**LIST OF UPCOMING MULTILATERAL DEVELOPMENT BANK (MDB) PROJECTS WITH
POSSIBLE ENVIRONMENTAL CONCERNS**

**April 1999**

![](media/image1.png){width="1.0618055555555554in"
height="1.4395833333333334in"}

**OFFICE OF ENVIRONMENT**

**BUREAU FOR POLICY AND PROGRAM COORDINATION**

**U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT**

**WASHINGTON, D.C. 20523**

# ABBREVIATIONS AND ACRONYMS USED

BANKS, LENDING INSTITUTIONS AND NGOs:

**ADB Asian Development Bank**

**AfDB African Development Bank**

**BIC Bank Information Center**

**CIDA Canadian International Development Agency**

**DOE Department of Energy (USG)**

**EBRD European Bank for Reconstruction and Development**

**EEC European Economic Commission**

**EU European Union**

**EXIM Export Import Bank (USG)**

**EXIMBANK Export Import Bank (Japan)**

**GEF Global Environmental Facility**

**GTZ German (bilateral) Technical Assistance Agency**

**FAO United Nations Food and Agriculture Organization**

**IDB Inter American Development Bank**

**IBRD International Bank for Reconstruction and Development (WB)**

**IDA International Development Association (WB)**

**IFC International Finance Corporation (WB)**

**IFAD International Fund for Agricultural Development**

**IMF International Monetary Fund**

**IUCN World Conservation Union**

**KfW Kreditanstalt für Wiederaufbau (German Bank for Reconstruction and
Development)**

**MIGA Multilateral Investment Guarantee Agency (WB)**

**MDB Multilateral Development Bank**

**MRC Multinationals Resource Center (an NG0)**

**NGO Non-Governmental Organization**

**NRC Nuclear Regulatory Commission (USG)**

**ODA Overseas Development Agency (United Kingdom)**

**OECF Overseas Economic Cooperation Fund (Japan)**

**SIDA Swedish International Development Agency**

**USAID United States Agency for International Development**

**USG United States Government**

**WB World Bank Group (including IBRD, IDA, IFC, and MIGA)**

**WWF World Wildlife Fund**

OTHER ABBREVIATIONS:

**EA Environmental Assessment**

**EIA Environmental Impact Assessment (used interchangeably with EA)**

**EDS Environmental Data Sheet (WB)**

**GIS Geographic Information System**

**Gwh Gigawatt hours**

**ha hectare(s); 1 ha = 2.47 acres, 1,000 ha (10 km²) = 3.87 miles²**

**ICDP Integrated conservation and development project**

**IEE Initial Environmental Examination**

**km kilometer(s); 1 km = .62 miles**

**kV kilovolts**

**MOS Monthly Operational Summary (World Bank)**

**MW Megawatts**

**N/A Not applicable**

**PID Project Information Document (WB)**

##### USED U.S. Executive Director

**LIST OF UPCOMING MULTILATERAL DEVELOPMENT BANK (MDB) PROJECTS WITH
POSSIBLE ENVIRONMENTAL CONCERNS**

# TABLE OF CONTENTS

ABBREVIATIONS AND ACRONYMS USED [2](#abbreviations-and-acronyms-used)

**TABLE OF CONTENTS** [3](#table-of-contents)

**MDB PROJECTS, FORMERLY REPORTED OR FOLLOWED, BY USAID THAT WERE
APPROVED DROPPED OR PUT INTO RESERVE STATUS SINCE THE JUNE 1998 REPORT**
[6](#mdb-projects-formerly-reported-or-followed-by-usaid-that-were-approved-dropped-or-put-into-reserve-status-since-the-june-1998-report)

**EXECUTIVE SUMMARY** [8](#executive-summary)

**TRENDS AND ANALYSES** [9](#trends-and-analyses)

Background [9](#background)

Belize: Southern Highway Project and
[11](#belize-southern-highway-project-inter-american-development-bank)

the Inter-American Development Bank
[11](#belize-southern-highway-project-inter-american-development-bank)

**REVIEW OF ENVIRONMENTAL ASSESSMENT CATEGORIES AT MDBs**
[16](#review-of-environmental-assessment-categories-at-mdbs)

World Bank [16](#world-bank)

African Development Bank (AfDB) [16](#african-development-bank-afdb)

Asian Development Bank (ADB) [16](#asian-development-bank-adb)

Inter-American Development Bank (IDB)
[17](#inter-american-development-bank-idb)

Illustrative examples [17](#illustrative-examples)

Stage of World Bank Processing for a Typical Project:
[18](#stage-of-world-bank-processing-for-a-typical-project)

**LIST OF UPCOMING MULTILATERAL DEVELOPMENT BANK (MDB) PROJECTS WITH
POSSIBLE ENVIRONMENTAL CONCERNS**
[19](#list-of-upcoming-multilateral-development-bank-mdb-projects-with-possible-environmental-concerns)

PROJECTS LOCATED IN AFRICA [19](#projects-located-in-africa)

1\. Western Africa: IDA/AfDB - Regional Hydropower Development (Mali,
Mauritania, and Senegal)
[19](#western-africa-idaafdb---regional-hydropower-development-mali-mauritania-and-senegal)

2\. Chad-Cameroon: IBRD/IFC - Petroleum Development and Pipeline
[24](#chad-cameroon-ibrdifc---petroleum-development-and-pipeline)

3\. Guinea-Bissau: AfDB - Etudes Routes Boke-Quebo (Boke-Quebo Road
Study)
[28](#guinea-bissau-afdb---etudes-routes-boke-quebo-boke-quebo-road-study)

4\. Madagascar: IDA - Transport Sector Project
[29](#madagascar-ida---transport-sector-project)

5\. Madagascar: IDA - Health II [31](#madagascar-ida---health-ii)

6\. Madagascar: AfDB -- National Locust Control Program^n^
[33](#madagascar-afdb-national-locust-control-programn)

7\. Uganda: IDA -- Road Development Program (formerly First Roads
Sector)
[36](#uganda-ida-road-development-program-formerly-first-roads-sector)

8\. Zimbabwe: IDA - Local Government Capital Development
[39](#zimbabwe-ida---local-government-capital-development)

PROJECTS LOCATED IN ASIA AND PACIFIC
[41](#projects-located-in-asia-and-pacific)

9\. China: IBRD/IDA - Western Poverty Reduction^n^
[41](#china-ibrdida---western-poverty-reductionn)

10\. Cambodia: IDA - Northeast Village Development
[43](#cambodia-ida---northeast-village-development)

11\. Cambodia: IDA - Road Rehabilitation^n^
[45](#cambodia-ida---road-rehabilitationn)

12\. Indonesia: IBRD - Semarang Flood Control
[47](#indonesia-ibrd---semarang-flood-control)

13\. Indonesia: IBRD - Decentralized Agricultural and Forestry
Extension^n^
[48](#indonesia-ibrd---decentralized-agricultural-and-forestry-extensionn)

14\. Indonesia: IBRD/GEF - Maluku Conservation and Natural Resources
Management^n^
[49](#indonesia-ibrdgef---maluku-conservation-and-natural-resources-managementn)

15\. Lao PDR: World Bank Group - Nam Theun II Hydropower
[50](#lao-pdr-world-bank-group---nam-theun-ii-hydropower)

16\. Vietnam: IDA - Mekong Delta Water Resources Development^n^
[54](#vietnam-ida---mekong-delta-water-resources-developmentn)

PROJECTS LOCATED IN EUROPE AND CENTRAL ASIA
[58](#projects-located-in-europe-and-central-asia)

17\. Ukraine: EBRD - Khmelnitsky 2 and Rivne 4 (K2R4) Completion^n^
[58](#ukraine-ebrd---khmelnitsky-2-and-rivne-4-k2r4-completionn)

PROJECTS LOCATED IN LATIN AMERICA AND THE CARIBBEAN
[62](#projects-located-in-latin-america-and-the-caribbean)

18\. Bolivia: IDB/WB - Export Corridors: Santa Cruz-Puerto Suárez
Highway
[62](#bolivia-idbwb---export-corridors-santa-cruz-puerto-suárez-highway)

19\. Dominican Republic: IBRD/IDB - Power Market Development/ San Pedro
de Macoris Power Plant
[66](#dominican-republic-ibrdidb---power-market-development-san-pedro-de-macoris-power-plant)

20\. Ecuador: IDB - National Roads Program II
[69](#ecuador-idb---national-roads-program-ii)

21\. Ecuador: IDB - Urban Development II
[71](#ecuador-idb---urban-development-ii)

22\. El Salvador: IDB - Critical Areas of Decontamination
[73](#el-salvador-idb---critical-areas-of-decontamination)

23\. Guyana: GEF - National Protected Area Systems^n^
[75](#guyana-gef---national-protected-area-systemsn)

24\. Haiti: IDB - Agricultural Sector Modernization
[76](#haiti-idb---agricultural-sector-modernization)

25\. Panama: IDB - Mining Sector Loan
[78](#panama-idb---mining-sector-loan)

26\. Panama: IDB -- Local Development Program
[80](#panama-idb-local-development-program)

27\. Paraguay: IDB - Development of Asunción Bay Coastal Area
[81](#paraguay-idb---development-of-asunción-bay-coastal-area)

PROJECTS LOCATED IN THE MIDDLE EAST AND NORTH AFRICA
[83](#projects-located-in-the-middle-east-and-north-africa)

28\. Jordan: IBRD - Disi Amman Conveyor Project
[83](#jordan-ibrd---disi-amman-conveyor-project)

29\. Jordan: IBRD - Samra First Private Power^n^
[84](#jordan-ibrd---samra-first-private-powern)

**1995-1999 Analysis of MDB Projects with Environmental Concerns**
[86](#analysis-of-upcoming-mdb-projects-with-environmental-concerns)

**REFERENCES** [93](#references)

**FIGURES:**

Figure 1a: Summary of MDB Projects with Environmental Concerns Number
Reported by Year, 1995-1999. 87

Figure 1b: Summary of MDB Projects with Environmental Concerns in \$US
Million by year, 1995-1999. 87

Figure 2: MDB Projects with Environmental Concerns by Region, 1995-1999.
89

Figure 3: MDB Projects with Environmental Concerns by Region in \$US
Millions, 1995-1999. 89

Figure 4: MDB Projects with Environmental Concerns by Sector, 1995-1999.
91

Figure 5: MDB Projects with Environmental Concerns by Sector in \$US
Millions, 1995-1999. 91

**TABLES:**

Table 1: Principle sectors reported on by region, USAID 1995-1999
reports to Congress, Upcoming MDB Projects with Possible Environmental
Concerns. 90

^n^ = Newly listed project since the June 1998 report

# MDB PROJECTS, FORMERLY REPORTED OR FOLLOWED, BY USAID THAT WERE APPROVED DROPPED OR PUT INTO RESERVE STATUS SINCE THE JUNE 1998 REPORT

# 

######  Country MDB Project Name Bank Status

**PROJECTS LOCATED IN AFRICA**

1.  Ethiopia IDA Health Sector Approved

2.  Ghana IDA Health Sector Support Approved 10/97

3.  Ghana AfDB Small-Scale Rubber Plantations Approved

4.  Kenya AfDB Rural Health Services Project II Approved

5.  Lesotho IBRD Lesotho Highlands Water Project --

Phase 1-B Approved 06/98

6.  Mali IDA Health Sector Development Approved

7.  Niger AfDB Kandaji Dam Construction study Approved

8.  Niger AfDB Natural Resource Conservation Approved

**PROJECTS LOCATED IN ASIA AND PACIFIC**

9.  India IFC Sarshatali Coal Mine^n^ Approved 12/98

10. Indonesia ADB Metro Medan Urban Development Approved 11/97

11. Sri Lanka IFC Lanka Hospital Corp/Apollo Hospital Approved

12. Vietnam IFC Namoi International Hospital Approved

**PROJECTS LOCATED IN EUROPE AND CENTRAL ASIA**

13. Armenia EBRD Hrasdan Unit No 5 Privatisation Approved

14. Azerbaijan and

Georgia IFC/EBRD, Early Oil Development Approved 02/99

15. Georgia EBRD Enguri Hydropower Plant Approved 12/98

16. Turkey IFC Bayindir Medical Centers Approved

17. 

**PROJECTS LOCATED IN LATIN AMERICA AND THE CARIBBEAN**

18. Colombia IDB Regional Roads Program Approved 10/97

19. Dominican

Republic IDB Watershed Management Program Dropped

20. Ecuador IDB Cuenca-Molleturo Road Dropped 03/99

21. El

Salvador IDB Water and Sewer Program Approved 05/98

22. Haiti IDB Organization and Rationalization

of the Health Sector Approved 08/98

23. Jamaica IBRD Road Infrastructure Development Approved

24. Panama IBRD Second Roads Rehabilitation Approved 09/98

25. Panama IDB National Rural Roads Program II Approved 09/98

26. Panama IDB Electricity Expansion Program Approved 07/98

27. Panama IDB Tourism Support Program Approved 10/99

28. Paraguay IDB Cotton Sector Support Program Approved 06/98

29. Paraguay IDB Support for Int'l Trade

Negotiations Approved 06/98

**[Country MDB Project Name Bank Status]{.underline}**

**PROJECTS LOCATED IN THE MIDDLE EAST AND NORTH AFRICA**

30. Algeria IBRD Algiers Urban Renewal Approved

31. Jordan: IBRD Amman Water & Sanitation Management Approved 03/99

For more information on the above projects contact the USAID Bureau for
Policy and Program Coordination, Office of Environment, PPC/ENV.

^n^ = newly listed since the June 1998 report.

# EXECUTIVE SUMMARY

In accordance with section 537(h) of Public Law 100-202, this April 1999
report lists proposed multilateral development bank (MDB) projects
likely to have adverse impacts on the environment, natural resources,
public health or indigenous peoples. This report does not prejudge the
United States Government\'s position on the final versions of projects
when they are considered by the MDB executive boards, rather it serves
as a record of USAID environmental monitoring of MDB projects. Since
USAID does not have the resources to methodically analyze every MDB
project, this analysis is a representative rather than comprehensive
listing. Even though it is representative, given the serious
consultative process to develop this list USAID has confidence in its
value as a snapshot of the current state of MDB projects with
environmental problems.

This year\'s report highlights environmental concerns with 29 MDB
projects totaling approximately \$2.3 billion in proposed MDB loans.
These include 10 projects in Latin American the Caribbean, 8 in Africa,
8 in Asia and the Pacific, 1 in Europe and Central Asia, and 2 in the
Middle East and North Africa. Projects are listed by region in the main
body of the report starting on page 19. Total project numbers sorted by
lending sectors include 8 public/urban infrastructure, 6 road, 5
power/hydropower, 5 agriculture, 2 health, 2 natural resources, and 1
mining. As seen in previous years, public/urban infrastructure, power,
and road projects continue to be the most environmentally problematic
sectors.

Individual projects in this report with significant environmental
concerns include:

-   Western Africa Manantali Hydropower Development

-   Chad-Cameroon Petroleum Pipeline

-   Indonesia Semarang Flood Control

-   Lao Nam Theun Hydropower II

-   China Western Poverty Reduction

-   Vietnam Mekong Delta Water Resources Development

-   Bolivia Export Corridors (Santa Cruz-Puerto Suárez Road)

-   Dominican Republic Power Market Development / Power Sector

> Hybrid Program

-   Ecuador National Roads Program II

-   El Salvador Critical Areas of Decontamination

-   Jordan Samra First Private Power.

The report's final section analyzes the 1995-1999 reporting period,
which includes 103 projects totaling almost \$9 billion in proposed MDB
loans and over \$35 billion in total project costs. The significant
number of MDB projects reported over the period indicates that while all
MDBs have good environmental impact assessment procedures, there
continues to be a steady number of proposed projects with significant
potential environmental impact. USAID's interventions through this
process have achieved important progress in many individually listed
projects, but the relatively steady number of new problem projects over
the years underscores the continuing need for independent environmental
monitoring of proposed MDBs projects.

# TRENDS AND ANALYSES

### Background {#background .unnumbered}

USAID began general monitoring of proposed MDB projects in 1983. Over
the course of the next several years it increased its review of
environmental aspects of loans, which were often the most problematic.
Congress expanded USAID\'s work in these activities through language in
appropriations legislation and amendments to the International Financial
Institutions Act. USAID\'s Bureau for Policy and Program Coordination
investigates and reports on environmental concerns identified by USAID
missions and interested non-governmental organizations (NGOs). USAID
co-chairs the \"Tuesday Group,\" a monthly meeting of concerned
international NGOs and U.S. government (USG) agencies, to discuss
environmental and social issues at the MDBs.

This report lists proposed Multilateral Development Bank (MDB) projects
\-- those that have not yet been approved by their respective Executive
Boards. Projects are considered for inclusion in the report if a USAID
Mission identifies environmental, natural resource, public health, or
indigenous peoples concerns. Project entries in the report also
incorporate comments from other USG agencies and NGOs, mostly through
the Tuesday Group meeting mentioned above. MDB staff have also been very
helpful in providing additional information and addressing issues raised
on projects.

The list concentrates on the major MDBs, including the World Bank, the
Asian Development Bank (ADB), the African Development Bank (AfDB), the
Inter-American Development Bank (IDB), and the European Bank for
Reconstruction and Development (EBRD). This report does not usually
include projects in countries where USAID does not have a program (such
as China, Vietnam, etc.). Also, the list is more thorough with respect
to projects from the World Bank and IDB, for which early information is
readily accessible. It is less complete for the AfDB, ADB, and EBRD.
Early project information from these MDBs is usually inadequate for a
preliminary environmental review.

The principal mechanism for compiling this report is USAID\'s Early
Project Notification (EPN) System. In this system, USAID\'s Bureau for
Policy and Program Coordination notifies USAID field offices, regional
bureau desk officers, and selected embassies of upcoming projects as
each MDB makes the information publicly available. USAID field missions
respond if there is reason to anticipate environmental and other
concerns, and the EPN System compiles the information. Projects are then
investigated further, and placed on the list based on available
information and the judgment of USAID. This report specifically notes
USAID field staff comments by referring to them with USAID/*country
name*. Brackets follow the comments with the method of communication
(cable number, fax, or e-mail) and date (for example, \[e-mail:
USAID/Kenya 12/4/96\].

Inclusion on the list indicates that the project could have significant
environmental impacts. Proper project planning and design should
anticipate these impacts. Environmental assessment of the project may
lead to its redesign, selection of alternative measures, or the
introduction of specific mitigative measures. Many concerns identified
in the list are being addressed through the environmental assessment and
project design process, and are noted. This report and more recent
editions of it are available on USAID\'s homepage on the Internet
(http://www.info.usaid.gov/environment/pubs). A list of MDB projects
formerly monitored by USAID that were approved, dropped, or put into
reserve status since the June 1998 report, appears after the Table of
Contents.

USAID works with the Departments of Treasury and State, the
Environmental Protection Agency and the U.S. Executive Directors\'
offices at the MDBs to help resolve or clarify environmental issues on
selected projects. USAID also works with MDB staff and management while
loans are in the design stage to resolve issues.

MDBs have made significant progress toward integrating environmental
concerns into their loan criteria and sector policies in recent years.
The World Bank, followed by IDB and ADB, have been leaders in improving
the MDB environmental policies. Strengthened staff capacity for most
MDBs, MDB policies in forestry, and World Bank policies in energy and
information access have been especially important changes.

Beginning in 1989, the World Bank and regional MDBs have put in place
internationally recognized standards for comprehensive environmental
assessment procedures. The procedures help ensure that proposed projects
are screened for possible environmental impacts, and that full
environmental assessments (EAs) are conducted when impacts are likely to
be significant. The EA classification systems differ by bank. A summary
of each classification system follows this Introduction. In addition,
all the MDBs have adopted procedures by which non-confidential
project-related information is available electronically and through
headquarters\' and field offices (however, this information is not
always provided in a timely manner). The U.S. Government was the leading
advocate for this move, as it improves the process of exchange,
consultation, and project performance.

The current edition of this report reflects the improvements at the
MDBs. The nature of the problems has shifted since the late 1980s. This
report no longer reveals a need for environmental procedures and
policies, but serves as an indicator for how well these are being
carried out. While the MDBs have been doing a much better job of
examining and addressing environmental impacts of their projects, USAID
is still identifying a substantial number of significant issues which
indicates that there is a continued need for monitoring.

