71608 G E T T I N G TO G R EEN A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness THE WORLD BANK GROUP GE T TING TO GREEN A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness The Pollution Management Sourcebook is intended to be a living document. Please check the website: www.worldbank.org/environment/pomasourcebook for the most recent version. THE WORLD BANK GROUP © 2012 The International Bank for Reconstruction and Development / THE WORLD BANK 1818 H Street, NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved. This volume is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. 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Cover design: Jim Cantrell Cover images courtesy of: The World Bank Photo Library Contents Acknowledgments v Executive Summary 1 Part I — User’s Guide 5 1. The Objectives and Scope of this Sourcebook 5 1.1 Introduction 5 1.2 Objective and Audience 6 1.3 Organization of the PoMa Sourcebook 6 1.4 Scope of This Sourcebook 6 2. Evolution Towards a Multi-stakeholder Approach 9 3. Conceptual Framework of a Pollution Management System 13 3.1 The Stakeholders and their Individual Goals and Incentives 13 3.2 Strengthening Pollution Management Systems through “Institutional Leapfrogging� 15 3.3 Applying the Conceptual Framework: Practical Examples and Lessons Learned 19 4. Roadmap for Users on How to Use the Sourcebook 25 4.1 Content of the Toolkit 25 4.2 Use of the Toolkit 25 4.2.1 Basic Use: Accessing an Individual Note 26 4.2.2 Intermediate Use: Putting together a “Package of Tools� 26 4.2.3 Strategic Use: Applying a Systems Approach to Pollution Management 27 Figure 1. Schematic Diagram of a Pollution Management System 13 Figure 2. Reinforcement through Multiple Policy Tools by Different Stakeholders Helps to Facilitate Desired Results 20 Table 1. Stakeholders in the Pollution Management System 14 Table 2. Mapping Policy Tools by Stakeholder and in terms of their Potential to Engage Other Stakeholders 17 iii Getting to Green Part II — Policy Tools 2.1 Governments 2.1.1 Strategic Environmental Assessment (SEA) 34 2.1.2 Life Cycle Assessment (LCA) 45 2.1.3 Targeting Legacy Pollution 57 2.1.4 Land Use Planning 70 2.1.5 Industrial Estates 77 2.1.6 Environmental Licensing 84 2.1.7 Market-Based Instruments/Economic Incentives 93 2.1.8 Labeling and Certification 107 2.1.9 Environmental Information Disclosure 118 2.1.10 Setting Priorities: Defining a Strategy within a Broader Framework 126 2.1.11 Environmental Regulation and Standards, Monitoring, Inspection, Compliance and Enforcement 142 2.1.12 Environmental Impact Assessment 151 2.2. Private Sector (Including Large, Medium and Small Enterprises) 2.2.1 Environmental Management Systems 160 2.2.2 Cleaner Production 173 2.2.3 Targeting Occupational Health and Safety 184 2.2.4 Sustainability in the Supply Chain 194 2.2.5 Stakeholder Engagement and Grievance Mechanisms 205 2.2.6 Corporate Environmental and Social Responsibility Programs 219 2.3 Financial Institutions 2.3.1 Environmental and Social Policy for Financial Intermediaries 230 2.4 Judiciary 2.4.1 Role of Judiciary in Pollution Management 242 2.5 Active Citizens (Including Civil Society Organizations) 2.5.1 Promoting active citizenry: Public Access to Information 258 2.5.2 Promoting active citizenry: Advocacy and participation in decision-making 268 2.5.3 Promoting active citizenry: Public Access to Redress and Legal Recourse 278 iv Acknowledgments Part I: User’s Guide was prepared by Kulsum Ahmed (Lead (PoMa) comprising staff from the World Bank, IFC, and Environment Specialist and Team Leader of the Gover- MIGA and which provided an important vehicle for nance and Pollution Management Anchor Program, gathering and sharing knowledge, perspectives, and expe- ENV), with contributions from a core team consisting of riences on pollution management from staff in the WBG. Mauricio Athie (Senior Environmental Specialist, CESI), Lakhdeep Babra (Principal Environmental Specialist, The finalization of the Sourcebook benefited from guid- CESI), Robert Gerrits (Social Development Specialist, ance, comments, and suggestions from Alberto Ninio CESI), Nina Chee (Senior Environmental Specialist, (Chief Counsel, LEGEN), Harvey Van Veldhuizen (Lead MIGEP), Johanna van Tilburg (Senior Counsel, LEGEN), Environmental Specialist, OPCQC), Harvey Himberg and Helena Naber (Environmental Economist, ENV), as (Consultant, OPCQC), Jostein Nygard (Senior Environ- well as early stage suggestions and comments from Jeffrey mental Specialist, ENV), Stephen Lintner (Senior Adviser, Thindwa (Lead Specialist, WBISG), Jane Nishida (Senior OPCQC), and Yves Prevost (Environmental Adviser, Environmental Institutions Specialist, SASDI), and ENV); as well as comments from LEGEN colleagues: Hocine Chalal (Regional Safeguards Advisor, SASDI). Nina Eejima (Senior Counsel), Flavia Rosembuj (Senior Counsel), and Sofia Ferreira (Consultant). Feedback was Peer reviewers included Josefina Doumbia (Lead also gratefully received during the public comments phase Economist, CESI), Wolfhart Pohl (Senior Environmental from H.N. Kopninia, Gyami Shrestha, Andrew Njeru, Specialist, ECSSD) and Allen Blackman (Senior Fellow, and the International Committee on Contaminated Land Resources for the Future). Additional comments were and Common Forum experts. provided by decision meeting participants James Warren Evans (Former Director, ENV), Bilal Rahill (Senior Man- The overall product was prepared under the guidance of ager, CESI), and Deniz Baharoglu (Sector Leader, MIGA), the following senior managers: James Warren Evans (for- Fernando Loayza (Senior SEA Specialist, ENV), Hocine mer Director, ENV), Bilal Rahill (Senior Manager, CESI/ Chalal (Regional Safeguards Adviser, MNACS), and Suiko IFC), Frank Lysi (former Director, MIGEP) and Ravi Yoshijima (Extended Term Consultant, MNSEN), as well Vish (Director, MIGEP), and finalized under the current as Alberto Ninio (Chief Counsel, LEGEN), Harvey van Environment Department senior managers: Mary Barton- Veldhuizen (Lead Environmental Specialist, OPCQC), Dock (Director) and Sari Soderstrom (Sector Manager). and Harvey Himberg (Consultant, OPCQC). Logistical and administrative assistance was provided by The preparation of Part I and Part II of this Sourcebook Juliette Guantai (Program Assistant, ENV) and Grace benefited from the Pollution Management thematic group Aguilar (Program Assistant, ENV). Editorial and website v Getting to Green assistance was provided by Stan Wanat (Consultant), Trust fund resources provided by the Governments of Amanda MacEvitt (Consultant, ENV), Elisabeth Mealey Denmark and Sweden for the preparation of this product (Senior Communications Officer, ENV), James Cantrell are gratefully acknowledged. (Communication Analyst, ENV), and Juliette Guantai (Program Assistant, ENV). vi Executive Summary This pollution management (PoMa) sourcebook has two The PoMa sourcebook is comprised of two parts. Part I, major goals. First, it is intended to provide users with cur- the User’s Guide, is divided into the following sections: rent information on available policy tools for pollution management. It is intended as a living document that will 1. the objective, audience, scope and organization be improved over time through periodic review and be of the sourcebook; updated based on the lessons learned from its application. 2. the evolution to a multi-stakeholder approach, Second, the sourcebook puts forward the advantages of given historical developments in pollution man- approaching pollution management through multiple agement approaches in the last decade; stakeholders (each applying their own policy tools in par- 3. the conceptual framework of a pollution manage- allel). Such collaboration can achieve positive outcomes ment system with multiple stakeholders and how more quickly and ensure a balance between, on the one it can be strengthened through “institutional hand, improved growth and competitiveness objectives, leapfrogging;� and and, on the other hand, pollution management objectives 4. a road map for users on how they can use the that help to maximize public welfare. In other words, such tools in the sourcebook to better manage pollu- a collaborative, balanced approach can achieve green and tion issues in a way that is consistent with “green sustainable growth. growth.� This PoMa sourcebook builds upon and broadens the Part II of the PoMa sourcebook, Policy Tools, also referred scope of The Pollution Prevention and Abatement Hand- to as the “Toolkit�, presents pollution management tools book: Towards Cleaner Production (PPAH), published in for different user groups, namely governments, private 1998, and reflects the lessons learned from over ten years sector companies, financial institutions, the judiciary, and of experience and changes in the external environment. civil society. The users for this sourcebook are policy mak- The PPAH has been enormously successful; it is widely ers at different levels of government, such as ministers, used by many financial, private sector, government, and vice-ministers, and city mayors, as well as chief executives development institutions as a reference source for policy of private companies and CSOs. This section is organized and technical guidance. Subsequently, in 2008, the indus- by the primary user of a particular policy tool, and pres- try-level technical guidance was updated and broadened ents a short, stand-alone guidance note on each of the in the World Bank Group’s Environmental, Health and twenty-three policy tools. Each guidance note contains Safety Guidelines. This sourcebook updates the guidance the following components: with respect to available policy tools. 1 Getting to Green 1. an introduction to the tool; • Pollution issues that result in a high social cost 2. a brief description of the tool and its application; for the country can be termed “priority� issues. 3. the prerequisite factors that are important to For such issues, it is important for a user of this effectively apply the tool, including minimal handbook to engage other stakeholders on pol- institutional requirements; lution management issues, even when there are 4. the advantages using the tool, and its limitations opposing views on pollution management policy (that is, when not to use the tool or what is not and implementation. This helps to ensure that covered by the tool); several views are taken into account in policy de- 5. the interaction of the tool with other tools, and sign. Such an inclusive approach to viewpoints in possible substitutes for the tool; turn helps to foster solutions that allow for both 6. practical examples of the application of the tool; economic growth and pollution management (to and finally, maximize public welfare) in the medium to long 7. references and resources that could be useful to term, rather than stalemate. The transaction costs practitioners applying the tool. of coordinating across multiple stakeholders can be high. However, these costs can be managed if The User’s Guide, drawing upon the relevant literature, there are effective conflict-resolution mechanisms discusses and presents the following main arguments and in operation, and can be offset against the po- concepts: tentially significant benefits of resolving priority pollution issues. • In practice, pollution management takes place • The User’s Guide also presents the conceptual un- in many different geographical settings (for ex- derpinning of the approaches that are proposed ample, at the level of a factory, a water basin, a for pollution management. The Guide highlights city, or a nation), and many stakeholders play a approaches that avoid short-term gains in either role in managing pollution in these settings (for growth or pollution management, in order to pre- example, stakeholders may include communities vent problems in the medium to long term; such and civil society, local and national authorities approaches are characterized as “Green Growth�. and private institutions). The reasons for manag- Engaging inactive stakeholders in pollution man- ing pollution can be quite different for different agement (at the level of any geographical setting, groups. For example, an Environment Ministry be it as allies or to advocate for one’s goals) helps may focus on pollution management from the to decouple growth and environmental degrada- standpoint of maximizing citizens’ quality of tion. The User’s Guide terms this “institutional life and society’s welfare. However, a private leap-frogging.� The Guide also touches on Coase’s company could focus on managing pollution to Theorem, which is consistent with this approach, minimize environmental risk, securing markets, and discusses how the context has evolved his- or both. This sourcebook acknowledges that it torically with respect to both evaluating benefits is perfectly natural for different stakeholders to and related transaction costs, as well as defining have different reasons to manage pollution, and property rights and why such an approach today hence derive different benefits. Therefore, the is more valid in certain cases. sourcebook makes the argument that benefits • The pollution management system in a particular are maximized for all concerned if a user of this geographical setting is comprised of many stake- handbook can engage other groups as allies (by holders and many tools that link in different ways. encouraging them to use their own policy tools Together, these stakeholders and tools dictate in parallel) to facilitate the effort to manage pol- the effectiveness of the pollution management lution. These are often termed “win-win� actions. system. The User’s Guide discusses how these 2 A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness tools link with each other to help align incentives on the application of that policy instrument, and towards effective pollution management. The each note is intended as a quick source of up-to- Guide also draws upon the business and environ- date guidance for the policy maker or decision ment literature to evaluate the experience to-date maker. with both mandatory and voluntary tools, as well • At an intermediate level, the Toolkit can be em- as sources of competitive advantage linked with ployed by an individual to better plan how differ- pollution management. This literature points in ent policy instruments can be used as a “package� particular to the effectiveness of tools that help to manage pollution and related environmental to provide information, be it for consumers, for risks more effectively and efficiently. communities, for industries, or for government. • Finally, the Toolkit can also be used at a strategic It indicates how these tools can enhance the pol- level to coordinate and plan for a more compre- lution management system, and shift it along a hensive approach involving multiple stakehold- green growth path. ers to tackle critical pollution problems. At the strategic level, the Toolkit is more likely to be Finally, the User’s Guide discusses how the Toolkit can used by a multi-stakeholder task force (often, but be used. It describes three approaches in detail, noting not always, set up by the government), in order what the policy guidance notes can provide, and what is to address priority issues. These may have high required on the part of the user, to derive the most benefit social costs or limit growth in the medium to from the Toolkit. long term, and therefore require solutions that simultaneously emphasize economic growth, • At the basic level, the policy guidance note on improve competitiveness, and maximize public each tool presents recent information and lessons welfare. 3 Part I — User’s Guide 1. The Objectives and Scope of this Sourcebook 1.1 Introduction The PPAH has been enormously successful as a reference source for policy and technical guidance. It is widely used This pollution management (PoMa) sourcebook is intend- by many financial, private sector, government, and devel- ed to provide users with current information on pollution opment institutions. Subsequently, in 2008, based on ten management, including available policy tools for pollution years of learning, the industry-level technical guidance prevention and resource efficiency. Part I, the User’s Guide, (Part III of the PPAH) was updated and broadened, and is explains how these tools can be used to manage pollution now referred to as the World Bank Group’s Environment, and what the advantages and limitations are for different Health and Safety (EHS) Guidelines. The EHS Guidelines stakeholders in following such an approach. It makes the are comprised of over sixty industry-specific guidelines in case that positive outcomes will come more quickly if sectors ranging from general manufacturing, to forestry, different stakeholders each apply their own policy tools to mining, to infrastructure, among others. towards solving a common pollution problem (even if it is for very different reasons). These outcomes are also more This sourcebook provides updated guidance on available balanced with respect to both improved competitiveness policy tools for pollution management, namely Parts I and and pollution management. II of the PPAH, reflecting the lessons learned and changes in the external environment in the last twelve years. The PoMa sourcebook builds upon and broadens the Notably, this sourcebook shifts the approach on pollution scope of The Pollution Prevention and Abatement Hand- management from an environmental management focus book: Towards Cleaner Production (PPAH), published in through primarily public regulatory instruments, towards 1998 by the World Bank Group. At that time, the Bank’s an approach acknowledging that multiple stakeholders approach to pollution had begun to shift away from pol- can affect pollution management (each through use of lution and waste collection and treatment, and toward a their own policy tools). The sourcebook emphasizes that more holistic approach based on environmental manage- applying these tools in parallel can help facilitate green ment. As a result, the PPAH emphasized the role of an growth, improved competitiveness, and ultimately sus- environmental agency in setting and enforcing standards tainable development. for environmental management1. 1. The PPAH consisted of three parts. Part I provided an overview of pollu- setting, environmental funds, and global and transboundary issues. Part III tion management and a set of key policy lessons. Part II focused on policy focused principally on specific good practice guidance regarding accept- implementation, particularly in air and water quality management and able emissions levels and pollutant control technologies for thirty-nine industrial pollution management, and examined basic principles, priority- individual industry sectors. 5 Getting to Green 1.2 Objective and Audience • describes the conceptual framework of a pollution management system with multiple stakeholders The objective of this sourcebook is to provide users with and how it can be strengthened; and finally current knowledge and information concerning the policy • provides a road map for users on how to use the tools for pollution management that are available to them. tools in the sourcebook to better manage pollu- It has therefore been structured so that each user group tion issues in a way that is consistent with “green can navigate easily through the sourcebook, and review growth.� the policy tools that each group has at its disposal to better manage pollution. Further, the sourcebook also puts for- The second part, Policy Tools, also referred to as the Tool- ward the advantages of a multi-stakeholder approach to kit, presents policy guidance notes on twenty-three key pollution management in certain cases. This is intended tools that different stakeholders have at their disposal to to help ensure a balance between improved growth and better manage pollution and shift towards a green growth competitiveness objectives, on the one hand, and pollu- approach. The contents of Part II are arranged by stake- tion management objectives designed to maximize public holder focus, or user group, to highlight the tools at the welfare, on the other hand. That is, the sourcebook advo- disposal of the following stakeholders: the government; cates an approach to green and sustainable growth. In the private sector (including large, medium, and small doing so, the sourcebook explains how the same policy enterprises); financial institutions; the judiciary; and citi- tools (available to each respective stakeholder group), zens, including civil society organizations. appropriately implemented, can be used to advance an agenda that promotes green growth, firm competitiveness, 1.4 Scope of This Sourcebook and pollution management. The focus of this sourcebook is on policy tools that enable The audience for this sourcebook is (a) policy makers in multiple stakeholders to better manage environmental developing countries, (b) top-tier domestic banks and pollution, so that they in turn can better respond to the domestic firms in emerging markets, and (c) staff of devel- following policy challenges: opment institutions and bilateral agencies engaged in this agenda, as well as (d) consultants engaged in pollution • Maximize public welfare (in particular by improv- issues with policy makers. ing health outcomes linked with environmental factors and maximizing productivity gains). The focus on policy tools in this sourcebook is synergistic • Maintain quality of life and basic human dignity with the technical guidance in the World Bank Group’s and self-respect. Environmental Health and Safety (EHS) Guidelines, which • Maintain competitiveness and secure markets by provides technical guidance on good practices linked with meeting buyers’ environmental demands. specific project sectors. • Promote environmentally and socially respon- sible investment. 1.3 Organization of the PoMa Sourcebook • Minimize financial and reputational risk on in- vestments. The PoMa Sourcebook consists of two parts. The remain- • Ensure sustainability of activities by ensuring der of this part, the User’s Guide, does the following: that the carrying capacity of the resource is not • presents the scope and organization of the exceeded. sourcebook; • Respond to national constitutions and comply • explains the evolution to a multi-stakeholder ap- with relevant international agreements and trea- proach over the last decade; ties. 6 A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness This sourcebook therefore focuses on policy tools that on specific tools that affect occupational exposure levels. help stakeholders to meet goals that are broader than However, some of the tools described in it (such as envi- just good environmental management. Subsequently, ronmental regulations or environmental management sys- the sourcebook focuses on tools that provide for green tems) are often used to reduce and better manage indoor growth, improved competitiveness, increased quality of pollution levels, and thus contribute towards reducing life, and ultimately sustainability. occupational exposure to pollution. The term “pollution� in this document covers discharges and emissions to air, water, as well as land or soil, that result in changes in the quality of their resource. This pol- lution could potentially arise from any source, including households, economic activity, urbanization, industry, and agriculture. The policy tools described in this document allow stakeholders to manage the quality of the resource (namely air, water, and land) through (i) reducing legacy pollution, (ii) better managing and reducing current levels of pollution, as well as (iii) managing environmental risk to minimize or prevent pollution.2 At the same time, it is important to note what this sourcebook does not do. The sourcebook is not technical guidance that provides information on optimal standards or emission levels, nor on optimal quality of a resource, which are found in the EHS Guidelines. The focus of this document is on broad policy tools that complement the EHS Guidelines. The sourcebook does not highlight tools that are specific to a particular specialized type of pollution, such as the treatment of nuclear waste or the management of hazardous materials. Instead it focuses on tools that can be applied to better manage (and prevent) a broader set of pollutants that affect air, water, and land quality. This sourcebook also does not highlight tools that exclusively emphasize the optimal management of carbon dioxide and other greenhouse gas emissions. However, it is important to note that the policy tools presented in this document seeking to encourage reduction in energy use, raw material use, and emissions of local pollutants, also generally result in encouraging a reduction of greenhouse gas emissions. Finally, this sourcebook also does not focus 2. It is important to note that “environmental management� is a broader term than “pollution management,� as it also includes a focus on manage- ment of the actual resource (for example, water resource management and land management). Pollution management, on the other hand, fo- cuses in particular on management of the quality of the resource (for ex- ample air, water, and land). 7 2. Evolution Towards a Multi-stakeholder Approach As described earlier, the 1998 PPAH shifted the agenda detailed findings were first shared with the companies, on pollution management by arguing for the need to shift and, after a suitable retesting period, were made available from pollution control to environmental management to the public, thus bestowing either honor or shame on more broadly. In doing so, it emphasized the regulator’s the rated factories and encouraging behavior change on role, briefly noting how voluntary initiatives by the pri- their part to clean up their act.4 China followed suit with vate sector could also contribute to better environmental a similar program, Green Watch, in 2000, in which two management. In this sourcebook, the emphasis shifts Chinese municipalities established pilot programs cover- further to an approach recognizing that multiple stake- ing 150 factories. In 2005, 20 municipalities adopted holders have a role to play in pollution management, and similar programs covering 8,500 factories. Research shows that the drivers for each of these stakeholders may be quite that the Green Watch program has significantly reduced diverse (as described above). The rationale for this shift is pollution emissions in China.5 Today, similar systems are discussed below by explaining the historical context. also in place in several countries, including India, Philip- pines, South Korea, Ghana, and Vietnam. This past decade witnessed a number of developments in the domains of environmental regulation and pollution The past decade also saw an increase in awareness of prevention and abatement.3 A marked shift took place environmental issues and heightened realization of envi- towards complementing the command and control and ronment as a human right. In 2001, the Aarhus Conven- market-based instruments with community-based instru- tion on Access to Information, Public Participation in ments (such as public disclosure programs). In 1995, Decision-making and Access to Justice in Environmental Indonesia put in place a voluntary, pilot public disclosure Matters entered into force; and in 2003, the Parties scheme that encouraged firms to clean up their water adopted a Protocol on Pollutant Release and Transfer pollution. The Program for Pollution Control, Evaluation and Rating (PROPER) required firms to self-report their 4. This draws from a case study prepared on this program in Blair, H. water pollution levels, which were subsequently checked 2008. “Building and Reinforcing Social Accountability for Improved Envi- by the government’s environmental agency, and then ronmental Governance.� In Strategic Environmental Assessment for Policies: An Instrument for Good Governance, ed. K. Ahmed and E. Sánchez-Triana, assigned a color-coded rating (e.g. black for the factories 135–46. Washington, DC: World Bank. that made no effort at control to gold for those that 5. Jin, Wang, and Wheeler. 2010. “Environmental Performance Rating and demonstrated adherence to international standards). The Disclosure: An Empirical Investigation of China’s Green Watch Program.� Policy Research Working Paper 5420. http://www-wds.worldbank.org/ 3. World Bank. 2000. Greening Industry: New Roles for Communities, Mar- servlet/WDSContentServer/WDSP/IB/2010/09/16/000158349_20100916 kets, and Governments. Washington, DC: World Bank. 105353/Rendered/PDF/WPS5420.pdf 9 Getting to Green Registers (PRTRs). Passage of national Freedom of There was also an increased application of the Corporate Information Acts (FOIAs) in many countries during this Environment and Social Responsibility concepts and period also helped to improve transparency with respect tools (including corporate environmental reporting, to environmental information. Today, it is estimated that codes of conduct, environmental management systems over eighty countries have enacted some form of FOIA, and eco-labeling). For example, by December 2007 and the vast majority of these have been introduced in the almost 130,000 entities, representing 140 countries and past five or six years.6 This is an encouraging sign, even economies, were certified in ISO 14001. The UN Global though practice often lags behind.7 Compact (2000) and the Equator Principles (2003) were launched, each setting principles for business and banks, This period also saw an increase in judicial activity with respectively, to ensure benefits to societies. The latter respect to environmental matters. In that regard, India in established principles to manage social and environmental particular has had some prominent cases, starting with issues related to the financing of development projects. the Delhi air quality ruling, which helped improve social These principles were subsequently updated in 2006 to accountability for a clean environment. In the early 1990s, reflect IFC’s new performance standards.10 an Indian nongovernmental organization (NGO) asked the Supreme Court to compel the Delhi government to Another major development has been the wide prolifera- enforce the clean air laws that had passed some fifteen tion of electronic media, easing the sharing of informa- years earlier. After a long and sustained campaign by the tion and increased experience and technology transfer. It NGO, which used quantitative information on health also facilitated industries’ and businesses’ taking on energy damage effects, including estimated mortality rates, as efficiency and cleaner production programs for financial well as an effective public awareness campaign through and reputational gains. This has affected both markets of the press, in 1998 the Supreme Court issued its first com- private sector firms, with customers and green consumers prehensive mandate for tackling air pollution, compelling demanding a different standard. On the other hand, the the government to enforce its own regulations.8 Another environmentally and socially responsible investors market important milestone linking constitutional human rights has also played a much more prominent role during the and the right to a clean environment was the 1994 ruling last decade. For example, the recently published Eurosif of the Pakistani Supreme Court in the case of Shehla Zia SRI 2010 Study shows that the European Sustainable and and others vs. WAPDA. In that case, the court concluded Responsible Investment (SRI) market has almost doubled that the right to a clean environment is a fundamental in the last two years, despite the ongoing global financial right of all citizens of Pakistan, covered by the right to crisis, with total European SRI assets under management life and right to dignity under Articles 9 and 14 of the Constitution.9 6. De Silva, L. 2010. “Freedom of Information Laws Spreading Around the World.� http://www.wri.org/stories/2010/09/freedom-information-laws- http://www.unep.org/padelia/publications/Jud.Dec.Nat.pre.pdf. Three spreading-around-world (accessed on August 23, 2011) cases from Pakistan are presented in this volume, all dating from 1994, the 7. Foti, J., L. de Silva, H. McGray, L. Shaffer, J. Talbot, and J. Werksman. 2008. first of which was Shehla Zia and others vs. WAPDA. Voice and Choice: Opening the Door to Environmental Democracy. Washing- 10. During this period, the International Finance Corporation (IFC) has ton, DC: World Resources Institute. experienced a sea change in environmental policy, with the sustainability 8. Blair, H. 2008. “Building and Reinforcing Social Accountability for Im- agenda shifting to become a central pillar of IFC’s work in 2000. This is proved Environmental Governance.� In Strategic Environmental Assessment further reflected in IFC’s development and implementation of a new Pol- for Policies: An Instrument for Good Governance, ed. K. Ahmed and E. Sán- icy on Social and Environmental Sustainability and Related Performance chez-Triana, 135–46. Washington, DC: World Bank. Standards in 2006, as well as on the portfolio front. For those performance standards, see: http://www.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/ 9. UNEP/UNDP/Dutch Government Joint Project on Environmental Law pol_PerformanceStandards2006_full/$FILE/IFC+Performance+Standards. and Institutions in Africa. 1998. National Decisions. Vol. 1 of Compendium pdf. As these are dynamic processes, the new versions of the performance of Judicial Decisions on matters Related to Environment. Nairobi, Kenya: standards are due to become effective January 2012 with updated Equa- UNEP-ELI/PAC. (ISBN92-807-1762-6) accessed on August 23, 2011 at tor Principles to follow. 10 A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness now reaching approximately five trillion Euros at the end sustainable approach. In the UK, for example, the private of 2009.11 sector played a major role in supporting the government to advocate for climate change policies. Many UK firms Changes in the external environment have also helped have also effectively used the climate change agenda to to create different expectations with respect to pollution highlight and enhance their own broader environmental management. One of these external drivers has been sustainability practices, in order to both distinguish their increased urbanization, which has increased pressures on own products from competitors as well as to provide cities to tackle the point and non-point pollution sources information to consumers so they can better compare in order to improve residents’ living conditions and products. Marks and Spencer plc’s slogan of “Plan A, quality of life. The example most quoted in this regard because there is no Plan B� is a classic example of this, is the city of Bogota in Colombia. Bogota today has one together with their efforts to highlight environmental of the finest (and best-known) examples of a bus rapid practices through improved product labeling. transit system (known as Transmilenio) in the world. Less- known, but no less important, were the concerted efforts by two consecutive mayors of Bogota, Antanas Mockus and Enrique Penalosa, during the 1990s in leading an effort to change the face of their city to improve quality of life for their constituents. In the early 1990s, mimes at street lights emphasized the importance of obeying traffic signals. Later an advertising campaign raised awareness among city inhabitants about the health effects of air pol- lution, which included a higher incidence of cardiovas- cular diseases and cancers, in addition to the respiratory illnesses that most were familiar with. The introduction of an annual “Day Without A Car,� when citizens were asked to use public transport, or walk or bike to work, also helped to raise awareness. However, raising awareness was not enough. It was also important to provide alterna- tive options for people, so that they could do something about their own habits. Investments were also made in an excellent bus rapid transit system, bike paths and pedestrian walkways. This focus on improving quality of life was not only directed to air pollution but to a more concerted effort across different sectors. Improvements in water and sanitation, upgrading inner city housing, and developing green areas for recreation were among some of the additional investments. These efforts changed the face of the city in a relatively short, 10-year period. Finally, climate change has also been an important driver for many private sector companies to embrace a more 11. Eurosif. 2010. European SRI Study 2010. Paris, France: Eurosif. http://031af82.netsolhost.com/research/eurosif-sri-study/2010 (accessed on August 23, 2011). 11 3. Conceptual Framework of a Pollution Management System 3.1 The Stakeholders and their Individual tool. The schematic diagram below illustrates this concept Goals and Incentives of a pollution management system. The historical developments described above strongly The respective goals and challenges of the different stake- suggest that in reality pollution management (at any holders in this pollution management system are sum- geographical level, be it within a factory, watershed, marized in table 1. locality, city, national or global level) is a system with multiple stakeholders, each with multiple levers or tools As illustrated in table 1, different stakeholders can have at their disposal to effect pollution. The system is further very different incentives for managing pollution. These complicated by the fact that these policy levers do not incentives range from maximizing public welfare from a solely have pollution management as the main goal or government standpoint to improving competitiveness and derived benefit. In fact, there are several other goals and securing markets for a private sector enterprise, to mini- co-benefits, which sometimes are the drivers for use of the mizing environmental risks in a portfolio for a financial Schematic Diagram of a of a Pollution Management System Figure 1. Schematic Diagram Pollution Management System Stakeholder relations not solely Between de�ned by government and Enterprise/Industry pollution industry management relationship not solely de�ned by Relation between Pollution regulation. In Management two stakeholders principle what is re pollution being advocated is management Government that the de�ned by overlap Civil Society relationship should be broader e.g., regulation, Points of common incentives, interest re pollution technology management for all development and stakeholders. In use, etc. principle what is being advocated is that we should aim to maximize the size of the box of overlapping interests (even if motives are different) 13 Getting to Green Table 1. Stakeholders in the Pollution Management System Role(s) Related to the Stakeholder Pollution Management System Pollution Management Co-Benefit (s) • All stakeholders are affected by pollution in All Stakeholders air, water, soil. • Regulator (direct and indirect, e.g., through • Maximization of public welfare taxation, and self-regulator (in cases of para- • Reduction in reputational risks, and increase in statal corporations and joint ventures) reputational gains for para-statal corporations • Promoter of good environmental perfor- and joint ventures Government mance (directly by industry, for example • Establishment of clear rules of the game for through tax rebates or indirectly through stakeholders often helps to attract new another stakeholder, for example public investment through public disclosure) • Provider of basic infrastructure and services • Supplier of services or goods that are • Maintenance of competitiveness and secure environmentally-sound or have been made in markets by meeting buyers’ environmental an environmentally-sound way demands • Buyer of raw materials and other products • Minimization of financial and reputational risk that are environmentally-sound or have been through, for example complying with national Private Sector made in an environmentally-sound way and parent company EHS regulations, meeting • Community player—open and collaborative potential financial investors’ environment- dialogue with local community related requirements, and working with local suppliers to ensure raw material quality and minimize reputational risk • Financier of environmentally and socially • Promotion of environmentally and socially Financial Institutions sound projects responsible investment and Investors • Minimization of financial and reputational risk on investments • Indirect regulator through the tort system • Ensure national law is followed Judiciary • Ensure international law is followed • Access to justice is available to all • Buyer of products and services • Quality of life is maintained Citizens and CSOs • Neighbor intermediary or an investor. When different incentives for opportunities for improving energy efficiency and oppor- different stakeholders are aligned in applying several tools tunities for switching to more energy efficient machinery. towards a common pollution management goal, these are often termed “win-win� options. The timing related to when benefits accrue is also impor- tant (the User’s Guide returns to this point in the next This is the case when the pollution management goal is section). In the example above, for the individual private to improve energy efficiency. When governments actively enterprise, there is a first mover’s advantage, since eventu- provide information and encourage (through market- ally all their competitors will also shift to the more energy based instruments) a shift to energy efficient equipment, efficient equipment. This effect could be even more pro- then financial institutions can provide access to both nounced for a large company that puts an EMS in place credit and subsidized interest rates for this equipment. voluntarily, in order to respond to government enacting In this model, private enterprises can actively assess (for and actively enforcing environmental standards. It also example, through an environmental management system) facilitates their company to move towards compliance. 14 A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness The financial stakes to align incentives for a private enter- be viewed as irrelevant by a local community, whose water prise, however, are somewhat higher in the latter case, supply is affected by the firm’s effluent discharges. In both as the consequences of non-compliance are a potential cases, a discussion between the concerned stakeholders is shutdown of the entire company, compared with losing important to reach agreement on how best to maximize smaller amounts of money to poor efficiency and hence both sets of co-benefits (firm competitiveness and public affecting competitiveness over a longer period. welfare). A formal mechanism to ensure that the debate can occur and be resolved quickly is also important, and The two examples above may suggest that it is only one a necessary feature of an effective pollution management stakeholder, namely the government, who takes the system. primary role in putting in place environmental manage- ment tools. While this is true in most countries, this is The best way to maximize co-benefits is therefore to not always the case. Often large companies, particu- involve many stakeholders in the pollution management larly multinational companies, have taken on the role of system (within whatever boundary the system is operating encouraging the use of pollution management tools by in, for example, at the level of a firm, a waterbasin, a city, the government, to develop a more equal playing field or a nation). This ultimately ensures that no one goal takes within which they can operate. There are examples of precedence over another at a cost to society, since these this with respect to liability legislation in Eastern Europe. stakeholders act as checks and balances on one another.12 Multinational companies, conscious of their environmen- tal risks and subsequent effects on the potential market, This approach is consistent with Coase’s Theorem and have also demanded higher standards from their smaller his emphasis on allowing all the stakeholders to negotiate suppliers. These companies have sometimes worked with directly, in order for them to reach the optimal solution, governments to ensure that their tool-use and implemen- and as he wrote, “in devising and choosing between social tation align with their goals. Civil society has also been the arrangements we should have regard for the total effect.�13 stakeholder pushing for governments and private sector to Environmental policy students will also recall, however, take action in some cases. For example, this is often the that when Coase advocated such an approach, he himself case following environmental disasters. acknowledged that two things in particular made it dif- ficult to implement. First, it required property rights to be 3.2 Strengthening Pollution Management assigned in advance, but also he noted that the transaction Systems through “Institutional costs of engaging stakeholders directly were extremely Leapfrogging� high. While this may have been true at the time, today several historical developments have helped to change the Aligning incentives and arriving at win-win options is context in which Coase’s theorem is applied. Three aspects important, but a better understanding of the real potential in particular have resulted in this paradigm shift. First, of a multi-stakeholder system for pollution management even though property rights over environmental media is only evident when it is not possible to align incentives in (air, water and land) are still not formally assigned, sev- the short term. It is also evident when stakeholders feel that eral court cases, including Pakistan’s case of Shehla Zia vs. a particular policy approach of one stakeholder is at odds WAPDA have helped to better define environmental rights with the co-benefits sought by other stakeholders. Putting as an extension of human rights. Second, with improved in place more stringent environmental standards could be information access, transactions costs are lowered. Finally, one example of this. However, private sector firms may 12. Engstrom, R., M. Nilsson, and G. Finnveden. 2008. “Which Environ- view such standards as limiting to their competitiveness in mental Problems get Policy Attention? Examining Energy and Agricultural some markets. Another example could be a firm enacting a Sector Policies in Sweden.� Environmental Impact Assessment Review 28 (4- corporate environment and social responsibility program 5): 241–55. to gain investor support. However, such a program may 13. Coase, R. 1960. “The Problem of Social Cost.� The Journal of Law and Economics 3 (October): 1–44. 15 Getting to Green the ratio of potential benefits to costs has also significantly that the efforts are not just “window-dressing.�16 On the changed. Initial application focused on accrual of local other hand, engaging stakeholder groups that have less or national benefits. Today, the global environmental power leads to a slower path towards strengthening the challenges faced, such as climate change, mean that the system and shifting to green growth pathways. However, benefits of following a particular path are also potentially this path is equally important, as in the optimal pollution much higher. This also suggests that in some cases, the management system all stakeholders are equally active and potential benefits could outweigh even potentially high act as checks and balances on each other, maximizing all transaction costs. potential co-benefits. Further, ensuring that all stakeholders are active within This suggests that any effort to strengthen the pollution the pollution management system offers an alternative management system needs to actually build the capacity approach to development than that proposed by the of the stakeholders, so that there is a balance of power Environmental Kuznets curve, which suggested only between them. Building capacity can be through multiple two alternative pathways: pollute now, clean up later, or means, but some tools appear to both affect pollution manage pollution, slow down growth. In the literature, management and to indirectly help build the capacity of it is suggested that leap frogging through technology is stakeholder groups to effect checks and balances in the the only way to bypass the Kuznets curve. This essen- system. Table 2 highlight which tools do this and how. As tially happens when users uptake a newer, more efficient this table shows, these effects occur mainly through provi- technology, while at the same time bypassing the use sion of information, putting in place formal mechanisms of a predecessor technology that others may have used. to engage different stakeholders and allow for forums of Essentially, a technology-shift occurs that helps to tunnel discussion, and finally putting in place mechanisms that through the curve. However, the literature also acknowl- allow for grievance redress or justice. Further, the table edges the importance of institutions in development.14 suggests that even though some tools inherently help to Thinking in terms of a multi-stakeholder model for pol- do this, other tools can also be designed in such a way lution management suggests that there is also a concept that they facilitate capacity building of other stakeholders. of “institutional leapfrogging,� in which efforts are made One such example is a licensing system, which by itself to involve a stakeholder group not otherwise active in does not strengthen capacity of non-government stake- pollution management activities. This helps to shift to a holders. However, by ensuring that all licenses and their new sustainable development or green growth pathway, processing information is freely available, civil society and or to tunnel through the Kuznets curve by ensuring that the private sector can act to seek redress if necessary, and multiple goals (such as economic growth, improved com- hence ensure social accountability. Thus, having a trans- petitiveness and pollution management) all remain high parent licensing process helps to ensure that the role of on society’s agenda.15 civil society and the private sector is potentially enhanced in the national pollution management system. Another If the stakeholder group is already a powerful actor, this important implication of table 2 is that it is not only suf- could potentially lead to immediate results, but at the same time will require that a check also be put in place 16. A report from Calvert Asset Management Company, Inc. and The Cor- porate Library found that 65 percent of S&P 100 index firms and nearly to ensure that all co-benefits are being maximized, and one-fifth of Russell 1000 index firms have a corporate responsibility-relat- ed board committee, compared with only four percent of companies in 14. World Bank. 2003. Sustainable Development in a Dynamic World. World the Russell 2000 index. Even where board oversight exists, however, com- Development Report 2003. Washington, DC: World Bank. panies often appear to view environmental and social issues in philan- thropic or marketing terms, rather than as fundamental business risks or 15. Binder, S., and E. Neumayer. 2005. “Environmental pressure group competitive advantages. This report can be found here: http://info.thecor- strength and air pollution: an empirical analysis.� Ecological Economics 55: poratelibrary.com/download-free-report-on-board-oversight-of-social- 527–38; Munasinghe, M. 1999. “Is Environmental Degradation an Inevi- and-environmental-issues/?utm_campaign=UNPRI-press-release&utm_ table Consequence of Economic Growth: Tunneling through the Environ- source=press%20release (accessed on August 23, 2011). mental Kuznets Curve.� Ecological Economics 29: 89–109. 16 A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness Table 2. Mapping Policy Tools by Stakeholder and in Terms of their Potential to Engage Other Stakeholders Tools for Allows for access to Facilitates Allows for use information to at least participation among recourse to by Guidance Note Main purpose of the tool one stakeholder stakeholders justice Strategic Incorporate environmental Yes, if effort is made to allow Yes, if effort to achieve No environmental considerations, at early stages of for access to information participation is made assessment (SEA) decision making, into policies, plans, Government and programs that affect natural resources Life cycle Assess a product’s total environmental Yes, if separate effort No No assessment impacts from raw materials extraction to share LCA results is on through to waste management undertaken Targeting legacy Set out the main steps and issues in Yes, if effort to allow Yes, only if participatory Yes, if pollution initiating the process of addressing access to information is approaches are environmental legacy pollution—any pollution that undertaken undertaken in liability remains from past activities where there addressing legacy legislation is put is no immediately responsible party pollution in place Land use planning Define land uses, establish where and Yes, if effort to allow Yes, if participatory Yes, if law how they occur, and effectively control access to information is approach to land provides for their performance and interrelation undertaken use planning and recourse to implementation is justice for land chosen use violation Industrial estates Regroup industrial facilities onto a No Yes, if effort to rely on No narrowly defined location to facilitate participatory approach and promote industrial and economic is made development, and offers opportunities to improve the facilities’ environmental performance in a cost-effective manner Environmental Regulate activities that may cause Yes, only if access to No Only when there licensing harmful pollution or environmental environmental licenses is public access degradation is covered by access to to environmental information law licenses and conditions in licenses Market-based Use market signals to affect the No Yes, if trading rights and No instruments behavior of both consumers and firms emissions are part of towards pollution, by implementing an design of instrument explicit or implicit price on emissions to create financial incentives for pollution control Labeling and Provide consumers with information Yes, through the No No certification about products that may help them information that is programs to balance their environmental contained in labels and preferences with costs when they make certification programs a choice about a product Green public Incorporate environmental criteria in Yes, if access to information No No procurement public procurement process on green public procurement is promoted Environmental Provide rights to the public to access Yes, as main mechanism of Yes, indirectly, because No information environmental information, which the tool disclosed information disclosure empowers the public to make effective could facilitate and efficient decisions relating to environmental activity environmental issues by stakeholders Tools to Initiate, stimulate and enhance the Yes, if application No No encourage raw uptake of cleaner production concepts specifically relies on material and information dissemination resource use, such as use of energy efficiency, environmental labeling and cleaner schemes production 17 Getting to Green Tools for Allows for access to Facilitates Allows for use information to at least participation among recourse to by Guidance Note Main purpose of the tool one stakeholder stakeholders justice Training and Develop an understanding and No Yes, indirectly by No education problem solving capacities of a range enhancing capacity of Government of sustainability, environmental and recipients of training pollution management concepts and education Setting priorities Provide approaches and tools to Yes, only if access to Yes, only if stakeholder No determine priorities information is specifically participation is targeted through the specifically sought process Environmental Set specific rules that authorize and Yes, in case of standards Yes, if voluntary tools Indirectly by regulation and control activities so that they operate and regulation. For other such as audit programs providing standards, within legally and socially acceptable elements, only if separate are used in conjunction benchmark monitoring, parameters effort to allow access to with enforcement to (standards) that inspection, information is made engage private sector should be abided compliance, and or if public disclosure by enforcement programs are used in conjunction with inspection to engage communities and firms Environmental Incorporate environmental Yes, only if public disclosure Yes, only if public Yes, only if legal impact considerations into decision making on is practiced participation is sought provisions are assessment investments and projects in place to allow recourse to justice Environmental Implement a structured program Yes, only if public disclosure No No management of continual improvement in is applied Private Sector systems environmental performance Clean production Apply an integrated approach to No No No management business, driving enhanced material systems and energy efficiency while minimizing unwanted outputs Occupational Foster a safe work environment, Yes, if effort is made to Yes, if participatory No health and safety including the protection of employers, make access to information approach is sought suppliers, customers, family members, part of the tool in design and nearby communities, and other implementation of tool members of the public who could be affected by a company’s operations Supply chain Manage the sourcing and procurement Yes, if effort is made to Yes No management of inputs, the processing and make access to information manufacture of products and services, part of the tool and their delivery to the consumer Stakeholder Build and maintain an open and Yes Yes, if participation No engagement constructive relationship with among stakeholders is and grievance stakeholders and thereby facilitate and specifically sought mechanisms enhance a company’s or a project’s management of its operations, including its environmental and social impacts and risks Corporate Implement a business approach Yes, if access to information Yes, if participation No environmental embodying open and transparent is specifically targeted among stakeholders is and social business practice, ethical behavior, through the process specifically sought responsibility respect for stakeholders, and a (CESR) programs commitment to add economic, social, and environmental values 18 A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness Tools for Allows for access to Facilitates Allows for use information to at least participation among recourse to by Guidance Note Main purpose of the tool one stakeholder stakeholders justice Role of financial Inform financial intermediaries of No Yes, only if participatory No intermediaries their role in reducing pollution and approach is sought Institutions Financial in pollution managing other environmental and management: social impacts from a risk management A risk perspective management perspective Pollution Ensure the rule of law in terms of Yes, if access to information Yes Yes, as direct Civil Society Judiciary management pollution management is specifically targeted objective of the tools for the through the process tool judiciary Public access to Engage citizens and promote public Yes, as direct objective of Yes, indirectly as Yes, indirectly information for an action through increased access the tool important factor in as a factor in active citizenry to information about pollution meaningful participation facilitating access management to justice Advocacy and Engage citizens and promote public Only as means to facilitate Yes, as direct objective No participation in action through increased advocacy participation of the tool decisionmaking and participation related to pollution for an active management citizenry Ability to Engage citizens and promote public No Yes, because legal Yes, as direct complain and action through complaint recourse allows for objective of the access to legal mechanisms and increased access to participation of at tool recourse (public legal recourse with regard to pollution least an additional interest litigation stakeholder group in cases) for an policy process active citizenry ficient to design tools to enhance access to information, a cookie-cutter approach for all countries. This is because encourage participation, and allow for recourse to justice. there is significant diversity in country situations with These tools must also ensure that during implementation, respect to the more and less powerful actors who are these aspects are highlighted and encouraged, in order to part of the pollution management system. Further, no realize the tools’ full benefits. particular country situation is optimal as a starting point, since very effective approaches to pollution management 3.3 Applying the Conceptual Framework— are evident in many different cultures and societies. What Practical Examples and Lessons Learned is important, however, is that the approach needs to work by taking account of the culture, rather than trying to In practice, this pollution management system already impose solutions that may be optimal in a totally different exists in any geographical context. However, institutional cultural context. So what does it mean in practice? and cultural context determine the relative power of each of the stakeholders in the system within its boundar- It requires a policymaker to assess their current pollution ies. This suggests that in order to move towards a green management system in the context of its cultural context, growth scenario, other stakeholders need to be actively including assessing the relative power of different stake- engaged in the pollution management system in order to holders in the pollution management system. Checks and maximize co-benefits. Part II of this sourcebook therefore balances mean ensuring that all stakeholders have near provides a more detailed approach to what exactly is equal power and activity within the pollution manage- needed, from an effectiveness stand-point, to strengthen ment system. Therefore, the next step is identifying which these stakeholders and hence the pollution management tools could be applied in order to increase the power of the system in a country for green growth. Yet this cannot be less powerful stakeholders or the activity of the inactive 19 Getting to Green stakeholders (even though they may already be powerful) competition, where clearly the government and national so that a greater balance of power can be achieved over the institutions play a major role. In other cases, the firms longer term. Another way for a stakeholder to think about themselves set up self-regulatory institutions that evolve this is, how can one make sure there are multiple stake- over time and support greener competition.18 holders who also have the same goal, namely green and sustainable growth, and to draw them into the system to The conceptual framework proposed here may be new. Yet support one’s efforts. This is clearly a deliberate approach there are several familiar examples of both deliberate and to strengthening the system over a shorter period than not-so-deliberate approaches that have already taken place might happen naturally. in different situations. These have led to a strengthening of pollution management systems towards a green growth For a private firm, the incentives are different, but the final path through “institutional leapfrogging.� Sometimes the course of action remains the same, namely engagement trigger to make a change has come not as a deliberate with other stakeholders. The business and environment attempt to strengthen the system, but as a result of broader literature17 suggests that firm managers might systemati- changes in culture within society prompting the change. cally miss profit opportunities Figure 2. Reinforcement through Multiple Policy Tools by (for example, opportunities Different Stakeholders Helps to Facilitate Desired Results linked with reduced consump- Cleaner tion or reduced use of environ- production mental resources, or improved centers competitive advantage) due to Regulations and lack of information-gathering enforcement Private sector systems as well as lack of mar- manufacturing ket pricing of new performance Supplier-chain criteria, which then leads to Government systematic underinvestment. This same literature shows that under certain conditions, Large governments and NGOs can Public disclosure Companies provide an important stimulus Civil Credit lines for for improvement, for example energy e cient by increasing the flow of infor- Society equipment mation available to managers to help improve their decision- Banks making, or by negotiating mutually beneficial changes in corporate practice. At the same time, the emerging literature In other cases, it has come from self-regulatory institu- suggests that environmental performance improve- tions, often initiated by the private sector in response to ments only pay for some firms, or only in certain cases different stimuli, which have evolved over time to involve or time frames. Real gains entail a change in the rules of other stakeholders to act as a check (primarily through information disclosure) and hence have helped the pol- lution management system shift to a new equilibrium 17. Berchicci, L., and A. King. 2007. “Postcards from the Edge: A Review of the Business and Environment Literature.� ERIM Report Series, Refer- towards a green growth pathway. ence No. ERS-2007-085-ORG. Available at SSRN: http://ssrn.com/ab- stract=1088210. 18. Ibid. 20 A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness The classic case of involving another stakeholder group relying on voluntary approaches. It also shows that chang- has been the efforts in several countries to engage the ing institutional culture, in this case promoting a culture private sector in the pollution management system. His- of compliance among industry, takes considerable time. torically, the first examples of such engagement negotiated agreements between industry and government to improve Many governments have also successfully involved com- environmental performance when standards were difficult munities in the pollution management system to help with to set. Through audit programs, they subsequently facili- enforcement of environmental standards, and with assur- tated the firms involved to comply with environmental ing a check on the private sector, while at the same time regulations and standards. An example of the latter engaging the private sector itself. The PROPER system in approach was applied in Mexico in the 1990s. Stimulated Indonesia (described above) was initially set up on a vol- by a major industrial environmental catastrophe in Gua- untary, pilot basis in 1995. Today, similar systems, which dalajara, the federal government created the Office of the rely on using community-friendly coding approaches to Federal Attorney General for Environmental Protection in highlight firm performance, are in place in many coun- 1992, including the Office of the Deputy Attorney Gen- tries. A recent review by Blackman found that, overall, eral for Environmental Audits. These audits were seen as a polluting plants in the program made significant improve- voluntary mechanism to assist industry in the highest risk ments, thus suggesting that public disclosure schemes sectors to resolve environmental challenges. Interestingly, could be an effective strategy to support governments to it seems that participation was not entirely voluntary, as enforce environmental standards.20 The literature shows a review of the program by Blackman and others (2010) that there are two underlying theories for the success of found that plants recently fined by environmental regula- public disclosure schemes. The first suggests that com- tors were more likely to participate.19 In the first 5 years, munities and consumers exert pressure for the firms to audits at over 900 facilities were conducted, and then in clean-up.21The second suggests that plant managers have 1997, public recognition was bestowed on the first 115 more information, thus allowing them to respond better companies to complete actions plans developed as a result to cleaning-up pressure.22 Both theories are consistent of the initial audits. This recognition was a mechanism with the concept of engaging additional stakeholders in designed to continue to engage these companies. There is the pollution management systems (be they communities no econometric analysis that assesses whether during the or plant managers). Interestingly, a review of India’s Green time the firms were engaged, their environmental perfor- Rating project by Powers and others found that plants mance improved. This is, in part, an assumption based located in wealthier communities were more responsive to on the fact that firms were implementing action plans to GRP ratings.23 One hypothesis for this could be that these actively reduce environmental risk. However, the Black- communities were in a stronger position with respect to man and others review of the first decade of experience seeking recourse to justice, and hence more influence. found that results were not long lasting with respect to environmental performance improvements, in that after 20. Blackman, A. 2010. “Alternative Pollution Control Policies in Develop- graduation from the program, participants were not fined ing Countries.� Review of Environmental Economics and Policy 4 (2): 234–53. at a substantially lower rate than non-participants. This 21. Pargal, S., and D. Wheeler. 1996. “Informal Regulation of Industrial Pol- emphasizes the importance of ensuring that different lution in Developing Countries: Evidence from Indonesia.� Journal of Po- stakeholders (in this case, both government and private litical Economy 106 (6): 1314–27; Zhang, B., J. Bi, Z. Yuan, J. Ge, B. Liu, and sector) remain engaged continuously in the pollution M. Bu. 2008. “Why Do Firms Engage in Environmental Management? An Empirical Study in China.� Journal of Cleaner Production 16 (10): 1036–45. management system, and hence shows the danger of solely 22. Blackman, A., S. Afsah, and D. Raunanda. 2004. “How does Public Dis- closure Work? Evidence from Indonesia’s PROPER Program.� Human Ecol- ogy Review 11 (3): 235–46. 19. Blackman, A., B. Lahiri, W. Pizer, M. R. Planter, and C. M. Piña. 2010. “Voluntary Regulation in Developing Countries: Mexico’s Clean Industry 23. Powers, N., A. Blackman, T. P. Lyon, and U. Narain. 2008. “Does Disclo- Program.� Journal of Environmental Economics and Management 60 (3): sure Reduce Pollution? Evidence from India’s Green Rating Project.� RFF 182–92. DP 08–38, Resources for the Future Discussion Paper, Washington, DC. 21 Getting to Green Self-regulatory institutions have been created by firms clearly requires constant adjustment of the pollution for very different reasons, such as responding to crises management system over time, based on the differing (for example, the Responsible Care program adopted by involvement of stakeholders. This in turn suggests that the chemical industry following the Bhopal accident), tools related to information disclosure, that provide or to credibly communicate the quality of their goods avenues for different stakeholders to participate and that and services (for example, by setting up inspection and allow for access to justice, are key for active stakeholders to certification programs). A review of the literature about both engage inactive stakeholders and provide a check on self-regulatory institutions by Berchicci and King suggests others.25 In theory, the use of these tools should provide a that often these programs suffer from a free rider problem, self-regulating mechanism for the system as a whole. unless they include strong sanctions or can draw upon sanctions from another institution.24 The latter could be In developing countries, many of the tools that seek to through government oversight, or in other words, another engage other stakeholders (such as public disclosure pro- stakeholder stepping in to provide a check and thus help grams and audit schemes) are often voluntary. The evidence balance the system. There are also examples where the from the literature shows that pure voluntary approaches private sector has been the stakeholder most involved in are not sufficient, and in order to be effective need to the pollution management system, and where they have be coupled with strong enforcement regimes, such as in (indirectly) encouraged the government to take a more Mexico’s Clean Industry program (described above). The prominent role. This was the case in Chile prior to the exception seems to be programs that emphasize disclosure passage of Environmental Assessment regulation in 1992, of information.26 Using our conceptual framework, this when mining companies, in line with their corporate can also be explained as a voluntary approach placing too requirements, prepared Environmental Impact Assess- much power in the hand of one stakeholder group and ments (EIAs) and submitted them to the government. not allowing for a check from another stakeholder group, This was prior to the creation of a formal environmental unless there is some level of disclosure and recourse to institution, and lead in turn to the creation of CONAMA, justice, which provides a mechanism to ensure account- a national environmental commission set up for the pur- ability. Furthermore, given the importance of these tools pose of reviewing EIAs. Another classic case of involving in the pollution management system to ensure checks and another stakeholder group is that of the government balances, pure reliance on a voluntary approach for their working closely with the courts to ensure that environ- use seems inappropriate. mental policies and standards are enforced. However, equally there are examples of the courts and civil society The tools for ensuring checks and balances also have to organizations coming together to ensure that the govern- be commensurate with the culture and informal rules in a ment better enforces its own regulations, as was the case country. For example, there is little point in emphasizing in Delhi in 1998. litigation as the main way forward, or enacting stringent inspections and enforcement and expecting quick changes The above are all familiar examples of engaging (inactive) in the pollution management system, if there is no culture stakeholder groups in the pollution management system. to do so. It is more important to consider short-term This is an important first step. However, maintaining a solutions while subsequently putting in place longer-term balance of power among stakeholders is the key to an solutions that will influence and change informal rules in effective system that tunnels through the Kuznets Curve and allows for green and sustainable growth by ensuring 25. Emphasizing dissemination of information is the key in voluntary that multiple goals (economic growth, improved com- regulation in developing countries to encourage polluting firms to par- ticipate and improve their environmental performance. (For example, see petitiveness and pollution management) remain high on Blackman, A. 2008. “Can Voluntary Environmental Regulation Work in De- society’s agenda. This can be surprisingly difficult and veloping Countries? Lessons from Case Studies.� Policy Studies Journal 36 (1): 119–41.) 24. Berchicci and King 2007. 26. A. Blackman 2010. 22 A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness a country. For example, in a country with poor enforce- be evaluated), and there is also a mechanism for redress ment regimes and lack of a compliance culture, it may if the EIA does not meet these standards, or if there be better to work with international buyers or through are stakeholders who oppose it and can move to action trade regimes to engage industry and encourage clean (beyond having their views heard). In the US for example, practices, in addition to providing both information and the litigation system provides this opportunity. In Brazil, wastewater treatment facilities in industrial estates, or in the link of the EIA with the licensing system allows for special economic zones. At the same time, a longer-term redress. This does not suggest that the tools should all be agenda needs to focus on improving information dissemi- developed at the same time. Rather, a process of prioritiza- nation (for example through public disclosure schemes) tion and sequencing of efforts would need to be applied, and ensuring that national regulations and standards are which would differ by country and by issue, since differ- appropriate and achievable in strengthening enforcement ent countries will have different starting points in terms regimes. of environmental governance and institutional contexts. Prioritizing and sequencing would also prevent overload- It is also important to realize that the pollution man- ing the human, technical, and financial resources of the agement system is not static, but is constantly evolving agency or agencies that are designing and implementing based on history and current events. Often, disasters have the different tools. spurred or resulted in changed paths (such as the explo- sion in Guadalajara or the chemical explosion in Bhopal). Litigation also has helped to raise public awareness in many countries. The impact on health and quality of life, as well as raising incomes and expectations from citizens has also influenced these systems. There is therefore a need to continuously review the system over time, and to adjust the tools within so that all stakeholders remain engaged and are restrained by checks and balances. Balance implies near equal power across all stakeholders. Equally impor- tant is to reassess tools so that they remain relevant within evolving cultural and development contexts. For example, development of recourse to justice systems in countries may mean that it is no longer necessary to link EIA proce- dures with licenses (as is the case in some countries), but rather to rely on the litigation system instead (as in the USA context). This discussion above also suggests that policy tools must always be considered as part of a multi-tool system, not individually. When putting these tools in place, stake- holders must ensure that all elements of the “package� are given equal attention (for example, emissions and ambient standards plus enforcement plus legal redress mechanisms or EIA administrative procedures plus standards plus legal redress mechanisms). This means that EIA, for example, is not an effective instrument unless it is linked to ambient and emissions standards (against which the project can 23 4. Roadmap for Users on How to Use the Sourcebook 4.1 Content of the Toolkit 5. the interaction of the tool with other tools, and possible substitutes for the tool; The policy tools section, referred to as the toolkit, pres- 6. practical examples of the application of the tool; ents short policy guidance notes on twenty-three key and finally, tools that different stakeholders have at their disposal to 7. references and resources that could be useful to better manage pollution and shift towards a green growth practitioners applying the tool. approach. It is subdivided by user group to highlight the tools at their disposal, and facilitate navigation through 4.2 Use of the Toolkit the toolkit. At the basic level, it is intended that the policy guidance The tools are therefore grouped together in the following notes on each tool are a quick source of up-to-date guid- sections: ance for the policy maker or decision maker, reflecting 1. tools for government; recent information and lessons on the application of the 2. tools for the private sector (including large, policy instruments for pollution management. medium, and small enterprises); 3. tools for financial institutions; At an intermediate level, the toolkit can be used by an 4. tools for the judiciary; and finally individual user to better plan how different policy instru- 5. tools for citizens, including civil society ments (all under their own control) can be used as a “pack- organizations. age� to more efficiently and effectively manage pollution and related environmental risks. For each of the tools, the policy guidance note presents the following information: Finally, the toolkit can also be used at a more strategic 1. an introduction to the tool; level to coordinate and plan for a more comprehensive 2. a brief description of the tool and its application; approach involving multiple stakeholders to tackle critical 3. the prerequisite factors that are important to pollution problems. For the latter, it is more likely to effectively apply the tool, including minimal be used by a multi-stakeholder task force (often, but not institutional requirements; always set up by the government), in order to address 4. the advantages of using the tool, and its limita- priority issues that have high social cost or limit growth tions (that is, when not to use the tool or what is in the medium to long term, and therefore solutions not covered by the tool); are sought which simultaneously emphasize economic 25 Getting to Green growth, improve competitiveness and maximize public • Improve the effectiveness of policy tools they are welfare. already using by ensuring a more effective linkage between different tools, or by adding additional The text section below describes each of the above uses in tools that help to make the whole system more more detail and points out both what the policy guidance effective. notes can provide, and what is required of the user, to derive the most benefit from the toolkit. Intermediate use typically occurs when a user comes to the toolkit thinking about a particular pollution issue or 4.2.1 Basic Use: Accessing an Individual Note risk, and needs information on all the policy tools that are available to them to resolve this issue. Tools are ultimately In this case, a user may want to: a means to an end or goal, and this approach helps to • Learn about a new policy tool that they are ensure the priority of the goal, rather than the tool. Inter- considering applying in their organization or at mediate use also occurs when the user desires to improve a public level. the effectiveness of the package of policy tools they already • Understand better why a policy instrument that have in place such that these tools all strive towards solv- they are already using is not effective in solving ing the priority issue or risk. In this case, the user turns a priority pollution problem, or in improving directly to the relevant user section in the toolkit that the effectiveness of a policy tool they are already applies to them. using. • Understand better how a policy instrument that It is already well recognized that effective national pol- they already have in mind may or may not be lution management systems need to comprise of a range useful to them to solve an existing pollution of different types of tools, from command and control management problem. to market-based instruments to those that rely on shar- ing information, as the incentives to respond to different Basic use typically occurs when a user approaches the pollution sources can be quite different.27 Moreover, the toolkit with a particular policy instrument in mind, and lessons learned from experience of applying these tools, as needs information related to the instrument in order to documented in Section 3, suggests that policy tools need use it more effectively. In this case, the user turns directly to always be looked at as part of a multi-tool package, so to the relevant pages in the toolkit for the particular policy they can be more effective in addressing the priority pollu- tool. The section on the interaction of a specific tool with tion issue or managing environmental risks. For example, other tools also allows the user to begin to use the toolkit EIA is not an effective instrument unless it is linked to at an intermediate level, as discussed below. relevant ambient and emissions standards (against which the project can be evaluated objectively), and there is also 4.2.2 Intermediate Use: Putting together a “Package of a mechanism for redress if the EIA does not meet these Tools� standards, or there are stakeholders who oppose it and can move to action (beyond having their views heard). In this case, a user may want to: • Address a particular pollution issue or reduce This toolkit helps the user take an approach to pollution environmental risk, and wants information on management that relies on a suite of policy tools to solve a the range of tools that they have at their disposal particular pollution problem or risk, including improving to do this. resource use efficiency. This does not suggest that the tools • Understand better or assess their system of policy tools in place and consider how to improve their 27. See for example Wu, J. 2009. “Environmental compliance: The good, effectiveness. the bad, and the super green.� Journal of Environmental Management 90 (August): 3363–81. 26 A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness should all be developed at the same time, but rather a pro- together (namely, identify all relevant stakehold- cess of prioritization and sequencing of efforts would need ers and relevant policy tools that each could to be applied, which would differ by country, organization apply) in order to decide how to make existing and by issue, since different countries and organizations tools more effective, or to identify new tools to will have different starting points in terms of environmen- be included in the system. tal governance and institutional contexts. Prioritizing and • Address a priority pollution issue or reduce envi- sequencing would also prevent overloading the human, ronmental risks, so that the outcome is sustain- technical, and financial resources of agencies and organi- able, namely in the medium to long term, and zations that are designing and implementing the different ensure that balanced solutions are sought which tools. At this stage, the toolkit does not provide particular simultaneously emphasize economic growth, advice on sequencing and prioritization of efforts, other improve competitiveness and maximize public than noting which other instruments must already be welfare. in place before the policy tool in question is effectively applied. For the most part, these decisions are left to the Strategic use typically occurs when an organization, discretion of the user. It is intended that experience gained country, or society faces a critical problem that a single from the application of this toolkit will be reviewed peri- user group cannot solve unilaterally. It also occurs when odically, and that such constant reappraisal will lead to a decision is made within an organization, country or inclusion of additional guidance on this subject. society to make a transformational shift from one level of operation to a much higher one. The desire for this The most strategic level of use of this toolkit is to shift shift can occur for many reasons. A private firm may be from individual users using multiple tools (the intermedi- interested in shifting to “world class� status or recognition. ate case) to multiple users, using multiple tools, coming Alternatively, society may demand a shift in quality of life together to address critical pollution problems. to a new norm due to rising incomes, or governments may decide to tackle pollution, as it is limiting growth due to 4.2.3 Strategic Use: Applying a Systems Approach to excessive health costs, or due to a recent environmental Pollution Management disaster. In this case, a user may want to do the following: The conceptual framework in Section 3 suggests that for • Address a priority pollution issue or significantly this type of transformational shift, multiple stakeholders reduce environmental risks, and realizes that they bringing multiple viewpoints to the table are important, cannot achieve this goal alone or cannot reach this so that ultimately solutions emerge that are balanced in goal fast enough through their own actions. They terms of design. There are multiple ways users can apply therefore need information on how other stake- this sourcebook to engage multiple stakeholders. In holders’ tools can also help towards achievement increasing complexity, they are as follows: of the goal. Alternatively, they need information on how they can engage other stakeholders to • As a first step, the user should consult table 2 in help them through application of the policy the sourcebook to understand how they can apply tools that are at their own disposal (for example, their own policy tools to involve other stakehold- how can a private sector firm engage civil society ers, before turning to the relevant policy note on through the firm’s application of its own tools). that tool in the toolkit. This could be through • Address a priority pollution issue or reduce en- making information available to the public, vironmental risks, have already established a dia- introducing mechanisms into existing tools that logue between multiple stakeholders, and want engage multiple stakeholders, or putting griev- to map out the pollution management system ance redress mechanisms in place. Conflict reso- 27 Getting to Green lution mechanisms are particularly important, applied equally across all entities. It could also and should be considered a priority in order to mean engaging in the development or review of resolve conflicts efficiently between groups when licensing procedures, to ensure that efficiencies they occur. This helps to maximize the benefits are maximized (so that business development is of having multiple viewpoints, while minimizing not affected) and yet the government’s goals are the costs associated with deadlock resulting from met. For governments, it could mean engaging multiple viewpoints. Again, table 2 shows which with self-regulatory institutions created by firms policy tools can be used in this way, to resolve to ensure there are strong sanctions for those who conflicts. want a “free ride� at the expense of others. For civil society, one of the few government tools Essentially, this approach is about involving other in the past allowing for stakeholder involve- stakeholders as allies to facilitate the user’s efforts, ment in the pollution management system was recognizing that they could have totally different environmental impact assessment (EIA).28 Today, reasons for moving in the same direction. These there are many more government and other are often termed “win-win� actions. Examples stakeholder tools (for example Strategic Environ- of this might include governments encouraging mental Assessment, SRI funds, public disclosure the use of public disclosure schemes, in order to schemes) through which other civil society can work with communities as allies to improve pub- also engage.29 lic welfare. Governments might work with the private sector by providing tax breaks for cleaner • The final way of using the toolkit is from a production equipment, or industrial estates that strategy design and planning standpoint. This is provide wastewater treatment facilities. Govern- typically conducted by policy makers in govern- ments might also utilize tools such as strategic ments, through review of table 2, along with the environmental assessment, to ensure that there policy guidance notes, and is often intended to is a structured dialogue with different stakehold- develop a systems approach to solving the prior- ers in designing new policies and programs. For ity pollution issue. This entails understanding the firms, this could mean ensuring that environ- underlying incentives and roles of different stake- mental management systems are implemented holders (table 1) and using this information to with public disclosure, so that financiers can strategically design or strengthen (often an exist- distinguish the lower environmental risks posed ing) pollution management system consisting of to them, and hence facilitate attracting additional multiple stakeholders applying their own tools, or lower rate financing. It could also mean work- in order to derive multiple benefits (for example ing closely with other firms through the supply see the schematic depiction on page 20). There chain to ensure that efficiencies are maximized, is no recipe for this. It is based on the cultural and hence firm competitiveness is enhanced. context of the country and previous experience, • As a second step, the user can also turn to other users’ tools in table 2, before looking them up in 28. EIA is one such tool that has been used, in theory, this way in many developing countries, namely to provide a formal mechanism for differ- the toolkit to learn more about them, and under- ent stakeholders to engage in projects with significant environmental stand how they (the user) can actively engage in impacts. Unfortunately, the participation part of EIA is also often the least effective part of the process in many developing countries, thus suggest- dialogue with other users through other’s tools. ing the EIA is not being used to its full potential. For a firm, this could mean actively engaging 29. For an approach to SEA that emphasizes participatory approaches, with a government to ensure that the rules of see World Bank. 2011. Strategic Environmental Assessment in Policy and Sec- the game with respect to legacy pollution are tor Reform: Conceptual Model and Operational Guidance. Washington, DC: World Bank. 28 A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness and is as much an art as a science. The principles listed below remain important: 1. nurturing discussion; 2. respecting others’ viewpoints and under- standing that they represent constituencies that are part of the system; 3. focusing first on tools that are win-win, where incentives are already aligned; 4. considering the timeframe of change and acknowledging that the process of change is also important in influencing the outcome; and 5. periodically reevaluating the results and ad- justing course as needed. The second part of this sourcebook looks at each of the tools available to different stakeholders in more detail. As stakeholders in the Pollution Management System review these tools and move forward to strengthen national environmental management systems, it will be crucial for them to bear in mind and apply this sourcebook in the different ways noted above, in order to shift towards a green and sustainable growth pathway, namely one that emphasizes economic growth, improved competitiveness, and maximizes public welfare. 