case study: key findings from country studies on environmental safeguards

8/3/2019 Case Study: Key Findings From Country Studies on Environmental Safeguards

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KEY FINDINGS FROM

COUNTRY STUDIES

Case Studies from the 2006 Special EvaluationStudy on Environmental Safeguards

July 2007

C. C. Yu

Operations Evaluation Department


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AbbreviationsADB Asian Development BankADF Asian Development FundDBP Development Bank of the PhilippinesDENR Department of Environment and Natural ResourcesEA executing agencyECA environmentally critical areaECC environmental compliance certificateEIA environmental impact assessmentEIS environment impact statementEMP environmental management planEPB environmental protection bureauGIS geographical information systemIEE initial environmental examination

INRM Indian Resident MissionJAES Jilin Academy of Environmental SciencesLGU local government unitMOEF Ministry of Environment and Forests ConservationNHAI National Highway Authority of IndiaOCR ordinary capital resourcesOEM Operations Evaluation MissionPOWERGRID Power Grid Corporation of India LimitedPPTA project preparatory technical assistancePRC Peoples Republic of ChinaSDP sector development program

SEIASEPA State Environmental Protection AdministrationSIEE Summary Initial Environmental ExaminationTA technical assistanceTRANSCO Transmission Commission

Weights and Measures

Km kilometerkV kilovolt

Note

In this report, $ refers to US dollars.


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Contents

Page

I. The Philippines 1

II. India 6

III. Peoples Republic of China 12

IV. Viet Nam 20


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I. The Philippines

1. The Philippines was the Asian Development Banks (ADB) eighth largestborrower over the decade between 1996 and 2005, averaging $270 million per year or

4.7% of ADBs lending total. It was the first of the four countries visited by theOperations Evaluation Mission (OEM) and, in a sense, served as a testing ground forthe study methodology. Four projects were selected, including one on energy, one ontransport, and two sector loans for urban development.

2. All 18 projects approved for the Philippines since 1997 were Category B projects,including the four projects included in the study.

1. Inv 7162/1769: Manila North Tollways Corporation

3. The project, approved in October 2000, was partly financed by a combined loan

of $70 million through ADBs private sector investment facility. It involved therehabilitation and expansion of 82.6 kilometers (km) of the North Luzon Expresswayfrom Manila to the Clark Special Economic Zone.

4. The project had a B category in both the governments and ADBs classification.This was deemed appropriate based on the governments standard that the roadrehabilitated does not go through an environmentally critical area (ECA). ADBs initialclassification of the project was A, but it agreed to downgrade to B based on theborrowers argument that the project did not require any additional right-of-way. Asimplemented, the project entailed a 46% increase in lane-kilometers, compared with theold road, due to the construction of additional lanes. The potential adverse impact of the

project could be significant, and its specific environmental impact would depend largelyon actual environmental measures, e.g., where the fill materials would be obtained andhow the spoil sites would be managed.

5. The Summary Initial Environmental Examination (SIEE),prepared by consultants engaged by the borrower based on theoriginal initial environmental examination (IEE), was detailed andinformative compared with SIEEs in general. ADB providedcomments on data gaps including noise and pollution due toincreased traffic volume and monitoring of environmentalcompliance. The borrower created a Quality, Environment, Safety

and Health Division to ensure corporate-wide environmental compliance. As required byloan covenants, an independent environmental consultant was engaged by the ManilaNorth Tollways Corporation (MNTC) to conduct quarterly monitoring during constructionof the implementation of environmental mitigating measures and to address newenvironmental issues/problems as they emerged. The contractors could draw moneyonly for work completed with a certificate from the environmental consultant onenvironmental compliance. The environmental management plan (EMP) as part of theSIEE was revised and updated to include site-specific (unanticipated) mitigating


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2 Special Evaluation Study on Environmental Safeguards: Key Findings from Country Studies

measures during project implementation and operations. Among observed site-specificunanticipated impacts were (i) poor drainage due to clogged culverts, which might leadto flooding of adjacent areas; (ii) impeded water flow along natural waterways due tosiltation and eutrophication; (iii) unsightly mounds of construction spoils and other solidwastes along roadsides; and (iv) poor aesthetics due to inadequate reforestation

program.