###  {#section-1 .unnumbered}

### An Example of USAID's Role in Assisting an MDB Problem Project: {#an-example-of-usaids-role-in-assisting-an-mdb-problem-project .unnumbered}

### Belize: Southern Highway Project (Inter-American Development Bank) {#belize-southern-highway-project-inter-american-development-bank .unnumbered}

USAID made a series of recommendations about the Belize IDB Southern
Highway Project, and reported on them in last year's edition of this
report. These are repeated below and followed by IDB's response made in
March 1999. As road and transport sector projects continue to be
environmentally and socially problematic, it is worth revisiting the
issues in light of IDB's response.

USAID conducted an affirmative investigation (or fact finding mission)
on the IDB-funded Belize Southern Highway Project, a \$16-million loan
for upgrading 64 km of the highway\'s northern section. The December
1997 investigation reviewed several environmental and social concerns
regarding the project, which IDB\'s board approved in early January
1998. Major concerns surrounded the project\'s potential and serious
impacts on the region\'s biodiversity, protected areas, coastal and
marine ecosystems, and social impacts on the Maya indigenous peoples and
other ethnic groups.

To mitigate indirect impacts of the Southern Highway Project, IDB
approved a separate \$2.6 million loan for the Environmental and Social
Technical Assistance Project (ESTAP) in March 1997. ESTAP is developing
a regional plan that is supposed to address comprehensive development
issues, including the road and mitigation of its indirect impacts. ESTAP
appeared to be on its way to developing the plan, and had active
participation of local groups and the government of Belize (GOB).
However, ESTAP had not finalized the regional plan prior to board
approval of the Southern Highway project. Also, no funding was available
or committed to the implementation of the plan. An approved
environmental and social mitigation plan \-- and financial commitments
to implement it \-- are essential to have in place prior to board
approval of any infrastructure project. Both the ESTAP and Southern
Highway project continue to be controversial.

The following USAID recommendations were based on field observations and
interviews with government officials, various representatives of Maya
organizations, and local representatives of environmental groups. USAID
recommended the following for USG support of the Southern Highway
Project:

1.  IDB should put in place adequate funding for Protected Area
    Conservation Trust (PACT), specifically for a protected area
    mitigation program in southern Belize, before board approval of the
    Southern Highway Project. This was also recommended by the
    project\'s EIA, and ignored by IDB and GOB. The terrestrial
    protected areas system in southern Belize has very little in the way
    of infrastructure and trained staff, making it particularly
    vulnerable to outside pressures. Forest Reserves are especially
    susceptible since they have logging leases in them, and, Colombia
    River excepted, do not have management plans or sufficient
    monitoring.

2.  GOB compliance with final recommendations regarding land tenure of
    all ethnic groups (especially Mayans) of the Regional Development
    Plan resulting from the ESTAP process should be made a condition of
    the project prior to letting out bids for construction. The land
    tenure situation of ethnic groups in the region, especially the
    Maya, is extremely vulnerable. Though ESTAP is designed to address
    the situation, government support of a resolution appears to be
    mixed.

3.  ESTAP needs to place more emphasis on addressing marine and coastal
    issues. A more thorough review of impacts on coastal and marine
    ecosystems and possible mitigation measures should be completed as a
    condition of the project prior to letting bids for construction.
    Belize\'s globally important barrier reef and other coastal and
    marine ecosystems will be affected by the change in water quality
    due to road-induced land use changes.

4.  A formal environmental and social analysis should be performed on a
    recently approved petroleum exploration lease in southern Belize.
    The analysis should comply with the rules and regulations of the
    existing Environmental Protection Act of Belize. This petroleum
    exploration lease in southern Belize has not been addressed by the
    project\'s EIA (the lessee plans to drill test wells in the area of
    Crique Sarco). This EA should be completed as a condition of the
    loan prior to letting bids out for construction.

5.  It is also strongly suggested that private sector interests be
    actively brought into to the ESTAP process through the Project
    Steering Committee or other appropriate means. There has been little
    involvement to date, and the private sector will play an important
    role in the region\'s development.

6.  IDB should clearly document the various donor interests in the
    region in the project documents, and ESTAP should provide a strong
    mechanism for donor coordination in the southern region. For the
    Southern Highway Project to become an impetus for sustainable
    development in the region, donor coordination in the Regional
    Development Plan will be essential.

7.  The Southern Highway Project should be brought back to the board for
    re-approval before letting out any bids for construction. A report
    on progress of these recommendations, especially 1 through 4, and
    that of ESTAP should be made available to the board and to the
    public 90 days in advance of this board vote.

In March 1999, IDB staff responded to each recommendation made in the
USAID report on this project:

The Protected Areas Conservation Trust (PACT) is in place. With the
adoption of the PACT Act (No. 15 of 1995), the PACT was established. It
became effective on January 2, 1996 and the Trust began operation on
June 1, 1996 by order of the Minister of Natural Resources. According to
the Act, PACT can generate revenue through various sources, but
specifically from the collection of "twenty percent of all concession
fees, recreation-related license fees, cruise ship passenger fees, and
permit fees collected in conjunction with the public protected areas of
Belize".

1.  As a Bank condition stated in the ESTAP Technical Cooperation Loan
    Agreement, prior to awarding contracts of the physical works, the
    PACT was to provide a list of priorities and supporting
    documentation for improved protected areas management in the
    southern region for potential inclusion in the PACT five-year
    strategic plan. This condition was met. In addition, PACT provided
    further assistance to two protected areas management groups in the
    Toledo District (Aguacaliente Management Group, and the Rio Blanco
    Maya Association) to become legally registered organizations. PACT
    is also currently sourcing funds for a series of protected areas in
    the southern region.

2.  Prior to Board approval of the Southern Highway Loan, in a letter to
    the IDB President dated December 8, 1997, the Prime Minister of
    Belize expressed Government's full appreciation of the concerns of
    the Maya in connection with land tenure and reiterated Government's
    commitment to addressing this issue within the context of ESTAP. In
    a separate letter to the Maya leaders of the same date (December
    8, 1997) the Prime Minister of Belize informed that "any allocation
    of land in the Toledo and Stann Creek Districts is to be consistent
    with ESTAP's land use planning consideration". In a subsequent
    meeting between the Community Representatives of the ESTAP Project
    Steering Committee and the Prime Minister on May 8, 1998, the Prime
    Minister restated this commitment.

> Second, the ESTAP Technical Cooperation Loan Agreement imposes a
> freeze on new applications for government lands along a two-mile
> corridor along the Southern Highway. Last year during the pre-election
> campaign the Bank was informed that Government issued some leases
> which, after review by an independent consultant hired to conduct the
> review, it was found that 25 leases were issued within the two-mile
> corridor. After verification by the Lands Inspector of the ESTAP Land
> Use Unit this was confirmed and the list of leases were sent the
> Ministry of Natural Resources. This Ministry immediately made its own
> verification and proceeded to cancel the leases found to be within the
> two-mile corridor. In the final resolution of this matter, the
> Ministry of Natural Resources has written to the Bank informing it of
> the official cancellation of the leases and reaffirming Ministry's
> commitment to temporarily freeze new applications for lands within the
> two-mile corridor.

3.  The ESTAP Environmental Protection Unit conducts regular water
    monitoring activities along the rivers that cross the Southern
    Highway as well as within the Port Honduras area, the coastal basin
    that receives the discharge of six of these rivers. Furthermore, in
    order to build local capacity to monitor potential impact of
    development on the coastal zone, the Bank approved a Community-Based
    Coastal Environmental Monitoring project (ATN/CP-6110-BL)in
    August 1998. Thus, along with the monitoring system that ESTAP is to
    put in place, this project will assist in ensuring continued
    monitoring of impacts to the coastal zone in the southern region.

4.  While it is known that a petroleum exploration lease has been issued
    to "A B Energy" in southern Belize, there is no known activity
    regarding this concession occurring in the region. The Government
    has informed us that the Department of Environment has officially
    requested that an environmental assessment, which includes
    addressing the social and economic impacts to the region, be
    conducted. Permission to go ahead with the exploration activity,
    therefore, can only move ahead if the result of environmental
    assessment is considered satisfactory by the Department of
    Environment and the National Environmental Appraisal Committee.

5.  The regional development plan is being developed through a
    participatory process involving all the stakeholders of the southern
    region including communities, community groups, landowners, private
    developers, etc., as required by the ESTAP Technical Cooperation
    Loan Agreement. Consultation has taken place with the banana
    growers, rice growers, and the tourism industry personnel of the
    region, among others. Once the plan is drafted the various
    stakeholders will be consulted on the draft before Government final
    approval. Regarding the ESTAP Project Steering Committee, of its 14
    members, 9 are non-government representatives representing
    communities, community groups and NGOs, otherwise private sector
    interests.

6.  The Ministry of Economic Development, which is the Executing Agency
    for ESTAP maintains permanent coordination with the donor countries
    in Belize, particularly the British Department for International
    Development (DFID), the Caribbean Development Bank (CDB), the Kuwait
    Fund, the Taiwan Fund, and the World Bank. The DFID is financing
    Section III of the Southern Highway for which the physical work has
    already started; the Caribbean Development Bank is funding part of
    the administrative cost related to the Executing Agency of this
    Project. The Taiwanese government is co-financing with the IDB
    Sections IV and V of the Southern Highway, and the Kuwait Fund has
    financed Section I, which is almost completed. At last year's annual
    meeting of the Caribbean Group for Cooperation in Economic
    Development (CGCED) Belize's Prime Minister officially stated his
    Government's request for awareness on the part of the donor
    countries that the Government of Belize will be looking for
    financing for the implementation of the Regional Development Plan.
    IDB is asked to coordinate the Belize's request to CGCED.

7.  Regarding the recommendation for "Board re-approval", there is no
    reference in the Southern Highway Loan documents concerning

> re-approval even though the Board has asked to periodically review
> progress on the project. The Loan was approved in January 1998; the
> contract was signed also in January 1998, and the Project is being
> executed according to the Loan conditions established in the Loan
> contract and its related document.

It is good that ESTAP is coordinating with PACT, but it is certain that
PACT would have funded the protected area projects mentioned in point
one without the Southern Highway Project. What the EIA intended was that
the project itself should provide additional funds to specifically
mitigate the impacts of the Southern Highway on the region's roads. The
project has provided no mitigation funds for protected areas in the
region. This is an egregious oversight and remains an unresolved issue.
Fortunately, many of the other social and environmental issues are on
their way to being resolved.

USAID\'s concerns regarding this particular project (funding for
mitigation programs, secure land tenure for indigenous peoples, adequate
environmental/social analysis, and participation issues) are generally
applicable to other transport sector projects funded by MDBs. Five other
road projects are listed in this year's report and are indicative of the
weakness in addressing these issues. Twenty percent of both the 1998 and
1999 report's consisted of transport sector projects. MDB-supported
transport sector projects continue to be a major source of environmental
and social concerns. When properly planned and implemented, roads can be
key to the sustainable development of a region. When poorly done, they
can be the cause of deforestation, biodiversity loss, land speculation,
and marginalizing of ethnic peoples. Prior resolution of the above
issues is essential to the success of a transportation project and
avoidance of serious and long-term environmental and social impacts on a
region and its development.

# REVIEW OF ENVIRONMENTAL ASSESSMENT CATEGORIES AT MDBs

In recent years most of the multilateral development banks (MDBs) have
come a long way toward integrating environmental concerns into their
loan criteria and sector policies. Most have developed environmental
assessment categories based on the nature, importance and sensitivity of
environmental issues. Since 1990, several banks have newly developed or
changed their environmental assessment procedures and classification
systems. They are not all the same, so a summary of their classification
systems follows.

### World Bank  {#world-bank .unnumbered}

{International Bank for Reconstruction and Development (IBRD),
International Development Association (IDA), & International Finance
Corporation (IFC)}:

Category A: Environmental Assessment is normally required as the project
may have adverse and significant environmental impacts.

> Category B: More limited environmental analysis is appropriate, as the
> project may have specific environmental impacts.
>
> Category C: Environmental analysis is normally unnecessary.

Category U: Unclassified indicates structural adjustment loans, which do
not fall within one of the above three categories for purposes of the
\[operational\] directive governing environmental assessment.

Category T: To be determined.

Category FI: [IFC only]{.underline} \-- relates to financial
intermediaries whose subprojects may result in environmental impacts,
thus requiring an environmental review by the intermediary, according to
IFC procedures.

### African Development Bank (AfDB) {#african-development-bank-afdb .unnumbered}

Category I: Projects that may have significant environmental impacts,
requiring detailed field review and an Environmental Impact Assessment
(EIA) study.

Category II: Projects with limited environmental impacts that can be
mitigated by applying specific measures in the project design.

Category III: Projects not anticipated to result in adverse
environmental impacts, for which environmental analysis is normally
unnecessary.

### Asian Development Bank (ADB) {#asian-development-bank-adb .unnumbered}

Category A: An EIA is undertaken for those projects for which
significant adverse environmental impacts have been forecast in the
initial environmental examination (IEE).

Category B: An IEE confirms that there are no significant adverse
environmental impacts requiring a detailed EIA. The IEE represents the
complete environmental assessment report. Projects in this category may
have adverse environmental impacts that are of a lesser degree than
Category A impact; mitigation measures for these impacts are more easily
prescribed.

Category C: An environmental assessment is normally not required for
Category C because the project is unlikely to have adverse environmental
impact.

### Inter-American Development Bank (IDB) {#inter-american-development-bank-idb .unnumbered}

IDB revised its EA categorization procedures in March 1997. As of yet,
there is no information available on the new procedures. The former
procedures are described below:

Category 4: Operations that may have significant negative impacts on the
environment and will require a detailed environmental assessment.

Category 3: Operations that may have a moderate impact on the
environment but for which there are recognized and well-defined
solutions.

Category 2: Operations that have no direct or indirect environmental
impact.

Category 1: Operations designed specifically to improve environmental
quality.

### Illustrative examples: {#illustrative-examples .unnumbered}

The Asian Development Bank gives illustrative examples of each
environmental category of project. These are generally representative of
all three basic categories used by the MDBs. They are:

Category A (World Bank A, AfDB I, and IDB 4):

-   Forest industries (large scale)

-   Irrigation (large scale with new source development)

-   River basin development

-   Large scale power plants

-   Large scale industries

-   Surface and underground mining

-   Large water impoundments

-   New railways/mass transit/roads (near or through sensitive areas)

-   Ports and harbors

-   Water supply (with impoundments and/or river intakes)

Category B (World Bank B, AfDB II, and IDB 3):

-   Agro-industries (small scale or no wet processing)

-   Renewable energy

-   Aquaculture and mariculture

-   Rehabilitation, maintenance and upgrading projects (small-scale)

-   Industries (small-scale and without toxic/harmful pollution
    discharges)

-   Water supply without impoundments or new river intakes

Category C (World Bank C, AfDB III, and IDB 1 & 2):

-   Forestry research and extension

-   Protected area establishment and management

-   Marine sciences education

-   Geological or mineral surveys

-   Education

-   Family planning

-   Capital market development study

-   Securities Ltd.

### Stage of World Bank Processing for a Typical Project: {#stage-of-world-bank-processing-for-a-typical-project .unnumbered}

1.  Identification

2.  Preparation, including feasibility studies, alternative studies,
    environmental assessment

3.  Preparation mission

4.  Pre-appraisal mission

5.  Pre-appraisal

6.  Appraisal mission, including comprehensive review of all aspects of
    the project

7.  Appraisal report preparation concludes this stage

8.  Negotiations

9.  Board date and approval

10. Signing of loan agreement

11. Implementation

# LIST OF UPCOMING MULTILATERAL DEVELOPMENT BANK (MDB) PROJECTS WITH POSSIBLE ENVIRONMENTAL CONCERNS 

# PROJECTS LOCATED IN AFRICA

## Western Africa: IDA/AfDB - Regional Hydropower Development (Mali, Mauritania, and Senegal)

Projected AfDB: \$ 20 million

IDA Funding: \$ 38 million

Projected Total Cost: \$444 million

Tentative AfDB Board Date Indefinite

WB Board Date: June 1997

> Stage: AfDB, negotiations completed in November 1997, but board
> consideration is pending a policy determination on multinational
> projects. World Bank approved its loan in June 1997.

AfDB Environmental Category: **I**

World Bank EA Category: **A**

WB Project ID: SNPA46648

Project first entered: March 1997

Entry last updated: April 1999

[Description]{.underline}: The main objectives of this proposed project
are to: (a) install power generation capacity to generate economic and
financial benefits from the Manantali dam which has already been built,
and encourage cooperation and energy exchanges between the three member
countries; (b) help minimize the long-term cost of electricity supply to
the three countries; (c) provide hydropower to help meet increased
demand for electricity and reduce fuel costs (in Dakar, Bamako, and
Nouakchott); (d) strengthen the Organization of the Development of the
Senegal River (OMVS) and the power sector entities in the three
countries and establish an effective organization to manage and operate
the Manantali dam and project facilities with satisfactory procedures,
in particular regarding safety, health and environment protection; and
(e) contribute to develop traditional agriculture downstream through the
rational management of the Manantali reservoir.

The proposed project would include the following components:

(a) construction of 200 MW hydroelectric plant (5 units of 40 MW each
    and civil works); construction of 225 KV high voltage transmission
    lines to Bamako (306 km) and to Decker (821 km) along the Senegal
    River, and a 132 KV transmission line to Knocked (219
    km);construction of 11 substations and a dispatching center;
    supervision of project construction;

(b) technical assistance and training (support to OMVS and The Society
    de Gestio de l\'Energie de Manantali (SOGEM), including regulatory,
    reservoir management, health and environment aspects and for the
    recruitment of a private operator for the project).

[Issues]{.underline}: The Bank has done a commendable job in recognizing
downstream and water management issues for the lower Senegal River in
conjunction with this project. It has the potential to promote a win-win
development program \-- by achieving sound development goals with
economic, environmental and social sustainability. However, it is not
clear from the EA and other project documents that the project design
takes full advantage of this opportunity.

Background: Since its completion in the late 1980\'s, the Manantali Dam
on the Bafing River in Mali, which controls about 45% of the total
Senegal River flow, has aggravated environmental and socioeconomic
conditions downstream, adversely affecting the well-being of hundreds of
thousands of riparian households. The pre-dam flood regime supported a
dense human and livestock population in a low rainfall area. The flood
made possible a sustainable seasonal succession of fishing, herding,
flood-recession farming, reforestation, and aquifer recharge.

The cessation of the natural flood, and the inconsistent and flawed
attempts to provide simulated floods, have resulted in incidents of
social conflict in the valley; herders and fishers now must compete for
land and water resources they previously were able to use mutually.
Poverty and out migration have increased, as productive yields have
declined. Labor burdens for women, children and the elderly have
increased without corresponding increases in income.

USAID realizes that this project is trying to rectify some of the
downstream impacts that the dam has had, while trying to realize its
economic potential through hydropower development. However, the EA
Summary (January 1997) does not analyze the downstream environmental and
social impacts that the Manantali has had, or refer to a host of studies
on the subject. Though the EA proposes a Water Management Optimization
Program to address downstream issues, it is vague on what OMVS will be
held accountable to. USAID supported the Institute for Development
Anthropology\'s studies of resettlement upstream from the dam and
environmental and socioeconomic impacts of the changed river regime
downstream. These studies conclude that a properly managed release of
reservoir waters replicating the natural flood would substantially
restore the pre-dam production system without adversely affecting
hydropower potential.

The issue of dam management has been much debated and politicized. Based
on the above research, the government of Senegal is willing to follow
recommendations regarding a controlled release program. Mali has been
indifferent on the subject, as long as power is generated, since most of
the floodplain is downstream from the country. Mauritania is apparently
resistant to the idea since it is seeking a shift from traditional
production to large-scale irrigation.

USAID understands that ORSTOM, a French agency, has been selected to
carry out an optimization study. ORSTOM historically has shown little
enthusiasm for maintaining the traditional production system, and its
river-flow model for dam releases should be replaced by one based on
rainfall and runoff data from the Fouta Djallon, where at least five
collection stations are tied into the meteorological satellite network.
The latter model would substantially enhance real time forecasting, and
should be carefully considered. A comparative analysis of the two models
would be in order. The World Bank reported that ORSTOM is using real
time (tele-detection) modeling based on rainfall and run‑off data
upstream, and also on measured flows of downstream river tributaries
(for better timing of the artificial flood).