29 Part II — Policy Tools 31 Table of Contents 2.1 Governments 2.1.1 Strategic Environmental Assessment (SEA) 34 2.1.2 Life Cycle Assessment (LCA) 45 2.1.3 Targeting Legacy Pollution 57 2.1.4 Land Use Planning 70 2.1.5 Industrial Estates 77 2.1.6 Environmental Licensing 84 2.1.7 Market-Based Instruments/Economic Incentives 93 2.1.8 Labeling and Certification 107 2.1.9 Environmental Information Disclosure 118 2.1.10 Setting Priorities: Defining a Strategy within a Broader Framework 126 2.1.11 Environmental Regulation and Standards, Monitoring, Inspection, Compliance and Enforcement 142 2.1.12 Environmental Impact Assessment 151 2.2. Private Sector (Including Large, Medium and Small Enterprises) 2.2.1 Environmental Management Systems 160 2.2.2 Cleaner Production 173 2.2.3 Targeting Occupational Health and Safety 184 2.2.4 Sustainability in the Supply Chain 194 2.2.5 Stakeholder Engagement and Grievance Mechanisms 205 2.2.6 Corporate Environmental and Social Responsibility Programs 219 2.3 Financial Institutions 2.3.1 Environmental and Social Policy for Financial Intermediaries 230 2.4 Judiciary 2.4.1 Role of Judiciary in Pollution Management 242 2.5 Active Citizens (Including Civil Society Organizations) 2.5.1 Promoting active citizenry: Public Access to Information 258 2.5.2 Promoting active citizenry: Advocacy and participation in decision-making 268 2.5.3 Promoting active citizenry: Public Access to Redress and Legal Recourse 278 32 | P a g e 2.1 Governments 33 | P a g e Strategic fosters and provides critical systematic considerations at the sectoral, regional, and national levels to Environmental promote environmental sustainability, smart growth, and pollution prevention. The term ―SEA‖ Assessment encompasses a spectrum of analytical processes such as Strategic Environmental and Social Assessment (SESA), Strategic Social Environmental Assessment Introduction (SSEA), Country Environmental Analysis (CEA), Combined Strategic Impact Assessment (CSIA), and Strategic Environmental Assessment (SEA) is a set of Cumulative Impact Assessment (CIA). analytical and participatory processes for incorporating environmental considerations, at early stages of decision making, into policies, plans, and programs that affect natural resources. SEA evaluates, Description and Application of Strategic Environmental Assessment at the highest strategic level, a project‘s environmental impacts in the context of social and Strategic Environmental Assessment is not a ―fixed, economic factors. This extends traditional single and prescriptive approach‖ (OECD 2006, 17). It Environmental Impact Assessments (EIA), which refers to a family of approaches that use a variety of focus solely on physical environmental impacts. SEA tools, such as fiscal incentives, land use plans, and sustainable development policy. The ―one size fits all‖  This guidance note was prepared by Fernando Loayza (Senior approach is not applicable to SEA. Effective SEAs Environmental Economist, ENV). Peer reviewers included Bryan Land (Senior Petroleum Specialist, SEGOM), Diji Behr (Natural adapt to fit the context and conditions of the project. Resource Economist, ARD), John Middleton (Principal They must incorporate the cumulative environmental Environmental Specialist, CESI), Ernesto Sanzhez-Triana (Lead Environmental Specialist, SASDI). Additional comments and impact of multiple simultaneous projects proposed by contributions were provided by Anjali Acharya (Senior Environmental Specialist, LCSEN), Gary McMahon (Senior Mining a development plan. Specialist, COCPO), Hanneke van Tilburg (Senior Counsel, LEGES), Harvey van Veldhuizen (Lead Environmental Specialist, OPCQC), Horacio Terraza (IADB), Jim Listorti (Consultant, FEU), Lakhdeep Babra (Principal Environmental Specialist, CESI), Mauricio Athie (Senior Environmental Specialist, CESI), Nicholas Bauer (Consultant, CES), Nicole Maywah (consultant, SASDI), Pete Kolsky (Senior Water and Sanitation Specialist, ETWWA), Robert Gerrits (Social Development Specialist, CESI), Sachiko Morita (Counsel, LEGEN), and Yewande Awe (Senior Environmental Engineer, ENV). Editorial assistance was provided by Stan Wanat (Consultant), Juliette Guantai (Program Assistant, ENV) and James Cantrell (Communication Analyst, ENV). The task team leaders for this product are Kulsum Ahmed (Lead Environment Specialist, ENV) and Helena Naber (Environmental Economist, ENV). The product was prepared under the guidance of the following World Bank Group management: James Warren Evans / Mary Barton-Dock (Directors, Environment Department, World Bank), Bilal Rahill (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). 34 | P a g e Box 1. Strategic Social Environmental Assessment (SSEA) of the Power Sector in the Nile River Basin Uganda and the rest of the Nile Equatorial Lakes (NEL) Region of Eastern Africa have experienced an acute lack of electric power. Additional low-cost power generation and an efficient regional electricity trade are development priorities. The World Bank supported the preparation of a Strategic Social Environmental Assessment (SSEA) of major regional power development options and regional transmission interconnections in the NEL Region. The assessment, which covers Burundi, the eastern region of the Democratic Republic of Congo, Rwanda, Kenya, Tanzania, and Uganda, proposed a power development strategy and an indicative development plan to the year 2020. Bujagali Falls on the upper Victoria Nile in Uganda has long been considered for hydropower development, and in the SSEA analysis emerged as the highest development priority for Uganda. The SSEA also assisted hydropower development in the NEL region by addressing the risk of drought over the lifetime of the Bujagali project through a detailed analysis of climate change and its potential impacts. The analysis shows that with rising temperatures due to global warming, precipitation and net runoff will both increase, as will the losses due to evaporation and evapotranspiration. Yet, it also finds that climate change may increase runoff for Bujagali and consequently provide a higher potential for power generation. Furthermore, Bujagali Energy Limited (BEL), with IFC’s financial support, developed the 250-megawatt Bujagali Hydropower Project. Building on the SSEA’s results, the project undertook sectoral and cumulative analyses to strengthen the project’s social impact assessment and its Environmental Impact Assessment (EIA). The SSEA provided key regional and sectoral information on the environmental sustainability of the Bujagali project. In reviewing this project, which had not been free of controversy, the World Bank’s inspection panel stressed, among other things, the importance of enhancing the integration of the SEA’s results in the project’s EIA to improve information disclosure, public consultation, and decision making. Source: Bujagali Energy Limited environmental documentation at www.ifc.org/disclosure and Inspection Panel 2011. Developing a successful SEA requires resourceful and proactive behavior to seize opportunities for Impact-centered SEA approach. An impact-centered influencing policy. Incorporating environmental SEA approach focuses on the physical and human sustainability considerations into a project is an impacts of a proposed development plan. Physical ongoing process. Ideally, this process should start at impacts include infrastructure projects and land-use the earliest phase of project formulation, extend change. Human impacts include promoting economic through the implementation phase, and conclude growth or health and safety. For an impact-centered only after full monitoring of the complete project has SEA approach, the decision-making criteria focus on been achieved, as seen in box 1. To accommodate incentive systems and institutions conducive to these developments, it is crucial to maintain an open attract investment, encourage savings or dialogue through every stage of a project. consumption, and promote exports. A critical component of an environmental assessment is to The two distinct approaches to an effective SEA are properly analyze the environment to optimally impact-centered and institution-centered. The context manage growth at a sustainable rate. of the development goal determines which approach is most appropriate. 35 | P a g e Institution-centered SEA approach. An institution- a project. SEA analytical work can be summarized by centered SEA approach focuses on a project‘s five steps, which are illustrated in figure 1 and managing body. Techniques from environmental described below. economics, policy economics, institutional management, political science, and sociology are Figure 1. Analytical Work Schematic appropriate for this form of SEA. An effective institution-centered SEA highlights the proper management techniques to sustainably implement a development project. Combined SEA approach. A comprehensive SEA will include strategy from both the impact-centered SEA approach and the institution-centered SEA approach. Project conditions will determine which methodology is most pertinent. For example, an SEA for a hydroelectric power plant will be developed using an impact-centered approach. It will focus on the environmental impact of the proposed construction and operation of the hydroelectric project and the economic impact of the electricity production. In 1) Identification of Environmental Priorities This contrast, an SEA for air pollution policy will be process will provide a compilation of existing key developed using an institution-centered approach. It environmental issues in the sector or region that will focus on the roles of stakeholder groups, such as will be affected by the policy. Their industry and local residents, and the policy interrelationship with economic and social challenges presented when new air pollution priority issues should be discussed to clarify how regulations are implemented. environmental priorities are linked to growth and poverty alleviation. A complete compilation SEA analytic proces. A comprehensive SEA demands a will examine preexisting private sector projects thorough analytic effort. The analytical framework and the standards by which they operate. provides decision makers with the information necessary to make informed decisions. This 2) Stakeholder Analysis This process will assess who information focuses on the environmental benefits, benefits from or is adversely affected by both the consequences, and risks associated with a variety of current situation and the potential development policy and program options. The analytical work project. It will analyze the vested interests, power includes alternatives and proposals to mitigate asymmetries, and impediments to collective potential damages and minimize risks associated with action of affected stakeholders. A complete and 36 | P a g e comprehensive analysis of all potential stakeholders is a critical component of an SEA. SEA public participation process SEA is a mechanism to engage all key stakeholders that will be potentially 3) Assessment of Institutional and Capacity Gaps This affected by the proposed policy. There are two main process addresses the environmental priorities potential development benefits of opening for the next step. It will include an assessment of development decision making to all affected parties. the extent to which the proposed policy may First, the voices and interests of weak and vulnerable aggravate or please the stakeholders. A full stakeholders can be heard and influence the decision- assessment will consider potential stakeholder making process. Second, public participation creates responses. increased accountability for the policy makers. 4) Policy Recommendations, Institutional Both of these outcomes enhance environmental Strengthening, and Capacity Building governance. Furthermore, public participation Recommendations. This process addresses the strengthens democratic institutions by reducing the institutional and capacity gaps identified in step ability of vested interests to misrepresent their 3. Policy recommendations should be sorted into interests as those of the public at large. Figure 2 three categories, short term (1–2 years), medium summarizes the main phases of effective public term (3–5 years), and long term (greater than 5 participation in SEA and the phases are briefly years). Each recommendation must include discussed below. monitoring indicators. 1) Stakeholder and Political Economy Analysis This 5) Political Economy Assessment of Proposed process is detailed above and insures a complete Adjustments This process addresses the understanding of power differentials and recommendations from step 4 and analyzes their cultural factors that can affect the quality and impact on the political and economic contribution of public participation. environment. The assessment completes the first cycle in developing an SEA report. 2) Selection of Public Participation Mechanisms This process addresses potential mechanisms for The second and successive cycles of an SEA resemble dialogue. It must include political and cultural a quality management cycle. In following up the constraints affecting a particular society. implementation of the SEA recommendations, Mechanisms may include, but are not limited to environmental priorities should be revisited. If new workshops, focus groups, surveys, and priorities are detected, a new cycle of assessment and ethnographic field research. Mechanisms are recommendations as depicted in the figure above selected to minimize and control for the bias that should follow. In this way an incremental and political and cultural factors may impose on the continuous improvement of the environmental dialogue. Successful mechanisms will open a sustainability of policy formation is fostered. 37 | P a g e forum for weak and vulnerable stakeholders to this stage stakeholders should voice their comfortably make their voices heard. opinions on the current policy and project draft. 3) Dialogue Adaptation to the Complexity of Decision This four-part public participation process reinforces Making This process allows policy makers to the SEA dynamic of a continuous adaptation to the interpret and prioritize results from the dialogue sector‘s environmental priorities. Furthermore, SEA discussion to fit the development goals. During assesses historical, cultural, institutional and systemic this process all stakeholder opinions will be conditions affecting environmental and natural considered as valid and adapted as needed to resources management that cannot be addressed at most appropriately fit the context of the project. the project level. In this way, SEA helps manage systemic environmental risks. If these conditions are 4) Engage Stakeholders in the Follow-Up and the not taken into consideration in the design and Implementation This process keeps the dialogue implementation of programs, plans, and policies, then open between project developers and policy society‘s welfare will suffer from environmental and makers, and the stakeholders. After policy and natural resource degradation and lowered growth rates. Figure 2. Public Participation Schematic project decisions are made, stakeholders must be Narrowly defined, the target audiences for SEA are informed in a comprehensive manner so they decision makers at the planning and sectoral understand the reasoning for the decisions. At ministries; local, regional, and national authorities 38 | P a g e with planning and policy responsibilities; and planning, climate change, national level overarching multilateral development groups. While the priority strategies and plans, national policy reforms and of these audiences cannot be denied, civil society budget support programs. Industries and firms may organizations, policy communities, the private sector, also be interested in policy-SEA as it enhances the and the media are also audiences of SEA due to their legitimacy of sector reforms and strengthens pollution interest in sound environmental management, management policies. For instance, critical enhanced governance, and sustainable development. environmental issues for firms‘ competitiveness such In Box 2 hints for having the buy-in of SEA from this as those related with water access and management broad audience are provided. can be better addressed at the basin than at the project Box 2. Getting the support of stakeholders to the policy-SEA process  SEA is linked to economic growth, social development and/or poverty alleviation imperatives  Stakeholders select SEA priorities, validate the institutional analysis and endorse the SEA recommendations  SEA Action Plan involves stakeholders in following-up and monitoring Public Sector Civil Society Private Sector  Sector/sub  SEA’s objectives, phases, intermediate outputs and expected outcomes are known and agreed national in advance authorities led  SEA public  A framework for local/regional sustainable development is facilitated by the SEA process participation the SEA involving local communities, the private sector and national and  An intersectoral plan is subnational governments committee to agreed early steer the SEA on in the process is process effectively (not formally) established Source: Own elaboration based on a review of a number of SEAs undertaken or supported by the World Bank. SEA at the policy level can be applied by level. Also, information on environmental priorities governments as part of their preparation of policy and policy alternatives discussed in policy-SEA reforms, development strategies, and high level plans would be a useful input to firms‘ strategies or and by donors, mainly in coordination with planning. governments, as part of their assistance to developing countries. Key sectors where SEA has been used are among others natural resource management, Prerequisite Factors for Strategic particularly forests, environmental management, Environmental Assessment extractive industries, basin management, energy and transport. Its potential for application is, however, Planning or policy competency, implementation broader comprising trade, industrial policy, urban capacity, and a tolerant society are the three necessary 39 | P a g e factors that must be in place to successfully effectiveness of SEA suffers. Likewise, societies where implement an SEA. social or gender discrimination limit the participation of weak and vulnerable groups will also limit the Planning or policy competency. The critical effectiveness of SEA. In these cases SEA practitioners prerequisite for SEA is that the organization that will should strive to elicit the views of excluded or undertake the SEA must have the planning or policy discriminated groups in any lawful way possible. competence on the sector or theme that will be subject Ultimately, SEA is a tool for strengthening to the SEA. This organization should have the formal governance and state building but, no matter how responsibility and powers to implement the SEA and well implemented, SEA cannot be a substitute for a sustainable options that come out of it. long-term comprehensive strategy for enhancing governance. The initial governance conditions Implementation capacity. Another prerequisite is prevailing in a country are, therefore, critical for that the organization should have the capacity to effective SEA. implement the SEA‘s recommendations. Usually, these recommendations pertain to widening the scope of their practice beyond their formal (and therefore Advantages and Limitations of Strategic narrow) responsibilities – taking alternative strategic Environmental Assessment options into consideration that normally would not be in their scope but in that of others. The organization, The use of SEA has numerous advantages: therefore, must be able to cooperate with other  Raise attention to key environmental issues government organizations that have these  Assess capacity gaps and institutional responsibilities. When this prerequisite is not effectiveness fulfilled, the SEA would need to promote inter  Provide a forum for discussion and institutional arrangements like the creation of information sharing for decision makers and intersectoral committees to allow cooperation and stakeholders joint working across more than one organization, as  Assess the interplay of interest groups to in the SEA for the tourism reform in Mexico and the keep the status quo or to promote greater SEA for the mining sector reform in Sierra Leone (see environmental sustainability by addressing Table 1). The challenge here, for which there are no key environmental issues recipes, is to promote joint ownership along with The benefits of SEA vary over time and largely stem separate sector accountability. from the process that it sets in motion. In the short Tolerant society. The importance for effective SEA of term, SEA provides key information to assess the an open society that can tolerate criticism and environmental risks and opportunities associated opposition to the prevailing policy and planning with alternative government interventions and the views cannot be understated. When these conditions existing capacity to manage them. It also provides a are lacking or are significantly constrained, the platform of dialogue to consider the environmental 40 | P a g e implications of these interventions along with Interaction with Other Tools and Possible mechanisms to reach agreements on priorities and Substitutes proposed actions. In the medium and long term, as SEA is closely related to other environmental, the SEA process becomes engrained in the planning planning, and policy appraisal tools. For and policy culture, it enhances environmental environmental assessment or analysis, SEA governance by strengthening environmental complements and extends the assessment of the constituencies, and promoting institution building, physical environment performed in an EIA. Yet, transparency and accountability of decision making. unlike an EIA, which is tied to a go-or-no-go decision, SEA is an iterative process of assessment and SEAs also have several of limitations: reassessment. Additionally, SEAs address  Experience in using SEA is limited compared technological, economic, social, and institutional to EIA and experience in using SEA at the changes, and environmental management systems. policy level is modest compared to SEA of SEA borrows the methods for stakeholder and programs and plans political economy analysis, and for public  Political pressures can reduce the participation, from poverty and social impact effectiveness of SEAs analysis, and from political economy. Other tools  Require an effective system of checks and with which SEA can interact are land use planning, balances to insure political biases are not cost-benefit analysis and life cycle analysis. introduced 41 | P a g e Practical Examples of Strategic Environmental Assessment and Lessons Learned Table 1. Benefits and Methodologies of SEA for Sectoral Policy Reform and Planning Lao PDR’s Hydropower Mining policy reform in Tourism reform in Environmental reform Development Plan (related Intervention Sierra Leone Mexico in Colombia to the Nam Theun 2 Project) Type of SEA SESA SEA CEA CIA Significant Preparation of technical Policy for sustainable Preparation of Lao PDR adoption in 2005 of contribution assistance project, development for Development Policy the “National Policy on (Benefits) including (i) tourism and Loan Program and Environmental and Social strengthening of Sierra development of Technical Assistance Sustainability for the Leone’s environmental “Mexico clean and project to Hydropower Sector.� agency and the beloved� campaign (a) improve the Improved resettlement and environmental unit in Improved collection effectiveness and consultation practices. the Ministry of Mineral and dissemination of efficiency of Colombia’s Creation of the Watershed Resources, (ii) data relating to National Environmental Management and Protection supporting capacity existing tourism System, and Authority for NT2. building of mining demand and supply (b) integrate the Integrated river basin communities, and (iii) to facilitate planning principles of planning improving regulations on for sustainable sustainable Guidelines for environmental resettlement, tourism; development into key and social analysis reclamation and EIA. Development and sector policies, Understanding of riparian Project preparation and updating of land use protecting the most risks of international rivers implementation on plans; vulnerable groups system of the Mekong “Strengthening Strengthened Debate that led to Compliance with WB and Community-Level institutional passage of Air Pollution ADB safeguard policies Accountability in Sierra framework that Control Bill Leone’s Mining Sector.� promotes interaction Information base as among all government stakeholders; strengthened Development of governance of regional fiscal incentives to environmental promote innovation authorities and the link and environmental between national and sustainability local priorities. Environmental In provincial workshops Government National environmental CIA evaluated potential priorities stakeholders selected considered priorities evaluated transboundary and national SESA priorities by environmental using economic analysis significant environmental ranking a list of quality crucial for to assess cost of impacts of three hydropower environmental and social strengthening the current environmental plants (NT1, NT2 & NT3) in issues identified through sector’s competitive degradation and the Mekong river system and case studies of mining advantages. through a the Tonle Sap Ecosystem in subsectors and Customer representative national Cambodia interviews to key perception surveys opinion poll survey. Strategic issues for the SIA informants. showed that Multiple focus groups were identified by reviewing National priorities are environmental and stakeholder literature and finding the provincial priorities quality, after workshops were used recurrent themes in field that happened to be security, was a key to validate findings site-visits. selected in the four determinant in the continuously. provinces of Sierra selection of Leone. destinations by tourists. 42 | P a g e Scenarios of tourism expansion were assessed against social and environmental impacts associated with those scenarios Capacity gap SESA drew lessons from Scenarios of tourism CEA focused on SIA updated the evaluation and a gap study focused on expansion were capacity and of the sector’s legal and institutional capacity and inter- assessed against institutional gaps within institutional framework and assessment institutional social and different levels of drew lessons from selective coordination within environmental government as well as case studies. different levels of impacts associated the sector’s legal and Response capacity to government and with these scenarios institutional framework strategic issues and between the Monitoring and and drew lessons from significant impacts was government and follow-up of selective case studies. assessed by reviewing traditional authorities. indicators developed The assessment was published plans and Formal and customary through the SEA has complemented by the consultation with rules to access to natural resulted in analysis of civil society stakeholders and donor resources were also continuous organizations to organizations assessed paying special improvement of account for the attention to the tourism policy over demand side of situation of poor and time environmental vulnerable stakeholders. governance. Discussion SESA engaged a very For the SEA, a high CEA engaged multiple SIA engaged government, Forum / Policy diverse stakeholder level mechanism for stakeholders including stakeholders and donors in Dialogue group comprising inter-institutional the planning, discussion on institutional women and youth to coordination was environment and and capacity needs for long- discuss environmental established. Later several sectoral term sector growth. and social issues in the this mechanism has ministries. A broader CIA engaged stakeholders in context of the mining been set of stakeholders discussions on regional reform institutionalized as were also consulted impacts and development A government inter- the inter-sectoral including regional issues at different spatial sectoral committee to Commission for authorities, the and temporal scales steer the SESA process Tourism Congress, NGOs, was also established academics, and private sector. Many of the CEA findings also were published in the media. Political The risk of SESA’s Not used Case studies on specific Not used Economy recommendations being priority issues and Analysis reverted or distorted, if institutional adopted, were analyzed assessment included in the context of political economy governance weaknesses analysis. and power asymmetries A historical analysis among stakeholders. provided insight into the political economy associated with current institutional set-ups. 43 | P a g e Sources Sierra Leone Mining Program Document. Environmental Environment Notes, No. 2, Sector Reform. Report Report No. 32248- Priorities and Poverty July 2009. World Bank No. 44655-SL (World MX (World Bank Reduction (Sanchez- Environmental and Social Bank 2008) 2005b) Triana and others Safeguards in Large Evaluación Ambiental 2007). Hydropower Estratégica del Sector (Morgan 2007) Turismo en México. (Environmental Resources Management 2005) References and Resources on Strategic Environmental Assessment Ahmed, K., and E. Sánchez-Triana, eds. 2008. Strategic Environmental Assessment for Pillai, P. 2008. Strengthening Policy Dialogue on Policies: An Instrument for Good Environment: Learning from Five Years of Governance. Washington, DC: World Bank. Country Environmental Analysis. Environment Directive 2001/42/EC of the European Parliament Department Papers, Paper No. 14. and of the Council. 2001. On the Assessment Washington, DC: World Bank. of the Effects of Certain Plans and Sadler, B., R. Aschemann, J. Dusik, T. B. Fischer, M. Programmes on the Environment. June 27, Partidario, and R. Verheem, eds. 2010. 2001. Handbook of Strategic Environmental Environmental Resources Management. 2005. Assessment. London: Earthscan Publications. Evaluación Ambiental Estratégica del Sector Sánchez-Triana, E., K. Ahmed, and Y. Awe, eds. 2007. Turismo en México. Mexico City: Environmental Priorities and Poverty Environmental Resources Management. Reduction: A Country Environmental Inspection Panel. 2011. ―Uganda: Bujugali Analysis for Colombia. Washington, DC: Hydropower Project.‖ World Bank. http://web.worldbank.org/WBSITE/EXTE World Bank. 2005a. Integrating Environmental RNAL/EXTINSPECTIONPANEL/0,,content Considerations in Policy Formulation: Lessons MDK:21680496~menuPK:4766090~pagePK:6 from Policy-Based SEA Experience. 4129751~piPK:64128378~theSitePK:380794,0 Washington, DC: World Bank. 0.html. ––––––. 2005b. Program Document. For a Second Morgan, G. 2007. ―Environmental and Social Programmatic Environment Development Policy Safeguards in Large Hydropower: Lessons Loan. Report No. 32248-MX. Washington, DC: from Nam Theun 2,‖ Washington, DC, World Bank. February 27, 2007. ––––––. 2008. Sierra Leone Mining Sector Reform: A OECD (Organisation for Economic Co-operation and Strategic Environmental and Social Assessment. Development). 2006. Applying Strategic Report No. 44655-SL. Washington, DC: Environmental Assessment: Good Practice World Bank. Guidance for Development Cooperation. DAC ––––––. ―Strategic Environmental Assessment Guidelines and Reference Series. Paris: Toolkit.‖ OECD. http://web.worldbank.org/WBSITE/EXTE –––––– . ―Strategic Environmental Assessment RNAL/TOPICS/ENVIRONMENT/0,,conte Network.‖ http://www.seataskteam.net. ntMDK:20885941~menuPK:2450778~pagePK :148956~piPK:216618~theSitePK:244381,00.ht ml. This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 44 | P a g e Life Cycle 1997; ISO 2006) were developed to harmonize methods. The standard is not specific enough to make Assessment the method objective, but it narrows down the methodological options somewhat and includes specific requirements on the reporting of the study. ―Life cycle analysis‖ is sometimes used to denote a Introduction life cycle study that does not adhere to the international standard for life cycle assessment. In this Life cycle analysis or assessment (LCA) is an Guidance Note, ―life cycle assessment‖ and ―life cycle examination of a product‘s total environmental analysis‖ are used interchangeably, although the term impacts from raw materials extraction on through to life cycle assessment is preferred. waste management. The idea of comprehensive environmental assessments of products was The broad scope of LCA can help decision makers conceived in Europe and in the United States in the avoid sub-optimization, which is the optimization or late 1960s and early 1970s (Hunt and Franklin 1996). improvement in part of a system that negatively affects other parts of the system. An LCA‘s broad Many guidelines (for example, Consoli and others scope reduces the risk that a decision aiming at 1993) and eventually an international standard (ISO reducing pollution simply shifts the environmental  This guidance note was prepared by Tomas Ekvall (Consultant). problem from one place to another or from one Peer reviewers included Craig Meisner (Environmental Economist, ECSS3), Lakhdeep Babra (Principal Environmental Specialist, CESI), environmental issue to another. The life-cycle concept and Mauricio Athie (Senior Environmental Specialist, CESI). Additional comments and contributions were provided by Alan also helps shift the focus of pollution management Miller (Principal Climate Change Specialist, CBGSM), Hanneke van from dealing with pollutants after they have formed Tilburg (Senior Counsel, LEGES), Katelijn van der Berg (Senior Environmental Economist, ECSS3), Wolfhart Pohl (Senior (called ―end-of-pipe solutions‖), to preventing Environment Specialist, ECSS3), as well as Frank Van Woerden (Senior Environmental Engineer, ECSSD), Isabelle Paris (Senior pollutants from being formed, so that environmental Environmental Specialist, CESI), Jane Nishida (Senior Environmental Institutions Specialist, SASDI), Josefina Doumbia impacts can be avoided or mitigated at a lower cost (Principal Environmental Specialist, CESI), Julie Terrell through product development and purchasing (Consultant, SDNCM), Julie Godin (Carbon Finance Specialist, ENVCF), Ken Green (Consultant, OPCQC), Pratibha Mistry (Water decisions (Allen and others 2002). Resources Specialist, SASDI), Sanjay Srivastava (Regional Safeguards Adviser, SARDE), and Tijen Arin (Senior Environmental Economist, ECSSD). Comments were also provided by the International Committee on Contaminated Land / Common Forum experts. Editorial assistance was provided by Stan Wanat (Consultant), Juliette Guantai (Program Assistant, ENV) and Jim Cantrell (Communication Analyst, ENV). The task team leaders for this product are Kulsum Ahmed (Lead Environment Specialist, ENV) and Helena Naber (Environmental Economist, ENV). The product was prepared under the guidance of the following World Bank Group management: James Warren Evans / Mary Barton- Dock (Directors, Environment Department, World Bank), Bilal Rahill (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). 45 | P a g e Description and Application of Life Cycle ancillary materials and equipment; through the item‘s Assessment production and use; to the product‘s disposal and the disposal of any ancillary materials and equipment. In LCA is defined as the compilation and evaluation of this context, the term ―product‖ is broadly defined to the inputs and outputs, and of the potential include not only physical products but also services. environmental impacts, of a product system The service of waste management is, for example, a throughout its life cycle (ISO 2006). The product common object of study in LCAs. system consists of models of the technological The LCA procedure includes four phases (ISO 2006). activities used for the product‘s various stages: from They are briefly described here, using an LCA of extraction of the product‘s raw materials, and for Explanation of Key Terms Cleaner Production: technology and other solutions that reduce the formation of pollutants and waste through, for example, improved energy efficiency and material efficiency (compare with end-of-pipe solutions, below). Cradle to cradle: a concept that emphasizes recycling. It can be regarded as a reaction to the cradle-to-grave concept, which can imply that the materials in the product are used only once (see below) Cradle to gate: the first part of the life cycle of a product, from raw materials extraction to production of the product. Cradle to grave: the life cycle of a product, from raw materials extraction on through to waste management. Waste management can, but does not necessarily, include recycling processes (compare with cradle to cradle, above). Economic input-output table: a matrix representing a nation's (or a region's) economy. Each column and each row represents a sector in the economy. Each element in the matrix states, in economic terms, how much one sector buys from another sector in order to produce a unit of output. Hence, the table shows how the output of one sector in the economy is an input to other sectors. End-of-pipe solutions: technology and other solutions to deal with pollutants that have formed. Common examples are cleaning of exhaust gas and treatment of waste. Integrated Product Policy: a framework for policy making that aims at minimizing the negative environmental impacts of products by looking at all phases of the products' life cycle and taking action where it is most effective. Life cycle analysis/assessment (LCA): an assessment of a product’s total environmental impacts from raw materials extraction on through to waste management. Life cycle impact assessment (LCIA): the part of an LCA where the potential environmental effects of the emissions and other effects of production are estimated. Life cycle inventory analysis (LCI): the part of an LCA where the emissions of pollutants, the quantities of waste, and the resources consumed are calculated Sub-optimization: optimization or improvements in part of a system that negatively affects other parts of the system. Systems analysis: studies of systems, that is, sets of interacting entities. The systems investigated are typically large-scale socio-technical systems, involving components such as technological processes, the human beings managing these processes, and economic transactions. This makes systems analysis an interdisciplinary science. Well to wheel: the life cycle of an energy carrier used for propelling vehicles. 46 | P a g e waste management as an illustrative example: results, and ensuring that they meet the goal of 1) Goal and scope definition (G&SD) describes the the study. This is accomplished by evaluating the study and its major system boundaries, sensitivity of significant data elements, assessing methodological choices, assumptions, and data the completeness and consistency of the study, requirements. The LCA of waste management and drawing conclusions and recommendations often starts with the sorting and collection of based on an understanding of how the LCA was waste. In addition, it typically includes the conducted and the results were developed (Skone energy systems affected by energy recovery from 2000). the waste, and the production of materials that is affected by the output of recycled material from An LCA provides information on the environmental the waste-management system (Ekvall 1999). performance of products, technological processes, and 2) Life cycle inventory analysis (LCI) is the calculation systems. Results from an LCA can be used by decision of environmental inputs and outputs. makers at all levels: from a government or the board Environmental inputs are the natural resources of a multinational organization or company, to a required in the life cycle. The outputs are the product developer, a professional purchaser, or even quantities of CO2 and other pollutants and waste a machine operator in a manufacturing plant (ISO that are released back to nature. The LCI requires 2006; Löfgren 2009). Policy makers can use LCA that data on material flows, resource use, results as part of the basis for the following actions: emissions, and waste are collected for all  decisions on legislative and economic policy processes and transports in the system defined in instruments, such as requirements, bans, the G&SD. It is typically better to use software environmental taxes and fees; specifically designed for LCA; there is even  strategic planning of infrastructure; software specialized for LCAs of waste  selection of indicators and requirements for management. eco-labeling schemes; and 3) Life cycle impact assessment (LCIA) is the  procurement decisions. estimation and calculation of potential impacts on the environment. The output from the LCI Industry can use LCA in product and process model is used as a basis for these calculations. development, but also for strategic planning, for The contribution of emissions of fossil CO2 and selection of the indicators used in monitoring other greenhouse gases to climate change is environmental performance, when selecting calculated using their global warming potential suppliers, and in marketing (for example, through (GWP). eco-labels). An LCA can also be made at various 4) Life cycle interpretation is the combination and levels of complexity. A team of experts might be evaluation of the LCI and LCIA results. This needed to perform an advanced LCA (Denmark, involves understanding the accuracy of the Ministry of Environment and Energy 1998), but there 47 | P a g e are also simplified LCA tools. Such tools can contain A simplified LCA tool with separate results for the complex models, but the interface is simple to allow different environmental impacts provides more quick LCAs to be made. They also sometimes result in information. Using such a tool can be a good solution a single score for the total environmental impact of for employees with sufficient environmental the investigated option. A drawback of simplified education to understand the results, if the LCA tool is LCA tools is typically a lack of transparency: more of consistent with the perspectives and environmental the basic data, calculations, and assumptions are priorities of the company. However, the lack of hidden and hence impossible to check, review, and transparency reduces the knowledge that can be understand. gained about such factors as the system investigated and the uncertainties involved. The lack of flexibility Since an LCA is an assessment of a complex socio- reduces the scope of questions that can be answered technical system, it does not describe an objective with the tool. For example, a purchaser can only truth but a perspective on this system. This is rarely use a simplified LCA tool to choose between particularly true when results for different different suppliers. environmental impacts are aggregated into a single index. When a simplified LCA tool is used, the Policy making is more complex than decision making perspective is partly or fully fixed and selected when in an industrial company since it typically affects the tool is developed. This makes the results more many stakeholders with different perspectives. robust in the sense that they are less dependent on CALCAS (2008b) calls for reflexive governance in who is doing the study. On the other hand, it is then environmental policy making. This means that the important that the tool be consistent with the main role of government is to provide a framework perspective and environmental priorities of the target for debate and other participatory processes. In this audience. context, the lack of flexibility of simplified LCA tools is a problem because they cannot account for the The level of complexity required for a particular LCA multiple perspectives of different stakeholders. If depends on how the LCA results are to be used. A transparency is poor, the LCA does not provide a simplified tool that provides a single score for the good basis for debate. total environmental impact makes it possible for industrial employees without environmental Ideally, policy makers and other stakeholders should education to use LCA results for decision making. be involved in discussing and selecting the study‘s This is adequate if the LCA results are only used focus, the system boundaries, and related features. within the company and the simplified LCA tool is This can make the LCA an integrated part of a consistent with the perspectives and environmental learning and consensus-building process. In cases priorities of the company. where active involvement by a full range of stakeholders in the LCA is not possible, the LCA should be performed by LCA experts and 48 | P a g e transparently reported. The results from such an LCA data can be found through, for example, should not be taken at face value, but instead be used international discussion lists. as a basis for informed debate. Used in this way, LCA  Time ranging from 100 to 5,000 person-hours can be an important tool for pollution management. during the course of 3–24 calendar months, depending on the required scope and detail of the study. Prerequisite Factors for Life Cycle Assessment Authorities could assist in this process by establishing national EPD programs, with the responsibility to An LCA for policy making requires: develop detailed rules for the calculation of life-cycle emissions of GHG and other pollutants (IEC Web  LCA expertise. This typically requires a site). Authorities can also enhance national use of background in engineering, natural sciences, LCA through initiating and funding education and or economics, and practical experience from training programs on LCA. For example, the LCA conducting LCAs; basic understanding of Initiative of UNEP/SETAC (2005) is currently LCA can be acquired through one of several working to alleviate this problem by building LCA textbooks on the topic; LCA practitioners capacity in developing countries. worldwide also assist one other through international discussion lists.  Generic LCA software. Several software Advantages and Limitations of Life Cycle packages are commercially available (see Assessment http://lca.jrc.ec.europa.eu/lcainfohub/toolL The most apparent advantage of LCA is its broad ist.vm); SimaPro and GaBi are among those scope. LCA takes into account a broad systems most widely used. perspective and many different types of  Access to at least one database with reliable environmental impacts, and there are other information on emissions, waste quantities, advantages. Since LCA is a widely used tool, there is and the use of energy and materials in a an established good practice. The expertise, software, large number of production processes, and databases required for an effective study are transportation modes, and waste- easily accessible in most OECD countries. The management processes. A substantial international standard also contributes to making database is often included in the commercial LCA a good tool, since it provides minimum software; other databases are published or requirements for the reporting of the study and some being developed around the world (Curran guidance on calculation methods. 2006; Finnveden and others 2009); additional 49 | P a g e As mentioned above, the broad scope of LCA can debate contributes to increasing environmental help decision makers avoid sub-optimization, which awareness among stakeholders as well as to is the optimization or improvement in part of a stimulating participatory processes in policy making. system that negatively affects other parts of the system. Furthermore, LCA can assist in solving The most apparent drawbacks are that full LCAs are environmental problems rather than just shifting relatively expensive, and that the results are uncertain them in time and space. Policy makers can use it as (Huijbregts 2001) and highly dependent on subjective part of the basis for decisions on legislative and methodological choices (for example, Ekvall 1999). economic policy instruments, eco-labeling schemes, These limitations are not unique to LCA, and they strategic planning, and procurement. occur in most methods for environmental systems analyses, which are studies of sets of interacting An LCA can also be conducted at various levels of entities, because of the inherent complexity of the complexity. Generic LCA models offer the flexibility systems. Expertise on LCA is scarce in most non- to respond to many different questions. They also OECD countries. An LCA does not cover issues other allow for greater accuracy in obtaining results and for than environmental impacts. Furthermore, LCA does greater transparency in how they are reported. not give adequate answers to several kinds of Simplified LCA models make results less dependent significant questions, such as the following (Ekvall on the choice of LCA practitioner. and others 2007):  finding the optimum mix of different Life-cycle thinking and LCA are well established in competing options; European policy making. In developing countries,  selecting the best location for an investment LCA is much less used because, for example, (such as for a road or a factory); environmental measurement data are unavailable, the  deciding if local environmental impacts are available LCIA methods are inadequate since they do important; and not include soil erosion and impacts on water  deciding on the size and timing of an resources – which are major environmental issues in investment. many non-OECD countries (Brent and others 2002), and LCA expertise is scarce. However, databases for LCA are currently being developed in many of these Interaction with other Tools and Possible countries (Curran 2006). New LCIA methods are also Substitutes being developed to model impacts of water use (for example, Mila i Canals and others 2009) and, possibly, The broad systems perspective of LCA makes it a soil erosion (Cowell and Clift 2000). good tool for advancing cleaner production, which has the aim of shifting focus from exhaust-gas If transparently reported, LCA can also provide a cleaning and waste treatment to reducing the good basis for debate on environmental issues. Such formation of pollutants and waste through, for 50 | P a g e example, improved energy efficiency and efficient combination, with LCA (Schepelman and others materials. It is also a good tool in the framework of 2008). As more aspects are added to the analysis, the sustainable consumption and production. Avoiding complexity of the study increases: more data are sub-optimization is a key element in these contexts. required, the uncertainty grows, and the study becomes less transparent. An LCA, just like systems analysis in general, entails a drastic simplification of a complex reality. The description can be made more comprehensive and Practical Examples of Life Cycle detailed by adding, for example, tools for economic Assessment and Lessons Learned analysis, dynamic linear and non-linear modeling, Legislation and other policy documents in the and site-dependent modeling of environmental European Union often call for life-cycle impacts. Such methods can be integrated with LCA considerations, as in the following examples: into a single assessment, or used as separate tools in  The Integrated Product Policy (DG parallel studies (Ekvall and others 2007). Environment 2000), a framework for policy making to minimize the negative Hybrid LCA is an LCA that uses tables (called environmental impacts of products by ―economic input-output tables‖) to represent a looking at all phases of the products' life nation‘s (or region‘s) economy. Each column and each cycle and taking action where it is most row represent a sector in the economy. Each element effective; in the matrix states, in economic terms, how much  The Thematic Strategy on the Sustainable one sector buys from another sector in order to Use of natural Resources (EU 2005a); produce a unit of output. Hence, the table shows how  The Thematic Strategy on the Prevention and the output of one sector in the economy is an input to Recycling of Waste (EU 2005b); other sectors. Economic input-output tables make the model of the life cycle more comprehensive  The Sustainable Consumption and Production Action Plan (EU 2008a); and (Finnveden and others 2009). Strategic environmental assessment (SEA) and  The Waste Framework Directive (EU 2008b). environmental impact assessment (EIA) are separate tools or frameworks for assessing policies and for site- The European legislation requires quantitative life- dependent assessments (Finnveden and Moberg cycle calculations to be made when reporting 2005). However, LCA can be included as an element emissions of greenhouse gases (GHG) from biofuels in both SEA and EIS. An LCA is also well suited for and for calculation of the resultant savings in GHG the environmental assessment in a cost-benefit emissions (EU 2009a; EU 2009b). analysis (CBA; Denmark, Nordic Council of Ministers 2007). Many other tools can be used in parallel, or in 51 | P a g e Authorities in many countries promote the use of cooperation with researchers from OECD countries. Environmental Product Declarations (EPDs), which Mungkung and others (2006) used an LCA on Thai present LCA results for professional purchasers (IEC shrimp production to demonstrate that LCA can Web site). Some countries, notably France (Boeglin provide a basis for eco-labeling programs. 2010) and Japan, will also require the labeling of consumer products with information on life cycle Besides policy making, LCA is likely to become a emissions of GHG and other pollutants. more important tool in the industries of all countries. Many manufacturers will even be required to Results from LCAs have also been used as basis for calculate and present the life-cycle emissions of their debate and decisions in the policy-making process. products in order to reach markets in France and Quantitative LCAs were systematically carried out on Japan. many different categories of energy-using products in the development of European eco-design requirements for such products (EU 2005c; VHK References and Resources on Life Cycle Assessment 2005). These LCAs where carried through using a simplified LCA tool, which served to make the many Allen, D., F. Consoli, G. Davis, J. Fava, and J. Warren, LCAs cheaper and more consistent. On the other eds. 2002. Public Policy Applications of Life- Cycle Assessment. Pensacola, FL: SETAC hand, the use of a simplified tool reduced the Press (Society of Environmental Toxicology accuracy and transparency of the studies. Stakeholder and Chemistry). Boeglin, N., ed. 2010. ―Display of the Environmental involvement was ensured at data collection and Characteristics of Products: A Major through workshops where the results of the studies Challenge of the Environment Round Table Regarding Sustainable Consumption.‖ le were presented. point sur No. 39, Delegation for Sustainable Development, Paris. http://www.developpement- Many LCAs have been published on energy carriers durable.gouv.fr/IMG/pdf/LPS39EN.pdf. (such as electricity, fuel, and heat); products from Brent, A. C., M. B. Rohwer, E. Friedrich, and H. von Blottnitz. 2002. ―Status of Life Cycle process industry (bulk materials such as paper, steel, Assessment and Engineering Research in and plastics); manufactured products (like cars and South Africa.‖ The International Journal of Life Cycle Assessment 7 (3): 167–72. cell phones); and food. Fewer LCAs have been carried CALCAS (Co-ordination Action for Innovation in through in the service sector. 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Various al/118902538/home publications available at: The International Journal of Life Cycle Assessment. http://lcinitiative.unep.fr/. Available at: http://www.springerlink.com/content/112 849/ 55 | P a g e Discussion lists Links to other links LCT-FORUM: join at http://lct.jrc.ec.europa.eu/lct- European Commission – Joint Research Center. LCA forum Info Hub: The PRé LCA list: join at http://lists.lyris.net/cgi- http://lca.jrc.ec.europa.eu/lcainfohub/other bin/lyris.pl?enter=lca Sites.vm US EPA. Risk Management Sustainable Technology. LCA Resources: http://www.epa.gov/nrmrl/std/lca/resour ces.html This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 56 | P a g e Targeting Legacy difficulties may frustrate efforts to enforce timely remediation action. Other sites are ―orphans‖ where Pollution the original polluters are unknown or untraceable or where the owners are (or claim to be) bankrupt. The legislation itself may not impose full liability on past activities which were legal and acceptable at the time. Introduction In such cases, the government has to initiate action to Legacy pollution refers to any pollution that remains control and ensure the remediation of the pollution, from past activities where there is no immediately although the government may have limited technical responsible party who can be held liable for the and financial resources to apply to such problems and pollution and compelled to carry out remediation. is likely to look to opportunities to involve the private Under typical legislation, as in OECD countries, the sector in the remediation where possible. polluter or the current owner of the facilities/land would normally be responsible and required to carry This guidance note identifies ways to address legacy out the necessary clean-up, in line with relevant pollution1 and the initial stages in implementing those standards and requirements. However, there are approaches. It sets out the main steps and issues in several reasons why this approach may not be initiating a remediation process, and does not address feasible in a given case. At some sites, liability cannot in detail the technical requirements for physical be enforced easily (as may be the case for former remediation of legacy pollution sites. state-owned enterprises), or legal and technical  This guidance note was prepared by David Hanrahan (Consultant). Peer reviewers included Wolfhart Pohl (Senior Description and Application of Targeting Environmental Specialist, ECSS3) and Sanjay Srivastava (Regional Legacy Pollution Safeguards Adviser, SARDE). Additional comments and contributions were provided by Frank Van Woerden (Senior Environmental Engineer, ECSSD), Isabelle Paris (Senior Legacy pollution is often associated with abandoned Environmental Specialist, CESI), Jane Nishida (Senior Environmental Institutions Specialist, SASDI), Josefina Doumbia buildings and facilities that are contaminated with (Principal Environmental Specialist, CESI), Julie Terrell (Consultant, SDNCM), Julie Godin (Carbon Finance Specialist, toxic materials, dumping of hazardous waste, or the ENVCF), Ken Green (Consultant, OPCQC), Pratibha Mistry (Water uncontrolled discharges of effluents. It is also Resources Specialist, SASDI), Sanjay Srivastava (Regional Safeguards Adviser, SARDE), and Tijen Arin (Senior Environmental associated with mining activities, especially where Economist, ECSSD). Comments were also provided by the International Committee on Contaminated Land / Common Forum there has been a long history of mining, with many experts. Editorial assistance was provided by Stan Wanat different operators. It is often evident as (Consultant), Juliette Guantai (Program Assistant, ENV) and James Cantrell (Communication Analyst, ENV). The task team leaders for contamination of land but can also result in polluted this product are Kulsum Ahmed (Lead Environment Specialist, ENV) and Helena Naber (Environmental Economist, ENV). The product was prepared under the guidance of the following World 1 Bank Group management: James Warren Evans / Mary Barton- The revitalization of run-down industrial areas, often known as Dock (Directors, Environment Department, World Bank), Bilal “brownfields redevelopment�, is the key objective of remediation Rahill (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, in some cases. A manual on these issues has just been prepared MIGA). by the World Bank’s ECA region (see Ionescu-Heroiu 2010). 57 | P a g e surface or groundwater. In some cases, such as the costs of remediation or uncertainty about abandoned mine tailings, the main impact may be standards, liability, and costs may be preventing through airborne dust and pollutants. private sector interventions to take advantage of that potential value. In other cases, the land value of the Legacy pollution sites are characterized by the sites may be very limited. Although the institutional existence of potentially harmful materials, which are context is different, many of the technical approaches known to be toxic to humans or destructive to the developed for dealing with contaminated land are environment, in proximity to communities or also applicable to legacy pollution. sensitive ecosystems that are being impacted or are at significant risk from the pollution. In serious cases, A need for urgent action arises when the legacy where toxic substances such as heavy metals and pollution is known to be causing serious impacts on organic chemicals are involved, there is the potential the health and wellbeing of local communities or to cause severe health impacts to human populations where it is resulting in significant and unsustainable and to result in significant and long-term damage to damage to the environment. In such cases, the the environment. government may be forced to step in and take action, even if all administrative or legal options have not The sites themselves may have potential economic or been exhausted. The priority then is to deal with the financial value because of their location and size but immediate health or environmental damage. Given Box 1. From Brownfields to the Olympics A well-known example of successful brownfields redevelopment is the site of the 2000 Olympic Games at Homebush Bay in Sydney. Sydney's rapid expansion in the 1950s and 60s resulted in increasing quantities of waste and by the end of the 1970s, the original bay no longer existed and most low-lying land had been filled. By 1988 there was an estimated 9 million cubic meters of waste and contaminated soils spread over 400 hectares within the 760 hectare site. The waste included petroleum waste, unexploded ordnance, illegally dumped wastes along the waterways (including POPs and other organic wastes), dredged sediments, municipal waste and industrial waste (including rubble, power station fly ash, gasworks waste, and asbestos) and contamination from site activities (including burning pits and chemical leaks). Efforts had begun nearly a decade before the Games to reclaim this area of “brickworks, slaughterhouses, salt works, landfill, and dumping grounds� on Homebush Bay. The initial aims of the remediation were to block the spread of contamination; restore the waterways; and provide for the long-term social, cultural, and sporting requirements of the people of New South Wales. However, the awarding of the Games to Sydney was used as the impetus to step up efforts and resulted in the Olympic Park, with its integrated ecological design, that has become one of Australia’s largest urban renewal projects. After the Games, the Sydney Olympic Park Authority was established with responsibility to manage the public assets created, including open space, venues, parklands, and development areas. The Authority is now working to a 2030 Master Plan, to continue to develop the area as a sporting, entertainment, and business center. Although the Olympic Park site is seen as a major success, on-going remediation efforts at another site at Homebush Bay have been controversial, with major community concerns about the standards and technologies proposed. Source: Sydney Olympic Park Authority Web site. 58 | P a g e the limited resources available, selecting priorities and working to realistic objectives are essential in Risk-Based Approach. It is rarely practical to return dealing with such cases. polluted areas to pristine conditions. For this reason, approaches based on risk and cost-effectiveness are In other cases, particularly in locations where there often adopted for remediation, which balance the had been large industrial complexes, the incentive for potential harm that a polluted area poses to the action may be economic regeneration of now defunct population and environment, on the one hand, with areas. In this context, the area may be too large or the the resources required to deal with that area, on the challenges too complex for private sector companies other hand (see box 2). The assessment can be to take the lead, even if some parts could be profitably implemented at different levels of detail. In practice, redeveloped (see box 1). In such cases, the a staged approach is usually used, where the initial government can use this as an opportunity to develop step is generally a qualitative screening process, a comprehensive approach which encourages parties based on information collected from readily available to work cooperatively, both for development of sources. individual sites and for the problems of legacy pollution as a whole. This step is followed by site-specific sampling and Box 2. Risk-Based Approach A hazard is a potentially harmful substance or situation, for example, a waste containing a high level of a toxic substance. A risk is the possibility that such a hazard will result in unacceptable impacts on humans or the environment, in a specific context. As summarized by an authoritative U.S. review at a time when approaches to environmental regulation were being broadly debated, “risk assessment is the characterization of the potential adverse health effects of human exposure to environmental hazards� (NRC 1983). That review states that risk assessment “contains some or all of the following four steps: hazard identification; dose-response assessment; exposure assessment; and risk characterization.� This is the essence of the widely used basic model of risk assessment, which looks at a causal linkage: Source-Pathway- Receptor (SPR). In the present context, the model can be seen as Pollution-Pathway-People. Each of these elements must be present and there must be plausible links between them for a serious risk of damage to exist. Hazard identification addresses the characteristics of the pollution source. Exposure assessment is the consideration of the population (or ecosystem) threatened by this pollution and the pathway by which they are impacted. The dose-response component, which addresses how the human (or other organism) reacts to the specific toxin, is normally taken from medical or other scientific literature (for example, World Health Organization guidelines for specific substances). Risk characterization is the combination of these components into an overall conclusion, expressed either qualitatively (high, medium, or low) or as a probability. Risk assessment examines each component to determine if the levels are significant and then reaches a judgment as to the overall level of risk posed. Risk management is the process of evaluating alternative actions to reduce the risk(s) and selecting among the options. The risks associated with implementing different options also need to be taken into account. 59 | P a g e data collection, and better definition of pathways kept of work done and any identified remaining linking pollution sources to affected populations, pollution. with specific target populations or ecological receptors identified. National standards or values The choice of remediation standards to apply to a from the international medical science literature are project is critical. For a specific site, it is important to typically used to address risks to human health for establish a small set of parameters of major relevance different pollutants. Once the pollution-pathway- and to define key values for these parameters for use people linkages are understood, then interventions to in the first round of investigations and remediation. reduce risk can be designed and options compared to Target Remediation Values relate to projected or find the preferred or most cost-effective actions to planned future uses and are the technical objectives of protect human health. These options cover: the the remediation. It is also useful to define a site- removal of the source of pollution; in cases where specific Intervention Value used to set the broad removal of the pollution (and safe disposal elsewhere) limits of the initial remediation effort. The is not a feasible option, then breaking the pathway by Intervention Value (or screening value or trigger containing the waste or similar approaches may be value) indicates the area within which serious feasible; if removal or avoidance is not practical, then contamination exists. An Action Value defines areas relocating people may have to be considered, of higher contamination which require priority especially if the numbers involved are limited. In remediation actions, for example areas where waste any case, involvement of the various stakeholders in material has been dumped. The Intervention and this process is essential to public acceptance of the Action Values are used to focus efforts on the areas outcomes. that are most polluted. The selection of such criteria in any given case will depend on local standards (if An important component of the risk-assessment any exist) or on the most relevant set of reference process is to understand, as far as possible, the standards (typically either North American or potential future uses for the site, recognizing that European). land-use planning systems may be weak in developing countries. A ―general use‖ (that is, The management of issues around legacy pollution is unrestricted) clean-up standard should not be complex, even in developed countries. The key adopted as a default without careful consideration of challenges that govern the responses are usually the cost implications. The assumptions about future institutional and financial; the required physical uses can have a significant impact on the remediation interventions, at least in the initial stages, are often decision-making process and need to be carefully relatively simple. Addressing legacy pollution will tested. It is difficult to predict how future changes in involve the government through different planning regulations may allow changes in use from departments and at different levels (national, sub- that assumed in the remediation process; therefore, national, and local). There will also be a variety of clear assumptions should be used and careful records private sector parties that need to be part of the 60 | P a g e process: these will include the original polluters (in finding solutions. The communities that are directly whatever form or legal entity they now exist); current affected need to be included, particularly where there owners (be they government, new companies, or are health concerns that have to be addressed. In unknown); local communities affected by the addition, respected independent specialists who have pollution and other groups; academics; and knowledge of the issues may be able to make institutions and various experts. Given the key important contributions to the stakeholder process. question of finance for remediation, the relevant Representatives of the polluting enterprises should be parties include government financial agencies, banks, involved (often through industry associations) as well and potential investors. as developers, potential financiers, and relevant technical specialists. These parties will often have The problem is inherently messy, and it may be both site-specific and more general expertise to difficult to know where to start. No one size fits all, contribute and are likely to be a significant part of any but there are a number of basic steps that are common major redevelopment effort. The interest of private to most legacy pollution problems. The following developers in the site in question is often constrained sections set out guidance on how to begin to address by uncertainty and by real or perceived risks – the the problems. stakeholder process should address these constraints in order to unlock the potential value of the site. Identification And Decision Stage. This step develops a thorough understanding of the pollution 4) Agree on objectives, accepting uncertainty and risk. issue. Several components must be reviewed to There will often be a wide range of perceptions of complete this step. problems, risks, and solutions. It is important at the early stage to reach agreement on immediate 1) Accept the problem and establish responsibility and objectives – in the context of possible future land uses leadership. Put in place the structures and personnel, – and on the process to be used in achieving those with the necessary authority to make the relevant objectives. decisions. This will have resource implications and needs planning ahead to ensure that adequate Preparation stage. After the groundwork is budgetary provisions are made. completed in the identification and decision stages, the project team may move on to the preparation 2) Carry out initial assessment. A clear, structured, and stage, which organizes the group dynamics. The four quantified assessment of the site(s) needs to be steps in this stage are outlined below. prepared at an early stage. 1) Appoint project manager and establish stakeholder 3) Identify stakeholders. A key requirement is that group. The stakeholder group may be a formal stakeholders who participate are committed to 61 | P a g e structure, such as a committee established by the 1) Potential value and uses of the site. These will control authorities, or it may be an ad hoc group. the remediation standards selected. A site that has limited potential future use may allow options such 2) Set priorities. The project manager, working with as containment and/or long term disposal on-site to the stakeholder group, must begin by establishing the be considered, with the appropriate institutional priorities, based on a review of the site risk controls. assessment and of the relevant standards and target values. 2) Biodegradability of the key pollutants. Biodegradable pollutants may be amenable to in-situ treatment 3) Assess technical aspects and options. Key parameters where the remediation is not driven by urgent risks. governing selection of plausible options are the size, location, and other physical characteristics of the site. 3) Extent of off-site transport of pollution. Where major A range of technologies is well established in pathways are off-site, such as surface or groundwater industrialized countries, but the necessary technical flows, or wind-blown dust, immediate action may be and the financial resources may be lacking to apply focused on dealing with the pathway. them in less developed cases, and the approaches may have to be adjusted or modified. 4) Groundwater as a critical pathway. Where the critical pathway is groundwater, action to remove the source 4) Legal and regulatory clearances. Remediation or to isolate it from the groundwater becomes crucial. activities, even if undertaken for good health and environmental reasons, still need to satisfy, or to be 5) Availability of secure disposal facilities. Removal from formally exempted from, the necessary legal and the site of highly contaminated material will often be regulatory requirements. constrained by the availability and cost of approved secure disposal facilities and the practicalities of Technical options. Selection of technology for transporting contaminated material. dealing with the pollution depends on a range of factors, some of which are specific to the The following table sets out some basic practical circumstances of a particular case. Relevant technical approaches that are likely to be appropriate for initial expertise will be required to support identification of remediation options (for more details see CLU-IN technical options, but extensive studies are not always Web site). More sophisticated approaches than those necessary in order to take initial action to deal with outlined here may be relevant but would need to be urgent problems. As well as the basic physical justified in terms of cost-effectiveness. Use of novel or parameters, five important factors are listed below untested technologies can only rarely be appropriate. that need to be taken into account in identifying feasible technical options. It should be noted that remediation design is very much an iterative process of establishing desired 62 | P a g e outcomes, considering technical options, examining parts of the site, the design process in effect continues costs and benefits – and then reviewing and revising throughout the whole remediation, with the results of the outcomes and options. For a complex site, where early interventions feeding back into subsequent a number of approaches may be needed for different stages (see table 1). Table 1. Some Practical Approaches to Dealing with Sources APPROACH APPLICATIONS AND CHALLENGES Isolation of Restriction of access may be an important initial step, which can be applied quickly, but does not allow the pollution source potential value of the site to be developed. Simple containment of the source may be effective if the pollution is in a small area. Capping and sealing a Containment waste dump can reduce the amount of material transported by wind and surface water. If the impacts are on groundwater, capping the surface material may have only limited benefits. As with isolation, containment is typically a short term solution and does not allow the potential value of the site to be realized. Excavation of the contaminated material and its safe disposal elsewhere removes the pollution source, but the Excavation and cost can be high. Finding an approved off-site disposal solution can be a major constraint and this needs to be disposal addressed at the earliest stages. It may be more practical and cost-effective to utilize a part of the contaminated site for secure disposal. However, this must be done in a technically sound manner. There are a number of techniques that involve in-situ physical, chemical, or thermal treatment of Physical or contaminated soil. Some in-situ treatments can be relatively straightforward, such as treatment with simple chemical chemicals to immobilize the contaminant, but others are relatively complicated and expensive. In other cases, treatment, in-situ ex-situ treatment (i.e. excavation, treatment (and replacement)) may be justified. These approaches are best or ex-situ applied to well-defined problems where the approach can be tailored to the circumstances. Soil vapor extraction applies suction (via wells) to the soil zone above the groundwater table. This approach, Soil vapor which is often targeted at volatile organic compounds (VOCs) in the soil, draws the volatiles to the surface extraction where they can be destroyed or vented via surface systems. The system functions best on relatively permeable soils. Various forms of in-situ bioremediation may be relevant to reduce contaminant levels, particularly where the Bioremediation areas/quantities are large. The approach is typically used where the contaminants are organic. The most effective treatment materials can be expensive and difficult to obtain. However, simpler additives may be cost- effective where application costs are low and where time can be allowed for repeated applications. Ex-situ versions of bio-remediation are also possible but are likely to be more costly. In this approach, contaminated lands are planted with specific species that selectively or very efficiently take Phytoremediation up the contaminants. This approach is often suitable for areas contaminated with heavy metals. The uptake of the contaminants is often slow and many seasons are required, but if local species can be used, then the costs are relatively low. Once groundwater has been polluted, it is normally very difficult to treat. Groundwater can be remediated Groundwater through pump and treat approaches, which re-inject the water, but these are usually too costly for most treatment developing country applications. In some circumstances, treatment of a specific concentrated pollutant plume by injection of chemicals may reduce the overall impacts, but these approaches are be costly and of limited application. Financing. It is possible to outline a series of different financing options, taking into account the extent to anticipation of financial or reputational returns. The which the private sector can be convinced to fundamental approach is based on the government undertake some or all of the clean-up in reasonable using various mechanisms to reduce the amount of 63 | P a g e public funding that has to be provided. In the best institutes may be able to provide support for surveys case, the government will compel or persuade the and analysis under research or technical training polluter to undertake the remediation. However, if programs. In some cases, industry associations that the original polluter is unwilling or unable, the are supportive of the remediation have accepted government will look to using planning, regulatory or contaminated material in private treatment or financial incentives as a way to bring other potential disposal facilities or provided space in disposal partners into the process by creating potential value facilities at reduced costs. Other government in the site, once remediated. Where it is not possible departments may be able to support ancillary works – to create adequate incentives, the government will such as access roads or connection of services – have to take action to deal with urgent problems. In through unrelated infrastructure funds. Creative such cases, the government will be careful about identification of such possible contributions is an maximizing the value of its investment and will also important role for the remediation team. look to recover any of its costs, after the fact, if possible. Options for financing physical works can be There are usually significant uncertainties and risks broadly outlined as shown in table 2. that constrain potential private sector initiatives to recover value from the site. A major role for The basic issue is that the estimated costs of government, through the stakeholder process, is to remediation are greater than the financial returns, understand the factors that prevent the private sector although not necessarily greater than the economic from playing a bigger role. Understanding and benefits. For a government-led remediation project, clarifying these factors can reduce the financing gap one important objective is to ensure that all funds are and can encourage the private sector to become used in an effective, transparent, accountable manner, involved in finding solutions. according to core technical and environmental requirements and with clear concepts in mind to recover as much as possible of any public funds provided. The government is therefore always seeking ways to reduce the costs, to obtain some of the funding from other sources, and to ensure that it can benefit from any increase in land values from the remediation. It is unlikely that one source of funding will cover all the remediation work. In practice, the remediation is often comprised of different actions and it may be possible to obtain in-kind or cash contributions from different parties. Local scientific or technical 64 | P a g e Table 2. Options for Financing OPTION CHARACTERISTICS Public-Led Collective Approach This will involve discussions with relevant parties – without necessarily admission Government provides financial and planning of liability by any of those associated with the source of pollution – in order to find incentives and may provide some relevant practical options. Collaborative clean-up approaches would typically include infrastructure such as roads. actions by the private sector, encouraged by financial incentives such as tax breaks or planning exemptions; by local governments, such as provision of infrastructure Polluter (or subsequent owner) carries out (for example, disposal sites); with inputs from community or non-governmental remediation (perhaps without admission of groups. The test for government support for actions under this approach is liability). whether they can achieve public benefits in a cost-effective manner. Brownfields Redevelopment with Public This form of collective solution may apply particularly in the case where the original Sector Support site or source of pollution was a large industrial facility belonging to a government entity that no longer exists. In such cases, a process of redevelopment that Private sector, typically developer, invests in generates enough revenue to cover the remediation costs may be a good solution remediation of site in order to create higher for all parties. Where development land is in demand, typically in urban fringes value land. where old industrial areas are being transformed into commercial and residential uses, it may be possible to recover the costs of the remediation. Government (especially if the nominal owner of the site) supports remediation by The government may, in effect, create value by relaxing some of the relevant negotiating planning and other conditions. planning or environmental requirements by, for example, accepting site-specific environmental standards. This may be suitable where the public good can be Process must be carried out in a transparent shown to justify the deviation from the normal requirements but must be subject and public way because of the potential for to transparent and effective review. misuse of discretion. In order to “kick-start� a brownfields redevelopment, the government may finance some of the most urgent interventions, with a view to attracting private sector funding for subsequent stages, where the risks are then lower. Public Funding with Cost Recovery Where the need for intervention is urgent, and administrative and legal actions are not being effective, the government may undertake the most urgent remediation Government establishes administrative works using its own funds and recover the costs (with administrative overheads) structure and provides adequate funding to from the responsible party. cover most urgent remediation expenditures. This approach, which draws on the concept behind the U.S. Superfund model, Costs recovered through legal action, would require significant legislative and administrative capabilities. It would be including taking ownership of (or a lien on) appropriate for countries where there is a large number of legacy or other the land, as payment for the costs of hazardous sites and where a multi-year program of interventions can be justified. remediation. In practice, it must be considered unlikely that the full costs could be recovered for all cases. Public Funding of Priority Interventions In cases where there is no prospect of recovering any of the costs from the polluter or a successor body, the government may be forced to take action because of the Government directly funds the priority seriousness of a particular case. Governments should establish the necessary interventions required to protect health and legislative and administrative framework to undertake such projects, in order to environment. ensure that the necessary interventions are identified and carried out as effectively as possible. Public consultation and community involvement required because of need to set In such cases, given the competing demands on public funds, a careful cost- priorities, in context of other government effectiveness analysis must be carried out to determine the sequence and timing of funding demands. priority actions, with the objective of initially removing the most immediate threats to health and environment. 65 | P a g e In some cases the government can unlock synergies Prerequisite Factors for Targeting Legacy by tying the remediation efforts to starting the Pollution redevelopment of a ―contaminated‖ district or by establishing a new transport corridor, which could The technical requirements for dealing with legacy both utilize and open up an affected area. Very often pollution are not significantly different from those a relatively limited government investment of seed normally available in an established environmental money can be an effective intervention. It is often the agency and related technical institutes. The specific perceived risks as much as the real situation that skills required to staff a remediation unit include: constitutes the investment obstacle, thus public funds toxicology/public health; risk assessment; for initial investigations and risk assessments at engineering and project management; and public various levels of detail can be very effective. These consultation processes. This group would need to be essential early studies make previously uncertain able to draw on specialist input as required, including liabilities much better understood and financially surveying, sampling and testing, and groundwater quantifiable, which can immediately increase the studies. The equipment requirements are relatively value of a site significantly, because investor basic and again similar to those required for a good confidence is bolstered. environmental office, and include computers, a GIS system, and transport. This technical team would Remediation Funds. It is an increasingly common require some support and capacity building in the practice in industrialized economies to put in place initial phases of the work, but this should not entail some system of provisions, liability, or levy to ensure significant time or resources. that individual companies are held responsible for the final closure and clean-up of facilities, and that they cannot avoid their responsibilities by winding up the Advantages and Limitations of Targeting operating company or through similar legal Legacy Pollution maneuvers. A wide range of possible systems exists, Targeting legacy pollution may open land to future and their review is beyond the scope of this guidance development opportunities and increase the value of note. However, while state funds created for neighboring property. Additionally, the mitigation of addressing pollution legacies can be effective, they an old pollution source may increase the health of may also be subject to inefficiency and outright local populations. corruption. Careful design and clear accountability are needed to ensure that the added value created by There are unfortunately many examples of broad centralized expertise and experience is not lost due to pollution that cannot be easily attributed to specific shortcomings in financial control. sources – examples include degraded air quality in urban areas and river systems that have been 66 | P a g e contaminated by a wide range of direct and indirect Preventing recurrence. Removing legacy pollution is discharges. The approaches summarized in this note often only one aspect of a broader health and can be part of a response to such challenges but are pollution management program. Other sources of not adequate, on their own, to address these broad pollution in the same location must also be controlled, problems. and measures must be put in place to prevent recurrence of the dumping or illegal disposal that caused the initial problems. In particular, the source Interaction with Other Tools and Possible of the toxic or hazardous wastes must be identified Substitutes and regulated, and practical alternatives to dumping must be established. In many cases, this is likely to Resources for remediation of legacy pollution are involve support for establishing affordable hazardous always limited; consequently, decisions have to be waste management facilities and for encouraging made about priorities and the extent of interventions. waste reduction and recycling measures. The classic economic approach to evaluating investment decisions is a cost-benefit analysis (CBA). However, estimating the benefits of health and Practical Examples of Targeting Legacy environmental improvements is complex and often Pollution and Lessons Learned contentious. The simpler and more easily understood approach is cost-effectiveness analysis (CEA), which Hazardous and legacy waste problems are usually is based on the cost of achieving specific risk- relatively localized – if severe – in their impacts. reduction levels. Consequently, the primary responsibility tends to be with local governments, which are usually not well Such a cost-effectiveness approach can guide the equipped to deal with these problems. It is important choice of options so that the greatest level of for national governments to take a proactive improvement is achieved with the resources approach to identifying and dealing with legacy available. The basis is the reduction of identified risks pollution, usually as a part of a national management in order to protect local communities from the program that will identify priority legacy sites and immediate impacts of pollution (or a similar high- will put in place mechanisms to guide and support level environmental objective). A goal of achieving the implementation of remediation at the individual specific low pollutant concentrations in the sites. environment may be the long-term objective but is not always appropriate for designing short-term interventions when resources are limited. 