (Indigenous Peoples): Protect livelihoods and cultures, support economic and social integration on peoples’ own preferred termsTriggers: investment within an area occupied or used for

economic purposes (presently or traditionally) by a group which falls within definition of IP (in ECA, only northern Russia)

OP 4.11 (Physical Cultural Resources): Preserve cultural heritageTriggers: civil works on historical buildings or in historic areas or

areas with rich cultural history)

OP 4.12 (Involuntary Resettlement): Protect people from economic & social impacts of losing land or access to land-based resourcesTriggers: potentially any case where land is required for

investment (privately owned or publicly owned). Residence or economic use; legal title or not. New construction: presume triggered unless clearly demonstrated otherwise.

SG OPs: Essence and Triggers (cont.)

Document: Indigenous Peoples Plan

Documents: Resettlement (or Land Acquisition) Policy Framework; Resettlement (or LA) Action Plan

Documents: Incorporated in EA/EMP

OP 4.36 (Forestry): Promote sustainable forest management; rural poverty reduction Triggers: investments in/near/upstream of forest areas (esp. natural forest)

which are likely to result in forest loss/encroachment; enterprises involving wood or non-timber forest products

OP 4.37 (Safety of dams): Protect people and investments from dam failure Triggers: dam construction/rehabilitation; water or power projects dependent

on dams

OP 7.50 (International Waters): riparian States notified of projects affecting common water bodies Triggers: ANY investment involving water abstraction, release of water or

materials into water, or hydrological impacts (regardless of scale) on water body shared by 2 or more countries (aquifers, open seas excluded; exception available for rehabilitation of existing schemes)

OP 7.60 (Disputed Areas): Ensure disputing States agree to proposed project

Trigger: investments in area which is under dispute between countries (e.g. disagreement on precise border)

Access to Information: Transparency, stakeholder participation, better projects

Trigger: all operations

SG Ops: Essence & Triggers (cont.)

Documents: Dam safety analysis, emergency plan, etc.

World Bank Screens and Sets Project

EA Category

Advises Borrower on the Bank’s EA requirements

Reviews and gives “No Objection” for EA reports (Due Diligence instruments)

Makes report available in Info shop

Supervises implementation of EA/EMP

Makes mutually agreeable changes during implementation

Borrower Prepares and Implements

EA/EMP/EMF in accordance with national laws and WB OPs

Consults project-affected groups and local NGOs

Discloses draft/final documents in country

Responds to Bank and public

Monitors implementation of EMP

Ensures compliance under national laws

Responsibilities: Direct Investment Projects

Responsibilities: “Intermediated” ProjectsWorld Bank

Assigns SG Category to the overall Project (FI, A, B, C)

Assesses FI capacity to implement SG

Advises FI on SGs and on Framework Documents; gives No Objection to Framework Documents

Discloses all SG documents in Infoshop and sends to Board as required

Prior and/or Post-review of EAs/EMPs/RAPs

Supervises implementation together with FI

FI (or other Intermediary)

Prepares Framework Documents for the overall Project (Environmental Management Framework; Resettlement Policy Framework)

Disclosure and public consultation on Framework Documents

Screens, categorizes, evaluates, approves and monitors Sub-projects based on Framework documents (including ensuring preparation of acceptable EAs/EMPs; RAPs)(Sub) Borrower

Prepares EA/EMP, RAP* based on guidance from FI

Disclosure & public consultation of EMP/RAP

Implementation of EMP/RAP* (including selection of contractors; incorporating EMP in contracts; ensuring compliance)

*Preparation and/or implementation of RAP might be responsibility of a Government agency

Contractual relationship

Simple SG steps in Typical Project Cycle

Prepare PCN &PCN stageISDS

PCN stage ISDS mtg. & clearance– Provisional EA category; agreement on SG requirements

PCN review mtg.

QER

Follow-up SG meeting (?)

Prepare draft PAD & Appraisal Stage ISDS

Appraisal stage ISDS mtg. & clearance

Decision Mtg.

Negotiations

Appraisal

EA/EMP/EMF & RFP/RAP disclosure & consultation

Preparation of EA/EMP/EMF; RPF/RAP

Effectiveness

Implementation Disclose final EA/EMP; RFP/RAP

SG implementation & supervision/reporting

Transfer to SM Transfer to SM

Transfer to SM

A Closer Look: OP 4.01 (Environmental Assessment)

Screening/Scoping – determine what are likely potential issues, including what (other SG) policies triggered

Assessment – confirm and evaluate the significance of issuesBaseline (valued ecological components)Likely impacts Acceptable changes from baseline

Mitigation – identify measures to avoid/reduce/compensate for negative impacts including the expected results (e.g. standards to be achieved); identify who is responsible and confirm they have the capacity and resources