Given the current situation, USAID suggests the following:

\(1\) The Bank should try to leverage as much as possible a policy
change at OMVS, to include as one of its fundamental objectives the
management of the Senegal River basin for recessional agriculture and
other flood-based activities in an integrated way with electricity
production.

\(2\) Loan disbursements should be conditioned on the successful
implementation of this integrated approach. Especially, the private
operator of the project should have incentives *and* disincentives in
its contract that would ensure an optimal artificial flood while
producing a maximum of electricity. The operator should not receive
bonuses based on electricity production alone.

\(3\) Downstream villages should be given representation on the board of
OMVS, or in some other significant way have an ongoing voice in
reservoir management.

\(4\) The project\'s environmental assessment should be expanded to
include (or refer to) an analysis of downstream environmental and social
impacts.

[Status]{.underline}: The World Bank\'s financing of the project was
approved and signed in June 1997. The African Development Bank\'s
financing decision is pending passage of its policy on multinational
projects.

USAID and Bank staff met regarding the above issues. Bank followed up
with the following comments: Although the EA summary of January 1997 is
not clear enough on how the project would contribute to achieving the
sound, use-balanced management of water resources from the Manantali
reservoir, this issue is much better addressed in the Environment Impact
Mitigation and Monitoring Plan (PASIE) which has just been finalized by
OMVS and its consultant, as well as in the corresponding sections of the
SAR on environment, social and health aspects, which should be sent to
the Board during the first week of June 1997. These aspects will be
discussed during credit negotiations; specifically, agreements must be
reached on: (i) detailed actions and budget to carry out the environment
impact mitigation and monitoring program (PASIE), in particular for
involuntary resettlement and land acquisition; (ii) final terms of
reference for preparing the Manantali reservoir management agreement.

On background, the three countries will, through OMVS, undertake an
agreement (Charter) for the sound management of the Manantali reservoir.
OMVS will be held accountable for monitoring the proper application of
the agreement, while the private operator of the hydropower plant will
be charged of the actual implementation of the reservoir management
program. Adequate dispositions will be defined in detail during the
studies financed by IDA, CIDA and France under the project. The study,
contracted by the Bank to a hydrology specialist during project
preparation, confirms the results of other detailed studies regarding
the need/feasibility of maintaining artificial flooding without
adversely affecting hydropower potential.

Also on background: after verification with Bank staff working in the
agriculture sector in this country, Mauritania is not \"resistant to the
idea (of a controlled release program) since it is seeking a shift from
traditional production to large-scale irrigation\". Indeed, in its
REPORT, Mauritania clearly defines the important role that artificial
flooding will continue to play in the valley, in complement to the
irrigation program.

On USAID suggestions: what is suggested in this section is precisely
what will be done through the project, OMVS subscribing to a Charter for
sound management of the Manantali reservoir; dated covenant in Credit
Agreements regarding this Charter; adequate incentives/disincentives in
the contract of the private operator to ensure application of the
Charter\'s dispositions for artificial flooding. It is not planned,
however, to expand the EA on downstream environmental and social
impacts, because both the EA and the PASIE refer to detailed studies
carried out on these aspects and endorse in large part their
conclusions.

USAID remains concerned about how sound management of the Manantali
reservoir will be achieved as the operating principles or objectives of
the agreement (Charter) have yet to be defined. USAID review of the
study concluded that it indicates hydropower would compete with
flooding. The EA does not refer to nor endorse numerous studies on
downstream and public health impacts of the dam. USAID has recently (May
1998) begun work on disseminating information on the project to
downstream water users and other stakeholders. USAID will continue to
dialogue with the Bank on these issues.

## Chad-Cameroon: IBRD/IFC - Petroleum Development and Pipeline

Projected IBRD Funding: \$ 90 million

Projected IFC Funding: \$ 250 million

Projected Total Cost: \$ 3.5 **b**illion

> Private sector sponsors: Exxon International, Royal Dutch Shell, and
> Elf Aquitaine. Exxon\'s local affiliate will be the operator of the
> project.

Tentative WB Board Date: July-September 1999

> Stage: Appraisal mission is scheduled for late May 1999. IDA: A draft
> EA is being revised by the borrowing governments, and a comprehensive
> EA summary is expected end of May 1999. IFC: Financing negotiations
> underway; financing negotiations underway.

World Bank EA Category: **A**

IBRD Project ID: TDPE44305

IFC Project ID: 4338

Project first entered: March 1997

Entry last updated: April 1999

[Description]{.underline}: The project involves the development of
Chad\'s oil fields and the construction of a petroleum export pipeline
from the south of Chad to the Atlantic coast of Cameroon and related
marine installations. The objectives of the project are:

a)  to promote the economic growth of Chad and Cameroon through the
    private sector led development of Chad\'s substantial petroleum
    reserves and their export through Cameroon; and

b)  to strengthen Chad\'s management of petroleum revenues through a
    technical assistance component.

The project would involve:

a)  the development of 300 production wells in Chad\'s Doba oil fields;

b)  the construction of a 30-inch, 1,050-km buried pipeline (170 km in
    Chad, 880 in Cameroon) from Chad's oil fields to Cameroon\'s
    Atlantic coast, and related pumping stations, ancillary facilities
    and infrastructure; and

c)  the installation of marine export terminal facilities in Cameroon (a
    moored floating storage and offloading vessel), and associated
    marine pipelines and related facilities.

[Issues]{.underline}: If approved, this would be one of the largest
construction projects in sub-Saharan Africa. The project is mentioned in
the World Bank\'s country program strategies for Chad and Cameroon.

The African Forest Action Network (AFAN), representing some 70 African
NGOs engaged in the forest sector in anglophone and francophone Africa,
is a major USAID partner in Cameroon for carrying out the Central
African Regional Program for the Environment (CARPE). USAID met with the
Network (in 1997) to review its concerns regarding the project. AFAN was
concerned with the three alternative pipeline routes and how they would
affect sensitive ecosystems. AFAN was also concerned about public
consultation in conjunction with the EIA; it sees public meetings as a
useful forum for discussing the project.

The Cameroon Environment and Development NGO (CED) reported that the EA
is not readily available within Cameroon, that it can only be read
inside a certain office, photocopies are not able to be made, and (2)
clearing for construction preparation has already begun in the area
south of Kribi, and (3) the mitigation plan in Cameroon has not yet been
made available for review.

CARPE is currently supporting the assessment of biodiversity priorities
in Cameroon; additional studies are planned for the identification of
priority areas for biodiversity conservation in the Congo Basin as a
whole. Initial results indicate that forest-savanna ecotones (areas
bridging forest and savanna ecosystems) are of particular interest
because they contain a high degree of endemic species and important
ongoing evolutionary processes. USAID suggests that these areas be taken
into account during the EA process.

[Status]{.underline}: The US Executive Director\'s office hosted a
January 1999 briefing by Bank staff for interested USG agencies. Bank
staff announced that it would produce a \"unified environmental and
social assessment\" that will include the all assessment and related
documents:

-   EAs for Chad and Cameroon received November 1997

-   EMP for Chad - November 1997

-   EMP for Cameroon - February 1998

-   Chad Compensation/Resettlement Plan - February 1998

-   Cameroon Compensation Plan - September 1998

-   Chad and Cameroon Environmental Management Plans (inc. tech. specs.)

-   Chad Compensation/Resettlement Plan

-   Cameroon Compensation Plan

-   Chad Rural Development Plan

-   Community Health Outreach Program

-   Oil Spill Response Plan

-   Decommissioning Plan

-   Indigenous Peoples Plan in Cameroon

-   Environmental Offset Program in Cameroon

Bank staff was hoping for a July board date, however, this will probably
be delayed by the 120-day requirement for public review of the
Environmental Assessment prior to the board vote. Until the unified EA
document and supporting material are on file at the World Bank, the USG
will not begin to count the 120 day period\-- which is required by the
Pelosi Amendment as well as by WB policy (notwithstanding IFC's separate
policy which requires only 60 days). According to staff, preliminary
disclosure and consultation with local peoples will happen before the
official transfer of the final project documents. Revisions to many of
the above documents have been made after review by the World Bank, ED's
offices, Chad and Cameroon governments, in-country public review, and
international NGOs.

Progress has been made on the re-routing issue. A recent meeting had
been held with the government of Cameroon, the consortium and Bank staff
where this was discussed extensively. Pipeline routing issues: The
pipeline will avoid, in part, some sensitive areas that were of concern:
The Mbere Rift Valley near Chad has been avoided (the pipeline will
follow the ridge); most of the Deng Deng forest was avoided (the
pipeline will now follow a railroad ROW through central Cameroon);
environmental offsets were still pending as new areas for protection
have yet to be chosen by the government of Cameroon. The proposed trust
fund would underwrite costs for the management of the new protected
areas. Regarding coastal forests, the pipeline has to go through some of
these to get to the coast. Various alternatives were studied, but
project staff concluded that the pipeline should go along the alignment
that was originally chosen.

Some resettlement has occurred already in Chad, though there is not
supposed to be any resettlement in Cameroon \-- only compensation for
lost land. There is still no indigenous peoples plan for the project,
nor has the associated trust fund plan been established. The Bank is
consulting with GEF on how to manage the trust fund.

A new revenue management plan has been passed in Chad, though it is
questionable how much effect this law will have on the project. The
World Bank's leverage to push for equitable revenue sharing on the Chad
side is limited, but the Bank has said that it will include language in
the loan agreement stipulating that Chad's failure to comply with
requirements will negatively affect future Bank funding for the country.
Major questions continue to surround the security situation and the role
of the military in Chad. Several other issues were also discussed at the
Bank staff briefing (additional oil production areas in Chad and their
possible connection to the project, project design capacity, the
regional development plan, and the policy letter passed by Chad\'s
parliament. \[USAID: April 1999\]

World Bank staff gave a briefing to USG representatives (including
USAID) on this project in April 1997. On consultation, Bank staff
reported that nine NGOs (both international and local, though these did
not include AFAN), 68 villages, local governments and several towns had
been consulted regarding the pipeline project. The Bank had released the
draft EA and mitigation plan for Chad, and the EA for Cameroon. The EA
was divided into two parts, the Chad EA on oil field and pipeline
development, and the Cameroon EA on pipeline and export facilities (no
refineries are associated with the project). With the Bank\'s
encouragement, the governments established expert panels to assist them
in analyzing the draft EA and to evaluate and comment on the mitigation
plan.

The project sponsors planned to consult with AFAN as part of its ongoing
public consultation process. In particular, an extensive in-country
survey of the pipeline route was conducted during the second half of
1997. This survey included consultations with NGOs and villages along
the route. Consultations with the public have also occurred in 1998 and
1999 in Chad and Cameroon.

The sponsors have indicated that the Bank\'s participation is essential
for the project to go forward. The sponsors and Bank have taken a
proactive approach on environmental and social aspects of the project.
The governments and the Bank have discussed transparent oil revenue
budgeting mechanism in association with the project. Revenues would be
channeled through the government of Cameroon or Chad's national budgets
that would help ensure accountability. Chad's Parliament has adopted an
Oil Revenue Management Law

## Guinea-Bissau: AfDB - Etudes Routes Boke-Quebo (Boke-Quebo Road Study)

Projected AfDB Funding: \$1.4 million

Projected Total Cost: \$ 40 million

Projected Date to AfDB Board: Second half of 1999.

Stage: Final

AfDB EA Category: **none given**

Project first entered: December 1996

Entry last updated: April 1999

[Description]{.underline}: The study involves the preparation of
technical aspects of bidding and contract documents for the road.

[Issues]{.underline}: USAID staff suggest that the planned study would
be for an Environmental Category I project, and that the construction of
the proposed road (southern Guinea-Bissau to northwest Guinea-Conakry)
would pose environmental risk. This new road may threaten nearby coastal
forests and biodiversity, including habitats of the forest elephant,
chimpanzees and numerous other important species. \[e-mail: USAID/Bissau
16Dec96\]

[Status]{.underline}: According to the AfDB, the Islamic Development
Bank prepared the feasibility study for this project. The Task manager
agrees that the project should be a Category I project due to the
coastal zone and biodiversity importance; a full Environmental Impact
Assessment will be done. AFDF will not fund this alone, and is seeking
other financiers. \[fax: AfDB/USED 07Feb97\]

The study has been delayed due to civil strife in Guinea-Bissau, funding
may be available for the study during the second half of 1999. (AfDB
email: 20Apr99\]

## Madagascar: IDA - Transport Sector Project

Projected IDA Funding: \$ 50 million

Projected Total Cost: \$436 million

Tentative WB Board Date: September 1999

> Stage: Appraisal mission is scheduled for June 1999.

World Bank EA Category: **B**

Project ID: 52208 (formerly MGPA01534)

Project first entered: January 1997

Entry last updated: April 1999

[Description]{.underline}: The project will:

a)  support the restructuring of public enterprises in charge of road
    and rail transport and coastal shipping;

b)  finance limited improvements to road and transport infrastructure;
    and

c)  support privatization of transport activities.

[Issues]{.underline}: Madagascar\'s new law for investment, MACAW,
requires that 0.5 percent of the investment (be it private or public)
will be set aside for environmental evaluation. This could be a good
test case for Madagascar to try the effectiveness of the law and local
ability to enforce it. \[e-mail: USAID/Madagascar 18Dec96\]

This would be excellent opportunity to test the capacity of
Madagascar\'s environmental impact legislation, MECIE *(Mise en
Compatibilite des Investissements avec l\'Environnement)* Law No.
95-377. Though thresholds have not been clearly established, private and
public investment in infrastructure is point 20 of Annex 1 of the law,
which specifies the list of investments requiring environmental impact
assessment in Madagascar.

In the project\'s Environmental Data Sheet, under the section on major
environmental issues, only two areas of concerns are identified.
USAID/Madagascar would also include (1) road site/railroad site impacts
(such as worker camps, use of local natural resource material, etc) and
possible mitigation measures; (2) track replacement and its
environmental consequences; and (3) water-routing changes or impacts and
presence of wetlands in construction of selected waterways
infrastructure. \[USAID/Madagascar email, 4/07/98\]

[Status]{.underline}: World bank staff reported that the timing of the
project\'s preappraisal was completed in December 1998, including an
annex on environmental issues. Though MECIE has not been regulated yet
at a Ministerial level, this annex recommends a methodology for uniform
application of EA procedures. \[WB email, April 1999\]

The railways component has not been included in this project, and is
being planned for the second phase of the transport project.

Regarding waterways, the studies are almost completed. The project
should only include, on a pilot basis, small investments aimed at
facilitating river navigation, i.e. loading docks. The Bank takes note
of the issue raised with regard to water-routing changes or impacts and
presence of wetlands. \[WB email, 5/08/98\]

## Madagascar: IDA - Health II

Projected IDA Funding: \$ 25 million

Projected Total Cost: \$ 27 million

WB Board Date: 1999

> Stage: Appraisal mission is scheduled for July 1999.

World Bank EA Category: **C**

Project ID: MGPE51741

Project first entered: April 1998

Entry last updated: April 1999

[Description]{.underline}: The project will:

a)  support the process of decentralization of the health delivery
    system currently under way;

b)  reinforce the health care services at the district level; and

c)  strengthen public health programs and promote community-managed cost
    recovery.

[Issues]{.underline}: This project is very important to the full
achievement of USAID/Madagascar\'s Strategic Objective No. 2, \"Smaller,
Healthier Families\" and USAID/Madagascar is substantively involved in
discussions with the World Bank and other partners concerning the
project\'s development. However, Mission recommends a Category B rating
although the EA category for this project is yet to be determined \[as
of April 1998\].

Two issues should be included in the EA scope: (1) Provisions must be
made for negative environmental impacts during rehabilitation or
construction of health centers or hospitals and mitigation measures
should be specified in the design to address potential construction
impacts; (2) It is not clear from the Project Information Document (PID)
whether this project will supply hospital or clinic products which may
result in biohazard wastes. If so, provisions must be made to address
waste issues.

In the Environmental Aspects section of the PID, the use of DDT is
mentioned. \"Spraying of DDT will not have a direct negative impact on
the environment as it will be residual indoor spraying and limited to
small geographical areas on the fringes of the highlands.\"

In an USAID 1995 Report on Pesticide Use and Pest Management in
Madagascar, the use of DDT is noted. \"Citizens on the high plateau are
required to allow its application to the inside of their homes for
malaria control every year. The chronic human health effects of this
chemical can include liver damage, degeneration of the central nervous
system, dermatitis, weakness and convulsions. Tremors are one of the
most noticeable effects of long-term exposure to DDT, even at fairly low
concentrations (Rengam and Snyder, 1991). In spite of these potential
problems, no one has monitored or kept systematic records of this or any
other pest-management campaign, even for applicator positioning.
Institutions that could contribute to a program do not coordinate their
activities at present\.... As a result, little information is available
about pesticide impact on human health and the environment in
Madagascar.\"

This project, if it proposes DDT use, should assure user safety, address
storage and handling issues and most importantly \-- make an effort at
addressing the issue of long term use or even single exposures through
appropriate studies. Finally how localized would DDT spraying be? It is
not clear whether the spraying is only an interior household campaign or
it implies the immediate surrounds as well. \[USAID/Madagascar email:
4/07/98\]

[Status]{.underline}: World Bank staff responded that the content of
this forthcoming project is being reconsidered by the Ministry of
Health. Provided that the new project includes health infrastructure
works and indoor DDT spraying, we will carefully address the question of
hospital waste and DDT chronic health effects, and, of course, the
project\'s environmental category. \[World Bank email: 5/08/98\]

## Madagascar: AfDB -- National Locust Control Program^n^

*\[**Projet National de Lutte Antiacridienne (PNLA)\]***

Projected AfDB Funding: \$ 7.2 million UC

> Projected Total Cost: \$11.2 million UC (about US\$14 million)

AfDB Board Date: End 1999

Stage: Appraisal report dated October 1998

AfDB EA Category: **I** (originally II)

Project ID: Unknown

Project first entered: April 1999

Entry last updated: April 1999

[Description]{.underline}: The AfDB project\'s financing will support
the preventive control component of the national locust control plan. It
will be implemented over a five-year period with funding by the AfDB.
The objectives of the project are to:

a)  support institutional strengthening, infrastructure, human resource
    development, materials and finances sufficient for locust control
    and prevention;

b)  provide technical assistance;

c)  establish monitoring and control teams (composed of technicians from
    the Directorate of Plant Protection and Farmers) in the areas of
    swarming, and support the teams' training and equipment needs; and

d)  investigate alternative methods of control, compatible with the
    environmental concerns, in particular biopesticides.

The components of the preventative control project consists of:

a)  monitoring for locust;

b)  research and training; and

c)  project coordination and management.