67 | P a g e Any national effort must start with the appropriate sources. The national government then needs to environmental agency being given the mandate and address the provision of technical and financial powers to develop and then implement a resources to allow the top priority sites to be cleaned comprehensive program. The first main element will up within a realistic time frame and for the necessary be to develop a list of priority sites or ―hotspots‖, as long-term measures to be put in place (see box 3). well as making an inventory of the facilities and resources available to deal with these pollution Box 3. Examples of Countries with National Programs China – which is particularly concerned about the extent of contamination of productive farmland, often from legacy pollution, and which is in the process of identifying priority areas and remediation options. Germany – where, through the Treuhand Agency, the government has taken responsibility for many industrial plants, a number of which had serious environmental legacy problems. The processes of sharing liability for these sites and the subsequent efforts to deal with the pollution still continue in some areas. India – which is preparing a National Remediation Program, under which the most urgent sites (including legacy sites) have been inventoried and priorities are being set for interventions. Mexico – where an inventory of contaminated sites has been prepared and a number of interventions are being developed. United States – which has the Superfund Program that addresses abandoned, accidentally spilled, and illegally dumped hazardous wastes that pose current or future threats to human health or the environment. A basic element of Superfund was provision to allow the government to proceed with urgent remediation work at its expense and to recover costs from liable parties. The Superfund has resulted in the clean-up of nearly a thousand sites over twenty-five years and has established an extensive body of technical and operational experience, particularly in relation to risk-assessment methodologies and treatment technologies. A number of significant Superfund site clean-ups have been well documented and provide insights and lessons for specific types of problems (for example, NRC 2005), although these insights and lessons can only be transferred to developing countries with full regard for local conditions and constraints. European Union – under EU directives, all the countries of the European Union are implementing programs in different ways to deal with toxic pollution and soil protection. The variety of such efforts demonstrates that there is no one best way to deal with the issues. References and Resources on Targeting http://www.worstpolluted.org/2009- report.html. Legacy Pollution CABERNET (Concerted Action on Brownfield and Economic Regeneration Network), Blacksmith Institute. 2009. World‘s Worst Polluted ―Sustainable Brownfield Regeneration: Places Report, by Block, M., and D. Hanrahan. CABERNET Network Report‖, CABERNET, 68 | P a g e http://www.cabernet.org.uk/resourcefs/42 Washington, DC. http://www- 7.pdf wds.worldbank.org/external/default/WDS CF (Common Forum), ―General questionnaires on ContentServer/WDSP/IB/2010/06/14/0003 Contaminated Land Management in 33037_20100614004032/Rendered/PDF/550 Europe,‖ CF, 090WP0P118011PUBLIC10brownfields.pdf http://www.commonforum.eu/questionnai rescf.asp# Landcare Research, ―Risk Assessment for CIRIA (Construction Industry and Research Contaminated Sites in New Zealand,‖ Information Association), ―The Portal for Landcare Research, Contaminated Land Information in the UK,‖ http://contamsites.landcareresearch.co.nz/. CIRIA, http://www.contaminated- Netherlands, Ministry of Housing, Spatial Planning land.org/. and Environment, www.vrom.nl/. CLU-IN (Hazardous Waste Clean-Up Information), NRC (National Research Council). 1983. Risk ―Contaminated Site: Clean-Up Information,‖ Assessment in the Federal Government: CLU-IN, http://www.clu-in.org/. Managing the Process. Washington, DC: DEFRA (Department for Environment Food and National Academies Press. Rural Affairs), ―Defra is the UK Government http://www.nap.edu/catalog.php?record_i Department Responsible for Policy and d=366#toc. Regulations on the Environment, Food and ––––––. 2005. Superfund and Mining Megasites: Lessons Rural Affairs,‖ DEFRA, from the Coeur d‘Alene River Basin. http://www.defra.gov.uk/environment/qu Washington, DC: National Academies Press. ality/land/contaminated/. http://books.nap.edu/catalog.php?record_i EUGRIS (European Ground Water and Contaminated d=11359. Land Information Service), ―Portal for Soil Sittig, M. 1994. World-Wide Limits for Toxic and and Water Management in Europe,‖ Hazardous Chemicals in Air, Water, and Soil. EUGRIS, www.eugris.info/. Park Ridge, NJ: Noyes. EU Joint Research Center, ―Derivation Methods Of Sydney Olympic Park Authority, ―Site Remediation,‖ Soil Screening Values In Europe‖, Sydney Olympic Park Authority, http://eusoils.jrc.ec.europa.eu/esdb_archive http://www.sydneyolympicpark.com.au/e /eusoils_docs/other/EUR22805.pdf ducation_and_learning/history/site_remedi ICCL (International Committee on Contaminated ation. Land), ―Management of Excavated US EPA (United States Environmental Protection Contaminated Soil – Summary of the Agency), ―Regional Screening Levels,‖ US Questionnaire‖, presentation by Reinikainen EPA, J. at the 9th ICCL meeting, Helsinki. www.epa.gov/region09/superfund/prg/. http://www.iccl.ch/download/meeting_hel ––––––, ―Superfund,‖ US EPA, sinki_09/B_Reinikainen.pdf and completed http://www.epa.gov/superfund. questionnaires at: WHO (World Health Organization), ―Guidelines for http://www.iccl.ch/meeting_helsinki.html Poison Control,‖ WHO, Ionescu-Heroiu, M. 2010. ―The Management of http://www.who.int/ipcs/publications/tra Brownfields Redevelopment: A Guidance ining_poisons/guidelines_poison_control/e Note.‖ Working Paper 55009, World Bank, n/index.html. This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 69 | P a g e Land Use Description and Application of Land Use Planning Planning Land use planning refers to the process by which a society, through its institutions, decides where, within its territory, different socioeconomic activities such as Introduction agriculture, housing, industry, recreation, and com- merce should take place. This includes protecting Land use planning is an essential tool for pollution well-defined areas from development due to prevention and control. Land uses are categories that environmental, cultural, historical, or similar reasons, refer to the different socioeconomic activities and establishing provisions that control the nature of occurring in a particular area, the human behavior development activities. These controls determine patterns they create, and their effects on the features such as plot areas, their land consumption or environment. While these activities take place at the surface ratio, their intensity or floor-area ratio, their local level, they can also contribute to global density or units of that activity (or people) per processes, such as climate change. Therefore, by hectare, the technical standards of the infrastructure appropriately defining land uses, establishing where and buildings that will serve them, and related and how they occur, as well as effectively controlling parking allowances. In relation to pollution their performance and interrelation, governments can prevention, land use provisions should include, actively participate in preventing and controlling where applicable, levels of gas emissions, light ra- pollution. diation, noise, water, solid waste discharges, and on- site or pre-disposal treatment of pollutants. All of  these provisions should be included in the This guidance note was prepared by Arturo Samper (Consultant). Peer reviewers included Dan Hoornweg (Lead Urban jurisdiction‘s land use or zoning code. This code Specialist, FEUUR) and Ming Zhang (Lead Urban Economist, becomes the legal guide for landowners, developers, LCSUW). Additional comments and contributions were provided by Alberto Ninio (Chief Counsel, LEGEN), Dan Biller (Lead citizens, and authorities. A good system of protected Economist, SASSD), Hua Wang (Senior Environmental Economist, areas, together with strong land use provisions, DECEE), Maged Hamed (Senior Environmental Specialist, MNSEN), Suiko Yoshijima (Consultant, MNSEN), and Tijen Arin (Senior should result in a less-polluted jurisdiction. Environmental Economist, ECSSD). Editorial assistance was Planning process. In open societies, the land use plan provided by Stan Wanat (Consultant), Juliette Guantai (Program Assistant, ENV) and James Cantrell (Communication Analyst, ENV). and zoning code are prepared by planning The task team leaders for this product are Kulsum Ahmed (Lead institutions (Mandelker and others 1990). The plan Environment Specialist, ENV) and Helena Naber (Environmental Economist, ENV). The product was prepared under the guidance and code are subject to the processes of public of the following World Bank Group management: James Warren consultation and participation defined by the juris- Evans / Mary Barton-Dock (Directors, Environment Department, World Bank), Bilal Rahill (Senior Manager, IFC), and Frank Lysy / diction‘s laws. The plan and code are approved by Ravi Vish (Director, MIGA). that jurisdiction‘s legislative branch, sanctioned by the jurisdiction‘s chief executive (such as a governor 70 | P a g e or mayor,), and are subject to the constitutional tests regulation, and the buffers separating them from and rulings of the judiciary. The plan is implemented residential and other activity zones. This should through the permit-issuing process for land be combined with fiscal and other incentives for subdivision (or development) and the construction- remediation and resettlement on contaminated permit process. Through these processes, landowners sites. In addition, pollution-control mechanisms yield a portion of their properties and pay de- that exceed standards should be applied. velopment fees that, together with land and real 3) Establish, within urbanized areas, land uses, estate taxes, constitute the main source of funding for densities, and intensity of development that construction and maintenance of public works and result in increased usage of public transit, public spaces, as well as for services by the decreased usage of private vehicles, and reduced jurisdiction. Ten good practices in land use planning consumption of energy at the household level. that can help attain positive environmental effects are This will diminish emissions, levels of air described below. pollution, and energy use, and increase the effectiveness of existing pollution-control 1) Define, make, and effectively protect ―no-go‖ mechanisms and practices. areas in recognition of their high environmental, 4) Integrate the urban and rural realms into the historical, or cultural values, for their same framework for land-use planning. This biodiversity, or because they can help contain allows an integrated approach to the unnecessary and costly urban expansion. conceptualization and management of growth Protection of ―no-go‖ areas should be combined and land use, as opposed to a competitive ap- with measures that allow transfer of proach in which urbanization is carried out at the development rights from these areas into ones expense of rural settings. where development is acceptable. Furthermore, 5) Carefully establish and modify urban-rural protection of ―no-go‖ areas should be supported boundaries, closely linking them to available by fiscal measures that preserve lands in their capacity for providing water and wastewater natural condition or preserve the profitability of treatment, and to the area‘s economic linkages rural economic activities. Such environmental and commuting patterns. This helps increase the protections will increase the likelihood of new overall density in urbanized areas, maximize the settlers establishing themselves in developed use of installed infrastructure and transit areas that will likely have pollution-control corridors, and reduce the costly extension of measures and other environmental protection infrastructure further into rural areas. mechanisms in place. 6) Define boundaries so they are perceived as territories, like greenbelts. These can be of a size, 2) Plan for industrial zones, by appropriately character, and use that can convey the idea of an defining their location, design, infrastructure, 71 | P a g e edge marking the transition from one setting to Coordinated, as well as in Collaborative, ways (Pivo the other, even if both are urbanized settings. 1996). 7) Develop all types of urban agriculture within greenbelts, boundary territories and inside urbanized areas. Such agriculture would include Prerequisite Factors for Land Use Planning green roofs, neighborhood and community farms, or large farm operations, and A multidisciplinary land-use planning institution implementing creative incentives to make them must incorporate strong community relations and a economically feasible. complete set of instruments for negotiating land uses 8) Establish authorized levels of gas emissions, and developments for the benefit of the public. This noise, air pollution, sun radiation, energy institution should be comprised of environmental, consumption, solid and water waste discharges, physical, transportation and infrastructure, and and similar measures for the different land uses socioeconomic development teams. Additionally, a and constructions that will house them. Fining or community relations division should be in charge of penalizing operations that exceed these general communications, of conducting public requirements. meetings, and of ensuring a participation process that 9) Require on-site or pre-disposal treatment of takes full advantage of the tools available to society in pollutants, and granting bonuses or incentives this area. A land-management division will be for additional, positive contributions to the entrusted with managing the planning process as well environment. as negotiating planning policies in the context of 10) Mandate the use of green building standards, sector area plans. A legal division will be entrusted techniques and materials, like the ones with defining, applying, and proposing reforms of the established by ASTM International (formerly the legal instruments necessary to create levers that will American Society of Testing and Materials). change the market. Finally, a division that provides geographic information, cadastre, and land-value The most valuable mechanism for pollution assessment will ensure the accessibility, consistency, prevention within the land use planning process is and quality of the legal and socioeconomic the way in which a government applies the above information on the properties that make up the mechanisms in an integrated manner. Several prin- jurisdiction. ciples and objectives are now recognized as valid means for controlling pollution and reducing the Additionally, a mechanism or institution must be ecological footprint of urbanized areas. These have established to ensure concerted, collaborative, and been named the six C's, and refer to the pursuit of cooperative decisions in the case of municipalities territories that are Complete, Compact, Conserve and comprising a metropolitan or regional area. These restore the natural resources, and to developments decisions would center on regional land uses, that are Comfortable and are produced in infrastructure, protection areas and other policies that 72 | P a g e need to be addressed at a supra-municipal level. That yield developed areas with densities sufficient to mechanism would also have the responsibility and support mass transit, and increase the number of authority to ensure acceptance or adoption of those public transit trips while reducing their length. policies at the local level. Additional benefits include reduced emissions of greenhouse gases and discharges of water and solid There are two instances in which land use planning waste, and increased greenery in urbanized areas, should not be applied. One is for areas declared to be thus increasing capacity to capture some of the of national interest and significance, which ought to emissions. In the long run, this should slowly yield have very restrictive measures defined by national patterns of human behavior that lead to better health authorities not associated with the land use and and fewer deaths from transportation accidents, development process. The other is for those areas diabetes, lung cancer, and coronary disease. Numer- belonging to, and actively controlled by, aboriginal ous studies have demonstrated the relations between peoples, who should be the rulers of the activities on land use, transportation, and public health. their territories and of how their land is used. However, environmental impacts that take place Land use planning can give rise to some complex within these territories should continue to be phenomena that can exacerbate the pollution levels regulated by the state. typically seen in developing countries. Often, large informal settlements arise on the fringes of decaying parts of urban or rural areas that are mainly Advantages and Limitations of Land Use residential but often industrial. This gives rise to a Planning number of social issues as well as environmental degradation. Traffic and congestion patterns, Land-use regulation leads to reduced emissions from frequently the result of a population commuting long transportation systems, less average commuting time, distances on unfinished or unregulated mass transit cultural flowering in new public spaces, less crime, systems, greatly affect air quality in urban space, and and most importantly, a much greater capacity to be thus quality of life. In addition, land use planning is informed about one‘s city and a greater capacity to limited by governmental capacity. For instance, a broadly communicate the advantages of such government may lack the ability to protect the regulation. This, in turn, leads to a less corrupt environment or to provide proper handling of government, a very strong citizen-participation residues and byproducts. Finally, the aggressive system, a much greater flow of information, and a nature with which some governments promote their much more intelligent use of it by citizens and economy by recruiting businesses and industries to organizations (Condon and others 2009). their jurisdiction without regard for negative Furthermore, if the mechanisms and principles of environmental externalities can lead to larger land use planning are applied correctly, they should environmental problems. 73 | P a g e Interaction with other Tools and Possible incorporate and effectively apply the Substitutes numerous land management instruments mentioned in this Guidance Note in order to Policy makers should define the land use plan and its formalize policies and procedures, and bring institutional setting in close relation to the tools about a more equitable land market. defined in the World Bank Guidance Note series on tools for effective pollution management. The land use plan should also be defined in relation to the Practical Examples of Land Use Planning following tools pertaining to governments: and Lessons Learned  Setting priorities, a process that consists of determining and stating a national-level The Colombian municipality of Soacha, located south framework for integrated land management, of Bogotá, suffered from a disordered system of land as well as determining and stating the uses. In 2007 a group of development promoters national government‘s perspectives became convinced that, if used properly, traditional regarding key land uses and decisions. land development resources such as easements would  Environmental Assessment, to ensure that the be able to finance urbanization in Soacha with the land use plan requires developers to conduct highest standards in public space, roads and these assessments and incorporate those infrastructure, community services and, of course, conclusions into their projects prior to housing. Ciudad Verde emerged after a two-year planning and construction approvals. process of negotiation involving promoters and local  Strategic Environmental Assessment, so the and national authorities that allowed assembly of 328 land use plan is subject to this type of hectares and administration of the public funds assessment, and so the land use plan generated by the project. It will include a network of incorporates all of that assessment‘s policies roads, pedestrian paths, bicycle paths, environmental and measures. protection areas, water bodies, and canals, consisting  Industrial estates, to guarantee that the land of 55 hectares, or 16% of the area. use plan incorporates the lands, procedures, practices, and regulations associated with Concerning land use planning, Bogotá issued Law the establishment and operation of industrial 388 in 1997, which mandated the fair distribution of estates. the costs and benefits of development throughout the  Environmental Regulation and Standards, areas where it was to take place. The law also granted Monitoring, Inspection, Compliance and the category of public function to the entire Enforcement, in that the plan and zoning code urbanization process. This included not only the include all relevant standards. construction of utilities, infrastructure, or the  Market-based instruments and taxation policies, provision of social housing, but everything that to ensure that the planning authorities happens in the land-development process. Legislation 74 | P a g e was subsequently passed to create a special plans with bold provisions for mixture and density. framework for the capital to manage its finances, land These plans should maximize the potential capacity of administration, service delivery, and public works. existing road grids, the potential demand on existing The government then implemented a massive citizen mass transit corridors, and bring different land uses education and culture program. Also included were and the population‘s different socioeconomic strata numerous tools for managing traffic, de-arming and together. This should increase accessibility to and anti-violence programs, the multiplication and from work places, reduce stress on the road system extension of the bicycle paths, and the launching of and average length of trips, and reduce pressures for the Bus Rapid Transit (BRT) system. Next, they built a additional, rural land to be incorporated to the urban remarkable system of public libraries and public setting. schools, and invested millions in restoring waterways and corridors. These efforts combined to increase the Governments should work on addressing immediate compact, complete, conserving, comfort, coordination challenges. This approach is less related to creating a and collaborative characteristics of Bogotá (Condon plan and much more related to how a plan is and others 2009). implemented. The emphasis should be on developing effective mechanisms for adherence to the plan, In 1992, lecturers and students at the National maintaining oversight, encouraging public University in Manizales initiated a community participation in the process, and ensuring that the training program for the environmental management land use plan is an evolving policy that reflects the of Olivares, a very poor community on the city‘s community‘s sentiments. margin. However, the top-down nature of this first approach limited its legitimacy among the local population. Eventually, the project had to be References and Resources on Land Use reformulated to give greater autonomy and Planning leadership to the community. Gradually, through a Allen, A. 2003. ―Environmental Planning and constant dialogue between the municipality and the Management of the Peri-Urban Interface: local administrative board, some of the credibility Perspectives on an Emerging Field.‖ Environment and Urbanization 15 (1): 135–48. that the municipality had lost in the eyes of the Cogeneration Technologies, ―Sustainable community was regained (Velasquez 1999). Urbanization,‖ http://www.cogeneration.net/sustainable_ urbanization.htm. To combat potential challenges to land use planning, Condon, P. M., D. Cavens, and N. Miller. 2009. ―Existing Tools to Asses GHG Emissions.‖ In governments should continue following the example Urban Planning Tools for Climate Change of developed territories that apply principles and Mitigation, 16–9. Cambridge, MA: Lincoln Institute of Land Policy. good practices discussed in this Guidance Note. Graham, H., and G. McGranahan. 2006. ―Editorial: Governments should continue to design land use Urban Ecologies.‖ Environment and Urbanization 18 (1): 3–8. 75 | P a g e Kenworthy, J. R. 2006. ―The Eco-City: Ten Key Additional Resources on Land Use Planning Transport and Planning Dimensions for Sustainable City Development.‖ Environment ASHRAE (American Society of Heating, and Urbanization 18 (1): 67–85. Refrigerating, and Air-Conditioning Lincoln Institute of Land Policy. 2009. Urban Planning Engineers), www.ashrae.org. International Tools for Climate Change Mitigation, by organization of 51,000 persons committed to Condon, P. M., D. Cavens, and N. Miller. advancing heating, ventilation, air Policy Focus Report. conditioning, and refrigeration to serve https://www.lincolninst.edu/pubs/dl/1573 humanity and promote a sustainable world _890_Tools%20for%20Climate%20Change%2 through research, standards writing, 0final.pdf. publishing, and continuing education. Mandelker, D. R., and R. A. Cunningham. 1990. ASTM (American Society for Testing and Materials) ―Government Intervention in Land Use International, ASTM International, Markets.‖ Chap. 1 In Planning and Control of www.astm.org. One of the largest voluntary Land Development: Cases and Materials, 3rd ed. standards-development organizations in the Charlottesville, VA: Michie. world and a trusted source for technical Newman, P. 1996. ―Reducing Automobile standards for materials, products, systems, Dependence.‖ Environment and Urbanization and services. 8 (1): 67–92. ICC (International Code Council), ―International –––––. 2006. ―The Environmental Impact of Cities.‖ Green Construction Code,‖ Environment and Urbanization 18 (2): 275–95. www.iccsafe.org/cs/igcc. Initiative, Pivo, G. 1996. ―Toward Sustainable Urbanization on launched in 2009, committed to developing a Main Street Cascadia.‖ Cities 13 (5): 339–54. model code focused on new and existing Roosa, S. A. 2008. Sustainable Development Handbook. commercial buildings addressing green Lilburn, GA: The Fairmont Press. building design. Roseland, M. 2005. Toward Sustainable Communities: NAHB (National Association of Home Builders), Resources for Citizens and their Governments. ―Reshaping and Enriching our Gabriola Island: New Society Publishers. Communities,‖ www.nahb.com. Trade Satterthwaite, D. 2009. ―Getting Land for Housing: association whose mission is to enhance the What Strategies Work for Low-Income climate for housing and the building Groups?‖ Environment and Urbanization 21 industry, and to provide and expand (2): 299–307. opportunities for all consumers to have safe, USGBC (United States Green Building Council). 2007. decent, and affordable housing. LEED (Leadership in Energy and NFPA (National Fire Protection Association), Environmental Design.) for neighborhood www.nfpa.org. International nonprofit development rating system. organization whose mission is to reduce the http://www.usgbc.org/ShowFile.aspx?Doc worldwide burden of fire and other hazards umentID=8880. on the quality of life by providing and Velásquez, L. S. 1999. ―The Local Environmental advocating consensus codes and standards, Action Plan for Olivares Commune in research, training, and education. Manizales, Colombia.‖ Environment and USGBC (US Green Building Council), Urbanization 11 (2): 41–50. www.usgbc.org. Organization that WBI (World Bank Institute). 2000. Planificar y developed the Leadership in Energy and administrar en función del medio ambiente. Environmental Design (LEED) Green Washington, DC: World Bank. Building Rating System and provides a suite Wheeler, S. M. 2004. Planning for Sustainability. of standards for the environmentally Routledge. sustainable design, construction, and Wheeler, S. M., and T. Beatley, eds. 2004. The operation of buildings and neighborhoods. Sustainable Urban Development Reader. Routledge Urban Reader Series. This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 76 | P a g e  opportunities. These include the chance to improve Industrial Estates the facilities‘ environmental performance in a cost- effective manner by allowing facilities to share common waste-treatment facilities. Furthermore, such Introduction regrouping allows companies to exploit opportunities Environmental regulators have access to a large set of where one firm‘s waste becomes another‘s input. policy tools and instruments to create incentives for More recently, industrial estates have also been industrial facilities to abate pollution. Command and promoted for the explicit purpose of facilitating the control is one approach where pollution standards for relocation of industrial facilities from densely emissions or effluence are set, and fines and penalties urbanized areas where high land prices may not are assessed against non-compliant facilities. Other justify the industrial use of such space, and where options include pollution charges, tradable permits, populations living in close proximity to industrial voluntary participation programs, as well as firms may be more directly exposed to adverse environmental performance rating and public environmental effects. disclosure programs. For related information, see the other World Bank Guidance Notes in this series on While the term ―industrial estates‖ is used to refer to effective pollution management and World Bank this particular regrouping of industrial facilities, the (2000) for reviews of these programs. term ―industrial parks‖ is also used to refer to the same concept. On the other hand, the term ―industrial Historically, industrial estates have been established zones‖ refers to an area of land set aside for industrial to facilitate and promote industrial and economic facilities without the explicit purpose of facilitating or development. Such regrouping of industrial facilities promoting the provision of common infrastructure onto a narrowly defined location offers additional and services (UNIDO 1997).  This guidance note was prepared by Benoit Laplante (Consultant). Peer reviewers included Adriana Damianova (Lead Description and Application Environmental Specialist, ECSS3) and Bekir Onursal (Senior Environmental Specialist, EASER). Additional comments and contributions were provided by Jiang Ru (Operations Officer, An industrial estate is a specific area (tract of land) EASER), Nat Pinnoi (Senior Carbon Finance Specialist, ENVCF), that is separated from urban and densely populated Remi Kini (Senior Environmental Economist, ENV), and Suiko Yoshijima (Extended Term Consultant, MNSEN). Editorial areas, and zoned specifically for the location of assistance was provided by Stan Wanat (Consultant), Juliette Guantai (Program Assistant, ENV) and James Cantrell industrial facilities. Industrial estates must support (Communication Analyst, ENV). The task team leaders for this product are Kulsum Ahmed (Lead Environment Specialist, ENV) proper infrastructure such as roads, power, water and Helena Naber (Environmental Economist, ENV). The product supply, and other utility services to all facilities was prepared under the guidance of the following World Bank Group management: James Warren Evans / Mary Barton-Dock located within the well-defined parameters of the (Directors, Environment Department, World Bank), Bilal Rahill (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). estate. 77 | P a g e possibility of sharing common pollution-control National and local authorities may support the services and facilities, but also explicitly aims at promotion and establishment of industrial estates by promoting the exchange of goods, services, material, encouraging foreign direct investment, redistributing energy, water, waste, and by-products. Owners and employment and production away from densely operators of an eco-industrial estate explicitly seek urbanized regions, and accelerating regional enhanced economic and environmental performance development. Industrial estates may attract industrial through the proactive management of environmental facilities by offering an attractive package of services issues. A key benefit of this approach is energy (such as power and water) that can be supplied recovery as well as waste recycling and minimization continuously, reliably, and at a cost that industrial (Schlarb 2001). facilities could not achieve on their own. This package of services is often complemented with various forms However, it has been noted that an effective waste- of preferential investment incentives such as exchange ―market‖ may be constrained by exemptions from import or export duties, income tax unreliability in the quantity and quality of waste exemptions, and various other subsidies. supplied. Furthermore, the presence of a waste- Furthermore, industrial estates also generally offer a exchange market may reduce incentives for waste ―one-door‖ policy aimed at facilitating the licensing prevention. Finally, implementation of industrial and permitting process of new industrial facilities. ecology principles into eco-industrial estates requires the careful selection of specific industrial firms. These In recent years, a small number of industrial estates organizations must be picked from specific sectors of have proactively promoted trade and exchange industrial activities that can indeed create this among industrial facilities located within the estate, industrial symbiosis among the locators. The effective including the trading of waste; such facilities are planning and management of eco-industrial estates is sometimes referred to as ―locators‖. This has given therefore a demanding process. This may explain rise to the concept of eco-industrial estates (also why, with a few exceptions, eco-industrial estates known as eco-industrial parks). Based on the remain a small proportion of the sector. principles of industrial ecology, the Eco-industrial Park Handbook for Asian Developing Countries defines the eco-industrial estate as a ―community of Prerequisite Factors manufacturing and service businesses located together on a common property. Member businesses Industrial estates may facilitate the development of a seek enhanced environmental, economic, and social more competitive and cleaner industrial sector, performance through collaboration in managing especially in circumstances where there is effective environmental and resource issues‖ (Lowe 2001, sec. integration of environmental and industrial 1.2). Hence, the eco-industrial estate differs from the development policies. The promotion of industrial typical industrial estate because it not only offers the estates (and eco-industrial estates) is an important 78 | P a g e component in the set of policy tools that public authorities have available to achieve given targets of Environmental management systems. It is good pollution abatement and improved ambient practice for industrial estates to develop credible and environmental quality. However, for industrial practical environmental management systems (EMS) estates to achieve their potential as effective for the whole of the estate. The EMS should clearly instruments for environmental management, a define explicit environmental policies and rules for number of conditions must be met. the estate, environmental performance objectives and targets, mechanisms by which these objectives and Location. If the primary purpose of industrial estates targets will be implemented, and a monitoring and is to enable industrial development, then these estates enforcement regime aimed at achieving compliance must be located to maximize access to markets (inputs with the objectives and targets. and outputs). Additionally, it must be recognized that large quantities of wastewater, air emissions, and Strong environmental regulator. The promotion of solid waste will be produced from this concentration industrial estates does not alleviate the need for a of a large number of industrial facilities. Therefore, to strong environmental regulator, adequately resourced avoid becoming a pollution hotspot, an industrial with budget, staffing, and legal authorities, to estate must have space to accommodate proper undertake all that is necessary to avoid industrial treatment facilities and have adequate disposal. The estates from turning into pollution hotspots. geographical location of industrial estates should be part of an overall land-use development plan and Synergy between industrial and environmental should be accompanied by appropriate land-zoning policies. Practice shows that in many developing regulations and a cumulative impact assessment of countries, pro-growth industrial policies that promote the development area. the development of industrial estates occasionally take a step further by shifting the oversight of the Selection of industries. The effectiveness of the estate's environmental operation to an agency that environmental services provided by industrial estates lacks the capacity to effectively oversee the industrial depends significantly on the industries. More estate‘s environmental management and precisely, the compatibility of a facility‘s waste with performance. Shifting most or all monitoring and the environmental services and waste treatment enforcement mandates onto such ill-equipped provided by the industrial estate is of the utmost agencies, or occasionally onto industrial estate importance. Industrial estates should carefully plan managers themselves, is generally not conducive to the nature of environmental services to be provided improved pollution control. Unless environmental by the estates and carefully select the industrial management objectives are effectively mainstreamed, facilities by waste characteristics. There must be clear and integrated into industrial development policies, and strict regulations limiting entry to the estate. 79 | P a g e the effectiveness of industrial estates as an Owners and operators of industrial estates recover the environmental management tool could be limited. costs of providing these environmental services either through their rental rates or by means of user fees set per unit of environmental services consumed (see box Advantages and Limitations 1). It is important to note that user fees may create From an environmental management perspective and disincentives for industrial units to use the common under certain conditions, such concentration of waste-treatment infrastructure effectively, especially industrial activity in a single location can offer in the absence of strong institutional capacity to important benefits for both the industrial facilities monitor the behavior of the firms located within the located within the estate and environmental industrial estate. regulators. Box 1. Thailand Industrial Estates Act B.E. 2522 Section 37 of the Act gives power to the Minister of Industry to issue ministerial regulation prescribing rules, methods, and conditions for the setting up of industrial estates. According to the latest ministerial regulation issued under this section in 2005, operators of industrial estates are required to arrange for infrastructure systems, facilities, and necessary services as appropriate for each type of industrial estate, including wastewater treatment facilities. The services and facilities provided must meet standards prescribed by rules issued by the Industrial Estate Authority of Thailand (IEAT). Section 12 gives IEAT the power to set appropriate fees for the rental of immovable and movable property, maintenance of facilities, and services provided in an industrial estate to generate sufficient funds for the operation of that industrial estate. Section 14 gives IEAT the power to determine the service fees for facilities and services provided in that industrial estate, taking into account the appropriate business rate. The same rule applies where an industrial estate has been developed by a private person or entity. Advantages for environmental regulators. From the Advantages for industrial facilities. For industrial point of view of environmental regulators, industrial facilities, the industrial estate is in a position to offer estates (including eco-industrial estates) offer three infrastructure and services for which there are important benefits. First, in circumstances where the significant economies of scale. One example is the use explicit purpose of industrial estates is to relocate of a common wastewater treatment facility, which existing industrial facilities from urban centers and would allow for economies of scale to be gained from densely populated areas, industrial estates deliver the collection, treatment, and disposal of solid and improved ambient environmental quality in the areas toxic waste. Use of such a shared facility would also from which they are being removed. allow for the provision of effluent monitoring and laboratory services. Industrial facilities may benefit Second, industrial estates may be of particular interest from reduced monitoring and pollution-control costs to small and medium enterprises (SMEs) whose size by sharing a common set of environmental services. often inhibits their use of effective pollution-control 80 | P a g e technologies. With the regrouping of SMEs into of industrial facilities and for environmental industrial estates and by providing common regulators. However, despite these apparent benefits, environmental services, environmental regulators industrial estates are typically not presented as may achieve significant pollution control for this shining examples of proper environmental particular category of enterprises, which would management. Two notable caveats will be discussed. otherwise remain a difficult and elusive task. It is First, not all pollution-control services offer the important to recognize that SMEs may resist such possibility of large economies of scale. Such is the relocation if the alternative to relocation continues to case, for example, for the control of air pollution. be no pollution control with impunity. The lack of a Hence, the nature and extent of the benefits strong enforcement regime to overcome such associated with reduced pollution control will vary resistance may imply that such relocation be greatly and depend on the specific nature of the generously subsidized and that pollution-control pollutants of concern. costs within the industrial estate be scaled from the larger to the smaller facilities. Second, the concentration of a large number of industrial facilities in a specific and narrowly defined Third, environmental regulators need not be area may be a source of significant environmental concerned with the pollution discharge of each damage, and may increase environmental health and individual plant located within the estate, but only safety risks if pollution discharges from the industrial with the discharges from the common facility, thereby estate are not strictly controlled. Hence, the considerably decreasing the time and resources environmental benefits that may result from required to monitor and inspect the pollution industrial estates will not be realized unless there is a discharged from a large number of facilities. strong environmental management system for the Similarly, the enforcement of environmental laws and estate and a willingness to implement the estate‘s regulations targets only the provider of environmental rules. Owners and operators of environmental services as opposed to a large number industrial estates are first and foremost industrial of single industrial facilities dispersed over a large promoters working within the context of an industrial area. This is a significant benefit for the development strategy. Incentives are always oriented environmental regulator, given that resources devoted towards maximizing the value of industrial output. to the monitoring and enforcement of environmental As a result, these environmental benefits will not be regulations have generally been recognized as realized without sufficient capacity on the part of the insufficient relative to the task‘s complexity and environmental regulator to monitor pollution magnitude. discharges along with the willingness to enforce environmental regulations. As an example, industrial Limitations. Industrial estates may thus offer estates competing with one another to attract new important benefits for both the regulated community locators may have incentives to reduce environmental 81 | P a g e services fees thus jeopardizing the financing and industrial exports from 19% to 35% in the near term delivery of effective pollution-control technologies. If (Dore and others 2008, 12). this were to be of significant concern, it may be of interest for environmental regulators to establish minimum environmental service fees that all estates Denmark. The most often cited example of must implement. implementation of the concepts of industrial ecology principles is the Kalundborg estate in Denmark. The key component of the estate is a 1500 MW coal-fired Interaction with Other Tools and Possible power plant that exchanges waste products with Substitutes other industrial facilities of the estate (for example, fly ash to a cement factory; steam to a pharmaceutical Effective industrial estates require adequate planning, plant, recovered heat to fish farming, and sludge to a effective management, and a strong regulatory fertilizer facility). However, evidence indicates that monitoring and enforcement regime. This may this system of exchange gradually emerged from a especially be the case where the establishment of sequence of independent actions as opposed to industrial estates responds essentially to profit having been carefully designed, planned, and motives of land developers, thus leaving implemented (Ehrenfeld and Gertler 1997). environmental management to an afterthought. Proper development of industrial estates should Other examples of eco-industrial estates are the include strategic environmental assessments, Dalian Industrial Estate (China), and the Naroda environmental impact statements, life cycle cost Industrial Estate (Gujarat, India). Asolekar and analysis, land use planning, and risk management Gopichandran (2005) presents further examples as tools. See World Bank Guidance Notes on these tools well as case studies. for more information. References and Resources on Industrial Practical Examples of Industrial Estates and Estates Lessons Learned Asolekar, S. R., and R. Gopichandran. 2005. Preventive Environmental Management: An Indian Perspective. Vietnam. Vietnam‘s Ministry of Planning and Environment and Development Book Series Project. New Delhi: Foundation Books; Investment has a strategic plan to develop industrial Ahmedabad: Centre for Environment Education. estates, with a vision to the year 2020. Their plan is to Dore, G., P. Brylski, J. Nygard, and P. Tran. 2008. Review and Analysis of the Pollution Impacts from achieve an annual average growth rate exceeding Vietnamese Manufacturing Sectors: EASRE. 20%. The ministry expects that companies sited in Washington, DC: World Bank. http://siteresources.worldbank.org/INTEAPRE industrial estates will experience a 17.7% increase in GTOPENVIRONMENT/Resources/PollutionIm output in the near term. Furthermore, such companies pactsEnglishforprinting.pdf. are expected to increase their share of Vietnam‘s 82 | P a g e Ehrenfeld, J., and N. Gertler. 1997. ―Industrial Schlarb, M. 2001. Eco-Industrial Development: A Ecology in Practice: The Evolution of Strategy for Building Sustainable Communities. Interdependence at Kalundborg.‖ Journal of Reviews of Economic Development Literature Industrial Ecology 1 (1): 67–79. and Practice, No. 8. Washington, DC: U.S. Lowe, E. A. 2001. Eco-industrial Park Handbook for Economic Development Administration. Asian Developing Countries. rev. ed. Santa Rosa, UNIDO (United Nations Industrial Development CA: Indigo Development. http://www.indigo Organization). 1997. Industrial Estates: Principles dev.com/documents/ADBHBCh1Intro.doc. and Practice. Vienna: UNIDO. OECD (Organisation for Economic Co-operation and World Bank. 2000. Greening Industry: New Roles for Development). 2003. Voluntary Approaches for Communities, Markets, and Governments. New Environmental Policy: Effectiveness, Efficiency and York: Oxford University Press, Inc. Usage in Policy Mixes. Paris: OECD. This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 83 | P a g e Environmental Figure 3. Schematic of Relations among Planning Processes and Pollution Control Licensing Economic planning process Introduction Environmental licensing is a tool that a public Territorial authority can use to prevent, control, and manage and land Pollution pollution. It is also an instrument for territorial and use control planning land use planning. Environmental licensing should be viewed as an integral part of the planning process for controlling activities that potentially cause pollution and significant environmental impacts. It aims at integrating environmental protection into the development process in order to achieve Description and Application of sustainability (see figure 1). Thus, it is in accord with Environmental Licensing Principles 4, 8, and 11 of the Declaration of the UN Environmental licensing is a tool to regulate activities Conference on Environment and Development (1992) that may cause harmful pollution or environmental and Principle 17 of the Declaration of the UN degradation. It sets legally binding requirements to Conference on the Human Environment (1972). protect human health and the environment through a public and transparent process. Environmental licensing should be carried out by a public  environmental authority prior to the approval of This guidance note was by Antonio Fernando Pinheiro Pedro and Daniela Stump (Consultants). Peer reviewers included Alberto projects in order to prevent, reduce, or compensate Ninio (Chief Counsel, Legen) and Jane Nishida (Senior Environmental Institutions Specialist, SASDI). Additional for the environmental impacts of human activities. comments and contributions were provided by Gael Gregoire (Senior Environemntal Specialist, MNSEN), Guillaume Meyssonnier (Environmental Specialist, MNSEN), Hanneke van This tool for protecting the environment takes into Tilburg (Senior Counsel, LEGEN), Hocine Chalal (Regional Safeguards Advisor, MNACS), and Luiz Maurer (Senior Industry consideration the regulation of land use, especially Specialist, AFTEG). Editorial assistance was provided by Stan Wanat (Consultant), Juliette Guantai (Program Assistant, ENV) and zoning rules, to ensure the most appropriate use of a James Cantrell (Communication Analyst, ENV). The task team leaders for this product are Kulsum Ahmed (Lead Environment property, the long-term quality of the land, and the Specialist, ENV) and Helena Naber (Environmental Economist, densities at which particular activities can be ENV). The product was prepared under the guidance of the following World Bank Group management: James Warren Evans / performed on a site. It also improves the economic Mary Barton-Dock (Directors, Environment Department, World Bank), Bilal Rahill (Senior Manager, IFC), and Frank Lysy / Ravi Vish planning process by coordinating private activities (Director, MIGA). 84 | P a g e that are desired by the government and the local environmental impacts. Listed below are categories community. Such activities include creating job and examples of such activities: opportunities, improving infrastructure, and  Industrial developments (manufacturing augmenting the tax base. Good environmental industries, landfills, oil and gas exploitation, licensing systems employ the ―assess and prevent‖ mining) approach that should prevail over the traditional  Infrastructure projects (roads, airports, ―react and remedy‖ model of public management, electric power plants, settlement and because it is more effective and efficient to prevent, housing projects) rather than try to cure, damage to the environment.  Urban constructions (shopping centers, university campuses) The cornerstone of environmental licensing is an  Agricultural and forest activities (cattle environmental assessment that enables a public raising, timber logging). authority to evaluate an activity‘s environmental The activities submitted to environmental licensing impacts. Environmental licensing should not be seen should be assessed in accordance with the legal and as an obstacle to economic development, but as a economic criteria of each country. supportive mechanism for achieving growth on a sustainable basis. In most cases, the private sector Simplified licensing processes should be applied to says ―what‖ and the environmental public authority small and medium enterprises (SMEs), such as gas says ―where and how.‖ It is a dynamic tool that stations and other SMEs that cause negligible should be adapted to fit the specific characteristics of environmental impacts. What determines whether to proposed development projects. use a simplified procedure or not is the activity‘s impact, since SMEs such as gas stations are not Application scope. Environmental licensing is best necessarily insignificant sources of pollution. applied when preceded by (1) environmental However, in cases where the impact is negligible, the baselines and assessments; (2) development planning; licensing process should be based on a simplified and (3) territorial and land use planning. These tools environmental assessment study, and consultation shape the broad context within which the technical with stakeholders may be conducted in a less complex assessment fits and they avoid consideration of manner than a public hearing. political and economic issues by the environmental authority during the licensing process. Another tool that may be applied to activities that cause low environmental impacts is self-licensing. In The targets of environmental licensing are activities this approach, the project proponent gives the that potentially cause pollution and significant environmental agency a declaration of the project‘s environmental feasibility, and an operating license is 85 | P a g e issued under conditions set by the agency. During the 4) Granting or denial of the environmental license. period of validity of the license, the environmental An approval involves two specific licenses: (a) an agency maintains oversight of the project‘s impacts installation license authorizing project and supervision of the project‘s activities. construction; and (b) an operating license authorizing project operations, upon Application process. The environmental licensing confirmation that the project‘s construction process should be carried out by an environmental or conditions were met. similar agency endowed with (1) autonomy; (2) 5) Mandating of technical conditions on the financial resources; (3) technical capacity and well- operating license, such as regular reports about qualified human resources to analyze sources and emissions and notification of unusual events like impacts of pollution projects; and (4) legal discharges that exceed limits or accidents. competence to apply the environmental legal and 6) Monitoring with periodic review of the operating regulatory framework. In some countries, like license to determine if that license will be Thailand, the sector agency can be both the licensing renewed. authority and promoting agency, which creates a potential or perceived conflict of interest. It is crucial The environmental agency should state the operating to elucidate the different roles of each agency. license‘s period of validity. Good practice suggests a period ranging from 4 to 10 years, according to the The agency should develop procedures encompassing project‘s characteristics and the monitoring the following steps in the application process: procedures adopted. A short period of validity may cause unnecessary increases in bureaucracy. 1) Submission by the applicant of a form describing Regardless, the environmental agency should have the proposed activities, sources of pollution, the competence and authority to review an existing related potential environmental impacts, license at any time, especially if important new proposed monitoring procedures, and emissions information becomes known. Figure 2 gives an control techniques. overview of the application process. 2) Analysis of the project‘s impacts. If significant environmental impacts are anticipated, Terms of Reference should be issued to study and assess those impacts. 3) Disclosure of information that has been collected and consultation with stakeholders such as NGOs and authorities with related interests. 86 | P a g e Figure 4. Basic Stages in Application There are additional factors to consider: 3) Project proponents and opponents should have the right to appeal to an administratively superior 1) Time limits are needed for each stage of the authority empowered to review either the refusal or procedure. There should be enough time to process the issuance of an environmental license. the license, but the timetable should not unduly The environmental authority‘s analysis of the constrain the investor. proposed project should answer the following 2) The license should be issued with technical conditions questions: and requirements that aim to internalize the project‘s environmental costs, in accordance with the polluter 1) Is the proposed activity legal? pays principle. 2) Is it planned for an area in which such projects are allowed? 87 | P a g e 3) Is the proposed technology environmentally 6) Clear guidance for identifying stakeholders and adequate? providing public access to information and 4) Do projected emissions comply with the emission participation (Principle 10 of the Declaration of limits and environmental quality standards? the UN Conference on Environment and 5) Can the proposed emissions standards be Development, 1992) improved? 6) Which pollution control and mitigation measures should be adopted? Advantages and Limitations of 7) Should compensation measures be adopted for Environmental Licensing potential irreversible damages to the environment? Are there other considerations Advantages. Environmental licensing prevents or (such as indigenous, vulnerable populations) to minimizes the release or discharge of toxic pollutants take into account? into the environment, ensures compliance with 8) What measures are proposed to restore the site environmental and public health standards, after the project ceases operations? encourages pollution prevention, waste minimization, 9) What time frame and technical criteria are and cleaner production, and promotes planning and appropriate for operating license renewal? development in an environmentally sustainable manner. Prerequisite Factors for Environmental Limitations. Environmental licensing most Licensing importantly, may increase the length of time and Institutional and legal requirements should be set technology required for project implementation, may forth to enable the tool to be applied effectively: increase bureaucracy, may increase the project‘s costs, and risks becoming a mechanism for rent capture 1) Clear legal division of authority (―who licenses rather than for pollution control. what‖) among federal, state, and municipal authorities An activity that has gone through environmental 2) Legal or regulatory framework setting forth licensing can still cause pollution, especially when emission limits, environmental quality standards, that activity‘s operations are out of compliance with and land use standards its environmental license. This tool may require 3) Technical capacity of the public sector to analyze modification or exemption when applied to strategic pollution sources in proposed projects military projects, emergency measures for 4) Taxes and fees to pay for the technical analysis environmental catastrophes, land tenure 5) General rules for all sources of pollution regularization of consolidated human settlements, 88 | P a g e and projects with negligible or no environmental environmental licensing process. During the licensing impact. process, the sector agency (1) is expected to comment on, or require additional information regarding, the EIA; (2) is required to attend one or more public Interaction with other Tools and Possible hearings regarding the proposed license; and (3) may Substitutes have to deal with technical requirements imposed by the environmental agency. Environmental licensing interacts with other governmental policies and programs such as hydro Environmental impact assessment (EIA). An EIA resources policy, economic and territorial planning, operates at the environmental authority‘s decision energy and mines policy, transportation policy, and level and aims at evaluating projects with significant health and safety directives. Where such interaction is environmental impacts already listed in the legal or needed, the following tools are recommended. regulatory framework. The environmental authority should incorporate recommendations for mitigation Strategic environmental assessment (SEA). This is a measures proposed in the EIA relating to conditions tool for use at the governmental authority decision for the permit. Following submission of the proposed level. The objective of the SEA is to assess the project, the environmental agency issues a Term of environmental impacts of governmental policies, Reference that defines the specific subjects that the plans, and programs. It identifies the environmental EIA must cover. When it has been completed, the EIA issues at stake and it defines the critical decision is submitted to the environmental agency for analysis. points subject to analysis by the governmental The agency may require the project‘s proposer to authority. Preliminary stages of the licensing process submit additional information or clarify statements in may be skipped and replaced by the outcome of the the EIA. Once the analysis of the EIA is completed, a SEA. SEAs are used to define the planning process public hearing takes place for discussion of the and influence policies upstream from the licensing project. decision at the project level. Environmental licensing of a certain activity is at its best when it fits the SEA‘s Environmental compliance and inspection tools, such goals, programs, and plan of action. as audits and monitoring. At the level of technical decision making, environmental compliance and Sector agencies’ interaction with the environmental inspection tools should be employed to monitor the licensing process. If a proposed project requires operation of the licensed activity. These tools help authorization from a sector agency (for example, in evaluate whether the operation complies with the the case of mining, or oil and gas activities), the sector technical conditions of the environmental license and agency would typically liaise with the environmental may be applied in the process of renewal of the agency to exchange information and contribute to the 89 | P a g e operating license. Environmental public audits may construction of Brazil‘s Belo Monte Hydroelectric serve as a tool to verify whether the licensed activity Project planned for the Xingu River. This project aims is complying with the technical conditions set forth by at generating 11,100 MW of electricity with a reservoir the environmental agency. When the project fails to of 440 km2 in the Amazon forest. Approximately comply with the technical conditions set for its 19,000 residents, including indigenous people, are operation, the environmental license may be subject going to be displaced or otherwise affected by the to revocation. Civil, administrative, and criminal project. A study estimated that the social and sanctions may also be applied. environmental costs arising from the licensing process average about 12% of total plant costs (World Bank 2008). About four-fifths of those social-impact costs Practical Examples of Use of Environmental will be required for population resettlement, support Licensing and Lessons Learned to communities and municipalities, and supplying infrastructure. The costs associated with the physical Environmental licensing of pollution sources in environment represent only 2% of total project costs. saturated areas. Industrialized and urban areas are often saturated with gases that cause air pollution as Public consultation. The Canadian Environmental oxides of nitrogen, carbon monoxide, particulate Assessment of Integral Studies sometimes includes matter, or oxides of sulfur. To maintain air quality citizen participation in open meetings, advisory standards, new sources of emissions may be required committees, liaison offices, or site visits. For the to use the best available technology for pollution Aquarius Mine project, there were open meetings control in order to comply with emission limits. In before and after the preparation of the Environmental some countries there are market schemes to enable Impact Assessment (EIA). All participants involved in the offset of emissions by acquiring emissions the project met with a group of technical experts and reduction credits from construction that achieved advisers, largely funded by the company reductions below the emissions limits. The RECLAIM (www.idrc.ca). In a more preventive approach, Chile (Regional Clean Air Incentives Market) Program is has developed a specific guide for preliminary citizen the world‘s first comprehensive market program for participation during the Environmental Impact reducing pollution. It was adopted by the South Coast Assessment that involves owners of investment Air Quality Management District in the United States projects. The guide is intended to avoid, at the in 1993. Trading schemes combined with beginning of the project, the creation of conflicts environmental licensing give the private sector between local people and businesses, and the creation flexibility in deciding how to reduce emissions. of fear and mistrust, since once such negative attitudes have become present, they are difficult to Social issues in licensing hydroelectric projects. An overcome example of these issues is the licensing process for 90 | P a g e (www.e-seia.cl/informacion_seia/usuarios_externos/ References and Resources on select_doc. php?id_doc=42). Environmental Licensing Multi-jurisdictional approach to environmental Directive 85/33/EEC of the European Parliament and of the Council. 1985. On the Assessment of the assessment. Environmental licensing as a tool for Effects of Certain Public and Private Projects on environmental decision making may involve the the Environment. June 27, 1985. Directive 2008/1/EC of the European Parliament and overlapping interests of different levels of of the Council. 2008. Concerning Integrated governments and institutions. A project may need to Pollution Prevention and Control. January 15, 2008. be submitted to more than one public authority, and Dresner, S., and N. Gilbert. 1999. ―Decision-Making those different authorities may apply distinct Processes for Projects Requiring Environmental Impact Assessment: Case environmental licensing procedures. Canada has Study in Six European Countries.‖ Journal of considered three approaches to inter-jurisdictional Environmental Assessment Policy and Management 1 (1): 105–30. coordination of environmental assessment: (1) Ecologic – Institute for International and European standardization through one common procedure used Environmental Policy. 2008. Convergence with EU IPPC Policies. Short Guide for ENP Partners across jurisdictions; (2) harmonization through and Russia. Berlin: European Communities. EnviroCentre. Enterprise Ireland. Integrated Pollution bilateral agreements between governments or project- Prevention and Control (IPPC). Available at based agreements; and (3) substitution of federal http://www.envirocentre.ie/includes/docu ments/2008%20June%20Integrated%20Poll% authority to take the pace of local governments when 20Prev%20Control190608.pdf a project is subject to federal review. EUROPA – Gateway to the European Union. Integrated Pollution Prevention and Control: IPPC Directive. Available at Revenue generation from license fees. In Brazil, a fee http://europa.eu/legislation_summaries/en vironment/waste_mana is paid to cover the expenses of an environmental gement/l28045_en.htm agency assessment. To avoid transforming this tool Justice and Environment. European Association of Environmental Law Organizations. 2006. EIA into just a source of government revenue, regulations and Transport Infrastructure. Position Paper. define the activities that must be done in the EIA, See http://www.justiceandenvironment.org/ which is the most expensive type of assessment Justice and Environment. European Association of carried out by that agency. For activities with Environmental Law Organizations. 2007. Integrated Pollution Prevention and Control. significant environmental impacts that cannot be Case Study Collection. See remedied or minimized, project owners must pay a http://www.justiceandenvironment.org/ Justice and Environment. European Association of fee for environmental compensation. Environmental Law Organizations. 2008. Good Examples of EIA and SEA Regulation and Practice in Five European Countries. See http://www.justiceandenvironment.org/ Marzuki, A. 2009. ―A Review on Public Participation in Environmental Impact Assessment in 91 | P a g e Malaysia.‖ Theoretical and Empirical Research June 3–14, 1992. Available at http://www. in Urban Management 3 (12): 126–136. un.org/documents/ga/conf151/aconf15126- OECD (Organisation for Economic Co-operation and 1annex1.htm Development). 2006. Transition to Integrated UN Conference on the Human Environment. 1972. Environmental Permitting System in Georgia: Declaration of the UN Conference on the Human Case Study. Paris: OECD. Environment. Stockholm, June 5–16, 1972. –––––. 2007. Guiding Principles of Effective Available at http://www. Environmental Permitting Systems. Paris: unep.org/Documents.Multilingual/Default. OECD. Print.asp?documentid=97&articleid=1503 –––––. 2009. Assessing Environmental Management US Environmental Protection Agency. 2002. An Capacity: Towards a Common Reference Evaluation of the South Coast Air Quality Framework. Paris: OECD. Management District´s Regional Clean Air Oliveira, A. I. A. 2005. Introdução à legislação ambiental Incentives Market – Lessons in Environmental brasileira e licenciamento ambiental. Rio de Markets and Innovation. Janeiro: Editora Lumem Juris. Van Lang, A. 2002. Droit de l‘ environnement. 1st Prieur, M. 2004. Droit de l‘ environnement. 5th Edition. Edition. Paris: Presse Universitaires de Paris: Dalloz. France. Rebelo, C., and J. Guerreiro. Comparing EIA Procedure Welman, C. N. J., and F. P. Retief. 2009. ―Performance and Contents in Kenya, Tanzania, Mozambique of EIA Screening in South Africa: A and EU. Lisboa: Instituto Ciência Aplicada e Comparative Analysis between the 1997 and Tecnologia, Faculdade de Ciências da 2006 EIA Regulations.‖ Available at Universidade de Lisboa. http://www.iaia.co.za/Conference_2009/_ Sinclair, J. A., and P. Fitzpatrick. 2009. ―Multi- Downloads/Papers/Welman_Coert_and_Re Jurisdictional Environmental Impact tief_Francois.pdf. Assessment: Canadian Experiences.‖ Wood, C. 2003. ―Environmental Impact Assessment in Environmental Impact Assessment Review 29 Developing Countries.‖ International (4): 252–60. Available at Development Planning Review 25 (3): 301–21. www.elsevier.com/locate/eiar World Bank. 2008. Environmental Licensing for UN Conference on Environment and Development. Hydroelectric Projects in Brazil: A contribution 1992. Declaration of the UN Conference on to the Debate. Volume I: Summary Report. Environment and Development. Rio de Janeiro, Washington, DC: World Bank. This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 92 | P a g e Market-Based innovations for pollution control. From a theoretical standpoint, ―…if properly designed and Instruments / implemented, market-based instruments allow any desired level of pollution clean-up to be realized at Economic the lowest overall cost to society, by providing incentives for the greatest reductions in pollution by Incentives those firms that can achieve these reductions most cheaply‖ (Stavins 2003, 359). Introduction This note provides guidance on the use of market- Description and Application of Market- based instruments (MBIs) for pollution control. MBIs, Based Instruments / Economic Incentives by implementing an explicit or implicit price on Table 1 (adapted from Blackman and Harrington emissions, create financial incentives for pollution 2000) classifies pollution control instruments into two control. These instruments use market signals to affect categories: direct and indirect. This classification the behavior of both consumers and firms towards compares major elements of MBIs with command and pollution. MBIs are also called economic incentives control (CAC) instruments. The use of direct (EI) for pollution control and include pollution instruments requires the regulator to monitor the charges or levies, taxes, subsidies, and tradable emissions. MBI fees and levies can be grouped in one permits. category, the charge system. Pollution charges are either fees or taxes applied as a proportion of the Market-based instruments create incentives for firms amount of pollution that a source generates. These are to adopt low-cost technological or process taxes levied on market activities that generate pollution or other negative spillover costs not covered  This guidance note was prepared by Salvatore Di Falco (Consultant). Peer reviewers included Glenn-Marie Lange (Senior in an item‘s price. Both an MBI charge system and an Environmental Economist, ENV), Hua Wang (Senior Environmental MBI tax system use financial instruments to persuade Economist, DECEE), Katelijn van den Berg (Senior Environmental Economist, ECSSD), and Tijen Arin (Senior Environmental polluters to reduce pollution. In both systems, the Economist, ECSSD). Additional comments were provided by Alberto Ninio (Chief Counsel, LEGEN), Giovanni Ruta (Senior regulator attempts to make pollution more costly to Environmental Economist, ENV), Jouni Eerikainen (Senior Evaluation Officer, CEXEG), Nina Chee (Senior Environmental the polluter. Specialist, MIGA), and Suiko Yoshijima (Consultant, MNSEN). Editorial assistance was provided by Stan Wanat (Consultant), Juliette Guantai (Program Assistant, ENV) and James Cantrell (Communication Analyst, ENV). The task team leaders for this product are Kulsum Ahmed (Lead Environment Specialist, ENV) and Helena Naber (Environmental Economist, ENV). The product was prepared under the guidance of the following World Bank Group management: James Warren Evans / Mary Barton-Dock (Directors, Environment Department, World Bank), Bilal Rahill (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). 93 | P a g e Table 1. Classification of Instruments Taxes. Regulators may impose taxes which are similar to the direct emission fees, however taxes are Regulatory Direct Indirect indirect instruments. Because taxes do not require the Tool Instruments Instruments regulator to determine an abatement level, they are Market-Based Emission fees; Taxes; Instruments / Tradable Subsidies easier to implement. Taxes seem appropriate in the Economic permits context of fuel use and choice. Air pollution control Incentives has been addressed in policies aimed at discouraging Command Emissions Technology and standards standards the use of private transportation during peak hours. Control Evidence from Costa Rica showed that the choice between public and private transportation by Emission Fees. Regulators may impose on polluters commuters reflected the cost of transportation mode. a direct charge for the emissions they produce. In an Increases in cost per car trip affect transport MBI charge system, the regulator sets up a standard substitution, although this effect seems small. for a pollutant, and a plant incurs a penalty when it Increases in other costs such as parking do not seem exceeds the standard. to be as effective as expected. In 1990, a USAID study estimated that by age seven, Bangkok children Tradable permits. Regulators may use tradable collectively suffered a loss of up to 700,000 IQ points permits and create a market for pollution. In theory, as a result of elevated blood-lead levels (O'Connor they can achieve the same cost-minimizing allocation 1999). This research prompted the Thai Government of the control burden as a charge system, while to introduce unleaded petrol at a slight discount avoiding the problem of uncertain responses by firms relative to leaded petrol, subsidizing the former (Stavins 2003). In a tradable permit system, an through a surtax on the latter (O'Connor 1999). allowable overall level of pollution is established and Moreover, the Thai Government introduced a subsequently allocated among firms in the form of regulation in 1993 requiring all cars sold in Thailand permits. Firms that keep their emissions below their from that date forward to be equipped with a catalytic allocated level may then sell their surplus allotment to converter; these measures resulted in the market other firms or use them to offset excess emissions in share of unleaded petrol rising to almost 50% in the other parts of their facilities (Stavins 2003). While the following few years (O'Connor 1999). implementation of these tools has become widespread, there is no tendency towards replacing There is evidence from Santiago, Chile, that the basic regulatory approach with a purely economic consumers responded to changes in relative prices by one. ―Economic instruments are complements mostly switching to lower-priced natural gas (Coria 2009). and substitutes only sometimes for other types of This supports the use of taxes on non-clean fuels. approaches‖ (OECD 1994, 187). Even if such taxes do not create incentives to abate emissions per se, they might create incentives to use cleaner fuels and reduce emissions. This approach 94 | P a g e Box 1. Are Fuel Taxes Regressive? A major concern about fuel taxes is their possibly regressive nature, and whether they should therefore be opposed on distributional grounds. Household survey data from Costa Rica was used to study the effects of a fuel tax; it was found that a 10% fuel price hike through all types of direct and indirect spending would be slightly regressive, but that the magnitude of this combined effect would be modest (Alpizar and Carlsson 2003). The study concluded that distributional concerns need not rule out using fuel taxes to address pressing public health and safety problems, particularly if gasoline and diesel taxes can be differentiated. also provides for ease of administration, because pollution are grants, low-interest loans, favorable tax collection of revenues would be implemented via tax treatment, and preferential procurement policies for collection institutions (Blackman and Harrington products believed to pose relatively low 2000). Moreover, consumption of fuel is usually much environmental risks. Subsidies for environmental easier to monitor than emissions. Taxes generate management are, however, sometimes criticized revenues for governments. These revenues can be because they can be viewed as a prize given to used to fund investment in projects. Nevertheless, polluters. Thus, such subsidies may be seen as taxes can be politically difficult to put in place. Taxes helping to bear costs that should be the polluters‘ need to be high enough to create a disincentive that responsibility. Subsidies for resource input have been then translates into environmental benefits. Moreover, successfully implemented in Latin America. it is possible that the taxes will be regressive, hence Reforestation subsidies, for instance, have been an particularly affecting the poorer part of the important driver behind Chile‘s forestry sector population. Decision makers may find this expansion, while energy subsidies in Barbados and unappealing. The issue of potential regressivity of Ecuador seem to have expanded the use of cleaner fuel taxes is addressed in box 1. Furthermore, the substitutes (Seroa da Motta and others 1999). successful implementation of taxes needs proper enforcement. An example is the forestry tax in Brazil Other environmentally related subsidies, such as and Colombia, a tax charged for wood consumption federal support for timber harvesting in national when the harvesting is not compensated for by forests, are criticized because they have proven reforestation activities. This may be seen as an harmful to the environment (Seroa da Motta 2006). incentive to curb deforestation. Its enforcement, Nonetheless, subsidies have become a fairly common however, has been very weak. Therefore the tax did tool to manage the environment at every level of not seem to affect the deforestation rates nor provide government. Eliminating environmentally harmful important budgetary benefits (Seroa da Motta and subsidies can be even more effective when used to others 1999). improve environmental quality. In the early 1990s, the World Bank made the phase out of pesticide subsidies Subsidies. Regulators may impose subsidies to a condition for new lending to Egypt. As a result, induce reductions in pollution. Among the subsidies pesticide use dropped by nearly 70% over the next that may be used to help manage environmental five years (Anderson 2002). 95 | P a g e One possible circumstance in which subsidies can be Prerequisite Factors for Marked-Based justified is the dissemination of new technology. Instruments / Economic Incentives Subsidies to a few early adopters of a technology that is virtually unknown in a particular region or country Strong regulatory and enforcement mechanisms, and can help demonstrate the profitability and pollution- strong institutions, are required for MBIs to function reduction effectiveness of a technology so that others effectively. MBIs may need to be preceded by, and adopt it later. These early adopters are thus accompanied by, CAC actions. There are three compensated for taking a risk (Peszko 2005). The essential phases that need to be considered by amount of compensation and the identification of the institutions or regulators in developing countries: first individuals are very important and add an extra setting up the rules; second monitoring performance element of difficulty in the implementation of this and third enforcing compliance. The achievement of tool. these three phases can be affected by a host of problems. First of all the issues of priority in the Deposit-refund systems. Regulators may require a agenda. Environment and development may be seen monetary deposit at the time a product is sold. The as substitute rather than complements and in a deposit is eventually refunded when the item is developing country context environmental quality returned. This scheme has been implemented can be seen as something that can be sacrificed for successfully in many high-income countries. In the development. Moreover, regulatory institutions can United States, deposit-refund systems have been be weak, understaffed and with lack of resources. applied to control the disposal of lead-acid batteries This can impair both monitoring and enforcement and products containing aluminum, as well as glass, phase. Finally, developing countries often have a pesticide containers, and tires. The private sector large set of very small firms that are more difficult to often creates and manages a disposal system. This monitor. Firms location may also be very spatially system helps subsidize the return of recyclable disperse. Besides these points, when one evaluates products. Deposit-refund systems thus appear to be the implementation of MBIs in a developing country a appropriate instruments for discrete, solid set of issues should be considered. These issues can be commodities. Such systems may, however, have a represented in the figure below, and all these element high cost of implementation. For instance, collecting add difficulties in the implementation of monitoring and refunding deposits on the sale of individual and enforcement: products and product disposal can be expensive activities. Among middle-income countries, South Korea has one of the most exhaustive deposit systems, covering a multitude of products from packaged paper, to televisions, to washing machines. 96 | P a g e Advantages and Limitations of Market- used together with command and control (CAC) Based Instruments / Economic Incentives instruments, which set performance targets and specify the technology to be used. Each of the various The benefits of MBIs include flexibility and efficiency, types of MBI has its own characteristics, strengths, especially since two of the most important and weaknesses (see table 2, next page). dimensions of environmental regulations are monitoring and enforcement. In practice, MBIs are Figure 5. The Environmental Regulatory process Public Sector Set up clear Problems rules Institutions Monitoring - Development vs Environment Performance - Political resistance - Weak Regulatory Institutions - Lack of Fiscal and technical resources Environment Enforcing - Small scale firms or plants Compliance Departments Regulators 97 | P a g e Table 2. Success Matrix for Implementation of MBIs Activities and requirements to establish and implement MBIs the instrument Conditions for success Strengths Weaknesses Charge The regulator needs to:  Monitoring data on  Charges proportional to  More complex to system  Set up clear rules pollutant must be pollution coordinate with  Collect the revenue available different sources of  Enforcing compliance pollution  Institutional integrity  Monitoring and must be very high enforcement are costly Deposit The regulator needs to:  Front-end charge  Low legal, institutional,  Difficult to enforce refund  Set up clear rules (deposit) combined with and political barriers because of the  Collect the revenue refund payable when  No need for monitoring voluntary nature of quantities are turned in when voluntary the scheme for recycling.  High cost of  Participation by implementation households Taxes The regulator needs to:  Enforcing compliance  Multiple sources of  Do not always  Set up clear rules  Institutional integrity pollution incentivize adoption  Collect the revenue must be very high  No need to identify an of abatement abatement level technologies  Works even when  May affect non- monitoring data targeted activities unavailable  Politically difficult to  Easy to manage accept  Generate revenues  Distributional impacts can be distortive Subsidies  The regulator needs to set up  Monitoring data on  Incentive to actually  Taxpayer gets part of clear rules pollutant must be change system the pollution burden available  Enforcing compliance Tradable  The regulator needs to set up  Data needed for initial  Flexibility in their  Major regulatory permits clear rules allocation application requirements  Tracking system required  Cost savings for the  Consistent legal  Enforcing compliance regulator framework  Less efficient units of  Political resistance production are likely to stop operating 98 | P a g e A number of points can be highlighted: expensive and counterproductive (Stavins 2003). A  There is evidence that MBI pollution charges central issue to be considered is the cost effectiveness and fees curb air and water pollution. of pollution control instruments, and CAC  These results seem to be stronger for larger instruments seem to impose a relatively high cost on units of production. firms (Pandey 2005).  Taxes can reduce air pollution by providing incentives for switching to cleaner energy. It would be inaccurate to view CAC and MBIs as  A balanced mix of regulatory measures and mutually exclusive or opposing approaches since, in MBIs will effectively achieve pollution many circumstances, these tools are complementary. reduction targets. A prime example is the Moreover, the success of MBIs depends upon an implementation of tradable permits. effectively functioning system for monitoring, and for  MBI requires effective systems and command and control, including properly functioning institutions for monitoring, and for institutions. CAC may be a sensible initial approach command and control. and be followed by MBIs. Therefore in reality CAC  CAC (through setting up standards) can be and MBIs can and do operate together. For example, superior to MBI in some situations. regulators might establish a specific threshold level (a  CAC approaches may be a sensible initial standard) of pollution, which is a CAC action, and approach, especially when there is limited apply a fee for the amount of pollution above that information and environmental damage is threshold, which is an MBI action. an important issue.  Monitoring and enforcement are very Much recent attention has been devoted to informal, important; without both, policies have been voluntary, or informational polices, all of which are ineffective. complementary tools to both MBIs and CAC. The usefulness of those policies becomes clear when one considers the issues of monitoring and enforcement. The potential beneficial effect of these policies for Interaction with other Tools and Possible pollution control was highlighted by the World Bank Substitutes (Blackman 2009a, 2). Evidence drawn from three Command and Control (CAC) instruments are often empirical studies of plant-level abatement practices contrasted to MBIs. By setting up standards, a CAC conducted 1992–94 clearly stressed that action can be superior to MBI in some situations. environmental performance is strongly and positively While setting performance standards through CAC related to external sources of pressure and can reduce some of the overall pollution, this process community action (Blackman and Bannister 1998; neglects consideration of the possible costs of holding Dasgupta and others 2000). all firms to the same target, since this can be 99 | P a g e Enforcement and compliance play very important Philippines shows that they react to announcements roles in environmental performance. In China, of environmental events, such as those of superior inspections dominate and better explain the environmental performance or citizens‘ complaints. environmental performance of industrial polluters. An empirical analysis of the impact of traditional Public disclosure mechanisms in developing countries enforcement and information strategies provided may be a useful model to consider given limited insights into the relative impact of traditional (fines government enforcement resources. Public disclosure and penalties) and emerging (public disclosure) can affect firms‘ responsiveness to industrial pollution enforcement strategies (Foulon and others 2002). control, as has been demonstrated in Indonesia. The Public disclosure of environmental performance role of the press has been analyzed in India. It offers a creates additional and strong incentives for pollution test of the hypothesis that the press can act as an control. informal agent of pollution control. This hypothesis was tested using monthly water pollution data from four hot spots in the state of Gujarat, India, for the Practical Examples of Market-Based period 1996 to 2000. Instruments / Economic Incentives and Lessons Learned The study‘s results show that the press can function Theoretical and anecdotal information on MBIs in as an informal regulator if there is sustained interest developing countries is fairly extensive; however, in news about pollution. The role of capital markets evidence based on robust econometric analysis is appears relevant as well. Evidence from capital limited (see table 3). markets in Argentina, Chile, Mexico, and the 100 | P a g e Table 3. Applications of MBIs in Developing Countries* Application in MBIs Issue or Source of Pollution Developing Countries Charge  Industrial air and water pollution from large units  China  Malaysia system  Colombia  Mexico  Ecuador  Philippines Deposit  Waste management households (glass and plastic, car  Colombia  Mexico refund batteries)  Ecuador  Sri Lanka  Jamaica  Taiwan  Korea  Venezuela Taxes  Air pollution mostly from large units  Brazil  Mexico  Fuel use  Chile  Thailand  Traffic congestion  Kenya  Halting deforestation via a “forestry tax� Subsidies  Air pollution from both large and small units  Brazil  Kenya  Used to incentivize reforestation and adoption of cleaner  Chile  Mexico technologies  Colombia  Tanzania  Ecuador Tradable  Air pollution (SO2) from large units  Chile permits  Water use by large units  Mexico  Car use/congestion in megacities  Singapore * Bolded items signify that evidence is based on quantitative studies. The Chinese pollution levy system is one of the most intensities have been highly responsive to that comprehensive emission charge system in the pollution intensity has been responsive to this developing world (see box 2). Data on water found instrument. A variety of analyses at both provincial that China‘s levy system had been working much and plant levels estimated responsiveness of pollution better than previously thought (Wang and Wheeler to the levies for different pollutants. 1996). The results suggest that pollution discharge Box 2. Chinese Levy System In 1982, China’s State Council began nationwide implementation of pollution charges. The system is applied to hundreds of thousands of sources of air, water, solid waste, and noise pollution. The implementation has been very widespread, and year after year the number of firms participating and the revenues collected have increased. For wastewater, fees are calculated for each pollutant in a discharge stream and the polluter pays the fee associated with the highest value among all the pollutants (Wang 2002). The resources collected as levies are used to finance environmental institutional development, administration, and environmental projects, and to provide subsidies or loans to firm-level pollution control projects. Enforcement is implemented via a schedule of penalties. 