6. Overall, ADB, as one of the financiers, appears to have provided important valueadded to impact assessment and environmental monitoring and management throughrequiring the engagement of an independent environmental consultant for projectappraisal and supervision. ADBs appraisal provided significant inputs to the design andimplementation of the project, e.g., inclusion of a health and safety plan, and inclusionof the monitoring of oil, grease, and noise into the EMP. ADB also required the borrowerto comply with international standards (emissions), i.e., the standards specified in theWorld Banks Pollution Prevention and Abatement Handbook. However, in the actualimplementation, as shown in the borrowers self-monitoring reports, parameters were

assessed against local or Department of Environment and Natural Resources (DENR)standards, which are not consistent (slightly lower/higher in some parameters) with theWorld Bank standards.

2. Loan 1984: Electricity Market and Transmission DevelopmentProject

7. The project, approved in December 2002, was partly financed through a loan of$40 million from ADBs ordinary capital resources (OCR). It aimed to develop thenecessary infrastructure for power sector restructuring. Part of the project involvedupgrading the Luzon transmission grid of 230 kilovolt (kV) lines and expanding theMindanao substations. It had an environmental category B, and an IEE wasundertaken.

8. Under the Philippine system, a transmission project of 230 kV or above and morethan 20 km long that does not go through an ECA is classified as B. However, a 1982Presidential Decree provides exemption for projects operating prior to 1982. In thiscase, the existing Luzon transmission line for upgrading, being operational since 1956,was therefore exempted from securing an environmental compliance certificate (ECC),or the transmission line components were classified as category D, for which aCertificate of Non-coverage was issued based on a Presidential Decree submitted bythe executing agency (EA), the then National Power Corporation. All Mindanaosubstations, falling under category C of the environmental impact statement (EIS)system for expansion, have secured ECCs based on PDs. Under ADBs system, theproject was classified as category B, and an SIEE was prepared (there was an IEEdocument; however, this is no longer available) and submitted to ADB.

9. The SIEE was prepared by the Environment Management Department ofNational Power Corporation and is of good quality. The Division (currently under theTransmission Corporation or TRANSCO) has 14 staff who are experienced in


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Special Evaluation Study on Environmental Safeguards: Key Findings from Country Studies 3

environmental assessment and monitoring for power transmission projects. However,ADB did not appear to have any substantial inputs or value added. This is partlybecause NPC had strong capacities and was mostly meeting DENRs requirementsrather than the requirements of ADB except for the SIEE. ADB did not haveenvironmental specialists or consultants as part of the fact-finding, appraisal, or loan

review missions.

10. The site visits confirmed that TRANSCO, which is ISO14000 certified, has a well-designed environmental management system in place that follows international bestpractices. The OEM was introduced to another project, the Leyte-Cebu TransmissionProject, financed by the Japan Bank for International Cooperation1 and thegovernments own resources with no ADB involvement. The project, which involvedconstruction of submarine transmission cables, demonstrated TRANSCOs strongcapacities and commitment to environmental safeguard. For example, to protect thecoral along the corridor, it engaged a group of biologists/divers to transplant the coralsto other locations nearby, as required by the conditions imposed by DENRs ECC, at a

substantial cost.

11. Overall, ADBs value added in environmental safeguard and enhancement in thisproject was limited. This was largely because of TRANSCOs own strong capacities andthe governments safeguard procedures.

3. Loan 1843: Mindanao Basic Urban Services Sector Project

12. The project, approved in September 2001, was partly financed with a sector loanof $30 million from ADBs OCR through the Land Bank of the Philippines. It aimed toimprove basic urban infrastructure and essential municipal services in about 40 urbanlocal government units (LGUs) throughout Mindanao. It involved building basic physicalinfrastructure covering water supply, sanitation, drainage, flood control, solid wastemanagement, urban roads, bridges, public markets, and other public facilities.

13. The project was assigned an environmental category B, and an IEE for theproject was undertaken as part of the project preparatory technical assistance (PPTA)based on ADBs Guidelines for Environmental Assessment for Sector Loans. IndividualIEEs were also prepared for three core subprojects that are likely to be representative ofthe types of components. The IEE and the SIEE prepared during the PPTA includedcomprehensive and significant data and analysis of the project and its potentialenvironmental impacts. However, the SIEE was not included as a core appendix in thereport and recommendation of the President but as a supplementary appendix onlyavailable on request. Subsequent IEEs were implemented by proponents, mostly LGUofficers/staff delegated in the Engineering/Planning offices, some of whom trained underthe technical assistance (TA) of the capacity-building component of this project.

1According to Transmission Commission officials, Japan Bank for International Cooperation required environmentalmonitoring but no environmental impact assessment. The project relied entirely on the governments ownenvironmental safeguard procedures.