[Issues]{.underline}: USAID has had the following concerns regarding the
initial proposal for this project:

a)  The October 1998 project appraisal report (project paper) was based
    on an EA category II project, which did not require an environmental
    assessment. The proposal downplayed the fact that pesticides would
    be used. Yet pesticide use is inevitable for a locust prevention
    program \-- if effective (timely, well-targeted) the amounts
    ultimately needed are greatly reduced, because it prevents or
    reduces the formation and spread of ever larger swarms. In fact,
    approximately \$8 million were budgeted for insecticides (although
    these funds were to be provided by another donor).

b)  In February-March 1999 USAID/Madagascar and the US Ambassador to
    Madagascar informed AfDB of their concerns regarding the project's
    locust biocontrol component. This was billed as the major element of
    the locust preventive intervention \"hinging on integrated pest
    management methods.\" Not only does this underplay the role of
    synthetic chemical pesticides, the proposed AfDB project had
    component that seemed to call for the introduction of an exotic
    locust pathogen (a fungus) into Madagascar. The proposed
    introduction of an exotic pathogen into Madagascar was controversial
    because of its potential negative effects on native biodiversity.
    Madagascar's has highly diverse \-- and threatened \-- animal and
    plant life, most of which is found nowhere else in the world. Exotic
    introductions are of particular concern to island nations. As a
    result, Madagascar is particularly sensitive about the integrity of
    its native biodiversity and intellectual property rights.

c)  As initially proposed, the AfDB project did not seem to take into
    account the fact that Madagascar already has its own program of
    research (funded in part by USAID/Madagascar over the past seven
    years) on a Malagasy species of fungal biopathogen of the same genus
    as the one being proposed within the AfDB proposal. The Malagasy
    species, which has gone through two large-scale field trials as part
    of the GOM's requirements for the pathogen to be registered, was
    developed entirely in Madagascar. The development of an indigenous
    biopathogen has been central to the GOM and USAID's support for
    locust biocontrol, in the name of environmental protection and
    biodiversity preservation. At the same time, this program builds
    local research and development capacity in locust control
    alternatives and opens opportunities for community-based enterprise
    development. The optimum approach would involve a consortium of all
    major research initiatives involved in locust biopathogen
    development.

d)  As a result of these concerns, AfDB postponed the board
    consideration of the project, reclassified the project as an
    Environmental Assessment (EA) Category I, and began to consider
    whether the EA being planned for the Madagascar locust program as a
    whole would serve the needs of the AfDB. This EA is expected to be
    completed towards the end of 1999. However, this then raised the
    prospect of delays in the approval of the project because of the
    additional time needed to complete the EA, even if initiated
    expeditiously, followed by a 120-day review period before it is
    submitted for approval by the MDB board. USAID/Madagascar has sought
    assistance to promote expedited completion of the EA process. The
    locust donors here recommended that the FAO assessment team being
    assembled in May 1999 (see below) be capitalized upon and used to
    help assemble an overall programmatic approach for the locust
    program. In this way the program formulation and EA teams would be
    closely parallel.

e)  USAID/Madagascar is supporting the development of a programmatic EA
    for the preventative locust management program, being developed by
    Office National de l\'Environnement (ONE) and the Natural Resources
    Institute - UK**.** ONE and USAID are encouraging all parties to buy
    into the Terms of Reference for and completion of this EA. The World
    Bank, EU, the French bilateral development agency, and other donors
    are currently supporting an emergency locust control program,
    funding for which runs out in June 1999 after one year of operation.
    On request of GOM and the donor coordinating group, FAO is carrying
    out an assessment of the locust outbreak status and developing an
    operations plan for short-, medium- and long-term locust management,
    \"Mission de Formulation d\'un Programme de Lutte Antiacridienne a
    Court (Juin-Decembre 1999).

f)  Overall donor coordination with locust prevention and control in
    Madagascar is an issue. Full consensus remains to be achieved
    regarding the complementarity of respective donors\' and Malagasy
    interests. Coordination will be key to the success of future locust
    prevention and control measures. The AfDB proposal should fully
    capture efforts made by others, including the World Bank, EU,
    France, USAID, GTZ, FAO, and other donors in host-country capacity
    strengthening through training, and try to build on these
    initiatives as much as possible. USAID enourages an active
    participation by entities such as FOFIFA (Centre National de la
    Recherche Appliquée et Développement Rural) and the University of
    Madagascar as partners, particularly in the medium- to longer-term
    locust management activities, e.g., research, environmental
    assessment, and technology development and transfer.

[Status]{.underline}: Efforts are presently underway to achieve as much
of a convergence as possible around a short-, medium- and long-term plan
for locust management in Madagascar, including a programmatic EA which
involves the key Malagasy partners (ONE, National Locust Control
Department), donors and technical assistance agencies.

The AfDB/USED's office responded to the above issues:

Issue a) Regarding the EA category in paragraph a) above, the original
project was based on the emergency phase being a category II and the
fact that the Bank\'s financing was supposed to be a part of this
emergency phase in 1997. When the project was converted to be preventive
in nature is when the oversight to reclassify took place - e.g. it was
not nearly as deliberate as this paragraph implies.

Issue d) Board consideration was postponed because the project was
reclassified from category II to category I therefore making it
mandatory to complete an EIA and have it distributed 120 days in advance
of Board presentation \-- in accordance w/the Bank\'s environmental
policy \-- which also respects the Pelosi Amendment.

Issue e) The Bank is \"buying in\" to the TOR for the EIA as it is
viewed as best to have one umbrella EIA and recommendations for all to
follow.

## Uganda: IDA -- Road Development Program (formerly First Roads Sector)

Projected IDA Funding: \$290 million

Projected Total Cost: \$750 million

Tentative Board Date: July 1999

> Stage: Negotiations were scheduled for May 1999

World Bank EA Category: **B**

Project ID: UGPE2970

Project first entered: May 1998

Entry last updated: April 1999

[Description]{.underline}: The project will (a) support institutional
strengthening and capacity building; (b) improve the classified road
network through pavement strengthening; (c) rehabilitate the classified
road network; (d) maintain of existing roads; (e) construct traffic
terminals in Kampala; and (f) provide technical assistance. Parallel
financing is expected from Germany and EU.

[Issues]{.underline}: USAID/Uganda has general concerns regarding
rehabilitation and maintenance of roads \-- beyond direct the
environmental impacts. The Project Information Document and
Environmental Data Sheets are not yet available for the First Roads
Sector project, so it difficult to be specific in stating the potential
for cumulative and indirect impacts. For example, the project could
cause increased migration along rehabilitated roads, resulting in
increased deforestation and other environmental impacts that go along
with increased human presence. The project should undergo an
environmental review (and if necessary an EA) *prior* to final design,
so that *actual* alternatives can be analyzed before commitments to
rehabilitate specific portions are made. The EA should also be shared
with the public and donors (for such a large project that seems
reasonable) \[USAID/Uganda email, April 1998\].

[Status]{.underline}: While World Bank staff understands USAID's
concerns, in the suggested report there are number of outdated
statements. The position of the project is quite different today than
described by USAID's office (messages from April 1998 and June 1998).
World Bank staff is very concerned on the issue. The project not only
envisaged an EIA for the each of the physical components of the program,
but has also carried out very detailed Sector Environment Policy and
Management Studies as well as a Social Impact Assessments for each of
the roads included in the program

1\. Regarding the employment of the environmental specialist, this
position was included in the staffing list of RAFU and Uganda government
accepted the requirement. The actual employment will be effected as soon
as the present evaluation of the candidates for various positions for
RAFU middle-management staffing is completed. The credit is expected to
be effective by November 1999, by which date the position will be
filled.

2\. The project did take into consideration not only the employment of
such specialist, but also supports establishment of an environmental/
social unit in the Ministry / RAFU, as recommended by the consultants
EUROCONSULT, on the environment sector. All reports produced for the
sector study have been copied to USAID's Kampala office. The final
report was issued on March 30, 1999 and copied to USAID's Kampala
office, NEMA and WFA. The consultants will also review and suggest
improvement of resettlement and land composition policy.

3\. The Bank financed Roads Development Program, RDP, is a \$295 million
APL type lending instrument and will support improving 5 major roads
(bitumen overlay), upgrading 300 km of feeder roads to the standard
classified road network, and rehabilitate about 1000 km of feeder roads.
The program will be implemented over 7 years and in 4 phases, each to be
implemented when and if the designed triggers are fulfilled. The Bank,
the borrower and other participating donors carried out pre-appraisal
and appraisal missions in June and November 1999, and have fully
appraised the all roads except for the feeder roads which is underway.
Our Aide Memoires describing all steps of the appraisals have been
shared with all donors, the shareholder community in Uganda, and other
major international financing agencies( AFDF, NDF, NORAD , etc.)
Internationally recruited consultants have carried out the feasibility
studies for the selected roads and are completing the detailed designs
for the first stage of the Program, now under consideration. As an
integral part of the process, both EIA and SIA (Social Impact Statement)
have been carried out for the selected 5 roads and draft reports have
been received by the Bank in January 1999 and commented have been
provided accordingly. The final EIA and SIA reports, incorporating our
comments, were received in March 1999. Copies of them were sent to the
Bank's PIC, and are available for public review, as well as the PID of
the Program and the Phase I project. \[World Bank Email, 5/11/99\]

\[From the June 1998 report\] Comments were forwarded to Bank staff and
USAID/Uganda met with them in Uganda and reported that the project is in
the process of doing the EAs. They have developed a list of possible
road rehabilitation projects, none of which are final, and are waiting
on other reports, including the EAs. If the EA finds significant
impacts, they will choose a different alternative. USAID/Uganda plans to
meet with the environmental consultants when they come to Uganda and
discuss road rehabilitation and EA content. USAID/Uganda is working with
the team doing an evaluation on the Rural Feeder Roads project here. A
substantial amount of road rehabilitation is occurring and environmental
issues have arisen. For example a rehabilitated road adjacent to a
protected forest reportedly has increased illegal timber cutting.
USAID/Uganda is generally satisfied with progress on with environmental
aspects of this project, and welcomes the chance to get involved, even
peripherally. \[USAID/Uganda email 6/29/98\]

## Zimbabwe: IDA - Local Government Capital Development

Projected IDA Funding: \$ 30 million

Projected Total Cost: \$ 60 million

Tentative Board Date: May 2000

Stage: Project preparation is underway.

World Bank EA Category: **B**

Project ID: ZMPE3306

Project first entered: May 1998

Entry last updated: April 1999

[Description]{.underline}: The project will provide infrastructure
financing and capacity-building support for local governments, including
rural and urban district councils. Environmental Assessment Category B.

[Issues]{.underline}: USAID/Zimbabwe reported that, though there is not
much information on which to comment, if the project is going to finance
infrastructure, it will qualify as a Environmental Assessment Category A
project, not B as stated. \[USAID/Zimbabwe Email 3/30/98\]

USAID/Zimbabwe suggests that the project should include strengthening of
environmental units of local governments. In Zimbabwe, at the moment,
knowledge on environmental reviews is very limited and restricted to the
Department of Natural Resources in the Ministry of Mines, Environment
and Tourism. It is virtually absent within local authorities.
USAID/Zimbabwe does not have any experiences with local governments
requiring environmental reviews for any projects. Local governments
don\'t have any mechanisms for screening projects for environmental
reviews. The Zimbabwe EIA Policy placed this function within the
Department of Natural Resources, who at the moment have severe capacity
constraints. It might be necessary for the project to set up a mechanism
for environmental reviews for its subprojects. \[USAID/Zimbabwe Email
5/29/98\].

[Status]{.underline}: World Bank staff responded that USAID/Zimbabwe is
quite correct that information is limited as we are at the initial stage
of agreement with the Government on project design. However, we have
agreed in principle that this would be a \"programmatic\" operation
under which infrastructure would be financed with proceeds of the IDA
credit only if Local Authorities meet strict eligibility criteria.

Two types of Local Authorities (representing all local government in
Zimbabwe) would be potentially eligible. First, Rural District Councils
(RDCs) would be eligible for District Development Grants (DDGs) as
continuation of the current Rural District Council Pilot Capital
Development Project. DDGs are small, about US\$100,000 equivalent per
RDC per year, and these are approved against meeting all the criteria
and procedures laid out in the agreed Operational Manual. Infrastructure
projects (e.g., boreholes, small bridges and the like) are approved as
part of the annual investment plan that is approved only if the
evaluation presented in the Manual is satisfied. This evaluation
includes environmental screening (EA Category B). The main objective of
this project is RDC capacity building.

Second, any Local Authority (22 Urban Councils and 57 RDCs) potentially
would be eligible to receive \"matching\" grants for financing of
investments that are (a) creditworthy and attract financing from
Zimbabwe\'s capital market and (b) meet all of the evaluation criteria
to be determined in a \"prospectus\" provided to potential investors.
These criteria will include screening of environment impact (again
Category B). Exact investments will be demand driven by the Local
Authorities and evaluated by the capital market. Some investments may be
for \"social\" infrastructure such as school and health building
rehabilitation or construction, for which a full EA may not be required.
Other investments may be for \"economic\" infrastructure, such a water
supply and sanitation or roads that, depending on their conditions may
require a full EA (Category A). In the latter case, an EA would be done,
summarized in the prospectus and placed in the public domain.

In summary, current dialogue with the Government indicates that
investments partially financed by IDA will be demand driven, subject to
strict eligibility and evaluation criteria and very diverse, ranging
from small rural projects, to social infrastructure, to large economic
infrastructure projects, most or all of which should have a full EA.
Thus, the proposed operation would be classified as Category B as an
overall operation, but some major infrastructure projects to be financed
would be classified as Category A.

# PROJECTS LOCATED IN ASIA AND PACIFIC

## China: IBRD/IDA - Western Poverty Reduction^n^

Projected IBRD/IDA Funding: \$ 60/100 million

Projected Total Cost: \$ 334 million

Tentative Board Date: June 1999

> Stage: Negotiations are underway

World Bank EA Category: **B**

Project ID: CNPE46564

Project first entered: April 1999

Entry updated: April 1999

[Description]{.underline}: The project seeks to reduce absolute poverty
through a multisectoral program in an environmentally sustainable rural
development that includes upland agriculture, rural infrastructure,
social services, voluntary settlement and rural enterprise development.

[Issues]{.underline}: This is a grossly miscategorized project, it
definitely should have been an environmental assessment category "A"
(complete EA) instead of a "B" (limited EA). The project will generate
significant environmental and social impacts, and clearly calls for a
complete EA. The World Bank's policies on resettlement and environmental
procedures call for projects that have significant resettlement,
large-scale irrigation, drainage, waterways, flood control, land
reclamation, and river basin development aspects to have complete EA (EA
category A).

The project has a major voluntary resettlement scheme for an estimated
100,000 poor people currently living in marginal, eroded and mountainous
areas of eastern Qinghai. About 26,700 ha of "suitable" land with
adequate water resources has been identified in central Qinghai for
resettlement. The irrigation development component entails the
construction of a 40-meter-high dam and renovation of an existing
8-meter dam; and construction of an irrigation and drainage (wells)
system on 26,500 ha in Qinghai.

According to the Project Information Document, the principal
environmental issues associated with include land leveling and soil
erosion; saline and sodic soils; energy and timber supplies for
settlers; livestock management; and land compensation. On soils the PID
mentions "the soil in much of the area Qinghai resettlement area is
saline and a minor part of it is likely to be sodic as well...
Additional work is required to define the severity and extent of the
sodic soils." Through field surveys, the bank should make sure that this
question is resolved before approval. A full environmental assessment,
completed with public consultation, would identify the apppropriate
alternatives and proper mitigation measures for developing these
less-than-adequate soils.

The PID also mentions: "In the long-run, the development of good water
management at the system level and at the field level is the key to
avoiding salt problems. BThe supply of energy for cooking and heating
and the demand for timber for construction purposes in Qinghai must be
addressed before resettlement occurs. In the absence of adequate
supplies there is potential for excessive demand on local timber
resources particularly in the adjacent sensitive mountain areas." Again,
a complete EA is necessary to resolve these issues.

## Cambodia: IDA - Northeast Village Development

(formerly Northeast Rural Development)

Projected IDA Funding: \$ 5.0 million

Projected Total Cost: Unknown

Tentative Board Date: May 1999

> Stage: Negotiations completed

World Bank EA Category: **B**

Project ID: KHPE58841 (formerly KHPE45621)

Project first entered: January 1997

Entry updated: April 1999

[Description]{.underline}: The learning and innovation credit aims at
improving rural livelihoods by piloting innovative approaches to the
selection, financing and sustainable operation of rural investment
subprojects in select poorer districts of northeast Cambodia as part of
a government decentralization initiative.

[Issues]{.underline}: This activity will be focused on the provinces of
the Northeast which are very sparsely populated and have some of
Cambodia\'s most pristine forests, including a large population of
indigenous peoples. An environmental assessment category \"C\" seems to
not fill this need for clearer understanding of potential impacts of
investments on the environment \[The project had been an EA category
C\]. For example will roads be a part of this infrastructure investment?
If so, what will be the impact on illegal logging, forest degradation,
etc. Also, production is listed as an input. There are plans for
large-scale plantations of palm oil, rubber, etc., which potentially
have major environmental impacts if implemented. \[e-mail:
USAID/Cambodia 25Nov96\]

USAID/Cambodia would like to correct the statement in the World Bank's
Environmental Data Sheet for the \"North East Rural Development\"
project that indicated that \"this support has already led to adoption
by the government significant short and long term policy changes for
forestry, whose implementation is being monitored.\" Substantive policy
recommendations in the forestry sector are only now being developed
under the auspices of a World Bank Forestry Project. This project is
tasked with developing recommendations that will affect forest policy,
sustainable forest management, monitoring of illegal logging operations,
and the legal environment conducive to sustainable forest resource use
in Cambodia. The technical assistance team responsible for the policy
recommendations (ARD) is scheduled to complete their assignment by the
end of May 1998. Additionally, the statement that \"it is expected that
it will lead to the adoption by the Government of a National
Environmental Action Plan in 1997\" should also be amended. An executive
summary of the final draft of the National Environmental Action Plan,
focusing on 1) forest policy, 2) fisheries and floodplain agriculture in
the Tonle Sap region, 3) coastal fisheries, 4) biodiversity and
protected areas, 5) energy and the environment, and 6) urban waste was
only recently circulated. \[USAID/Cambodia email: 4/03/98\]

[Status]{.underline}: The World Bank responded that, having initiated a
major effort on forest/logging policy in Cambodia over the past year, we
are familiar with the value of and threats to the natural resources of
the North East part of the country.

In fact, the proposed NE Rural Development Project will focus on raising
incomes of poor farming households mainly in the Mekong river valley,
from Kompong Cham up to Stung Treng, rather than in the two very
sparsely populated, highland provinces of the northeast (Ratanakiri,
Mondulkiri) that USAID/Cambodia probably has in mind.

The project would not include any large-scale plantation development. It
would finance subprojects for the improvement of small-scale crop
farming and livestock raising and possibly some non-farm enterprise
development.

The project would help repair some of the roads and other basic
infrastructure in the area, which as USAID/Cambodia knows, has received
virtually no public investment or maintenance for nearly 30 years, but
would not get into new road or highway construction. Thus, it would not
be opening up forest land for commercial logging, and would help
discourage illegal tree felling by local residents by improving
alternative income earning opportunities in agricultural and similar
activities.

By helping to establish village-based organizations for community
development and by strengthening local government capacities for basic
land use planning, the project would help pave the way for a possible
GEF-supported natural resource management/ biodiversity conservation
project in the NE of Cambodia. This possible GEF project would include
the watershed areas of the three Mekong tributaries reportedly being
considered for hydropower development by the MRC as well as critical
riverine and wetland areas in the Mekong valley proposed as a RAMSAR
site.

Thus, the proposed RDP does not raise any significant environmental
issues but, rather, helps develop local capacities and willingness to
prevent them. Its environmental category rating will be decided at the
concept review stage (February 24). \[E-mail: World Bank 18Feb97\]

\[The project is an EA category B instead of a C.\]

## Cambodia: IDA - Road Rehabilitation^n^

Projected IDA Funding: \$ 45.3 million

Projected Total Cost: Unknown

Tentative Board Date: March 1999

> Stage: Approval

World Bank EA Category: **B**

Project ID: KHPA4030

\] Project first entered: March 1999

Entry updated: April 1999

[Description]{.underline}: The project will include (a) rehabilitation
of national and urban priority roads; (b) development of road management
and sector policy; and (c) restoration of historical bridges. An IDA
advance of US\$ 350,000 has been approved.

[Issues]{.underline}: The mitigation measures proposed under the
environment management action plan to: 1) control air and noise
pollution during construction phases of the project; and 2) minimize
impacts on historical bridges and trees by maintaining the current road
alignment appear to be more than adequate. There is, however, some
concern with issues associated with the maintenance of roads. While
donors, including USAID, have invested millions of dollars in road
programs during the past several years, the Royal Government of Cambodia
has done little to protect these investments through an operable
maintenance program. The Ministry of Public Works and Transportation
(MPWT) has requested maintenance funds on numerous occasions. The
requests have been favorably received by lawmakers, but a budget has yet
to be provided to enable implementation on even the smallest scale.

The USAID-funded reconstruction of National Highway #4 exemplifies this
concern. The reconstruction work on the road was not followed up with
routine maintenance to prevent water damage, and the formation of
potholes. In the two years since reconstruction, not even
labor-intensive work was performed to clear and clean draining channels
and culverts.