101 | P a g e For air pollution, the results imply that emissions In Poland, a revenue-raising charge to provide funds decline by about 0.65% for each 1% increase in the for environmental protection and water management effective levy rate. Water pollution declines by 1.08% on a national, provincial, and municipal scale was for each 1% increase in the levy. For SO2 emissions implemented. Pollutants targeted include biochemical alone, the estimated decline is again noticeable, 1.03% oxygen demand (BOD) and chemical oxygen demand for each 1% increase in the levy. Firms‘ response to (two indicators of the physico-chemical properties of the water pollution levy is focused on process change, water samples), suspended solids, chloride and rather than end-of-pipe removal. sulphate ions, heavy metals, and volatile compounds. In 1996 BOD decreased by 11,000 tons and insoluble A similar water pollution scheme was adopted in substances by 71,000 tons (OECD 1999). Similar Colombia. The Colombia discharge fee program actions were taken in Estonia, Latvia (Speck and encountered a set of serious problems that limited its others 2006), Malaysia, and the Philippines (World success in some regions. These included widespread Bank 1997). Box 3 presents information about MBIs in noncompliance by municipal sewerage authorities, developed countries. and a confused relationship between discharge fees and emissions standards. Nonetheless, Colombia‘s program seems to have achieved its targets. In some watersheds, pollution loads dropped significantly after the program was introduced (Blackman 2009b). For instance, in the ecologically sensitive area of Rio Negro, watershed water pollution from industrial sources was reduced by 28% (Sterner 2003). Box 3. MBIs in Developed Countries During the last 20 years many OECD countries have experimented with MBIs for pollution control. Charges and fees are the most popular tools (both emissions and product charges). For instance emissions charges levied on air and water pollutants have been applied in more than 20 countries. Carbon taxes in Denmark, Norway, and Sweden are intended to have an incentive effect, in addition to a revenue-generating effect, but it has been difficult to determine their actual impacts (Blackman and Harrington 2000). Claims have been made that the Swedish and Norwegian taxes have reduced carbon emission (Larsen and Nesbakken 1997). Stronger evidence is on reduction in water pollution. The Netherlands, for instance, has assessed effluent fees on heavy metals discharges from large enterprises, and organic discharges from urban and farm households, and from small, medium, and large enterprises. In some cases, the charges reduced total organic discharges by half, and industrial organic emissions by 75 percent (World Bank 2000). The most ambitious implementation of MBIs has been the control of sulfur dioxide (SO2) Polluters were allowed to trade the permits or bank them. The results of the program were very good. 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Productivity Analysis 33 (1): 47–66. This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 105 | P a g e APPENDIX Details of Studies proposing quantitative evidence MBIs Study Country Issue Key Findings Wang and Water pollution Industry highly responsive to the levy Wheeler 1996 Levy decomposition into two components: Wang and Air and water pollution pollution intensity of process production Wheeler 1999 (TSP COD) and degree of end-of-pipe (EOP) abatement Charge China system Expenditures on end-of-pipe wastewater Wang 2002 Water Pollution (COD) treatment are strongly responsive to the pollution charges Wang and Air and water pollution Strong marginal deterrence effect for the Wheeler 2005 (COD TSS SO2) pollution levy Market incentives are also very influential Determinant Seroa da Motta determinants. Cost savings on inputs and Brazil of Environmental 2006 subsidized credit are found equally Performance Subsidies important Large response of the rate of switching to Coria 2009 Costa Rica Fuel expenditure the lower price of natural gas Fuel taxes can also be useful to incentivize Taxes Alpizar and Costa Rica Transport Mode technological change and adopt Carlsson 2003 alternative technologies 106 | P a g e Labeling and Description and Application of Labeling and Certification Certification Environmental labeling. Labeling gives information about the environmental impacts associated with the production or use of a product. They are typically Introduction voluntary but may be mandatory in certain instances, for example, requiring certain toxic ingredients to be Labeling and certification are two tools that indicated on the product or mandatory energy labels government officials may employ, in conjunction with for domestic appliances. While there are many other tools, to effectively manage pollution. These two different environmental labeling programs, there are instruments provide consumers with information that three basic types of environmental labels (see box 1). was previously unknown to them and that may alter Effective labeling allows a government to address a their choices when they balance their environmental preferences with costs. Effective labeling and certification mechanisms may shift consumption and Box 1. Types of Environmental Labels production towards socially responsible and sustainable patterns. In the long term, through the Type I labels are labels that give consumers an indication of the overall environmental performance of a specific demand-side response to labels and certifications, product compared with others within the same product category. Type I labels can address a single criterion, but are business practices will adapt to reflect the ethical typically based on some form of Life Cycle Analysis (LCA). demands of their consumers. Because of the lack of adequate scientific knowledge, the high cost of some testing procedures, and the perception that some environmental issues deserve priority, the criteria for type I labels often involve weighted judgments. Type I labels are typically voluntary labels. (For more information, see World Bank Guidance Note on Life Cycle Analysis.)  This guidance note was prepared by Jaap van der Meer Type II labels are any kind of declaration made by (Consultant, IVAM). Peer reviewers included Mauricio Athie (Senior Environmental Specialist, CESI). Additional comments and manufacturers, importers, distributors, or anyone else who contributions were provided by Adam Rubinfield (Environmental is likely to benefit from a product’s environmental claim. Specialist, ENV), Frank van Woerden (Senior Environmental They generally address single issues without considering the Engineer, ECSS3), Jigar Shah (Senior Technical Specialist, CESCL), environmental impacts throughout a product’s entire life and Jouni Eerikainen (Senior Evaluation Officer, CEXEG). Editorial cycle. Type II labels are typically mandatory labels. assistance was provided by Stan Wanat (Consultant), Juliette Guantai (Program Assistant, ENV) and James Cantrell Type III labels are comprehensive data lists that give (Communication Analyst, ENV). The task team leaders for this environmental information on a product throughout its life product are Kulsum Ahmed (Lead Environment Specialist, ENV) and Helena Naber (Environmental Economist, ENV). The product cycle. was prepared under the guidance of the following World Bank Group management: James Warren Evans / Mary Barton-Dock Source: ISO 2000. (Directors, Environment Department, World Bank), Bilal Rahill (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). 107 | P a g e specific environmental concern. ―Ecomark‖ is a type I Voluntary labels and specifically multi-criteria type I labeling program used in India. Initially launched by labels should be promoted when governments want the government of India as a voluntary labeling to change behavioral patterns of consumption. program with criteria based on a cradle-to-grave approach, ―Ecomark‖ has become mandatory for For policy makers, environmental labeling may also some products such as refrigerators and air represent a short-term solution to a difficult conditioners. Energy labels, such the EU energy label regulatory problem. Labeling can become a and China energy label, are type II labels used to compromise that is particularly attractive to policy reduce reliance on oil imports and to reduce makers because of its market-based character. In the greenhouse gases. These labels allow consumers to long term, labeling can become one of the first steps in compare the energy efficiency of appliances before a government strategy of steering the behavior of purchasing a device. In this case, consumers may producers and consumers in a sustainable direction compare the energy efficiency of the appliance with (Golan and others 2001). Box 2 illustrates the effective its cost. implementation of labeling. Environmental certification programs assess the Box 2. Effective Implementation of Labeling In the early 1990s, environmental labels became non-tariff barriers to certain products in China such as silk, which, due to the lack of an environmental label, failed to get an import quota in France. In addition, export to some European countries of refrigerators dropped 60% because they lacked an environmental label (and the refrigerators contained chlorofluorocarbons). In 1993, the State Environmental Protection Administration (SEPA) announced the establishment of an environmental labeling program. Because an important objective was to promote Chinese exports, the certifying organization CCELP selected silk cloth and refrigerators to be among the first seven types of products that could display environmental labels. In order for exports to benefit from such labels, the labeling requirements had to be consistent with those of other countries. CCELP referred to Canadian labeling requirements when it formulated criteria for water-based paints, and it considered German criteria when it developed criteria for silk cloth. Source: Zhao and Xia 1999. Most environmental labeling programs are developed overall environmental policy and management of a nationally. Consequently, they address national company. Such programs give information on the preferences relating to environmental quality. environmental impacts of a company‘s processing Promotion of environmental labels by governments and production methods, for instance, resource use, should demonstrate the priorities of a country. For production techniques, and emissions. Unlike example, countries with high per capita energy environmental labels, which give information on the consumption could introduce mandatory energy impacts associated with a particular product, labels on household appliances, cars, and buildings. environmental certification programs give 108 | P a g e information on the impacts of a company‘s entire manufacturers that meet minimum emission activity. standards and agree to take back used batteries for environmental recycling. In principle, an environmental certification approach can be applied to any business enterprise, public Environmental certification may be encouraged by administration, or government department. Currently governments for industries that are difficult to there are two internationally accepted and third party regulate due to complex processes and regulations, or certified generic environmental certification schemes: have an irregular or bad compliance history, or that the International Standards Organization (ISO) 14.001 pose a particular threat to environment and health. Environmental Management System (EMS; see ISO Furthermore, environmental certification, especially 2004) standard and the Eco-Management and when certified by an accredited internationally Auditing Scheme (EMAS). These generic schemes recognized third party, can modernize industries by provide overarching comparisons between industries improving the way they manage risks, whether those and outline fundamental environmental codes for are related to quality, environment, and/or health. industry. Additionally, there are sector-specific environmental certification schemes that can provide Labeling and certification process Environmental more specialized and detailed guidance to companies certification is considered a unilateral commitment to within the same industry. This approach gives greater improving environmental performance. The company assurance that a certified company is managing its independently determines when and how goals will environmental impacts responsibly. See Guidance Note be reached. For the implementation of environmental on Environmental Management Systems in certification programs, government may provide Multinationals, Private Sector, and SMEs part for more incentives (or implement sanctions) and promote the information. diffusion of environmental certification into companies. Companies frequently visited by Similar to mandatory environmental labeling, regulators and companies with an irregular environmental certification can also address a compliance history are more likely to adopt particular issue within a specific target group or environmental certification programs. Companies industry. Public certification schemes are devised by a that are not regularly visited, or that are at either end public authority or international agency that develops of the compliance continuum (that is, not in voluntary codes, guidelines, and standards. compliance, or in full compliance) are the least likely Companies are subsequently invited to comply with to adopt environmental certification schemes (Potoski those criteria. An example is the Better Environmental and Prakash 2005). Sustainability Targets (BEST) certification program, which provides recognition for lead battery 109 | P a g e For implementing an environmental label, the governments to promote similar programs in their responsible government agency (or other establishing country in order to comply with their own body) has to consider several steps (see table 1). commitment to develop an environmentally Table 1. Steps for the Labeling and Certification Process Phases Steps Issues to consider Assignment of Clear assignment of who is responsible for defining criteria, certifying products, and responsibilities generally administering the program Preparation & Launching Selection and Selection of product categories and determination of certification criteria for these Phase determination categories. Gathering of proposals for certification criteria and categories from industry, of product science, trade, consumers, environmental, and other public organizations (stakeholder categories process) Once product categories are selected, the next step is the establishment of requirements that an applicant must meet to be approved by the eco-labeling program. For example, if a labeling program is developed to overcome trade barriers, then the country’s labeling requirements should be consistent with labeling requirements in Development other countries. Criteria for granting an eco-label to a product or service can be limited, Negotiation of criteria, or without limits, as to the number of products that will qualify for the label. The group Phase standards, or responsible for setting the criteria may include scientific and technical experts from guidelines both government and the private sector. Feedback and comments from interested stakeholders should be included before finalizing the list of criteria. This list should be periodically reassessed. Producers, service providers, suppliers, retailers, distributors, importers, and legitimated institutions may apply for certification. Implementation Certification The awarding process includes testing and compliance verification, applicant licensing, Phase and licensing and monitoring (with periodic reexamination every 2 to 5 years). Applicants usually have to pay an application fee, the cost of verification, and an annual fee for use of the eco-label; these fees depend on annual product turnover. Source: Porrini 2005. Role of government. In the last 10 years, the sustainable society (GEN 2007; ISO 2010). implementation of environmental labeling and certification has seen a rapid rise worldwide. This The potential role of the national government in growth has made both tools attractive for establishing environmental labeling programs has 110 | P a g e multiple facets. Government organizations can be and private organizations (for example, certifying involved in the selection of product categories, organizations). Involving a wide range of definition of certification criteria, certification of stakeholders through all steps of program products, and administration of the program. In some development and implementation brings about countries, as is the case for China and Japan, the societal support for the program. government provides all technical research and administrative support. However, in other countries, Governments should insure transparency throughout such as Germany and Austria, government officials the program‘s development and operation. Although and certification authorities share these duties. In governments can choose to award certification Austria a consumer organization and a private themselves, credibility increases significantly when it certification authority are in charge of the labeling is awarded after successful independent third-party program. certification without conflict of interest (GEN 2004). Other government roles can be in developing programs to lower the entry barriers by, for example, Prerequisite Factors for Labeling and supporting small and medium-size enterprises Certification (SMEs) in the certification process. National governments can facilitate the development of a third- Establishing environmental labeling and promoting party certifying body and consulting companies that environmental certification programs require a clear will reduce the costs for companies. Government understanding of the environmental (and non- should stimulate private sector support, because environmental) concerns that the tool will focus on. In industry and commercial awareness, interest, and order to establish such an understanding, it is direct involvement are essential to program success necessary to involve relevant stakeholders in a (see box 3). consultation process. Stakeholders should be industry experts, the scientific and engineering community, consumer organizations and other NGOs, retailers, 111 | P a g e Box 3. Effective Implementation of Labeling Organizational Structure of China’s Environmental Labeling Program State Environmental Protection Administration (SEPA) Functions: to offer policy support for environmental labeling products and technology development, to issue guidelines and requirements for accrediting environmental labeling products, to conduct research on technology and policies related to environmental labeling, and to supervise management and certification. China Certification Committee for Environmental Labeling (CCEL) Functions: to investigate developments and trends in environmental labeling both domestically and overseas; to propose the nature of, and direction for, the certification system for environmental labeling products; to publicize China’s environmental labeling program and promote its products; to honor the outstanding units and individuals in the field of environmental labeling; and to advocate for related international communication. China Environmental United Certification Center Co., Ltd (CEC) Functions: to enforce the requirement for improving the technique and quality of certification issued by SEPA; to make sure the label is honored, managed, and supervised properly; and to cooperate with CCEL in publicizing and honoring the environmental labeling program. Source: SEPA CEC web site. Advantages and Limitations of Labeling Nonetheless, positive responses from industry and and Certification consumers suggest that such labels are perceived as good marketing tools and generally accepted symbols Most national environmental labeling programs are of environmentally sound choices. Other success new, and efforts made to measure their effectiveness indicators of an environmental labeling program are are incomplete. Additionally, it is difficult to separate increased numbers of certified products and increased the impact of environmental labeling from other industry involvement in the selection and economic, environmental, and social policies. development of category criteria. Strengths and Therefore, few programs have claimed direct weaknesses of this tool are shown in Table 2. environmental benefits from environmental labeling. Table 2. Strengths and Weaknesses of Labeling and Certification Strengths Weaknesses Stakeholder participation Many different labels Negotiating detailed award criteria takes places between Increased number of environmental product labels with public and private experts and a number of other different guiding standards can lead to consumer confusion. stakeholders. (continued) 112 | P a g e Strengths Weaknesses Reward leadership Potential trade effects Eco-labeling programs reward environmentally ambitious Eco-labels can raise trade concerns when criteria include companies with public recognition, thus encouraging ones that discriminate against imported products. companies to take a pro-active approach towards the Transparency in development of criteria and consultation environment. with importers is critical to avoid potential barriers. Increased environmental awareness No continuous innovation incentive Through their public visibility, eco-labels are likely to raise When criteria are not continuously evaluated and updated, awareness among consumers about environmental issues. no incentive exists for companies to improve performance beyond the specifications of the current criteria. Diffusion of best available techniques Effectiveness is difficult to assess Ambitious eco-labels can help to make the best available Efforts to measure effectiveness are incomplete, for techniques clearly recognizable and widely applied. example, there are difficulties in assessing the impact of eco- labels on the overall performance of companies. Provision of economic incentives Not always clear preferences For manufacturers, labels provide benchmarking information Labels mainly address domestic economic and and information on the marketplace, help to green the environmental priorities; therefore, selected criteria may not corporate image, and serve as a communication tool. be relevant to broader environmental and social issues. Provide greater flexibility than regulations Appropriate framework conditions Environmental certification can offer more ambitious goals Testing procedures require adapted technologies, than compliance with regulations, while lowering infrastructure, and expertise that are not always easily administrative costs and enabling faster implementation. accessible, especially not for producers in developing countries. Encourage proactive and precautionary attitudes in industry Difficult to apply in areas with little business self-interest Environmental certification can shift businesses’ mindsets Environmental certifications are limited to areas where from reactionary to proactive, cleaner production. industries have financial motivation to change their behavior. Improve dialogue and trust between industry and government Criteria depend on public perception Implementing environmental certification programs will Environmental issues mirrored by the criteria might be more improve industry compliance and build relationships that are reflective of the public’s sometimes irrational concerns, more cooperative. rather than reflective of sound scientific evaluations. Demand-driven policy instrument Size matters As consumers have the ultimate voice through purchasing Environmental certification programs focus on management decisions, eco-label criteria are likely to reflect consumers’ structure, and the required changes may not be compatible preferences and concerns. with the management styles of small and medium enterprises. Can improve trade Environment impacts may not be the driving force Environmental certification programs, when third party When market demand, instead of environmental impacts, is certified, can be seen as a commitment by the company to the driving force, going beyond compliance and continuous improve environmental performance, reduce risks, and improvement may not be wholeheartedly pursued. comply with customer requirements. Sources: GEN 2004; Gerstenfeld and Roberts 2000; OECD 2003; and UNEP DTIE 1998. 113 | P a g e In some cases, costs hamper the implementation of significantly reduces the harm it would otherwise environmental certification because a company is too cause the environment could be considered an small to afford the certification process (Khan 2008). environment friendly product. The criteria follow a See box 4. ―cradle to grave‖ approach, meaning that the entire Box 4. Example of Certification Costs Costs for obtaining an eco-label certificate differ by country. In China, the total fee for obtaining an eco-label certificate ranges from US$ 1,800 to US$ 6,000 (Zhao and Xia 1999). In the Netherlands, acquiring an eco-label certificate has two cost components: a onetime certification fee of US$ 800 and an annual fee between US$ 600 and US$ 39,000 (2008 figures; SMK web site). The EU charges an application fee of 200 to 1,200 euros and an annual fee of 1,500 euros (EU web site). Interaction with other Tools and Possible production process is evaluated, from raw material Substitutes extraction to disposal. The Ecomark label is awarded to consumer goods that meet the specified Labeling and certification work in conjunction with a environmental criteria and the quality requirements number of other policy tools. These include audit of Indian standards. The program has become programs; environmental information disclosure mandatory for certain products including (EID); environmental management systems (EMS); refrigerators, air conditioners, distribution environmental licensing; life cycle analysis (LCA); transformers, and florescent lamps. Ecomark labeling regulations and standards, monitoring, inspection, is scheduled to become mandatory for color compliance, and enforcement programs; and televisions, liquid propane gas stoves, and electric voluntary agreements. For more information, see motors. World Bank Guidance Note series on tools for pollution management, including the reports on EID, EMS, Eco-Watch. In the Philippines, the local environment environmental licensing, LCA, regulations and agency designed a rating or labeling program called standards, and the other guidance notes in this series. Eco-Watch to rate firms and label them with one of five colors according to their environmental performance. Black indicates the least compliant, Practical Examples of Labeling and followed by red, blue, green, and ending with gold, Certification, and Lessons Learned which represents the best practices. In the first Ecomark In 1991, the government of India launched evaluation, 92% (48 out of 52) of the companies the eco-labeling scheme known as Ecomark for easy involved in the program were found to be non- identification of environment friendly products. Any compliant, and given either ―Black‖ or ―Red‖ ratings. product made, used, or disposed of in a way that The program led to improved environmental 114 | P a g e performance, and the number of compliant It has been estimated that the US Energy Star companies with ―Blue‖ ratings increased from 8% to program will save approximately US$ 90 billion (a 58% within 18 months. billion is 1,000 million) during the 2007–2015 period (Sanchez and others 2008). The Energy Star program Energy Star. Energy Star is a voluntary labeling has helped spread the use of LED (light-emitting program operated jointly by the United States diode) traffic lights, efficient fluorescent lighting, Department of Energy (US DOE) and the United power management systems for office equipment, States Environmental Protection Agency (US EPA) in and low use of standby energy. an attempt to reduce energy consumption and greenhouse gas emissions by power plants. The US GreenLabel. Singapore‘s GreenLabel program was DOE and the US EPA enter into partnerships with launched in May 1992 by the Ministry of the manufacturers and key stakeholders to promote Environment as part of the country‘s national products that meet energy efficiency and performance environmental plan. GreenLabel is a voluntary ISO criteria established by the agencies. The program was Type I program open to local and foreign companies. intended to be part of a series of voluntary programs, This program covers a broad range of products, as such as Green Lights and the Methane Program, to well as services and processes, but not food, drinks, or demonstrate the potential for profitable reduction of pharmaceuticals. More than 700 products have the greenhouse gases and facilitate further steps to reduce GreenLabel, involving over 130 manufacturers (SEC global warming gases. web site). Initiated as a voluntary labeling program designed to Green Rating Project. In India, a public disclosure allow consumers to identify and purchase energy program, the Green Rating Project, was established by efficient products, Energy Star began with labels for the Centre for Science and Environment, an computer products. In 1995, the program was environmental NGO. Apart from the Project Advisory significantly expanded, introducing labels for Panel, there was a three member technical panel from residential heating and cooling systems and new the pulp and paper sector formed to help develop the homes. As of 2006, more than 40,000 Energy Star rating process. The results of the project showed that products were available in a wide range of items among 31 large pulp and paper factories, the adoption including major appliances, office equipment, of a formal environmental policy increased from 30% lighting, and home electronics. In addition, the label to 89%, the establishment of an environmental can be found on new homes, and on commercial and department increased from 18% to 89%, and industrial buildings. In 2009, nearly 21 percent of new certification of the EMS according to ISO 14001 housing in the United States was labeled Energy Star increased from 3% to 46%. 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This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 117 | P a g e Environmental individual shall have appropriate access to information concerning the environment that is Information held by public authorities, including information on hazardous materials and activities in their Disclosure communities, and the opportunity to participate in decision-making processes. States shall facilitate and encourage public awareness and participation by making information widely Introduction available. Effective access to judicial and administrative proceedings, including redress Governments throughout the world seek to attain and remedy, shall be provided. (UN DESA 1992) sustainable development environmentally and socially. The link between sustainable development The principle of public access to environmental and access to environmental information is information is also reinforced by the Aarhus established in principle 10 of the Rio Declaration (a Convention1 and by national legislation in dozens of soft law instrument), which reinforces the principle of countries as necessary for sustainable development. public access to environmental information in achieving sustainable development. Principle 10 of Environmental information generally refers to data the Rio Declaration on Environment and held by public authorities that is generated by Development, which was adopted at the United environmental legislation and measures at all levels Nations Conference on Environment and of government. An example is information on the Development in June 1992, states: state of water, air, soil, fauna, flora, land, and natural sites, and data on activities that are likely to affect  Environmental issues are best handled with the these resources adversely or on measures designed to participation of all concerned citizens, at the protect these, including administrative measures and relevant level. At the national level, each 1 The Aarhus Convention is the United Nations Economic Commission for Europe (UNECE) Convention on Access to  This guidance note was prepared by Hua Wang (Senior Information, Public Participation in Decision Making and Access to Environmental Economist, DECEE). Peer reviewers included Justice in Environmental Matters. It requires its 44 parties to Maged Hamed (Senior Environmental Specialist, MNSEN) and guarantee rights of access to information, public participation in Tijen Arin (Senior Environmental Economist, ECSSD). Additional decision making, and access to justice in environmental matters. comments and contributions were provided by Dan Biller (Lead The Convention states that any person, regardless of nationality Economist, SASSD) and Suiko Yoshijima (Consultant, MNSEN). or place of residence, can ask for environmental information held Editorial assistance was provided by Stan Wanat (Consultant), by public authorities. The person requesting the information does Juliette Guantai (Program Assistant) and James Cantrell not need to state a reason. The authorities are required to help (Communication Analyst). The task team leaders for this product people with requests, for instance by making practical are Kulsum Ahmed (Lead Environment Specialist, ENV) and Helena arrangements for obtaining information or by passing a request to Naber (Environmental Economist, ENV). The product was another authority if the first authority approached does not hold prepared under the guidance of the following World Bank Group it. The Aarhus Convention is the first and so far only legally management: James Warren Evans / Mary Barton-Dock binding multilateral environmental agreement to explicitly (Directors, Environment Department, World Bank), Bilal Rahill implement Principle 10 of the Rio Declaration; and, is a regional (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). environmental treaty that has been ratified by almost all European countries and the European Union. 118 | P a g e environmental management programs. pollution control, in a way that traditional Environmental information also includes data held by enforcement tools or market-based approaches may private entities, such as companies2. A great deal of not be able to achieve (Dasgupta and others 2007). environmental information is being generated and Environmental regulators may make beneficial use of collected as a result of environmental law and the situation by publicly releasing appropriate regulations or in connection with applications for information pertaining to the firm‘s environmental governmental licenses. Most of the environment- performance. related information is generated for purposes of environmental monitoring and control or government The public‘s right to know environmental information oversight. Research activities may also have as well as the need to incentivize sources of pollution generated or collected some environmental to minimize contamination has led many countries to information. develop and implement environmental information disclosure (EID) programs. This Guidance Note is Providing rights to the public for accessing meant for national governments who are considering environmental information can empower the public whether to implement an EID program. The Note to make effective and efficient decisions relating to identifies key points to consider when developing an environmental issues. This may include personal EID program while keeping system costs as low as is decisions about purchases. practical. The disclosure approach involves releasing information on a polluter‘s environmental Description and Application of performance, including emissions to air, wastewater Environmental Information Disclosure discharges, waste, and compliance with standards in a manner that is clear to a large and varied audience. An EID program can be a simple environmental The underlying assumption behind public disclosure information system (EIS) that collects and publicly is that that industrial facilities (or a subset of them) releases important environmental data in one or more may be sensitive about their reputation in the market of the following ways: place or in the communities where they are located, and will thus avoid this reputation from being 1) An environmental catalogue or register of tarnished, or will seek this reputation being enhanced potentially harmful pollutant releases (this in the public arena, in other words social and/or system is called Pollutant Release and Transfer market pressure can generate strong incentives for Register, or PRTR). Modeled from the successful United States PRTR program and strong pressure 2 Moreover, some consider that environmental information from the United Nations' Rio Protocol, includes all information relevant to decision-making that concerns the environment: thus financial, social, economic data can also be environmental information. 119 | P a g e international organizations began assisting following specific issues in establishing an EID countries in PRTR development. for pollution control: 2) A disclosure of environmental performance 1) The list of pollutants and other data to be ratings based on a set of pollution control reported upon; indicators and a performance rating 2) Who must report and how often; methodology (such a system is called an 3) To whom the data shall be reported; Environmental Performance Rating and 4) How claims of confidentiality will be Disclosure, or EPRD). Countries such as China, handled; Indonesia, Philippines, and Ukraine have 5) How the performance would be rated if an successfully established EPRD programs. EPRD approach is chosen; 6) How the data will be provided to the public; Additionally, the public can request for certain 7) Whether the EID will be mandatory in information that a government agency may have. nature and if so, how its requirements will be enforced; Research has shown that EID programs can help 8) How the EID will be implemented citizens make more efficient decisions related to administratively and by whom, e.g. environmental quality and can generate strong guidance issued to polluters, inspection impacts on polluters (Jin and others 2010). Significant capabilities, data reception and analysis; pollution reduction can be achieved with no further what financial and human resources will be regulatory efforts, because environmental information needed to implement EID, especially in its disclosure can affect a polluter‘s relationship with early stages. various stakeholders in markets and communities. Establishment and Implementation. Major principles 1) Preliminary Objectives. The first step in concerning establishment and implementation of an establishing an EID program is for the EID system include: government to determine preliminary objectives for its EID. These preliminary objectives become 1) Reducing duplicative reporting and cost, EID the basis for initial discussion with interested systems should start from the existing parties such as industry, local government, information system; citizen groups, and government-owned or 2) EID systems should undergo evaluations and operated installations. Unless these have the flexibility to be altered by the "stakeholders" reach agreement on the scope, government in response to these evaluations or objectives, and details of management, to the changing needs of affected and interested successfully implementing an EID is likely to be parties; difficult. Decisions may be needed on the 120 | P a g e 3) Handling data and managing capabilities of the may or must use for pollution control, and the system should allow for verification of data program should become an explicit feature of the entries and outputs; legal and institutional framework. 4) Establishing the EID system, its implementation, and operation should be transparent and Monitoring facilities are necessary for an effective EID objective. program. These facilities can require significant financial resources. This is especially the case during EID effectively provides incentives for local inception. It is also the case when insufficient governments and for firms to protect the environment information is available about pollution from further and to empower the public and individual emissions. citizens alike to make better decisions when the environment is a concern. EID is easy to design and Where no sufficient legal provisions are available for operate, with relatively low regulatory cost. EID, governments may still be able to establish and operate public disclosure programs. An example would be a voluntary disclosure program, where Prerequisite Factors for Environmental firms may submit their environmental information to Information Disclosure government agencies voluntarily and government agencies make that information publicly available. In Many countries that stipulate, as a general rule, broad the long run, the governments should mandate public access and dissemination of environmental disclosure. information also have in place a list of exceptions to protect other relevant interests and values, such as Effective application of the principle of public access privacy or confidential commercial information. In its to environmental information requires that any inception phase, due regard should be paid to the natural or legal person should have affordable, existing legal framework, to determine whether or not effective, and timely access to environmental it is legal to disclose publicly the environmental information held by public authorities upon information of the targeted facilities. Agencies reasonable request, without having to prove a legal or interested in establishing an EID program need to other interest. Governments need to ensure that their determine whether any provision of law (such as the competent public authorities regularly collect and constitution, environmental protection, or rights-to- update relevant environmental information, information legislation) legally justifies public including information on environmental performance disclosure of environmental information and whether and compliance by operators of activities potentially the targeted facilities could argue in court that the affecting the environment. To that end, governments public disclosure would violate privacy laws. An EID should establish relevant systems to ensure an program should become an explicit and legally adequate flow of information about proposed and recognized instrument that environmental regulators 121 | P a g e existing activities that may significantly affect the treatment of firm‘s performance information may environment. They should periodically prepare and draw setbacks. disseminate at reasonable intervals up-to-date information on the state of the environment, An EID program can be a complement to traditional including information on its quality and on pressures command-and-control regulations and market-based on the environment. In the event of an imminent instruments. It can help enforce those traditional threat of harm to human health or the environment, regulations in place. An EID program, however, can governments should ensure that all information that be an independent program without interacting with would enable the public to take measures to prevent other environmental policy programs. The necessary such harm is disseminated immediately. condition for an EID program to work is the Governments should encourage and provide means availability of environmental information that is for effective capacity building, both among public accessible to the public. The cost of establishing and authorities and among the public, to facilitate maintaining an EID program varies and is effective access to environmental information. determined by various factors including program scale, program methodology, data availability, and means of data collection and disclosure, etc. Advantages and Limitations of However, once the necessary data is available, the Environmental Information Disclosure operation cost of an EID program is very low, comparing to other regulatory approaches. Funding An EID can help achieve pollution prevention and for establishing such a program can also be low if control with relatively lower regulatory costs as long only using existing data. as certain environmental information is available. A public disclosure program can serve as a major Legal and political barriers may exist to prevent driving force for pollution reduction throughout governments of certain countries from adopting many sectors of the economy. Disclosure can lead to a public disclosure strategies for environmental competition among polluters to reduce pollution management; bad environmental performers may emissions. With a disclosure system in place, local or always try to block the use of public disclosure regional governments can better assess the status of strategies. Data availability can be another constraint, local environments and can use the results as one especially when environmental monitoring facilities input for assessing risks to human health and the are not in place, in which case substantial financial environment. Citizens can better decide on certain resource is necessary for establishing and maintaining environmental issues and mitigate potential a public disclosure program. EPRD programs are environmental risks. However, legal, political, or mostly found in the developing world so far, while financial barriers may exist, especially at its inception PRTR programs are found mostly in the developed stage; disclosure of inaccurate information or unfair countries. In a developed country, compliance to environmental regulations is less of a problem. While 122 | P a g e accurate emissions information can be readily gaining ground throughout the world, including in available and environmental NGOs can be very active developing economies. in judging relative environmental performance, a PRTR program may be more appropriate. However, in a less developed country, the government may Practical Examples of Environmental have more difficulty in collecting and releasing Information Disclosure and Lessons detailed firm-level pollution emission information Learned and therefore an EPRD program could be more Canada. In autumn 1991, Environment Canada feasible and effective. initiated design of a PRTR program, National Pollutant Release Inventory (PRI). Stakeholders from industry, environmental organizations, labor Interactions with Other Tools and Possible organizations, provincial government agencies, and Substitutes national government formed a committee to develop Providing public access to firm-level environmental the basis for this disclosure program. The Committee information can also be a cost-effective regulatory set up work groups to study the scope, list of tool for pollution control. Traditionally, chemicals to be included, sources, and reporting environmental regulators have applied the thresholds. In 1992, the Committee held a number of ‗command-and-control‘ approaches to regulate information and consultation sessions throughout pollution discharges from industries. Under this Canada to obtain additional views. The Committee approach, industrial facilities are required to limit achieved consensus that anyone owning a facility in their pollution discharges to amounts within Canada that manufactures, processes, or otherwise regulatory standards. As a complement to command- uses any substance on the Canadian PRI list in and-control regulations, market-based approaches quantities of 10 tons or more per year, and that aim to generate incentives for pollution control by employs 10 or more employees per year, be required introducing or creating a price for pollution by law to report releases/transfers to the Minister of discharges. However, an effective implementation of Environment. The Committee agreed on a list of 176 the command-and-control approaches and/or the substances as the initial items to be reported. These market-based instruments has thus far proved were drawn from the list in the United States Toxic challenging for environmental regulators, especially Release Inventory but omitted all items not in in the developing countries, who usually have limited Canadian commerce. The Committee agreed that data institutional capacity and resources. Information be collected electronically on a computerized disclosure strategies have recently emerged as an reporting form; however, a paper version is available alternative or a complementary approach to create for those lacking computer access. The Committee incentives for pollution control. They are rapidly agreed that data be electronically accessible from any part of Canada and that the PRI present geographic 123 | P a g e data about releases/transfers. The Committee environmental management system and a pollution completed its work in December 1992. More than 300 treatment system. substances have been listed in Canada‘s PRI, and more than 8000 facilities report pollution release and transfer data to the program (Environment Canada References and Resources on Web site). Environmental Information Disclosure Dasgupta, S., H. Wang, and D. Wheeler. 2007. Philippines. In another case, the Department of ―Disclosure Strategies for Pollution Control,‖ Environment and Natural Resources (DENR) of the In The International Yearbook of Environmental Republic of the Philippines implemented in 1998 an and Resource Economics, eds. Tietenberg, T., EPRD program named the Industrial EcoWatch and H. Folmer, 93–119. Cheltenham: Edward Elgar Publishing. System. EcoWatch was introduced by DENR in 2003. Environment Canada, ―National Pollutant Release The adoption was based on the Bill of Rights of the Inventory,‖ Environment Canada, 1987 Philippine Constitution, which refers to the http://www.ec.gc.ca/inrp- npri/default.asp?lang=en. Right of Access to Information. A group of European Commission Directorate-General for the stakeholders known as the Program Monitoring Environment, ―The European Pollutant Group (PMG) oversees the implementation of the Release and Transfer Register (E-PRTR),‖ European Commission Directorate-General Industrial EcoWatch System. The PMG consists of for the Environment, representatives of local government units Luguna http://ec.europa.eu/environment/air/pollu Lake Development Authority (LLDA), the tants/stationary/eper/index.htm. Gozun, E. G., B. Laplante, and H. Wang. 2011. Environmental Management Bureau of the DENR, the ―Design and Implementation of private sector representatives, and an NGO Environmental Performance Rating and representative. LLDA has been particularly active Public Disclosure Programs: A Summary of implementing its own EcoWatch System. This Issues and Recommendations Based on Experiences in East Asian Countries.‖ Policy authority has rated and recently disclosed the names Research Working Paper 5551, World Bank, of more than 700 enterprises in 2008. In 2008, DENR Washington, DC. http://www- announced expansion of its Industrial EcoWatch wds.worldbank.org/servlet/WDSContentSe rver/WDSP/IB/2011/01/25/000158349_201 System to include compliance ratings on air pollution 10125153118/Rendered/PDF/WPS5551.pdf. in addition to water pollution, which had been the Jin, Y., H. Wang, and D. Wheeler. 2010. sole focus of EcoWatch since its inception in 1998. ―Environmental Performance Rating and Disclosure: An Empirical Investigation of Industries‘ performance is rated using five colors – China‘s Green Watch Program.‖ Policy black, red, blue, green, silver and gold, from worst to Research Working Paper 5420, World Bank, Washington, DC. best. The performance indicators include pollution OECD (Organisation for Economic Co-operation and emission relative to emission standards, compliance Development), ―Welcome to PRTR.net,‖ OECD http://www.prtr.net/. with government procedure requirements, public TAI (The Access Initiative), ―The Access Initiative,‖ complaints, clean technology, and the presence of TAI, www.accessinitiative.org. 124 | P a g e UN DESA (United Nations Department of Economic US EPA (United States Environmental Protection and Social Affairs). 1992. ―Report of the United Agency), ―TRI around the World,‖ Nations Conference on Environment and http://www.epa.gov/tri/programs/interna Development.‖ UN DESA. tional/index.htm. http://www.un.org/documents/ga/conf151/ac onf15126-1annex1.htm. 15.35 This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 125 | P a g e Setting Priorities: need to address poverty and growth in a sustainable manner. This Guidance Note focuses on setting priorities as a tool that is available to government Defining a Strategy stakeholders for effective pollution management. within a Broader How is pollution management relevant to setting priorities? Framework Setting priorities links to pollution from two perspectives: on one hand, pollution results from the path taken by countries to achieve growth and Introduction development, and different paths may result in Government agencies have finite human and financial different types and levels of pollution. On the other resources to dedicate to the achievement of growth hand, pollution is one of the environmental issues and development, poverty reduction, and that face countries (alongside biodiversity environmental sustainability goals. For this reason, it conservation, land degradation, climate change, is important to ensure that scarce public resources are water, and other issues) and impacts countries‘ dedicated to the different priorities in a cost-effective development and poverty reduction. For this reason, manner that maximizes their use benefit. Therefore, addressing pollution is an environmental priority that determination of priorities should ideally follow an links to the choices a country makes to address approach that emphasizes both participation and poverty reduction, economic growth, and analysis; optimizes budget allocations; demonstrates development priorities. the need for cost effectiveness and cost efficiency; addresses risk and political issues; and shows the Who sets pollution management priorities?  This guidance note was prepared by Helena Naber (Environmental Economist, ENV) with contributions from Alexei Pollution results from activities undertaken in Slenzak (Senior Operations Officer, ECSSD). Peer reviewers socioeconomic and development sectors, for example, included Yewande Awe (Senior Environmental Engineer, ENV) and Wolfhart Pohl (Senior Environmental Specialist, ECSS3). Additional from economic activities such as mining, industry, comments and contributions were provided by Carmen Bernardo- Garcia (Junior Professional Officer, SASDI); Monica Dorhoi tourism, construction, and transport). For this reason, (Consultant, MNACS); Robert Gerrits (Social Development pollution management is relevant not only to Specialist, CESI); and Fernando Loayza (Senior Environmental Economist, ENV). Comments were also provided by the environmental ministries and agencies, but also to International Committee on Contaminated Land / Common Forum experts. Editorial assistance was provided by Stan Wanat agencies responsible for setting policies in productive (Consultant), Juliette Guantai (Program Assistant) and James Cantrell (Communication Analyst). The task team leaders for this and economic sectors. These include ministries product are Kulsum Ahmed (Lead Environment Specialist, ENV) responsible for transport, mining, energy, industry, and Helena Naber (Environmental Economist, ENV). The product was prepared under the guidance of the following World Bank and trade, as well as ministries of economy, planning, Group management: James Warren Evans / Mary Barton-Dock (Directors, Environment Department, World Bank), Bilal Rahill or finance responsible for setting a country‘s broader (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). 126 | P a g e economic development and poverty reduction stakeholder involvement in achieving pollution policies. management priorities. Environment agencies set priorities through processes such as the national Responsibilities for setting priorities that impact environmental action plans, and environment pollution management are often divided among sector strategies. several government and public agencies (with an agency leading the process), which often have their 2) Productive sector. by productive sector own sets of priorities. This diffusion of agencies/ministries such as ministries of responsibilities is one of the main challenges that face industry, mining, transport, and trade. These the priority-setting process. Different agencies set the agencies set priorities in their respective sectors, priorities that influence pollution management, which in turn influence pollution type and whether that relates to how pollution is generated, to quantity. For example, the ministry of transport changing the pollution profile, or to reducing could set a priority of increasing the reliance on pollution. Furthermore, these agencies use different public transport or shifting from road freight to processes to set priorities. Three distinct profiles may railroad. This, in turn, would influence the be distinguished in this regard: amount, type, and location of transport-related air emissions. While productive sectors‘ policies 1) Environment sector. by agencies responsible for influence pollution management, pollution the environment-sector portfolio such as management itself is often not a priority for these ministries of environment at the national levels agencies, and it is important that the pollution (and at regional levels where applicable). The agenda advocated by the environmental ministry role of the environment ministries is integral in does not hold back the productive sector identifying environment issues and relevant agencies. Productive sector agencies set their interventions, including setting priorities for priorities through their own sector strategies and addressing pollution issues. Pollution is often the action plans. Pollution management and result of activities that are considered the domain environmental priorities could be mainstreamed of other agencies (for example, economic and through the application of strategic development activities). Furthermore, many environmental assessment. environmental agencies worldwide face institutional and capacity constraints (for 3) Social protection, planning, and development example, financial resources, staffing, and sectors. by ministries of planning, finance, equipment). Consequently, it becomes necessary and/or economic development. Poverty for the environment agency to also champion reduction and economic development priorities pollution-management-related priorities and to set at the national levels by these agencies in promote inter-agency collaboration and wider national development planning processes, as well 127 | P a g e as in poverty reduction strategy and plans (for example, national environmental action plans) to (PRSPs), influence the pollution management set environmental priorities. Furthermore, priorities agenda. Priority setting processes relating to for the various levels above use different processes PRSPs need to consider implications for the (for example, strategic environmental assessment and pollution management agenda, as well as the country environmental analysis) to identify and impact of pollution on development and poverty mainstream environmental priorities into national reduction objectives. and sectoral growth and development priorities. A number of economic and scientific tools could be used The priorities that are set differ in their geographic within these processes to ensure a scientific and coverage; that is, priorities could be set at national, methodologically-sound approach to setting sub-national, and local levels, and could feed into priorities. These processes and tools are described each other in a bottom-up or top--down approach. below. Furthermore, priorities differ in their sectoral coverage (environment sector and productive Processes for setting priorities sectors), and in their timescale (short-term, medium- term, and long-term priorities). Priorities for pollution Agencies rely on a variety of processes in which they management are set at the three levels described set their national/regional pollution management above in their relevant processes. A number of tools priorities. Some of the common processes are could be used within these processes to ensure that described below. In many countries, a combination of priorities are identified using a scientific approach these specific processes is used. and a sound economic basis. Some of these tools are more often used to identify issues, while others are  National Development Plan and Poverty more often used to identify interventions. The section Reduction Strategy and Plan (PRSP). Ministries of below provides an overview of processes that finance, economic development, and/or planning government stakeholders use to set priorities at often lead the preparation of national development different levels, as well as the tools that could be used plans and strategies. PRSPS were introduced in 1999 within these processes to prioritize pollution by the World Bank and the IMF to enhance domestic management issues and interventions. accountability for poverty reduction reform efforts, and to enhance the coordination of development assistance between governments and development Description and Application of Setting partners. PSRPs were a precondition for access to debt Priorities relief and concessional financing from both institutions' HIPC Initiative (World Bank 2010). Priorities for the various levels described above PRSPs build upon existing strategies and plans (environment sector, productive sectors, and national wherever possible, both at the sectoral and the development policy levels) rely on different processes national level. Existing national strategies or 128 | P a g e development plans that are consistent with the PSRP environmental priorities will provide an account of approach‘s guiding principles may well be considered existing key environmental issues in the sector or to be the PRSP. region to be affected by the policy. Their interrelationship with economic and social priority  Country Environmental Analysis/profile issues (that is, existing private sector projects and the (CEA). Multilateral development banks rely on CEA standards to which they operate) should also be to integrate environmental considerations into discussed to clarify how environmental priorities are country assistance strategies, poverty reduction linked to growth and poverty alleviation; ii) strategy papers, and development policy lending by Stakeholder analysis; iii) Assessment of institutional linking national environmental priorities to priorities and capacity gaps; iv) Policy recommendations, for sustainable growth and poverty reduction. CEA institutional strengthening, and capacity building consists of three broad components (building blocks): recommendations; and v) Political economy risk. For i) Identification of environment priorities linked with details about SEA, please see the SEA Guidance Note. growth and development through a range of quantitative and/or economic tools such as analysis  National Environmental Action Plans of the costs of environmental degradation, net savings (NEAP). prepared mostly by environmental analysis, distributional analysis, and surveys; ii) ministries or agencies, the NEAP was introduced Assessment of environmental policies and following a call during the 1992 Rio Earth Summit to institutions; and iii) Analysis of environmental prepare national environmental action plans to priorities and themes. The CEA preparation process accelerate environmentally sound and sustainable relies on the participation of the ministries of development. World Bank operational policy (World environment, and their results could be incorporated Bank OP 4.02) envisages NEAPs as living documents into the work of planning and finance ministries in that contribute to overall national development policy their national development plans and PRSPs. and decision making, and are intended to be demand- driven, participatory, and result in a time-bound plan  Strategic Environmental Assessment (SEA). of action to help countries integrate environmental SEA is a process in sectoral planning that could be concerns in their overall development strategies. In used by sectoral ministries/agencies and is also used response, many countries developed their national by development agencies. SEA provides a platform of environmental action plans (NEAP), which often dialogue to consider the environmental implications were the turning point in addressing the challenges of of interventions along with mechanisms to reach managing both the environment and development. agreements on priorities and proposed actions. However, in most cases NEAPs were not used as Analytical work is intertwined with public instruments for priority setting based on sound cost- participation in policy-SEA. Analytical work could be benefit analyses. Often, they did not take the political summarized in five steps: i) Identification of economy into consideration and thus failed to 129 | P a g e demonstrate the economic importance of the (such as ecosystem valuation and cost of environment sector or mainstreaming the environmental degradation), while others are better environment into the productive sectors of the suited for prioritizing interventions (for example, economy (Croitoru and Sarraf 2010). For this reason, cost-benefit analysis and multi-criteria analysis). it is important that in the preparation of NEAP, Moreover, different tools can be used as part of economic tools are used that would demonstrate the different processes. For example, economic tools economic importance of the environment sector. Such could be incorporated in the preparation of national tools include cost-benefit analysis and economic environmental action plan and as part of national valuation, which would give a common denominator development planning, or CEA. Moreover, a number for the different environmental priorities (such as of tools (such as combining the cost of environmental biodiversity, solid waste, air pollution, and depletion degradation with surveys and distributional analysis of water resources) and help with the prioritization of in a CEA) could be used within the same process. issues and interventions. Below is a brief description of examples of these processes and tools: Choice of process for setting priorities. Tools that help in prioritizing issues. The choice of processes for setting priorities often depends on level of planning, objective of the process,  Cost of environmental degradation and the sectoral and geographic scale of planning. It (COED): The objective of the COED is to estimate the also depends on contextual factors, such as the stage annual cost of present and future impacts of in the planning cycle; the need for planning at environmental damage occurring in a given year. different levels; and by the legal and institutional Estimates are stated as percentage of the country‘s framework and organizational responsibilities gross domestic product (GDP) for the year, making it determined by law in a country. relevant to both policy makers and the general population (Sarraf 2004). The COED usually measures Tools for Setting Priorities. the damage caused to several environmental categories such as water, air quality, agricultural land, A number of tools may be used within the context of forests, waste, and coastal zone. Spatially, the analysis national/sectoral planning (either stand-alone or as can be done at the local level and national level. part of SEA or CEA) such as use of economic tools COED is useful for moving the environmental agenda and indicators (COED, CBA, macroeconomic into the realm of sectoral ministries other than the indicators); decision support tools (such as multi- ministries of environment. Specifically, the COED criteria analysis, risk assessment, and comparative could serve as an instrument to identify areas where risk analyses); and statistical tools (for example, environmental degradation imposes the largest costs distributional analysis and surveys). Moreover, there to society; identify areas that most significantly are tools that are better suited for prioritizing issues undermine social and economic development 130 | P a g e processes; provide a basis for integrating relevant to key economic ministries. In this regard, environmental issues into the financial and economic two relevant indicators are built on the idea that the evaluation of investment projects as well as in sector- generation of well-being depends on a country's asset wide and economy-wide policies and regulations; base, which includes natural resources as well as provide a monetary basis for allocation of scarce produced and human capital. A country's capacity to private and public resources toward environmental sustain growth in well-being is closely linked to how protection; and enhance the role of the ministries of its asset base varies over time. Wealth Estimates the environment in demonstrating the importance of measure a country's total wealth as composed of environmental protection, using the same language as produced capital (infrastructure and urban land), finance and economy ministers (Croitoru and Sarraf natural capital (such as cropland, forests, fish stocks, 2010). It is possible to estimate the cost of and minerals) and human resources (human capital environmental degradation by valuing impacts on and quality of institutions). Adjusted Net Saving is an health and quality of life and on natural resources indicator of the sustainability of an economy. It (Bolt and others 2005). However, because health data measures changes in wealth from one year to the next are more easily available, COED have tended to by looking at increases in produced capital (through estimate value health impacts more often. The investments), depletion of natural resources (such as damages to ecosystem services could also be included through the extraction of oil or timber from forests), in COED studies alongside damages to health and investments in human capital (for example, through quality of life. education), and damages to health caused by pollution.  Natural capital and ecosystem accounting. Including the value of ecosystem services in national  Surveys and distributional analysis of accounts would provide information to decision environmental priorities. Surveys and distributional makers in planning /economy/ finance ministries analyses allow the priority setting agency to gauge regarding the importance of services that ecosystems the opinion of different groups of populations provide. Pollution impacts the ability of ecosystems to regarding what they consider as environmental provide services, thus impacting national accounts. priorities. This ensures that opinions of different For example, acid rain leads to degradation of forests, groups are taken into consideration and most thus decreasing their ability to provide ecosystem importantly ensures that voices of the poor are taken services). into consideration in setting environmental priorities.  Macroeconomic indicators. The use of  Comparative Risk Assessment. is a macro-economic indicators in setting priorities helps systematic way for looking at environmental mainstream environmental and pollution problems that pose different types and degrees of management considerations into a framework that is health risk; the purpose of this kind of assessment is 131 | P a g e to identify the most important health risks from the economic benefit of improving transport links). A point of view of the people affected (World Bank more sophisticated CBA approach attempts to put a 1998). A risk assessment for a toxic air pollutant financial value on intangible costs and benefits. Data combines results of studies on the health effects of requirements for CBA could make it difficult to various animal and human exposures to the pollutant implement for a broad array of possible priorities. with results of studies that estimate the level of CBA is useful to identify interventions for the people's exposures at different distances from the identified environmental priorities. CBA is a useful pollutant‘s source. While the estimates provided by tool for prioritizing interventions for priority issues these risk assessments are far from perfect, they help that have been identified. scientists evaluate the risks associated with emissions of toxic air pollutants. Using risk estimates and other  Multi-Criteria Analysis (MCA). is a factors, the government can set regulatory standards technique to assess alternative options according to a to reduce people's exposures to toxic air pollutants variety of criteria having different units. MCA assigns and reduce the risk of associated health problems. weights and scores to options so both quantitative The risk assessment process consists of four steps: i) and qualitative criteria can be analyzed. MCA hazard identification; ii) dose-response assessment; techniques have three common components: a given iii) exposure assessment; and iv) risk characterization set of alternatives; a set of criteria for comparing the (EPA website 2010). Together with consideration of alternatives; and a method for ranking the costs, technical feasibility, and other factors, the alternatives. results of comparative risk assessment can be used to set priorities for environmental management (World Choice of tool(s) to use within the processes for Bank 1998). setting priorities Tools that help in prioritizing interventions The tool to use in setting priorities depends on the objective for using the tool – whether it is to better  Cost-Benefit Analysis (CBA). CBA takes the identify winners and losers in setting priorities; cost of environmental degradation one step further by ensure that priorities important to different segments comparing the monetary value of benefits with the of society are taken into consideration; or provide a monetary value of costs in order to evaluate and common economic denominator for comparing prioritize issues. The effect of time (that is, the time it issues. In choosing a tool, it is important to note that takes for the benefits of a change to repay its costs) is tools could be used in complementary manner, and to taken into consideration by calculating a payback be flexible in applying the different tools to ensure period. In its simple form, CBA uses only financial that their application is useful for the objective costs and financial benefits (for example, a simple sought. Figure 1 identifies different tools. CBA of a road scheme would measure the cost of building the road, and subtract this from the 132 | P a g e Figure 6. Simple Decision Tree to Identify Tools that could be Used in Setting Priorities Prerequisite Factors for Setting Priorities environmental degradation and other quantitative tools. See Guidance Note on  Data requirements and environmental Environmental Regulation and Standards, monitoring: Most tools for setting priorities Monitoring, Inspection, Compliance, and require a certain amount of information to Enforcement as a Tool for Pollution Management. function, and they differ in these informational While the importance of comprehensive and requirements. Environmental monitoring is one reliable data cannot be over-emphasized for the important tool to provide information for purposes of setting priorities, many techniques objective assessment of the state of the are available to compensate for the lack of data. environment. This monitoring in turn feeds data An example is the use of appropriate models to to tools such as those to calculate the cost of estimate emissions from the industrial sector 133 | P a g e based on more readily available employment ensure that priorities are determined not only data rather than using actual emissions or output within a sector but cross-sectorally as well. data that may not be available. Nevertheless, environmental monitoring and data availability  Flexibility: Various tools (or combinations of in their combination are fundamental for any tools) can be used as part of different priority- decision-making process, prioritizing, or setting processes. It is important to use the environmental policy making. processes and tools in a flexible manner that is responsive to the context in which they are  Champion agency: A champion agency with applied, rather than applying these tools and vision, authority (backed by a clear and strongly processes in a rigid manner that may decrease backed mandate from government and/or their overall usefulness for the needed objectives. political forces), determination, and the proper means (staff and resources) is essential to setting priorities. Most countries have some form of Advantages and Limitations of Setting environmental agency or environmental Priorities ministry, either stand-alone or in combination Setting priorities is a difficult process that is often with another sector (such as tourism and influenced by public clamor, cultural, historical, environment, or forestry and environment). institutional, and political factors; development Usually, these agencies are expected to take the agency priorities; international agreements; judicial lead in setting environmental priorities. decisions; and the results of technical studies. Important activities to consider in setting priorities  Collaboration across a broad set of include (Ahmed and Sánchez-Triana 2008): stakeholders: The priority-setting process should recognize the need for working with a broad set  Periodically reevaluating goals and addressing of stakeholders both in the priority-setting new or emerging priorities; process and in the implementation of priorities.  Ensuring that the voice of the most vulnerable is This necessary collaboration includes inter- heard; sectoral and inter-agency collaboration, and  Reinforcing social accountability; working with non-governmental sectors (the  Incorporating learning in environmental policy business community, civil society, and the making and implementation; and general public) to identify and achieve priorities.  Ensuring that priorities include measurable Setting environmental priorities requires a targets, operational monitoring, and evaluation. collaborative approach to ensure that all ministries and agencies are on board and have ownership of the agreed-upon priorities. Moreover, a collaborative approach would 134 | P a g e Interaction with Other Tools and Possible Substitutes Setting priorities relies on a number of tools that feed information into the process and help with decision making, such as strategic environmental assessment (SEA) and life cycle assessment (LCA). A number of tools discussed in other Guidance Notes serve to raise awareness of issues and could contribute to enhanced and more informed public participation (such as environmental information disclosure, and training and education). A number of tools that are at the disposal of active citizenry could also facilitate public participation in priority setting: access to information; public participation; and access to legal recourse (see relevant Guidance Notes). 135 | P a g e Practical Examples of Setting Priorities and Boxes 1 and 2 below discuss priority-setting processes Lessons Learned in Ukraine and Senegal. Box 1. Use of Risk Assessment to Identify Priority Pollutants and Pollution Sources in Zaporizhya (Ukraine) The city of Zaporizhya is one of industrial pollution hot spots where large polluting industries are surrounded by residential areas, and where privatization was made without proper attention to past and present environmental impacts. Many pollutants are regulated but, with dozens of heavy-polluting industrial enterprises, it is difficult to define which pollutant source is more hazardous and should be controlled as a priority. Risk assessment methodology was selected because it takes into account pollutants and sources, as well as the spatial distribution of the affected population – the latter not being taken into account by current regulations. Technical assistance on human health risk assessment was provided first by US EPA (2004–06) and later supported by the World Bank (2007–10). The bulk of research work and analysis was done by the Marzeev Institute of Hygiene and Medical Ecology (Kyiv). To carry out risk calculations, information on the location of sources, emissions levels, weather conditions, terrain characteristics, and the location of affected populations were needed. Several significant obstacles were identified from the onset: i) communication and information exchange among stakeholders were limited; ii) databases of city and government departments were not compatible, and spatial information was rarely available; iii) information on pollution sources and emission volumes was inaccurate and outdated; and iv) information on affected populations often was missing or required verification. City authorities organized stakeholder meetings to disseminate the results of risk assessment and a special Web site was launched for information dissemination and communication. This was an important step in the consensus-building process, which was not easy. Too many stakeholders were involved: city administration, regional departments of Ministries of Environmental Protection and Public Health, owners and managers of enterprises, developers, and the public. The driving force behind the Zaporizhya effort to combat air pollution was city authorities headed by the mayor. The mayor created and led a special working group that helped secure stakeholder participation and reviewed the results of risk assessment. This working group became a forum where the need for pollution reduction and priorities were discussed. As a result of this effort, the health risks (carcinogenic and non-carcinogenic) to particular population groups were calculated for 144 substances emitted by Zaporizhya enterprises. Later, the list of 54 priority substances was compiled. High-risk areas were mapped and affected groups of population identified. The municipality is developing prevention measures, and risk-mapping results are used by development planners. Furthermore, the city ordered calculation of risks by enterprises seeking renewal of emission permits. Several enterprises launched their own health risks assessment studies to ensure compliance and prioritize their environmental protection investments. Several enterprises have already drafted action plans to reduce risks to human health from pollution. Other municipalities in Ukraine (Kyiv, Rivne, Druzhkivka, Cherkasy, and Ladyzhyn), following Zaporizhya’s example, are implementing risk assessment techniques to minimize health risks to their residents. Source: Alexei Slenzak 136 | P a g e Box 2: Use of Benefit-Cost Analysis as a Tool for Setting Priorities in Country Environmental Analysis (CEA) The main goals of the Senegal CEA were to promote better integration of environmental priorities into national and sectoral policy; guide environmental support and capacity development activities; and favor a strategic approach to priority environmental issues. As part of the CEA, benefit-cost analyses were conducted of existing and other potential management options to ensure that scarce financial resources are made the most of. A benefit-cost analysis of malaria control, improved hand washing, improved water supplies and sanitation, and low-sulfur diesel and diesel vehicle particulate control technology was undertaken to illustrate the use of economic analysis as an instrument for setting environmental priorities. The CEA further recommended that SEA and CBA (including environmental costs and benefits) should serve as selection tools for sectoral programs. Where resources are scarce, the programs chosen by the government should aim to maximize positive effects on the environment per unit cost. Lessons learned from successful case studies should be more widely communicated and used in policy development. Pilot projects should be encouraged to confirm the effectiveness of environmental programs before implementing policies on a larger scale. Also, feedback mechanisms should be used to quickly identify program advantages and disadvantages, and then make required corrections in a timely fashion. References and Resources on Setting RNAL/ TOPICS/ENVIRONMENT/EXTEEI/0,,cont Priorities entMDK:20781069~menuPK:2770701~pageP K:210058~piPK:210062~theSitePK:408050,00. Ahmed, K. and E. Sánchez-Triana, ed. 2008. Strategic html/. Environmental Assessment for Policies: An Bonvoisin, N., J. Dusik, A. Jurkeviciute, and B. Sadler. Instrument for Good Governance. Washington, 2007. Final Draft Resource Manual to Support DC: World Bank. Application of the UNECE Protocol on Strategic Belli, P., J. Anderson, H. Barnum, J. Dixon, and J. Tan. Environmental Assessment. Kiev: United 2001. Economic Analysis of Investment Nations Economic Commission for Europe & Operations: Analytical Tools and Practical Regional Environmental Center for Central Applications. Washington, DC: World Bank and Eastern Europe. Institute. http://www.unece.org/env/eia/sea_manu Bolt, K., M. Matete, and M. Clemens. 2002. Manual for al/documents/ Calculating Adjusted Net Savings. SEAmanualDraftFinalApril2007notags.pdf/. Washington, DC: World Bank. http:// Croitoru, L., and M. Sarraf. 2010. The Cost of siteresources.worldbank.org/INTEEI/11056 Environmental Degradation: Case Studies from 43- the Middle East and North Africa. Washington, 1115814965717/20486606/Savingsmanual20 DC: World Bank. 02.pdf/. Department for Communities and Local Government. Bolt, K., G. Ruta, and M. Sarraf. 2005. Estimating the 2009. Multi-Criteria Analysis: A Manual. Cost of Environmental Degradation: A Training London: Eland House. Manual in English, French and Arabic. http://www.communities.gov.uk/documen Environment Department Papers. ts/corporate/pdf/ 1132618.pdf/. Washington, DC: World Bank. http://web.worldbank.org/WBSITE/EXTE 137 | P a g e Drakenberg, O., S. Paulsen, J. Andersson, E. Dahlberg, Sterner, T. 2003. Policy Instruments for Environmental K. D. Mattsson, and E. Wikstrom. 2009. and Natural Resource Management. Greening Development Planning: A Review of Washington, DC: RFF Press. Country Case Studies for Making the Economic Winograd M. 2003. El uso de información geo- Case for Improved Management of Environment referenciada para la toma de decisiones. and Natural Resources. OECD Environment Presentation prepared for CEPAL Working Papers, No. 5, Gothenburg: OECD Conference, Curso sobre indicadores de Publishing. desarrollo sostenible, Santiago, June 2–6. http://www.oecd.org/dataoecd/1/23/4206 World Bank. 1998. Pollution Prevention and Abatement 9446.pdf/. Handbook. Washington, DC: World Bank. EPA, ―Risk Assessment Portal,‖ EPA, ––––––. 2010. Strategic Environmental Assessment in http://www.epa.gov/risk/index.htm/. Policy and Sector Reform – Conceptual Model Pearce, D., G. Atkinson, and S. Mourato. 2006. Cost- and Operational Guidance. Washington, DC: Benefit Analysis and the Environment: Recent World Bank. Developments. Paris: OECD. ––––––. 2011a. ―Poverty Reduction Strategy Papers Sarraf, M. 2004. Assessing the Costs of Environmental (PRSPs): What are PRSPs?‖ World Bank, Degradation in the Middle East and North Africa http://web.worldbank.org/WBSITE/EXTE Region. Environment Strategy Note, Paper RNAL/TOPICS/EXTPOVERTY/ No. 9. Washington, DC: World Bank. EXTPRS/0,,contentMDK:22283891~pagePK: Sarraf, M., B. Larsen, and M. Owaygen. 2004. Cost of 210058~piPK:210062~theSitePK:384201,00.ht Environmental Degradation: The Case of ml/. Lebanon and Tunisia. Environmental ––––––. 2011b. The Changing Wealth of Nations: Economic Series, Paper No. 97. Washington, Measuring Sustainable Development in the New DC: World Bank. Millennium. Environment and Development Scorecard, ―What is Comparative Risk Analysis?‖ Series. Washington, DC: World Bank. Scorecard, http://www.scorecard.org/comp- risk/def/comprisk_explanation.html/. This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 138 | P a g e Table 1: Comparison of Selected Tools that Could Be Used in Different Processes for Setting Priorities Tool What is this tool? Application in setting priorities Advantages/strengths Limitations Tools that help in prioritizing issues Cost of  Uses economic valuation to measure  Identifies the environmental  Enables comparison of brown and  Cost estimates are often environmental the lost welfare of a nation due to areas with the highest impact on non-brown issues. approximations that are degradation environmental degradation. Such a development.  Offers policy makers an indicative of the order of loss may include loss of healthy life instrument for integrating magnitude and should be taken and well-being (premature death, environment into economic as such. absence of clean environment), development decisions.  Methodological issues pertaining economic losses (reduced soil to valuation techniques and data productivity), and loss of requirements. environmental opportunities (reduced recreational value for beaches, forests).  What is the lost welfare as a result of environmental degradation? Natural capital  Uses economic valuation techniques  Identifies the value of services  Offers policy makers an  Methodological issues pertaining and ecosystem to measure value of services carried out by ecosystems. instrument for integrating to valuation techniques and data accounting provided by ecosystems. Ecosystem environment into economic requirements. accounting seeks to integrate value development decisions.  Estimations are often on lower of these services into national bound due to data limitations. accounts.  How much do ecosystem services contribute towards welfare? Macro-economic  Wealth Estimates measure a  Helps mainstream environmental  Linked with the other national  Methodological difficulties with indicators country's total wealth as composed (and pollution management) accounting measures such as valuing some forms of capital of produced and natural capital, and considerations into a framework gross national income, gross (such as social capital) and some human resources. Adjusted Net that is relevant to key economic saving, and net saving. ecosystem services. Saving is an indicator of the ministries.  Adjusted net savings (ANS) sustainability of an economy. provides policy makers 139 | P a g e Tool What is this tool? Application in setting priorities Advantages/strengths Limitations immediate feedback on an annual basis about the direction of the economy.  ANS particularly useful for resource-rich countries. Comparative risk  It is an environmental decision-  Produces a list or lists of issue  Possible to compare several  CRA avoids cross-category assessment making tool used to systematically areas ranked in terms of relative pollutants in terms of their health comparisons. measure, compare, and rank risks. risks.  Does not provide overall ranking. environmental problems or issue  Differentiates actual risk from  Difficult to separate out the most areas. The process typically focuses potential exposure. important effects, and difficult to on the risks a problem poses to compare different types of risks. human health, the natural  Direct comparisons cannot be environment, and quality of life. made with other economic  What are the risks to human health indicators; such comparisons of the policy options? could be helpful in allocating public and private resources. Surveys and  Provides ways to gauge the opinions  Allows setting priorities that  Widely-used and recognized  Reliance is on self-reported distributional of different groups of populations would take into consideration the techniques. subjective data. analysis of regarding what they consider as needs and opinions of different  Could be administered in a simple  Inaccuracies resulting from environmental environmental priorities. segments of society. way. possible survey flaws. priorities  What are the priority issues as perceived by different socio- economic groups (for example, regional distribution, gender distribution, income distribution)? Tools that help in prioritizing interventions Cost benefit  A technique that compares the monetary  Public investment projects.  CBA is a widely-used and  Issues of contention in CBA analysis value of benefits with the monetary  Public policy. recognized technique. pertaining to discount rates and value of costs in order to evaluate and  It provides easy-to-understand to valuation of health, life, and prioritize issues. The effect of time (for information (in monetary terms) environmental goods and example, the time it takes for the to the decision maker. services. benefits of a change to repay its costs) is  Allows comparison of effects that  Technical difficulties and dispute 140 | P a g e Tool What is this tool? Application in setting priorities Advantages/strengths Limitations taken into consideration by calculating a otherwise might be difficult to regarding methods used within payback period. compare. CBA, such as contingent  What policy options provide the highest valuation. economic return (have the highest ratio of benefits to costs)? Multi-Criteria  A technique to assess alternative options  Assessment of impacts.  Takes into account different  Reduces rational debate about Analysis according to a variety of criteria that  Contributing to development criteria at the same time. various pros and cons of have different units. MCA assigns and comparison of  May be used to bring together proposed alternative options into weights and scores to options so that alternatives. the view of the different discussion about abstract both quantitative and qualitative criteria stakeholders in the evaluation. numbers (scores and weights). can be analyzed. MCA techniques have  Transparent and explicit (the  Cannot facilitate consensus on three common components: a given set scores and weights are recorded), very controversial decisions. of alternatives; a set of criteria for and it is easy to audit.  May create a false impression of comparing the alternatives; and a  May facilitate communication accuracy despite being heavily method for ranking the alternatives. with decision maker and dependent on a value judgment.  