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Reviews of samples of these succeeding IEE documents showed some deficiencies inanalysis.14. ADB was to undertake an assessment of the legislative and institutionalframework within which subprojects were to be implemented, to ensure that these werein accord with ADBs environmental assessment policies and in order to identify any

necessary strengthening measures. As the project included a large number of smallcomponent projects (under the predetermined free limit), it was deemed desirable to bescreened, approved, and monitored using existing DENR laws, procedures, andinstitutional resources. This was also consistent with the project objective of increasingthe self-reliance of LGUs and strengthening all levels of government capacity insubproject preparation, appraisal, approval, implementation, and monitoring. So far,ADB appears to have delegated most of the appraising and approving tasks to LGUs,and the delegation of such authorities does not seem to be based on a soundassessment of local capacities as envisaged at appraisal. For example, the responsibleLGUs have approved a number of subprojects without definite schedule and resourcesto ensure that supplemental infrastructure is in place prior to their completion and

operation. The public markets in Makilala and Ozamis Cities are under way, eventhough these LGUs have inadequate facilities for solid waste disposal. The Ozamis Citypublic market will be relocating some 1,000 vendors to a temporary site that will not belarge enough to accommodate all the vendors.

15. On monitoring of the implementation of the EMP as part of the IEE submitted toDENR, the EA or the LGU is responsible for the direct supervision of subprojectimplementation and monitoring of subproject operations and performance. ADB issupposed to review the execution of subprojects on a selective basis, but, in reality, ithas carried out little checking. Of all four subprojects visited, none of the responsibleDENR regional offices has yet to conduct any monitoring, either.

16. The sector loan has an environmental category B, and it is not permissible tofinance any environmentally sensitive subprojects. One of the subprojects currentlyunder preparation to be financed by the loan is a landfill site. Under Philippineregulations, landfill sites beyond 10 hectares are classified as A, for which a full EIS isrequired. The subproject landfill site is under that limit and therefore is classified as B.However, depending on future needs, there is a plan to build three phases of the landfillsite, which together will exceed the limit for category B. This example highlights theneed to adopt a conservative principle for determining environmental categories bylooking at the future cumulative impact and entirety of the projects rather than individualsubprojects.

17. Overall, ADB has not provided as much value added as envisaged at loanappraisal in terms of strengthening local capacities for appraising and approvingsubprojects environmental impacts. Monitoring by DENR and ADB is inadequate.However, despite the aforementioned deficiencies, field visits by the OEM indicated thatADB-funded subprojects have generally adopted better safety and environmentalmeasures during construction compared with similar types of projects funded by thegovernments own resources.


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4. Loan 2063: Development of Poor Urban Communities SectorProject

18. The sector project, approved in December 2003, was partly financed through aloan of $30.5 million from ADBs OCR, administered with the Development Bank of the

Philippines (DBP) as an intermediary financing agency It aims to increase the supply ofappropriate and affordable shelter with secure tenure for the urban poor, improve theurban poors quality of life, and strengthen the capability and capacity of shelter sectorinstitutions. The project covers three components: (i) site development and distributionof secure tenure, (ii) shelter finance provision, and (iii) capacity building andimplementation support. It aims to benefit poor communities in the 73 cities and 103first-class municipalities outside Metro Manila.

19. The project is classified as an environmental category B. However, a fullenvironmental impact assessment (EIA) was conducted during the PPTA, whichincluded six core subprojects. An SIEE (as the project was eventually classified as B)

was prepared based on the EIA report, and its quality is highly satisfactory. It identifiedserious environmental risks associated with three sites proposed for the housingdevelopment subprojects. These sites selected included steep slopes, which are highlyvulnerable for erosion and landslides; a former city dump, which would expose thefuture residents to some serious health and environmental risks; and a site (for citycenter upgrade) that is flood prone. For the first subproject, the SIEEs recommendedhaving strict control of slopes of maximum 30% and other erosion control measures. Forthe second subproject, the SIEE recommended dropping the former dumpsite andopting for a new site along Purok Riverside. For the third subproject, the SIEErecommended indefinite deferral until the flood issue is addressed on a larger scale.The OEMs interviews with DBP confirmed that all three subprojects were latercancelled, largely because of the environmental risks/concerns raised in the SIEEs.