This lack of maintenance had been noted previously. USAID, in 1995,
invested in a rural roads "maintenance" program which, in fact, was a
complete reconstruction of the same 500 kilometers of road that had been
constructed in the northwest part of the country in 1992-1993.

Maintenance is a serious consideration. The MPWT has been requesting
donors to contribute to a road maintenance fund for a considerable
period of time, but has yet to be successful in its efforts. Donors,
including the World Bank, that plan to invest in infrastructure,
especially roads, should consider building funds into the program to
perform the required maintenance work needed to safeguard public
investments. Increasing the MPWT's capacity to perform road maintenance
work is insufficient without a corresponding means of obtaining an
implementing budget allocation. \[USAID/Cambodia email: 3/23/99\]

[Status]{.underline}: The points on road maintenance are well taken.
Actually the project will complement the action of other donors on the
road maintenance front on three accounts:

a)  strengthen the quality of MPWT maintenance operations through
    training and provision of adequate equipment.

b)  testing and development of small scale contractors through
    maintenance of urban roads in Phnom Penh and Sihanoukville.

c)  setting up of a Road Transport Policy that will address, inter alia,
    the sustainable financing of road maintenance through user\'s
    charges and the right balance between capital investment and
    maintenance expenses.

The points above were clearly raised and discussed during the Project

Informational Briefing held on May 6 in Phnom Penh and to which the
donor community was invited. We are looking forward to working closely
with all donors, and USAID in particular, to improve the quality and
sustainability of the road transport in Cambodia.

MPWT plans to invite all stakeholders, including donors, to share their
views through three formal workshops that will be organized over the
project implementation. \[WB email: 5/10/99\]

## Indonesia: IBRD - Semarang Flood Control

Projected IBRD Funding: \$ 75 million

Projected Total Cost: \$120 million

Tentative Board Date: Unknown

> Stage: Preparation studies commenced in October 1998 with completion
> scheduled for August 1999. Preappraisal mission is scheduled for
> November 1999.
>
> World Bank EA Category: **To be determined.**

Project ID: IDPA42542

Project first entered: December 1996

Entry updated: April 1998

[Description]{.underline}: The aim of the project is to mitigate flood
damages to areas located east and west of Semarang in Central Java. The
project will finance flood protection works and related studies for
possible future investments and introduce a cost recovery policy for
such works. Preparation studies commenced in October 1998 with
completion scheduled for August 1999

[Issues]{.underline}: The purpose of this project is to reduce flood
damage to public infrastructure, industrial areas and agricultural lands
and commercial urban areas through the construction of new floodways and
rehabilitation of existing ones which are not suitable for the current
volume of water that needs to be transported to the sea. Construction
will be implemented in the middle of the urban area (East and West
Semarang). Population density in the Semarang area is very high and is
likely that this program will have socio-economic problems.

The Semarang Flood Control Project needs to have a full environmental
assessment \[category \"A\"\] since this project will involve
resettlement of \"squatters\" living along the river banks. \[The World
Bank\'s Operational Directive on Involuntary Resettlement (4.30) states
that \"the screening process for EA normally classifies a project
involving involuntary resettlement as an \"A,\" so that environmental
impacts of resettlement can be adequately assessed\...\"\].

[Status]{.underline}: The Bank informed USAID that preparation of the
project continues, and it is not expected to be completed until early
1998. Several design changes are necessary, partly triggered by the high
cost for land acquisition and resettlement. In response to USAID\'s
query, the Bank wishes to inform USAID that the discussion continues in
the Bank on whether the EA category for this project should be \"A\" or
\"B.\" However, no firm decision has been made so far. This issue will
be addressed by the \"core\" task team, once the final land acquisition
and resettlement requirements are known. This is not expected to be
before the end of 1997. \[WB fax: 23Jan97\] The project\'s EA category
is still to be determined as of April 1999.

## Indonesia: IBRD - Decentralized Agricultural and Forestry Extension^n^

Projected IBRD Funding: \$ 18 million

Projected Total Cost: \$ 23 millioni

Tentative Board Date: August 1999

> Stage: Appraisal mission is in the field.

World Bank EA Category: **C**

Project ID: IDPE3983

Project first entered: March 1999

Entry updated: April 1999

Task Manager: Dely Gapasin (458-2363)

[Description]{.underline}**:** The project will improve the provision of
extension support services at the district level through an operational,
integrated, farmer and agribusiness-oriented agricultural and forestry
extension system which would promote adoption of environmentally
sustainable farming practices and increase farmers' income. The project
will enhance farmers' participation and capacity to determine the
extension program and priorities, strengthen the integrated district
level agricultural and forestry extension system and extension staff
capacity, and provide central extension and project management support.

[Issues]{.underline}: The project would promote farming practices which
are environmentally sound, such as conservation farming in upland areas
to integrate trees in the farming system; use of IPM (integrated pest
management) approaches in rice and secondary crops; use of soil analysis
as basis for fertilizer recommendation. However, since the project mixes
agriculture and forestry or has agroforestry activities, this always has
an environmental implication. We need to carefully assess the
environmental implication during the process and if there is a need we
need to conduct an IEE (initial environmental examination) before we
continue the program. The project should be classified an EA category
"B." \[USAID/Indonesia email, 03/99\]

[Status]{.underline}: These comments have been conveyed to World Bank
staff.

## Indonesia: IBRD/GEF - Maluku Conservation and Natural Resources Management^n^

Projected IBRD/GEF Funding: \$2.0/6.0 million

Projected Total Cost: \$10.6 million

Tentative Board Date: 1999

> Stage: Project preparation has been delayed due to civil unrest in
> Maluku.

World Bank EA Category: **B**

Project ID: IDPE37095

Project first entered: March 1999

Entry updated: April 1999

Task Manager: Sari Soderstrom 473-8726

[Description]{.underline}: The project will include (a) environmental
performance-based Kabupaten block grants; (b) on-site management of
priority protected areas; (c) protected-areas systems establishment; (d)
biodiversity monitoring; (e) an environmental public awareness campaign;
and (f) independent monitoring.

[Issues]{.underline}: This program is to develop and test a framework
for alternative methods to establish and mange protected terrestrial and
marine areas in Indonesia, while promoting poverty reduction in remote
outer island like in South East Maluku. Block grants are given to
mitigate the pressure on natural resources and protected areas and
reduce unsustainable harvesting of endangered species by improving
village welfare via provision of financing alternative income generating
activities. Investments into basic infrastructure and field equipment
are also planned. From the project description, it appears that this is
a complex project. The project may have adverse environmental impacts
therefore environmental analysis (at a minimum) is required before
project implementation. Especially if resettlement is expected, the
project should be reclassified as an EA category "A". \[USAID/Indonesia
email, 03/99\]

[Status]{.underline}: These comments have been conveyed to the World
Bank.

## Lao PDR: World Bank Group - Nam Theun II Hydropower

Projected World Bank Funding: Possible partial risk guarantee and an IDA
Credit, possible IFC funding.

Projected Total Cost: 1.3 billion

Tentative Board Date: To be determined

Stage: Under study

World Bank EA Category: **A**

Project ID LAPE4206

Project first entered: February 1996

Project information updated: April 1999

[Description]{.underline}: The objectives of the NT2 project are to: (i)
generate long-term net revenues and foreign exchange for the Government;
(ii) encourage the use of those revenues in support of economic growth
and poverty alleviation through investments in rural and human resource
development; (iii) fulfill the Government's commitment to supply
Thailand with 3000 MW of electricity by 2006; and (iv) link hydropower
development with environmental and social objectives (e.g. long-term
financing for the NNT watershed, a globally significant biodiversity
site). The project also aims to develop a model for public-private
partnerships which could stimulate future private sector participation
in Lao PDR, a country with limited domestic financing resources.

The NT2 project components are: (i) dam construction, including the dam
itself (50-m-high), the power station (900 MW), intake and tunnel,
transmission line, downstream channel, and other related infrastructure;
(ii) resettlement and community development activities, including public
health, in the reservoir and downstream areas; (iii) environmental
management and mitigation activities, focusing on reservoir management
and water quality, downstream flooding, and downstream biodiversity
impacts; (iv) conservation of the NNT watershed, including community
development programs; and (v) environmental capacity strengthening,
training, and education.

The proposed project involves the construction of a 50-m-high dam, with
a 690-MW power plant, on the Nam Theun tributary of the Mekong River. It
would create a 450-km² reservoir (about one-fourth the size of
Yacyretá\'s reservoir in Argentina and Paraguay, but both have about the
same (low) kilowatts per hectare of flooded area ratio). Nam Theun II is
being developed by private developers \-- a consortium of Australian,
French, Italian and Thai companies. The bulk of the financing would come
from the private sector, with the government of Lao PDR taking an equity
stake of approximately 25%. Virtually all electricity output would be
exported to Thailand under an existing memorandum of understanding (for
purchase of 3,000 MW) between the two governments.

The project is expected to generate approximately \$35 million per year
in revenues to Lao PDR 5 years after completion, increasing to about
\$100 million per year in year 10, and leveling off at \$100 million
until year 25, when the loan will finally be paid off. It is expected to
generate about \$4 billion in aggregate pay out.

[Issues]{.underline}: The World Bank Group has asked the government of
Lao PDR and private developers to conduct several environmental, social
and resettlement studies before it would consider appraising the
project. A Project Information Document is available from the Bank, but
the project is not listed in the World Bank's Monthly Operational
Summary.

Key issues relate to the loss of habitat of high conservation value,
economic issues, the social impacts of resettling 950 families, and the
hydrological and water quality impacts on two river systems. IUCN
recently identified the Nam Theun area as a high priority for
conservation. Also, the Global Environmental Facility (GEF) approved a
\$5 million Wildlife and Protected Areas Conservation Project in
February 1994, listing the Nakai/Nam Theun area as a priority for
protection.

The GEF profile of the proposed protected area stated the \[Nam Theun
2\] hydro project would be a major threat to the protected area\'s
establishment. The proposed reservoir would flood about 80 km² of
pristine tropical forest and about 370 km² of degraded forest due to
shifting cultivation. The Nakai/Nam Theun component was recently dropped
from the GEF project because of this planned major infrastructure.
According to the Bank, however, there is now a general agreement in
principle among the power developers that the project will provide funds
for the establishment and long-term management of the 3,500-km² Nakai
Biodiversity Conservation Area (NBCA) which includes approximately 1/3
of the Nakai Plateau. This would also include sustainable development
programs for about 1000 families in the protected area. If properly
planned, this could be a showcase example for the World Bank on
sustainable mitigation for large hydro projects. Attention to planning
and implementation of this needed, more so than has currently has been
done.

International NGOs (such as the International Rivers Network-IRN) have
highlighted economic, resettlement, and biodiversity issues. There is
also concern about the cumulative effects of hydropower projects in the
relatively undeveloped Mekong basin, which is being developed in the
absence of a national energy sector strategy. An IRN-commissioned review
of the hydrological data for Nam Theun 2 indicated that the available
hydrological data \"is not sufficient to fully assess the Nam Theun 2
Hydroelectric Project\'s viability.\" Apparently, much of the stream
flow data are based on only a seven-year period of rainfall data.
Without adequate knowledge of how much water will be available to turn
the dam\'s turbines, investors in the project will expose themselves to
a high risk of less than expected energy production. The potential
environmental and social impacts will also be difficult to assess with
limited hydrological data.

International NGOs are not in a position to represent locals \-- but
Laotian NGOs are nearly non-existent. At the request of the World Bank,
the Lao PDR government to held public consultations meetings in 1998.
Regional criticism comes from Thai NGOs because all the power from the
project will be sold to Thailand. UNDP has offered to hold a forum on
the project. The World Bank has been asked to present information and
coordinate with UNDP.

The project may also undermine an existing bank loan in Lao PDR,
Forestry Management and Conservation Project (#Cr.2586.LA). It is also
questionable that the bank is spending so much time and funds on
preparatory studies for this project without officially listing it in
its portfolio of proposed projects. This undermines the Bank\'s
credibility regarding openness.

[Status]{.underline}: According to the World Bank\'s draft Country
Assistance Strategy for Lao PDR, the government of Lao PDR has asked the
Bank Group to provide financial support for the project through the IFC,
and partial risk guarantees from the MIGA. The Bank Group\'s position is
that only on the basis of preparation to acceptable standards would the
Bank group appraise the project and subsequently decide whether it can
participate in its financing. In particular, the project would have to
comply with its policies concerning the environment, resettlement and
indigenous peoples.

The 1997 EIA has been completed, but further work on mitigation is
required. Not enough effort was put into realistic mitigation, the
mitigation plan is not detailed enough, especially regarding the
development of a long-range plan to maintain the ecology of the
catchment area. The follow aspects of the EIA are inadequate: It is
based on very little field data. For example, water quality data is
available from the wet season months, when 95 percent of the water flows
through the basin. Water quality and waste management issues with the
proposed resettlement plan for the people to be resettled adjacent to
the reservoir have not been adequately addressed. Hunting and access to
the catchment area will be facilitated by the reservoir through the use
of boats. The resettlement action plan. The most recent EIA draft is
dated May 1997. This was translated into Lao, but the government of Lao
PDR has not agreed to release it.

Alternative power generation possibilities, including sites for
hydropower development, need to be studied further in a manner
acceptable to the Bank, so as to confirm the preliminary findings of the
site\'s economic viability and to place the proposed project within a
comprehensive power development strategy. A precondition for Bank
consideration of this project is a public consultation plan, including
an open, transparent, participatory process in conducting the studies to
satisfy the above Bank concerns. This was done, the plan is questioned
because LAO PDR is a communist country. According to the Bank, it has
also asked the government to prepare a regional social action plan which
would try to anticipate and shape economic and social development in the
broader project impact area.

The private developers want Bank support, and have indicated that they
would strive to meet the Bank\'s expectations. Bank staff considered the
developer\'s support for environmental protection of the watershed as
enlightened self interest, not altruism. The Bank regarded this as
assurance that the developer would comply with such a condition when
required by the Bank. However, to date the government of Lao PDR has not
agreed to undertake these studies. If the government agrees,
precondition studies will be conducted addressing three broad areas of
concern: economic impact, analysis of alternatives, and environmental
and social impact. The studies have a six-month time frame, but the
consultation process may take longer than that. When the studies are
completed, the Bank Group will be in a position to appraise the project.

In addition, the Bank reported that it has had a very open dialogue with
the NGO community so far. The Bank has stated that its objective is to
manage a transparent process for arriving at its decision with regard to
this project.

## Vietnam: IDA - Mekong Delta Water Resources Development^n^

Projected IDA Funding: \$102 million

Projected Total Cost: \$148 million

Board Date: May 4, 1999

Stage: Approved

World Bank EA Category: **B**

Project first entered: April 1999

Project information updated: April 1999

[Description]{.underline}: The Mekong is the 10^th^ largest river in the
world. This project will support completion of salinity control and
water delivery systems, to improve agricultural production and increase
rural income in some of the poor regions in the lower Delta. The
proposed project would cover five subproject areas in six provinces with
a total area of 535,000 ha (14% of the Mekong Delta). Four of the
subprojects, South Mang Thit (225,682 ha), Quanlo-Phuonghiep (178,900
ha), Baring-Talim (31,000 ha) and Tiep Nhat (54,000 ha) are in the lower
Delta. The Omon-Xano subproject (45,430 ha) is in the middle Delta. Each
area is a unique hydraulic unit.

The basic approach to the development of the subprojects in the lower
Delta is to prevent salinity intrusion by extending existing dikes and
installing about 200 additional sluice gates on canals serving the
agricultural areas, together with completion and improvement of existing
irrigation systems. The sluice gates would close at low tide, especially
in the dry season, to prevent saline tidal flows from entering existing
agricultural lands. They would open in periods of high freshwater flow
to allow drainage and flushing of contaminants. This would create a
year-round fresh water environment to allow an additional crop to be
grown in the dry season. Improvement of drainage and inundation in the
wet season would secure the second or third crop. Existing canals would
be enlarged where necessary and the density of secondary canals would be
increased to improve water delivery capacity for irrigation and
drainage. Tertiary canals and on-farm systems would be developed.

The Omon-Xano area is above the salinity line and freshwater is
available all year round. The main aim of this sub-project would be to
improve flood protection and drainage through extending embankments and
building sluices, and to improve secondary canals.

Overall, the improved water delivery systems of over 3,000 km of
irrigation /drainage canals, embankments and structures would promote
agricultural intensification and diversification by providing freshwater
and through improved drainage. The project would facilitate rural
transport through enhancements in canals, bridges and canal connected
rural roads.

The project will also develop a number of deep groundwater wells to
provide drinking water to the rural population of the region (about a
million people), as mitigation for expected declines in surface water
quality.

The project involves resettlement of 1650 families (moving homes), and
compensation for 34,000 families expected to lose small parts of their
farmland. It has a resettlement budget of \$21 million, to be completely
covered by the Government (a problematic practice in some countries, but
the GoV appears committed). The Resettlement Action Plan (RAP) appears
to have been well-done \-- a major improvement over the prior Vietnam
Inland Waterways project, which the USG opposed.

[Issues]{.underline}: A USG review of the project found that the
project\'s limited environmental assessment inadequately addresses
issues of surface and groundwater quality, fishery impacts, nutrition
trends with specific reference to protein intake, water-borne diseases
and pesticide exposure, and subsidence related to groundwater pumping.
Such issues apply not only to the project area, but also to downstream
impacts where the fresh water meets the sea.

According to USG interpretation of the Bank's operational policies, the
project should be classified as an EA category "A" because of the
project's significant resettlement, and large-scale irrigation,
drainage, waterways, flood control, land reclamation, and river basin
development aspects. The Bank says that it was given a category "B" due
to the prior completion of a Mekong Delta Master Plan, which indicated a
preference for these projects and included some sort of regional
environmental impact assessment.

However, the area has a high international profile for environmental
sensitivity, and a paucity of baseline data, as acknowledged by the
project's EIA numerous times.

The project does not convert non-agricultural lands, but its essential
purpose is to control salinity intrusion and flooding in order to
convert a formerly large area of seasonally brackish (salty) wetlands to
a freshwater wetland regime. This will enable rice production to go from
1 or 2 crops per year to 2 or 3 crops (the Bank says the third crop will
usually not be rice, but other crops with less water demand). This type
and scale of land reclamation or conversion can be potentially
ecologically significant, with diverse effects - to disease vectors such
as mosquitoes carrying Japanese encephalitis and malaria, mangroves,
fisheries, waterfowl, etc.

The project EA focuses by sub-project area on the issues of salinity,
local hydrology, acidic soils, within-site fisheries economics, and
inhibition of transport, without ever looking at the cumulative picture
or areas adjacent to the projects that are likely to be affected.

A USG interagency review (by NOAA, EPA, USAID, State, Treasury) of the
EA and related documentation concluded that the environmental studies
were too narrow in scope and suffer from a serious lack of baseline data
on a variety of potentially serious issues:

a)  There was no apparent consideration of development alternatives to
    the project, other than moving sluice gates from one location to
    another.

b)  There are reports that some farmers prefer to and are already
    illegally pumping saline groundwater into some project areas in
    order to grow more lucrative shrimp, rather than rice. The
    sustainability of this practice is uncertain. The Bank assumes that
    this was occurring in areas that had been excluded from the project,
    as they expressly redesigned it to avoid overlap with shrimp
    production areas.

c)  A variety of potentially serious issues were not even considered,
    such as: human health impacts of several different types, delta
    subsidence, changes in Mekong flows due to upstream development or
    water sharing agreements to be worked out under a forthcoming WB/GEF
    project, nutritional and other socio-economic impacts of changes in
    common property regimes such as subsistence fisheries, gender and
    economic aspects of farmer's O&M responsibilities, etc.

d)  A variety of other issues were very briefly mentioned but dismissed
    without basic data collection: water quality, increased use of
    pesticides and fertilizer use, sediment flows, fisheries, protected
    areas, etc.

e)  The EA and other studies seem to make widely conflicting statements
    about a variety of issues, sometimes in adjacent sentences (e.g.,
    magnitude of increases in pesticide and fertilizer usage;
    contamination/ isolation of deep aquifers).

f)  The mitigation plan suggests expanding a small existing integrated
    pest management program, but no funding was provided. The Bank
    promised to discuss this with the GoV in relation to a separate
    agriculture Bank project.

g)  Monitoring components are inadequate (total of \$300k). The Bank
    promised to increase the monitoring program, especially regarding
    fisheries, nutrition, water quality, and disease vectors.