What policy options satisfy the highest sometimes with the wider  Results may be manipulated. number of identified criteria? community. Sources: Bolt and others 2002; Bolt and others 2005; Scorecard Web site; World Bank 2011b. 141 | P a g e Environmental compliance with these regulations and standards is of vital importance, as this yields information for both Regulation and the regulated agent and authorities. Inspection should ideally be a mere cross-check on monitoring, to Standards, confirm whether agents are in compliance. However, achieving compliance quite often requires Monitoring, enforcement of regulations and standards, because most firms are not always in full compliance. Inspection, Environmental regulation and standards are classical command and control instruments, but they have Compliance, and evolved to some extent and facilitate pollution Enforcement prevention and management as long as they are well designed, appropriately applied, and their use is coordinated with other policy instruments. Introduction Description and Application of Environmental regulation and standards refer to the Environmental Regulation and Standards set of specific rules that authorize and control a given firm‘s activities so that it operates within legally and Environmental Regulation. This policy tool imposes socially acceptable parameters. Monitoring the firm‘s specific limits on firms‘ ongoing activities or to changes and expansions of existing firms. Despite the  This guidance note was prepared by Francisco Giner importance of fairness, limits for otherwise identical (Consultant). Peer reviewers included Juan C. Belausteguigoitia (Lead Environmental Economist, LCSEN) and Una Meades (Senior firms may be different depending on several aspects Counsel, LEGEN). Additional comments and contributions were of the operation, such as health or environmental provided by Carmen Bernardo-Garcia (Junior Professional Officer, SASDI), Giovanni Bo (Consultant, LEGEN), Harvey Himberg risks that depend more on the surroundings than on (Consultant, OPCQC), Hocine Chalal (Regional Safeguards Adviser, MNACS), Nicole Maywah (Consultant, SASDI); Olga Puntus the firm itself. Environmental regulation adopts the (Consultant, CESAD), Raffaella Marinucci (Consultant, CESI), and form of operational permits that are often issued by Zhengfang Shi (Environmental Specialist, CES-IFC). Additional comments were provided by the International Committee on different authorities in charge of particular portions of Contaminated Land / Common Forum experts. Editorial assistance was provided by Stan Wanat (Consultant), Juliette Guantai the environment. The kinds of permits that (Program Assistant, ENV) and James Cantrell (Communication Analyst, ENV). The task team leaders for this product are Kulsum authorities, whether central or local government Ahmed (Lead Environment Specialist, ENV) and Helena Naber agencies, most often require are water permits, air (Environmental Economist, ENV). The product was prepared under the guidance of the following World Bank Group permits, waste permits, and hazardous materials management: James Warren Evans / Mary Barton-Dock (Directors, Environment Department, World Bank), Bilal Rahill permits. When these permits are issued with common (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). 142 | P a g e policy goals, they become an extremely powerful tool. forcing agents to move towards those technologies. However, if there is a lack of coordination between Standards have typically been expressed in authorities, they lose most of their power, as they may concentrations, but there is increasing use of load- not prevent pollution but merely transfer it to other based standards, which reflect the overall objective of media (for example, from air to water). The same reducing the pollution load on the environment, and applies to monitoring and to enforcement of the also discouraging excessive resource use for dilution conditions set in permits, which should also be kept of emissions to comply with standards. Alternatively simple and be done in a coordinated way. emissions standards can be established by estimating the discharges that are compatible with ensuring that Environmental Standards. These policy tools are receiving areas around the firm meet the ambient perhaps the oldest of environmental tools, though standards defined for the pollutant. This however designed and used to control or prevent requires considerable information on both the sources environmental health problems. Standards are and the ambient environment, and varies from area to categorized as either ambient or emissions standards;1 area. New source performance standards are specific both are important to comprehensive environmental emissions standards for new plants. They tend to be regulation. Setting ambient standards requires an stricter as they assume that new plants can more explicit agreement on environmental quality easily adopt cleaner processes at the design stage. objectives that are desirable and the costs that society is willing to bear to accept these objectives. Since Most standards are set on an activity basis and in ambient standards can be set at different levels for terms of one or more pollutants that affect a specific different locations, they can be used to protect medium (for example, air, water, and soil). This is valuable environments. Ambient standards also offer done because it is deemed to be simpler and more a simple method for setting priorities with respect to effective, although it has many shortcomings and focusing efforts on pollution management, since areas risks. Standards have also historically focused on that comply with ambient standards are considered to simple pollutants, like BOD, and this derives from require no further intervention. their being relatively easy to detect and measure. Attention has now moved to other more persistent Emissions standards typically set maximum emission pollutants (such as heavy metals and poly-carbonated limits of particular pollutants to one or more media, biphenyls — PCBs) which may be less obvious, but and these limits are usually based on the best which tend to accumulate and are non-biodegradable, available and economically feasible technologies, thus thus resulting in more severe health impacts. Several international conventions (for example, Basel 1 The World Bank Group has a set of good practice technical guidelines with respect to ambient and emissions standards for Convention2, Rotterdam Convention, and Stockholm different industry sectors. The reader may find these useful to review in conjunction with this policy note. These Environmental, 2 Health, and Safety Guidelines are available at Basel Convention on the Control of Transboundary Movements http://www.ifc.org/ifcext/sustainability.nsf/Content/EHSGuidelin of Hazardous Wastes and their Disposal (see Basel Convention es (IFC 2011). Web site). 143 | P a g e Convention on Persistent Organic Pollutants) address adopt the technology which may not in practice solve some of these persistent pollutants. the problem. If standards are not set within a clear policy Standards, however well designed, normally impose framework and according to clear priorities, they may financial and economic burdens on the agents that result in preventing or controlling pollution in a have to comply with them. Although it is difficult to particular medium, but at the same time may induce a compare environmental benefits with financial costs, transfer of pollutants to other media. Hence, not only an effort must be made to ensure that the cost of does the policy design and framework need to be implementing a standard does not exceed the social consistent and clear, but the development of benefits it creates. In this sense the regulated agents standards must also take into account effects on and other stakeholders within society should transfers of pollution across media, in order to avoid participate significantly in the design and creating new problems. There is no correct way to set development of the standard, and this must be done standards. It requires an iterative process that allows without favoring any party, be it the regulated agents, for consideration of both environmental and or authorities and civil society. Avoiding an economic benefits. This is one reason why it is not environmental problem always seems a good appropriate to import standards from other countries, objective, but sometimes the solution involves closure and also why it is important to ensure periodic re- of plants, loss of jobs, and at times even indirect evaluation in order to determine if standards are negative environmental effects. Standards must be responsive in furthering national environmental strict, but must not go against sustainability. policy. Monitoring. The monitoring of activities or agents It has also been argued that if a standard is set to that have to meet environmental standards is as protect the environment, its sole purpose is to important as the nature and quality of the standard internalize environmental costs and avoid itself. If limits are not clearly measurable, the environmental damage. Thus, the cleaner an industry compliance with standards that cannot be easily is, the lower its required investment in pollution monitored by the agents themselves or by authorities control. This definitely creates a bias in favor of renders the tool virtually useless. Thus, methods to cleaner activities and cleaner firms, which in actual verify compliance with standards must be as clear fact may be seen as a cost correction. Yet, standards and as simple as possible so that the agents can know that have been set this way face the difficulty of how they perform vis-à-vis the standard and whether discouraging economic activity in the short term or they can prevent actions that might put compliance at worse. Quite often standards are based on a particular risk. Similarly, authorities should be able to determine technology as the solution to a problem, forcing some accurately and rapidly if the agents are compliant. agents to mount an undue effort and forcing others to 144 | P a g e Adequate monitoring diminishes the need for Inspection. If there are costs that have to be faced by inspection and the cost of inspection itself, although agents to comply with the limits set in the standard, here again we often find that agencies impose the effectiveness of inspection is crucial. The higher monitoring according to their own needs and increase the risk of being caught out of compliance for a costs significantly. In most countries inspection is particular agent, the more likely its behavior will done by the agencies themselves or in a specialized effectively change, although this also depends upon manner, focusing on particular issues. This often the level and effectiveness of fines. In the same way as leads to biased results, as some important a proper balance should be sought in the shortcomings may be overlooked, whereas less development of standards, a balance between important problems are stressed. In some cases, inspecting authorities is also crucial. If a certain group potential conflicts may arise if there are significant of standards is not adequately addressed in differences between the monitoring technology and inspections, then there may be a perfectly designed inspection methods used. Furthermore, in some set of standards, but they will not induce the desired activities where shifts can be made rapidly, pollution changes in behavior. Current best practices tend to transfers may occur (see box 1). A coordinated unify or coordinate inspection activities even if these monitoring process would lead to a decrease in are by different authorities. overall costs of regulation and improve outcomes. Standards in general impose conditions that must be met by all agents and seldom take into account Box 1. Monitoring in Mexico environmental or health risks that may require more An example of pollution transfers between media is strict limits in particular zones, though this should be the case of water and air inspections during the Presa common practice. In general site-specific or critical de Silva crisis in Mexico in 1996, where chrome discharges to water were known to be a problem. local conditions should not determine standards, as Every time water inspectors visited shoe- these should be dealt with in a different manner – that manufacturing plants, legal reasons compelled them to wait a day. is, through specific environmental regulation of firms or activities in particular areas. When the inspection took place, discharges were perfectly within limits, while air emissions created discomfort for the neighbors. When air authorities Adequate enforcement. For environmental regulation visited the same plants and inspected them a day later, their air emissions were within standards, and standards to be effective, there must be strength though the water was foul. and credibility behind the policy. Strength derives It took the water and air inspectors about a week to from both the likelihood of inspection and the level of accept that unless they did a joint visit, they would never find problems, and when they agreed to do it fines. If the cost of compliance is higher than the fines they found that both air and water parameters were that may be imposed and the likelihood of being out of bounds, thus reaching an adequate assessment and diagnosis. This led to clean technology projects for caught is low, given the weakness of inspecting these shoe-manufacturers, which eventually became agencies, most agents will not seek to be in compliant. compliance, unless non-compliance has other 145 | P a g e consequences that actually increase the cost, such as (including government), and only after that will the closure of operations for periods of time or loss of application of tradable permits be possible. market share or niches. Agency Coordination. All authorities that intervene A question that has no definite answer is whether in the permitting of a specific firm should be aware of inspection and enforcement should be part of the the effect their particular action has upon the firm and responsibilities of the regulating authorities or carried upon the particular conditions imposed by others, but out by a separate agency or agencies. The preferable often this is not the case. Water authorities are solution depends more on how coordinated focused on avoiding polluting water discharges, and inspection is with direct regulation and the air authorities on avoiding air emissions. Waste is standardization process, than on a particular often divided between central and local government institutional setting. Separating command and control agencies, with this being a central government issue reduces the discretionary power of agencies, whereas in the case of hazardous or toxic waste and a local putting them together under a single management issue for all other waste. Unless all authorities are increases the likelihood of coordination. Promotion of coordinated, it is quite likely that different permits compliance through voluntary instruments is will have different degrees of strictness, and may thus extremely valuable both to diminish the inspection induce the transfer of pollutants from one medium to requirements and to increase compliance and best another. Pollution prevention focuses on preventing practices. the generation of pollutants, and yet if permitting is not carried out in a multi-medium manner, it may have the effect of, for example, simply transforming Prerequisite Factors for Environmental toxic waste into toxic gases and toxic water Regulations and Standards discharges. Adequate Timelines. Best practices in The need for coordination is clear, but there are huge standardization: To avoid high costs and to allow obstacles to achieving it in actual practice. For every firms to adapt properly, time should be allowed for government agency, the more restricted its goals are, firms to change their technology, although this crucial the better; thus, the agency only requires information factor may become a reason for failure if deadlines are that concerns its subject. As a consequence, although either moved by the authority, or agents feel that they government and environmental policy should have a will not have to comply. Other ways of avoiding high global picture of a firm, it quite often has only bits costs of implementation of standards are to explicitly and pieces, and each agency lacks the information the combine them with economic instruments, such as others have. Consequently, each agency reaches a tradable permits. However, these solutions more biased assessment, based on its particular interest, often than not follow a sequence where the standard rather than a coordinated view of the problems and is set, then monitoring becomes reliable for all actors trade-offs. This is exacerbated by the fact that firms 146 | P a g e normally react to particular permits one at a time, institutions is necessary and may not often be found because they are seldom issued simultaneously. Thus, in developing economies, which often results in the an effective instrument for pollution prevention quite adoption of other countries‘ standards, trying to take often becomes an instrument for pollution transfer, into account plausible effects. See box 2 below. where the most affected medium is the one being regulated by the weakest agency. Advantages and Limitations of Coordination is the only way these transfers can be Environmental Regulations and Standards avoided, and this would foster prevention. However, Certainty. A benefit of standards that is seldom coordination requires enormous political will and a acknowledged is they provide certainty to agents and clear environmental policy design. Europe had both, enhance their ability to adapt to social demands on and since 1997 it has been unifying all permitting their behavior. Thus, although standards represent criteria and centering them on promoting the best costs, which are often not negligible, they also have available and economically feasible technology. advantages for private firms, as their planning Furthermore, this has come with differential horizon is more clearly outlined. incentives for different sizes of firms, and has been set as community law. However, not all regions or Transfer Pollution Medium. A common danger to countries have succeeded in coordination. both standards and environmental regulation is that they may not induce pollution prevention in the sense Local Knowledge. The development of standards of fewer pollutants, but that they may induce requires a solid scientific and technological basis as pollution transfers from one medium to another. This well as a good assessment of the weaknesses and should be avoided as much as possible, and it strengths of the country‘s productive structure and its requires that an accurate and common diagnosis of effects on pollution. Thus, a critical mass of the problem be reached across all agencies. Integrated researchers, industry, civil organizations, and public pollution prevention and control (IPPC) approaches as have been required by the EU for more than a Box 2. Water Temperature Regulations decade address this issue. Such approaches are also A typical case of the adoption of imported temperature becoming more widespread in developing countries, limits involves regulating water discharges. In many such as South Africa. tropical countries, absolute limits were imposed on maximum discharge temperatures (especially in the case of hydroelectric plants), and often these imported limits Standards should not center on one particular were lower than the temperature of incoming water to the generating plant. medium, but on the effect of the pollutant on all media, and this can be achieved either by a unified This problem was usually solved during the development of the standard, as electricity generating firms normally standard or through coordinated standards. Similarly take part in the process of standardization, but at times environmental regulation should avoid establishing this posed problems to plants using particularly warm upstream water. 147 | P a g e weak limits in one or more areas, as this will most field, but it enables authorities to solve local problems likely be the source of increased pressure upon the in a more efficient way. medium with lax limits. Strictness. Making a standard too strict will often Interaction with other Tools and Possible promote unwanted results, as regulated agents may Substitutions not be able to bear the cost of meeting the standard, or It is very difficult to regulate, or enforce through a are no longer allowed to do what they were doing standard, the total number of agents operating in a and have to do something environmentally worse. See given area. Thus, the number of agents may exceed example in box 3. the particular carrying capacity of an area even when all agents are in compliance with applicable Box 3. Regulation of Hazardous Waste in regulations. These situations require other tools, such Mexico as land use permits, tradable emission permits, or An example of unwanted results of environmental other limitations on the number of agents. Yet, standards in Mexico was the declaration that classified differentiated standards can significantly enhance used oil as a hazardous waste and the imposition of a number of restrictions on its disposal, with poor results if combined with other instruments and if enforcement. As a result, the cost of handling used oil differentiated limits are set to impose a greater effort according to the new regulations skyrocketed. on agents in areas with higher activity density (see Most small users of oil opted to deny they generated box 4). used it, and a black market for used oil appeared where informal brickyards substituted used oil for cleaner fuels. Thus, there was both a loss of control and a host of new problems. Box 4. Differentiated Air Quality Standards Scope. Another typical case where standards are not A good example of differentiated limits to solve a an adequate tool to achieve policy goals occurs when problem involving large numbers of agents are emission standards for vehicles in highly contaminated a single agent or a small number of them create an cities, where the policy objective is to improve air acute local problem. In such circumstances, direct and quality through diminished vehicle emissions. These standards state that vehicles with emissions above a specific environmental regulation becomes the perfect certain level cannot be used every day in the particular complement for standards. If a small number of area, but the strict standard applies only to cities with severe problems or where a trend towards these agents create a problem, a modification of their problems is present and needs to be stopped. operational permits would be the best solution to the Relatively less clean vehicles are allowed to circulate every day in other cities and towns and in rural areas, problem, making them face stricter limits than other as the very strict standards are not required. This has been partially successful in Santiago de Chile and in similar agents. This may seem unfair, because it goes Mexico City. against the notion of a technologically level playing 148 | P a g e compliance through the program. (PROFEPA, Most economic instruments entail artificial prices that Programa de Industria Limpia, require scarcity, which can be created partially www.PROFEPA.gob.mx). through command and control; most economic instruments also require adequate monitoring. This United States. The U.S.‘s water emissions standards creates situations of complementarity. In such stem from the Clean Water Act and require circumstances, a good standard can be much less discharges to undergo tertiary wastewater treatment costly if a market is envisaged along with it than if it regardless of the firm‘s activities. The design of these relies exclusively on inspection and enforcement. The standards assumes that a tertiary treatment plant for best example of this is the SOx – NOx regulation of water discharges would solve most if not all water utilities in the United States, where the emission quality problems and would not bias competitiveness standard was modified and a market was created. It is between industries, as firms would all face similar important to note that more often than not, markets marginal costs regardless of their activity as a result require standards and monitoring in place in order to of the standard. In practice, this has meant that firms operate. Likewise, voluntary instruments, used in whose discharges are relatively clean have had to face conjunction with standards and regulations, may significant costs to treat the water, whereas others significantly reduce the cost of regulations and where tertiary treatment is not enough have been simultaneously achieve enhanced results. In addition, acknowledged as being in compliance with the other tools, such as EIA, require standards to be in standards. Most Latin American countries have place to be able to assess objectively whether a project imported the same philosophy in developing their needs to mitigate its impact on the environment. standards (albeit only requiring either primary or secondary treatment for discharges rather than tertiary treatment). This has led to similar Practical Examples of Environmental shortcomings. Regulations and Standards Mexico. The Programa de Industria Limpia (Clean References and Resources for Industry Program) in Mexico seeks to promote Environmental Regulations and Standards pollution prevention by creating incentives (basically public recognition and fewer inspections) for firms Basel Convention, Basel Convention on the Control of Transboundary Movements of Hazardous Wastes that adhere to a commitment to achieve and their Disposal. Basel Convention, environmental targets that go beyond compulsory http://www.basel.int/. EC (European Commission). Industrial Emissions: requirements. This process has been extremely Prevention and Control of Industrial Emissions. successful for large firms that seek the recognition, EC, http://ec.europa.eu/environment/air/pollu and has also helped inspections to target hot spots tants/stationary/index.htm . rather than large firms, given that the latter ensure 149 | P a g e INECE (International Network for Environmental Integrated Environmental Management. Compliance and Enforcement). INECE, Information Series 0. Pretoria. http://inece.org/ US EPA (US Environmental Protection Agency). OECD (Organisation for Economic Cooperation and Compliance. US EPA, Development). 2007. Guiding Principles of http://www.epa.gov/lawsregs/compliance Effective Environmental Permitting Systems. ––––––, Enforcement. US EPA, Paris: OECD. http://www.epa.gov/lawsregs/enforcemen http://www.oecd.org/dataoecd/ t/ 21/59/37311624.pdf/ World Bank Group, ―Environmental, Health, and PROFEPA (Programa de Industria Limpia). Safety Guidelines,‖ IFC, PROFERA, http://www.PROFEPA.gob.mx http://www.ifc.org/ifcext/sustainability.nsf South Africa, Department of Environmental Affairs /Content/EHSGuidelines/. and Tourism (DEAT). 2004. Overview of Integrated Environmental Management, This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 150 | P a g e Environmental environmental standards by identifying if the proposed investment or development project satisfies Impact applicable environmental standards or needs, and mitigating impacts to comply with standards. Assessment Furthermore, EIA enhances public participation and engages stakeholders to inform decision makers of different views. Introduction Additionally, EIA, in conjunction with monitoring tools and recourse mechanisms, allows the gathering The main focus of this Guidance Note is the use of of information on environmental quality and provides EIA as a policy tool available to policy makers for a venue for expression and discussion of diverging effective pollution management.1 EIA facilitates opinions. This Guidance Note does not discuss the pollution management through its link to technical aspects of preparing an environmental assessment, since numerous resources and good  This guidance note was prepared by Helena Naber practices are available on preparing an EIA. Instead, (Environmental Economist, ENV), with significant contribution this Note focuses on the broader use of EIA as a from Ernesto Sánchez-Triana (Lead Environmental Specialist, SASDI) and Santiago Enriquez (Consultant, SASDI), and policy instrument within the range of policy contribution from Francisco Giner de Los Rios (Consultant). Peer reviewers included Harvey Himberg (Consultant, OCPQC) and instruments discussed in this toolkit, and which are Hocine Chalal (Regional Safeguards Adviser, MNACS). Additional available to different stakeholders for pollution comments and contributions were received from Maged Hamed (Senior Environmental Specialist, MNSSD), as well as Carmen management. Bernardo-Garcia (Junior Professional Officer, SASDI), Giovanni Bo (Consultant, LEGEN); Nicole Maywah (Consultant, SASDI); Olga Puntus (Consultant, CESAD), Rafael Hernandez (Consultant, ENV), Raffaella Marinucci (Consultant, CESI), and Zhengfang Shi (Environmental Specialist, CES-IFC). Editorial assistance was Description and Application of provided by Stan Wanat (Consultant), Juliette Guantai (Program Assistant) and James Cantrell (Communication Analyst). The task Environmental Impact Assessment team leaders for this product are Kulsum Ahmed (Lead Environment Specialist, ENV) and Helena Naber (Environmental The environmental assessment process would Economist, ENV). The product was prepared under the guidance of the following World Bank Group management: James Warren usually, according to the various international Evans / Mary Barton-Dock (Directors, Environment Department, approaches currently implemented, incorporate the World Bank), Bilal Rahill (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). following main stages: screening to determine 1 Environmental Assessment (EA) is a main tool for the World applicability and level of detail of an EIA; scoping Bank to ensure environmental and social sustainability. This Guidance Note however does not address the use of EA by the during which issues that should be taken into World Bank but rather discusses EA as a tool that may be used by consideration are identified and the terms of reference government stakeholders for effective pollution management. For guidance on the World Bank’s environmental assessment for the EIA are completed; preparation of the policy, please refer to Safeguard Policies on the World Bank site: http://go.worldbank.org/WTA1ODE7T0 and to IFC performance environmental assessment report, including standards: identification of impacts, evaluation of alternatives, http://www.ifc.org/ifcext/sustainability.nsf/Content/EnvSocStand ards 151 | P a g e and design of mitigation measures; and the countries. As a result, the use of EIA as a tool varies preparation of the environmental management plan, among countries from its consideration as an which is usually part of the environmental assessment administrative process that helps incorporate report, but can be a stand-alone piece for simple environmental and social concerns of different projects. Public participation and disclosure are stakeholders into the decision-making of authorities. important attributes of the EIA process in many Underlying the value of EIA is the view that countries. environmental decision-making processes are strengthened when the responsible authority can The United States was the first country in the world to systematically incorporate the views and opinions of introduce environmental assessment as part of the all relevant stakeholders regarding the decision at National Environmental Policy Act (NEPA) in 1969 as hand – as is the case in the U.S. (CEQ 2007). An a tool that would lead to implementation of NEPA alternative vision of EIA considers this instrument as policies. The environmental assessment process had an environmental management tool that helps control two major purposes: ensure that decision makers are the environmental impacts of a broad range of making informed choices regarding impacts on the projects, such as in Brazil where authorities often environment and open the process to citizen establish design and operational conditions through involvement (CEQ 2007). Over the past 40 years, EIA the EIA process (World Bank 2008), or Guatemala entered the fabric of environmental governance in (World Bank 2006c) and Nepal (World Bank 2007b), over 100 countries worldwide (Glasson and others where EIA became the main policy instrument to 2005). minimize or mitigate environmental impacts. Such alternative conditions have generated various EIA also became an important instrument for ‗models‘ of EIA, such as those proposed by environmental sustainability for multi-lateral Doberstein (2004) who distills two models of EIA: a development agencies, including the World Bank. The ‗technical model‘ and a ‗planning model‘, as two Bank introduced EIA – as one of its ten extremes of a continuum with systems of most environmental, social, and legal safeguard policies – countries exhibiting a mixture of these. He further to identify, avoid, and mitigate the potential negative notes that most developing countries start with a form environmental impacts associated with Bank lending of EIA that most closely matches the technical model operations (World Bank 1999). Even though most EIA characterized by a focus on the project level, with systems follow the steps of the generic EIA, there are weak public participation and reliance on quantitative substantive and procedural emphasis differences: measurement rather than qualitative perceptions. Nature of EIA. A country‘s legal system and its Screening. Prescriptive and standardized approaches political, administrative, and cultural context play an are two general methods for screening. They are important role in shaping that country‘s EIA system, defined through positive or negative lists in and account for differences in EIA systems among legislation and regulations, and discretionary or 152 | P a g e Figure 7. A Framework for Screening (UNEP 2002) customized approaches where indicative guidance is identified. In some instances, EIA scope is determined relied upon to determine requirement for EIA on an either through formal (for example, Ecuador and U.S.) individual or case-by-case basis (UNEP 2002). Figure or informal (such as in Peru) consultations; or defined 1 presents a framework for screening (UNEP 2002). by the legal framework without providing opportunities for public input (for example, Screening tools include positive lists that identify Colombia). Terms of reference for EIA are then activities that require EIA; negative lists that identify prepared based on results of consultations, legal activities that are excluded from EIA requirement; requirements, or based on generic terms of reference. expert judgments; or a combination of lists and expert An important factor in determining the scope of an judgments. Screening could also include analysis of EIA is drawing the boundary of the impacts of the impacts and risks, such as in the United States, where proposed activity issues that are appropriately EIA applies to investment activities that can pose addressed through the EIA process, and making sure significant negative impacts. that issues that remain outside of this boundary are Scoping. Identifying the scope of an EIA study is an addressed by other instruments such as Strategic important aspect of the EIA process, and as with other Environmental Assessment (SEA), cumulative impact aspects of EIA, countries differ in how scope is assessment study, and land use planning. 153 | P a g e Preparation, Approval, and Supervision. Supervision Public Participation and Public Disclosure. of the EIA preparation usually falls either on the Countries vary widely in the extent to which EIA sectoral agency (for example, Peru, Ecuador, US), or relies on public participation, ranging from countries on the environmental agency (for example, Belize), or where opening the decision-making process to citizen is a responsibility shared by sectoral and involvement is one of the main purposes of EIA, to environmental agencies (for example, Argentina). The countries where public participation and involvement environment agency‘s role could range from review in the EIA process are not required by EIA regulations and provision of comments about the adequacy of the and rarely practiced. Most countries fall in between, analysis and the impact on the environment, ensuring with regulations that require public involvement at public participation in the EIA, to the approval of the various stages of the EIA process (at screening, EIA, including prior approval of the terms of the scoping, EA preparation, and before and after reference through the screening and scoping stages. government decisions). Moreover, in many countries, agencies at the local level (provincial / municipal) are responsible for A study of the effectiveness of the EIA Directive in the supervising EIA preparation. For example, in EU (COWI 2009) revealed that two main benefits of Pakistan the federal environmental protection agency the EIA procedure were it ensures that environmental (EPA) has jurisdiction over all EIAs, but often aspects are taken into consideration in the decision- delegates its power to provincial EPAs, resulting in making process, and EIA ensures transparency in provincial authorities having jurisdiction for the vast environmental decision making. Countries also vary majority of EIA cases except for those involving with respect to interagency coordination; legal federal land, military projects, and trans-border or provisions regarding access to information – for trans-provincial impacts (World Bank 2006d). example, the EU directive was modified to accommodate the provisions of Aarhus convention Many agencies establish registers for consultants, or (EC 2009); public hearings; and creation of technical specialists, or firms that carry out EIA (for opportunities to receive public input during various example, Bangladesh and Guatemala) and some seek stages of the EIA process. to issue certifications or provide learning courses for EIA practitioners in attempts to improve EIA quality EIA systems vary in terms of how technical the EIA (World Bank 2006a; 2006c; 2006f). Project proponents, process is perceived to be, from those where it is seen together with the consultants often hired by them to as a technical process left to technical experts, to prepare EIA, have significant effects on EIAs‘ quality systems where the EIA process is seen as more and objectivity. The capacity of EIA practitioners has participatory with respect to public involvement. often been cited as an important factor in the quality Similarly, disclosure of EIA varies between countries of EIAs, alongside resources allocated to EIAs by where disclosure of EIA is mandatory, to countries proponents (Nadeem and Hameed 2008). where there is no legal requirement for disclosure of 154 | P a g e EIA, or where there are legal requirements that are Advantages and Limitations of not applied in practice. Environmental Impact Assessment Public Discussion and Participation. One major strength and outstanding feature of EIA in many Prerequisite Factors for Environmental countries is increased public discussion and Impact Assessment participation (COWI 2009). However, in practice a In designing or modifying the EIA system, it is number of limitations occur. In some instances where important to have clarity regarding the purpose of the public participation is required by EIA legislation, EIA and what it should and could accomplish within such participation could be limited in practice. For the broader policy framework: whether the need is for example, the law in India required that a public a technical report focused on preparation of hearing is conducted; however, NGOs often mitigation measures for the identified impacts, or considered the public hearing as a staged process that instead for a tool to open the decision-making process appeared to involve citizens when the decision had to public involvement. An overall regulatory already been made. framework within which the EIA tool is anchored should be established. This framework is an In response, the 2006 EIA notification changed the important element in the successful application and requirement from public hearing to public use of EIA (UNU 2011). consultation in an attempt to force project proponents to proactively seek the views of affected communities. As evidenced by experiences in El Salvador and In other instances, where projects are only discussed Guatemala (see below), over-reliance on EIA is better openly for their potential environmental merits and avoided; instead, a mix of tools should be utilized to shortcomings, but not for social or economic ones, achieve the goals of environmental management. The public discussion could focus on allegedly organization responsible for preparation and review environmental problems when there are underlying of EIA needs to have the required capacity for the EIA social or economic reasons for delaying or stopping a system‘s intended purpose, to ensure that the public project (World Bank 2006e). participation and technical aspects are implemented. The required capacity includes knowledge of Over-reliance on EIA to Achieve Environmental procedures, analytical work, and technical and social Management Objectives. EIA should be used in skills. Finally, the availability of baseline data is conjunction with other policy tools and should not be important in implementing and operating an EIA over-emphasized for achieving environmental system (UNEP 2002). management objectives. For example, in El Salvador, the National Environment Law (1998) introduced nine instruments of environmental policy including, among others, environmental zoning, environmental 155 | P a g e evaluation, environmental information and public (World Bank 2007a). Similarly, in El Salvador, broad participation, and economic and financial incentives. screening procedures have led to a situation where 300–400 EIAs were prepared annually. The number However, the implementation of the environmental was beyond the capacity of the responsible reviewing policy focused on the EIA, and this led to over- authority (MARN), and resulted in a backlog of 2,500 burdening the tool. Further development of other EIAs, and led EIA to becoming a bottleneck to instruments was recommended to complement a development (World Bank 2006b). comprehensive environmental policy (World Bank 2006b). South Africa, where EIA is applied within the Potential for Rent Seeking. Where the EIA is linked framework of an integrated environmental to the licensing process, it may become a tool for rent- management system, the Strategic Plan for the seeking and could be a source of illegal influence on Environment Sector has called for developing a the responsible authorities. For example, in broader ‗toolkit‘ of environmental impact Bangladesh, the Environment Conservation Act (1995) management approaches and instruments in addition required environmental clearance for development to EIA in order to address the issue of over-reliance projects, but it also reserved the right to the on EIA (see Tarr 2003). government to waive the clearance requirement. This provided the incentive for project proponents to exert Time-Intensive Process. An effective screening influence to avoid this requirement. Because public system is important to ensure that the EIA does not consultation and public participation were limited, become a prerequisite for too many activities, thus these two forces for were precluded from countering limiting the responsible authority‘s ability to the illegal influence, and they were blocked from adequately assess important projects and weakening providing an incentive for the effective identification the legitimacy of EIA. For example, in Colombia the and mitigation of potential environmental impacts lack of a screening procedure resulted in an EIA being (World Bank 2006a). required for any project, regardless of the intensity and magnitude of its potential impacts, location, the sensitivity of the surrounding area, or public opinion Interaction with other Tools and Possible regarding the project. The need for vast numbers of Substitutes EIAs coupled with an absence of baseline environmental data resulted in mass production of EIA is more effective when applied in combination EIAs of poor quality and little value. with other policy tools and mechanisms for environmental management, such as environmental Lack of screening has led to a situation where the EIA regulations, standards, enforcement, and monitoring regulations become a hurdle to projects and add little systems; land use planning; and market-based value to the environmental planning and incentives. In many legal systems, the judiciary management processes for which they were intended provides an important avenue for recourse. 156 | P a g e Furthermore, public participation is enhanced developers of new projects to take environmental through tools that promote access to information, impacts and risks into account (partially internalizing advocacy and participation in decision making, and the cost). Second, it allows or may allow governments ability to complain and access to legal recourse. and society to analyze projects in depth. Yet this is an expensive process with regard to both inputs and Moreover, in many legal systems, the approval of an time. Even when studies are of excellent quality, the EIA is a requirement for environmental licensing, and process may reach wrong conclusions because EIA the two tools are closely linked. In countries where takes the project‘s effects into account but seldom are EIA is regarded as an environmental management cumulative effects considered. Hence it is important tool, EIA is often linked to the licensing process, and to apply EIA selectively, but also apply it in approval of the EIA is often a prerequisite for conjunction with other tools that take cumulative granting a license. For example, in Jordan the effects into consideration. approval of an EIA is a prerequisite for any and all licenses or permits required prior to construction (World Bank 2010). On the other hand, in the US, EIA References and Resources for is not linked to environmental permitting, but is Environmental Impact Assessment rather a way to open the decision-making process to Council on Environmental Quality. 2007. A Citizen‘s public scrutiny. For permitting purposes, the U.S. Guide to the NEPA – Having Your Voice system relies on other instruments such as zoning Heard. Washington, DC: CEQ. http://ceq.hss.doe.gov/nepa/Citizens_Guid plans, and standards and regulations. e_Dec07.pdf/. COWI. 2009. Study Concerning the Report on the Application and Effectiveness of the EIA Many instruments inform the EIA process. For Directive, by COWI for the European example, SEA extends the application of Commission and DG ENV. Final Report. http://ec.europa.eu/ environmental assessment from projects to policies, environment/eia/pdf/eia_study_june_09.pd plans, and programs, and assesses environmental f/. Demidova, O., and A. Cherp. 2005. ―Risk Assessment aspects considering their inter-linkages with social for Improved Treatment of Health and economic factors. Risk assessment may also feed Considerations in EIA.‖ Environmental Impact Assessment Review 25 (4): 411–29. health-issue considerations into the EIA process for Doberstein, B. 2004. ―EIA Models and Capacity projects requiring thorough examination of risks to Building in Vietnam: An Analysis of Development Aid Programs.‖ human health, and could either proceed separately of Environmental Impact Assessment Review EIA or be integrated within the EIA process 24: 283–318. European Commission. 2009. Report from the (Demidova and Cherp 2005). Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Despite these risks and limitations, EIA remains a Regions on the Application and Effectiveness useful tool for two reasons. First, it does drive of the EIA Directive. Report. Brussels. 157 | P a g e Glasson, J., R. Therivel, and A. Chadwi. 2005. ––––––. 2006b. Republic of El Salvador: Country Introduction to Environmental Impact Environmental Analysis. Improving Assessment. New York: Routledge. Environmental Management to Address International Finance Corporation, ―IFC Sustainability Trade Liberalization and Infrastructure – Environmental and Social Standards,‖ IFC, Expansion. Washington, DC: World Bank. http://www.ifc.org/ifcext/sustainability.nsf ––––––. 2006c. Guatemala: Country Environmental /Content/EnvSocStandards/. Analysis – Addressing the Environmental Nadeem, O., and R. Hameed. 2008. ―Evaluation of Aspects of Trade and Infrastructure Environmental Impact Assessment in Expansion. Washington, DC: World Bank. Pakistan.‖ Environmental Impact ––––––. 2006d. Pakistan Strategic Country Assessment Review. 28: 562–71. Environmental Assessment. Washington, Sánchez� Triana, E., and S. Enriquez. 2007. ―A DC: World Bank. Comparative Analysis of Environmental ––––––. 2006e. India – Strengthening Institutions for Impact Analysis Systems in Latin America.‖ Sustainable Growth: Country Environmental Paper prepared for the Annual Conference Analysis. Washington, DC: World Bank. of the International Association for Impact ––––––. 2006f. Environmental Impact Assessment Assessment, ―Growth, Conservation and Regulations and Strategic Environmental Responsibility,‖ Seoul, June 3–9. Assessment Requirements – Practices and South Africa, Environmental Affairs Department. Lessons Learned in East and Southeast Asia. 2009. Strategic Plan for the Environmental Washington, DC: World Bank: Sector 2009 – 2014. Report. Pretoria. http://siteresources.worldbank.org/ http://www.environment.gov.za/Documen INTEAPREGTOPENVIRONMENT/Resourc ts/Documents/2011Jan19_1/ es/EIA&SEA-regional-review.pdf/. 200914_strategicplan.pdf /. ––––––. 2007a. Environmental Priorities and Poverty Tarr, P. 2003. ―EIA in Southern Africa: Summary and Reduction: A Country Environmental Future Focus.‖ SAIEA. Analysis for Colombia. Washington, DC: http://www.saiea.com/ saiea- World Bank. book/Summary1.pdf /. ––––––. 2007b. Nepal Country Environmental UNEP (United Nations Environment Program). 2002. Analysis: Strengthening Institutions and UNEP Environmental Impact Assessment Management Systems for Enhanced Training Resource Manual. Geneva: UNEP. Environmental Governance. Washington, United Nations University, ―Environmental Impact DC: World Bank. Assessment Course Module,‖ UNU, ––––––. 2008. Environmental Licensing for http://eia.unu.edu/course/ ?page_id=173/. Hydroelectric Projects in Brazil – A Wood, C. 2003. Environmental Impact Assessment: A Contribution to the Debate. Summary Comparative Review. Harlow: Pearson Report. Washington, DC: World Bank. Education Limited. ––––––. 2009. The Philippines: Country World Bank. 1999. World Bank Safeguards Policies – Environmental Analysis. Manila: World Environmental Assessment. Washington, Bank. DC: World Bank. ––––––. 2010. Jordan: Country Environmental ––––––. 2005. Arab Republic of Egypt: Country Analysis. Washington, DC: World Bank. Environmental Analysis (1992–2002). ––––––, ―Safeguard Policies,‖ World Bank, Washington, DC: World Bank. http://go.worldbank.org/WTA1ODE7T0/. ––––––. 2006a. Bangladesh: Country Environmental Analysis. Washington, DC: World Bank. This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 158 | P a g e 2.2. Private Sector (Including Large, Medium and Small Enterprises) 159 | P a g e Environmental organizations of various types and sizes can easily apply the principles of EMS. Examples include Management publicly traded companies, public-private organizations (such as utilities, roads, and energy Systems production and distribution), government structures at national and sub-national levels (such as municipalities), and financial intermediaries. Introduction An environmental management system (EMS) is a Description and Application of tool to implement a structured program of continual Environmental Management Systems improvement in environmental performance. An EMS An EMS can take a variety of forms and complexities. follows procedures drawn from established business It can be stand-alone, or fully integrated with all management practices and principles of quality business processes; it can be formal or informal. It can management systems. The concept is straightforward. be externally certified or self-declared sufficient in its If their management commits to, and supports, EMS, scope, content, and operation. The design and then large companies, small and medium-sized implementation of an EMS should, however, be enterprises (SMEs), and privately owned singular in its intent. It should provide an  organization with a structure that permits the This guidance note was prepared by Paolo Lombardo (Senior Environmental Specialist, CESI). Peer reviewers included Jeremy establishment to understand the social and Ansell (Environmental Specialist, CESI), Stephen Bailey (Principal Environmental Specialist, CESI), and Mauricio Athié (Senior environmental impacts and risks associated with the Environmental Specialist, CESI). Additional comments and organization‘s activities. Furthermore, an EMS should contributions were provided by Adriana Triana (Environmental Specialist, CESI), Anjali Acharya (Senior Environmental Specialist, provide a means to ensure that the organization LCSEN), Anna Hidalgo (Program Officer, CESKM), Bilal Rahill (Senior Manager, CESI), Domenico Lombardi (Senior Advisor, subsequently manages these impacts and risks SECVP), Edmond Mjekiqi (Strategy Analyst, CESPQ), Ernesto Sanchez-Triana (Lead Environmental Specialist, SASDI), Isabelle according to what is important to the organization. Paris (Senior Environmental Specialist, CESI), Jessica McHugh (Consultant, CESKM), Jigar Shah (Senior Technical Specialist, CESCL), Jose Felix Filho (IADB), Josefina Doumbia (Principal As indicated above, a management system is a tool to Environmental Specialist, CESI), Lakhdeep Babra (Principal Environmental Specialist, CESI), Lei Liu (Program Officer, CESPQ), implement a structured program of continual Luis Miglino (Consultant, SASDI), Rong Zhang (Program Officer, improvement in environmental performance. CESPQ), and Wenlei Zhou (Environmental and Social Development Specialist, CESI). Editorial assistance was provided by Stan Wanat Therefore, an organization must develop its EMS (Consultant), Juliette Guantai (Program Assistant, ENV) and James Cantrell (Communication Analyst, ENV). The task team leaders for according to structured, clear, and auditable elements. this product are Kulsum Ahmed (Lead Environment Specialist, ENV) and Helena Naber (Environmental Economist, ENV). The Figure 1 highlights the 17 building blocks required of product was prepared under the guidance of the following World an EMS as defined in the international standard for Bank Group management: James Warren Evans / Mary Barton- Dock (Directors, Environment Department, World Bank), Bilal EMS, ISO 14001:2004. Rahill (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). 160 | P a g e Figure 1. The Basic Blocks of an EMS, as Defined in ISO 14001:2004 An EMS must include a cycle of planning, performance and act when that performance is not implementation, monitoring, and management appropriate or needs enhancing, to ensure progress review stages with regard to environmental risks and stays on track. impacts. The planning stage involves the identification of what is important. This may include Adoption of an EMS can assist enterprises in the environmental, social, health, and safety risks and developing countries to obtain financing, to be impacts. In the planning stage, the organization must competitive in the market, and to access new clients, decide how to best mitigate these risks and impacts including large corporations. The IFC, the World given the resources available. Bank Group, and other international financial institutions, such as regional development banks, The implementation stage encompasses the period of have specific environmental mandates for financing institutional learning as the organization introduces business activities that are environmentally sound these policies. Almost in parallel with the and sustainable. These organizations generally implementation stage, the monitoring and review require the development of appropriate management stages require that the organization check its own 161 | P a g e systems to control the risks posed to both society and ISO 14000 series. The overall approach and broad the environment from those business activities.1 success of ISO‘s quality management standards (the ISO 9000 series) form the basis for the ISO 14000 EMS Standards and EMS Certification. EMS is both series. ISO 14001 is a voluntary standard to provide a an internal management tool and a tool to manage framework for a holistic, strategic approach to the and communicate an enterprise‘s environmental organization's environmental policy, plans, and performance to internal and outside parties, including actions, thereby setting out the basic structure for an its workers, regulators, local communities, EMS. ISO 14004 provides relevant guidance. The commercial partners and investors, bankers and emphasis of ISO 14001 is threefold: insurers, and the general public. Effective communication requires some level of • compliance with legislation and any other standardization and common understanding. The requirements, programs, or plans that the best known international standards for EMS are the organization subscribes to – for example, ISO 14001 series and the EMAS. industry codes, lender‘s requirements, and regulatory guides; ISO 14001. The International Organization for • prevention of pollution by avoiding, Standardization (ISO; see ISO Web site) developed the reducing, and controlling pollutants; and 1 • continual improvement of the EMS to IFC Performance Standard 1, paragraph 3, states that “The client will establish and maintain a Social and Environmental enhance the overall environmental Management System appropriate to the nature and scale of the project and commensurate with the level of social and performance of the organization in line with environmental risks and impacts. The Management System will its environmental policy. incorporate the following elements: (i) Social and Environmental Assessment; (ii) management program; (iii) organizational capacity; (iv) training; (v) community engagement; (vi) monitoring; and (vii) reporting� (International Finance Corporation (IFC)/World Organizations can apply the standard throughout the Bank Group Web site world and for any type of business activity. ISO 14001 http://www.ifc.org/ifcext/sustainability.nsf/AttachmentsByTitle/p ol_PerformanceStandards2006_full/$FILE/IFC+Performance+Stan defines the standard elements of a system, thereby dards.pdf). As a condition of making an investment, IFC requires the client to provide a satisfactory management system making it possible to independently audit and certify appropriate to the nature and scale of the business activities that IFC will finance, and commensurate with the level of social and that system. Although it requires a commitment to environmental risks and impacts. If the client does not have a legal and regulatory compliance, along with a satisfactory management system at the time of IFC’s appraisal of the proposed business activities, then the client should develop commitment to continual improvement, ISO 14001 and implement one over a reasonable period of time agreed with IFC, so that the system will be in effect in time to manage does not specify levels of environmental performance, activities financed by IFC. Many private banks that finance and therefore, a wide variety of organizations can international projects require candidate clients to meet the requirements of the Equator Principles, for which borrowers implement it, irrespective of their level of should “build on, maintain or establish a Social and Environmental Management System that addresses the environmental maturity. management of (these) impacts, risks, and corrective actions required to comply with applicable host country social and environmental laws and regulations, and requirements of the EMAS. Another international EMS standard is the applicable Performance Standards and EHS Guidelines� of IFC/World Bank Group (see Equator Principles website European Eco-Management and Audit Scheme www.equator-principles.com). 162 | P a g e (EMAS; see EMASeasy Web site). EMAS is broader in standard. The process of accredited certification is its requirements than ISO 14000. In particular, EMAS therefore a means of demonstrating that the covers all the standard requirements of ISO 14001, but enterprise is adopting a standard and recognized also framework for environmental management practice • requires an initial environmental review via a trusted partner. Although conformity does not before implementing the management always mean best environmental practice, this is system; important in the context of increasingly stringent • aims to go beyond legal compliance and legislation and rising concern from interested parties. target best practice; • implements an independent EMS validation Using a certification body is typically a two-stage program for an initial period; and approach where the certification body reviews the • requires the publication of an independently EMS documentation against the standard. The validated annual environmental statement certification body then recommends whether the detailing environmental performance. organization is able to progress to the next stage of assessment – that is, to a formal on-site audit of the EMS Certification. EMS has two basic pillars: (1) EMS EMS in practice. If this is the case, the certification certification is voluntary, not mandatory; and (2) the body will visit the enterprise to review all operational enterprise decides which EMS standard to adopt. An areas and evaluate performance against the standard organization will decide if and how to establish, and associated legislative compliance requirements. adopt, maintain, and develop an EMS. Then, the The outcome depends upon whether the enterprise‘s organization will decide how to demonstrate EMS successfully fulfills all standard requirements. If conformity with the standard voluntarily adopted. so, the evaluating body produces a certificate An organization can demonstrate conformity in detailing the scope of the EMS, the standard, and the several ways: (a) making a self-determination and organization‘s details. Certificates are valid for a self-declaration; or (b) seeking confirmation of its self- limited amount of time set by the certification body declaration by a party external to the organization (for (and generally no more than three years). Throughout instance, an assessment of conformity by a business that period, there will be a continual audit cycle to client); or (c) seeking certification (or registration) of enable successful continuation of registration to the its EMS by engaging an external qualified body (that standard. is, an accredited certification body). While there are many certification bodies, these An EMS attains certification when a certification body organizations must ensure they are exercising due completes its inspection of the enterprise‘s EMS diligence, and that the enterprise applying for system and makes a formal declaration that the certification is receiving an impartial service that fully system conforms to the requirements of the adopted embraces the concepts of continual environmental 163 | P a g e improvement. The issue of accreditation of certifiers is unnecessary due to their small scale and as a costly becoming increasingly important as demand for their burden against their own primary concern. services grows. Since the onset of the certification systems, there has been an inherent risk of having The managerial and technical resources of SMEs often second-class certification bodies and systems. The role have limited knowledge regarding how their of government as a regulator of certification auditors enterprise affects the environment, and limited is vital to program success. Specific mechanisms are knowledge about how to manage their environmental available to mitigate the risk and ensure certification performance. Furthermore, SMEs have limited credibility and acceptability in the international resources to dedicate to environmental marketplace and not only within one country‘s considerations, and they have short-term pressures on boundaries. These mechanisms include an cash flow. In addition, there are significant challenges international forum of national accreditation bodies specific to developing countries, where (i) more (International Accreditation Forum, IAF) that financial and technical constraints often exist; (ii) examines mechanisms for achieving international appropriate infrastructure is less available or reciprocity through multilateral agreements (IAF accessible (as, for example, for waste management Multilateral Recognition Arrangement, MLA). and sewerage), posing another challenge to the Certification bodies must adhere to specific standards, enterprises in dealing with environmental aspects; such as ISO 17021 (Conformity assessment – and (iii) the legal framework is less developed and/or Requirements for bodies providing audit and effective. Although these challenges do not prevent certification of management systems), which place the development and implementation of an EMS, they great emphasis on the impartiality of the certification may pose serious obstacles, create an additional process and the competence of all personnel, financial burden and frustration, and eventually managers, administrators, and auditors of the constitute substantial disincentives for the SMEs. certification body. An enterprise considering certification of an EMS should ensure that the Some difficulties encountered by SMEs relate to more certification body has full accreditation under the technical issues, such as defining the organization‘s relevant standard. environmental aspects and impacts. These definitions sometimes require specialized technical knowledge Application to Small and Medium Enterprises and understanding, which can add to the overall (SMEs). Most of the development and application of financial impact of developing an EMS. Finally, while EMS have taken place in large companies and the costs of certification that local ISO certifiers carry organizations. The development and use of such out in developing countries tend to be significantly systems in SMEs continue to be limited. SMEs need to lower than in developed economies, certification may focus on economic survival and profitability, and become relatively expensive, if national certification often perceive environmental management as and accreditation bodies are non-existent, or if 164 | P a g e overseas markets do not accept certification by organization in terms of environmental national bodies. performance. 3) Draft an environmental policy stating the In recent years, international organizations have company‘s intentions and its commitment to created several support tools (see References and compliance with legal and other applicable Resources section of this Guidance Note) to help requirements, and its commitment to continual SMEs develop an EMS using simple and tested improvement of its environmental methodologies with limited burden to the enterprise. performance through pollution prevention. The owners and administrators of enterprises often 4) Develop measurable and simple indicators of believe that training and enhancing competencies environmental performance. within organizations require employing a specialist 5) Properly staff and structure the organization and taking personnel out of the work arena for long so it can design, implement, monitor, and periods, but this may not always be the case. Targeted review all of the preceding steps. training in management and quality control can improve overall performance, including An organization can use its existing production-based environmental aspects, and can provide a basis for and quality-based management systems as a EMS development. Training could consist of short foundation on which to build the elements of an EMS sessions in practical settings within the working consistent with internationally recognized standards. environment where, for example, internal personnel Management systems require similar types of review operational controls or demonstrate how to procedures for document and record control, put emergency preparations and responses into place communication, internal audit and inspection, in real environments. Web-based methods now reporting non-conformances, and implementing available are instrumental in improving knowledge corrective and preventive actions. and communication both internally and externally. Staff already acquainted with the concepts of quality management and safety management will adapt more Prerequisite Factors for Environmental easily to the EMS requirements. Additionally, with Management Systems previously trained staff, the time spent establishing and running an EMS and documenting the Staff. For an effective EMS, the following steps are performance indicators will be less. Analyses have necessary: shown that higher capacity and access to resources in 1) Obtain and maintain management an enterprise typically cause the costs of adopting an commitment. EMS to decrease. 2) Conduct a focused baseline assessment to identity what really matters for the 165 | P a g e Costs. Typical costs to set up an EMS, including Advantages and Limitations of external consulting fees as well as communication Environmental Management Systems and registration costs, can range from approximately Environmental Performance. Through the systematic US$ 10,000 for a simple system to more than US$ approach of an EMS, an enterprise can define and 50,000 for a more complex organization and the implement the organization‘s environmental policy, development of a full EMS. Analyses have shown that ensure compliance with relevant environmental the cost of setting up an EMS can range from US$ 300 legislation and regulations, identify and manage its to more than US$ 1,000 per staff member. A phased environmental impacts, and achieve continual approach can also help in reducing costs. improvements in environmental performance. If an enterprise adequately designs and sizes its EMS for A full EMS requires an appreciable commitment of the scale of the business‘s activity, then the EMS‘s operational resources that an organization can reduce implementation will allow management to through the implementation of discrete steps, starting understand and track its environmental performance, from a basic, simple procedure and becoming more and thereby develop and adopt measures to improve comprehensive and sophisticated as capabilities such performance. enhance and resources allow. Once the basic EMS is in place, it is possible to carry out a gap analysis and Compliance Awareness. An EMS dictates that an to make a balanced judgment on the costs and organization not only understands the regulatory benefits of seeking certification. framework in which it operates, but that the organization incorporates these specific requirements Business Support. Local business support into the controls developed to manage specific tasks organizations may provide the needed technical and risks. Adoption of an EMS can enable assistance for the development of EMSs. Another organizations to collect data that they did not effective approach for businesses that are involved in previously have. Examples would be water use, supply chains for a larger business partner is entering energy consumption, and volume of waste generated. into a mentoring agreement with that partner. There Additionally, these data can assist in responding to are several examples of large organizations having regulators as well as to markets. The challenge occurs, helped their contractors and suppliers to develop an particularly in developing or transitional countries, EMS in order to achieve a green supply chain with when the environmental regulatory framework is still clear benefits for both parties. immature or under development. An important benefit of an EMS is its capacity to help improve an organization‘s performance in developing countries where the regulatory framework and other drivers may not be as robust. 166 | P a g e Economic Performance. An effective EMS reviews and sets improvement programs linked to impacts Multinational corporations with operations or associated with resource consumption. An enterprise procurement processes within developing countries can make tangible savings quickly and visibly in this are keen to ensure that their supply of products and area. Simple, low-cost housekeeping measures services is via a defined corporate responsibility path, systematically implemented through the adoption of and meets their quality and environmental standards. an EMS can reduce costs such as those for energy, This typically involves the evaluation of potential fuel, water, raw materials, wastewater treatment, and contractors‘ and suppliers‘ environmental waste disposal. Quantification of economic performance before awarding contracts, with good performance improvements due to the scores given to those that demonstrate the adoption of implementation of EMS is difficult; however, these an EMS. Procurement routes more and more often use improvements are significant. Trade Opportunities. Environmental and social Box 1. Example of New Trade from an performance may indeed become an important EMS commercial factor, either as a positive attribute or as a potential trade barrier (see box 1). The Since its first project with IFC, a generic drug manufacturer in Bosnia and Herzegovina has implementation of an EMS is a way to demonstrate an established an environmental management system, acceptable level of environmental commitment, which which has been subject to external audit and received in turn can assist with extending or developing new ISO 14001 certification in January 2003. trade opportunities or markets, as well as reputational The EMS incorporated European Union Good enhancement within the marketplace. Manufacturing Practice (GMP) Rules and Guidance for Pharmaceutical Manufacturers, resulting in the company meeting the requirements to export its The significant growth in the number of EMS certified products to the European Union, and enhancing trade to standards such as ISO 14001 across the globe opportunities. suggests that enterprises are using these standards to harmonize competition on the world stage and provide opportunities to trade with organizations in internationally recognized EMS standards as a the developed world. The export performance of shortcut or prerequisite to procurement decisions. businesses in developing countries can benefit from a level playing field, especially where in-country Changes in Environmental Attitudes and market forces may account for lower operational or Environmental Awareness. Effective communication human resource costs. Enterprises can use an EMS as is fundamental if an organization is to adequately a vehicle for competitive advantage within the ethical engage with the local communities and obtain a social and environmental products market. license to operate. Core elements of an EMS, such as 167 | P a g e training and internal communication on environmental performance, have a positive effect on Time Commitments. Some private businesses, and employee motivation and build the organization‘s especially SMEs, may consider a formal EMS to be too reputation as a good employer, with positive impacts complex and time-consuming and that it generates on human resources management and quality. The too much documentation. However, the data commitment to continual improvement in necessary to demonstrate environmental compliance environmental performance sends a strong message and performance are often already being collected to important external stakeholders, such as local and reported to regulatory authorities. Enabling authorities, regulators, and the local community, that performance data to flow to management and having the enterprise uses good practices and is a good periodic reviews of performance by top management corporate citizen. give management better control over how a business progresses towards its objectives. In turn, better Effective external communication mechanisms serve knowledge and control allow improved efficiency by to meet requirements of the international financiers‘ helping lower operational costs and strengthen the community, prevent and address community organization‘s financial sustainability. concerns, reduce risk, and assist larger processes that create positive social change. Finally, an It must be noted that an EMS (certified or not) does organization‘s communication that it is implementing not guarantee good environmental performance. The an EMS is important to investors and shareholders to EMS is a framework to approach environmental reassure them about legal compliance, against management in a systematic way, but it does not reputational risks, and to enhance the brand image of imply good environmental management in itself, and the organization‘s products and services. certification is about adherence to procedures, rather than good performance and adherence to the spirit. Risk and Liability Control. Financial advantages The desirable approach would be for management to may include potential lower costs for insurance make a commitment to specific environment coverage for pollution incidents, and better control to performance improvements within a defined period minimize potential liabilities and fines. Minimizing or and then use the EMS standard as the mechanism for eliminating pollution incidents through the design demonstrating that it is complying with that and implementation of effective controls helps reduce commitment. risks and liabilities (for example, those deriving from contaminated land). This may increase the attractiveness of the organization as a low-risk Interaction with other Tools and Possible investment. Conversely, poor environmental Substitutes management practices have the potential to reduce While traditionally focused on the identification and overall asset value because of remediation or liability management of environmental impacts, the EMS issues. 168 | P a g e framework has recently expanded to include social Cleaner Production Methods. Both EMS and cleaner impacts, hence creating Environmental and Social production are organization-wide concepts Management Systems (ESMS). Further, because of the addressing all aspects of the organization‘s commonality of processes, organizations may also operations, from use of natural resources to product integrate EMS with management systems utilized for disposal. While EMSs are the systems for an other disciplines particularly Occupational Health organization to identify, develop, and control its and Safety (OHS), thereby creating occupational pollution prevention and abatement options, cleaner health and safety and environmental management production options and tools make more efficient use systems (HSEMS), and occupational health and of resources such as raw materials, energy, and water safety, environmental, social, security and quality along a company's value chain. This reduces waste management systems (HSESSQ MS). and saves companies money on direct input and clean-up costs (see box 2). Many cleaner production Additionally, organizations should note that the EMS investments also reduce emissions, which benefits approach is robust enough to enable integration with surrounding communities. Box 2. Clean Production Assessment as a Part of an EMS A company in Dar es Salaam, Tanzania, is a private undertaking with 45 permanent staff members and 20 seasonal employees. It manufactures five tons of bar laundry soap per hour. The company makes soap from fat through a saponification process utilizing caustic soda. The principal source of process energy is steam generated from the combustion of industrial diesel oil in the boiler furnace burners. The company uses steam throughout the whole process and for handling materials (such as unloading of fat from truck tankers, and fat storage heating). The Cleaner Production (CP) assessment revealed leakages of steam from some of the valves and inefficient use of steam. The unloading of fat delivered to the factory resulted in spillage of 3,000 kg annually. The soil absorbed the spilled fat. The solutions identified to conserve steam energy and curb spillage of raw material allowed reducing the boiler furnace consumption of industrial diesel oil by 54 percent to only 30 liters per ton of laundry soap produced, saving 415,800 liters per year. This measure also resulted in a considerable decrease in the emission of CO2, SO2, and NOx. The recovery of spilled fat also made a significant improvement to the direct environment of the factory. The only option that needed some investment was the installation of steam valves, which cost US$ 830. All steam-saving measures together resulted in annual savings of US$ 185,700. The payback time was only two days. Recovery of the spilled fat requires virtually no energy input, creating a savings of US$ 2,400 per year. (See further details in IFC SME Toolkit. http://www.smetoolkit.org/smetoolkit/en/content/en/279/Creating-an-Environmental-Management-System-EMS-) other private-sector systems such as those linked to quality management, occupational health and safety Public Involvement. There is considerable evidence and social impact management, accountability, and that an informed public has a strong influence on the performance. environmental performance of industrial enterprises. Communicating out the key objectives and policies of 169 | P a g e the EMS, and its performance, on a regular basis is Zimbabwe. A company operating two sugar invaluable. Public release of the main environmental refineries in Zimbabwe with a yearly production of information from an EMS can also be a central 140,000 tons of refined sugar and employing component of a community relations program, approximately 500 people faced high surcharges although this goes beyond the basic concept of an when its water consumption level exceeded the EMS. The World Bank‘s three Guidance Notes on allocated amount. In response, the company Promoting Active Citizenry, including the one on identified water conservation measures. The Advocacy and Participation in Decision-Making can company projected that these measures would reduce serve as a resource. its water consumption by approximately 86,000 m3 annually and reduce its solid wastes by 120 tons per International Standards. An EMS may use the year. The factory invested US$ 28,000 for the framework of a number of internationally recognized reduction of water consumption. With an expected standards including the ISO 9000 series, the ISO 14000 saving of US$ 24,000 per year on water charges, series, specifically ISO 14001 and ISO 14004, and the payback period was calculated to be 14 months, not European Eco-Management and Audit Scheme. considering any possible surcharges for which the company may have been responsible. See further details in Practical Examples of Environmental http://www.smetoolkit.org/smetoolkit/en/content/ Management Systems and Lessons Learned en/279/Creating-an-Environmental-Management- System-EMS-. Russia. One of the largest regional banks in Russia, serving both large corporations and SMEs, developed an SEMS based on IFC's Exclusion List, project References and Resources on categorization, and applicable local environmental Environmental Management Systems laws and regulations. During appraisal of new loans, Fryxell G. E., C. W. Lo, and S. S. Chung. 2004. the bank uses environmental impact assessment and ―Influence of Motivations for Seeking site visits to evaluate social and environmental ISO14001 Certification on Perceptions of EMS Effectiveness in China.‖ Environmental criteria of funded projects and takes on Management 33 (2): 239–51. environmental liability insurance. The bank also ICCA (International Council of Chemical Associations), ―ICCA Responsible Care routinely carries out consultations with clients on Initiative,‖ ICCA, http://www.icca- social and environmental risk management and, with chem.org/en/Home/Responsible-care/. participation of local social and environmental The following are examples of accepted international authorities, assists in developing an action plan to standards for formal environmental management systems: mitigate and monitor the identified risks. EMAS, ―European Commission – Environment,‖ EMAS, http://ec.europa.eu/environment/emas/in 170 | P a g e dex_en.htm/. (EMAS - Eco-Management --------, ―EMASeasy,‖ EMAS, www.emas-easy.eu/. and Audit Scheme (European Commission) - IEMA (Institute of Environmental Management & EU voluntary instrument which Assessment), ―IEMA Acorn Scheme,‖ IEMA, acknowledges organizations that improve www.iema.net/ems/acorn_scheme/. their environmental performance on a --------, ―Web Portal for EMS Acorn Downloads,‖ continuous basis.) IEMA, www.iema.net/ems/acorn_scheme/ ISO (International Organization for Standardization), acorndownloads/. ―ISO 14000 Environmental Management,‖ IFC (International Finance Corporation), ―Creating an ISO, Environmental Management System (EMS),‖ IFC, http://www.iso.org/iso/iso_catalogue/ma http://www.smetoolkit.org/smetoolkit/en/ nagement_standards/iso_9000_iso_14000/ content/en/279/Creating-an- iso_14000_essentials.htm/. (Details the Environmental-Management-System-EMS-/. requirements for an EMS, to enable an INEM (International Network for Environmental organization to develop a policy and Management), ―INEM Web Site,‖ INEM, objectives taking into account legislative www.inem.org/ default.asp/. requirements and information about significant environmental impacts. ISO A training kit in EMS, prepared by the United 14004:2004 gives general EMS guidelines). Nations Environment Programme (UNEP), the --------, ―ISO/TC207 Web Site,‖ ISO, International Chamber of Commerce (ICC) and the International Federation of Consulting Engineers http://www.tc207.org/ faq.asp/. (Provides (FIDIC), is available from the following websites: useful information on the standardization of Environmental Management.) FIDIC (International Federation of Consulting Engineers), ―FIDIC Resources: UN Global Guidance and certification support can be obtained Compact Initiatives,‖ FIDIC, from several certification bodies and from national accreditation bodies. http://www1.fidic.org/resources/globalco mpact/. IAF (International Accreditation Forum), UNEP (United Nations Environment Programme), ―International Accreditation Forum, Inc.,‖ ―UNEP DPTIE Branch: Business & Corporate IAF, http://www.iaf.nu/. Responsibility,‖ UNEP, http://www.uneptie.org/scp/business/em Example of support toolkit, especially designed to p/. support SMEs in implementing an EMS, can be found at the following websites: An article providing basic information on how an BSI (British Standards Institution), ―BS 8555 SME can implement an EMS is: Environmental Management Systems,‖ BSI, Baxter, M. 2004. ―Taking the First Steps in http://shop.bsigroup.com/en/ProductDetai Environmental Management.‖ ISO l/?pid=000000000030077920/. Management Systems (July): 13–8. EEA (European Environment Agency), http://www.iso.org/iso/ims0404- ―Environmental Management Tools for environment.pdf. SMEs – A Handbook,‖ EEA, http://www.eea.europa.eu/publications/G A good summary of the pilot project on adoption of EMS in SMEs in Mexico, mentioned in this paper, is H-14-98-065-EN-C/. provided in Chapter 7 of: EMAS (EU Eco-Management and Audit Scheme), ―EMAS Toolkit for Small Organizations,‖ Blackman, A., ed. 2006. Small Firms and the EMAS, Environment in Developing Countries. http://ec.europa.eu/environment/emas/to olkit/. 171 | P a g e Washington, DC: Resources for the Future 1: Social and Environmental Assessment and Press. Management System: Guidance on the requirements relevant to the social IFC, ―IFC Sustainability Performance Standards and and environmental management systems is available Guidance Notes,‖ IFC, in the Guidance Note 1 of IFC Performance Standard http://www.ifc.org/ifcext/sustainability.nsf /Content/PerformanceStandards/ This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 172 | P a g e Cleaner is to complement a separate paper written for the public sector. Production CP can be applied at all decision-making levels in industry. However, the chief focus is the adoption of cleaner technologies and techniques, and is applicable Introduction to a wide range of sectors (for example, industry, infrastructure, housing, and hospitality services) and UNEP DTIE (United Nations Environment organization sizes (from a large petrochemical plant Programme, Division of Technology, Industry and to a small industrial enterprise). Costly end-of-pipe Environment) coined the term ―Cleaner Production‖ pollution control systems are gradually replaced with (CP) in 1989 as ―...the continuous application of an a strategy that reduces and avoids pollution and integrated preventive environmental strategy applied waste throughout the entire production cycle, starting to processes, products, and services to increase overall with product design, and then moving to efficiency and reduce risks to humans and the manufacturing issues such as efficient use of raw environment‖ (UNEP 2011). Cleaner Production materials, energy, and water. It is an especially principles, which are also practiced as waste effective measure for climate change mitigation minimization, pollution prevention, and eco- because of its potential to reduce greenhouse gas efficiency, are founded on the four Rs: Reduce, (GHG) emissions. Table 1 gives examples. Recycle, Reuse, and Reformulate. This paper is written from the perspective of the private sector and  This guidance note was prepared by Jigar Shah (Senior Technical Specialist, CESCL). Peer reviewers included John Graham (Principal Environmental Specialist, CESI), and Mauricio Athie (Senior Environmental Specialist, CESI). Additional comments and contributions were provided by Adriana Triana (Environmental Specialist, CESI), Akiko Nishimae (Environmental Specialist, ENV), Anna Hidalgo (Operations Officer, ENVCI), Ari Huhtala (Senior Environmental Specialist, ENV), Baljit Wadhwa (Senior Evaluation Officer, CESME), Bilal Rahill (Senior Manager, CESI), Hakim Zahar (Consultant, CAFAF), Jorge Villegas (Social Development Specialist, CESI), Kirtan Sahoo (Technical Specialist, ENVCF), Lakhdeep Babra (Principal Environmental Specialist, CESI), Laura Mecagni (Senior Investment Officer, CDFIN), Rafael Hernandez (Consultant, ENV), Sabin Basnyat (Technical Specialist, CESCL), and Sanjay Srivastava (Regional Safeguards Adviser, SARDE). Editorial assistance was provided by Stan Wanat (Consultant), Juliette Guantai (Program Assistant, ENV) and James Cantrell (Communication Analyst, ENV). The task team leaders for this product are Kulsum Ahmed (Lead Environment Specialist, ENV) and Helena Naber (Environmental Economist, ENV). The product was prepared under the guidance of the following World Bank Group management: James Warren Evans / Mary Barton-Dock (Directors, Environment Department, World Bank), Bilal Rahill (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). 173 | P a g e Table 1. Examples of Cleaner Production CP Actions Examples Certain forging techniques reduce the amount of A reduction in the quantity of material or energy material required to make the product while also consumed in manufacturing a unit of product reducing machining energy and waste A reduction in the hazardous material required to extract Pre-aeration of ore in water increases efficiency of gold a unit of mineral in metallurgical processes extraction, thereby reducing the use of cyanide A reduction of materials used in a product Lightweight bottles and small caps for water bottles A reduction of air emissions, wastewater, and solid waste Resource efficiency as pollution prevention, as in the generated in production of a unit or product case of recycling water to achieve zero discharge A reduction of water and energy use in hospitality Water-efficient showers and toilet appliances; low- services energy illumination Energy-efficient orientation to maximize the amount of A reduction of energy use in low-income housing by light entering housing units, and shading to minimize using green building design use of A/C CP emphasizes both energy and resource-efficiency  Identify (and quantify) opportunities to improvements, and many of the requirements relating reduce, reuse, and recycle resources, and to to organization, data, and best practices are the same set cleaner production goals. for both. CP results in benefits for all parties; it  Conduct a CP assessment. protects the environment, the consumer, and the  Develop an implementation plan based on worker while improving industrial efficiency, the CP assessment. profitability, and competitiveness.  Implement the actions of the plan.  Identify further CP opportunities through new performance benchmarking. Description and Application of Cleaner Production The CP process is an ongoing campaign with continuous benchmarking of performance and improvements, consisting of the following steps (see figure 1):  Benchmark current resource usage through use of input-process-output analysis. 174 | P a g e Figure 8. Cleaner Production Process products, materials, or services to the company that is assembling either an intermediate or a final product. Where a company sits within the supply chain will often affect its motivation and ability to take actions to improve CP performance among its suppliers. In some ways, best practices in supply chain CP resemble those applied to internal operations strategies. Leading companies will often offer their efficiency expertise to their suppliers, essentially to support replication of those practices. However, expanding into the supply chain creates substantial new challenges in data collection, analysis, normalization, and reporting. Supply chain efforts are typically much newer, taking formal shape only in the last few years for many companies; these efforts are still in developmental stages for many others. Two Changing an organization‘s culture is rarely easy, and key prerequisites apply: (1) the company must both overcoming this barrier can be a significant challenge. learn how to run an internal CP program and When implemented within a total corporate demonstrate its commitment by mounting an effective sustainability or social responsibility commitment, CP internal operations effort; and (2) the company must helps to generate waves of innovation that reach work hard to communicate with its suppliers, beyond the immediate confines of the CP explaining why it is asking for data and subsequent performance objectives. commitments, and showing them the benefits of their efforts. At first, companies naturally focus their sustainability strategies internally. This is where they have most Many companies are improving the energy efficiency control, can get the quickest results, and see the direct of their products and services. Several companies bottom-line benefits. However, as they assess their have estimated the energy or carbon footprint of their total environmental footprint and examine the total products and services (the total carbon emissions flow of resources in the entire chain of economic from products and services over their useful life). Key activity in which they operate, many learn that much drivers motivating companies to develop and market of the company‘s footprint results from what they buy more energy-efficient products include pressure from or sell outside their own operations. These public agencies and advocates, competition, and the ―upstream‖ activities refer to the entities that supply push for higher revenue and profit. 