20. Interviews with DBP officials and the environmental consultant engaged underADBs technical assistance for project supervision indicated that environmental andsocial considerations have been integrated into project design and implementation forthe subprojects, in terms of site selection, and environment-friendly designs of thehousing projects. ADB has had clear value added in (i) environmental impactassessment, i.e., both in terms of helping to identify the environmental risks associatedwith the core subprojects and assisting IEE preparation by LGUs for succeedingsubprojects; (ii) monitoring and implementation; and (iii) capacity building forbeneficiaries (LGUs and local communities) through knowledge transfer. In particular,the provision of a project supervision TA, which includes an environmental consultant,has played a vital role all three areas. A further point is that, although ADBs ownsafeguard requirements are limited with respect to this particular project, ADBsparticipation in the project is helping DBP and the borrowers (LGUs) better enforce thegovernments own environmental safeguard regulations. This is being achieved mainlythrough (i) more resources allocated for monitoring and supervision, and (ii) reduction ofpotential corruption that otherwise may exist in the money for ECC deals.


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5. Summary of Philippine Case Studies

21. Several key points emerge from the Philippine case studies. Over the years andwith the assistance of various development partners, the Philippines has developed acomprehensive environmental safeguard system that is tailored to the countrys needs.

There are high procedural commonalities between ADBs and the Philippinesenvironmental safeguard systems. Generally, the Philippines and ADBs projectenvironmental categorization systems provide similar divisions in each category,according to the nature and scale of a project. Both systems (i) have similarenvironmental assessment requirements for the same or similar category of projects;and (ii) recognize the need for open and proactive public communications throughconsultations and information dissemination to promote social acceptability of projectsand foster participatory development, e.g., consultations prior to project implementationare required under both systems. A unique aspect of the Philippines projectenvironmental categorization is that it has a separate category for environmentalimprovement.

22. However, DENR is severely constrained in EIS reviewand monitoring capacities. For two of the four projectsreviewed, ADB has provided for third-party monitoring oncompliance of mitigating measures and environmentalimpacts during construction. This has had a positive impacton the environmental performance and quality of the projects.For the remaining projects, ADBs value added was limited.Overall, ADBs future assistance for the Philippines withrespect to environment should particularly focus on improvingthe local monitoring and implementing capacities to helpenforce the governments own environmental protectionpolicies and laws rather than having a separate set ofprocedural requirements. Such assistance can be both at theproject level, through introducing monitoring mechanisms forADB-funded projects, and at the sector level, throughprovision of technical and other assistance.

II. India

23. India is currently ADBs second largest borrowing country after the Peoples

Republic of China (PRC), averaging $885 million per year over the last decade or15.4% of ADBs total lending. However, its environmental portfolio is surprisinglysmall. Between 1997 and May 2006, 44 environmental category A and B projects wereapproved, but only one of them was category A.

24. The four projects selected are all environmental category B. The only category Aproject, LPG Pipeline Project, since 1997 has been completed and was not selected forthe case studies.

ADBs future assistance

for the Philippines withrespect to environmentshould particularly focuson improving the localmonitoring andimplementing capacities

to help enforce thegovernments ownenvironmental protection

policies and laws ratherthan having a separateset of procedural

requirements.


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1. Loan 1944-IND: East-West Corridor Project

25. The project, approved in November 2002, was partly financed with a loan of $320million from ADBs OCR. It aimed to reduce the capacity constraint on the East-WestCorridor through rehabilitating and widening two-lane highways totaling 468.3 km to

dual two-lane carriageways (four lanes) with various road safety features.

26. The main reason cited for the B classification, as with many other ADB-supportedprojects in India, was that it was a rehabilitation of an existing road, and no additionalright-of-way was needed. However, this justification may have overlooked a crucial factthat the main environmental impact of road projects may occur offsite, in quarries andspoils sites. Whether it is an existing right-of-way or not often matters much less thanexpected when it comes to offsite environmental impacts.

27. An IEE was prepared by a domestic consulting firm, and the SIEE was preparedbased on the IEE. For a $320 million loan with potentially serious significant

environmental impacts, the 3-page SIEE is vague and does not contain any quantitativeassessment of the type, magnitude, or location of possible adverse impact. Instead, itconsists of mostly general and motherhood statements on type of impact, e.g., noise,dust, construction wastes, and mitigating methods, but fails to highlight specific keyissues that might face each subproject or segment of the roads. The SIEE does notinclude an EMP specifying the type of impact and mitigating measures, and theresponsible parties for implementing and monitoring the mitigating measures.