Monitoring – verify that mitigation measures are being implemented and that they are achieving the expected results (if not, need to modify them)

Environmental Management Process

Refer to other SG Policies

Environmental Screening/EA CategoriesCategory A

adverse environmental impacts are broad, diverse [not easily predictable], extend beyond local site, likely irreversible

major resettlement

conversion/degradation of natural habitats

hazardous materials

Category Bpotential impacts less adverse & more limited, fewer, site-specific, largely reversible

readily identified and reliably mitigated through known methods

Category Cexpected to have no adverse environmental impacts, or only minimal impacts easily and fully mitigated

Category FI

project provides funds to a bank, credit institution, etc. for on-lending at FI’s own risk (OP/BP 8.30 – FI lending)

Sub-projects to be screened and categorized as A, B or C and handled accordingly

Requirements and procedures set out in Environmental Management Framework

Criteria approach = flexibilityList approach = consistency

Identifying Category A Projects: Relevant Information

Project type: some sectors/industries presumed to be Category A regardless of scale (unless demonstrated otherwise)

Project scale: some sectors/industries are only Category A at large scale, due to area of land take, input materials required, waste volume generated, etc. (thresholds set based on experience)

Project location: some investments are acceptable only in non-sensitive locations (social, cultural, environmental significance and vulnerability)

Types and magnitudes of activities: some projects in generally “non-risky” sectors can include specific activities which are risky

“Sensitive issues”: some projects are in sectors or include activities which raise concerns at a wider (e.g. international) level, beyond the risks and potential impacts of the specific project, and their risks must be seen in that context

Types and magnitude of impacts: Broad, irreversible, beyond project site, etc.

Identifying Category A Projects

Type of Project

Scale of project

Project Activities

Project location

Geographic location Site’s environmental significance and sensitivities

Nature of impacts

Magnitude of impacts“Sensitive” is

sues

Directly financed

Associated

Knowledge and Experience

FI Category Projects

Subprojects financed through a Financial Intermediary

( E.g.: SME credit lines, community-driven development, Small Grants Programs, Green Investment Schemes, etc.)

FI assumes responsibility for sub-project screening, evaluation, monitoring

WB prior and/or post-review

Criteria, procedures, responsibilities set out in an “environmental (and social) management framework” -- free standing, or environmental section of Project Implementation Manual or FI Operational Manual

allow or exclude Category A sub-projects if Cat. A sub-projects eligible, EMF may be subject to Pelosi requirement Category A sub-project EIAs must be submitted to Infoshop, Exec. Summaries

to WB Executive Directors

Types of Environmental Safeguard Documents (required for Project appraisal)

Full Environmental Impact Assessment (EIA) (Category A)

Limited Environmental Assessment (EA) (Category B) Strategic Environmental Assessment (SEA) (regional,

sectoral) Environmental Audit Hazard or Risk Assessment

Environmental Management Plan (including Checklist EMP) (Category FI)

Environmental Management Framework (Category FI)

(Details in upcoming presentation)

Environmental Assessment Requirements For projects and sub-projects

Category A: full, comprehensive EIA (or Strategic EA for program level)at least 2 public consultations (scoping/TOR stage and draft EIA) independent preparation

Category B: limited/partial EA and/or EMP (in some cases, just applicable

regulations and standards)at least 1 public consultation (draft EA)

Category C: No EA requirement (for new investments)

Support for pre-existing operations: Environmental audit; hazard risk assessment :o for Category A or B investment, in addition to other EA requirementso for Category C investment, in place of other EA requirementso for low-risk sectors and non-direct linked investments may be limited to

verifying compliance with national regulations/permit requirements

What is Cumulative Impact Assessment?

Project A site

Project A zone of impact

Important Env. Asset

Important Cultural Asset

Existing Facility B site

Facility B zone of impact

Zone of impact of planned/reasonably foreseeable development or trend

Zone of Impact of directly linked or induced development

EIA Screening: Category A vs. BApproach 1: Difference between Category A and B -- breadth and depth of EA requiredCategory A requires full EIA including: • Stakeholder consultation on TOR/scoping (as well as on draft EA)• Assessment of offsite, cumulative and indirect impacts • Analysis of environmental pros and cons of feasible alternatives (site, technology, scale,

etc.)• Up-to-date, detailed baseline data on site conditions (biological, hydrological, etc.) • Institutional analysis (responsibilities, capacity)• Independent preparation to ensure unbiased analysis and consideration of alternatives

Approach 4: How many other SG policies apply? (especially Natural Habitats, Forests, Dam Safety)

Approach 3: Scale sale and irreversibility criteria (e.g.: physical resettlement of 100+ households; new dam > 15m and/or new reservoir > 3 mill m3; total volume of earthworks >100,000 m3; land “take” > 1000 ha, etc.)