175 | P a g e There is no single ideal organization chart for and assemble the potential for savings across multiple successful CP strategies. In fact, the most practical facilities and projects can show senior management programs seek to fit the CP mission and organization the total bottom-line value of these investments. This to the company‘s structure and culture, rather than can bring to light ideas that astute individuals may create a separate organization. have known about for years, but only when the program made them visible in a meaningful way to The one common feature of effective CP organizations senior management do they become actionable. is that they involve all key functions and operating units in the company. These organizations typically have someone who is identified as the corporate Prerequisite Factors for Cleaner Production CP/energy manager or CP/energy team leader. They may operate out of environmental health and safety, Champion. A visible ‗champion‘ at management sustainability, engineering, or operations units. The level is a key requirement for a successful CP locus of the team leader is not as important as the way campaign. The team identifying and implementing the team is built across functions and operating units. CP projects should be comprised of different Effective CP team structures are typically cross- stakeholders including company experts, external functional, multi-level, and matrixed. consultants, representatives from shop floor, engineering, finance and management. The campaign When the unit making equipment-purchasing must create the necessary tools with rewards, decisions differs from both the unit paying the bills recognition, and incentives to encourage all staff to and the facility operations unit, then the barrier participate in identifying opportunities and known by economists as the ―principal-agent‖ implementing changes in process. A clear problem stymies CP performance. Companies communication of the program and all its benefits to determined to break through this barrier succeed by the employee, the community, the company, and the building a program that brings these agents together environment is essential. to pursue a common objective. They connect procurement policies with billing systems with A report sponsored by the Pew Center summarizes facility operations and investment decisions. The the core elements of the best corporate energy motives of all organizational units are aligned under a efficiency strategies into ―Seven Habits‖ of core single goal: meeting and beating the company‘s practices and principles, cutting across internal performance targets. operations, supply chains, and products and services (see box 1). Though the study was focused on energy Most CP investments are small, and when considered efficiency, its results and conclusions apply more individually can be hard to notice, compared to the generally to CP. many larger investment opportunities corporate leaders entertain. Winning CP strategies that assess 176 | P a g e baseline becomes the basis of target setting, and then Box 1. Best Corporate Strategies – Seven of measuring progress against the target. Habits of Core Practices and Principles 1. Efficiency is a core strategy. Effective systems must measure performance against goals in regular reporting cycles with data viewed by 2. Leadership and organizational support is real and sustained. senior executives with decision-making authority. Facility-level staff must be supported with project 3. Company has SMART (Sustainable, Measurable, Accountable, Replicable, and Time Sensitive) energy data or operating checklist guidance to maintain or efficiency goals. improve performance. However, simply reporting information is not enough. Effective programs 4. Strategy relies on a robust tracking and measurement system. encourage direct and specific feedback, so that leaders not only see performance information, but also have 5. Organization puts substantial and sustained resources into efficiency. practical channels through which they can act. Additionally, leaders must know whom to contact in 6. Energy efficiency strategy shows demonstrated results. case of a lagging facility or other operating unit. Data. Collecting and reporting data is a critical 7. Company effectively communicates energy efficiency element of any corporate CP strategy. In many The best CP programs do not treat their data results. organizations, key CP information such as energy and collection and reporting systems as just a compliance water data simply are rolled into larger operating cost requirement, although they also find that an element categories, and thus cannot be seen as separate Source: Prindle 2010. of compliance is needed to get broad participation, elements. A corporate CP program requires an especially at first. Rather, they tap into a broader organization-wide system that tracks units of cultural ethic of continuous improvement, using the consumption as well as cost. A standardized set of reporting system as a tool that empowers people to units is needed to create a consistent basis for seek new efficiencies and associated innovations. performance measurement. To be useful as a performance metric, resource use is typically normalized by one or more factors the organization considers critical to its overall performance. Normalized energy data is typically expressed as ―kWh per X‖ (kilogram of product, square meter of floor space, or product unit, among others). Beyond normalizing resource use, effective systems also develop baseline usage, typically expressed as performance in a specific year. This 177 | P a g e Figure 9. Survey Results: Co-benefits of Cleaner Production (Energy Efficiency) Investments Source: Prindle 2010. Advantages and Limitations of Cleaner payback (Pew Center survey respondents averaged 2 Production 8 years; see Prindle 2010), and other analyses like Internal Rate of Return (IRR) (Pew Center survey Advantages. The most compelling benefit of CP is in respondents averaged 18.5 percent IRR), the best CP reducing operating costs and improving productivity strategies today often take other factors, or co- for a company. It provides an economic justification benefits, into account. These co-benefits are for making physical and environmental summarized in figure 2. improvements to a product or process, and it may act as a trigger for innovation at strategic level. In many CP investments provide reputational value. cases, it enhances market access and prevents market Companies are finding that CP, eminently measurable exclusion. Often it serves as a proactive approach to by sustainability indicators, can quickly lead to forthcoming legislation. documented accomplishments that increase reputational value among employees, investors, and CP investments provide bottom line value. other stakeholders. Companies have found that well-crafted CP investments are highly cost-effective, with rapid As the emphasis on water scarcity, climate change paybacks and competitive rates of return, frequently and carbon emissions becomes a larger part of the at low cost and usually with low risk. Thus, CP sustainability equation, the fact that energy and water investment decisions are often viewed in simple terms consumption accounts for the majority of most through metrics like ―simple payback,‖ the ratio of companies‘ measured footprints means that CP‘s annual energy savings to investment costs. Three-year importance as a sustainability indicator will likely paybacks are about as far as most companies are continue to rise. willing to go. While companies still use simple 178 | P a g e CP brings top-line benefits: efficiency-driven Finding capital is the top-rated obstacle to progress in innovations not only reduce operating costs, they can advancing CP programs. Perhaps the single most also drive business growth opportunities. Some effective approach that companies have used to companies apply the technologies and practices they improve access to capital is setting aggressive innovate internally to their customer offerings, efficiency goals, making them a priority, and forcing gaining a double stream of benefits. the organization‘s decision makers to reset their investment priorities to favor efficiency. Many Limitations. Barriers arise from a combination of the companies have found ways to help efficiency following factors, any of which can impede the projects are approved as a strategic goal, even when uptake of CP: conventional financial analyses make them appear less favorable than other investment options.  Companies‘ lack of focus on CP.  Lack of awareness of cost savings from CP and hence reluctance to invest upfront costs. Interaction with Other Tools and Possible  Lack of technical ability to identify CP Substitutes projects and develop these into profitable Opportunities to implement cleaner production can projects. occur at the pre-operational phase or at any point  Perception of risk of implementing a during the project life, at the design stage, or as a technology that may be outside the industry retrofit of an existing process. In practice, the greatest norm. gains to be had from cleaner production can be  Lack of access to finance, although many CP achieved at the earliest stages, as retrofitting is investments require relatively modest sums. usually more difficult and expensive. However, potentially valuable opportunities are present in The core of the difficulty lies in the intertwined existing situations. There are many sources for CP problems of perceived high risk driving up implicit opportunities, which may result from continuous discount rates associated with projects, high improvement programs such as six sigma and lean transaction costs, and difficulties in structuring manufacturing, as well as from industry standards, workable contracts for preparing, financing and product and process engineering groups, and through implementing CP investments. With their main technical development and research. financial benefits focused on savings of energy costs, these cost-saving projects rarely rank as equals with projects to expand production or capture new markets, especially in rapidly growing economies. Practical Examples of Cleaner Production Mexico. Vinte Viviendas Integrales is a mid-sized vertically integrated housing developer targeting the 179 | P a g e medium- and low-income segments of the population Taylor, R. P., C. Govindarajalu, J. Levin, A. Meyer, in several cities in Mexico. Vinte housing estates and W. Ward. 2008. Financing Energy Efficiency: Lessons from Brazil, China, India, and feature low-energy lights and solar water heaters. In Beyond. Washington, DC: World Bank. various estates, Vinte is also installing a photovoltaic UNEP (United Nations Environment Programme). system for lighting in common areas and a telemetric http://www.unep.org/resources/business/ Focus_Areas/ system to help owners optimize the use of waste, gas USGBC (US Green Building Council). and electricity. http://www.usgbc.org/DisplayPage.aspx?C MSPageID=1720 Yaacoub, A., and J. Fresner. 2006. Half is Enough: An Turkey. Assan Demir, the largest player in the Introduction to Cleaner Production. Beirut, LB: Turkish aluminum sheet, coil, and foil industry, LCPC Press. implemented CP projects to improve energy Resources efficiency and product yield at its Tuzla plant. The company invested $4 million in capital mainly for The Canadian Industry Program for Energy reducing heat loss in the melting and casting furnaces, Conservation (CIPEC), sponsored by and recovering waste heat. Expected benefits include Natural Resources Canada (NRCan), has developed a benchmarking and best a 6 percent improvement in energy efficiency. Assan practices program for Canada's industrial also replaced a degreasing machine with a new- sectors. The program helps industry achieve generation machine that uses hot water instead of significant energy efficiencies. http://oee.nrcan.gc.ca/industrial/technical- chemicals, thereby reducing environmental impact info/benchmarking/benchmarking_guides.c and improving the quality of the strip. fm?attr=24 ChemAlliance.org: “Nuts and Bolts of Chemical Process Pollution Prevention� References and Resources on Cleaner ChemAlliance provides information Production concerning the environmental regulations affecting the chemical industry. ChemAlliance is operated by a partnership References of environmental professionals in academia, government, and industry. The ―Nuts and Clayton, A., G. Spinardi, and R. Williams. 1999. Bolts of Chemical Process Pollution Policies for Cleaner Production: A New Agenda Prevention‖ presentation provides practical for Government and Industry. London, UK: strategies for preventing waste and reducing Earthscan Publications Ltd. energy consumption in chemical Journal of Cleaner Production. Elsevier. manufacturing facilities. The examples are www.elsevier.com drawn from more than 400 case studies Prindle, W. R.. 2010. From Shop Floor to Top Floor: Best contained in the ChemAlliance Virtual Plant Business Practices in Energy Efficiency. Fairfax, Tour. Virginia: Pew Center on Global Climate http://www.chemalliance.org/Presentation Change, ICF International. s/nuts_and_bolts_p2/index.asp http://www.pewclimate.org/docUploads/ PEW_EnergyEfficiency_FullReport.pdf 180 | P a g e EPA South Australia (EPA SA) CP Case Studies improve energy management at industrial The Environment Protection Authority is facilities. The software is a web-based tool South Australia's primary environmental and is available free of charge from this Web regulator, responsible for the protection of site. This Web page provides an overview of air and water quality, and the control of the Quick PEP Software Tool, including pollution, waste, noise and radiation. intended users, inputs, outputs, availability, http://www.epa.sa.gov.au/casestudies.html and links to more information. European Bank for Reconstruction and Development (EBRD) Regional Activity Centre for Cleaner Production The EBRD's energy efficiency and climate This center based in Barcelona is one of the change team works to develop energy six Regional Activity Centres (RACs) within efficiency and renewable energy credit lines, the Mediterranean Action Plan (MAP). Each to promote energy efficiency in public one of these centers is responsible for a buildings and industries, and to build a specific thematic area. The main goal of the carbon-credit market in the countries of RAC/CP is the promotion and operations. dissemination of prevention, and the http://www.ebrd.com/index.htm reduction of pollution at source in the industrial, agriculture, and tourism sectors. European Integrated Pollution Prevention and The RAC/CP is situated in the city of Control (EIPPC) Best Practices Barcelona (Spain). The European Integrated Pollution http://www.cprac.org/eng/01_presentacio. Prevention and Control Bureau (EIPPCB) htm was set up to organize an exchange of information between Member States and RAC Studies (English, French, and Spanish) industry on Best Available Techniques This resource offers a detailed analysis of an (BAT), associated monitoring, and industrial sector, and shows its situation and developments within them. The European trends in each of the Mediterranean IPPC Bureau is an output-oriented team that countries. These studies are a tool to produces reference documents on Best encourage the implementation of eco- Available Techniques, called BREFs. BREFs efficiency in industries. They describe are the main reference documents used by production processes and their competent authorities in Member States environmental impact, while proposing when issuing operating permits for the feasible pollution prevention options. installations that represent a significant http://www.cprac.org/eng/03_activitats_es pollution potential in Europe. There are tudis_03.htm#13 about 50,000 of these installations in Europe. Database of Consultants compiled by RAC http://eippcb.jrc.es/reference/ http://www.cprac.org/eng/03_activitats_b http://eippcb.jrc.es/pub/english.cgi/0/733 bddsectorials_01.htm 169 RETScreen International Clean Energy Decision Quick PEP Software Tool Support Centre The Quick PEP Software Tool is one of the The RETScreen center seeks to build the software tools developed by the US capacity of planners, decision-makers, and Department of Energy Industrial industry to implement renewable energy, Technologies Program to help US industry cogeneration, and energy efficiency projects. 181 | P a g e This objective is achieved by: developing US EPA ENERGY STAR decision-making tools (that is, RETScreen This information center contains energy Software) that reduce the cost of pre- savings information tailored to industries or feasibility studies; disseminating knowledge focused on specific plant utility and process to help people make better decisions; and by improvements. ENERGY STAR tools and training people to better analyze the resources are also available to manage technical and financial viability of possible building energy efficiency. projects. http://www.energystar.gov/index.cfm?c=in http://www.retscreen.net/ang/centre.php dustry.bus_industry http://www.retscreen.net/ang/t_training.p hp US EPA Energy Star Energy Performance Indicators http://www.retscreen.net/ang/t_case_studi (EPIs) es.php US EPA has developed energy performance http://www.retscreen.net/ang/t_software. indicators (EPIs) for use in several php industries‘ production plants and operations plants. This rating tool is an external United Nations Industrial Development yardstick that enables you to assess how Organisation efficiently your plant uses energy, relative to United Nations Environmental Programme (UNEP) similar plants in the USA. The rating National Cleaner Production Centre (UNIDO system's 1–100 scale enables company NCPC) personnel to quickly understand how their UNIDO and UNEP have joined forces to plant is performing. For instance, a rating of help introduce Cleaner Production in 50 indicates average energy performance, developing countries and countries in while a rating of 75 or better indicates top transition. The UNIDO/UNEP Programme performance. Plants receiving an EPI score of for National Cleaner Production Centres 75 or higher in the USA are eligible to earn (NCPCs) is a unique program of capacity ENERGY STAR recognition. EPIs for Food, development to help achieve adoption and Glass, Petrochemicals, and Steel are still further development of the Cleaner under development. Production concept at the national level. http://www.energystar.gov/index.cfm?c=in www.unido.org/index.php?id=o5133 _focus.bus_industries_focus http://www.unep.org/resourceefficiency/ Home/tabid/214/language/fr- EPIs are currently available for these FR/Default.aspx industries: Cement Manufacturing US Department of Energy Office of Energy http://www.energystar.gov/index. Efficiency and Renewable Energy cfm?c=in_focus.bus_cement_manuf_focus Best Practices Case Studies Container Glass Manufacturing Plants http://www.energystar.gov/index. http://www1.eere.energy.gov/industry/be cfm?c=in_focus.bus_glass_manuf_f stpractices/case_studies.html ocus The U.S. Department of Energy (DOE) Save Corn Refining Energy Now Program http://www.energystar.gov/index. http://www1.eere.energy.gov/industry/sa cfm?c=in_focus.bus_corn_refine_fo veenergynow/ cus Flat Glass Manufacturing Plants http://www.energystar.gov/index. cfm?c=in_focus.bus_glass_manuf_f ocus 182 | P a g e Frozen Fried Potato Processing Plants US Green Building Council http://www.energystar.gov/index. The US Green Building Council (USGBC; see cfm?c=in_focus.bus_food_proc_focus USGBC Web site) is a non-profit Juice Processing Plants organization committed to a prosperous and http://www.energystar.gov/index. cfm?c=in_focus.bus_food_proc_foc sustainable future for our nation through us cost-efficient and energy-saving green Motor Vehicle Manufacturing buildings. http://www.energystar.gov/index. http://www.usgbc.org/DisplayPage.aspx?C cfm?c=in_focus.bus_motorveh_manuf_focus MSPageID=1720 Pharmaceutical Manufacturing http://www.energystar.gov/index. cfm?c=in_focus.bus_pharmaceutical_focus This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 183 | P a g e Targeting from factors adverse to health; the placing and maintenance of the worker in an occupational Occupational environment adapted to his physiological and psychological capabilities and, to summarize: the Health and Safety adaptation of work to man and of each man to his job. (Guidotti 2011, 5) Introduction All occupational health and safety programs aim to Occupational health and safety (OHS) management foster a safe work environment, including the protects the safety, health, and welfare of people at protection of employers, suppliers, customers, family the workplace. In 1950, the first session of the joint members, nearby communities, and other members of International Labour Organization (ILO) and the the public who could be affected by a company‘s World Health Organization (WHO) Committee on operations. Such programs draw on disciplines such Occupational Health adopted a definition of as occupational medicine, occupational or industrial occupational health. The definition was subsequently hygiene, public health, safety engineering, chemistry, revised in 1995 and states: health physics, ergonomics, toxicology, epidemiology, and environmental health.  Occupational health should aim at the promotion and maintenance of the highest degree of physical, mental and social well-being of workers Description and Application of Targeting in all occupations; the prevention amongst Occupational Health and Safety workers of departures from health caused by Typical occupational health and safety risks common their working conditions; the protection of to the industrial sectors may be categorized as workers in their employment from risks resulting physical, chemical, ergonomic, and biological risks. Slips, trips, falls, noise, and vibration are examples of  This guidance note was prepared by Josefina Doumbia (Principal physical risks. Fires, explosions, leaks, spills, and Environmental Specialist, CESI). Peer reviewers included Adriana Triana (Environmental Specialist, CESI) and Mauricio Athie (Senior exposure to gases, vapors, mists, dust, and fumes are Environmental Specialist, CESI). Additional comments and common chemical risks. Muscular-skeletal problems contributions were provided by Bilal Rahil (Senior Manager, CESI), Carlos Arias (Senior Environmental Specialist, CESPQ), Johanna resulting from repetitive activities such as lifting and van Tilburg (Senior Counsel, LEGES), and Robert Gerrits (Senior Social Development Specialist, CESI). Editorial assistance was carrying, or from spending long periods in one single provided by Stan Wanat (Consultant), Juliette Guantai (Program position such as sitting at desks and working with Assistant, ENV) and James Cantrell (Communication Analyst, ENV). The task team leaders for this product are Kulsum Ahmed (Lead computers, are typical ergonomic risks. Lastly, Environment Specialist, ENV) and Helena Naber (Environmental Economist, ENV). The product was prepared under the guidance exposure to bacteria, viruses, biogenic toxins, and of the following World Bank Group management: James Warren Evans / Mary Barton-Dock (Directors, Environment Department, allergens is characteristic of biological risks. World Bank), Bilal Rahill (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). 184 | P a g e Box 1. Typical Risk-Control Hierarchy Avoid the risk – this is ideal, but not always attainable. Replace the dangerous with the less dangerous – for example, replace hazardous materials with safer alternatives. Prioritize the risk – focus attention on the greater risks, including those where the public is involved. Control hazards at their source – deal with the hazard directly, do not use a secondary control; for example, control noise by repairing or maintaining the machine, not by using hearing protectors. Adapt work to individuals’ abilities – for example, use stronger people for tasks demanding strength. Upgrade work equipment as technology improves – newer equipment may be marked to show that it meets tougher safety standards. Implement a coherent control policy – ensure that the specific risk control does not cause a disproportionate problem elsewhere; for example, do not solve the problem of a noisy machine by relocating it. Ensure that collective measures have priority over individual measures – for example, it is better to provide a safety roof rather than to rely on individual measures such as hard hats. Inform, instruct, train, and supervise the workforce. Provide Personal Protective Equipment (PPE). Although PPE is often essential, all the higher level controls should be considered first before using PPE as the alternative to solve a problem. Appropriate PPE (for example, overalls, safety boots, gloves, and hard hats) should be required even in the safest environments. To address occupational health and safety, a business requires risk to be managed to a level that is as low as should identify the workplace hazards (see Appendix, is reasonably practical. This assessment should detect page 10). A hazard refers to a circumstance that has the hazards, identify all affected by the hazards, the potential to cause harm. It may indicate a physical evaluate the risk, and offer and prioritize appropriate situation or it may indicate the omission of necessary control measures. preventative measures. An example of a physical situation would be exposure to equipment with sharp The evaluation of risk is based on the likelihood or edges that could cause lacerations, while an example probability of the harm being realized and the of an omission would be the failure to provide a severity of the consequences. This can be expressed guard to prevent injury from the sharp edges on the mathematically as a quantitative assessment by equipment. assigning integers to denote low, medium, or high likelihood, and assigning integers to indicate the Modern occupational health and safety legislation severity of the consequences. The integer assigned for usually demands that a risk assessment be carried out likelihood and the one assigned for severity can be prior to making an intervention. Risk management multiplied together to obtain a risk factor. Risk can 185 | P a g e also be evaluated qualitatively by describing the implementing proven behavioral safety processes, a circumstance in which the harm could arise. Newly business can dramatically reduce the number of lost- introduced controls should lower risk by one level time and minor injuries. (for example, from high to medium or from medium to low). Risk increases as the seriousness of resulting Advocacy for behavior-based safety has also harm increases, and as the likelihood increases that stimulated controversy, with some arguing that a the circumstance will occur. Ideally, all risks would be behavioral focus puts excessive responsibility on the mitigated; however, this is usually not feasible. Box 1 workers, and that BBS is too limiting and should aim lists a typical risk-control hierarchy. for a more holistic or culture-focused approach. In any case, behavioral safety has provided a platform Implementing an occupational health and safety for constructive debate, and the conflicting opinions management system, which can be carried out in- have provided the opportunity to learn more about house or by specialized consultants, is a reliable way the psychology of injury prevention (Cooper 2007; of improving occupational health and safety Geller 2004). performance in the workplace. These health and safety systems promote, facilitate, and enable To be successful, the BBS program must include all consistency throughout workplace activities and employees from the CEO to the most basic job processes. It is important to note that the system alone position, since the changes needed cannot be will not produce safe behavior or a safe workplace. accomplished without buy-in and support from all System effectiveness comes from complete involved in making those decisions. Central elements commitment to the health and safety system. This of a BBS program include (a) common goals for the includes proper implementation, follow-up, and employees and the managers, (b) behavioral training. observation and feedback processes, (c) formal review of observation data, (d) improvement goals, and (e) Behavior-Based Safety. Behavior-based safety (BBS) reinforcement for improvement and goal attainment. is an approach used to reduce workplace accidents Other aspects that can contribute to a BBS program‘s and fatalities. It is set on the premise that safety in the success include (a) multilevel teams for the workplace is a combination of three measurable assessment phase, the observation and the review components: personality, environment, and behavior. phases, or for all three phases; (b) placing the focus on Only when these three elements are combined can the site observation; and (c) recognizing that BBS is not a workplace be ―accident free.‖ BBS argues that by quick fix, but rather a commitment to a safer observing and analyzing the interactions between environment and injury reduction. people's behavior and the work environment, it is possible to identify factors that support safe or unsafe OHS Application in Small and Medium-Sized behavior. BBS also maintains that by changing the Enterprises. Small enterprises are commonly defined environment to support safe behavior and as having 1–49 employees and medium-sized 186 | P a g e enterprises as having 50–249 employees. As key resources to develop an occupational health and drivers in the world economies, small and medium- safety management system should be based on the sized enterprises (SMEs) need to have their safety and system‘s potential to reduce the human cost of health performance on a par with that of larger physical harm and the financial cost of the accidents, companies. If an SME did not understand its health in relation to the costs associated with the and safety risks, then it would lack the knowledge to management system. manage its health and safety performance, and as a result may not assign needed resources to provide Sometimes, the lack of clear health and safety adequate training. regulations may hinder the implementation of management systems. In such cases, it is a good Typical occupational health and safety management for SMEs includes the following: meeting legal responsibilities, establishing an organizational health Box 2. Basic Elements for Good Health and safety structure, developing a written health and and Safety Management Systems safety policy, assessing risks, training the workforce, Management Commitment and Employee Involvement. The manager or management team leads consulting with the workforce, monitoring and the way by setting policy, assigning and supporting improving safety performance, and providing safe responsibility, setting an example, and involving employees. facilities. The requirements for the safe environment of an SME are not different from those for any other Worksite Analysis. The worksite is continually analyzed to identify all existing and potential hazards. business. However, the economic impact of an accident is more severe on a SME than on a big Hazard Prevention and Control. Methods to prevent or control existing or potential hazards are put in place company, since an SME has less working capital. and maintained. Mechanisms to overcome SMEs‘ occupational health Training for Employees, Supervisors and Managers. and safety issues might include organizing to obtain Managers, supervisors, and employees are trained to collective training from the government, or understand and deal with worksite hazards. participating in sector-specific OHS initiatives. Follow-up. To determine what is working well and Practicalities of implementation. It is a good what changes are needed. business practice for all operations, regardless of size, to have an occupational health and safety business practice to refer to established sector-specific management system commensurate with their risks. benchmarks for good health and safety practices, and However, implementing such a system may involve established occupational health and safety regulations costs that businesses had not anticipated and may be from other regions. unwilling to bear. Businesses should quantify the costs associated with accidents that cause harm to people or property. Deciding whether to allocate 187 | P a g e If the workforce has low literacy or educational levels, Additionally, documentation of the activities in all and/or lacks the appropriate skills set (for example, elements of the safety and health program is farmers becoming factory workers, and women or important. Essential records, including those legally youngsters becoming part of the labor force), it is required for workers' compensation, insurance audits, highly advisable that businesses focus additional and government inspections, must be maintained as efforts to train the labor force so as to minimize the long as the actual need exists or as required by law. likelihood of accidents and unsafe working Keeping records of all activities, such as policy conditions. statements, training sessions, safety and health meetings, information distributed to employees, and In a few circumstances, cultural beliefs may prevent medical arrangements made, is greatly encouraged. some health and safety controls from being applied (for example, in the United Kingdom, Sikhs required Maintaining essential records will demonstrate sound an exemption from the regulation that drivers of business management as supporting proof for credit motorcycles wear crash helmets). Where such applications, for insurance and other audits. constraints occur, it is especially important that Furthermore, such records help in the review of on- technical solutions are found to minimize health and going safety and health activities for better control of safety risks in the workplace. current operations and to plan improvements. Records of accidents, related injuries, illnesses, and property losses are essential to developing procedures Prerequisite Factors for Targeting to prevent recurrence. Occupational Health and Safety Any good management system requires periodic New businesses sometimes fail to include review to determine what is working well and what occupational health and safety within their changes are needed. A widely accepted way to management priorities. Thus since management may identify hazards is to conduct safety and health not carry out early identification and proper inspections. Using checklists is a good way to get an assessment of health and safety risks, it cannot make indication of where to begin taking action towards a its employees aware of the workplace risks, and safer and more healthful business. The self-inspection training programs may not be properly established. checklist in Appendix 1 includes a basic, but not New businesses should begin addressing health and exhaustive, list of areas to be considered when safety from day one (see box 2). assessing health and safety risks. Open communication with the employees is crucial to the success of an occupational health and safety system. The employees‘ cooperation depends on their understanding of the system‘s goals, why it is important to them, and how it affects their work. 188 | P a g e Advantages and Limitations of Targeting respond through the enactment of legal instruments Occupational Health and Safety to enforce minimum health and safety standards. Businesses may establish good occupational health The complexity of a business‘s occupational health and safety systems for ethical reasons, to realize and safety management should be directly economic benefits, and/or to satisfy legal proportional to the business‘s occupational health and requirements. Economic benefits are secondary to safety risks. There is little to be gained from a human health and safety as a rationale for health and management system that generates paperwork and safety protection. However, businesses may consider takes up significant time and effort, but results in little calculating the total (direct and indirect) costs of or no risk reduction. To help businesses in identifying work-related injuries and illnesses to determine the work-related hazards, there are commercially economic benefits that may achieved by preventing available software tools. injuries and illnesses. Conversely, businesses may recognize the economic disadvantages of poor Established businesses with a good safety record may occupational health and safety performance in terms become complacent and overlook the inherent risks of lost productivity, and the requirements to pay associated with their operations. If there is a long compensation and fines. period with zero accidents, management might wrongly relax safety practices, assuming that the When operating with appropriate occupational health workplace is safe. Established operations should and safety systems, businesses may recognize that carefully implement occupational health and safety these systems improve staff performance and principles and closely monitor occupational health availability for work, help in recruiting and retaining and safety performance data, including reports of key skills and expertise, avoid possible disability near misses and incidents. discrimination, reduce workers‘ compensation insurance costs and medical expenditures, and produce fewer faulty products. Other indirect benefits Interaction with other Tools and Possible may include increased morale, better labor and Substitutes management relations, reduced turnover, and better use of human resources. There is an ongoing tendency to integrate the occupational health and safety management system Governments experience the disadvantages of poor with other structures typically used to manage occupational health and safety performance through businesses successfully. These other structures lost tax revenue, through increased welfare costs for include the environmental and social management social security payments and medical treatments, and system and the quality management system. This through the social costs of accidents. Governments approach allows a business to address the key aspects 189 | P a g e of its operations through a coordinated approach by analysis of costs and benefits as well as consideration integrating all of the business‘s systems and processes of the range of available technology. into one complete framework. Sometimes the regulatory framework combines the A good practice is to benchmark a business‘s two approaches. In the United Kingdom, for example, occupational health and safety performance to while there is a movement towards risk assessment in establish the system‘s level of effectiveness. Good recent laws governing asbestos and fire safety sources include the benchmarks published by some management, prescriptive legislation requires that all countries‘ regulatory agencies responsible for health dangerous parts on workplace equipment be suitably and safety enforcement, for example the U.K. Health guarded to prevent harm to people, if such guarding and Safety Executive‘s Corporate Health & Safety is technically possible. Performance Index (HSE Web site), the industrial trade associations, IFC environmental guidelines, the Many governments have established national EU Best Available Technique Reference Notes (BREF), agencies whose role it is to carry out research, provide the ILO small and medium enterprise toolkits, occupational health and safety information and Occupational Health and Safety Advisory Service training, inspect workplaces, and enforce regulatory (OHSAS) 18001:2007, the American National compliance. Standards Institute (ANSI) and American Industrial Hygiene Association (AIHA) Z10-2005, and British Good business practices would also consider the System (BS): 8800:2004. benefits of a sound occupational health and safety system from the perspective of avoiding penalties Certification to the standard may confer a marketing from lack of compliance with government advantage and be of commercial benefit to some requirements, anticipating legal challenges, and businesses, particularly to satisfy the supply-chain possibly benefiting from better insurance premiums. requirements of clients that have their own occupational health and safety management system certified to the standard. Practical Examples of Targeting Occupational Health and Safety and National governments may take a prescriptive Lessons Learned approach to occupational health and safety Brazil. A large Brazilian construction company legislation, or they may embrace the concept of risk significantly reduced the number of accidents and assessment, which aims to identify hazards and fatalities by developing a rigorous occupational implement reasonably practical measures to reduce health and safety program. Key elements of this risks to the lowest possible level. Judgments about program included (a) a detailed workers toolkit what is ―reasonably practical‖ include economic identifying all job-related risks, typical accident 190 | P a g e causes, and clear ways to prevent/avoid them; (b) CDC (Centers for Disease Control and Prevention), ―The National Institute for Occupational rigorous and focused H&S training for managers and Safety and Health (NIOSH),‖ CDC, supervisors; (c) constant worker H&S induction and http://www.cdc.gov/niosh/. Cooper, D. 2007. ―Behavioral Safety Approaches: training; and (d) monetary rewards to the entire team Which Are the Most Effective?‖ White Paper, including project manager and employees. The source B-Safe Management Solutions Inc., Franklin, Indiana. of these financial incentives is the money allocated for http://bsmsinc.com/articles/White.pdf. accidents/fatalities compensation not having to be European Agency for Safety and Health at Work, ―EU-OSHA Welcome!‖ European Agency for used for that purpose. The number of accidents and Safety and Health at Work, fatalities has been reduced below the typical http://osha.europa.eu. Geller, E. S. 2004. ―Behavior-Based Safety: A Solution benchmark for construction operations. to Injury Prevention: Behavior-Based Safety ‗Empowers‘ Employees and Addresses the Dynamics of Injury Prevention.‖ Risk & China. To motivate employees to work safely, a Insurance 15 (12): 66. Chinese chemical company decided that, in addition Gervais, R. L., Z. Pawlowska, R. Bojanowski, A. Kouvonen, M. Karanika-Murray, K. Van den to its standard safety procedures and practices, it Broek, and M. De Greef. 2009. ―Occupational would ask each employee to bring a family picture to Safety and Health and Economic Performance in Small and Medium-Sized work in order to create a family bulletin board for Enterprises: A Review.‖ Working each work area. The board was located in the room Environment Information Working Paper, European Agency for Safety and Health at where, each morning, the workers had a five-minute Work, Luxembourg. safety talk and pledged to their families to have a safe http://osha.europa.eu/en/publications/rep orts/TE-80-09-640-EN- workday. After introducing these practices, N_occupational_safety_health_economic_pe management noticed that workers began talking rformance_small_medium_sized_enterprises _review. about safety among themselves, and management Guidotti, T. L., ed. 2011. Global Occupational Health. credits these innovations as contributing to a reduced New York: Oxford. HSE (Health and Safety Executive). 1997. Successful accident rate. Health and Safety Management. Suffolk, UK: HSE Books, http://www.qub.ac.uk/safety- reps/sr_webpages/safety_downloads/succe References and Resources on Targeting ssful_h&S_management.pdf. Occupational Health and Safety ––––––, ―Corporate Health and Safety Performance Index,‖ HSE, www.chaspi.info-exchange.com. ––––––, ―Home,‖ HSE, http://www.hse.gov.uk/. Businesslink, ―Health and Safety Performance ILO (International Labour Organization), Indicator for SMEs,‖ Businesslink, ―Programme on Safety and Health at Work http://www.hse.gov.uk/corporateresponsib and the Environment (SAFEWORK),‖ ILO, ility/smes.htm. http://www.ilo.org/safework/lang-- CCOHS (Canadian Centre for Occupational Health en/index.htm. and Safety), ―Canada‘s National Centre for ––––––, ―Promoting Jobs, Protecting People,‖ ILO, Occupational Health and Safety www.ilo.org. Information,‖ CCOHS, NIOSH (National Institute for Occupational Safety http://www.ccohs.ca/. and Health) Malaysia, ―National Institute of Occupational Safety and Health (Malaysia), 191 | P a g e Ministry of Human Resources, Malaysia,‖ NIOSH Malaysia, http://www.niosh.com.my/. Occupational Health and Safety Group, ―The Health and Safety and OHSAS Guide,‖ Occupational Health and Safety Group, http://www.ohsas-18001-occupational- health-and-safety.com. Stellman, J. M., ed. 1998. Encyclopaedia of Occupational Health and Safety. Geneva: International Labour Organization. http://www.ilo.org/safework/info/databas es/lang--en/WCMS_113329/index.htm US Department of Labor, ―Occupational Safety and Health Administration (OSHA),‖ US Department of Labor, http://www.osha.gov/. WHO (World Health Organization), ―Occupational Health,‖ WHO, http://www.who.int/occupational_health/ en/. This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 192 | P a g e Appendix: Self-Inspection Checklist Building and Grounds Conditions – floors, walls, ceilings, exits, stairs, walkways, ramps, platforms, driveways, aisles Chemicals – storage, handling, transportation, spills, disposals, amounts used, labeling, toxicity or other harmful effects, warning signs, supervision, training, protective clothing and equipment, hazard communication requirements Electricity – equipment, switches, breakers, fuses, switch-boxes, junctions, special fixtures, circuits, insulation, extensions, tools, motors, grounding, national electric code compliance Evacuation Plan – establish and practice procedures for an emergency evacuation in response to a fire, chemical/biological incident, bomb threat; include escape procedures and routes, critical plant operations, employee accounting following an evacuation, rescue and medical duties, ways to report emergencies Fire Prevention – extinguishers, alarms, sprinklers, smoking rules, exits, personnel assigned, separation of flammable materials and dangerous operations, explosion-proof fixtures in hazardous locations, waste disposal, training First Aid Program/Supplies – medical care facilities locations, posted emergency numbers, accessible first aid kits Hand and Power Tools – purchasing standards, inspection, storage, repair, maintenance, grounding, use, handling Heating and Ventilation – type, effectiveness, temperature, humidity, controls, natural and artificial ventilation, exhausting Housekeeping Program – waste disposal, tools, objects, materials, leakage and spillage, cleaning methods, schedules, work areas, remote areas, storage areas Lighting – type, intensity, controls, conditions, diffusion, location, glare and shadow control Machinery – points of operation, flywheels, gears, shafts, pulleys, key ways, belts, couplings, sprockets, chains, frames, controls, lighting for tools and equipment, brakes, exhausting, feeding, oiling, adjusting, maintenance, lockout/tagout, grounding, work space, location, purchasing standards Maintenance – provide regular and preventive maintenance on all equipment used at the worksite, record all work performed on the machinery and train personnel to properly care for and service the equipment Personnel – training, including hazard identification training; experience; methods of checking machines before use; type of clothing to be worn; use of guards; tool storage; work practices; methods for cleaning, oiling, adjusting machinery Processing, Receiving, Shipping, and Storage – equipment, job planning, layout, heights, floor loads, projection of materials, material handling and storage methods, training for material-handling equipment Provide Personal Protective Equipment (PPE) – type, size, maintenance, repair, age, storage, assignment of responsibility, purchasing methods, standards observed, training in care and use, rules of use, method of assignment Transportation – motor vehicle safety, seat belts, vehicle maintenance, safe driver programs 193 | P a g e Sustainability in business model capable of quickly reacting to dynamic market demands and rapidly changing the Supply Chain features. SCM provides opportunities through which private sector companies can extend their influence in pollution control and abatement beyond their own operations and into their supply chain. This involves Introduction coordination and collaboration with partners throughout the value chain, which can include Supply chain management (SCM) is the process suppliers, intermediaries, third-party service through which a company manages the sourcing and providers, and customers. procurement of inputs, the processing and manufacture of products and services, and their The term ―supply chain‖ includes all organizations, delivery to the consumer (figure 1). The primary activities, and processes associated with all stages of objective of supply chain management is to meet the business processes involved in the planning, consumer demand with more efficient use of sourcing, processing, manufacturing, and delivery of resources including labor, inventory, stock, and goods and services. This process begins with distribution capacity. Accordingly, supply chain suppliers of raw materials and inputs, proceeds to management aims to integrate major business processors and manufacturers, and culminates to the functions and business processes within and across delivery of completed goods and services to companies into a cohesive and high-performing consumers and end users. The supply chain of multinational corporations can be complex, extensive  This guidance note was prepared by Robert Gerrits (Social and may be global in nature, whereas the supply Development Specialist, CESI). Peer reviewers included Mauricio Athie (Senior Environmental Specialist, CESI), Paolo Lombardo chain of national or smaller enterprises will be less (Senior Environmental Specialist, CESI), David Gibson (Senior Environmental and Social Development Specialist, CESI), and complex, smaller in scale, and local in nature, Adriana Triana (Environmental Specialist, CESI). Additional involving only local contractors, subcontractors, and comments and contributions were provided by Anna Hidalgo (Operations Officer, ENVCI), Bilal Rahill (Senior Manager, CESI), home workers. Globalization has led to increased Dahlia Lotayef (Program Coordinator, AFTEN), Giovanna Monti (Consultant, CESI), Isabelle Paris (Senior Environmental Specialist, visibility of the environmental and social (E&S) CESI), Jeremy Ansell (Environmental Specialist, CESI), Raymi Beltran (Environmental Specialist, CESI). Editorial assistance was impacts associated with the sourcing and processing provided by Stan Wanat (Consultant), Juliette Guantai (Program of raw materials. Increased visibility has led to Assistant, ENV) and James Cantrell (Communication Analyst, ENV). The task team leaders for this product are Kulsum Ahmed (Lead heightened consumer awareness and increased Environment Specialist, ENV) and Helena Naber (Environmental Economist, ENV). The product was prepared under the guidance demand that firms ensure E&S sustainability through of the following World Bank Group management: James Warren the entire supply chain. Evans / Mary Barton-Dock (Directors, Environment Department, World Bank), Bilal Rahill (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). 194 | P a g e Figure 1. Generic Illustration of Supply Chain and Potential Sustainability Issues Potential SCM E&S Sustainability Issues Primary Source Labor Use Primary Processing Distribution Water Use (Intermediate Supply Manufacturing products) Energy Efficiency Pollution Prevention Biosecurity Processing Social Impacts Such as Indigenous People, Displacement Retailer (Final products) Loss of Biodiversity Consumer Secondary Forest Conversion and Land Use Distribution Sustainable Use of Living Resources The key objective of supply chain management is to sustainability and it is often described in general increase the efficiency of the activities and processes terms through tools like responsible sourcing, green involved in the planning, sourcing, supply chains and triple value chain management processing/manufacture and delivery of goods and (TVC), or more generically through corporate social services to end consumers. Increased efficiency may responsibility. The application of E&S sustainability be achieved across either part of or the entire supply criteria to supply chains has focused on physical chain and typically is associated with improved products such as food and clothing. This focus productivity, increased product quality, improved extends to the sourcing of raw materials, their logistics and ultimately a reduction in costs. Many processing, and their use in the manufacture of aspects of SCM already consider resource utilisation intermediate and final products. and cost savings. As such the inclusion of a sustainability dimension in supply chains and SCM builds on the underlying business case for SCM. Description of Supply Chain Management Sustainability is thus becoming an integral component of supply chain management. There is no Description of Supply Chain Management. A basic single, universally accepted definition of supply chain supply chain management system has five key components. 195 | P a g e model (SCOR), developed by the global Supply Chain 1) Plan The overall strategy of the SCM program Council as a cross-industry standard diagnostic tool including the development of SCM metrics for for supply chain management. The Supply Chain monitoring; Operations Reference (SCOR®) model is the product of Supply Chain Council (SCC). The SCOR model 2) Source Identification, evaluation and selection of provides a framework that links business process, suppliers of goods and services; procurement metrics, best practices, and technology features into a contracting including performance guarantees unified structure to support communication among and targets; and monitoring; supply chain partners and to improve the effectiveness of supply chain management and 3) Manufacture. Make or manufacturing component, related supply chain improvement activities which refers to the execution of processes needed (available to SCC members at http://supply- to produce, test, and package your products or chain.org/). An individual firm can apply SCM services; across the entire sourcing – production – distribution process or to any of its components. 4) Delivery. The system for receiving orders from customers, developing a network of warehouses; Integration of Environmental and Social Criteria into getting the products to the customers; invoicing Supply Chain Management. SCM is an umbrella that customers and receiving payment from them; encompasses the entire process from plan to sourcing and to manufacture to distribution. Environmental and social sustainability criteria can be integrated into 5) Return. A responsive and flexible network for each of the five key components of SCM. For each of receiving defective and excess products back these components there are various E&S tools from customers and supporting customers who through which the firm may define, monitor and have problems with delivered products. evaluate E &S performance of the SCM component (figure 2). There are a number of models to help manage supply chains, such as Supply Chain Operations Reference 196 | P a g e Figure 2. Environmental Processes Based on SCOR Model (Supply Chain Council) PLAN SOURCE MAKE DELIVER RETURN  Environmental  Environmental  Pollution  Green logistics  Reverse logistics Cost Accounting Management prevention, for activities for post-sale  Environmental Systems (EMS) example, products and materials Life Cycle  Environmental substitution,  Remanufacturing Analysis auditing by 3rd product process to clean, repair  Design for party or buyer modification, and restore durable environment  Certification recycling products for resale principle  Environmental  Recycling to reuse management, materials e.g., ISO14001 Source: Paquette 2005. E&S Sustainability of Supply Chains  Position of the firm within the supply chain of the product. Firms involved in sourcing of raw Supply Chain Sustainability. There is no universally materials or commodities may either have direct accepted definition of supply chain sustainability. responsibility for sourcing (for example mining) Specific definitions and supporting principles and or have short supply chains which may criteria vary by sector and commodity. In general nonetheless involve a large number of producers terms the following environmental and social issues (for example smallholder agricultural are considered - labour use, water use, energy commodities). In contrast, firms involved in the efficiency, pollution prevention, biosecurity, social manufacture of end products have an extensive impacts (e.g., displacement, indigenous people), loss chain of suppliers involved in sourcing of raw of biodiversity, forest conversion and land use and materials, processing and manufacture of sustainable use of living resources1. intermediate products. Market-based power to demand changes in supplier policy, behavior and Figure 3 illustrates a simple supply chain for an product attributes is strongest with the primary individual firm. The potential for the firm to promote suppliers of the firm. E&S sustainability within its supply chain involves the following factors:  Various factors affect the ability of a firm to promote improved sustainability: o Where the introduction of sustainability 1 The IFC Sustainability Policy and Performance Standards focus on only two aspects of environmental and social sustainability of considerations in the supply chain leads supply chains, namely labour use (i.e., use of child and forced to mutual advantage and the costs are labour) and biodiversity. 197 | P a g e neither excessive nor disproportionate o Leverage refers to the ability to demand to benefits, it is more straightforward to E&S sustainability performance within promote E&S sustainability within the the supply chain. Higher leverage is supply chain. associated with access to proprietary technology and knowledge, greater o Downstream enterprises requiring market share, and greater purchasing inclusion of E&S criteria in their supply power, resulting in a greater chains may be required to invest dependence of suppliers on the end resources in building the capacity of user. Where the firm has complex their suppliers to ensure that they operations with multiple tiers of understand and are able act upon E&S suppliers, its leverage will diminish requirements. Such activities include toward the more distant tiers. defining and sharing industry benchmarks, identification and analysis o The position of the firm at a national, of alternatives, and joint regional, or global level affects its ability implementation of selected to bring about change within value sustainability initiatives. chain. Figure 3. Diagrammatic Illustration of a Firm’s Supply Chain 198 | P a g e Strategies and Tools for Promoting Sustainability in  Development of an E&S Policy and Code of Conduct the Supply Chain. Key suppliers can be asked to develop and E&S policy or Code of Conduct specific to the key Assessment Ideally E&S sustainability criteria should E&S risks and impacts associated with their inform development of a firm‘s supply chain. This operations. could be achieved by ensuring that E&S criteria are integrated into the process of identifying and  Legal and Regulatory Compliance As part of E&S evaluating potential suppliers. However, in policy development, firms typically assure recognition that, for the most part, such E&S criteria compliance with legal and regulatory are developed and applied retroactively, the firm environment. should conduct an assessment of its supply chain to identify key E&S issues associated with the sourcing  Supply and Procurement Contracts Firms may of raw materials, commodities and intermediate include E&S performance requirements in products. Subsequently, the firm should assess the contracts with their suppliers. Often such ease with which E&S sustainability criteria can be requirements include the need to adopt and integrated into component supply chains. Together implement appropriate management systems, to these assessments will inform the firm about priority obtain relevant product certification, and among risks, key areas of legal and regulatory non- other things, to develop Codes of Conduct. In compliance, and as such direct the development of defining E&S contractual obligations, the firm supply chain policy and actions. should ensure that the length of contract reflects the type of investment needed to achieve E&S Building Awareness Definition and operationalization requirements. Where appropriate, the firm of a firm‘s supply chain sustainability requirements should also ensure that an adequate time period vis-à-vis its supply chain may require a period of is provided to meet E&S requirements. building awareness amongst key suppliers, and an appropriate transition period during which key  Requiring Certification for Established E&S suppliers can develop the capacity to meet Standards There are an increasing number of requirements. globally recognized industry and commodity standards that include E&S sustainability issues. Defining Supply Chain Sustainability Requirements Firms may ask suppliers to adopt standards and There are a range of possible requirements that a firm ensure certification that operations and products could require of its suppliers so as to promote E&S comply with the requirements of the standards. sustainability within the supply chain. These include: 199 | P a g e  Requirements to Use Recognized E&S Management Systems Firms may ask other firms to adopt Small and Medium Enterprises recognized E&S management systems including ISO14001, OHSAS 18001, SA8000, AA1000, and When considered individually, SMEs are not major Enviro-Mark (web-based). contributors to E&S issues. However, in aggregate they represent a substantial contributor to  Supplier Assessment and Approval A firm may environmental and social issues, this being also require suppliers to develop their own exacerbated by the often limited enforcement of E&S supply chain management policy and law and regulations in the sector. procedures. With regard to E&S sustainability of supply chains, it  E&S Reporting A firm may ask its suppliers to is recognized that small and medium enterprises provide reports including E&S risks and impacts (SMEs) are generally at the end of the supply chain, and their management. This might include and as such are more likely to be subject to E&S energy usage, greenhouse gases, disposal and supply chain sustainability requirements (described recycling of waste products; water consumption; above) from the firms they supply. SMEs can both occupational health and safety; legal non- prepare for and increase their competitive advantage compliances and regulatory notices, and major by proactively seeking to meet some of the E&S E&S events, among others. supply chain sustainability requirements. Activities might include development of an E&S management  Capacity Building Depending on the position of system, development of E&S policy and Code of the end user and the degree to which supply Conduct, participation in SME for those concerned chain sustainability is a sector-market norm, a with E&S management, and inclusion of E&S firm may elect to support suppliers unable to reporting requirements. immediately meet new E&S criteria with capacity building and other resources. Finally, requirements for E&S sustainability in the supply chain may require both time and capacity  Monitoring and Verification Requiring E&S building. SMEs should seek to partner with the firms supply chain sustainability is typically associated they supply to draw on expertise and resources, and with the need to monitor and verify. Firms may partner for improved E&S performance. assign staff to conduct regular monitoring of key suppliers or otherwise seek third party verification of E&S performance, use of management systems and compliance with the requirements of product standards. 200 | P a g e Business Drivers and Constraints / Barriers competitive advantages involving loyalty of the of Sustainability in the Supply Chain supply base, brand differentiation and increased competitiveness. Finally, in certain sectors, Business Drivers Additional business drivers for the addressing E&S sustainability concerns is a key inclusion of a sustainability dimension in SCM are aspect of establishing and maintaining outlined below: reputation.  Market Demand Consumers are increasingly  E&S Legislation and Regulatory Requirements aware of and concerned with the E&S Environmental and social legislation and sustainability of the products they consume. This regulatory directives may include performance awareness and concern has translated into requirements, material mandates, and extended market pressure for producers to integrate producer responsibility. Substantial amounts of sustainability concerns into their production and environmental legislation and regulations require their supply chain. Market pressure is perhaps companies to ensure supply chain compliance. most widely recognized for agro-commodities Examples include US biosecurity legislation and (for example palm oil, soy, sugar, cotton, cocoa, regulations, and EU directives such as Reduction coffee) and forest products (including timber and of Hazardous Substances (RoHs) 2002/95/EC paper) where end users are demanding that July 2006; Waste Electrical and Electronic producers source sustainably, and, where Equipment (WEEE) 2002/96/EC February 2003; relevant, are active in the development of and Registration, Evaluation, Authorization, and sustainable sources. The proliferation of Restriction of Chemicals (REACH) June 2007. As voluntary commodity standards promoting such, the development of legislation in one sustainable production and supply chains reflects region may involve new requirements that such market pressure. enterprises subsequently pass on to their suppliers in their supply chain.  Brand Competitiveness and Reputation As market demand drives supply chain sustainability, firms  Resource Scarcity and Price Volatility As noted active in defining, adopting, and integrating above, SCM is traditionally concerned with supply chain sustainability into their operations resource efficiency and cost savings, and as such are seen to be leading the market and developing many SCM activities that are common practice a competitive advantage. This advantage stems already include an E&S sustainability dimension. both from an ability to define how the specific Assessment of supplier use of resources market is addressing supply chain sustainability (including energy and water) and promotion of concerns and building business models around industry best practices in terms of resource use agreed approaches. It also reflects market level efficiency are becoming common practice. 201 | P a g e Constraints / Barriers Acceptable E&S supply chain verifiable chain of custody it is not always possible to sustainability requirements vary according to a trace this to the point of origin. For example, the number of factors; these include sector, industry, and aggregation of agricultural commodities is usually commodity. In the vast majority of cases, a firm can associated with the loss of traceability to the point of promote E&S performance in the supply chain production, for example, the farm. As such there are through a relatively limited and straightforward limits to which E&S sustainability criteria can be series of requirements. As the complexity of the applied to the entire supply chain. supply chain increases and it becomes increasingly difficult to promote and verify E&S supply chain Leverage Over Supply Chain Players Leverage refers to sustainability, it becomes increasingly difficult to the ability to demand E&S sustainability performance address supply chain sustainability. Listed below are within the supply chain. As a result, the client should types of requirements relating to sustainability in the focus on the primary tier of suppliers, and possibly supply chain. the secondary ones to have a meaningful impact. Market Supply Chain Sustainability and Existence of Cost The introduction of E&S sustainability criteria Standards It is more straightforward to apply supply into the supply chain involves costs for the firm and chain sustainability requirements in a market its suppliers. For the firm demanding E&S supply environment already familiar with key aspects of chain sustainability there is a need for: (i) expertise to these requirements. Further, the existence of relevant understand production processes within the supply E&S benchmarks and standards is a useful but not chain and key E&S issues associated with these necessary condition for application of E&S supply processes; (ii) expertise to define E&S supply chain chain sustainability requirements. sustainability requirements and integrate these into day-to-day operations through contracting, Defining Boundaries of Responsibility A firm‘s position monitoring and verification. in the supply chain will determine the number of its suppliers and the length and complexity of its supply chain. In principle it may be desirable to trace the Interaction with other Tools origin of component products to their raw material, but this is difficult in practice. As such, firms focus on Other guidance notes in the Pollution Management their primary suppliers in requiring supply chain Sourcebook, including the following, are linked with sustainability. Sustainability in the Supply Chain: Chain of Custody and Traceability Chain of custody  Life Cycle Assessment and product traceability is a necessary condition to  Environmental Management Systems verify production practices including environmental and social sustainability. While most products have a  Cleaner Production 202 | P a g e http://www.duurzamehandel.com/en/idh-  Labeling and Certification publications  Corporate Environmental and Social Internet Sources Responsibility Programs Business for Social Responsibility (BSR). A leader in corporate responsibility since 1992, Business for Social References and Resources on Sustainability Responsibility (BSR) works with its global network of in the Supply Chain more than 250 member companies to develop Insight Investment. 2004. ―Buying your way into sustainable business strategies and solutions through trouble? The challenge of responsible supply consulting, research and cross-sector collaboration: chain management.‖ London, UK: Insight Investment. www.bsr.org Kummer, N., V. Türk, S. Moron, M. Narberhaus. 2006. ―Sustainable Supply Chain Management: Council of Supply Chain Management Professionals How to manage triple value chains.‖ Wuppertal, Germany: Triple Innova. (CSCMP). Council of Supply Chain Management http://www.triple- Professionals (CSCMP) provides resources and innova.de/images/stories/publikationen/tr services for its members through mentoring, iple%20innova%20scmbrochure.pdf speaking, sponsorships, roundtables and writing Lillywhite, S. 2004. ―Responsible Supply Chain Management: Ethical purchasing in articles for our publications: www.cscmp.org practice.‖ Victoria, Australia: Brotherhood of St Laurence. Institute for Supply Management (ISM) Founded in http://www.bsl.org.au/pdfs/Lillywhite_Os lo_Ethical_purchasing_checklist.pdf 1915, the Institute for Supply Management (ISM) is a New Zealand Business Council for Sustainable not-for-profit association that provides opportunities Development. 2003. ―Business Guide to a for the promotion of the profession and the expansion Sustainable Supply Chain: A Practical Guide.‖ Auckland, NZ: New Zealand of professional skills and knowledge: www.ism.ws Business Council for Sustainable Development. Supplier Ethical Data Exchange (Sedex) Sedex, the http://www.nzbcsd.org.nz/supplychain/S upplyChain.pdf Supplier Ethical Data Exchange, is a membership Paquette, J. 2005. The Supply Chain Response to organization for businesses committed to continuous Environmental Pressures. MIT Center for improvement of the ethical performance of their Transportation and Logistics (CTL). supply chains: www.sedex.org.uk Discussion paper. Cambridge MA: MIT. Van Hoeven, H. 2009. Sustainable Sourcing and Procurement: Sourcing and Procurement as Supply Chain Council (SCC) Supply Chain Council Driving Forces for Sustainable Business. Best (SCC) is a global nonprofit organization whose Practices Series. Utrecht, NL: Dutch Sustainable Trade Initiative. methodology, diagnostic, and benchmarking tools help organizations make dramatic and rapid 203 | P a g e improvements in supply chain processes. SCC has supply chain activities and their performance: established the supply chain world‘s most widely www.supply-chain.org accepted framework for evaluating and comparing This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 204 | P a g e Stakeholder assessing the feasibility of a mine, project proponents are finding that they can minimize risk and increase Engagement and positive outcomes through early, ongoing engagement with stakeholders that builds trusting Grievance relationships. At the same time, stakeholders have increased expectations of their role in providing input Mechanisms into project development, particularly where they anticipate direct impacts or benefits. These stakeholder expectations may require project Introduction proponents to gain new engagement skills. Stakeholder engagement aims to build and maintain New approaches and forms of engagement are an open and constructive relationship with evolving as approaches to consultation and disclosure stakeholders and thereby facilitate and enhance a change from a short-term means of meeting company‘s or a project‘s management of its regulatory and lender requirements to a longer-term, operations, including its environmental and social more strategic channel for relationship-building, risk effects and risks. mitigation, and identification of new business opportunities. This Guidance Note gives an overview The last decade has seen a fundamental of current approaches to stakeholder engagement as transformation in the way that the private sector and well as resources for further study. government entities relate to stakeholders during project development. Whether building a road or  Definitions This guidance note was prepared by Leyla Day (Consultant). Peer reviewers included Mauricio Athié (Senior Environmental Specialist, CESI), Ekaterina Grigoryeva (Policy Officer, CESPQ), The following terms are often found in the literature Robert Gerrits (Social Development Specialist, CESI). Additional comments and contributions were provided by Bilal Rahill (Senior on stakeholder engagement: Manager, CESI), Hocine Chalal (Regional Safeguards Adviser, MNACS), Jessica McHugh (Consultant, CES), Jorge Villegas (Social Development Specialist, CESI), Monica Dorhoi (Consultant, Stakeholders: Persons or groups who are directly or MNACS), Paolo Lombardo (Senior Environmental Specialist, CESI), Robert Gerrits (Social Development Specialist, CESI), Sofie indirectly affected by a project as well as those who Michaelsen (Senior Social Development Specialist, CESI), and Suchitra Balachandran (Program Assistant, CESI). Editorial may have interests in a project and/or the ability to assistance was provided by Stan Wanat (Consultant), Juliette influence its outcome, either positively or negatively. Guantai (Program Assistant, ENV) and James Cantrell (Communication Analyst, ENV). The task team leaders for this They may include locally affected communities or product are Kulsum Ahmed (Lead Environment Specialist, ENV) and Helena Naber (Environmental Economist, ENV). The product individuals and their formal or informal was prepared under the guidance of the following World Bank Group management: James Warren Evans / Mary Barton-Dock representatives, national or local government (Directors, Environment Department, World Bank), Bilal Rahill authorities, politicians, religious leaders, civil society (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). 205 | P a g e organizations and groups with special interests, the part of an integrated engagement process. Although academic community, or other businesses. each organization or project must determine the type and scale of stakeholder engagement that best serves Stakeholder Mapping: The process of identifying a the organization‘s or project‘s purposes, the following project‘s stakeholders. are hallmarks of strong stakeholder engagement programs: Grievance: An issue, concern, problem, or claim (perceived or actual) that an individual or community 1. Initiated Early, Continues through Project group wants a company or contractor to address and Completion For the best outcomes, stakeholder resolve. engagement begins during project design and continues for the life of the project. Building a Grievance Mechanism: A locally based, formalized way strong relationship from the start can help to receive, assess, and resolve stakeholder complaints develop support for the project. Information about the performance or behavior of project exchange during the design phase can help proponents, including its contractors or employees1. organizations avoid costly mistakes that are difficult to fix at a later stage. Stakeholder Engagement, A New Approach 2. Transparent and Honest Interaction with stakeholders is characterized by transparency The term ―stakeholder engagement‖ is emerging as a and honesty, and builds trust in the process. way to describe a broader, more inclusive, and continuous process between a company and those 3. Managed as a Business Function Engagement with potentially affected by a project. Stakeholder stakeholders should be driven by a well-defined engagement can encompass a range of activities and strategy and have a clear set of objectives, approaches, and usually spans the life of a project. A timetable, budget, and allocation of broad array of terms describes this new approach to responsibilities. Organizations that take a engaging stakeholders, including consultation, systematic approach grounded in business engagement, external relations, information operations get better results from their time and disclosure and dissemination, and participation. resources, and can more effectively track and These terms have been used loosely and manage stakeholder issues and risks. interchangeably, because all these components can be 4. Inclusive Efforts are made to include highly 1 Project level grievance mechanisms offer companies, projects visible stakeholders as well as those that are and affected communities an alternative to external dispute resolution processes. Other grievance or dispute resolution typically underrepresented, such as minority mechanisms are part of a broader accountability framework and groups, women, youth, and vulnerable people. as such project-level grievance mechanisms are deemed to be only one of the tools available to respond to the need for greater When these important groups are left out of the accountability. 206 | P a g e process, the stakeholder engagement process is is no compelling reason not to share it. To the inadequate. extent possible, companies should be open about the project; in short, ―tell it like it is.‖ Companies 5. Culturally Appropriate and Accessible Information that share objective information of importance to is given in a format, language, and location stakeholders are more likely to be considered accessible and comprehensible to stakeholders. trustworthy. 6. Proactive The project or organization plans To be able to participate in an informed manner, ahead and identifies stakeholders and their stakeholders should receive the information they concerns, supplies information, and solicits need when they need it and in a format and a feedback before problems arise. language that is accessible. There are almost unlimited methods of disclosing information, 7. Grievances Managed Effective stakeholder including radio programs, posters, meetings, engagement includes using a procedure to ensure theater, videos, consultation forums, puppet that grievances are received and responded to in shows, comic books, expert presentations, a timely manner, and are tracked so that results participatory monitoring, and mock-ups. can be analyzed. Proactive organizations can identify innovative means of information disclosure that target their Stakeholder Engagement: the Building Blocks. Most stakeholders. programs for stakeholder engagement contain the following nine key components (eight of which are  Stakeholder Consultation This is a dialogue illustrated in figure 1): between the project (including third-party experts where necessary) and its stakeholders.  Stakeholder Identification and Analysis This This dialogue, much like in any relationship, is involves determining who your project about initiating and sustaining constructive stakeholders are (this process is called stakeholder relationships over time. For projects with mapping). From this flows stakeholder analysis, a environmental and social impacts, this will not be more in-depth look at the interests of stakeholder a single conversation but a series of opportunities groups, how they will be affected, and what to create understanding about the project among influence they can have on a project. those it will likely affect or interest, and to learn how these stakeholders view the project and its  Information Disclosure Good practice suggests attendant risks, impacts, opportunities, and adopting a ―presumption in favor of disclosure,‖ mitigation measures. which means being forthcoming with information whenever possible, especially if there 207 | P a g e Listening to stakeholder concerns and feedback stakeholder relationships is important to can improve project design and outcomes, and facilitating mutually acceptable outcomes. help a company identify and control external Negotiations with stakeholders can cover access risks. It can also form the basis for future to land or land acquisition, positions for local collaboration and partnerships. Methods for employment, or formation of benefit-sharing consultation are varied and might include large- programs. Negotiations with stakeholders should scale forums, key stakeholder interviews, focus be approached in ―good faith,‖ that is, conducted groups, mapping of community interests and with an open mind, a willingness to engage in the concerns, and attitude surveys. However, all process, and a genuine desire to build solutions methods used should ensure that all stakeholders and reach agreements. Negotiations must be free are sufficiently informed before consultation so from coercion and must take place with they can be informed participants during legitimate community representatives; consultation. In other words, stakeholders need stakeholders must also have equal access to the to understand the project and its potential best available information. positive and negative impacts to develop informed opinions.  Grievance Management A grievance mechanism should be scaled to fit the level of risks and  Consultation with Indigenous Peoples Indigenous impacts of a project. It should flow from a peoples, as social groups with identities that are company‘s broader process of stakeholder distinct from dominant groups in national engagement and business integrity principles, societies, are often among the most marginalized and integrate the various elements of and vulnerable segments of a population. If a engagement discussed so far. For more detail on project will directly affect indigenous groups and grievance mechanisms, see the following section. their customary lands under use, early engagement is an essential first step in building  Stakeholder Involvement in Project Monitoring One longer-term processes of consultation, informed way to help satisfy stakeholder concerns and participation, and good-faith negotiation. In promote transparency is to involve project- many countries, as with many financial affected stakeholders in monitoring any institutions, there are special legal, statutory, and mitigation measures or other environmental and regulatory or procedural requirements for social programs. Frequently called ―participatory consulting indigenous people. monitoring,‖ these programs can increase the frequency and quality of company  Negotiation and Partnerships Effective stakeholder communication with communities. Such engagement lays the foundation for effective participation and the flow of information can also negotiation. With negotiation and partnerships, encourage stakeholders to take a greater degree as with so many other things, the quality of of responsibility for their environment and 208 | P a g e welfare, and to feel empowered that they can do  Management Functions Increasingly, good something practical to address issues that affect practice points to incorporating stakeholder their lives. Participatory monitoring also tends to engagement activities into a company‘s strengthen relationships between the project and environmental and social management system. In its stakeholders. practice this means making its management systematic by integrating it with core business  Reporting to Stakeholders In both personal and activities. Consequently, stakeholder engagement business relationships, follow-through is should be managed as one would manage any important. The same principle applies to other business function: with clearly defined stakeholder engagement. Once consultations objectives and targets, professional and dedicated have taken place, stakeholders will want to know staff, established timelines and budget, and which of their suggestions will be used, what risk senior management responsibility and oversight. or impact mitigation measures will be put in place to address their concerns, and how, for Eight of these components are shown in figure 1, example, project impacts are being monitored. which illustrates their interconnectedness. Often the same methods used in information disclosure are applied to reporting back to stakeholders. This can include large-scale forums, brochures, targeted meetings, and consultative committees. 209 | P a g e Figure 1. Major Components of Stakeholder Engagement Source: IFC 2007. 210 | P a g e Grievance Mechanisms  Procedure Is Formalized Grievances are systematically recorded, tracked, analyzed, and A grievance can be defined as ―a real or imagined responded to. The process is predictable, with cause for complaint.‖ It may be expressed formally known procedures and timeframes for each (for example, in writing) or informally (for example, stage. The system provides a learning by telephone). In the context of development projects, opportunity for companies. Summary results grievances may relate to alleged or potential risks and from the grievance monitoring are given to adverse impacts associated with a project, an alleged stakeholders. non-compliance with a project commitment, or to matters concerned with employment and working  Proportionality The mechanism is scaled to conditions. A grievance mechanism is an important potential project risks and adverse impacts. pillar of the stakeholder-engagement process because Staffing is appropriate for the volume and type of it creates opportunities for companies and grievances. communities to identify problems and discover solutions together. It also helps evaluate the  Cultural Appropriateness A project-level grievance performance of the social and environmental mechanism should take into account specific management system, and to strengthen project cultural attributes as well as traditional operations by informing the company about needed mechanisms for raising and resolving issues, to improvements. ensure that the concerns of significantly different groups and subgroups are addressed Stakeholders generally expect an acknowledgment of appropriately. their problem or concern as well as an honest response to questions about company activities.  Accessibility and Responsiveness The grievance Depending on the grievance, stakeholders may want mechanism must be one that is clear and a detailed explanation, an apology, compensation, or understandable. The mechanism must be modification of the conduct that led to the grievance. accessible and responsive to all segments of the In expressing their concerns, they also expect to be affected communities, and provided to all heard and taken seriously. They may also want to be segments at no cost to them. The community involved in monitoring the conduct so that it will not must be well informed about the mechanism. happen again. Although grievance mechanisms must Methods for achieving this can include be designed to suit the project context, both the information booths, community liaisons who approach and the underlying principles are aligned schedule regular visits to stakeholders, phone with the other components of the company‘s hotlines, and open-door policies at the project stakeholder engagement process. The grievance site. mechanism should have the following characteristics: 211 | P a g e  Transparency and Accountability to All Stakeholders These precautions include a clear policy of no A grievance mechanism should be a way for the retaliation, measures to ensure confidentiality community to hold the company accountable, to and physical protection of complainants, be sure it takes community inputs seriously, safeguarding of personal data collected in deals with them through a clear and transparent relation to a complaint, and an option for process, follows through with actions, and complainants to submit anonymous grievances communicates with the community. A grievance where necessary. mechanism is transparent when members of the affected community  Redress Mechanism The grievance mechanism must allow access to an external body for o know who in the organization handles consideration of the grievance where necessary. complaints and communicates outcomes, and who is in charge of the mechanism‘s Five Step Grievance Process. Grievance mechanisms oversight; should be scaled to the size and degree of complexity of projects as well as to the potential for significant o have input into its development; impacts. Typical grievance procedures will generally include at the least the following five steps: o have enough information on how to access it; and 1. Publicizing the Grievance Mechanism to Stakeholders o have power to ensure that the process is Organizations should ensure that stakeholders adhered to by those directly responsible for know who can raise a grievance, where managing it. grievances can be filed, who is responsible for receiving and registering complaints, what sort of  Staffed and Budgeted The company or response stakeholders can expect from the organization must ensure adequate staffing and company including timing of response, and what budgeting of the mechanism. other rights and protections are guaranteed.  Appropriate Protection A grievance mechanism 2. Receipt, Register, and Tracking of Grievances The will work when communities are encouraged to method for registering and tracking grievances share their concerns freely, with the will vary with the scale of the mechanism. understanding that no retribution will be exacted However, all incoming grievances should be for participation. A mechanism free of retribution acknowledged and registered in a grievance log, will consider potential dangers and risks to which can be as simple as a spreadsheet or as complainants and incorporate ways to prevent complex as the situation demands. All methods harm. should allow the organization to view trends and to monitor grievance outcomes. 