28. The OEM did not have an opportunity to visit the project sites but held an in-depth discussion with the EA for the project, National Highways Authority of India(NHAI), with respect to environmental safeguard measures and ADBs value added onenvironmental safeguards and enhancement for roads projects in its administration ingeneral (not confined to this particular project). Generally, the NHAI officials interviewedsuggested that India has a stringent environmental safeguard system, perhaps evenmore so than the ADB system. The official mentioned that ADB has pursued a strategyof avoiding sensitive subprojects by picking only those sections of roads that can beclassified as B under the ADB classification system. In some cases, this even led tothe situation where ADB would finance road sections only going in and coming out of asanctuary, leaving the sections within the sanctuary to NHAIs own financing.2 This ismainly based on the consideration that more environmentally sensitive roads orsections of roads would take 1-2 years to get environmental clearance from the Ministryof Environment and Forests Conservation, which would cause excessive delays forADB-financed projects, entailing higher commitment charges.3

2The Operations Evaluation Mission learned that, under ADB Loan 2019: National Highway Corridor Sector I, ADBfinanced the Chittorgarth-Kota section, the edge of a gavial sanctuary, and the section starting at the other end ofthe sanctuary, leaving NHAI to handle the bypass section falling in the Jawahar Sagar Sanctuary areas.

3Officials at the Department of Economic Affairs of the Ministry of Finance confirmed that ADBs approach ofavoiding environmentally sensitive sections of roads is welcomed by the government, since this reduces the cost ofborrowing, particularly in the form of commitment charges and interest during construction.


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29. The apparent avoidance of environmentally sensitive projects by ADB may bepartly due to the lack of expertise and capacity of both ADB Headquarters and theIndian Resident Mission (INRM) for appraising and monitoring such projects, forexample, the latter having no environmental safeguard specialist and only oneenvironmental consultant.4 NHAI officials suggested that ADB has never sent an

environment-related mission. In comparison, the World Bank, with about eightconsultants led by an environmental safeguard specialist at its Delhi office, has beenhelping NHAI not only in mitigating adverse environmental impacts during construction,but also in improving road landscape design and integration of environmentalconsiderations into project implementation with little or no cost. In addition, it has gonebeyond project-specific assistance by assisting NHAI to develop an environmental andsocial safeguard information system. The system will be useful for assessing theperformance of various contractors/suppliers in terms of environmental performance tomove toward a performance rating or accreditation system. Overall, the NHAI officialsfelt that the World Bank, with strong environmental expertise in the field office, hasoffered much more value added than ADB.

2. Loan 1959-IND: Madhya Pradesh State Roads SectorDevelopment Program

30. The sector development program (SDP), approved in December 2002, was partlyfinanced with a loan of $150 million from ADBs OCR. The loan component of the SDPwas designed to rehabilitate about 1,750 km of state roads identified in important stateroad corridors.

31. As was the case with Loan 1944, the SDP was categorized as B, the mainreason being that it is a rehabilitation of an existing road, and no additional right-of-wayis needed. At the time of loan approval, an IEE was prepared for five project corridors ofthe Phase I civil works, and IEEs were to be prepared for all the remaining projectsroads selected during implementation. The SIEE was prepared based on the IEE forPhase I as a supplementary appendix to the RRP, available only on request. It wasvague on details of potential impact and contained no EMP.

32. One of the criteria for selecting subprojects for the SDP is that Environmentallysensitive candidate roads will be excluded for investment. While this criterion may haveaimed to minimize adverse environmental impacts of ADBs road projects, in practice,this approach may have some undesirable outcomes. As in the case described by NHAIofficials, the EA officials also suggested that ADB has financed road sections on eitherside of national protection areas while leaving the sections within the protected area forthe governments own financing.5 The approach may be best characterized as the tailwagging the dog, as ADB lets its desire to minimize environment-related risks anddelays dictate what it can finance, and it may have missed out potential opportunities for

4In comparison, the other two resident missions visited by the Operations Evaluation Mission, viz., in PRC and VietNam, have even lower capacities, without either an environmental specialist or consultant.

5The officials mentioned the Orcha-Tikamgarh and Sagar-Jabalpur sections as examples of this kind of selectivefinancing.


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more value added for improving the environmental practices of the road projects in Indiaby playing the demonstration role. It may have also exposed ADB to some moral risks,as one EA official put it: ADB cannot completely run away if some environmental risksmaterialize, as the road will be perceived as one road.

33. The OEM visited one of the roads being built under the project and observed thatthe construction was along the existing alignment, with no additional right-of-wayrequired. The environmental management was generally satisfactory, with no majorspoils sites visible and the construction materials mixing site well kept and clean.However, as with many road projects, the main environmental impacts may occuroffsite, depending on where and how the construction materials are excavated andwastes disposed of. Neither the SIEE nor site interviews could provide answers to thequestions. It appears that ADB is almost completely relying on the semiannual self-monitoring reports on compliance prepared by the EA, and ADB rarely conductsmonitoring on this and other road projects in India due to lack of capacity.