Developed countries have realized that while widely practiced in the
past, conversion of wetland ecosystems, whether from wet to dry or from
brackish to freshwater regimes, is a major ecological sustainability
issue. The United States is now spending billions of dollars to undo the
billions it spent on such works in Florida, Louisiana, Texas,
California, etc. A cavalier attitude toward such delta modification has
proven to be catastrophic in Senegal. It should not be taken lightly or
dismissed as minor because sufficient data is lacking on the Mekong
delta.

The U.S. believes this project should have had a far more comprehensive
regional/sectoral environmental assessment, with baseline data
collection, and including long-term sustainability issues. This should
include an appropriate array of ecologists and social impact
specialists, not just engineers and economists.

[Documents reviewed]{.underline}:

a)  Human health implications, by member of World Bank Panel of Experts
    on tropical health and water projects.

b)  Hydrological study by NOAA.

c)  Fisheries study, by USAID.

d)  Sub-project level EIAs

e)  Rural drinking water supply study, including limited aspects of
    groundwater..

# PROJECTS LOCATED IN EUROPE AND CENTRAL ASIA

## Ukraine: EBRD - Khmelnitsky 2 and Rivne 4 (K2R4) Completion^n^

Projected EBRD Funding: \$190 million (ECU\$175 million)

Projected Total Cost: \$1.725 **b**illion (ECU\$1.590 **b**illon)

Tentative EBRD Board Date: Unknown

Stage: Final review

EBRD EA Category: **A**

Project ID: Unknown

Project first entered: April 1999

Entry updated: April 1999

[Description]{.underline}: The EBRD\'s objectives would be to:

a)  increase nuclear safety in Ukraine by facilitating closure of the
    Chernobyl nuclear power plant and strengthening the Nuclear
    Regulatory Authority; and

b)  stimulate reform and privatization of the Ukrainian power sector.

The financing of K2R4 would support Ukraine\'s market-oriented reforms,
in particular the privatization and financial strengthening of the
electricity sector. In turn, this would advance economic transition.
Successful implementation of this project would also provide an
internationally acceptable benchmark for safety levels of nuclear power
units with VVER 1000 type reactors

The Least-Cost Electric Power System Development Analysis was completed
in May 1998, and EBRD's Project Summary Document in October 1998.

Environmental summary (from the Project Summary Document on EBRD's
website)

The EIAs were made publicly available in the end of 1998 by the project
sponsor. Environmental Action Plans (EAPs) for the two NPPs are being
developed. The EAPs will be covenanted in the project\'s loan
documentation.

The EIAs set out the policy, legal and administrative framework, details
of the existing environments, details of the proposed project including
arrangements for radiological protection, and the potential
environmental impacts associated with the project, taking into account
both normal operation and abnormal conditions. Measures are identified
to mitigate possible environmental and radiological impacts.

Assessments of the impacts of predicted discharges from both K2 and R4
during normal operation indicate that the annual radiation dose which
would be received by the most exposed member of the public would be
substantially less than 1 per cent of the regulatory limit set by
Ukrainian regulations. These regulations are consistent with those
recommended by the International Commission on Radiological Protection
(ICRP). The annual radiation dose to the population residing within 30km
of the NPPs, taking into account the other operational nuclear reactors
at the Khmelnitsky and Rivne sites, and assuming normal operations,
would also be well within internationally accepted radiological
protection criteria.

The EA also covers transport of fuel, consideration of a worst-case
design-basis accident, occupational safety, and emergency planning.
Regulatory documentation dealing with radioactive waste management is
currently in preparation together with a national policy on radioactive
waste management.

Spent fuel will continue to be stored at both sites for significant
periods following the initial three-year decay period, which is
customary prior to fuel reprocessing. Assuming that current proposals
for the capacity of the spent fuel ponds at both sites are realized, no
significant environmental or radiological impacts are anticipated. A
package of regulatory documents dealing with decommissioning is
currently in preparation. Prior to commissioning of the reactors, the
operator will need to have undertaken an assessment of the different
strategies for decommissioning.

Environmental impacts which are not related to radiation exposure may
arise during completion and operation of the NPPs. The effects of
construction impacts would be reduced due to the 3km sanitary protection
zone around the NPPs. Such impacts would be of little significance
beyond 3km from the NPPs.

The operation of both K2 and R4 would result in increased water
requirements at both NPP sites. The exact requirements and the extent to
which they can be met from surface or artesian sources require further
assessment at both sites.

Public consultation: Public consultation was undertaken at two stages
during the process of preparing the EIAs. Scoping meetings were held at
three locations in Ukraine at the end of 1996. The outcome of these
meetings was taken into account when defining the terms of reference for
the EIAs. A further meeting, which was held in Kiev in September 1997,
provided information that was taken into account in the preparation of
the EIAs. The public was invited to provide comment on the EIAs, which
were made publicly available during the third quarter of 1998. Details
of the public consultation process will be made available by Energoatom.

Alternatives: The EIA methodology required comparison to be made between
the completion and operation of K2 and R4 and the \"no change option.\"
The latter assumed that the operation of two of the units at the
Chernobyl NPP site would continue following completion of an upgrading
and safety program and that K2 and R4 would not be completed. This
comparison has indicated that routine discharges of radioactivity from
two units at Chernobyl would significantly exceed those from the
operation of K2 and R4. There would also be an increased risk of a
catastrophic accident as a result of the continued operation of
Chernobyl. This would lead to widespread radioactive contamination. Work
is also being undertaken on an initial assessment of the environmental
impacts that would be associated with a thermal power sector program in
Ukraine, which assumes closure of Chernobyl without the completion of K2
and R4.

[Issues]{.underline}: The Bank Information Center and its European
partners have raised the following concerns.

Safety problems: The reactors at K2/R4 are far below present safety
standards and would not be allowed to operate in any western country.
Furthermore, Energoatom (Ukraine\'s state-owned nuclear energy company)
is planning to begin operating these reactors before implementation of
all safety measures; the company will only correct some of the known
safety problems at the first refueling. Therefore, even the designed
(but unsatisfactory) safety level will only be reached after three years
of operation. These safety problems are compounded by the fact that
Ukrainian workers are not getting their salaries.

Economic evaluation of the project: One of the EBRD\'s conditions for
its involvement is that the project must be the least-cost option. In
1997, the EBRD contracted an independent Panel of Experts to review the
economics of the project. The Panel concluded that: \"\...K2/R4 are not
economic. Completing these reactors would not represent the most
productive use of 1 billion USD at this time.\" At the time of this
conclusion, the cost of completion was expected to be 1.2 billion USD;
that figure has now risen to 1.72 billion USD.

The Panel found that power needs in Ukraine are declining, and that
these needs could best be met through conservation and demand-side
management, as several studies have shown. Recent developments in
Ukraine have confirmed the Panel\'s findings. In 1997, energy
consumption in the country declined by an additional 7%, and in 1998 by
another 3%. There is a significant over-capacity in electricity
generation in Ukraine, with overall installed capacity at 53.9 GW in
1997 (mainly in the base load sources). Even without the Chernobyl
nuclear power plant, this is about twice the capacity needed to cover
current peak electricity demand, which in 1997 was 27.2 GW. In addition
to this, there was a significant decrease in gas prices on the world
market, making gas-based alternatives cheaper than in previous analyses.
Meanwhile, the price of atomic waste storage increased dramatically
(Russian prices for storing Ukrainian waste rose by more than 20% since
December 1998). All of these factors have an impact on the least-cost
analyses. In addition, a recent confidential EIB study says: \"A
substantial degree of uncertainty attaches to a number of key parameters
of the project, notably - but not exclusively - the demand of electric
power and project costs, resulting in high financial and economic risk
relative to the \[energy\] sector \...\"

Non-payment issue Ukraine is currently in a critical financial
situation. This loan could make the situation even worse, especially as
cost overruns and construction delays are highly probable. The current
rate of monetary payment for energy in Ukraine is very low (16.4 %), and
payment for electricity is even lower. According to G. Sazonov, monetary
payment for electricity is now 4.2-4.5%, while barter payments make up
52-53% of the total bills. This means that over 40% of all electricity
is presently going unpaid. Furthermore, recent experience has shown that
as electricity prices increase due to tariff reform, a lower collection
ratio results. So, despite higher tariffs, the total income to
generators and distributors will remain constant at best, and is more
likely to decrease in the foreseeable future. It is therefore highly
questionable whether the Ukraine will be able to repay the loan in the
foreseeable future.

Public opinion in Ukraine: The great majority of residents in the Rivne
and Khmelnitsky region oppose K2/R4. A survey done in 1998 indicates
that 94 % of respondents answered \"No\" to the question: \"Do you agree
with the completion of new units at the Rivne and Khmelnitsky NPPs?\"
Yet Ukrainian authorities stated openly that they were going to ignore
public opinion on this issue. Furthermore, they are attempting to
silence the debate about the K2/R4 project by using coercion and force
to intimidate the project\'s critics. Incidents involving the Ukrainian
Secret Service have raised serious concerns regarding human rights
violations against those who oppose K2/R4.

Where the money should go/Alternatives to K2/R4 The EBRD, the G-7
governments, and other international financial institutions should stop
working on the K2/R4 project. They should instead finance the gas
turbines project and other energy sources proposed by Ukraine when the
MoU was under negotiation. The Ukrainian energy sector has a problem
with peak load capacity, a problem which can be solved not by nuclear
plants, but rather by gas power plants. In addition to this, the
Ukrainian State Committee for Energy Conservation has prepared a list of
66 alternative energy projects, which would more than compensate for the
2000 MW presently produced by Chernobyl. All of the proposed alternative
projects will provide equal or greater possibilities for use of Western
technologies.

# PROJECTS LOCATED IN LATIN AMERICA AND THE CARIBBEAN

## Bolivia: IDB/WB - Export Corridors: Santa Cruz-Puerto Suárez Highway

Projected IDB Funding: \$134 million

Projected WB/IDA Funding: \$ 65 million

Projected Total Cost: Unknown

Tentative IDB Board Date: To be determined

Tentative WB Board Date May 2001

Stage: Preparation stage

IDB EA Category: **Full EIA and Social Impact**

WB EA Category **B**

Project ID: BO036

Project first entered: January 1997

Entry updated: March 1999

[Description]{.underline}: IDB: The goal of this proposed project is to
increase the competitiveness of Bolivian products in international
markets by decreasing transportation costs in the country and assuring
that the Santa Cruz-Puerto Suárez Highway remains open and passable
throughout the year. The program will include works, studies, and an
environmental impact mitigation component.

WB/IDA: The credit will finance construction of the San José-Puerto
Suárez road, a sector of about 400 km of the export corridor Santa
Cruz-Puerto Suárez. Identification mission is scheduled for fiscal year
2000.

[Issues]{.underline}: USAID/Bolivia understands that this project aims
at improving an existing road, that it has major economic and
development significance, and that it will have an environmental impact
mitigation component. It is not the direct impacts of the road itself
that are of concern, but rather the indirect ones. The project
description itself alludes to those potential indirect impacts when it
implies that this is a natural area for population expansion.

Specifically, USAID/Bolivia wants to make sure that the improved road
will not accelerate haphazard colonization and deforestation, in
particular into areas that are 1) inappropriate for long-term
agricultural production, or 2) of high biological value (e.g., the
Tucavaca Valley; while much of this is already slated for
\"traditional\" development, at least portions of this valley need to be
protected \-- see RAP Working Paper No. 4, \"The Lowland Dry Forests of
Santa Cruz, Bolivia: A Global Conservation Priority,\" July 1993. An
improved road would almost certainly put this area under increased
conversion pressure, and maybe that \"protection\" issue should be
considered and resolved before the road work would begin).

There\'s also the issue of what impact the road would have on the
Bolivian Pantanal. According to biologist Ted Parker, \"Although
worldwide attention has been focused on conservation efforts in Brazil,
the Bolivian Pantanal may be of even greater biological importance due
to the very extensive tracts of undisturbed dry forest and cerrado\...\"
(p. 52). He goes on to flag his fears of \"an increasing emphasis on
mining (e.g., Cerro Mutun), the export of natural gas, and harvest of
timber in the dry forests to the northwest\" (p. 56) \-- the kind of
things this project will presumably encourage. Cerro Mutun is just to
the south of Puerto Suárez.

USAID/Bolivia would like to see rigorous enforcement of authoritative
land-use planning before the road improvements begin. The improved road
would also potentially move more people relatively close to the Kaa Iya
del Gran Chaco National Park (where USAID supports work with WCS and the
Izoceño indigenous people). There should be some guarantees that it
would not encourage encroachment into the park (in particular with
cattle ranches, logging of quebracho, or irrigated agriculture). Some
increased protection for the northern border of the park linked to the
road improvement might also make sense.

The road is a priority development project, and USAID is not suggesting
that it should not go ahead. But it suggests it should be classified as
an IDB EA Category 4, or [World Bank EA Category A]{.underline} \--
"operations that may have significant negative impacts on the
environment and will require a detailed environmental assessment." This
activity would also explore the feasibility of other transportation
infrastructure improvements in this environmentally fragile area, and it
would be a good idea to make sure everyone knows, up front, how
important the question of environmental impact is when doing this kind
of planning. Participation and consultation will be important during the
EA process \[USAID realizes that IDB has changed its EA classification
system to eliminate numbered category in March 1997\]. \[e-mail:
USAID/Bolivia 12/05/96\]

The local Wildlife Conservation Society (WCS) representative, STRONGLY
endorsed USAID/Bolivia\'s recommendation \-- that a full impact
assessment should be required.

Not only are the areas flagged above of critical conservation
importance, but there is also the Chiquitano dry tropical forest that
goes from the north to the south of the proposed road. This is also
\"important and highly threatened habitat,\" according to the WCS. Many
of these areas have already been flagged as being of critical
conservation importance in the Santa Cruz land use plan (the PLUS, done
with German and World Bank funding). WCS echoed USAID concerns: These
areas should have some concrete protection before the road improvement.
In addition, USAID/Bolivia strongly recommends that an anthropologist be
on the team. The reason is the project is likely to affect several
important indigenous peoples groups, i.e., the Izoceños and Chiquitanos
(USAID/Bolivia is working with both groups under its forestry and
biodiversity conservation work), as well as the Ayoreos and perhaps
others.

USAID/Bolivia recommends using the project as a vehicle to ensure that
these areas are protected, i.e., build into the project, on the basis of
the EA, resources to mitigate the indirect impacts of the road
construction. \[e-mail: USAID/Bolivia 12/12/96\]

The project would also give a push for the Hidrovía Waterway \-- the
paved road would go right to its door, so to speak, and that would make
agricultural production and logging that much more profitable, over a
much bigger area. The pressures from those sectors for the Hidrovía
would therefore increase substantially; all the more reason to do some
serious thinking before the road gets improved.

[Status]{.underline} These comments have been conveyed to IDB staff,
which responded that since April 1997, IDB has not used environmental
classification by category for its projects, but determines on a
case-by-case basis the scope of the EIA required. Particularly for this
project, a full EIA was required which corresponded to the earlier
category 3 classification. For the Santa Cruz - San José segment, a
consulting firm is preparing the detailed engineering design and the
detailed environmental assessment. For the San José - Puerto Suárez
segment, this firm is preparing the EIA and feasibility study. Although
slowly, the studies are proceeding forward. The draft of the EIA has
been presented and the final report (feasibility studies and engineering
designs) is expected for April, 1999. The IDB staff plans to commission
additional environmental and social impact studies for the corridor,
which would not preclude the presentation and acceptance of the designs
from the consulting firm for the Pailón-San José segment. \[IDB March
1999\]

The World Bank responded that regarding the Santa Cruz-Puerto Suárez
Road, including the San José-Puerto Suárez segment, which is the one in
the World Bank\'s portfolio. IDB plans to finance the segment Pailon-San
José, which together with the existing Santa Cruz-Pailon will complete
the Santa Cruz-Puerto Suárez Road.

Concerning the section San José-Puerto Suárez, the World Bank hashas not
yet started the project preparation, pending on the results of the
prefeasibility study financed by IDB, as USAID rightly said in its
message, and the approval of our budget for fiscal year 2000, which
starts on July 1, 1999.

With respect to USAID's concerns about the environmental assessment
categorization for the project, the categorization of \"B\" is
provisional and it will not be definitive until the Project Concept
Document Review, when most probably will be changed to \"A\". In any
case, the World Bank plans to conduct a full EA, as we have done with
the Abapo-Camiri Road, now in the final stage of preparation. The full
EA will be performed separately from the one for Pailon-San José, to be
prepared by IDB, but in close coordination with it.

Finally, our tentative Board Date is now May 2001, to give time enough
to complete and discuss the engineering design and the EA. It could be
advanced if both are completed before expected.

World Bank staff will be also happy to discuss the environmental issues
with USAID at the early stages of project preparation. \[World Bank
email, 4/19/99\]

## Dominican Republic: IBRD/IDB - Power Market Development/ San Pedro de Macoris Power Plant

Projected IBRD Funding: \$110 million

Projected IDB Funding: \$ 70 million

Projected Private Funding: \$155 million

Projected Total Cost: \$375 - 400 million

Tentative WB Board Date: Unknown

> Stage: Project preparation is underway. Japanese Grant Facility is
> funding project preparation studies.

World Bank EA Category: **A**

IDB EA Category **3**

WB Project ID Number: DO-PAO-7011/6DOMPA035

IDB Project ID Number: DR0133 (formerly DR0080)

Project first entered: July 1993

Entry last updated: April 1999

[Description]{.underline}: The proposed World Bank (formerly named Power
Transmission or Power II) project includes:

The overall objective is to support power sector reform by establishing
a competitive bulk supply market for electricity. Specifically, the
project seeks to lift transmission constraints that hinder open access
of publicly as well as privately owned power generators and to support

a)  installation of an Energy Control Center (ECC) and Financial
    Settlement Center;

b)  strengthening and expansion of the Interconnected Transmission
    System; and

c)  providing technical assistance.

The proposed IDB project, San Macoris Power Plant (DR0133), was formerly
called the Power Sector Hybrid Program (DR0080). The San Pedro de
Macoris Power Plant will be a combined-cycle power plant, consisting of
three oil-fired units of 100 MW with total net generating capacity of
296 MW. The project is located at an undeveloped site on the west bank
of the Higuamo River approximately 8 km from the town of San Pedro de
Macoris along the south-central coast of the Dominican Republic. Each
low nitrogen oxide gas turbine will be coupled with a heat recovery
steam generator and a steam turbine. Cooling towers will be used, with
makeup water coming from onsite wells, offsite wells and from the
Higuamo River, which is located immediately east of the project site.
Plant process water will be obtained from on-site groundwater wells.
Cooling water and treated process waste water from the project will be
discharged to the Higuamo River.

The project will include the construction of mooring and fuel unloading
facilities near the mouth of the Higuamo River. A fuel pipeline will be
constructed to connect the power plant and fuel unloading facility.

[Issues]{.underline}: USAID/Dominican Republic recommended that the
project have an adequate assessment of the potential for air emissions,
water and marine contamination, and landscape contamination. \[#05649
06Jul93\]. This project should fit into a general integrated resource
planning strategy for the Dominican Republic. Serious adverse
environmental impacts from the site location and possible resettlement
include effects on sensitive marine and coastal ecosystems.

The government of the Dominican Republic had suggested 1) the Samaná
Bay, one of the largest winter breeding areas for humpback whales in the
Caribbean; and 2) the Luperón Bay, the last known breeding area for the
West Indian manatee. These two sites have apparently been eliminated as
alternatives.