212 | P a g e options. Regardless of the outcome, all 3. Review and Investigation of Grievances For a complainants should receive a response. grievance mechanism to work, all complaints should be handled as promptly as possible, 5. Monitoring, Reporting, and Evaluation of the depending on the nature and complexity of the Grievance Mechanism Monitoring and reporting matter. Some grievances are easily resolved and can be tools for measuring the effectiveness of the are actually requests for additional information. grievance mechanism and the efficient use of Other grievances can be quite complex, such as resources. These tools can also help determine those involving multiple parties and land broad trends and recurring problems so they can ownership. In these cases, management, be resolved before they become points of contractors, and even external experts may contention. Monitoring helps identify common or become involved in the investigation. In recurrent claims that might require structural circumstances where the resolution process takes solutions or a policy change, and it enables the time, the mechanism must ensure that the company to capture any lessons learned in complainant is informed of the progress. addressing grievances. Monitoring and reporting also create a base level of information that can be 4. Development of Resolution Options, Response to used by the company to report back to Grievances, and Close-out Like the grievance communities. mechanism itself, resolution options can be very simple and streamlined, or they can be complex and drawn out, involving multiple parties. Benefits of Stakeholder Engagement and Resolution of grievances caused by a one-off Common Challenges breach of environmental standards, or by a single Benefits of Stakeholder Engagement. traffic incident, will differ significantly from Organizations that have grasped the importance of complex and repetitive community grievances. actively developing and sustaining relationships More complex and controversial issues, with affected communities and other stakeholders especially those raised by large groups of people, throughout the life of a project reap the benefits of usually involve overlapping issues with no improved risk management and better outcomes on obvious solution. Resolution of these issues may the ground. The new approach to stakeholder benefit from access to independent bodies that engagement has benefited both projects and can provide the credibility that comes with stakeholders. Projects that apply stakeholder impartiality. Such independent bodies can foster engagement tools and disclose project information, dialogue and collaboration between companies actively seek feedback from communities, encourage and affected communities as they undertake the stakeholder design of mitigation measures, and often-lengthy process of exploring resolution establish relationships with stakeholders based on 213 | P a g e mutual trust are more likely to receive and sustain the social and environmental management system to support for the project. Following are some benefits relevant stakeholders. from an effective stakeholder engagement process: Reduction of Project Costs Opposition to a project, Support for the Project Stakeholders are more likely such as blockages and demonstrations, can be to support a project‘s development if they have been extremely costly in money and time. Robust involved in identifying project risks and mitigating stakeholder engagement programs that are well impacts, and if they believe they will benefit from designed and implemented can significantly reduce the project. Similarly, communities are more likely the overall cost of project development by to trust and support a company if there are promoting stakeholder support, and reducing mechanisms in place to manage grievances, as well conflict caused by misunderstanding or lack of as mechanisms for holding the company information. accountable for its activities. Common Challenges. Stakeholder engagement Risk Management Stakeholder engagement is one empowers stakeholders. Depending on the country way to manage project and reputational risk. A and project context, there may be restrictions on the sound process for stakeholder engagement that degree to which stakeholder engagement is offers continuous access to information, responds to encouraged. Various factors (for example, historical, grievances, and regularly solicits feedback can political, economic, social, and cultural ones) may substantially reduce the risk of grievances arising in limit the extent to which best-practice stakeholder the first place, or escalating to a level that could engagement can be developed and implemented. undermine business performance. Complex Socio-Economic Contexts Companies need to Improved Project Outcomes Stakeholders often be prepared for the fact that they are entering into a have knowledge about the local area that companies preexisting yet dynamic environment with do not. Consequently, engaging stakeholders during established histories and cultures, and often-complex the project design phase can help ensure that the political, social, and economic relations between project has adequate mitigation measures. groups. These relations can be destabilized by the Understanding what stakeholders‘ concerns and development of a project and by the development expectations are from the outset enables process that may accompany it. Stakeholders typically organizations to plan accordingly. do not present a unified front, and there may be a broad diversity of opinion and support for the project, ISO Certification Establishing robust procedures with some parties in the same community in favor of for consulting with external stakeholders will the project and others opposed. There is no easy facilitate ISO certification. These procedures should formula for addressing these challenges, except to include disclosing information about key aspects of manage the process proactively and adapt some of the 214 | P a g e established good practice approaches and principles  Corporate Environmental and Social described in this toolkit to fit your own local context. Responsibility (CESR) Programs  Public Access to Information for an Active Organizational Project managers are increasingly Citizenry recognizing the importance of adequate stakeholder engagement and are staffing and budgeting accordingly. Complex projects with insufficient  Advocacy and Participation in Decision-making internal resources for this critical process may find for an Active Citizenry that stakeholders‘ failure to support the project  Ability to Complain and Access to Legal results in costs that could have been avoided. Recourse (Public Interest Litigation Cases) for an Active Citizenry Perception versus Reality The culture, language, and vision of stakeholders often differ from those of companies. What companies may understand to be Overview of Stakeholder Engagement or a negligible issue may in fact be of enormous Consultation Guidelines concern to communities. It is important to work to understand the real concerns of stakeholders to be Today, many evolving global initiatives reflect an able to provide the right information or the increasing international interest in the benefits of appropriate mitigation for the situation. multi-stakeholder models. The following practical initiatives shape themselves around social and environmental considerations, in an effort to harness both public and private interest to green growth: Interaction with Other Tools Stakeholder engagement and grievance mechanisms National Laws. These typically require project can benefit from a range of supplementary tools. The proponents to conduct public consultations before potential for their application across a wide array of and after conducting environmental social impact private sector and government contexts encourages assessments. Depending on the country, these public project proponents to develop innovative consultation forums can be held by the project relationships with stakeholders reflecting diverse sponsor or the relevant government authorities. Some considerations. As such, various other guidance countries have increased consultation requirements notes in the Pollution Management Sourcebook are when stakeholders are indigenous people. linked with Stakeholder Engagement and Grievance Mechanisms, including the following: Equator Principles. These were established in 2003 through the voluntary participation of several Equator Principle Financial Institutions (EPFI) to 215 | P a g e ensure that projects to be financed were developed in a socially responsible manner and reflected sound environmental management practices. The Equator References and Resources for Stakeholder Principles are almost identical to the IFC Performance Engagement and Grievance Mechanisms Standards. Currently, 72 banks are signatories (Equator Principles Association 2011). Stakeholder Engagement AccountAbility. 2011. AA1000SES Stakeholder International Finance Corporation (World Bank Engagement Standard. Group) Performance Standards. These social and http://www.accountability.org/standards/ aa1000ses/index.html environmental performance standards are guidelines ADB (Asian Development Bank). 2006. Strengthening on how projects will engage with stakeholders. The Participation for Development Results: A Staff Guide to Participation and Development. standards mandate that communities be Manila, PH: Asian Development Bank. appropriately consulted during project design and http://socialimpact.com/for- consultants/downloads/strengthening- development, as well as engaged in project decision- participation.pdf making processes. The standards also require projects Business for Social Responsibility. 2003. ―Issue Brief: Stakeholder Engagement.‖ to establish a grievance mechanism as part of their http://www.bsr.org/en/our- social and environmental management system. insights/reports Darby, L. ―Social, Ethical and Environmental Current standards call for free, prior, informed Disclosure – An Introduction to Current consultation (FPIC) of indigenous people. Revised Trends and Thoughts for the Future.‖ Cardiff, UK: Centre for Business standards will be issued in January 2012; these will Relationships, Accountability, Sustainability require free, prior, informed consent of indigenous & Society. www.brass.cf.ac.uk/uploads/caseedld0203. people impacted by projects. pdf Dialogue Matters. Wye, UK: Dialogue Matters. ISO 14001. This is a voluntary international http://www.dialoguematters.co.uk/index.asp standard that is a framework for a sound Equator Principles Association. 2011. London, UK: Equator Principles Association. environmental management system. The standard is http://www.equator- applied by private sector and governmental entities principles.com/index.php/members- reporting/members-and-reporting around the globe and allows for standardized Grayson, D. 2009. ―Stakeholder Engagement and assessment and certification by independent Corporate Responsibility.‖ Cranfield, UK: Cranfield University School of Management. agencies worldwide. ISO 14001 calls for establishing www.som.cranfield.ac.uk/som/p13903/thin procedures for receiving, documenting, and k-cranfield/stakeholder-engagement-and- corporate-responsibility responding to communications from external Herbertson, K., A. Ballesteros, R. Goodland, and I. interested parties. There is a requirement that the Munilla. 2009. Breaking Ground: Engaging Communities in Extractive and Infrastructure entities consider externally communicating Projects. 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Washington, DC: Works! 21 Techniques of Community International Finance Corporation. Participation for the 21st Century. London, UK: http://www.ifc.org/ifcext/enviro.nsf/attac The New Economics Foundation. hmentsbytitle/p_stakeholderengagement_fu http://www.dundeecity.gov.uk/dundeecity ll/$file/ifc_stakeholderengagement.pdf /uploaded_publications/publication_286.pd ILO (International Labour Organization). 1989. C169 f Indigenous and Tribal Peoples Convention. Slocum N. 2003. Participatory Methods Toolkit: A Geneva, CH: International Labour Practitioner‘s Manual. Mol, BE: Flemish Organization. Institute for Science and Technology http://www.ilo.org/ilolex/english/convdis Assessment; Tokyo, JP: United Nations p1.htm University, Comparative Regional OECD (Organisation for Economic Co-operation and Integration Studies. 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A Guide to Environmental Management: A Literature Designing and Implementing Grievance Review.‖ Biological Conservation 141 Mechanisms for Development Projects. (February): 2417–31. Washington, DC: Office of the Compliance SustainAbility. 2007. Practices and Principles for Advisor/Ombudsman. Successful Stakeholder Engagement. London, EBRD (European Bank for Reconstruction and UK: SustainAbility. Development). 2005. Independent Recourse http://www.sustainability.com/library/suc Mechanism. Addressing Local Community cessful-stakeholder-engagement Concerns About EBRD-financed Projects. Zigiaris, S. 2001. ―Dissemination Plan.‖ Paper London, UK: European Bank for prepared for the Virtual Environment for Reconstruction and Development. Innovation Management Technologies Kick- http://www.ebrd.com/downloads/researc Off Network Event, Thessaloniki, November h/policies/irml.pdf 29. http://www.e-innovation.org/kickoff. ICMM (International Council on Mining and Metals). 2009. 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Melbourne, AU: Oxfam Australia. http://www.oxfam.org.au/campaigns/mini ng/ombudsman/complaints_mechanism.ht ml. http://www.oxfam.org.au/resources/pages/view.p hp?ref=238&k= This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 218 | P a g e Corporate environmental and social risk management; and, most recently, as strategic CESR-driven product services Environmental and processes. While this variability has created, and continues to create, confusion and perhaps even and Social justify some criticism of CESR, it has also promoted a clearer understanding of what CESR constitutes Responsibility today. Programs Description and Application of Corporate Environmental and Social Responsibility Introduction Programs The term ―Corporate Environmental and Social In general, CESR represents issues that embrace Responsibility (CESR)‖ has multiple definitions and financial integrity; corporate ethics; and dimensions many synonyms including Corporate Social of economic, social, and environmental value added. Responsibility (CSR), Corporate Accountability, It refers to a business approach embodying open and Corporate Citizenship, or simply Corporate transparent business practices; ethical behavior; Responsibility (CR). Over the last two decades respect for stakeholders; and a commitment to add various stakeholders have characterized and applied economic, social, and environmental value. the CESR concept in many different ways: as a means to achieving compliance; as a form of charity; as The definition used by the ISO 26000 Social corporate philanthropy; as a component of Responsibility standard is a useful reference point,  because it focuses on both environmental and social This guidance note was prepared by Rajiv Maher (Consultant) and Sofie Michaelsen (Senior Social Development Specialist, CESI). impacts, and was arrived at through a global multi- Peer reviewers included Luis Iseppe (Operations Officer, CSBAS) and Maria Arsenova (Operations Officer, CSBCI). Additional stakeholder engagement process. The definition states comments and contributions were provided by Bilal Rahill (Senior that an organization‘s social responsibility is the Manager, CESI), Hocine Chalal (Regional Safeguards Adviser, MNACS), Jessica McHugh (Consultant, CES), Jorge Villegas (Social responsibility of an organization for the impacts of its Development Specialist, CESI), Mauricio Athié (Senior Environmental Specialist, CESI), Monica Dorhoi (Consultant, decisions and activities on society and the MNACS), Paolo Lombardo (Senior Environmental Specialist, CESI), Suchitra Balachandran (Program Assistant, CESI). Editorial environment, through transparent and ethical assistance was provided by Stan Wanat (Consultant), Juliette behavior that: Guantai (Program Assistant, ENV) and James Cantrell (Communication Analyst, ENV). The task team leaders for this  contributes to sustainable development, product are Kulsum Ahmed (Lead Environment Specialist, ENV) and Helena Naber (Environmental Economist, ENV). The product including the health and welfare of was prepared under the guidance of the following World Bank society; Group management: James Warren Evans / Mary Barton-Dock (Directors, Environment Department, World Bank), Bilal Rahill (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). 219 | P a g e  takes into account the expectations of meaningful and sustainable, it is imperative that stakeholders; companies focus on issues that are important to their  is in compliance with applicable law stakeholders and that can also help maximize and consistent with international norms business results. In other words, strategic CSR should of behavior; be closely linked with the business strategy of a  and is integrated throughout the company. It is also referred to as a win-win or shared organization and practiced in its value. relationships. (Source: ISO Web site) Adopting strategic approach to CESR does not mean that companies should abandon all CESR activities CESR programs seek to integrate key areas of ethical that are more philanthropic in nature and benefit less concern into a company‘s core values. Such programs vocal stakeholders. Rather, it suggests that the include the following common focal areas: majority of the company‘s CESR investments should be coordinated with its business strategy and be - anti-bribery and - health, safety, and supported by the company‘s core assets and anti-corruption environmental measures; stewardship; expertise. - clean and alternative - human resource technologies; management; - community - human rights; Building a CESR Strategy and Program. While there development and - labor rights; are many guidelines that can assist a firm in investment; - responsible - corporate marketing and addressing the various aspects of CESR, each firm governance and labeling; must engage in its own process of developing an ethics; - socially responsible - corporate investment; and appropriate CESR strategy so as to ensure that the philanthropy and - supply chain firm‘s specific requirements are taken into account. employee performance and volunteering; relations. Figure 1 is a flowchart of the key steps associated - fair and ethical with this process. trade; Strategic CESR. The cutting-edge conceptualization of CESR is ―strategic CESR‖. This concept embodies the idea that for sustainability efforts to be 220 | P a g e Figure 10. CESR Strategy and Program Implementation 1) Identify and Understand Company Values and should be taken into consideration when Priorities. Each organization has its own values, deciding on the program areas of the CESR mission, and goals. If these have not already been strategy. formulated, then company leadership should work together in defining the organization‘s At this stage, engagement with senior values and mission statement. Most companies management is critical. More often than not the include such statements in public annual reports. personal values, motivation, and creativity of The organizational values should be linked to the company leaders is the central factor associated firm‘s core business—that is, to the firm‘s with a firm‘s adoption and commitment to CESR, products and services, and to the personal values and its integration within the firm. Such and convictions of the founders and current integration, particularly with senior leadership. Once defined, the values and mission management, must be broad-based and genuine, 221 | P a g e so that management maintains its commitment to should identify the stakeholders who are the CESR in the face of difficult situations. target of the CESR strategy and investment. Third, the firm should consider the indicated 2) Engage with Relevant Stakeholders to Identify Core budget for the CESR strategy and programs. An CESR Issues. A company‘s CESR strategy and important aspect of budget considerations is the direction should be informed by engaging the ability to sustain the CESR program over time stakeholders who are the target of the CESR irrespective of market performance. This is activities. Companies need to identify the particularly the case for social and community stakeholders most relevant to their business development programs that may form the basis values and objectives, and then engage with of establishing long-term, trust-based relations them through dialog to uncover the emerging with communities within the project area of social and environmental issues of concern to influence. Finally it should be noted that a these stakeholders and which also are relevant to project‘s circumstances may change over time; the core business and competitive advantage of consequently, firms should be flexible about the the firm. design parameters of their CESR strategy. Based on this engagement and with desktop 4) Build the Business Case and Secure Management research on CESR issues and trends, companies Support. Following identification of core CESR should be in a position to identify several core issues that could be included in the CESR CESR issues that could potentially be the focus of strategy, the team should work to articulate a their CESR strategy. Certain issues are of more business case and a CESR program proposal relevance to some industry sectors than to other (ideally with projected figures and results) to sectors. Engaging with stakeholders should be an secure senior management support. The support iterative exercise that should not necessarily end of leadership is crucial for creating and managing before commencing the next steps. Indeed organizational cultural change throughout the stakeholders should be consulted throughout the firm. CESR strategy implementation, and adjustments to the strategy should be made accordingly. 5) Embedding the New CESR Vision and Strategy. A review of private sector CESR activities shows 3) Define CESR Design Parameters. Before that CESR is often managed in silos or as add-ons embarking upon designing a CESR strategy, to an organization‘s public relations and companies should first define the primary communication functions. However, strategic purpose and objectives of their CESR. First, a CESR requires the integration of the company‘s firm may decide to focus on a CESR that focuses CESR vision, strategy, and programs into the on market development or social investment, or organization. Typically this is a time-consuming on a combination of the two. Second, the firm process that can only be achieved through the 222 | P a g e allocation of resources for program development companies should be innovative and creative. For and staff training. example, a company could invite an independent assurance panel of experts from civil society 6) CESR Program Implementation. CESR component organizations or other respected leaders relevant programs may be implemented by staff or a wide to their industry sector to comment on the report. range of partners including NGOs and Alternatively, a company could engage with new government. Credibility in the public eye is an social media formats such as Facebook to allow important issue in program development and stakeholders to interact with the company about implementation, and in subsequent its CESR policies. Such activities can also be communication and reporting. The CESR effective learning resources for companies implementation process should be iterative, with working with CESR. constant dialog and engagement between internal and external stakeholders once the CESR type and direction has been decided. Stora Enso Prerequisite Factors for Corporate in China has its CESR department of just two Environmental and Social Responsibility people work with the UNDP to implement social Programs investment programming with the local CESR programs embody the idea that for community. sustainability efforts to be meaningful and workable, it is imperative that companies focus on issues that 7) Communication and Reporting. The communication are important to their stakeholders and that can also and reporting of a company‘s CESR strategy, help maximize business results. In other words, objectives, and component programs are critical strategic CESR should be closely linked with the in CESR. business strategy of a company. The Global Reporting Initiative (GRI) has been Adopting strategic approach to CESR does not mean recognized as the globally accepted CESR that companies should abandon all CESR activities reporting standard, and it has been widely that are more philanthropic in nature and benefit less adopted as a framework for annual reporting of vocal stakeholders. Rather, it suggests that the CESR strategy and component programs. The majority of the company‘s CESR investments should GRI helps companies report on over 60 CESR- be coordinated with its business strategy and be related indicators, as well as helping companies supported by the company‘s core assets and with stakeholder dialog and the identification of expertise. CESR issues. In order to gain credibility from stakeholders for the CESR reporting and communicating, 223 | P a g e Advantages and Limitations of Corporate Access to Investment CESR may be an important Environmental and Social Responsibility component of ethical and sustainable investing, since Programs some investors prefer to invest only in companies that have demonstrable environmental and social Advantages of CESR A firm‘s decision to commit to performance. CESR may be based on several reasons. More and more companies invest in addressing key Employee Motivation An important motivation and environmental, social, and governance issues to benefit accruing from CESR for companies is that they respond to stakeholder concerns, develop their can become more attractive for recruiting new talent. markets, and gain competitive advantage. Some of the A company‘s CESR credentials may serve as an most common drivers are listed below: important factor affecting MBA graduates‘ decisions regarding their preferred employer. Further CESR can Branding and Reputation CESR may encourage also improve employee morale, motivation, and consumers to make a positive association with a reduce staff turnover. product or firm. The branding and reputational benefits may be associated with a higher market Government policy, regulation, and support In some profile, increased competitiveness, and higher cases, government may be the principal stakeholder returns. In developed countries, consumers are driving CESR by promoting firms‘ adoption and becoming more aware of companies‘ CESR activities development of strategic CESR through policy, and increasingly use the information as one factor regulation, and/or support. influencing their choices. Limitations of CESR CESR is vulnerable to criticism Social License to Operate CESR may be an important for various reasons. One reason is that multiple contributor to gaining a social license to operate. definitions and multiple drivers create a degree of Affected people within the project area of influence ambiguity regarding what constitutes CESR and the may develop a positive perception of a firm as a motives for engaging in CESR. A second reason is the partner in development through the process of voluntary, beyond compliance nature of CESR. A collaborating with a firm to implement a CESR third reason is the lack of accepted standards, as well program. as of objective measurement, monitoring, and 224 | P a g e Table 1. Comparative Analysis of Different CESR Tools for Creating a Business Case Materiality Implementation/ Global Risk Bench- Strategy Integration Accounting Assessment Planning Learning Assessment marking ISO 26000 • • • PRI • • • CERES • OECD • UN Global • • • Compact Equator • • • Principles GLN • • • • • • • GRI • • • BSR • • • • • • SA 8000 • Management • • • • • • Consultants DJSI • • FTSE4Good • Bovespa Sustain- • ability Index Source: AccountAbility Web site. evaluation. These limitations raise questions about the component-oriented guidance. In the latter, the focus capacities of the private sector to monitor, evaluate, is on individual program components, including the and publically report on its social and environmental development of CESR strategy, design, planning, and responsibilities. implementation. These reasons have provided the basis for claims that The UN Global Compact conducted a study of 97 CESR is ―greenwash‖ and lacking in credibility. different CESR-related standards, guides, and tools to While GRI reporting (involving auditing of CESR assess how well they addressed development of an activities) has addressed such criticism, it remains effective business case for CESR. Table 1 shows a that the implicit relationship between social good on sample of 14 of the CESR-related guides in three the one hand, and public relations, brand, market, different groups. and reputational benefits, on the other hand, is always subject to criticism. 1) High-level CESR issues are addressed by ISO 26000, CERES, UN Principles for Responsible Investment, Equator Principles OECD and UN Interaction with other Tools and Possible Global Compact. Substitutes 2) CESR implementation is addressed by GLN, GRI, and BSR. There is a wide array of CESR guidance and tools in 3) Guides for ranking large corporations with the public domain, which range from all-inclusive to respect to their CESR performance include Dow 225 | P a g e Jones Sustainability Index, Bovespa Sustainability Ranking CESR Performance – Dow Jones Sustainability Index The Dow Jones Sustainability Index provides a Index, and FTSE4Good. All these individual tools guide for ranking large corporations by their CESR are important sources of information for an performance. Dow Jones launched the first set of global sustainability indexes in 1999 called “Dow Jones organization developing a CESR program. Sustainability Index (DJSI).� DJSI tracks the financial performance of the leading sustainability-driven Box 1 provides details of the different groups companies worldwide. DJSI focuses on how a company recognizes the risks and opportunities arising from described. sustainability issues in its business strategy. Sustainability Asset Management (SAM), an investment group focused exclusively on sustainability investing, manages DJSI. SAM assesses companies in different Dow Jones indexes on Box 1. Examples of CESR Guides their corporate sustainability. SAM selects the top companies within industry groups for inclusion in the DJSI High-Level CESR Issues – ISO 26000 The “ISO 26000:2010 indexes. Guidance on social responsibility� (see ISO Web site) is one of the standards that address high-level CESR issues. It offers a working and practical guide and definition (stated in the first section) of social responsibility for all organizations. The standard was developed over the Practical Examples of Corporate course of five years in a multi-stakeholder consensus Environmental and Social Responsibility process. It was officially launched in late 2010, and Programs guidance for implementation has been disseminated since then. The standard highlights the following core subjects Brazil. Grupo Schahin Construction, an IFC client in for social responsibility, which firms should address. The standard offers further guidance as to how the following Brazil, chose sustainable construction as a business subjects and sub-subjects should be individually response to a pressing CESR issue. As a result, addressed: organizational governance human rights, labor practices, the environment, fair operating practices, sustainable construction catalyzed internal projects to consumer issues, and community involvement and improve construction site practices. A green building development. real estate company also identified Schahin as a CESR Implementation focused – GLN The Global Leadership Network (GLN) offers a self-assessment tool for potential partner. companies to identify material social and environmental issues in relation to company business objectives. Once the tool identifies these issues, it guides companies Natura, the Brazilian cosmetics firm, identified its through to prioritizing the relevant social and local communities as important stakeholders for environmental issues that will be addressed. After selecting the CESR issues to be addressed, the GLN tool engagement due to their role as suppliers of raw leads companies through planning and budgeting for the materials. Natura‘s values are based on the concept of implementation of each CESR issue within the business’s overall operations and strategy. sustainable development, and this required engaging with and building the capacity of the local The GLN also serves as a peer-group organization where other member companies share best practices and meet impoverished communities in the Amazon region. on an annual basis. Therefore the GLN is a platform for This has meant training, certifying, monitoring, and learning and benchmarking in relation to CESR practices and performance. However, caution is required regarding dialog with the communities to ensure the GLN’s self-assessment methodology, since some sustainability of the sourcing process. companies have needed the assistance of external CESR consultants to help them through the process. 226 | P a g e Sadia, a Brazilian agriculture and good producer, linked the company‘s key values to environmental References and Resources on Corporate and pollution abatement. The firm consequently Environmental and Social Responsibility decided to work with local pig farmers who were also Programs suppliers in using the animal waste to generate The following provides additional sources of methane gas for energy and also to sell as carbon information from some of the reputable CESR related credits. organizations and think tanks: Thought Leadership Chile. Kinross Gold Maricunga is an example of a AccountAbility, ―AccountAbility: Setting the firm‘s social investment oriented CESR program that Standard for Corporate Responsibility and defined its parameters. The mining company Sustainable Development,‖ AccountAbility, http://www.accountability.org. (Strong established a budget for its social investment program focus on stakeholder engagement standards. and engaged closely with the local community. Based in the UK, USA, China and Brazil.) Boston College Carroll School of Management, Together they created a social investment agreement ―Center for Corporate Citizenship,‖ Boston or ―protocol‖ as they refer to it. The protocol sets College Carroll School of Management, http://www.bcccc.net. objectives and guidelines for how the social BSR, ―BSR: The Business of a Better World,‖ BSR, investment and relationship will be managed. http://www.bsr.org. (USA thought leader and consultant for CSR also based in Europe and China.) South Africa. Lonmin, a producer of platinum-group MIT Sloan Management Review, ―Sustainability & Innovation,‖ MIT Sloan Management Review, metals operating in South Africa has a sustainability http://sloanreview.mit.edu/sustainability/. strategy that focuses on economic growth, safety, (Together with Boston Consulting Group the MIT based think tank focuses on research health, human capital, community, and environment. based around sustainability) SNV (Netherlands Development Organization), ―SNV: Netherlands Development United States. Ford Motor Company selected Organization,‖ SNV, ―reducing climate change‖ as part of its core values. http://www.snvworld.org. (Since 1965, Dutch development organization present in As a result Ford focused on making their cars more 35 emerging market countries with the aim energy efficient and also able to operate on cleaner for the private sector to reduce poverty) SustainAbility, ―SustainAbility,‖ SustainAbility, sources of fuel such as electricity. http://www.sustainability.com. (Started up United Kingdom. The UK retailer Marks and Spencer by the influential John Elkington. Focus on CESR as a strategy for shared value. Offices identified sustainability as its core value towards in London, USA, India and China) customers, employees, and other stakeholders. This WBCSD (World Business Council for Sustainable Development), ―wbcsd: Vision 2050,‖ led the company to devise ―Plan A‖, which would WBCSD, http://www.wbcsd.org. create a new sustainability-focused line of goods that (Established since 1992 by Swiss entrepreneur. Advocate for sustainability in was also produced and distributed in an ecological the private sector.) and energy-efficient manner. 227 | P a g e International CESR Standards Responsibility.‖ Harvard Business Review 84 (12): 78–92. Global Reporting Initiative, ―Global Reporting Initiative,‖ Global Reporting Initiative, Senge, P. 2008. The Necessary Revolution: How http://www.globalreporting.org. Individuals and Organizations are Working ISO (International Organization for Standardization), Together to Create a Sustainable World. New ―ISO 26000:2010 – Guidance on social York: Doubleday Publishing. responsibility,‖ ISO, Zadek, S. 2007. The Civil Corporation. London: http://www.iso.org/iso/catalogue_detail?c Earthscan. snumber=42546 United Nations, ―United Nations Global Compact,‖ Academic Institutions United Nations, http://www.unglobalcompact.org/. Copenhagen Business School, ―Forside: CBS – Copenhagen Business School,‖ Copenhagen Academic Sources Business School, http://uk.cbs.dk/. Doughty Centre for Corporate Responsibility, Elkington, J. 1994. ―Towards the Sustainable Cranfield School of Management, UK, Corporation: Win-Win-Win Business http://www.som.cranfield.ac.uk/som/p108 Strategies for Sustainable Development.‖ 0/Research/Research-Centres/Doughty- California Management Review 36 (2): 90–100. Centre-for-Corporate-Responsibility. Grayson, D., and A. Hodges. 2004. Corporate Social Harvard Kennedy School, ―The Corporate Social Opportunity! 7 Steps to Make Corporate Social Responsibility Initiative,‖ Harvard Kennedy Responsibility Work for your Business. School, http://www.hks.harvard.edu/m- Sheffield: Greenleaf Publishing. rcbg/CSRI/. Jenkins, B. 2007. ―Expanding Economic Opportunity: The Role of Large Firms.‖ Corporate Social Responsibility Initiative Report 17. Porter, M. E., and M. R. Kramer. 2006. ―Strategy and Society: The Link Between Competitive Advantage and Corporate Social This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 228 | P a g e 2.3 Financial Institutions 229 | P a g e Environmental for FIs, and outlines ways FIs can reduce E&S impacts to improve their business sustainability and and Social Policy contribute to national E&S development goals by implementing an environmental and social for Financial management system (ESMS). Intermediaries Commercial banks, leasing companies, investment funds, and other FIs act as the intermediaries between fund providers and fund users. FIs may affect the environment directly through their in-house use of Introduction energy and resources, and indirectly through the financial products and services they offer to enable The objective of this Guidance Note is to inform their clients (industrial and commercial borrowers, financial intermediaries (FIs) and other interested investee companies, or projects) to conduct activities parties about the role of FIs in reducing pollution and having a range of E&S impacts. Such impacts in turn managing other adverse environmental and social create the E&S risks and opportunities for the FIs. (E&S) impacts of their financing activities. This Note This Note focuses on mitigating such indirect E&S presents an overview of E&S risks and opportunities impacts and risks for FIs.  This Guidance Note was prepared by Zhenfang Shi (Environmental Specialist, CESI). Peer reviewers included Atiyah Curmally (Senior Environmental Specialist, CESI), Felipe Albertani Description and Application of (Environmental and Social Development Specialist, CESI), Lisbet Kugler (Consultant, CESI) and Mauricio Athie (Senior Environmental and Social Policy of Environmental Specialist, CESI). Additional comments and Financial Intermediaries contributions were provided by Akiko Nakagawa (Senior Environmental Specialist, SASDI), Bekir Onursal (IFC/IBRD Consultant), Bilal Rahill (Senior Manager, CESI), Gijs Nolet The central objective in FIs‘ management of E&S risk (Steward Redqueen), Harvey van Veldhuizen (Lead Environmental Specialist, OPCQC); Hocine Chalal (Regional Safeguards Adviser, is to avoid or mitigate any adverse impacts that their MNACS), Jiang Ru (Operations Officer, EASER), Josefina Doumbia (Principal Environmental Specialist, CESI), Jouni Eerikainen (Senior financing activities have on the environment and Evaluation Officer, IFC-IEG), Krispijn Bertoen (Steward Redqueen), surrounding communities. This requires proactive Marian de los Angeles (Senior Environmental Economist, WBICC), Michiko Shima (Consultant, CESI), Monica Dorhoi (Consultant, identification, assessment, and management of E&S MNACS), Natalia Magradze (Project Analyst, ENVCI), Nina Chee (Senior Environmental Specialist, MIGA), SangHee Jeong risks before they become significant or result in (Consultant, ENV), Song Li (Environmental Specialist, MNSEN), adverse outcomes. An FI can achieve this objective by and Tijen Arin (Senior Environmental Economist, ECSSD). Editorial assistance was provided by Stan Wanat (Consultant), Juliette implementing an E&S policy or broadly speaking, an Guantai (Program Assistant, ENV) and James Cantrell (Communication Analyst, ENV). The task team leaders for this ESMS to systematically assess and manage the E&S product are Kulsum Ahmed (Lead Environment Specialist, ENV) and Helena Naber (Environmental Economist, ENV). The product risks during the entire client relationship or project was prepared under the guidance of the following World Bank life cycle. An effective ESMS should contain or Group management: James Warren Evans / Mary Barton-Dock (Directors, Environment Department, World Bank), Bilal Rahill address the following: (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). 230 | P a g e E&S risks and impacts. E&S risks and impacts of this E&S policy and objectives. The policy shall state the scale are typically reviewed within the host country‘s FI‘s commitment to managing E&S risks associated E&S regulatory framework. The FI needs to ensure with its client activities. Typically, this will include a that the client complies with all applicable regulatory policy statement committing the FI to ensure that its requirements. clients or financing activities will meet the requirements of applicable national E&S laws and For high-risk transactions such as large corporate or regulations, and applicable internationally recognized project financing, the FI should carry out an in-depth performance standards or best practices. The policy ESDD to assess potential E&S risks and impacts may also identify activities that the FI will not against applicable national E&S laws and regulations support, for example, the production or trade of and where appropriate, internationally recognized products or activities deemed illegal or subject to standards or practices, and identify proper action international bans under host country laws or plans to manage these risks and impacts. Depending international conventions and agreements. on the complexity of the client‘s business and the associated E&S risks, the FI should, where necessary, Transaction screening and risk categorization. The retain outside experts. Based on the ESDD (or FI shall screen all its transactions or clients against subsequent monitoring) of the client‘s E&S established criteria and categorize them according to performance, the FI shall require clients to implement their potential E&S risks. This screening and corrective actions within a specified timeframe. categorization will determine the scope of the FI‘s E&S due diligence. The categorization will enable the E&S covenants. The FI shall incorporate the FI to prioritize its transactions and focus more on corrective action plan and other E&S requirements in clients or client activities with high E&S risks. its legal agreement with the client. The scope of E&S clauses depends on the transaction type (loan, equity E&S due diligence and corrective action plan. The FI investment, or risk-sharing) and the E&S risks of the shall conduct E&S due diligence (ESDD) for all its client operations. To strengthen these clauses, FIs transactions, although the extent of ESDD may vary often set the satisfactory execution of certain critical transaction by transaction. For low-risk transactions corrective actions as conditions of (first or such as retail finance, the ESDD may be a simple subsequent) disbursement or conditions of payment review of the client‘s operations to confirm that the in the risk-sharing cases. FIs shall consider including FI‘s financing will be used for the intended purpose remedy and exit clauses in the financing agreement and is consistent with the FI‘s business principles. For and exercise them in case the E&S risks cannot be medium-risk transactions such as financing that is appropriately mitigated. provided to small and medium enterprises, the ESDD will include an overview of the client‘s operations, Monitoring E&S performance. The FI shall monitor which may require a site visit to identify potential client‘s compliance with the E&S requirements as 231 | P a g e determined in the ESDD and in the E&S covenants by meetings. Relevant staff should be trained on E&S requiring periodic reports from clients and policies and procedures, and on use of supporting conducting periodic site inspections by qualified tools and guidance materials. personnel on behalf of the FI. Performance gaps should be discussed with the client and resolved The FI‘s ESMS officer should periodically review within a reasonable time. ESMS implementation at the aggregate portfolio level and at the individual transaction level, and Supporting tools, systems, and documentation. To recommend improvements to senior management. help FI staff and clients properly assess E&S risks, and The scope and implementation of an FI‘s ESMS monitor corrective actions and ongoing E&S should be appropriate to its portfolio activities. Box 1 performance, the ESMS should include proper tools describes the businesses and ESMS requirements for such as checklists, templates, reporting forms, and four types of FIs that are typical in developing reference materials. The ESDD for all transactions and countries. monitoring activities should be properly documented. Roles, responsibilities, and capacity building. The FI Environmental and Social Risks — shall establish the necessary organizational structure, Assessment and Management and assign roles and responsibilities to its various departments and staff positions for carrying out the Environmental issues range from temporary to tasks above. The FI should appoint an ESMS officer permanent changes in the atmosphere, water, and from senior management to oversee the FI‘s overall land due to human activities, which can result in E&S risk management and ESMS implementation. irreversible impacts on the environment. Social issues Depending on the FI‘s portfolio size and complexity, may emerge in the workplace of companies or in the ESMS officer could have assistance from surrounding communities affected by the companies‘ coordinators responsible for day-to-day ESMS operations. Table 1 displays the areas in which E&S implementation. The ESMS officer should bring E&S impacts should be properly monitored by both FIs issues to investment-review sessions and decision and their clients. 232 | P a g e Box 1: E&S Risk Management of Financial Intermediaries Commercial banks may finance different business entities or activities, such as large corporations, small and medium enterprises, housing developments, trade and other short-term financing, and retail banking. As a result, commercial banks’ exposure to E&S risks varies significantly according to their clients and clients’ activities in different industries and geographic locations. For example, E&S risks will be more significant for large corporate or project finance transactions, which are typically large size and of long duration, and usually tied to clients whose operations are complex and have potentially high E&S impacts. E&S risks will be lower for short-term finance transactions or transactions that support the activities of small and medium enterprises. For retail transactions such as mortgages or consumer loans, the E&S risks are generally considered minimal. As a starting point, a commercial bank should review its portfolio, broken down by transaction type and by exposure to different industry sectors. The bank may thus adopt a tiered approach and apply E&S risk-management requirements and procedures suited for different types of transactions and business segments. In general, the procedure shall be substantial for high-risk transactions, and streamlined for low-risk transactions. Leasing companies provide financial or operational leases that vary in duration and in the leased asset, such as office equipment, vehicles, real estate, and specialized equipment and machinery. Leasing companies’ exposure to E&S risks is generally related to the installation, operation, and maintenance of the leased assets and will be more significant for transactions involving specialized or heavy equipment or machinery for use in certain industry sectors such as forestry operations, cargo shipping, oil and gas, and mining activities. Similar to banks, leasing companies should apply E&S risk- management procedures commensurate to each transaction type as part of their overall risk-management framework. Microfinance institutions (MFIs) offer small loans (often in the range of a few hundred to a few thousand dollars) to families and to owners of small businesses whose operations are generally small. As a result, MFIs’ exposure to E&S risks is typically low, requiring in most cases some simple E&S risk-management procedures to screen transactions against a list of pre-established excluded customers or activities such as those involving the use of child labor or hazardous chemicals. These procedures can easily be incorporated into the MFI’s credit manual or risk-management framework. Private equity funds (PEF) make long-term equity investments in companies (generally small and medium enterprises); those investments will later be sold for price above the amount the PEF invested, thereby yielding a profit for the PEF. Because such transactions make the PEF a partial or full owner of an investee company, the PEF is directly exposed to, and could be liable for, the E&S risks of an investee company. A PEF thus has a keen interest in mitigating potential E&S risks that would otherwise reduce an investee company’s market value and affect the PEF’s timed exit from the company. A PEF’s ownership gives it a unique position to advocate for sound E&S management and to identify E&S opportunities that enhance an investee company’s financial value. PEFs should apply their ESMS across the investment portfolio during the entire investment cycle, from deal sourcing and due diligence, on through investment agreement, portfolio management, and exit. For portfolio investments involving high E&S risks, an in-depth E&S analysis shall be performed as compared to those portfolio companies having low E&S risk. 233 | P a g e Table 1. E&S Impact Areas for FIs 3) Loss of market share. Due to existing or new Air and Water Quality Water Use and Conservation E&S regulations or market demands for socially Resource Energy Use and Conservation Management Biodiversity and Natural Resources responsible or environmentally preferable Land Acquisition and products and services, a client may lose market Contamination Wastewater share if it cannot meet these requirements or Solid Waste expectations. Waste Management Hazardous Material Air Emissions Labor and Working Conditions 4) Market devaluation. The client may face E&S Occupational Health and Safety Community Health, Safety, and liabilities such as costly land or groundwater Human Capital Security remediation required by environmental Land Resettlement Indigenous Peoples regulations. It can also face claims for damages Cultural Heritage individuals or communities for E&S damages by its operations. This would represent a significant E&S Risks to FI Clients. An industrial or commercial financial burden to the client and result in market client‘s exposure to E&S risks are due to improper devaluation of assets. planning or management of the impact areas as described in Table 1. Such risks may have unexpected 5) Poor reputation. With communities‘ E&S implications for the client and jeopardize the client‘s awareness growing, FI clients face increased financial and operational viability through the public scrutiny for good management and following channels: accountability. Poor E&S performance can result in opposition to a client‘s presence in the 1) Disruption of operations A client‘s operations community and operational delays or may be disrupted by changing social conditions interruptions. Negative reputation or public such as high staff turnover, protest by perception can decrease demand for clients‘ communities, or changing environmental products or services. conditions such as accidents or deterioration of resources on which the operation depends. Management of E&S Risks to Financial Intermediaries. E&S risk associated with a client‘s 2) Legal issues. A country‘s E&S regulations operations as indicated above will likely be passed on establish requirements for operating licenses, to the FI that finances the client in different forms and occupational health and safety standards, and at different times. Thus an FI‘s financing decisions emission and discharge permits. A client‘s failure should take into consideration the E&S risks or continuous negligence to comply with these described below. requirements will result in fines, penalties and even criminal sanctions 234 | P a g e 1) Liability risk By taking possession of collateral site is found to be contaminated, the market assets or involving itself in a client‘s business value of the client company or the underlying operations, an FI is exposed to liability risk collateral will fall. stemming from the client‘s legal obligations. This may include fines, penalties, and costs for third- 4) Reputational risk Negative publicity or loss of party damage claims for actual or potential land reputation associated with a client‘s poor E&S contamination. If the FI is a principal practices can harm the FI‘s brand value and shareholder, it may become directly liable for all image in the broad public, including its E&S risks. customers, neighbors, employees, as well as in the business and financial communities, which 2) Credit risk An FI is exposed to credit risk when a consequently will affect the FI‘s ability to raise client does not fulfill its contractual obligations to funds or do business. the FI as a result of E&S incidents that reduce the client‘s cash flow. Credit risk also arises if a client E&S Risk Categorization. In assessing and managing faces increased costs of complying with clients‘ E&S risks, FIs often categorize these risks into mandatory E&S standards, or if absent or expired different levels to indicate potential E&S impacts and operating and emission discharge permits result to determine the appropriate level of E&S due in regulatory fines or penalties. diligence and monitoring. The level or category of E&S risks depends on the characteristics of the client 3) Market risk E&S problems may cause an FI to activities supported by the FI financing, such as incur market risk from a reduction in the value of industry sector, size of operation, location, sensitivity, assets or collateral it holds as security in its client and magnitude of impact. companies. For example, if a client‘s production 235 | P a g e Table 2. Examples of Projects with Different E&S Risk Levels (A, B, C) High Risk Projects (A) Medium Risk Projects (B) Low Risk Projects (C) Forestry operations Breweries Software development Mining (opencast and pit) Cement manufacture Consulting firms Large dams and reservoirs Dairy operations Service industries Oil and gas developments Food processing Technical assistance Major irrigation projects General manufacturing plants Share registries Large infrastructure projects Hospitals Stock broking Metal smelting, refining, foundry Hotel/tourism developments Retail banking Large thermal and hydropower Mining (small scale) Projects involving cultural property Metal plating Projects with serious occupational risks or health issues Modernization of existing plants Impacts on protected habitats or high-biodiversity areas Pulp and paper mills Projects affecting indigenous peoples Textile plants Projects involving resettlement Many FIs categorize their client activities or projects Understanding and managing E&S risks and impacts using three risk levels: Category A represents will be a defining aspect of success in modern potentially significant adverse E&S risks or impacts financing activities. As shown in the few cases in Box that are diverse, irreversible, or unprecedented; 2 below, FIs should act now and implement proper Category B represents medium or potentially limited systems and procedures to manage E&S risks and adverse E&S risks or impacts that are few in number, prepare themselves for present and future business generally site-specific, largely reversible, and readily development opportunities. addressed through mitigation measures; and Category C represents minimal or low E&S risks. Table 2 shows examples of activities with different Advantages and Challenges of E&S risk levels (A, B, C). A portfolio breakdown by Environmental and Social Policy of these categories can provide an indication of the Financial Intermediaries overall level of E&S portfolio risks for the FI. There Better Risk Management. Implementing an E&S are many ways by which financial intermediaries can policy or an ESMS enables an FI to systematically mitigate their E&S risks commensurate with their assess the E&S risk of financial transactions within financing activities. Box 1 (above) gives several specific industries or geographic contexts. ESMS examples from a range of financial intermediaries. implementation also helps an FI understand its exposure to E&S risks in different portfolio subsets. 236 | P a g e Although exposure to some level of E&S risk is adopt an ESMS. External stakeholders are pushing FIs unavoidable in many cases, an ESMS improves the to comply with international E&S standards, and FI‘s ability to control its overall E&S risk exposure, policy makers are sending regulatory signals to FIs on thereby supporting the FI‘s long-term business improving E&S performances of FI portfolios. sustainability. Challenges. Understanding and managing E&S risks New Business Opportunities. Implementing an ESMS associated with their financing transactions is still is important for risk management. ESMS relatively new to many FIs. FIs may see E&S issues as implementation can also help the FI identify new a private matter of their clients that should be business opportunities and design new products and addressed by the government regulators. FIs in services to reduce such risks. These opportunities emerging markets may worry that increased E&S include the promotion of energy efficiency, renewable oversight by them or required by their international energy production and distribution, the investors may damage their competitiveness, since manufacturing of pollution-control equipment, green there would not be a level playing field among their buildings, recycling services, sustainable tourism, peers unless a mandatory government policy or carbon trading, and even global market penetration. voluntary industry-wide self-regulation came into Opportunities such as these will initiate new existence. Even though committed, many FIs still face partnerships and create a new client base, thus barriers such as the necessary knowledge and in- contributing to the overall development of economies. house capacities in implementing an effective ESMS. For example, in a survey conducted by the Competitive Advantage. Issues such as good International Finance Corporation (IFC 2005b) with a governance, greater accountability, and increased group of commercial bankers, many respondents lender liability are relevant to all FIs. FIs that cited ―lack of best practice cases about social and endeavor to address E&S risks can improve their environmental management for financial institutions reputation among current and prospective clients, in the emerging markets‖ and ―lack of know-how/in- and among the general public. Implementing ESMS house capacity‖ among the main barriers to their can also increase an F‘s ability to attract investors, implementation of ESMS. clients, or new business opportunities. Having an effective ESMS is a core competency that an FI can use However, despite unevenness in both playing fields to differentiate itself from others for competitive and the implementation of ESMS, there is a clear advantages. business case for FIs to think and act strategically regarding E&S risks and impacts in their financing Increasingly, clients are looking at an FI‘s position on activities and the long-term sustainability of their E&S issues when deciding where to take their businesses. FIs that implement an effective ESMS will business; investors and lenders, particularly be better positioned to deal with, and benefit from, international FIs, are expecting their investee FIs to the challenges of climate change, environmental 237 | P a g e degradation, natural resource depletion, and other and safety, and promoting active citizenry. E&S issues that will drive new regulations, and shape the future market and economy. Modern FIs respond to global drivers by incorporating or promoting E&S standards or technologies into their lending or investment Interaction with other Tools decisions. To facilitate managing their E&S risks, FIs may want to consider using the other World Bank Implementation by FIs of environmental and social Guidance Notes, such as Environmental Information policies and procedures contained in an ESMS Disclosure, Environmental Licensing, Land Use requires the interaction with a number of other Planning, Market-Based Instruments/Economic management tools. These include information Incentives, Occupational Health and Safety, and disclosure, land use planning, market-based Promoting Active Citizenry. instruments/economic incentives, occupational health Box 2. Toward Sustainable Banking: Three Cases from Emerging Markets Center-Invest Bank is one of the largest regional banks in Russia and serves both large corporations and SMEs. It developed an ESMS based on IFC's Exclusion List, project categorization, and applicable local environmental laws and regulations. During appraisal of new loans, Center-Invest Bank uses environmental impact assessments and site visits to evaluate social and environmental criteria of funded projects and takes on environmental liability insurance. The bank also routinely carries out consultations with clients on E&S risk management and, with participation of local E&S authorities, assists in developing an action plan to mitigate and monitor the identified risks. The Cuscatlan Group is one of the leading commercial and retail banking institutions in Central America. It has introduced a comprehensive and well-coordinated environmental management system (EMS), which includes unified annual reports from all country subsidiaries. The bank makes a continuous effort to mainstream E&S components into overall lending operations. The EMS contains detailed procedures and checklists for environmental appraisal, screening, and monitoring, including the requirements of IFC’s Exclusion List. The E&S impacts are analyzed according to the checklist. An Environmental Action Plan is tailored for each project financed. The bank also offers innovative products in cleaner production and energy efficiency, and finances projects for environmental improvements. With USAID as the guarantor, the bank finances and provides guarantees for cleaner production projects to small and medium enterprises in Central America Industrial Bank of China is a joint stock bank with branches across all major Chinese cities. In October 2008, the bank became the first bank in China to adopt the Equator Principles that are based on IFC’s Performance Standards. Industrial Bank has established a dedicated Sustainable Development Unit to implement the Equator Principles and developed internal E&S policy and procedures (ESMS). It has integrated E&S considerations into its credit-review process and trained loan officers and other relevant staff of all levels in headquarters and local branches. To enlist support from clients, the bank also reaches out to educate clients on its E&S requirements. Supporting the clients through sustainability, both Center-Invest Bank and Industrial Bank have grown their businesses in energy efficiency and other environmentally friendly projects. They are the first bank in Russia and China, respectively, to offer innovative financing packages to energy efficiency projects that reduce production costs as well as carbon dioxide emissions. For their pioneering and successful work in such areas, both banks have won multiple sustainability awards, including the Financial Times-sponsored Sustainable Banking Awards in recent years. 238 | P a g e References and Resources on policyreview.nsf/Content/SafeguardPolices Update/. Environmental and Social Policy for Organisation for Economic Co-operation and Financial Intermediaries Development, ―Guidelines for Multinational Enterprises,‖ Organisation for Economic Co- Dow Jones Indexes, ―Sustainability Group Indices,‖ operation and Development, Dow Jones Indexes, http://www.oecd.org/dataoecd/12/21/190 http://www.sustainability-index.com/. 3291.pdf/. Equator Principles Association, ―Equator Principles,‖ Social Accountability International, ―SA 8000 Social Equator Principles Association, Accountability Standard,‖ Social http://www.equator-principles.com/. Accountability International, FIRST for Sustainability, ―Financial Institutions: http://www.sa-intl.org/. Resources, Solutions and Tools,‖ FIRST for Socioeconomic Data and Applications Center, Sustainability, ―Environmental Sustainability Index,‖ http://www.firstforsustainability.org/. Columbia University, Global Reporting Initiative, ―GRI Sector Supplement,‖ http://sedac.ciesin.columbia.edu/es/esi/. Global Reporting Initiative, United Nations, ―United Nations Global Compact,‖ http://www.globalreporting.org/. United Nations, International Chamber of Commerce, ―The Business http://www.unglobalcompact.org/. Charter for Sustainable Development,‖ United Nations Environment Programme, ―UNEP International Chamber of Commerce, Statement by Financial Institutions on the http://www.iccwbo.org/policy/environme Environment and Sustainable nt/id1309/ index.html/. Development,‖ United Nations, International Finance Corporation. 2003. Beyond Risk. http://www.unepfi.org/ Washington, DC: IFC. signatories/statements/fi/. ––––––. 2005a. Choices Matter: 2005 Sustainability World Bank. 2010. Smart Growth, Firm Report. Washington, DC: IFC. Competitiveness, and Pollution ––––––. 2005b. Sustainability Survey of Financial Management: Guidance Note on Institutions. Washington, DC: IFC. Environmental Management Systems. ––––––. 2007. Banking on Sustainability: Financing Washington, DC: World Bank. Environmental and Social Opportunities in World Business Council for Sustainable Development, Emerging Markets. Washington, DC: IFC. ―Financial Sector Statement,‖ World ––––––, ―IFC Policy and Performance Standards for Business Council for Sustainable Social and Environmental Sustainability,‖ Development, International Finance Corporation, http://www.wbcsd.ch/plugins/ http://www.ifc.org/ifcext/ DocSearch/details.asp?type=DocDet&Object Id=MTc3/. This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 239 | P a g e 240 | P a g e 2.4 Judiciary 241 | P a g e Role of Judiciary The judiciary‘s role in pollution and natural in Pollution resource management is secondary to that of executive and administrative agencies. Although Management secondary, the role of the judiciary is significant – enforcing compliance with rules and standards. Because courts are final arbiters of actions to enforce environmental laws they can be Introduction instrumental in promoting compliance. Courts Pollution management typically is the primary also are often given the role of reviewing the responsibility of executive or administrative legality of decisions made by administrative agencies of government, private sector managers, agencies. Thus, the judiciary has a crucial and and operators of public services such as waste unique role in the management of pollution - collection and treatment. Prevention, control, ensuring that it operates under the rule of law. and management of pollution depend on changes in individual and corporate behavior, including Box 1. World Summit on Sustainable the use of appropriate technology. Some of these Development behavior changes and technologies may be In 2002, prior to the World Summit on Sustainable required or encouraged by law. Government Development, more than one hundred senior judges from agencies often have a larger and more direct role fifty-nine countries adopted the Johannesburg Principles. These set out the judges’ shared understanding of the role in management of natural resources, particularly of the judiciary with respect to environmental law and sustainable development. They affirmed their commitment where, as is often the case, the resources are to principles of sustainable development, emphasizing the role of the judiciary in “implementing and enforcing owned by the government. applicable international and national laws, that . . . will assist in sustaining . . . an enduring civilization . . .� They further affirmed the principle that “an independent judiciary and  judicial process is vital for the implementation, development This guidance note was prepared by John Pendergrass and enforcement of environmental law; and that members (Consultant). Peer reviewers included Hocine Chalal of the judiciary . . . are crucial partners for promoting (Regional Safeguards Advisor, MNACS) and Johanna van compliance with, and the implementation and enforcement Tilburg (Senior Counsel, Leges). Additional comments and of, international and national law.�1 contributions were provided by Alberto Ninio (Chief Counsel, LEGEN), Gael Gregoire (Senior Environmental Specialist, MNSEN), Guillaume Meyssonnier (Environmental Specialist, MNSEN), and Luiz Maurer (Senior Industry Specialist, AFTEG). Editorial assistance was provided by Jenepher Moseley (Consultant), Juliette Guantai (Program Assistant, ENV) and james Cantrell (Communication Analyst, ENV). The task team leaders for this product are Kulsum Ahmed (Lead Environment Specialist, ENV) and Helena Naber (Environmental Economist, ENV). The product was prepared under the guidance of the following World Bank 1 Group management: James Warren Evans / Mary Barton- The Johannesburg Principles on the Role of Law and Dock (Directors, Environment Department, World Bank), Sustainable Development Adopted at the Global Judges Bilal Rahill (Senior Manager, IFC), and Frank Lysy / Ravi Vish Symposium Held in Johannesburg, South Africa on 18th to (Director, MIGA). 20th August 2002, UNEP (2002). 242 | P a g e Description and Application of Role of additional role - establishing rules of behavior Judiciary in Pollution Management and standards for pollution prevention and control. In common law jurisdictions judges In civil law jurisdictions, typically based on the apply to new facts the rules of law established by Roman legal tradition and in use in much of the the legislature or by judges in prior decisions. world, the role of judges is to apply the laws Where the statutes or precedents are not clear, common law judges interpret the rules to fit new situations and, where there is no statute covering Box 2. Role of Judiciary in the Tort System a situation, may establish new rules when the prior decisions or precedents do not fit the facts Judges in common law jurisdictions were vitally important in the early development of principles that of the case. In both systems courts may be became the foundations of environmental law through their role in articulating rules of law to apply authorized to review actions by administrative to situations not covered by statutes. Tort and agencies to assure they are in accord with property law rules developed by common law judges cover aspects of pollution that infringe on the statutory rules. personal or property rights of individuals, including disposal of wastes or pollution that harms another person or her property. Tort law has been used to Strict liability, or the polluter pays principle, is redress injuries caused by pollution and other environmental injuries. Tort law compensates victims another area where the common law contributed for injuries caused by another party and may also be to the development of legal rules widely used in used to enjoin actions that are causing, or are likely to cause, harm to another. The common law concept of modern management of pollution. The English private nuisance protects private landowners, or other persons in possession of land, from any courts first articulated a rule of strict liability for unreasonable interference with their use and injuries that result from unnatural uses of land or enjoyment of the land. A similar, but distinct, doctrine of public nuisance protects the public from dangerous activities almost a century and a half activities that would endanger the public health and ago in Rylands v. Fletcher.2 This rule of strict safety. Both of these doctrines have been applied by the judiciary to remove specific sources of pollution, liability has been adopted by the courts in many but are not well designed to manage or control pollution from multiple sources or over a period of common law jurisdictions as applicable to time. Tort law is best suited for disputes between ―abnormally dangerous activities.‖3 The general individuals or parties that can effectively be treated as single entities. Judge-made tort law is not well rule is that (1) One who carries on an abnormally suited to establishing and enforcing specific rules of dangerous activity is subject to liability for harm conduct or for regulating the use of common resources such as air and water. For these reasons in resulting from the activity, although he has civil law nations, as well as many common law ones, legislatures have drafted statutes to establish specific exercised the utmost care to prevent the harm. (2) rules of conduct regulating pollution and the use of This strict liability is limited to the kind of harm, common resources. written by the legislature. In nations whose legal 2 Rylands v. Fletcher, 3 H. & C. 774, 159 Eng. Rep. 737 (1865) system is based on the British system, referred to rev’d in Fletcher v. Rylands, L.R. 1 Ex. 265 (1866), aff’d in Rylands v. Fletcher, L.R. 3 H.L. 330 (1868). as common law jurisdictions, the judiciary has an 3 See RESTATEMENT (SECOND) OF TORTS §519 (1977). 243 | P a g e the possibility of which makes the activity schools in providing instruction on abnormally dangerous.4 environmental law. This legal concept has become generally accepted Recruitment, training and permanent education throughout the world even as it has become of judicial officers. The recruitment of judicial broader in scope and become more widely officers varies significantly from nation to nation, understood as the polluter pays principle. although many that follow the civil law system Legislatures in both common law and civil law have adopted selection systems designed to nations have enacted laws requiring polluters to recruit the most capable legal minds relatively pay for the damage they cause to the soon after they complete their initial legal environment, applying strict liability to many training. Another common attribute of many civil forms of pollution. In addition, the polluter pays law jurisdictions is their requirement, and principle has been adopted in international provision, of additional post-graduate education treaties and in non-binding international designed to prepare judicial officer candidates for instruments. the unique roles and responsibilities of the judiciary. These judicial academies may provide Administration for environmental justice courses of instruction up to a year in length as well as supervised practical learning experiences Environmental law education at universities. with sitting judicial officers. Few such judicial Environmental law is a relatively new topic of academies, however, include environmental law instruction in law schools, first gaining as a regular part of their curriculum. acceptance as a topic worthy of specific instruction in the 1970s. Nevertheless many law The United Nations Environment Programme schools did not begin offering courses in (UNEP) had initiated a series of regional environmental law before the 1990s. Academic workshops to educate judges about institutions are also actively involved in environmental law, which led to the Global providing instruction about their own national Judges Symposium and the adoption of the and sub-national environmental laws as well as Johannesburg Principles in 2002. In the years comparative analysis of other national laws and following the Global Judges Symposium, UNEP international environmental law. The developed several important resources International Union for the Conservation of specifically for judges: the Judicial Handbook on Nature (IUCN) has an Academy of Environmental Law, authored by Dinah Shelton Environmental Law that seeks to develop and Alexandre Kiss in 2005; the Guide to Global curricula on environmental law, particularly new Trends in Application of Environmental Law by topics such as climate change, and assist law National Courts and Tribunals; and Judicial Training Modules on Environmental Law in 4 Id. 244 | P a g e 2007. It continued to hold regional workshops businesses. Arbitration involves presenting and partnered with the Environmental Law information about a dispute to one or more Institute (ELI) and other organizations, including impartial arbitrators, who then make a final national judicial education bodies, to educate decision that is binding on the parties. judges in specific countries.  Mediation is intended to facilitate negotiation of a mutually agreed upon Other institutions dedicated to education of resolution of the dispute, though a mediator judicial officers are now providing programs on has no authority to impose a resolution or environmental law such as the American Bar settlement. The mediator works with all Association Rule of Law Initiative, the Asian sides and can help them identify alternative Environmental Compliance and Enforcement solutions. Network, and International Network for  Summary jury trials were developed by a Environmental Compliance and Enforcement. United States federal trial judge as a method of assisting parties in long, complex cases to Alternative dispute resolution mechanisms. evaluate the strength of their case, Environmental disputes can be difficult to particularly their estimates of damages. A resolve for many reasons: they often involve summary trial involves a non-binding technical evidence; may involve experts from summary presentation by each party to six many disciplines, including multiple scientific jurors who deliver a consensus verdict or, if fields, economics, and engineering; they may no consensus is reached, anonymous affect or be affected by resources that may be individual verdicts. Even if a complete difficult to observe (i.e. atmospheric or resolution is not reached, this technique, subsurface); they may involve multiple parties; along with the following two methods, can and they often involve complex legal issues. The be useful in narrowing the issues before the number of environmental cases can also become court thus reducing the burden on the court. burdensome, particularly where judges face  Early neutral evaluation is another process multiple cases involving one or more of these involving a mutually agreed on neutral complicating factors. Courts and parties have party who helps the parties to the dispute therefore explored a number of mechanisms to evaluate the relative merits of their cases. reduce the burden on judges and the time and The parties typically exchange written expense to parties of prolonged litigation such as: summaries of the issues, evidence, and  Court-annexed arbitration means that views on liability and damage issues. The arbitration of the dispute remains within the neutral then holds an informal evaluation judicial system rather than operating as a session where the parties present their separate system of dispute resolution as is claims, defenses, and evidence. The neutral provided for by some contracts between evaluator then prepares a written evaluation 245 | P a g e of the dispute, which is used by each party specialized training on environmental law, they to inform its participation on further will need access to sources of environmental law. negotiations, sometimes mediated by the Several excellent sources of information about neutral evaluator. environmental law are available to those with  Judicial settlement conferences may be Box 3. Green Benches (India, New conducted by the judge presiding over a trial Jersey, USA) and may be initiated by the judge, and therefore mandatory, or by the parties. They In the mid-1990s the Supreme Court of India are informal, with no record made, but established a three-judge Green Bench typically headed by the Chief Justice, which handled generally the parties are present along with numerous petitions and issued several landmark the attorneys who will try the case. judgments. The Green Bench sat as often as weekly to hear petitions and oversee work by committees of experts it appointed to investigate and take action on Specialization of courts/court officers. A environmental and natural resource issues. In 1996, the Supreme Court directed the chief judge of the relatively small but increasing number of Calcutta High Court to establish a Green Bench to jurisdictions are relying on judges specially hear environmental petitions. Later that year the Supreme Court asked the Chennai High Court to trained in environmental law to handle some or establish a similar green bench. These Green Benches all environmental disputes. For example, in June are distinguished from Australia’s Land and Environment Court in that they are not separate 2009, the environment minister of Indonesia courts, but rather a method of concentrating signed a Memorandum of Understanding with environmental cases before a single bench of judges. As of the end of 2009, however, the Government of the Chief Justice of the Supreme Court providing India was preparing legislation to create an that the ministry would train 100 judges in environmental tribunal as part of a comprehensive scheme to improve enforcement of environmental environmental law. These judges will be assigned law. to handle environmental cases throughout the Also in the 1990s, the Supreme Court of New Jersey country. A significant challenge for courts is adopted a rule requiring the chief judges of each of its districts to designate a judge to handle obtaining funds to pay for training for environmental cases that required expedited specialization of judicial officers and for treatment. These special environmental assignment judges handle only those cases where the plaintiff operation of environmental courts. Funding to alleges there is imminent danger and a need for train judges in environmental law has been expedited action by the court. provide by developed countries, multilateral development banks, and foundations, but funding to operate specialized courts typically access to the internet. These include ECOLEX, must be generated locally. operated by the International Union for the Conservation of Nature (IUCN), the Food and Agriculture Organization (FAO), and UNEP Access to information on environmental law. http://www.ecolex.org/start.php and FAOLEX Regardless of whether judges have had http://faolex.fao.org/faolex/ (English, French, 246 | P a g e Spanish, and Arabic). UNEP has also produced IUCN‘s Environmental Law Programme.5 The three Volumes of UNEP Compendia of Commission has a Specialist Group on the Summaries of Environment Related Cases and Judiciary, whose purpose is to share knowledge, UNEP Training Manual on International experience, and judgments among judges who Environmental Law. More general is Global handle environmental cases.6 Legal Information Network (GLIN) http://www.glin.gov/search.action a public The International Network for Environmental database of official texts of laws, regulations, Compliance and Enforcement (INECE) is a judicial decisions, and other complementary legal network of professionals engaged in the practice sources contributed by governmental agencies of environmental compliance and enforcement.7 and international organizations. These GLIN One of its chief goals is to improve capacity to members contribute the full texts of their enforce environmental requirements. It has published documents to the database in their regional groups around the world. original languages. Each document is accompanied by a summary in English and, in Specialized Environmental Courts . A recent many cases in additional languages, plus subject study suggests that at least 35 nations have terms selected from the multilingual index to adopted some form of specialized environmental GLIN. court or tribunal.8 These jurisdictions seek to address many of the challenges the judiciary Regional and sub-regional judicial colloquia / faces when adjudicating environmental cases. judicial cooperation. Judges in several Among the reasons cited for establishing such regions have formed regional colloquia to specialized courts are reducing the time to reach promote the Johannesburg Principles within their a decision, improve the quality of decisions by regions. increasing expertise of judges, increase uniformity of decisions within the jurisdiction, Professional networks. Several professional improve access to justice by identifying a forum networks provide information and other to handle environmental claims, reduce backlogs assistance on environmental law and 5 http://www.iucn.org/about/union/commissions/cel/ (last environmental issues to judges and other court visited January 31, 2010). 6 officers. IUCN‘s Commission on Environmental http://www.iucn.org/about/union/commissions/cel/cel_wor Law (CEL) is a network of experts in king/cel_wt_sg/cel_sg_judiciary/ (last visited January 31, 2010). environmental law and policy who volunteer to 7 http://www.inece.org (last visited January 31, 2010). 8 George (Rock) Pring and Catherine (Kitty) Pring, Specialized share their expertise to promote the goals of Environmental Courts and Tribunals at the Confluence of Human Rights and the Environment, 11 Oregon Review of International Law (2009), George (Rock) Pring and Catherine (Kitty) Pring, GREENING JUSTICE: CREATING AND IMPROVING ENVIRONMENTAL COURTS AND TRIBUNALS, WRI: The Access Initiative (2009). 247 | P a g e of cases, and avoiding marginalization of whether to establish a specialized court or environmental cases because they are more time- another form of tribunal. A specialized court is a consuming or complex.9 There are countervailing special court within the judicial branch that has reasons given in favor of retaining jurisdiction the full characteristics of courts within that over environmental cases within courts of jurisdiction such as independence, secure tenure general jurisdiction, including the value of judges for the judges, and judges trained in the field. bring broad experience to bear on environmental The Land and Environment court of New South matters that may have economic and social Wales provides a model for such specialized implications, concerns about increased costs of courts. (See examples discussed in Specialized the judicial system, inadequate caseload to Court box). Some jurisdictions have not been warrant investment in personnel, lack of judges willing to fully adopt this model of a completely with the needed expertise, and concern that the separate court, which can be relatively expensive judges may be ‗captured‘ by special interests. in time and judicial resources, but have identified A committee studying the general issue of judges to handle environmental cases. These establishing specialized courts in the United ―Green Benches‖ may be more flexible in that the States set out the following criteria for evaluating judges may be available to handle non- whether such courts are needed: environmental cases if the environmental 1. The subject is a focused area of caseload is not sufficient to keep a court busy. administrative decision-making, which The judges on the green benches are likely to is may be separated from other claims; develop expertise through their handling of the 2. The area has a high volume of cases, cases but the jurisdiction may not invest whose diversion might alleviate resources in providing training. India is a notable burdens in generalist courts; example of the application of Green Benches and 3. There is a predominance of scientific or of their flexibility in responding to varying other technical issues requiring special caseloads. (See Green Bench box). Environmental expertise of decision makers; and tribunals are specialized decision-making bodies 4. Uniformity in agency administration of that are not part of the judicial branch of the program is important.10 government. Typically they are housed within an administrative agency such as the nation‘s Environmental litigation typically meets three of environmental protection agency. Such tribunals these four criteria with the only question being can be expanded or contracted relatively easily to whether a jurisdiction has a high volume of respond to varying caseloads and, as the environmental cases. The next question is experience in the U.S. demonstrates, can be very effective in handling large numbers of cases. The 9 Id. Environmental Appeals Board of the United 10 Id. referencing Report of the Federal Courts Study Committee, reprinted at 22 CONN. L. REV. 733 States provides a model for such tribunals. (1990). 248 | P a g e bringing the courts to their locations. Following a Experience has demonstrated that specialized model established in Guatemala, mobile courts environmental courts or tribunals are effective in have been adopted by the Philippines, India, and resolving environmental disputes fairly, Bangladesh. Box 4. Guatemala and Philippines: Mobile Courts Guatemala ended more than three decades of war in 1996 when peace accords were signed. The government and judiciary agreed that judicial reform was an essential aspect of post-conflict reconstruction and social stability. With support from the World Bank the judiciary created mobile courts – courts housed in buses that could take judges, court personnel, and courtroom facilities to people in remote regions. The buses are air conditioned and include facilities for hearing cases as well as for mediating disputes. Initially mobile courts focused on cases involving the poor, youth, and women, and on reducing backlogs of cases involving these underserved people. The Guatemalan Mobile Peace Courts, for example, have jurisdiction in labor, family, and civil cases involving less than $3,000 (US). They have been credited with improving the perception of accessibility of the justice system to the poor. Recently the Philippine Supreme Court authorized use of one of its Justice on Wheels (JOW) buses to handle environmental cases in an area, the Visayas, known for its rich marine resources and subject to overexploitation of its marine environment. As with the Guatemalan buses, the JOW buses contain two rooms, one for hearing cases and a second for mediation of disputes. By authorizing the JOW to hear and mediate environmental cases in this region court administrators intend to deter violation of environmental law and overexploitation of the resources. In the Philippines funding for the JOW program is provided by local governments, which benefit directly from the reduction of backlog of cases as fewer poor people are held in prisons awaiting trial. consistently, and efficiently and in reducing Prerequisite Factors for Role of burdens on general courts. Such courts or Judiciary in Pollution Management tribunals are easily justified where there are a Case management systems, standard forms, significant number of environmental cases and, computerizations etc to improve management of even where the numbers may not be large may caseloads. Courts throughout the world are be worthwhile if general judges are having improving their delivery of court services difficulty dealing with the complex scientific, through a variety of methods for reducing economic, and technological issues. unnecessary paperwork and other nonessential tasks. Case management systems developed for The poor, disadvantaged, and those living in other types of cases will be applicable in most remote areas often have little access to justice. environmental litigation. Computerization can be Courts typically are located in urban areas and particularly useful for environmental cases that lawyers can be too expensive for the poor to involve large numbers of parties as computers afford. Mobile courts can improve access to can manage large amounts of data. Judicial justice for the poor and those in remote areas by 249 | P a g e officers must be aware of the limitations of often relies on relatively new and difficult computerization, including that they depend on scientific concepts and on technically advanced accuracy in the entering of data. evidence. Nevertheless, the role of the judiciary remains to ensure the peaceful disposition of Transparency and accountability of the disputes, uphold the rule of law, apply, and, Judiciary. Transparency is fundamental to the where authorized, interpret the law.11 rule of law and applies equally to the judiciary, to the executive, and to legislative authorities. An independent judiciary is also fundamental to Box 5. India’s Supreme Court Role in effective governance and the rule of law, but Pollution Management In one case the Court ordered the capital city of does not negate the need for transparency. New Delhi to convert all public vehicles from buses to taxis and auto-rickshaws to run on compressed natural gas (CHG) as a means to reduce air pollution. The court has also ordered mass closures and Advantages and Limitations of Role of relocations of industrial facilities out of cities and Judiciary in Pollution Management the construction of facilities to treat and dispose of hazardous wastes. Each of these decisions were Under both civil and common law systems, the made directly by the court rather than in reviewing decisions made by government officials. The Court judiciary‘s role as an independent arbiter and has stated that it has made these decisions only in guardian of the rule of law sets it apart from the absence of action by government officials, but other tools for management of pollution. It is doing so has required extremely large commitments of time and resources by the court. Because the important for policy makers to recognize that judges lack expertise in environmental sciences and judges are not environmental experts. The initial management they have relied heavily on advisory decisions about what actions are necessary in committees of experts. Although many of the Court’s decisions have been credited with providing order to prevent or control pollution generally immediate solutions to pollution problems, it is should be made by executive or administrative generally acknowledged that government officials officials on behalf of government and facility are better at making decisions concerning the means to achieve environmental goals. Government managers on behalf of pollution generators. officials generally have access to more complete Policy makers need to understand the limited but information and expertise than judges and can essential role of the judiciary in ensuring that involve other affected or relevant agencies and the public in the decision making process in ways that pollution laws are applied fairly and that those courts are not well suited to do. subject to the law comply. Judges, however, must also recognize that, although environmental law is relatively new and may be unfamiliar to them, In carrying out its duties described above, the they have a duty to apply their best efforts to that judiciary in both civil and common law area of the law as they do to any other field of jurisdictions must ascertain and apply the rules law. Environmental law can be complex and 11 Dinah Shelton and Alexandre Kiss, Judicial Handbook on Environmental Law, UNEP (2005) at XIX. 250 | P a g e of law. These include a nation‘s constitution, potential defendants and highly technical which in many cases establish environmental evidence in order to effectively manage the rights and responsibilities on citizens and information and deliver justice to all the parties. government,12 national laws (including common Specialized environmental courts are the gold law where applicable),13 and, where applicable, standard for competent, uniform, efficient, and international law. Most nations, regardless of fair enforcement of environmental law by the whether they have a common or civil law system, judiciary. Such courts require a significant have enacted statutes regulating pollution. As a investment by a jurisdiction in funding, but also result the role of judges in both systems is quite significantly in training and otherwise similar in cases relating to management of developing the expertise of the judges assigned pollution – they all apply the statutory rules to to such a court. Costs are likely to be primarily the facts of the case. The core function of judges for the salaries of members of the specialized in both systems is to assure that the law is fairly court. If the members are already judges and are administered. not replaced in the general courts the overall salary costs may not increase, but many Another important role of the judiciary in both jurisdictions have found it most beneficial to systems is to assure that everyone has access to appoint people with expertise in environmental the courts and to justice. In addition to its law or environmental issues, thus adding to the articulation by judges in the Johannesburg number of judges. These investments may in Principles, access to justice has been considered a some situations be directly recouped due to key element of international environmental law savings in the time and resources of general through its inclusion in the Convention on courts that no longer handle complex Access to Information, Public Participation in environmental cases. In most situations the Decision-Making and Access to Justice in investment is likely to be worthwhile when Environmental Matters (Aarhus Convention) and broader considerations of administration of other international instruments. justice are considered. Regardless of whether a nation has a specialized In the absence of specialized courts, non-judicial environmental court, the courts will need environmental tribunals can be an effective resources to provide computers and training in means of accomplishing some of the goals of their use to judges handling environmental (or specialized courts, particularly uniformity and other) cases with large numbers of victims or competence, at a lower cost and in a more flexible manner. Such tribunals are not as efficient as 12 specialized courts because their decisions Id. at 7. see e.g. Constitutional Environmental Law: Giving Force to Fundamental Principles in Africa, 2nd Edition ELI typically are, as they should be, subject to review (2007). 