3. Loan 2151-IND: Multisector Project for InfrastructureRehabilitation in Jammu and Kashmir

34. The sector project, approved in December 2004, was partly financed with anOCR loan of $250 million. It targeted the rehabilitation of existing infrastructure and theutility facilities in Jammu and Kashmir. It aimed to restore facilities needed to deliverminimum water services in the two main cities, Jammu and Srinagar, and therehabilitation of key roads and bridges in 14 districts.

35. The project was categorized as B, and a SIEE was completed based on IEEsprepared for individual subprojects. The SIEE, as a supplementary appendix to theRRP, was brief on potential impact and contents of the EMP. The OEM obtained theoriginal IEEs for the sample subprojects prepared by the domestic consultants engagedby the EA. The IEEs are of good quality, contained in detailed EMPs to mitigatepotential adverse impacts. The IEEs stated that initially there was a proposal toconstruct a high ground-level reservoir located in a wildlife sanctuary. This would haverequired clearance under the Jammu and Kashmir Wildlife (Protection) Act and wouldhave also triggered an A category as per ADBs guidelines. It was decided thatsubprojects falling under category A would not be included in this project. This resultedin a change in the location of the proposed reservoir to outside the sanctuary.

36. The OEM could not visit the project sites as it was unable to obtain securityclearance from the government. However, the OEM was able to meet a key EA officialvisiting Delhi and the responsible project officer at INRM. It appears that projectimplementation has encountered serious delays, i.e., approximately only $5 milliondisbursed with about one third of the time elapsed. Although the reasons for the delaysare complex, slow approval procedures by the government including environmentalcompliance procedures contributed to the delays. The main challenge facing this projectis that, as the sector loan has many subprojects, many small subprojects require IEEs inorder to get the governments and ADBs approval. INRM has only one environmental


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consultant and is severely constrained in its capacity to provide assistance to the EAs inreviewing and approving IEEs. INRM appears to have received limited support fromHeadquarters for administering the project due to the latters own limited capacities.

37. The sector loan, like many other sectors loans, requires intensive staff inputs

during implementation, even though the process may have been less complicated atloan appraisal compared with a project loan. Presently, INRM does not have thecapacity to support such intensive inputs, which could either cause project delays orintroduce safeguard-related risks, resulting in low customer satisfaction.

4. Loan 2152-IND: Power Grid Transmission (Sector) Project

38. The sector project, approved in December 2004, was partly financed with a loanof $400 million from ADBs OCR. It was formulated to finance the 5-year requirementsof Power Grid Corporation of India Limited (POWERGRID) National TransmissionDevelopment Plan covering strengthening and expansion of 765 kV and 400 kV

transmission lines and associated substations.

39. The project was categorized as B, and an initial IEE was undertaken and placedas a supplementary appendix to the RRP, available upon request. The SIEE is of goodquality and contains detailed identification of the types of potential environmental impactrelated to location and design, construction, and operation. The assessment ofalternative routes is soundly based on geographical information system and walkoversurveys. The potential impacts related to construction were identified, but theassessment is descriptive, often without site-specific assessment. The EMP, albeitcomprehensive, appears to be a generic description of possible mitigating measuresbased on industry best practices.

40. The OEM held a discussion with the officials atPOWERGRID responsible for environmental and socialsafeguards. POWERGRID has developed corporateenvironmental and social safeguard procedures integrating theprocedures of the government, ADB, and the World Bank. It is thestrongest effort yet made at the corporate level by any of the EAsvisited in the four countries to harmonize the safeguardprocedures of the government and major development partners.

POWERGRID appears to have a strong and experienced environmental and socialsafeguard department responsible for both environmental impact assessment, i.e.,mostly IEEs, at project appraisal and monitoring during implementation. ADB (and theWorld Bank) appears to have had some influence on the environmental and socialsafeguards of POWERGRID at the policy and procedural level, but the inputs to actualimplementation and monitoring are limited. This is largely due to the fact thatPOWERGRID has relatively strong expertise and capacities in the concerned technicalareas.


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5. Summary of India Case Studies

41. India has a well-developed, comprehensive legal basis for its environmentalsafeguards. A unique aspect of the Indian system is that it does not have an explicitdistinction between category A and B projects. Rather, a distinction is made between

projects requiring a comprehensive EIA and those needing only a rapid EIA.