Approach 2: high risk activities e.g.:production/use/storage/disposal of significant quantities of hazardous material; large scale burning of fuel or other pollution-emitting processes; construction of new permanent roads, etc.

(NOTE: Figures are illustrative – not WB policy)

Category A ExamplesPlovdiza Dam, Bulgaria

Storage of Chemicals, Kosovo

Rijeka Port, Croatia

EIA Screening: “High” B vs. “Low” B vs. C“High B” requires a limited EA to provide site-specific information (e.g. due to environmentally sensitive site, or need to better define and understand potential issues) “Low B” requires only basic EMP (mitigation and monitoring tables), or Checklist EMP, or can make a case for application of specific national regulations and standards if acceptable monitoring/enforcement system is in place

C requires no EA or EMP and no regular monitoring, only general good practice (e.g. building codes, construction standards)

Construction of a new juice manufacturing and canning plant in an industrial zone?

Construction of a small eco-lodge within a multiple-use protected area?

Construction of a primary school on a “brownfield” site

Construction of a landfill for mixed urban and industrial waste?

Cleaning and Rehabilitation of existing irrigation canals?

Category B Project examples

Rehabilitation of tertiaryirrigation canal, Serbia

Hospital rehabilitation,Turkey

Wastewater TreatmentPlant Rehabilitation,Ukraine

It’s not Category C if…

…the project will/might/could finance new construction or building rehabilitation* (beyond minimal painting, wiring, etc.)

…the project provides Technical Assistance or other support which could lead directly to activities which would trigger SG policies

…any of the above are financed by WB, or Government or other co-financers (covered by overall Project financing plan)

Caution: apparent C projects may include “sleeper” B category activities (sometimes even A category)

Screening methodology and outcomes (when is EIA required)

Alternative EA documents (e.g. EMP) Contents of EIA One integrated EIA vs. separate EIAs for

different project components Timing (at what stage of project

preparation) Consultation (timing, frequency, scope,

reporting)

Common Gaps and Conflicts Between OP 4.01 and National Laws

A Closer Look: OP 4.04 (Natural Habitats)

Does promote and support natural habitat conservation and improved land use through integration of natural habitat conservation into national and regional development, and the rehabilitation of degraded natural habitats;

Does not support projects that involve significant conversion or degradation of critical natural habitats

Does not support projects involving the significant conversion or degradation of natural habitats unless:

there are no feasible alternatives for the project and its siting, and comprehensive analysis demonstrates that overall benefits from the project

substantially outweigh the environmental costs

If EA indicates a project would significantly impact a (non-critical) NH, it must include mitigation measures acceptable to the WB

OP 4.04 Principles – The World Bank:

Definitions* Natural Habitat : land and water areas where

o the biological communities are formed largely by native plant and animal species, and o human activity has not essentially modified the area's primary ecological functions

Critical Natural Habitat:* subset of Natural Habitats which have very high biodiversity value, e.g.: ◦ required for survival of endangered, threatened or migratory species;◦ have special significance for endemic species or species with limited ranges;◦ support high concentrations of individuals of congregatory species;◦ Have unique assemblages of species or are associated with key evolutionary processes◦ Support biodiversity of highly significant social, economic or cultural importance to local

communities;

OR◦ Are strictly protected under national laws and/or international agreements

Significant conversion/degradation: elimination or severe diminution of integrity of NH caused by a major, long-term change in land or water use (or short term change with a long recovery time) or by severe pollution. Can result directly or indirectly from the project

Appropriate conservation/mitigation: measures to eliminate or reduce adverse impacts to levels within socially defined limits of acceptable change. May include:◦ full or strategic partial site protection; ◦ restricting conversion or modification to non-essential elements of ecosystem◦ habitat restoration/species re-introduction◦ establishment and maintenance of an ecologically similar (equal value) protected area of suitable

size and contiguity.

(Mitigation measures should always include provision for monitoring/evaluation and adaptive management based on the results)

* Paraphrased combination of WB and IFC definitions

Identify geographic/ecological Zone of Influence of the project; Determine whether ZoI includes any likely Natural Habitat

If yes, carry out desk and site assessment and consultations to determine:

◦ baseline biodiversity and ecological values;◦ whether it qualifies as Critical Natural Habitat or Natural Habitat

If project could effect (non-critical) Natural Habitat:◦ EA is required, involving special expertise;◦ Ensure consultations involve suitable stakeholders (NGOs, resource user groups)

OP 4.04 – Screening and Application Steps

Some Indicators of Natural Habitat:• vegetation entirely or mostly comprised of wild plant species• no large scale livestock presence• water body with little or no surrounding development• few or no permanent residences or other significant structures or

infrastructure (except small dirt roads and tracks roads)• no significant economic activity other than moderate harvesting of wild species• no significant sources of pollution (sufficient to impair ecosystem functions)• above conditions cover ecologically significant area (varies by ecosystem)