Project-specific EAs should be conducted for power plant construction
with careful consideration given to site location of new plants to avoid
placement in environmentally sensitive areas such a Samaná Bay and
Luperon Bay. The energy law designed to establish the legal and
regulatory framework for privatization of the electrical energy sector
is still languishing in congress after three years. However, there are
indications that the recently elected government will \"legally\"
proceed to privatize the CDE and establish the regulatory framework,
without the energy law. The Mission still plans to help the government
of the Dominican Republic establish internationally accepted
environmental norms and standards for electric power generation and
distribution under the USAID/DR Electrical Energy Restructuring Project.
The project was recently redesigned to place more emphasis on
commercially feasibly renewable energy options for rural
electrification. The major environmental concerns on proposed
conventional power projects are pollution (especially in environmentally
sensitive areas), institutional weaknesses and ability to enforce new
environmental regulations. USAID/DR suggests that prior to construction
of new power plants, environmental regulations should be in place and a
regulatory body established to implement and enforce the regulations.
USAID/DR would also like for IDB and IBRD to support the inclusion of
environmentally sound renewable energy into a National Energy Plan.\"
\[e-mail: USAID/Dominican Republic 05Dec96\]

[Status]{.underline}: IDB responded that:

1\. The site: Luperon and Samana were discarded as possible sites in
studies done in 1993 and 1994. The February 1994 study only recommended
Azua, Bacahica and San Pedro de Macoris as sites. Afterward, the first
two were discarded and since 1994, IDB has only been discussing sites in
the San Pedro de Macoris area.

2\. Environmental Regulations: USAID has had the leadership in the area
of environmental issues. Recently, USAID hired a consultancy to do
environmental audits of the electricity distribution system, prior to
privatization and preliminary audits on power generation. Also, to
prepare an Environmental Management Plan and basic regulations, and to
develop a plan to strengthen the regulatory capacity of the government.
The regulation of the sector would be done through the Electricity
Superintendency, an agency that is expected to be created via a decree,
in case the Electricity Sector Law is not approved. The project\'s
schedule is pending results of ongoing discussions with the government,
which is currently undergoing a power restructuring. \[e-mail: IDB,
12May97\]

In February 1996, IDB responded that the project has been delayed,
however, project-specific EIA\'s had been requested and are being
performed. The sector analysis and some of the specific EIA
\[previously\] prepared by Bechtel will have to be updated if the
operation goes back on line. There may be some action on the project
after the \[local\] elections in May.

For the March 1995 report, the World Bank stated that a detailed EA of
the entire electric power sector has just recently been completed, and
is being reviewed by the Bank. This study, which was financed by USAID,
also examined in detail the environmental implications of the two new
thermal power plants which the Power II project would help finance.
Moreover, the study recommended specific improvements in the
environmental management of the power plants, including the
transportation land storage of coal and the management of ash residues.
The Bank reported that project-specific EAs will be carried out for the
two sites mentioned above, before any construction activities start at
those sites. The EA category was changed from an B to an A since this
report was last issued in December 1993.

In conclusion, USAID\'s emphasizes the need for project-specific EAs
conducted with careful consideration given to *site location
alternatives*, local participation, marine resources and contamination.
The above sectoral EA, though very valuable, will not guarantee complete
coverage of the proposed Power II project sites.

World Bank recently confirmed that a project-specific EA should be
carried out by the company selected to develop the proposed 250MW power
plant, before starting its construction. This condition has been
included in the proposed Request for Proposal for the above power plant.

## Ecuador: IDB - National Roads Program II

Projected IDB Funding: \$ 80 million

Projected Total Cost: \$100 million

Tentative IDB Board Date: Unknown

Stage: In identification.

IDB EA Category: **Not yet determined**

Project ID: EC0132

Project first entered: April 1998

Entry updated: March 1999

[Description]{.underline}: To continue the current pluriannual program
to rehabilitate and maintain the national road system.

[Issues]{.underline}: The National Roads Program II project (EC0132) is
of major concern, because the Ministry of Public Works and the
Provincial Councils do not always consider the environment when building
infrastructure. Cases in point are the Borbón-Mataje road and the
Cuenca-Molleturo road. This project will need to establish an
Environmental Assessment for each road to be rehabilitated or improved.

Regarding the Cuenca-Molleturo Road II (EC0181): The Cuenca-Molleturo
road, as the IDB well knows, is ALREADY AN ENVIRONMENTAL DISASTER,
having caused eutrophication of numerous paramo lakes \[in a national
park\], destruction of large areas of montaine rain forests with
probable consequent loss of biological diversity, severe soil erosion,
elimination of tourism businesses, flooding and permanent loss of prime
coastal agricultural land, and sedimentation and loss of marine life in
mangrove forests.

Any additional loans for this road should undoubtedly include severe
requirements for environmental analysis to define necessary mitigations
of environmental impacts that have already been caused as well as
identification and mitigation of impacts from new proposed actions.
\[USAID/Ecuador Email 4/17/98\].

[Status]{.underline}: These comments have been conveyed to IDB staff,
which responded that National Roads Program II Project on road
rehabilitation is being considered in the pipeline for the year 2000,
but it has not been initiated. The processing of this program is
contingent to solving several issues, political, institutional and
technical. One of such issues is the long term mitigation of the
environmental and social damages caused by the Cuenca-Molleturo-Naranjal
road.

Emergency works and detailed studies for a more definite solution to
these damages are being financed through the Emergency Program for El
Niño, approved in November 1997 (US\$16 million were tied to this road).
Other issues have to do with the institutional capacity of the MOP to
manage all technical matters, particularly environmental issues.

As part of preparation of the National Road Rehabilitation Program, a
sector environmental and social assessment will be developed. It will
stress cross sector institutional/policy issues related to environmental
management, environmental and social impacts and mitigation measures of
each project included in the program menu, and specific environmental
and social requirements and procedures to be applied during program
implementation.

Regarding the Cuenca/Molleturo Two Project (EC-0181), it no longer
appears as a possible 1999-2001 loan, which means it will not be
considered in the near future. It has not been completely eliminated as
a possible project; later on, if and only if the social and
environmental problems are now facing with the impact of Cuenca
Molleturo One, can be adequately resolved. The Bank is very involved in
the continuous follow up and revision of this case and all its very
delicate and sensitive social and environmental problems... \[IDB email,
March 1999\]

## Ecuador: IDB - Urban Development II 

Projected IDB Funding: \$ 75 million

Projected Total Cost: \$240 million

Tentative IDB Board Date: Unknown

Stage: In preparation.

IDB EA Category: **An Environmental Impact Assessment would be
required.**

Project ID: EC0139

Project first entered: April 1998

Entry updated: April 1999

[Description]{.underline}: This second phase would continue the current
Municipal Development Program, which will be expanded to include
decentralization of functions to provincial governments. It would
consist of the following components: (a) a line of credit for
investments;

\(b\) technical assistance; and (c) institutional development for the
sector.

The first component would provide credit financing for local public
sector infrastructure projects or packages of projects that make up a
local investment program. The technical assistance component would
provide assistance in: (a) development of local autonomous service
entities; (b) strategic planning; and (c) community participation in
service management. The municipal training would be directed at
sectional governments and local service agencies involved in managing
services, finances, credit and the environment. The institutional
development component would strengthen the agencies participating in
this program, as well as support a plan to get commercial banks and
capital markets involved in local financing. A financial information and
tracing system for municipalities would be strengthened to continuously
evaluate their capacity to service their debts and the coverage,
organization, costs and quality of the services they provide.

[Issues]{.underline}: USAID/Ecuador and USAID/Regional Urban Development
Office are working with several small municipalities in Ecuador, mainly
on solid waste management. Since this project includes a credit
component for unidentified investments, USAID/Ecuador agrees it will
need more than an Environmental Assessment. It will be useful to know if
it is a country-wide implementation project or if the municipalities to
be served are already identified, to avoid duplication of efforts with
our programs and due to the small funding USAID/Ecuador has.
\[USAID/Ecuador Email 4/17/98\].

[Status]{.underline}: These comments have been conveyed to IDB staff,
which responded that the resources from PDM II will be made available to
all municipalities and public or private entities that, as a result of
the project, provide local public services. Funds will be provided on a
credit basis with a small subsidy component calculated on a set of
predetermined criteria. The projects will have to meet the
environmental, financial, economic, technical and institutional
evaluation criteria. The clients will be evaluated for credit
worthiness.

The Environmental Impact Assessment Report for PDM II will include:

1.  The Environmental Policy statement for the PDM II.

2.  An updated set of Environmental Evaluation Manuals, per sector to be
    financed, covering actions and steps per stage in the project cycle,
    from the identification stage. The purpose of these guidelines is to
    ensure environmentally sound and sustainable investments.

3.  Environmental Guidelines for contractors.

4.  Design of training modules on environmental assessment and
    management for local officials and for BEDE.

\[IDB Email, March 1999\]

## El Salvador: IDB - Critical Areas of Decontamination

Projected IDB Funding: \$ 45 million

Projected Total Cost: \$ 55 million

Tentative IDB Board Date: July 1999

Stage: Final

IDB EA Category: **Full EIA & Social Assessments integrated in project
preparation**

Project ID: ES0074

Project first entered: January 1997

Entry updated: March 1999

[Description]{.underline}: The program would be at a national level with
a concentration in the urban areas and would cover: protection of
selected contaminated bodies of water; solid waste management in urban
centers; monitoring of the main sources of atmospheric pollutants and
institutional strengthening of the entities involved. It would consist
of two components: (a) support for an environmental regulatory
framework; and (b) integrated management of solid waste in small- and
medium-sized cities.

Local viable solutions are sought. The idea is to strengthen municipal
capacity to manage solid waste and get community and private sector
involvement.

There is a small component to establish basic capacity in the country to
monitor air quality, and to help on related policy and regulation
issues.

Protection of specific sources of potable water (aquifers) includes
Opico Quezaltepeque and the Lago Ilopango watersheds \[these two
aquifers are no longer included in the project\]. In the former, the
idea is to find a solution to an illegal waste dump sitting on top of
the main aquifer for San Salvador. In the latter, the objective is to
protect the potable water plant on the Cuaya River, in the Lago Ilopango
watershed. Protection measures may include some work with the local
industries for pollution control, with the municipalities for solid
waste and sanitation work. This may become a small-scale pilot project
for integrated pollution control in a very specific area. The program
will also include institutional support, capacity building, education
and promotion. \[e-mail: USAID/El Salvador 10Dec96\]

[Issues]{.underline}: The Critical Areas of the Decontamination Project
could have a moderate to severe effect on the environment during
construction depending on where the systems are located. Normal IDB
environmental review and mitigation procedures should be carefully
monitored for this project. Actual implementation through local
institutions should ensure that these institutions have environmental
monitoring units established in the entity AND that appropriate
procedures for following mitigation are in place AND actually carried
out.

USAID/El Salvador has maintained close liaison with the IDB and the
Secretariat of the Environment (SEMA) for the overall El Salvadoran
Environmental Program (PAES) of which this project is a part. USAID/El
Salvador\'s environmental program includes complementary actions to
project 0074 which will require close coordination. This coordination
should ensure that USAID will be aware of adverse impacts and can assist
in drawing them to the attention of IDB if necessary. As mentioned in
the project brief, the PAES is assisting SEMA in the strengthening of
their Environmental Impact Assessment Division, and USAID/El Salvador
has also worked with this group. USAID recommends that the IDB continue
with its plans for an Environmental Review and that the mitigation
suggested be carefully followed. \[e-mail: USAID/El Salvador 10Dec96\]

[Status]{.underline}: In response to the above comments, IDB staff said
that the project will focus on the capacity to do air quality
monitoring, developing an institutional framework, and technical support
implementing agencies. Solid waste management support will go to
medium-sized municipalities to develop locally viable solutions. For
industrial pollution, the project will focus on two key water sources,
to protect key water sources. This will prevent problems with
contamination of these aquifers. The project will help define a strategy
for management of solid waste, with some financing available for
improved management of existing systems. Mitigation measures for solid
waste management will be decided upon in consultation with local
communities. Appropriate procedures are in place for environmental
mitigation measures and their implementation. IDB will closely monitor
the implementation of this project. \[e-mail: IDB 29Apr97\]

IDB also responded that, basically, the program is conceptualized as an
environmental one, designed to strengthening the Ministry of the
Environment in three critical areas: air, water and solid waste
regulation. The focus is on information gathering, monitoring,
development of action plans and strategies, and implementation of norms
and regulations. Integrated solid waste management activities and
investments are included for small and medium size municipalities. There
aren't any investments in water pollution control at this stage. The
Opico-Quezaltepeque activities and the protection of the Cuaya River are
not included anymore. IDB procedures were followed regarding social and
environmental assessments. \[IDB email, March 1999\]

## Guyana: GEF - National Protected Area Systems^n^

Projected GEF Funding: \$ 6 million

Projected Total Cost: \$ 9 million

Tentative WB Board Date: To be determined

Stage: Project preparation is underway

EA Category: **B**

Project ID: GYGE37003

Project first entered: April 1999

Entry updated: March 1999

[Description]{.underline}: The project will enable the government to
establish a national system of protected areas which would conserve
globally important biodiversity as an essential step toward the
sustainable management of the country\'s natural resources, and the
maintenance of access to international markets for these resources.

[Issues]{.underline}: The lack of consultation between the GOG and the
Amerindian community in the area of Kaietuer Falls National Park is a
major problem. The Kaietuer Falls park area came as an immediate
response to what had been determined to be contamination in the water -
likely due to mining operations. It is hard to believe that the
Amerindian communities didn\'t know anything about it. Certainly their
organizations in Georgetown knew.

It appears that neither side knows how to tackle this problem. It is,
more than anything else a land title/use issue and is both complex and
controversial.

The ball should be in the World Bank\'s court - and it should be
pressuring the GOG to hold meetings (perhaps with an independent
facilator) with the Amerindian groups to begin the dialogue. Their needs
to be a long-term vision and strategy on both sides and an understanding
that there will be some accommodation by both. \[USAID/Guyana email\]

[Status]{.underline}: These comments have been conveyed to the World
Bank.

## Haiti: IDB - Agricultural Sector Modernization

Projected IDB Funding: \$ 43 million

Projected Total Cost: \$ 48 million

Tentative IDB Board Date: June 1999

Stage: Final

IDB EA Category: **EIA and Social Impact Assessment required**

Project ID: HA0016

Project first entered: January 1997

Entry updated: March 1999

[Description]{.underline}: The objective of the program is to enable
farmers to increase their incomes and total output through
intensification of staple and export crop production in selected areas
of Haiti with high sustainable potential. The program would finance
institutional and physical infrastructure required to improve producer
access to and utilization of water and land resources, as well as
strengthen selected support services. It would include three components:

a)  a water resource management component to complete feasibility
    studies and implement selected irrigation schemes, including
    rehabilitation of existing infrastructure, construction of
    additional water impoundment, diversion and distribution facilities,
    and assistance in the establishment of a system of private
    water-user groups and upstream watershed management through
    institutional strengthening and institution-building activities at
    the local level;

b)  a land tenure administration component to implement key elements of
    the investment program being developed the Instituto de Reforme
    Agraire (INARA), including investments in equipment, systems
    installations, technical assistance and training for that agency;
    and

c)  an agricultural support services component to focus on reinforcing
    the regulatory and supervisory capacities of the executing agency to
    assure that selected support services be provided to producers in
    the intensified production areas (although actual service delivery
    may be provided by private firms or NGOs), particularly in the areas
    of technology transfers, soil conservation measures, and animal and
    plant health protection

[Issues]{.underline}: One of the project components will be dealing with
construction of water impoundments and diversion of water from streams.
There is also a potential for population resettlement; changes in the
agricultural production systems. Use of chemicals (fertilizers &
pesticides), should also be carefully addressed in the environmental
assessment process.

There is some overlap with USAID projects : ASSET 2000 (not yet funded),
Productive Land Use Systems, and Coffee Revitalization. \[e-mail:
USAID/Haiti, 12Dec96\]

[Status]{.underline}: These comments have been conveyed to IDB staff,
which responded that the program anticipates water diversion but no
longer any impoundment. The Bank's Dutch Environmental Trust Fund
recently completed an analysis of the impact of the proposed water
diversion on downstream water availability and quality, concluding that
they would not be adversely affected. Furthermore the hydrological
impact assessment methodology is being transferred to the national
hydrological monitoring service (SNRE) to be used to evaluate future
prospective sites, supported by outside technical assistance. The
program envisions no resettlement, in fact Sub-Program B will enable the
population to return to areas from which they were displaced by
Hurricane Georges and which are still at risk from future flooding. The
measures for monitoring and protecting the population from contamination
from agricultural chemicals, amongst various other potential
environmental and social impact measures, have been presented and
approved by the Bank's review entity, the Committee on Environment and
Social Impact (CESI).\[Email: March 1999\]

## Panama: IDB - Mining Sector Loan 

Projected IDB Funding: \$ 17.5 million

Projected Total Cost: \$ 25 million

Tentative Board Date: June 1999

Stage: In preparation.

> IDB EA Category: Environmental Management Framework Required

Project ID: PN0114

Project first entered: April 1998

Entry updated: **March 1999**

[Description]{.underline}: The program would establish the legal,
fiscal, institutional and technical framework to promote private
investment in the mining sector, while protecting the rights and
interests of rural communities and indigenous peoples, as well as
protecting the environment. It would include the following components:

a)  fiscal and legal reforms (\$250,000) to attract private investment,
    modify the tax regime as it applies to mining in order to bring
    Panama up to international standards, and improve security for mine
    properties;

b)  institutional modernization (\$2,200,000), including restructuring
    of the Dirección General de Recursos Minerales (DGRM) to improve its
    financial and administrative autonomy, as well as training for
    personnel, basic equipment, and promotional activities for the
    mining sector;

c)  community participation (\$1,500,000), including community
    development activities, to make sure that rural communities\',
    indigenous peoples\' and investors\' needs are all taken into
    account and met;

d)  environment (\$1,400,000), to consolidate the legal and
    institutional framework for environmental management within the
    mining sector by creating an environmental management unit within
    the executing agency (MICI) that has the capacity to evaluate
    environmental impacts and supervise the application of the law;

e)  geological information (\$13,500,000), to generate and disseminate
    geological information in order to facilitate prospecting, as well
    as to develop environmental policies (including a topographical map,
    geomagnetic maps, radar maps, and a geochemical map of the entire
    country, as well as a 15-page digital geological map of priority
    areas on a 1:50,000 scale and a mining and geological information
    system); and

f)  training for mining specialists.

The program\'s components are:

[Issues]{.underline}: The mining projects currently authorized are only
for nonmetallic minerals. Since the last protests from indigenous groups
affected by mining projects in the Chiriqui Province, the GOP assured
the public that the Ministry of Commerce would submit an EIA prior to
approval of any mining project. An unresolved problem still exists with
an indigenous group in Chiriqui where a mining project is in the process
of being approved by the GOP. There is another mining project within the
Chagres National Park in the Panama Canal watershed that has yet to be
approved by INRENARE (the National Institute for Renewable Natural
Resources) because of concerns about park degradation. INRENARE is
considering requiring mitigation through the purchase of additional
lands for the National Park. \[USIAD/Panama Email, March 1998\].

[Status]{.underline}: These comments have been conveyed to IDB staff,
which responded that the referred project is not intended to have any
physical investments for mining development. Rather, its purpose is
mostly to help the GOPN establish the legal (including environmental and
community participation) framework for the mining sector (concessions;
zoning and the like) and baseline cartography and environmental
management strengthening necessary, both at the national environmental
authority(ANAM) and at the sectoral Ministry in charge (Environmental
Sectoral Unit of the Ministry of Industry, Commerce and Mining).

Therefore, the project team is designing a specific environmental
component which will cover those issues. \[Email: March 1999\]

## Panama: IDB -- Local Development Program 

(Formerly, Social Emergency Fund II)

Projected IDB Funding: \$ 50 million

Projected Total Cost: Pending definition

Tentative Board Date: August 1999

Stage: In preparation

IDB EA Category: **Evaluation and improved EIA control included in
project**

Project ID: PN0111

Project first entered: April 1998

Entry updated: March 1999

[Description]{.underline}: Definition of a strategy to extend the
mandate of the Social Emergency Fund to include an increased emphasis on
local development.

[Issues]{.underline}: The change towards increased emphasis on local
development has no salient environmental impacts. Regarding FES projects
in general, INRENARE and the Social Emergency Fund (FES) are negotiating
an agreement that would allow FES to use a computerized mechanism for
environmental impact assessments of its projects (these EIAs will then
be submitted to INRENARE for approval). FES has met with ANCON, an NGO,
to learn about their computerized EIA program with the possibility of
adopting the same methodology. When the system is up and running, it
should be required that all proposed FES projects pass through the EIA
process before approval. \[USAID/Panama email, March 1998\].