42. A review of the IEE reports for the four selected case studies (all category Bprojects), shows a close resemblance in content, which may be indicative of proceduralcompliance during project processing. Description of baseline conditions emerged asthe strong area of the projects reviewed, while analysis of alternatives and predictionand assessment of impacts were found to be relatively weak. Rarely are issuesprioritized to lend focus as well as cost effectiveness to the environmental assessment.Often a large quantity of the data collected are not directly relevant to the project.6 Onereason for weak exploration of different alternatives may be the failure to initiate the EIAat the earliest stage of project design. In some cases, EIAs were undertaken when most

of the crucial aspects of the project design had already been decided, and the EIAsprimarily aimed to identify measures to mitigate the potential risks and adverse impactsdue to the project. Prediction and assessment of impacts is found to be generic. Most ofthe environmental assessment has not used the appropriate quantitative analytical toolssuch as mathematical water/air quality models or geographical information systems(GIS) with the exception of the power grid project, which made use of GIS. Littleattention was paid to induced, secondary, and offsite impacts.

43. Although mitigation measures were one of the stronger areas, many measureswere generic and have not been integrated with the projects due to lack of specifics withrespect to where and when. Most SIEEs/IEEs reviewed included monitoring planscovering all major mitigation measures and an institutional framework forimplementation. However, inadequate monitoring of progress in agreed-upon EMPimplementation is one of the weak aspects. From the discussions with the EA, lack of

local ownership of the EIA process and weak supervisionby ADB emerged as a reason for unsatisfactory outcomes.Absence of regular environmental safeguard personnel inINRM is a point in case.

44. There has been a clear preference by ADB for lessenvironmentally sensitive projects in India. Since 1997, ofthe 43 category A and B projects approved for India, onlyone was categorized as A. All four projects reviewed bythis study were sector loans with a clear criterion toexclude environmentally sensitive subprojects. ADB has

adopted an implicit strategy to minimize environment-related risks and delays by leavingout more sensitive projects or subprojects. While this approach may be cost-effective

6This may be because many Ministry of Environment and Forests Conservation complex questionnaires give moreemphasis on collecting a wide array of background data. This requirement is not oriented to identifying andprioritizing the environmental issues arising from the project activities.

Most ADB projects wererehabilitation of existing

infrastructure or facilities,and no additional right of

way is needed, but itoverlooks the fact that evenrehabilitation of existingfacilities could havesignificant onsite and offsite

environmental impacts.


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for both ADB and the government, it can expose ADB to some potential moral risks.ADB could have achieved greater environmental and developmental impact had itchosen more complex but more influential projects. Another reason often quoted forADB having a disproportionately large number of category B projects is that most ADB-supported projects were rehabilitation of existing infrastructure or facilities, and no

additional right-of-way was needed. This justification, while fueling a wrong impressionthat if its a rehabilitation project, it is category B, overlooks the fact that evenrehabilitation of existing facilities could have significant onsite and offsite environmentalimpacts.

III. Peoples Republic of China

45. The PRC is currently ADBs largest borrower, averaging $1.1 billion per year overthe last decade and accounting for 19.1% of ADBs total lending. It is arguably the mostchallenging of the four sample countries in terms of the need for environmentalprotection and improvement. In a startling contrast to the other three countries, since

1997, ADB has approved 58 category A and B projects, of which 43 (74%) werecategory A.

46. Six projects were chosen for this review, including four in transport, one inenergy, and one in water supply and sanitation. This sample of projects roughlyrepresents ADBs current portfolio in the PRC. With one recently completed, the otherfive projects are ongoing. This combination allows the assessment of the projectsenvironmental performance during implementation and as completed. Unlike in theother three countries selected for review, where category B projects dominated thesamples, all six projects are category A under both the governments and ADBsclassification.

1. Loan1851-PRC: Guangxi Roads Development Project and Loan2094-PRC: Guangxi Roads Development II Project

47. Loan 1851, approved in October 2001 for $150 million from ADBs OCR, aimedto (i) provide additional transport capacity, alleviate congestion, and reduce trafficaccidents and vehicle operating costs; (ii) improve access for the poor rural populationin the transport corridor; and (iii) facilitate regional cooperation by providing betteraccess from Guangxi and other PRC provinces to Viet Nam. The scope of the projectincluded (i) construction of 136 km of four-lane access-controlled tollway from Nanningto Ningming, 43 km of four-lane class I road from Ningming to Youyiguan at the VietNam border, and 49 km of class II connector roads between the project road and majortowns; and (ii) improvement of about 100 km of access roads to affected villages alongthe project road alignment.