Projects likely to trigger Natural Habitats Policy

Infrastructure: • Transportation construction (roads, railways, ports, etc.)• Power (hydroelectric, wind, thermal, transmission lines, access roads)• Water (reservoirs, diversions, canals)• Urban or rural development (large land conversion, wetland drainage or filling…)

Agriculture/livestock: land clearing, fencing, pesticides, irrigation

Fisheries: conversion of wetlands or near-shore habitats for aquaculture, destructive/over fishing

Forestry/wood : intensive logging of natural forest; conversion to plantation

Industry: pollution of terrestrial and aquatic habitats, land clearing, access roads

Tourism: land clearing, wetland drainage or filling, excessive disturbance

Telecommunications: transmission lines and towers (often on mountain tops)

Privatization: sale of state-owned lands, water rights

A Closer Look: OP 4.12 (Involuntary Resettlement)

It’s all about the land

Indicators for OP 4.12: Investment with a physical footprint (needs land)

New construction or expansion of infrastructure; land use changes

The land is being occupied or used by someone Legal or illegal/informal; permanent or sporadic; verify on the ground!

Resettlement Land AcquisitionX

Impacts that Trigger OP 4.12

Loss of land or land-based assets Loss of access to land or land-based assets

due to creation of a Protected Area Loss of shelter /relocation of residence Loss of income sources or means of livelihood

(whether or not the affected persons must move to another location)

Restriction of access to legally designated parks and protected areas that result in adverse impacts on the livelihoods of affected persons

The many faces of land acquisition/involuntary resettlement

OP 4.12 applies to:

all projects involving land take, regardless of the total number of people affected or the significance/severity of impacts

all components of the project involving land take, regardless of the source of financing

other activities requiring land take that are: directly and significantly related to a Bank-assisted project, necessary to achieve its objectives as set forth in the project

documents, and carried out, or planned to be carried out, contemporaneously

with the project

both privately owned and public lands

both public and private investments

Common gaps and conflicts between OP 4.12 and national laws

WHO IS ELIGIBLE: WB requires compensation/ assistance to informal land users & occupants (“squatters and encroachers”)

VALUATION: WB requires compensation equal to replacement value of land/assets

BEYOND COMPENSATION: WB requires assistance for restoration of livelihoods (not worse off as result of project)

TIMING: WB requires compensation/assistance provided in full prior to beginning implementation of works

A Closer Look: OP 4.37 (Dam Safety)

Failure of large dams can have catastrophic consequences for human safety, environment, economic assets.

For the life of the dam, the owner is responsible to take measures to avoid and mitigate this risk.

Construction of a new dam WB requires:

Design and construction supervision by experienced, competent experts:Large dams (>15 m, or >10 m with other risk factors):

review by Panel of experts (appointed by Borrower; acceptable to Bank) preparation/implementation of detailed plans for

quality assurance, instrumentation, operation and maintenance, emergency preparedness

prequalification of bidders during procurement and bid tendering periodic safety inspections of the dam after completion

Small dams: generic safety measures designed by qualified engineers

Borrower adopt and implement dam safety measures for the design, bid tendering, construction, operation, and maintenance of the dam and associated works

Terms of Reference: Primary: review and advising the borrower on matters relative to dam safety and other critical aspects of the dam, its appurtenant structures, the catchment area, the area surrounding the reservoir, and downstream areas

Usually extend also cover:• project formulation• technical design• construction procedures• associated works (e.g. for water storage dams – power

facilities, river diversion during construction, shiplifts, fish ladders)

PANEL OF EXPERTS

Operation and reporting: PoE is formed early in Project preparation. Meets regularly during feasibility, design, construction, filling, early start-up

stages (WB notified of meetings, usual participates as observer). After each meeting, report signed by all PoE members is sent to Borrower & WB After filling and start-up, WB reviews PoE findings and recommendations PoE may be disbanded if no problems found after start-up

Existing Dams and Dams Under Construction

Situation:

WB-financed project does not include dam construction, but does rely on the performance of a dam:

dam failure damage project infrastructure poor dam operation project cannot achieve objectives Increased dam capacity required to achieve project objectives

What are some examples of such projects?

World Bank policy requires Borrower to:

Arrange for independent specialists to :

Inspect and evaluate safety status/performance history of the dam Review/evaluate operation and maintenance procedures Provide a written report with recommendations for any measures to upgrade to

acceptable safety standard (can be financed by the project)

OR, in low/moderate risk cases:

Provide acceptable existing inspections and dam safety assessments and evidence that an effective dam safety program is in operation