[Status]{.underline}: These comments have been conveyed to IDB staff,
which responded that as the USAID report indicates the change towards
increased emphasis on local development has no salient environmental
impacts. If anything, and thanks to independent evaluations of the First
Phase of the FES approved by the Bank and almost fully completed, the
Panamanian authorities are committed to strengthen four areas: (i)
financial administration; (ii) information systems; (iii) planning
capacity; and (iv) environmental quality control. As a result of the
last recommendation, the FES has recently established an Office for
Environmental Quality Control (Dirección de Control de Calidad
Ambiental) that will report periodically to the ANAM, the new national
environmental authority. \[March 1999\].

## Paraguay: IDB - Development of Asunción Bay Coastal Area

Projected IDB Funding: \$ 27 million

Projected Total Cost: \$ 30 million

Tentative Board Date: January 2000

Stage: In preparation.

IDB EA Category: **Environmental Assessment Required (3)**

Project ID: PR0043

Project first entered: January 1997

Entry updated: March 1999

[Description]{.underline}: An integrated program to protect Asunción
from flooding by the Paraguay River. The program would include:

a)  construction of a protective road;

b)  residential development;

c)  relocation of inhabitants by the river;

d)  housing consolidation;

e)  protection of natural areas;

f)  employment improvement; and

g)  reconversion of building facilities (convention center, tourism
    projects, and other facilities).

[Issues]{.underline}: The design of this project incorporated
environmental

considerations from the very beginning, however environmental impact
assessment should be done as required by Paraguayan law. Proposed
dredging and filling activities should be designed so as to have minimal
impact on wetland ecosystems along the Paraguay

river bank. This project has also been framed by NGOs and the Government
within the context of the controversial Hidrovía project that is
proposed for the Paraguay River. Therefore, it should be studied with
care and integrated within the broader context of development for the
region. Resettlement indicates that the project environmental assessment
category should be a 4. \[e-mail: USAID/Paraguay 03Dec96\]

[Status]{.underline}: Comments have been conveyed to the IDB staff,
which reported that both projects \[the Asunción Bay project and the
National Environmental Program - PR017\] contains specific components or
activities for developing and implementing sustainable natural resource
policies. These include the establishment of an independent
environmental authority, strengthening the Environment and Forestry
Directorates of the Subsecretary of Natural Resources, and a planning
and policy group in the re-structured MAG. Finally, at the level of
extension and education activities, the Terms of Reference include
sustainable resource use, integrated pest management, etc. (E-mail: IDB
25Apr97\]

[Status]{.underline}: IDB responded that:

1.  The principal objective of the Development of Asunción Bay Coastal
    Area was not to comprehensively protect Asunción from all flooding
    because just a small part of the flooding area was covered by the
    project, the \"bañado norte\". The principal objective was to
    develop the urban zone where low-income families live in the flooded
    area of bañado norte. A road project, that has important
    environmental flood protection components, was also included in this
    project.

2.  A consulting firm did the EIA according to the country's
    environmental regulations. The EIA was reviewed and approved by the
    country's environmental authority and was made available to the
    public on May 20, of 1997.

3.  The bay area ecosystems were considered in the landfill project. The
    consulting firm analyzed different alternatives and chose the one
    that minimized the impact and maximized the conservation of
    ecosystems. This is described in the EIA that was sent to the IDB
    Public Information Center on February 17, 1998.

4.  The EIA also describes the fluvial hydraulic analyses of the impacts
    of dredging upstream and downstream.

5.  This project is not part of the Hidrovía project. This is why the
    Hidrovía effects were not evaluated in a wider regional context.
    Nevertheless, an analysis of the river was done to evaluate the
    Hidrovía effects on the project, especially a proposed removal of
    rivershed rocks upstream.

6.  The project is not a category 4, since the resettlement is
    temporary, while urban and safety conditions in the area are
    improved by the project. In the design of the project, extreme care
    was taken to minimize the inconveniences to the beneficiaries, by
    minimizing the required resettlement time and the distance from
    their original living and working places. The population indicated
    in surveys its desire to remain in their original places once these
    were improved. Their preferences were reflected in the selected
    plan.

7.  Finally, the municipal authorities of Asuncion and the government of
    Paraguay are making changes to the project. The project is now
    waiting for its official resubmittal. Once the changes are received,
    they will be evaluated from the social and environmental points of
    view, as was the original design.

# PROJECTS LOCATED IN THE MIDDLE EAST AND NORTH AFRICA

## Jordan: IBRD - Disi Amman Conveyor Project

Projected IBRD Funding: \$ 100 million

Projected Total Cost: \$ 730 million

Tentative Board Date: March 1999

Stage: Project preparation underway

World Bank EA Category: **A (EA due June 1999)**

Project ID: JOGU51749

Project first entered: December 1996

Entry updated: April 1999

[Description]{.underline}: The development objective of the operation is
to provide an adequate and reliable supply of bulk water to meet the
needs of municipal and industrial consumers in greater Amman. The
project will be implemented and managed by a private sector
concessionaire, with costs recovered from consumers, and within the
context of a strengthened national water resources management
capability.

The proposed project would consist of development of two well fields;
transmission facilities including pump stations and approximately 320 km
of pipeline; reservoirs; monitoring and control equipment; all
constructed and operated under a Build, Operate and Transfer (BOT)
contract with a 20-year concession to supply bulk water to Amman.

[Issues]{.underline}: The project is intended to pump groundwater from
the Disi aquifer that is non-rechargeable. The Feasibility Study
conducted on the Disi aquifer shows that it will sustain a water supply
of 50 million cubic meters per year for 100 years. The major
environmental issues facing this project are the sustainability of the
project, soil erosion and cultural heritage. \[e-mail: USAID/Jordan
12/12/96\]

[Status]{.underline}: An EA has been prepared by consultants to the
government of Jordan as part of the Feasibility Study and is the subject
of Bank review. Because of the high cost of the project, the Bank is
giving priority support to a project to improve the efficiency of water
management in Amman. (USAID\'s comments supporting this project have
been received). The non-renewable nature of the Disi aquifer (depletion
of natural capital) will be taken into account during the economic
appraisal of the project according to established Bank practices. World
Bank staff agrees with USAID's other comments and appropriate provision
will be made in project design. \[World Bank fax: 1/30/97\]

## Jordan: IBRD - Samra First Private Power^n^

Projected IBRD Funding: \$ 50 million

Projected Total Cost: \$200-250 million

Tentative Board Date: December 1999

Stage: The request for proposals for selection of private project
sponsors has been released.

World Bank EA Category: **A**

Project ID: JOPA55678

Project first entered: February 1999

Entry updated: April 1999

Task Manager: Ms. Zoubeida Ladhibi-Belk(458-0020)

[Description]{.underline}: The project will consist of a 300-450 MW,
dual-fired (diesel oil and natural gas) combined-cycle power plant to be
located near Amman and developed by a private special purpose company on
a build, own and operate basis. It will (a) support the government's new
initiative for private power generation and its efforts to tap new
sources of private capital for the power sector; (b) add new power
generating capacity at competitive prices while improving the efficiency
and reliability of the power supply; and (c) strengthen the capacity of
the Ministry of Energy and Natural Resources to prepare future private
projects and put into effect key policies for the sustainable
development of the energy sector.

[Issues]{.underline}: USAID is trying to mitigate the environmental
effect of As-samra treatment plant on the people residing around
As-Samra. At present the residents of As-Samra as well as residents of
other nearby communities suffers environmentally from the effect of
Refinery, the existing thermal power station located near the Refinery,
plus the As-Samra stabilization ponds. The GOJ is planning to build a
mechanical wastewater system to replace the As-Samra Ponds, and thereby
reduce the environmental effect on the people of those areas.

This power project is planned to be built near As-Samra, for several
reasons among which, to use the effluent coming out from the As-Samra to
cool the power plant towers. In addition to its environmental effect on
the communities, the effect of warming the effluent should be examined
and discussed in details. Warming the treatment plant effluent will have
its effect on the use of this effluent on using it in irrigation plus it
may effect the water reservoir of King Talal Dam.

In Aqaba, the National Electric Power Company is expanding the capacity
of its existing thermal power station, which uses heavy fuel oil, from
260 MW to double this capacity. The present expansion will meet Jordan
demand through 2005-2010. The plant in Aqaba uses seawater as a cooling
source. \[USAID/Jordan email: 02/04/99\]

[Status]{.underline}: World Bank staff responded that:

a)  The expansion being mentioned for Aqaba power station is being
    completed and has been taken into consideration when doing the
    demand forecast to investigate the timing of the proposed Samra
    power project. Based on the current estimate Samra will be needed as
    early as 2002/2003;

b)  The site for Samra was selected for two main reasons: one, as
    indicated in USAID's message, i.e the use of the waste water from
    the treatement plant; the second is the close proximity to the load
    center is Amman;

c)  The project is classified as Category A for environmental
    assessment. The environmental aspects of the project will be carried
    out in accordance with the Bank\'s directives and guidelines. The
    issues USAID raised will be investigated when the selected sponsors
    will be preparing the environmental assessment. \[World Bank email,
    05/05/99\]

#   {#section-2 .unnumbered}

# 1995-1999 Analysis of Upcoming MDB Projects with Environmental Concerns

This section is a brief analysis of the annual lists of MDB projects
that were submitted to Congress between 1995-1999. The purpose is to
discern possible trends in MDB progress towards implementing sound
environmental impact assessment procedures.

The five most recent annual reports list a cumulative total of 161
projects with environmental concerns (Figures 1a and 1b). This comprises
103 individual projects when considering the approximate 35% overlap of
projects between years (projects are kept on the list until they are
approved, dropped or put into a reserve program). The year with the
fewest projects listed was 1996 with 21 projects and the most was in
1998 with 47. The total funding represented is \$8.9 billion in proposed
(individual) MDB financed loans and \$35.3 billion in total project
costs when contributions from all investors are added.

When considering the graphs in this section it is important to keep in
mind that because of limited resources, these reports to Congress are a
representative rather than an absolute number of MDB projects with
environmental concerns. These numbers are influenced to a degree by the
level of resources available in a given year both within USAID and with
our partners. They are also affected by the number of countries in which
USAID has a presence in a given year. For example, USAID has no programs
in China and many other countries where MDBs are active, so it is
difficult for USAID to monitor MDB activities there. Still, USAID feels
that these numbers are useful indicators.

As seen in Figure 1a, the number of projects reported to Congress in
USAID's annual report varies from year to year, ranging from 21 to 47
with an average of 32. There is no clear trend in the number of projects
during 1995 to 1999. While the significant decrease from 1998 to 1999 is
hopeful, given the fluctuation over the previous years it would be
premature to state that this is a trend, especially since our ongoing
work of identifying new projects with potential issues does not seem to
be falling off. At least for the near term, it appears that a
significant number of MDB projects with potential environmental problems
will continue cropping up.

As seen in Figure 1b, the proposed MDB loan dollar values in these
projects is also variable, ranging from about \$2.3 billion in 1999 to
\$3.8 billion in 1997. The total costs of these particular projects,
including all other investors, is significantly higher than the MDB
investment alone, ranging from \$9.2 billion in 1995 to \$17.2 billion
in 1997. These figures are likely to be conservative, as information on
other investors was sometimes not available. These numbers indicate that
MDB investments on these projects constitute an average

![](media/image2.wmf)

of 20% to 25% of the total, leveraging projects that are considerably
larger than the MDB investment alone. The impact of this leveraging is
that environmental impacts can be greatly magnified beyond just what
would result from the MDB loan amounts. As with the number of projects
seen in Figure 1a, there is a promising downward trend in the dollar
value, but again, it is not clear yet whether this represents a real
trend or is just year to year variability.

A regional analysis of the proposed MDB projects with environmental
concerns is presented in Figures 2 and 3. During the five-year period,
the reports highlighted 60 projects (37%) with environmental concerns in
the Latin America/Caribbean region, 40 projects (25%) in Africa, and 27
projects (17%) in the Asia/Pacific region. Europe/Central Asia and the
Middle East/North Africa regions trail the others with just 17 projects
(11%) each. The high level of projects with environmental concerns from
the Latin America/Caribbean region may be due to the greater USAID and
partner NGO presence in the region. It may also be due to the LAC
region's proximity to the US which facilitates communications with the
World Bank and the Inter-American Bank headquarters, both located in
Washington DC. One might expect the Asia/Pacific region to be more
represented since the World Bank approves approximately one third of its
annual commitment to projects in the East Asia/Pacific region. For
example, \$9.6 billion of IBRD/IDA commitments went to this region in
1998, including \$2.6 billion to China alone, out of a total of \$28.6
billion for the year. However, with USAID presence limited to Cambodia,
Indonesia and the Philippines, it is difficult to review the MDB
portfolio for the entire region.

The Latin America/Caribbean region led the other regions with \$4.6
billion in proposed MDB loans to projects with environmental concerns
within the 1995-1999 period (Figure 3). The Europe/Central Asia region
was second with just under \$4 billion in proposed loans. Africa,
Asia/Pacific, and Middle East/North Africa regions had \$3.1 million,
\$2.0 million, and \$1.0 million respectively in proposed loans to
projects with environmental concerns. Considering that the report listed
the least number of projects in the Europe/Central Asia region, it is
surprising that it had such a high level of proposed loans. Upon closer
examination, the region included many large power sector projects, such
as the Russia Petroleum Joint Venture (IBRD, \$500 million), Azerbaijan
Early Oil (IFC/EBRD \$400 million), and the Slovak Republic Mochovce
Nuclear Safety Improvement (EBRD, \$300 million) projects. The scale of
these projects makes for considerable potential environmental and social
impacts.

Table 1 lists the main sectors having environmental concerns in each
region during the 1995-1999 period. In the LAC region, the main sectors
were transport and urban/public infrastructure, with about one fourth of
the projects listed in each.

![](media/image4.wmf)

The sectors with the most projects in the Africa region were power and
transport. In the Asia/Pacific region, urban/public infrastructure,
transport, and agriculture were the main sectors. In the Europe/Central
Asia region, the main sectors were power and urban/public
Infrastructure. The Middle East/North Africa's most represented sector
by far was urban/public infrastructure, which accounted for over 60%
percent of the MDB projects.

**Table 1: Principle sectors reported on by region, USAID 1995-1999
report**s **to Congress, Upcoming MDB Projects with Possible
Environmental Concerns.**

+----------+---------+---------+---------+---------+---------+---------+
| **S      |         |         |         |         |         |         |
| ECTORS** |         |         |         |         |         |         |
+==========+=========+=========+=========+=========+=========+=========+
| ####     | **Agri- | **      | **Trans | *       | **Other | **      |
|  REGIONS | cu      | Power** | -port** | *Urban/ | Se      | Total** |
|          | lture** |         |         | P       | ctors** |         |
|          |         |         |         | ublic** |         |         |
|          |         |         |         |         |         |         |
|          |         |         |         | **I     |         |         |
|          |         |         |         | nfra.** |         |         |
+----------+---------+---------+---------+---------+---------+---------+
| ####     | 10%     | **35%** | **23%** | 8%      | **24**% | 100%    |
| # Africa |         |         |         |         |         |         |
+----------+---------+---------+---------+---------+---------+---------+
| **As     | **21%** | **25%** | 4%      | **32**% | 18%     | 100%    |
| ia/Pac** |         |         |         |         |         |         |
+----------+---------+---------+---------+---------+---------+---------+
| **E      | 6%      | **47%** | 18%     | **24%** | 4%      | 100%    |
| ur./Cen. |         |         |         |         |         |         |
| Asia**   |         |         |         |         |         |         |
+----------+---------+---------+---------+---------+---------+---------+
| **Latin  | 10%     | 15%     | **27%** | **23%** | **25%** | 100%    |
| Am       |         |         |         |         |         |         |
| ./Car.** |         |         |         |         |         |         |
+----------+---------+---------+---------+---------+---------+---------+
| **M      | 13%     | 0%      | 6%      | **63%** | **25%** | 100%    |
| .East/N. |         |         |         |         |         |         |
| Africa** |         |         |         |         |         |         |
+----------+---------+---------+---------+---------+---------+---------+

A sectoral analysis of proposed MDB projects with environmental concerns
is portrayed in Figures 4 and 5. The power sector and urban/public
infrastructure sectors have the greatest number of projects with 39 each
(24% each). The transport sector followed with 30 projects (19%),
natural resource with 20 projects (12%), agriculture with 19 projects
(12%), and other sectors with 14 project (6%). The power sector had
\$7.7 billion in proposed MDB loans to projects with environmental
concerns during the five-year period (Figure 5), as much as all the
other sectors combined. These same projects in the power sector total
\$40.2 billion when considering total project costs (including all
investors). The MDB investment in the power sector is considerable, as
are the potential environmental and social impacts.

The transport sector had \$2.6 billion in proposed MDB loans to projects
with environmental concerns, followed by \$2.3 billion in the
urban/public infrastructure sector, \$1.2 billion in the agriculture
sector, \$0.5 billion in other sectors combined, and \$0.4 billion in
the natural resources sector. The power, transport and urban/public
infrastructure sectors are consistently highlighted in this report with
environmental concerns. These are also the sectors with the highest MDB
financial investment, especially the power sector. Other sectors are
inconsistently reported on over the 1995-1999 period.

![](media/image6.wmf)

The projects highlighted cover about five to ten percent of the major
(AfDB, ADB, EBRD, IBRD/IDA, and IDB) multilateral development banks'
annual commitment to project loans, about \$30-\$50 billion per year
over the past five years. These figures are a concern considering that:

1)  the report concentrates on countries where USAID has a presence,
    missing many of the countries (such as China) where there is
    significant MDB spending. For example IBRD/IDA and ADB committed 10%
    and 20% respectively of their total lending in 1998 to China; and

2)  the World Bank IBRD/IDA commitment to projects specifically designed
    to be environmentally beneficial has declined from a high of \$747
    million in 1994 (or 3.6% of its portfolio) to \$247 million in 1997
    (or 1.3% ). This level rose to 902 million in 1998, but this is
    still only 3.1% of its annual commitment --- a small number compared
    to the amount committed to projects with significant negative
    environmental impacts. For example in 1997, 32% or about \$6 billion
    of just the World Bank IBRD/IDA lending went to environmentally
    destructive sectors (including transport; electric power and energy;
    mining; oil, gas, and coal; and industry sectors). This reported
    highlighted \$3.8 billion of proposed MDB projects with
    environmental concerns during the same year.

A significant number of MDB projects with environmental, public health
and indigenous peoples concerns coupled with a declining level of MDB
spending on environmentally beneficial projects is not encouraging. It
raises the question of the degree of sustainability of MDB lending and
underscores the critical importance for independent environmental
monitoring of the MDBs.

[Conclusion]{.underline}: This summary analysis of the past 5 years of
reports indicates that while there are signs of both hope and possible
slippage, the data is insufficient to declare a trend. While all of the
MDBs have modern environmental review procedures and high quality
environmental experts in place, implementation continues to be less than
optimal. The one solid conclusion that can be reached is that at least
for the near term we expect that there will continue to be a substantial
number of large MDB projects with environmental concerns.

# REFERENCES

In addition to USAID\'s Early Project Notification System, the following
references were used in compiling project data and descriptions:

[ADB Business Opportunities: Proposed Projects, Procurement Notices and
Contract Awards.]{.underline} Asian Development Bank, Metro Manila,
Philippines. April 1999.

[Monthly Operational Summary of Bank and IDA Proposed Projects (As of
April 15, 1999)]{.underline}. World Bank. Washington, DC. May 3, 1999.

[Monthly Operations Report, January 1999]{.underline}. International
Finance Corporation, Washington, DC.

[Monthly Report on Status of Loan Applications and Technical Cooperation
and Status of Procurement, April 1999]{.underline}. Inter-American
Development Bank, Washington, DC.

[Project Information Documents]{.underline} World Bank, various dates.
These reports, available at the Bank\'s Public Information Center, were
used extensively in describing World Bank projects.

[African Development Bank Business Bulletin (as of December
1998)]{.underline}. African Development Bank, Central Projects
Department, Abidjan, Cote D\'Ivoire.