13 Shelton and Kiss supra note 2 at 6-7, 8-9. by regular courts. Tribunals may be particularly 251 | P a g e useful in handling routine cases of enforcement Box 6. Case example from Brazil of pollution control laws including establishing penalties and other sanctions, the terms by which Members of the Ministerio Publico in Brazil, for a polluter must clean up the pollution and bring example, oversee the functioning of state and federal its facility into compliance, and the actions it environmental agencies to assure they carry out their responsibilities, bring actions against polluters on behalf must take to restore damage to the environment. of the public, and prosecute criminal violations of the law. Attorneys for NGOs often bring cases to prevent or This reduces the need for a reviewing court to control pollution in the absence of action by immerse itself in the technical details of prosecutors (though in Brazil the Ministerio Publico will continue such a case even if the NGO drops out of the compliance, clean up, and restoration. case). Expert witnesses are often critical in helping judges understand the scientific and technological issues involved in pollution cases. Experts can examine The complexity and novel concepts involved in the technical data and provide the judge with an environmental law mean that the judiciary needs evaluation of the meaning and significance of the evidence. This crucial role means that expert witnesses to be trained in environmental law. Such training must be carefully selected for their qualifications and need only be provided to the limited number of reliability. Although some courts rely on advocates for each side to produce experts who may offer differing judges who are members of a specialized court, opinions about the evidence, many courts appoint but in the absence of such a court basic training independent experts to advise them on the facts without bias from the opposing sides. for all judges is important so that they do not misapply this complex area of the law. In time such training will likely be provided to most graduates of law schools, but in the interim specialized post-graduate training for the Judges cannot administer justice alone, they rely judiciary is needed. on many others including prosecutors, attorneys for private interests and non-governmental organizations (NGOs), and expert witnesses. Prosecutors typically represent the interests of the public and particularly in many civil law Interaction with Other Tools and jurisdictions this is a broadly encompassing role. Possible Substitutes 252 | P a g e Practical Examples of Role of Judiciary in Pollution Management Box 7. Specialized Courts (Australia, Brazil, Philippines, Pakistan, Vermont, USA) The first court specializing in environmental law was created by statute in New South Wales, Australia in 1980. The Land and Environment Court is a superior court of record that combines several judicial functions in one tribunal. It has an administrative review function whereby it reviews the merits of government decisions on planning, building, environmental, and similar matters. Non-judge experts are employed by the court to undertake this and other non- judicial roles. The court also serves the judicial function in civil and criminal enforcement of a variety of environmental laws and compensation for compulsory land acquisition and Aboriginal land claims. In addition it hears * appeals from criminal convictions or sentences under environmental laws from the local trial courts. This court provides the model for specialized environmental courts; it has minimized delay for environmental cases, a major hindrance to the resolution of environmental disputes by courts of general jurisdiction in many nations; it has contributed substantially to jurisprudence on environmental law; and it has provided consistency in implementation ** of environmental law within its jurisdiction. Brazil has at least four federal trial courts, two state trial courts, and one state appeals court designated as specializing in environmental issues. These courts have jurisdiction over civil, administrative, and criminal cases and thus cover the full set of environmental cases. In January 2008, the Supreme Court of the Philippines designated 117 trial courts as special environmental courts. Of particular note is that the Philippines Judicial Academy is providing special training on environmental law to the judges of these environmental courts. Chief Justice Reynato S. Puno said “All efforts will be undertaken so that the newly designated environmental courts will be manned by ‘green judges’ – skillful judges who not only master environmental laws, but also understand the philosophy of environmentalism and ecologism.� Pakistan’s Environmental Protection Act 1997 created Environmental Protection Tribunals (EPTs) as the final decision makers on environmental issues, including appeals of decisions by the governmental agencies established to control pollution and promote sustainable development and complaints against alleged polluters. The tribunals are composed of a chairperson and two members and are independent of the government and its environmental protection agency. Five such EPTs have been constituted covering significant areas, but not all, of the country. In 2009, the Supreme Court of Pakistan referred a public interest petition concerning pollution of a lake in Islamabad to an EPT, but first had to note that such an EPT needed to be established for the capitol. Thailand has also established special environmental courts as a division within the court system. The state of Vermont in the United States created an environmental tribunal in 1990 to hear appeals of orders issued and penalties assessed by the state’s natural resources agency. The court does not hear environmental damage cases between private parties, which are decided by courts of general jurisdiction. * Brian J. Preston, Operating an environmental court: The experience of the Land and Environment Court of New South Wales, 25 EPLJ385-409 (2008). ** Id. at 405 – 409. 253 | P a g e Box 8. Environmental Tribunals (US, India) In the United States, the federal government and many states have established environmental tribunals within the executive branch of government. The U.S. Environmental Protection Agency (EPA), for example, created the Environmental Appeals Board (EAB) in 1992 to hear appeals of permit decisions by agency officials, decisions by * administrative law judges on civil penalties, and other cases specified by various environmental statutes. The administrative law judges and EAB handle the majority of the large number of appeals of penalties imposed by the EPA, reducing the number of cases in the federal courts. Administrative law judges and members of the EAB are attorneys employed by the EPA and are required to follow the environmental statutes, but have a degree of independence as they are separate from the enforcement and permit decision makers. Many U.S. states also rely on hearing examiners or administrative law judges as initial triers of fact when a person is adversely affected by a decision of the environmental agency. Some states provide greater independence by constituting an office of administrative appeals that is separate from all executive departments and handles appeals from all such departments. Final decisions by such administrative tribunals may be appealed to the courts, federal courts for decisions by the EAB and state courts for those by state tribunals. Federal law generally provides that the federal courts will only consider the evidence produced before the administrative tribunal unless the petitioner is able to convince the court that extraordinary circumstances exist. The courts exercise independent judgment on issues of law. This system has reduced the number of cases reaching the courts and provides parties the benefit of triers of fact who possess expert knowledge of the environmental laws while allowing recourse to courts to determine important legal issues. India provides an example of how such tribunals may be ineffective because they are subject to the control of the legislative or executive branch rather than the judicial branch. India enacted the National Environmental Tribunal Act in 1995 for the purpose of establishing strict liability for damages from any accident arising from the handling of hazardous wastes and for establishing a national environmental tribunal to hear cases resulting from such accidents. Establishment of the Environmental Tribunal was made dependent on the national government appointing members, which the government has failed to do. References and Resources on Role of Judiciary in Pollution Management. * http://www.epa.gov/eab/ (last visited January 31, 2010). References and Resources on Role of Judiciary in Pollution Management Global Judges Symposium on Sustainable Dinah Shelton and Alexandre Kiss, Judicial Development and the Role of Law, Handbook on Environmental Law, Volumes I & II, UNEP (2002). UNEP (2005). Louis J. Kotze and Alexander R. Paterson, The Guide to Global Trends in Application of Role of the Judiciary in Environmental Environmental Law by National Courts Governance, Wolters Kluwer (2009). and Tribunals, UNEP. Thomas Greiber, Judges and the Rule of Law: Judicial Training Modules on Environmental Creating the Links: Environment, Law, UNEP (2007). Human Rights and Poverty, IUCN UNEP Compendium of Summaries of Judicial (2006). Decisions in Environment Related Constitutional Environmental Law: Giving Force Cases, UNEP (2020). to Fundamental Principles in Africa, 2nd Training Manual on International Environmental Edition ELI (2007). Law, UNEP (2006). George (Rock) Pring and Catherine (Kitty) Pring, Greening Justice: Creating and Improving Environmental Courts and 254 | P a g e Tribunals, WRI: The Access Initiative IUCN Environmental Law Programme, (2009). http://www.iucn.org/about/work/pro ECOLEX, IUCN, FAO, and UNEP grammes/environmental_law/ http://www.ecolex.org/start.php IUCN Academy of Environmental Law, FAOLEX http://faolex.fao.org/faolex/ (English, http://www.iucnael.org/ French, Spanish, and Arabic). IUCN Commission on Environmental Law Specialist Group on Judiciary, http://cms.iucn.org/about/union/com missions/cel/cel_working/cel_wt_sg/c el_sg_judiciary/ This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 255 | P a g e 256 | P a g e 2.5 Active Citizens (Including Civil Society Organizations) 257 | P a g e Promoting Active government to improve performance. By providing information and responding to inquiries, Citizenry — governments can build trust and develop policies that better reflect the public‘s interests and needs. These Public Access to policies are also more likely to be sustainable, reducing pollution‘s negative effects on the Information environment. What constitutes public access to information will Introduction vary across countries. International agreements such This Guidance Note analyzes tools that government as the Rio Declaration, Principle 10 (UNEP Web site) policy makers and leaders use to engage citizens and and the Aarhus Convention (UNECE Web site) promote public action through increased access to reinforce a global recognition and commitment to information about pollution management. Access to principles of access (access to information, such information empowers citizens to make participation, and justice). Such principles are knowledgeable choices and encourages industry and necessary components of sustainable development.1  This guidance note was prepared by Linda Shaffer (Consultant). Peer reviewers included Alberto Ninio (Chief Counsel, LEGEN), Jeffrey Thindwa (Lead Specialist, WBISG), Sofie Fleischer Description and Application of Promoting Michaelsen (Senior Social Development Specialist, CESI), Shaza Active Citizenry: Public Access to Zeinelabdin (Social Development Specialist, CESI), and Debra Sequeira (Senior Social Development Specialist, CESI). Additional Information comments and contributions were provided by Akiko Nishimae (Environmental Specialist, ENV), Ernesto Sanchez-Triana (Lead Governments are increasingly implementing policies Environmental Specialist, SASDI), Fernando Loayza (Senior Environmental Economist, ENV), Hocine Chalal (Regional and actions that increase public access to information Safeguards Advisor, MNACS), Jane Nishida (Senior Institutional Specialist, SASDI), Jim Listorti (Consultant, FEU), Joseph Foti (see figure 1). Categories of tools include legal (World Resources Institute), Lesly Baesens (World Resources frameworks for access to information; public Institute), Luiz Maurer (Senior Industry Specialist, AFTEG), Monika Kerdeman (World Resources Institute), Robert Gerrits disclosure programs; the collection, analysis, and (Social Development Specialist, CESI), Sachiko Morita (Counsel, LEGEN), Sanjay Agarwal (Social Development Specialist, SDV), dissemination of environmental information; the and Tijen Arin (Senior Environmental Economist, ECSSD). media; public education; and broad capacity-building Editorial assistance was provided by Stan Wanat (Consultant, ENV), Juliette Guantai (Program Assistant, ENV) and James initiatives. Policy makers should start with a Cantrell (Communication Analyst, ENV). The task team leaders for this product are Kulsum Ahmed (Lead Environment diagnostic tool to determine where information is Specialist, ENV) and Helena Naber (Environmental Economist, ENV). The product was prepared under the guidance of the weak, and where systems are non-existent or failing. following World Bank Group management: James Warren Evans / Mary Barton-Dock (Directors, Environment Department, World 1 Access to information policies are not restricted to countries. For Bank), Bilal Rahill (Senior Manager, IFC), and Frank Lysy / Ravi example, a number of multi-lateral development banks have Vish (Director, MIGA). information access policies, such as the Bank's Access to Information Policy which has set forth a groundbreaking change in how the World Bank makes information available to the public. 258 | P a g e Tools for this purpose include The Access Initiative right to information and reinforces the government‘s Figure 1. Common Tools for Fostering toolkit, The Open Society Institute Access to accountability to the public. More than 65 countries Information Monitoring toolkit, and UNITAR country have enacted formal statutes guaranteeing freedom of assessment tools (TAI Web site). information. Public Disclosure. Public disclosure programs, such Access to Information about Environment as pollutant registers, provide information to the Legal frameworks. Freedom of information (FOI) public about harmful chemicals that affect their legislation is one of the most widely used instruments environment. Through mandated industry reports, to promote access to information. These laws these registers inventory potentially hazardous represent a legal mechanism that ensures the public‘s chemicals or pollutants that are released into the air, 259 | P a g e land, and water, and track substances that are strengthen the underlying messages contained in the transferred off-site for treatment or disposal. These reports. online registers enable the public to monitor the behavior of polluters and create an incentive for ―Scorecard: the Pollution Information Site‖ is a Web industry to behave more responsibly. Many site that enables users to learn about pollution levels countries, including Chile, Sweden, and the United in their community by typing in their zip code States, have adopted public disclosure programs (Scorecard Web site). The site provides geographic known as Pollutant Release and Transfer Registers rankings and provides information on known health (PRTRs; see OECD Web site) or Toxic Release effects from a list of chemicals. The site does not cover Inventories (TRIs; see US EPA Web site). In 2000, all sources of pollution or risks to toxic chemicals, and members of the European Union adopted the the information is limited to national data sources. European Pollutant Register (EPRTR), which tracks 50 pollutants from more than 12,000 industrial facilities Citizen Report Cards, or CRCs, started in India in across 36 countries (EC Web site). 1994 as a way for the private sector to gather consumer feedback regarding goods and services. The Collection, analysis, and disclosure of information. card is essentially a survey of user satisfaction on the Governments can employ a variety of tools to collect, quality of different services such as health and analyze, and disseminate information to the public. education. Scores are applied to different These include State of the Environment reports, a performance criteria, and the overall rating is a scorecard on pollution, citizen report cards (CRCs), quantifiable measure of the quality of services. CRCs air and water quality monitoring systems, early have been implemented throughout the world in emergency warning systems, and dedicated varying contexts. In general, the media collect government information institutes or centers (CRC information through questionnaires and user Web site; World Bank Web site). feedback for the CRCs. It can take months to implement this tool fully. A similar tool called the State of Environment (SOE) reports are effective tools community report card incorporates the CRC for governments to communicate technical data to techniques but includes direct engagement with the wide audiences in an informed, easy-to-understand service sector through meetings. In this way, feedback manner using visual charts and graphs. SOE reports is immediate. can track trends over time and show progress toward stated environmental goals. They are effective tools to Other examples of established systems for public inform citizens of broad environmental problems access include the US Air Quality Index (AQI) and the facing the country. However, these reports must be Water Environment Partnership in Asia (WEPA). produced in regular intervals and more widely AQI is only one of many air-quality monitoring distributed to reach all audiences. Developing systems in the world (AIRNow Web site). The AQI associated products, such as teacher‘s guides, can reveals air pollution levels and associated health 260 | P a g e effects or risks to a community. The index is a by providing immediate, reliable, and accurate government-supported program that works with information in the face of confusion caused by a multiple government agencies (national and state disaster or crisis. Citizens can be regularly informed level) as well as the news media to report conditions of changing circumstances and respond more quickly related to ozone and particle pollution. The index is when communication systems are in place. The calculated for five major air pollutants regulated by United Nations Office for the Coordination of the US Clean Air Act. The site does not offer Humanitarian Affairs (OCHA) works with national calculations for every US city and can experience gaps and local entities to implement information in information due to data-collection problems. Maps contingency plans as part of an effective emergency are sometimes unavailable due to transmission errors. response at the start of a crisis (OCHA Web site). Water-quality information systems are also important Media Training. Mass media (newspapers, radio, tools to empower citizens to make informed choices and television) play a central role in monitoring about the water they drink and help them challenge democracy and promoting transparency, polluters and weak government policies. WEPA accountability, and good governance. In many includes 11 countries in East Asia who promote better countries, a free press serves as a communicator for water management practices and publish information government and as a voice for citizens. Media about facilities that treat water (JME Web site). The provide a forum for public dialogue and input. Media WEPA site does not show the possible health effects can also focus the public‘s attention on important on a community, nor does it provide information in environmental matters and consequences of an easy-to-understand format. It does however detail government decisions. Media can strengthen the specific country laws that mandate water quality. incentives for governments to proactively distribute information and increase the capacity of the public to Effects of environmental emergencies can range from demand information. This in turn helps reduce the small incidents that threaten a local village to space for corruption. widespread national disasters that endanger millions of people. Good emergency warning systems can help 261 | P a g e The effectiveness of media depends upon the capacity access to information. Programs can be especially of journalists and the laws that protect freedom of effective when done jointly with local NGOs. For expression. Organizations such as the Institute for example, Mexico‘s SEMARNAT has joined with four Further Education of Journalists (FOJO) and the NGOs to develop and publish the Citizen‘s Guide to World Press Institute implement training programs in Access to Information, produce (and later translate into developing countries that are designed to strengthen indigenous languages) a television drama series on the capacity of journalists to report environmental the public‘s right to information, and host two annual information. In 2009, the Tanzanian government Access to Information Days. This last activity has signed a memorandum of understanding with six been done in conjunction with the IFAI (IFAI Web national media organizations to establish an annual site). In Bolivia, the Ministry of Rural Development award for journalists who exemplify freedom of and the Environment collaborated with local NGOs to Box 1. Training in Malawi Focuses on Journalists A government partnership with a civil society organization looks to media as an entry point for activating citizens in Malawi. Because of greater newspaper and radio coverage of environmental issues, the public is more informed and more involved in issues such as air pollution. In 2008, the Malawi Minister of Education collaborated with the Centre for Policy and Advocacy (CEPA) to develop five training modules on access issues for practitioners working in print and electronic media. This program was designed to increase environmental information through media reporting and to highlight the importance of the environment and natural resources to livelihoods. Modules focused on the legal and policy framework regarding environment and natural resources in Malawi; investigative journalism and the environment; current environmental issues in Malawi; and government of Malawi environmental programs and projects. Trainings were held in Blantyre and Lilongwe, and participants included representatives from civil society, government departments (Environmental Affairs Department, and Information and Civic Education Department), government media, Malawi television, private radio stations, and faith- based radio stations. Those participants and a network of journalists received training. Since the trainings, CEPA has reported a significant increase in the number of environment-related articles in the daily newspapers and an increase in inquiries from media practitioners seeking technical advice on access issues. One of the private radio stations also approached CEPA to conduct a program on climate-change issues. This program generated considerable public interest, particularly in rural areas where 75% of the phone-in questions and comments originated. expression. In Malawi, government officials work develop a poster detailing the proper code of conduct side-by-side with civil society organizations to raise for public officials regarding access to information. citizen awareness through increased media exposure of environmental issues (see box 1). Capacity Building Initiatives. Many information systems are hindered by the lack of stakeholders‘ Public Education. Many governments look to public capacity to implement such systems fully. education programs to engage citizens regarding Government officials need regular training on 262 | P a g e changes in FOI laws and the process for government agency. Answers should direct the public implementing these laws. There is also a need to to information, not just documents. Ideally, promote actively a ―culture of access,‖ which in some information should be provided free of charge or at countries presents a significant departure from old- minimal cost. style ―cultures of secrecy.‖ Programs that establish protocols for openness can help foster better Box 2. Building the Capacity of Public engagement with citizens. Capacity-building Officials in Ecuador initiatives are also important for citizens, who do not always understand what type of information is A new partnership between civil society and available or the process for requesting and, if government in Ecuador is strengthening the capacity of civil servants to promote access to information and necessary, demanding it. Sometimes the information public participation in environmental management. provided is too technical for public consumption. In 2008, the civil society organization ECOLEX developed and implemented a training program for Many governments are now collaborating with public officials and CSO leaders implementing Ecuador’s new national Transparency and Access to citizen groups on programs to increase the capacity of Information Law. Working with members of the government officials to provide access as well as the Secretaría de Pueblos, Movimientos Sociales y Participación Ciudadana, and the Human Rights public‘s capacity to demand it. One partnership in Program at the Universidad Andina Simon Bolivar Ecuador established a university certificate program (UASB), ECOLEX developed the materials for the ten- week certificate program now offered at the UASB. The that trains public officials how to implement national first training took place in July 2008 and included 23 transparency laws (see box 2). government officials from 11 national and state agencies. Participants analyzed current institutional policies and learned how agencies could enhance information access and increase public participation in their procedures, policies, and structures. Prerequisite Factors for Promoting Active While mainstreaming this program into current Citizenry: Public Access to Information practice will largely depend on the political will of each institution, ECOLEX has received positive feedback from two institutions, the Ombudsperson and the State Empowering citizens requires that governments General Attorney’s Office. The Ombudsperson wants to proactively collect, analyze, and disseminate offer the training course to members of its regional offices, and the State General Attorney’s Office is information to the public. Information must be up-to- considering creating a new environmental division date, in a format that is easy to understand, and because of their experience in the training program. available in the languages of all stakeholders. Information should also be disseminated using different channels to reach the maximum number of Effective access by citizens to information requires stakeholders. Requests for information made by proactive government; information that is useful, citizens should be permitted in writing or orally, and widely disseminated, and free to the public; and answered in a timely fashion by the appropriate timely response to public requests for data. 263 | P a g e Figure 2. Access to Information Collaborating with civil society organizations (CSOs) Prerequisite Factors can help governments deepen their efforts to promote an active citizenry. CSOs are indispensable in Access to Information Proactive Government supporting public access to information. They + generate independent research, advocate for legal Information that is useful reform, build public demand for information, increase + Information that is widely disseminated the capacity of the public and government officials + through training, promote awareness of best Timely response to public requests practices, and monitor the implementation of laws. + Information is free to the public Because of new technologies, they are also able to build on knowledge and best practices from Since pollution is trans-boundary in nature, colleagues in other regions. governments within an affected region are encouraged to work together to address common It is important to note that implementation of concerns. Many of the tools described in this Guidance principles for promoting public access will vary Note can be implemented at the regional level. depending on the political and cultural openness of a society. The tools presented in this Guidance Note require a certain change in the behavior of governments and citizens, that this change can itself Limitations of Promoting Active Citizenry: pose a challenge to implementation. Financial Public Access to Information resources are also essential. Post-conflict countries FOI legislation can be weak and is often hindered by a must address additional challenges of rebuilding lack of administrative rules and operational policies. basic infrastructure, promoting non-partisan media, There are often wide exemptions to the laws, and and earning the public‘s trust. many do not require governments to release information proactively in the absence of specific requests. To be effective, FOI legislation should require governments to publish guidelines or instructions for how the public may request information. Exemptions should be limited. Where exemptions apply to a document, its non-exempt parts should be released. Public officials must have the capacity to carry out laws relating to public access and actively promote their implementation. 264 | P a g e Public registers of pollutants and polluters are not as air pollution, but increased pollutants in other exhaustive. In many instances, owners of small areas, such as generating increased waste. businesses are not required to report, and only Many different agencies within a single government facilities that manufacture certain quantities of listed may collect different types of information. Citizens Box 3. Mexico Creates Central Institute for Information Mexico is proving that a centralized institute in charge of public requests for information effectively engages citizens. The system is a model for other countries promoting access to information. Created in 2002 with the passage of sweeping new access-to-information legislation, Mexico’s Federal Institute for Access to Information (IFAI in Spanish) was created as the central communications point for citizens requesting information and the 230 government agencies that provide it. IFAI is a powerful oversight agency. The autonomous organization promotes transparency, monitors developments in access to information, processes citizen requests for information, and settles disputes between citizens and government bodies over responses to these requests. As such, it functions as an administrative court to review negative responses by executive agencies and as an ombudsperson in charge of strengthening the “culture of transparency� in both government and society. The public is encouraged to file FOI requests using InfoMex, IFAI’s easy-to-use electronic system. The site walks users through the process of requesting and receiving information. Users may also track the status of any request in the system and access information provided to others. Citizens have seen improvements in pollution because of the system. In 2006, information requested regarding a sewerage project in Cintalapa exposed dangerous levels of waste flowing into a nearby town. The project was quickly halted until changes were made to ensure the water was properly treated. IFAI receives approximately 148 requests for information daily. Since 2003, the agency has processed more than 218,000 requests; however, most of these requests come from the capital metropolitan area. One challenge facing IFAI is how to encourage greater citizen participation from other areas of the country. IFAI collaborates with Mexico’s civil society groups like Iniciativa de Acceso – Mexico to reach citizens through activities such as the Access to Information Day. Source: IFAI Web site. chemicals are required to report, leaving these often experience a lack of coordination between facilities off the radar and out of public scrutiny. agencies when trying to request information. Some Finding current data can sometimes be problematic, governments, such as Uganda, have responded by as registers have varying reporting timeframes. establishing single information centers where citizens Online registers often exclude remote communities. may obtain information in one location from across all Finally, while the incentive is there for businesses to agencies. Other governments, such as Mexico, have reduce individual toxins, many registers do not look established full federal-level institutes with the at a business‘s total impact on pollution. A more capacity to develop and implement more elaborate inclusive view is necessary, since many businesses information systems (see box 3). Clear coordination have reduced pollutants in one area of activity, such between agencies can result in better, robust 265 | P a g e information systems that are more efficient in the long https://www.infomex.org.mx/gobiernofede run. In contrast, uncoordinated systems cost the ral/home.action. JME (Japan Ministry of Environment), ―Water government more money to implement, lead to Environment Partnership in Asia (WEPA),‖ serious information gaps, and often result in citizens Japan Ministry of Environment, not receiving the information requested. http://www.wepa-db.net/index.htm. Morse, J. 2006. ―Freedom of Information Laws Benefit Government and Public.‖ USINFO (Bureau References and Resources on Promoting of International Information Programs). Active Citizenry: Public Access to http://www.america.gov/st/washfile- Information english/2006/December/20061214160102aje srom0.1726038.html. AIRNow, ―United States Air Quality Summary,‖ OECD (Organisation for Economic Co-operation and AIRNow, http://airnow.gov. Development), ―Welcome to PRTR.net,‖ CRC (Citizen Report Card), ―Improving Local OECD, http://www.prtr.net/. Governance and Pro-Poor Service Delivery: Petkova, E., N. Henninger, C. Maurer, F. Irwin, J. Citizen Report Card Learning Toolkit,‖ CRC, Coyle, and G. Hoff. 2002. Closing the Gap: http://www.citizenreportcard.com/. Information, Participation and Justice in Eagan, P., L. Wiese, and D. Liebl. 2001. ―Public Access Decision-Making for the Environment. to Environmental Information.‖ In Washington, DC: World Resources Institute. Information Systems and the Environment, ed. Scorecard, ―Scorecard: The Pollution Information Richards, D. J., R. Allenby, and W. D. Site,‖ Scorecard, Compton, 173–84. Washington, DC: National http://www.scorecard.org/. Academies Press. TAI (The Access Initiative), ―The Access Initiative,‖ EC (European Commission), ―The European Pollutant TAI, www.accessinitiative.org. Release and Transfer Register (E-PRTR),‖ ––––––, ―Findings,‖ TAI, http://accessinitiative.info/. EC, UNDP (United Nations Development Programme), http://ec.europa.eu/environment/air/pollu ―Governance in Post-Conflict Situations: tants/stationary/eper/index.htm. Access to Information,‖ UNDP, Foti, J., L. de Silva, H. McGray, L. Shaffer, J. Talbot, http://www.undp.org/oslocentre/docs04/ and J. Werksman. 2008. Voice and Choice: Access%20to%20Information.pdf. Opening the Door to Environmental Democracy. ––––––, ―Media and Accountability: Promoting Washington, DC: World Resources Institute. Access to Information through Media Freedom House, ―Freedom of the Press,‖ Freedom Development,‖ UNDP, House, http://regionalcentrebangkok.undp.or.th/p http://www.freedomhouse.org/template.cf ractices/governance/MediaandAccountabili m?page=16. ty.html. FreedomInfo, ―Freedominfo.org: The Global Network UNECE (United Nations Economic Commission for of Freedom of Information Advocates,‖ Europe), ―Introducing the Aarhus FreedomInfo, Convention,‖ UNECE, http://www.freedominfo.org/. http://www.unece.org/env/pp/. Fox, J. A., T. S. Andrade, P. R. Bribiesca, and H. UNEP (United Nations Environment Programme), Hofbauer. 2007. Mexico‘s Right to Know ―Rio Declaration on Environment and Reforms. Washington, DC: Woodrow Wilson Development,‖ UNEP, International Center for Scholars. http://www.unep.org/Documents.Multilin IFAI (Federal Institute for Access to Information), gual/Default.asp?documentid=78&articleid ―INFOMEX Gobierno Federal,‖ IFAI, =1163. 266 | P a g e ––––––, ―State of Environment Gateway‖, Washington, DC: World Bank. http://www.grida.no/soe . http://siteresources.worldbank.org/INTPC UNITAR (United Nations Institute for Training and ENG/1143380- Research), ―United Nations Institute for 1116506267488/20511066/reportcardnote.pd Training and Research,‖ UNITAR, f. http://www.unitar.org/. ––––––, ―Citizen Report Card and Community Score UNOCHA (United Nations Office for the Card,‖ World Bank, Coordination of Humanitarian Affairs), http://web.worldbank.org/WBSITE/EXTE ―Coordination,‖ UNOCHA, RNAL/TOPICS/EXTSOCIALDEVELOPME http://ochaonline.un.org/ToolsServices/tab NT/EXTPCENG/0,,contentMDK:20507680~ id/1083/Default.aspx. pagePK:148956~piPK:216618~theSitePK:4103 US EPA (United States Environmental Protection 06,00.html. Agency), ―EPA TRI: International TRI,‖ US World Resources Institute. 2003. World Resources EPA, Report 2002–2004: Decisions for the Earth: http://www.epa.gov/tri/programs/interna Balance, Voice and Power. Washington DC: tional/index.htm. World Resources Institute. World Bank. 2004. Social and Development Notes: Participation and Civic Engagement (No. 91). This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 267 | P a g e Promoting Active Meaningful public participation enables citizens to provide informed and timely input and ultimately Citizenry — influence decisions that affect their environment. Decisions can range from individual projects (such as Advocacy and the location of a chemical factory) to broader strategic plans, laws and policies (such as permitting Participation in regulations). For citizens, participation can include commenting on draft policies, raising concerns at a Decision Making public hearing, or serving on advisory committees. For governments, engaging the public in decisions Introduction can enhance the quality and legitimacy of decisions. It This Guidance Note analyzes tools policymakers and can ensure fairness in decisions, and give voice to leaders of government can use to engage citizens and underrepresented groups. For the private sector, promote public action through increased advocacy public participation can generate demand for higher and participation related to pollution management. industry standards and support for better practice. Public participation builds trust between parties and  This guidance note was prepared by Linda Shaffer (Consultant). strengthens the capacity of all stakeholders to engage Peer reviewers included Alberto Ninio (Chief Counsel, LEGEN), Jeffrey Thindwa (Lead Specialist, WBISG), Sofie Fleischer in environmental decisions and policies. When done Michaelsen (Senior Social Development Specialist, CESI), Shaza well, public participation can offer clear benefits for Zeinelabdin (Social Development Specialist, CESI), and Debra Sequeira (Senior Social Development Specialist, CESI). Additional government, the private sector and society. On the comments and contributions were provided by Akiko Nishimae contrary, done poorly or failure to provide for public (Environmental Specialist, ENV), Ernesto Sanchez-Triana (Lead Environmental Specialist, SASDI), Fernando Loayza (Senior participation can result in conflict and public Environmental Economist, ENV), Hocine Chalal (Regional resistance to new policies. Safeguards Advisor, MNACS), Jane Nishida (Senior Institutional Specialist, SASDI), James Listorti (Consultant, FEU), Joseph Foti (World Resources Institute), Lesly Baesens (World Resources The ability of the public to participate in decisions Institute), Luiz Maurer (Senior Industry Specialist, AFTEG), Monika Kerdeman (World Resources Institute), Robert Gerrits (Social that affect the environment can be determined by the Development Specialist, CESI), Sachiko Morita (Counsel, LEGEN), willingness of government officials to engage citizens Sanjay Agarwal (Social Development Specialist, SDV), Tijen Arin (Senior Environmental Economist, ECSSD). Editorial assistance was as well as the efforts by citizens to participate. It is provided by Stan Wanat (Consultant), Juliette Guantai (Program important to note that policy decisions are not made Assistant, ENV) and James Cantrell (Communication Analyst, ENV). The task team leaders for this product are Kulsum Ahmed (Lead in a linear and organized manner. They are complex Environment Specialist, ENV) and Helena Naber (Environmental processes with changing circumstances. For the public Economist, ENV). The product was prepared under the guidance of the following World Bank Group management: James Warren to feel that their input is valuable, public participation Evans / Mary Barton-Dock (Directors, Environment Department, must be incorporated into the larger culture of World Bank), Bilal Rahill (Senior Manager, IFC), and Frank Lysy / Ravi Vish (Director, MIGA). decision making. Public participation cannot exist merely as a series of singular events where only the 268 | P a g e loudest voice is heard. There must be an inclusive When systems are accessible, the public has community of participation where stakeholders have knowledge about where to go to participate, and how equal voice and play a continuous role in the policy to participate. They also know the process for making making process. the decision, and the impact of their participation on the decision. Governments should make every effort to provide advance notice of consultations, in Description and Application of Promoting multiple locations, targeting a variety of affected Active Citizenry: Advocacy and stakeholders. In-person consultations should be held Participation in Decision Making in known, easy-to-reach locations. Electronic consultation should utilize widely used information There is no universal definition for effective public and communication technology such as telephones participation. The Aarhus Convention sets minimum (cell or landline) or the Internet. The public should standards for public participation including timely have advance access to documents that summarize and effective notification between parties, reasonable the project or policy under consideration. Documents timeframes for participation and at an early stage of should include full environmental impact the decision making process, availability of relevant assessments (EIAs) or management plans and any documentation free of charge, due account of the related documents. Governments should ensure that outcome of public participation, and prompt documents are in the appropriate language, and notification and publication of the decision (UNECE adapted for public consumption. This does not imply Web site). A more detailed summary of the Aarhus that information is not disclosed, but that the Convention is available in box 1. information is shared in a format that is useful to citizens. Following consultations, there should be a The effectiveness of public participation in practice feedback mechanism that notifies stakeholders the can be influenced by the quality of the process itself. outcome of the process. Government investments in public consultation early in the decision making process and sufficient advance notification and documentation can enhance the quality of the input into the decision. Often the public is consulted too late in the process to make any difference in the decision. This can erode trust and negatively affect the willingness of the public to participate in future consultations. Participation should also include a variety of stakeholders including civil society organizations, local experts and underrepresented groups such as the poor. 269 | P a g e Box 1. The Aarhus Convention Hailed as a benchmark in environmental democracy, the Aarhus Convention is a unique global instrument that establishes minimum standards for promoting access to information, public participation in decision making and access to justice in environmental matters. It was negotiated by governments of Europe and entered into force in 2001. Today there are 42 parties to the Convention (2009). Highlights:  Convention is open to all members of the United Nations.  It enables every person (regardless of citizenship or nationality) to have a say in decisions that affect the environment.  The Convention empowers members of the public to hold governments accountable and become more active in promoting sustainable development.  It recognizes every person’s right to a healthy environment today and in future generations.  It creates a unified legal framework that guarantees citizen access rights across Europe and Central Asia.  The rights protected by the Convention are respected by all “public authorities� including government bodies from all sectors, at national and local levels (except judicial and legislative bodies), public and private bodies performing public administrative functions or services (such as providers of electricity or natural gas) and institutions of regional economic integration organizations that become Parties. Challenges:  Change can be slow for long-established democracies. Newer democracies however have adapted systems more quickly.  More capacity is needed to establish effective legislative frameworks, set-up institutional structures, train officials in how to apply the Convention and teach citizens how to exercise their rights.  Slow implementation can paralyze the work of an administration. Governments must introduce detailed national implementing legislation and procedures.  Governments need to better harmonize Convention requirements across all departments, not just those pertaining to environment.  Wide perception that Aarhus Convention is a regional instrument, not a global one. Participation can take a variety of forms depending on the decision to be made, time and resources available, or political circumstances. Together they form a continuum based on the extent of the involvement and role in decision making. Common forms are illustrated in Figure 1. 270 | P a g e Figure 1. Common Forms for Advocacy and Participation Advocacy & Participation: Common Forms Legal frameworks EIA Diagnostic tools Stakeholder Analysis P ress conference, P assive radio Focus group, town Consultative hall P ower shared with citizens Advisory Council External Water Association included in monitoring compliance of EIA mitigation Legal frameworks. Many countries have laws and measures. Laws should apply to both public and policies that require public participation. This can private sector development activities. include constitutional guarantees; conditions for notice and comment in sector policy-making; and Diagnostic tools. Diagnostic tools such as provisions in environmental impact assessments stakeholder analysis, institutional analysis, and social (EIAs). National constitutional reform provides an impact analysis are used to identify key stakeholders ideal entry point for establishing public participation and target groups early in the policy process. These systems. Many countries such as Bolivia, Nepal, can help reveal the broad range of social impacts and Thailand and Uganda have used constitutional potential responses in relation to the policy. This in reform as a way of strengthening the public‘s right to turn can save critical time and resources early in the participate in environmental decision making. Public process. participation in sectoral policies helps integrate citizen concerns into decisions related to energy, Passive forms of participation. Some forms of water, and other sectors that are prone to pollution. participation are passive with information exchanged Provisions for participation in EIA should explicitly from one party to the other. This can include require public comment and notice at various stages document distribution, press conferences, radio and of the decision making process. Participation should television programs, and some websites. New be required before final approval of the EIA and be technologies enable decision makers to reach a large 271 | P a g e numbers of citizens quickly. These forms of The National Pollution Prevention Roundtable participation provide transparency, increase (NPPR) is the largest membership organization in the accountability of decision makers, enhance the United States devoted exclusively to pollution legitimacy of decisions and build the capacity of the prevention. It provides a national forum to promote public. They do not however solicit input from decisions that avoid, eliminate, or reduce pollution at targeted stakeholders or seek to incorporate public the source. Members participate in work groups and input into a decision. act as advisors on documents, reports and legislation. Members include pollution prevention experts from Consultative forms of participation. More state and local government programs, small business consultative forms of participation include the networks, citizen organizations, industry associations establishment of focus groups, town hall meetings, and federal agencies among others (NPPR Web site). public hearings and workshops. Here citizens participate in dialogues where the intent is to gather Participation where power is shared with citizens. feedback for a particular decision. These meetings In some participation models, decision making provide a forum where stakeholders inform each powers are shared with the citizens. This is useful other of their views and opinions, local concerns are when external knowledge and capacity is critical for identified, public support is generated and reaching the policy objective. This enables collaborative partnerships between groups are stakeholders to directly influence the outcome of the fostered. Citizen report cards and community decision. Examples include: advisory councils, task scorecards are also monitoring tools that enable the forces, and referenda. In Brazil, the municipality of public to provide feedback on public services. (See Porte Alegre invited citizens to participate in decision chapter on citizen access to information for more making for municipal budgets. The program was so information). successful that it is now being replicated in other municipalities around the world. (See box 2). Box 2. Participatory Budgeting in Brazil In 1989, the Brazilian municipality of Porte Alegre relinquished decision making over municipal budgets to citizens. This included decisions on overall priorities, choices for investment, and citizen assemblies. Through local meetings, citizens identified spending priorities and elected budget delegates to represent their communities. These delegates then developed specific proposals that were later approved by the citizens. The public was ultimately responsible for determining school budgets, housing project budgets, etc. Studies suggest that participatory budgeting can lead to more equitable public spending, increase public satisfaction over decisions taken, greater transparency and accountability, and improved livelihood. In the case of Porto Alegre, the initiative generated increased citizen participation (especially among marginalized groups). Since 1989, participatory budgeting has expanded to more than 1,000 municipalities across Latin America, Europe, Africa and Asia. 272 | P a g e External forms of participation. There are some Prerequisite Factors for Promoting Active forms of participation that occur outside a structured Citizenry: Advocacy and Participation in setting. These include external actors that carry out Decision Making policy mandates without government oversight or There are strong links between access to information involvement. This can include local natural resources and public participation. Participating in a management committees or water associations. meaningful way requires that citizens have adequate access to full documentation for a given project or The Citizen Watershed Monitoring Network in policy. (See chapter on citizen access to information). Monterey Bay California, started by the Ocean Establishing a robust information system will enable Conservancy, the Costal Watershed Council and the (and encourage) citizen involvement in decision Sanctuary‘s Water Quality Protection Program, serves making processes. Likewise, as the chapter on citizen as a forum for local citizen monitoring initiatives. The complaint highlights, citizens must also know that network empowers community citizens to become there is a mechanism set up for grievances. active stewards of the watershed by providing guidance and training for public data monitoring (for Local decision makers must be able to clearly identify example measuring water quality and sediment load what citizen input is needed and when in the process in streams). The network increases communication it is most useful. They should be specific about between citizens and local government authorities. defining the ―affected‖ public and not exclude Local authorities use information gathered by citizens disadvantaged groups. They must carefully assess in efforts to protect the watershed (Monterey Bay the power relationships at work. The most dominant Sanctuary Citizen Watershed Monitoring Network voice in the room should not be the most influential. Web site). Decision makers should also acknowledge the need for resources. In some cases, a public education There are significantly more opportunities for the program may be needed to provide sufficient public to participate in project level decisions. For background information on the subject being decision makers too, it is often easier to cultivate an discussed. Citizens should have a thorough active citizenry when projects are known to directly understanding on how their input will be used and affect those in the community. Some common ways to receive notification of the final decision. engage citizens at the local level include: EIA, citizen task forces; public meetings; workshops; questionnaires and interviews. Participation is not limited to the decision itself but continues into the implementation and monitoring stages of the project or policy. 273 | P a g e Advantages and Limitations of Promoting are supposed to represent the public on issues related Active Citizenry: Advocacy and to environmental policy. In practice however, they Participation in Decision Making have experienced difficulty in attracting participants to the meetings; cultivating technical expertise and It is important to note that even the most effective securing financial resources. Capacity and public participation has limits. It should never be a coordination are weak. The Technical Advisory substitute for equal and fair representation. Council, in particular, is dominated by the private Participation can reveal choices to be made, but sector. cannot be a substitute for the ballot. Not every person is able to participate in every decision and elected officials must be permitted to represent Interaction with other Tools and Possible constituencies. It is therefore important to engage the Substitutes public when they will be more likely to impact decisions. Extensive reliance on citizen input can also Opportunities for public participation at the strategic, undermine the responsibilities of legislative bodies planning or policy level are not as extensive. They whose role include checks and balances to other require more time and resources and the consultation executive bodies. Public participation itself cannot is often more comprehensive. However the result can provide accountability it can hold only officials lead to better broad policies that can positively affect accountable for decisions made. the implementation of specific projects. Tools such as Cumulative Impact Assessments (CIAs) and Strategic Public participation can also increase the Environmental Assessments (SEAs) are used to solicit representation of citizen interests in legislative stakeholder input in programs or plans. CIA can processes. It can increase public acceptance in new provide an entry point to initiate stakeholder laws or policies. However maintaining consistency in discussions, increase awareness and strengthen practice across regions and over time can be a institutional capacity and complement more challenge. More countries need guidelines at the conventional analyses. SEA‘s approach is more national level and procedures at the local level. upstream and its reach is broader addressing wider regional or sectoral impacts. All can result in more Finally, simply setting up mechanisms for strategic policies. participation will not necessarily guarantee a public voice in decision making. In the case of Colombia, NGOs are included in the boards of regional agencies (Autonomous Regional Corporations or CARs) and are included (along with members from academia) in formulating policy formulation as a part of the National Technical Advisory Council. Both groups 274 | P a g e Practical Examples of Promoting Active The SEA was prepared by the Indonesian National Citizenry: Advocacy and Participation in Development Planning Agency and a task force made Decision Making, and Lessons Learned up of multiple agency representatives (at various levels) working together. This created an opportunity Estonia. In 2001, Estonia launched the ―I Decide for greater policy considerations and horizontal Today‖ campaign to foster citizen participation. The accountability. The group held a series of successful E-government initiative enables Estonian Ministries public consultations at the national, provincial, to upload draft bills and amendments so that citizens district and local levels. Local facilitators and NGO‘s can review, comment and make proposals on the with expertise in environmental and social issues legislative process over a 14-day period. They can also were engaged. Representatives from different sectors respond to comments already submitted and provide in the reform process were also included. Benefits suggestion for additional amendments. At the close of and risks were discussed and alternative policy the commenting period, all remarks go back to the options were identified. Nearly all the environmental Ministry for review. Revised legislation is made risks that were identified were attributed to public and registered users of the system may vote in institutional and governance issues. support. While the system has not been as effective as hoped (not as many users as expected), it nonetheless At the end of the process, many of the suggestions encourages regular citizen participation and that were raised were incorporated into the final monitoring of national laws. design of the loan‘s reform agenda. The process also led to the introduction of participation in policy Indonesia. In the late 1990s, an SEA for a loan reform. The SEA experience led task force and sector adjustment in the water sector undertaken in agencies to include public consultation in future Indonesia resulted in a shift in the way public reforms. This signaled a major shift in the way public participation was used in policy reform. The pilot participation was viewed in shaping policy. SEA came at a time when the country‘s water sector was plagued with problems: very little interagency South Africa. In 2003, with support from the World coordination, poor accountability and lack of public Bank and Canadian CIDA, the Southern African participation in the face of rising water costs, Institute for Environmental Assessment (SAIEA) watershed degradation and increased water initiated a project to enhance democratic reform pollution. The aim was to address a broad set of through increased public participation in decision policy and institutional reforms in the water sector making processes. including the potential consequences of such reform and associated environmental risks. The assessment The Calabash Project is a research and civil society also prescribed mitigation and monitoring procedures capacity building program designed to increase the to reduce any adverse impacts. effectiveness and ability of civil society to participate 275 | P a g e in decisions that affect the environment. The instructions on how citizens may comment and program works with communities and regulators to procedures following the comment period (United identify opportunities for civil society involvement in Kingdom Environment Agency Web site). the environmental impact assessment (EIA) process. In its initial phase, the project engaged a core group of people identified as key levers of change in the References and Resources on Promoting region, developed a 30-person Advisory Team, Active Citizenry: Advocacy and published an assessment of participation and EIA in Participation in Decision Making the region that identified strengths and weaknesses Ahmed, K., and E. Sánchez-Triana, eds. 2008. Strategic and opportunities for improvement, and developed a Environmental Assessment for Policies: An communications strategy to broadcast results of the Instrument for Good Governance. Washington, DC: World Bank. program. Charles, A. 2004. “Estonia: The State of the E-State.� Baltic News. http://www.baltictimes.com/news/articles/1052 Calabash has also developed tools for integrating 2. environmental planning, assessment and Creighton, J. L. 2005. The Public Participation Handbook: Making Better Decisions Through Citizen management into community-driven development. Involvement. San Francisco: Jossey-Bass. These include: A Guide to Opportunities for Public Foti, J., L. de Silva, H. McGray, L. Shaffer, J. Talbot, and J. Werksman. 2008. Voice and Choice: Opening the Participation in Environmental Assessment in the Door to Environmental Democracy. Washington, DC: World Resources Institute. Southern Africa Development Community; Generic GDRC (Global Development Research Center), Public Participation Terms of Reference; and an “Participatory Monitoring and Evaluation,� http://www.gdrc.org/uem/e-mgmt/10.html. electronic library of public participation and civil Imparato, I., and J. Ruster. 2003. Slum Upgrading and society engagement (SAIEA Web site). Participation: Lessons from Latin America. Washington, DC: World Bank. Monterey Bay Sanctuary Citizen Watershed Monitoring Network, “Citizen Watershed Monitoring Network,� United Kingdom. The United Kingdom Environment http://montereybay.noaa.gov/monitoringnetwo Agency publishes environmental data through rk/welcome.html. NPPR (National Pollution Prevention Roundtable), ―What‘s in your backyard?‖ a GIS Internet based “National Pollution Prevention Roundtable,� portal for public consultation. The easy to use site http://www.p2.org. Petkova, E., C. Maurer, N. Henninger, and F. Irwin. 2002. details open and closed consultation periods, Closing the Gap: Information, Participation and provides a summary of the issue, links to relevant Justice in Decision-Making for the Environment. Washington, DC: World Resources Institute. documents, and provides a series of questions Pillai, P., and J. Mercier. 2007. “Learning from First- intended to guide responses. Questions such as ―Is it Generation Strategic Environmental Assessments Supported by the World Bank.� clear where you can find out about applications we Environment Department Paper, World Bank, receive for environmental permits?‖ and ―Do you Washington, DC. http://siteresources.worldbank.org/INTRANETEN agree with our proposal to advertise applications for VIRONMENT/Resources/SEA_Review_paper.pdf. environmental permits?‖ The site offers clear 276 | P a g e SAIEA (Southern African Institute for Environmental Env&Social-Responsibility.pdf. Assessment), “The Calabash Project: Reports and UNECE (United Nations Economic Commission for Europe), Outputs,� http://www.saiea.com/calabash/. “Introducing the Aarhus Convention,� Sánchez-Triana, E., K. Ahmed, and Y. Awe, eds. 2007. http://www.unece.org/env/pp/. Environmental Priorities and Poverty Reduction: United Kingdom Environment Agency, “What’s In Your A Country Environmental Analysis for Colombia. Backyard,� http://www.environment- Washington, DC: World Bank. agency.gov.uk/homeandleisure/37793.aspx. Shima, M. 2006. “Corporate Environmental and Social World Resources Institute. 2003. World Resources Report Responsibility in the East Asia and Pacific Region: 2002-2004: Decisions for the Earth: Balance, Review of Emerging Practice.� Discussion Paper, Voice and Power. Washington DC: World Bank Environment and Social Development and World Resources Institute; New York: UNDP; Department, East Asia and Pacific Region, World Nairobi: UNEP. Bank, Washington, DC. http://siteresources.worldbank.org/INTEAPREGT OPENVIRONMENT/Resources/Corporate- This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 277 | P a g e Promoting Active grievances relating to pollution. Citizenry: Public Description and Application of Promoting Access to Redress Active Citizenry: Public Access to Redress and Legal Recourse and Legal Public access to redress and legal recourse can be a Recourse powerful tool for pollution management, since it provides a means for individuals and organizations to access a country‘s justice system as a means to protecting the environment. Access to redress and Introduction legal recourse makes it possible for the public to hold decision makers in the public sector and those This Guidance Note presents tools that government in the private sector accountable for their actions. policy makers and leaders may use to engage citizens There are multiple approaches governments can use and promote public action on matters relating to for increasing public access to redress and legal pollution by providing public access to complaint recourse. These approaches include legal mechanisms, and by providing public access to legal frameworks (legislation and regulation), capacity recourse. Appropriate complaint mechanisms provide building, alternative dispute resolution, legal aid, the public with avenues for seeking redress of their citizen monitoring and enforcement, and  international networks. This guidance note was prepared by Linda Shaffer (Consultant). Peer reviewers included Alberto Ninio (Chief Counsel, LEGEN), Jeffrey Thindwa (Lead Specialist, WBISG), and Jose Zevallos (Senior Social Development Specialist, LCSSO). Additional comments and contributions were provided by Akiko Nishimae (Environmental Specialist, ENV), Ernesto Sanchez-Triana (Lead Prerequisite Factors for Promoting Active Environmental Specialist, SASDI), Fernando Loayza (Senior Citizenry: Public Access to Redress and Environmental Economist, ENV), Hocine Chalal (Regional Safeguards Advisor, MNACS), Jane Nishida (Senior Institutional Legal Recourse Specialist, SASDI), Jim Listorti (Consultant, FEU), Joseph Foti (World Resources Institute), Lesly Baesens (World Resources Governments can facilitate citizen access to justice Institute), Luiz Maurer (Senior Industry Specialist, AFTEG), Monika Kerdeman (World Resources Institute), Robert Gerrits (Social by establishing clear information and participation Development Specialist, CESI1), Sachiko Morita (Counsel, LEGEN), Sanjay Agarwal (Social Development Specialist, SDV), Tijen Arin laws that provide adequate legal grounds for (Senior Environmental Economist, ECSSD). Editorial assistance was provided by Stan Wanat (Consultant), Juliette Guantai (Program citizens seeking redress (see Guidance Notes on Assistant, ENV) and James Cantrell (Communication Analyst, ENV). citizen access to information and public The task team leaders for this product are Kulsum Ahmed (Lead Environment Specialist, ENV) and Helena Naber (Environmental participation for more information). Economist, ENV). The product was prepared under the guidance of the following World Bank Group management: James Warren Evans / Mary Barton-Dock (Directors, Environment Department, World Bank), Bilal Rahill (Senior Manager, IFC), and Frank Lysy / Programs that build the capacity of officials, judges, Ravi Vish (Director, MIGA). and citizens to effectively use complaint 278 | P a g e mechanisms and legal recourse can bolster citizen Advantages and Limitations of Promoting involvement. Governments can also expand the Active Citizenry: Public Access to Redress processes used for redress to include administrative and Legal Recourse courts and alternative dispute mechanisms. The ability of citizens to seek redress or challenge Government-sponsored legal aid also helps defer decisions is a fundamental element of good the costs for citizens and groups to lodge a environmental governance. Box 1 identifies the complaint. foundational components for public access to redress and legal recourse. Public access to redress Comprehensive systems providing access to and legal recourse allows citizens to protect their information and public participation are most rights to information and participation, and to effective when citizens and government officials dispute decisions that do not take the interests of the (administrative, legislative, and judicial) have a community into account. When citizens are able to thorough understanding of the laws and its practice. hold decision makers accountable with regard to environmental decisions, the monitoring and Rule of law is a fundamental requirement to ensure enforcement of regulations is enhanced, the interests public access to legal recourse institutions. In the of underrepresented stakeholders are better absence of rule of law, seeking legal recourse lacks protected, and disputes over natural resources are legitimacy and dissuades active citizenry. more likely to be resolved. In many countries, citizens encounter barriers when Box 1. Access to Redress and Legal Recourse they try to access administrative and judicial Awareness of legal rights proceedings. Among the barriers that citizens + encounter are the following: Understanding of procedures and processes + • lack of awareness of legal rights and Timeliness of claims processing + remedies; Reasonable costs in litigation • lack of understanding of the processes for + Accessibility of courts engaging the system; + • significant delays in the processing of claims; Ability to bring a case to court (standing) • high costs of litigation; • geographic location and physical accessibility of the courts, especially if a case is sent to the country‘s high court; and • lack of ability to bring cases to court or lack of standing. 279 | P a g e Interaction with Other Tools and Possible Substitutes Legal frameworks. Legal frameworks include laws and regulations. In the context of promoting active Policy tools relating to public access to information, citizenry as a tool for pollution management, two and policy tools relating to public advocacy and important examples are freedom of information participation in decision making, are the tools that legislation (Freedom of Information Act, FOIA) and most interact with public access to redress and legal Environmental Impact Assessment (EIA) recourse (see Guidance Note on public access to regulations. For further information, see the information and Guidance Note on public advocacy Guidance Note on promoting active citizenry: public and participation in decision making). access to information and the Guidance Note on Conventions such as Aarhus (UNECE 2006) and environmental impact assessment. global mechanisms such as the World Bank Inspection Panel (see World Bank Inspection Panel Building capacity for government and citizens. Web site) are especially important in resolving Many governments are investing in public trans-boundary pollution cases. These instruments education programs and judicial training to build encourage harmonization of policies and practices their government‘s capacity to provide access and among countries, and provide a forum for global encourage citizens to demand it. Latvia recently citizens seeking justice. established a program to train judges on implementing national access laws (see box 2). Collaborating with civil society organizations can Practical Examples of Promoting Active increase the reach of these programs and the Citizenry: Public Access to Redress and expertise used to develop them. Legal Recourse, and Lessons Learned Figure 1 identifies approaches to redress and recourse, and provides examples of the approaches. Figure 11. Types of Approaches with Examples to Redress and Recourse Redress & Legal Recourse Legal frameworks FOIA, EIA, etc Capacity building for government and Latvia judges training citizens Ghana Judicial Alternative Dispute Resolution Services Legal aid Australia EDO Chemical Weapons Citizen monitoring and enforcement Working Group International networks ELAW 280 | P a g e direct means to address and resolve disputes. It also helps alleviate backlogs in the courts and increases Box 2. Training for Judges in Latvia access to justice for poor and vulnerable communities (see ADR Center Web site). In 2008, the Latvian Ministry of Environment, the Aarhus Convention Bureau, and the non-governmental organization REC-Latvia jointly hosted a “Constitutional In Ghana, ADR is a part of the adjudicating process and Administrative Courts Judges Capacity-Building of the Judicial Service of Ghana and available to Seminar� for 35 judges from three different Latvian parties who file cases in the court. In the first two courts: Constitutional, Administrative, and Supreme. The event reinforced specific roles for judges implementing years of the program, more than 151 mediators were access laws in the country. Programs like this can trained and assigned to 41 district courts throughout harmonize implementation of laws and encourage public Ghana. Of the cases referred to mediation in these access to justice. courts, approximately half were successfully The Ecuadoran Center for Environmental Law resolved. Today the program is expanding to all (CEDA, Centro Ecuatoriano de Derecho Ambiental; district, circuit, and high courts (see Judicial Service see Cárdenas 2006) is a nonprofit organization of Ghana Web site). established in 1996 by lawyers with the goal of promoting national and international legislation as a The Alternative Dispute Resolution Center at the means to protect the environment. The group has International Law Institute (ILI) offers seminars in led many capacity-building workshops throughout mediation and arbitration law and practice for Ecuador, training more than 2,500 representatives government officials, lawyers, judges, and the from civil society, academia, and central and local private sector. It also offers a program in governments on access to justice (Cárdenas 2006). international commercial arbitration at its center in The group also reviews litigation cases where citizen Uganda and has trained mediators and arbitrators in access rights have been denied and drafts policy Chile, Egypt, Ghana, Kenya, Nigeria, and Turkey. recommendations to government. Groups like The group has also advised lawyers and CEDA help ensure that citizens are aware of their government officials on the drafting of laws and rights and have access to legal recourse, which has ADR mechanisms in Armenia, Bulgaria, and the resulted in a more active community. Republic of Georgia. Legal aid. In many countries, the high cost of Alternative dispute resolution (ADR). ADR is a representation is a barrier to citizen participation in means, outside the formal legal system, for resolving the legal system. Legal aid programs help ensure disputes. It can include negotiation, mediation, more equitable public access to justice regardless of neutral evaluation, and arbitration. For citizens, the economic status of those involved. Public ADR is often an affordable, accessible, and faster interest organizations often provide legal services means for resolving disputes between parties. For free or at reduced cost. Governments can provide governments, ADR offers an equitable, flexible, and 281 | P a g e incentives for attorneys who participate in these improved industry compliance with environmental programs. Such incentives include tax breaks, laws. These groups also alert government to subsidies for services, expense waivers, or attorney possible violations of law and potential threats to compensation after a trial. public health. This is especially true in the case of Pollutant Release and Transfer Registers (PRTRs) Earthjustice, formerly called Sierra Club Legal and other public disclosure schemes that are Defense Fund, is a nonprofit public interest law firm addressed in the Guidance Note on citizen access to dedicated to defending citizens‘ rights to a healthy information. environment. Earthjustice monitors US environmental law, and this organization challenges In some countries, like Estonia, governments have authorities who fail to enforce the laws and contracted citizen groups to assist in local inspection industries that break them. Earthjustice works on efforts. These contracted ―public inspectors‖ behalf of local communities and environmental monitor compliance with laws, regulations, and groups, providing free legal services (see permits relating to hunting, fishing, and forestry, Earthjustice Web site). and document any violations they encounter. In Poland, the Nature Protection Guard is comprised of Australian Network of Environment Defender‘s citizens who have powers similar to forest rangers. Offices (ANEDO) provides legal services and They enforce local conservation laws and have the environmental education directly to communities right to ticket violators and impose fines. Article 16 that would otherwise not have access to such of the Mexico Constitution grants citizens the right services. In 2006, ANEDO established an Indigenous to arrest any person caught in the act of committing Engagement Officer position to provide free legal an offense. support for indigenous communities. In 2008, the group defended critical water rights for indigenous The Chemical Weapons Working Group (CWWG) is populations and raised concerns over the lack of an international coalition comprised of citizens who participation of these communities in consultations live near one of nine storage sites for chemical for the nation‘s Water Amendment Bill. weapons in the United States, Russia, and the Pacific. The group opposes incineration of chemical Citizen monitoring and enforcement. A well- weapons and works with policy makers to ensure informed and active public leads to increased safe disposal of these munitions, and of other demand for transparency and accountability on the chemical warfare and toxic materials. As part of decision makers in government and industry. governments comply with international obligations The result is better enforcement of environmental to dispose of chemical weapons, CWWG works to laws and policies. Through independent monitoring, ensure that this is done safely and in a transparent citizen groups involved in monitoring and manner. In 1996, CWWG successfully convinced the enforcement elevate citizen voices and help ensure Pentagon and Congress to use $300 million dollars 282 | P a g e for the safe disposal of more than 880,000 chemical acknowledgement of the negative health impacts of weapons in the US. pollution and a commitment to relocate citizens who were exposed to toxins. See box 3. Box 3: Protecting Citizens from Pollution Started in 1989 by a handful of lawyers, Environmental Law Alliance Worldwide (ELAW) now connects more than 300 public interest advocates across 60 countries. The network promotes effective environmental protection through law using common strategies and shared legal and scientific experiences. Partners work with citizens to challenge environmental abuses, strengthen environmental laws, and build local capacity to defend the environment. In 2005, ELAW US helped win an important ruling from the European Court of Human Rights on pollution-related illnesses. The group presented compelling scientific evidence showing that Nadezhda Fadeyeva, a Russian citizen who lived near the Severstal steel plant, suffered serious health problems as a direct result of the plant’s toxic emissions. The court ruled that the factory’s pollution violated Mrs. Fadeyeva’s human rights and ordered the Russian government to uphold its 1965 commitment to relocate citizens living in the “security zone� around the plant. The case reaffirmed that people have a human right to live free from toxic pollution and opened the door for more citizens to pursue justice. International networks. The rapid growth of environmental civil society organizations in recent Sometimes, groups act on behalf of citizens, without years has led to a rise in international networks, any broad public mandates. In India in the 1990s, partnerships, and collaborative efforts across two Civil Society Organizations (CSOs) brought borders. Armed with modern technology and public interest lawsuits that compelled the expertise, these groups help promote citizen government to enforce, and be accountable to, legal engagement in environmental legal matters. New requirements regulating air pollution. The CSOs technological tools like Facebook and Twitter help were highly successful in their pursuits; however, groups to connect with citizens and to share up-to- the groups themselves did not represent the date information at an unprecedented rate. Some opinions of the broader public. Both groups were groups are formal organizations, while others are ad self-appointed to protect the interests of the public, hoc. Some exist outside the state, while others may but neither had any mandate nor any groundswell have quasi-state status. of public support. Essentially, they were small elite organizations, and local citizens were informed of International networks can be useful instruments in the lawsuits rather than involved in them. advocacy for citizens‘ rights to live in a healthy environment. In the case of Nadezhda Fadeyeva, Table 1 presents a summary of means to promote efforts by the Environmental Law Alliance active citizenry through public access to redress and Worldwide (ELAW) resulted in government legal recourse. 283 | P a g e Table 1. Summary of Means for Promoting Active Citizenry through Redress and Legal Recourse Category / Resources Example Description Application Pros Cons Good practice Legal FOIA, EIA Laws that National, Legally binding, Laws can be Laws should provide frameworks guarantee provincial, and enforceable right to weak, lack citizens adequate the public's regional levels. legal redress. administrative grounds for redress and www.greenla right to rules and include administrative w.org participate in operational rules, operational decision- policies. Wide policies. making. exemptions. Capacity Training Initiatives to Workshops, Ensures broad Can take time to Government building for programs enhance certificate implementation of laws, design, partnership with civil government for government programs. wide use by citizens. implement. society organizations and citizens judges officials’ Significant start- and universities to ability to up costs. create and implement www.ecolex- implement programs. ec.org laws and build citizen awareness of rights. Alternative Ghana Means to Includes An affordable, accessible No "checks and ADR has wide public dispute Judicial resolve negotiation, and faster means for balances", acceptance and resolution Services; conflict mediation, resolving disputes. sometimes used government support. Alternati outside the neutral evaluation Alleviates court by people who Sufficient funds, www.adrcen ve formal legal and arbitration. backlogs, increases are not trained in training and evaluation ter.com/inter Dispute system. access to justice for the collection of provided. Voluntary, national/adr- Resolutio poor. evidence. Non- flexible and access-to- n Center traditional expeditious. justice.html approach may be inappropriate for some cases. Legal aid Australia Programs or Free legal Citizens are able to Increase in legal Aid reaches those most EDO; groups that services, exercise right to legal cases contributing in need of services. http://www. Earthjusti provide low- government recourse regardless of to backlog in Administrative and edo.org.au ce; cost or free incentives (tax financial stature. courts. court fees are not governm legal breaks, subsidies) barriers to justice. ent assistance to for participating Independent legal programs citizens. attorneys. representation is available, accessible. Citizen Chemical Programs or Informed citizens Enhances industry Can be viewed as Mutually beneficial monitoring Weapons groups that alert government accountability, threatening to relationships between and Working monitor laws of possible transparency. Alerts industry and citizen groups, industry enforcement Group and inform violations of law. authorities to public government. and government. citizens of health threats, early Collective support. http://www. policies and warning. cwwg.org/Lin industry ks.html compliance. International ELAW Partnerships Some groups are Rapid learning across Groups may act Action based on networks that promote formal different legal systems, on behalf of common strategies and citizen organizations and countries. Emergence of citizens without shared legal and www.elaw.or engagement others are ad hoc. international best any broad public scientific experiences. g in legal Some have quasi- practice. Ability to mandate. Broad public support. matters. state status. mobilize large stakeholder groups. 284 | P a g e References and Resources on Promoting http://www.ibcperu.org/doc/isis/11311.pd f Active Citizenry: Public Access to Redress CWWG (Chemical Weapons Working Group). and Legal Recourse ―Chemical Weapons Working Group,‖ Chemical Weapons Working Group, http://www.cwwg.org/index.html Access Initiative, www.accessinitiative.org Earthjustice, ―About Us,‖ Earthjustice, –––––––, ―Diagnostic Toolkit,‖ http://www.earthjustice.org http://accessinitiative.info/ ELAW (Environmental Law Alliance Worldwide). ADR Center, ―ADR and Access to Justice,‖ ADR 2005. Impact Newsletter. Eugene, OR: Center, ELAW. http://www.adrcenter.com/international/a –––––––. www.elaw.org/ dr-access-to-justice.html. Foti, J., with L. de Silva, H. McGray, L. Shaffer, J. Ahmed, K., and E. Sánchez-Triana, eds. 2008. Strategic Environmental Assessment for Policies: An Talbot, and J. Werksman. 2008. Voice and Choice: Opening the Door to Environmental Instrument for Good Governance. Washington, Democracy. Washington, DC: World DC: World Bank. Resources Institute. ANEDO (Australian Network of Environmental Futrell, S. ―The Evolving Role of Citizens in Defender‘s Offices). 2008. Submission to the Senate Rural and Regional Affairs and Transport Environmental Enforcement‖. Committee Inquiry into the Water Amendment Environmental Law Institute. Bill 2008. Canberra: ANEDO. http://www.inece.org/4thvol1/futrell.pdf http://www.edo.org.au/edonq/images/sto Henninger, N., E. Petkova, C. Maurer, and F. Irwin, ries/law_reform_submissions/20082009/su with J. Coyle and G. Hoff. 2002. Closing the bmission_on_the_draft_water_amendment_ Gap: Information, Participation and Justice in Decision-Making for the Environment. bill_2008_anedo_-_7_november_2008.pdf. Washington, DC: World Resources Institute. Angula, K. A. 2008. ―Partakers or Spectators? An International Environmental Law Research Centre, Analysis of Civil Society Participation in the http://www.ielrc.org/content/n0401.htm Formulation of Environmental Policy and Judicial Service of Ghana, ―Court-Connected ADR- Legislation in Uganda.‖ University of Enhancing Access to Justice in Our Pretoria. Communities,‖ Judicial Service of Ghana, http://repository.up.ac.za/dspace/bitstrea http://www.judicial.gov.gh/index.php?opti m/2263/7946/1/angula.pdf. on=com_content&task=view&id=141&Itemi Bonine, J. 1998. Doors to Democracy. Current Trends d=158 and Practices in Public Participation in Muralidhar, S. 2003. ―Alternative Dispute Resolution Environmental Decision Making in Central and Problems of Access to Justice.‖ Nairobi, and Eastern Europe. Szentendre, Hungary: Kenya: IELRC (International Environmental REC (Regional Environmental Center). Law Research Centre). http://archive.rec.org/REC/Publications/P http://www.ielrc.org/content/n0401.htm PDoors/CEE/cover.html UNDP (United Nations Development Programme). –––––––. 2009. ―Best Practices-Access to Justice.‖ 2004. Access to Justice Practice Note. New World Resources Institute. York: UNDP. http://www.accessinitiative.org/resource/b http://www.undp.org/governance/docs/J est-practices%E2%80%94access- ustice_PN_En.pdf justice%EF%80%AA. –––––––. 2008. Legal Empowerment of the Poor: Canadian Environmental Law Association. 2005. Access to Justice and Protecting Environmental Making the Law Work for Everyone. New Rights. CELA Annual Report. York: UNDP. http://www.cela.ca/article/access-justice- http://www.undp.org/legalempowerment and-protecting-environmental-rights /report/Making_the_Law_Work_for_Every Cárdenas, C. 2006. ―Manual de capacitación 3: acceso one.pdf a la justicia ambiental.‖ Centro Ecuatoriano UNECE (United Nations Economic Commission for de Derecho Ambiental. Europe). 2006. Your Right to a Healthy Environment: A Simplified Guide to the 285 | P a g e Aarhus Convention on Access to K:64132057~pagePK:64130364~piPK:6413205 Information, Public Participation in 6~theSitePK:380794,00.html Decision-making and Access to Justice in WRI (World Resources Institute). 2003. World Environmental Matters. Geneva: UNECE. Resources Report 2002-2004: Decisions for the World Bank Inspection Panel. Earth: Balance, Voice and Power. Washington http://web.worldbank.org/WBSITE/EXTE DC: UNDP, UNEP, World Bank, and WRI. RNAL/EXTINSPECTIONPANEL/0,,menuP This guidance note is part of World Bank Group publication: Getting to Green—A Sourcebook of Pollution Management Policy Tools for Growth and Competitiveness, available online at www.worldbank.org 286 | P a g e The World Bank Group 1818 H Street, NW Washington, D.C. 20433 USA Tel: 202-473-1000 Fax: 202-477-6391 Internet: www.worldbank.org