48. Loan 2094, approved in October 2004 for $200 million from ADBs OCR, hadsimilar objectives as Loan 1851. It aimed to (i) construct about 188 km of a four-laneaccess-controlled Nanning-Baise toll expressway, 25 km of class II connecting roads,12 interchanges, 12 toll stations, 3 traffic control centers, 8 roadside stations, and 4asset management and maintenance centers; and (ii) upgrade 250 km of intercounty


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roads and 500 km of minority village roads.

49. Both projects were categorized as A, and EIAs were prepared by domesticconsultants engaged by the EA before ADBs involvement.7 Both summaryenvironmental impact assessment (SEIA) provide sufficient assessment of the main

expected impact during construction and operation, as well as EMPs. The assessmentof project alternatives was carried out, but the do nothing alternative and alternativetransport modes were not rigorously assessed. However, the alternative routes for theplanned expressways were well assessed following the overall principle of minimizingdisruption of the environment such as tunneling and avoiding natural reserves. Publicconsultations were implemented through interviews and questionnaire surveys withstakeholders and affected persons. The results of the public consultations indicated thatbetween 86% and 90% of the people supported the projects. However, as the SEIA

cautioned, the samples may have been skewed, and the people who did not showsupport could have been those who were adversely affected.

50. The OEM held discussions with the EA for both projects followed by site visits. Atthe time of the visit, Loan 1851 was substantially completed and Loan 2094 wasongoing. Overall, while both projects have adopted generally sound environmentalpractices, the discussions and site visits revealed some important issues.

51. First, as the EIAs were prepared by the EA well before ADBs involvement,ADBs PPTA consultants were used mostly to translate the reports and reformat inaccordance with ADBs requirements. There was generally no substantial improvementexcept that ADB provided support for in-depth investigation of specific issues facing theprojects. For example, for Loan 1851, the Guangxi Government requested ADB tosupport a further study on a type of monkeys that live in the areas of the expressway

corridor. The TA was approved and successfully implemented.8 The officials expressedthe view that ADB should not just come to inspect but also contribute to solvingspecific problems. ADB should also try to improve its dissemination channels for itssafeguard policies and procedures through conducting workshops and training coursesfor the EAs in Chinese. Currently, the main information channel for the EAs to learnabout ADBs environmental safeguard policy is ADBs website in English.

52. The EA presented its efforts to improve environmental management duringconstruction through selecting routes that would cause the least environmental damageand bring more benefits to local people. One of the measures undertaken was, in orderto ensure that contractors complied with the environmental safeguard clauses written

into their contracts, deposits were required from the contractors, e.g., Y5,000 per mu(PRC acre) of land borrowed. Upon satisfactory restoration of the borrowed lands aftercompletion, the deposits would be returned in full. Furthermore, learning a lesson fromLoan 1851, under Loan 2094, the EA requires that all quarries must be located 300

7The environmental impact assessment (EIA) for Loan 1851 was prepared by Xian Communication University andthe EIA for Loan 2094 was prepared by Highway Research Institute of the Ministry of Communications.

8TA 3821-PRC: Nature Reserve Management Plan in Guangxi Zhuang Autonomous Region, for $100,000,approved in December 2001.


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meters away from either side of the road and must not be visible from the road.

53. A prominent issue that the EA faced during project implementation was thatmany contractors, mostly state-owned enterprises that were financially strapped,underbid in order to win the contracts first. They did this by putting unrealistically low

cost estimates or even zero costs on some items including environmental protectionmeasures. Many of the bids were much lower than the engineering estimates. Underthe PRC procurement regulation, a bid more than 10% below the engineering estimatewould be considered nonresponsive. However, ADB insisted on the least-cost bidevaluation, which, according to the EA officials, resulted in winning bidders incurringsevere financial losses and cash flow problems for both loans. Lack of budget clearlymade it difficult for them to comply with the environmental requirements and also madeit difficult for the EA and supervision companies to supervise and monitor compliance.9

54. The OEM toured the entire expressway constructed under Loan 1851 andconfirmed that the quality of the construction is satisfactory to excellent and that

environmental management, particularly slope control and spoils site management, hasbeen generally in accordance with international good practices. Visits to selected sitesunder the ongoing Loan 2094 also revealed similar practices, though there were somedeficiencies in terms of management of waste generated by construction workers. Thisis despite the cash flow problems identified by the EA officials. An important valueadded of ADB-financed projects, compared with similar projects financed by domesticsources, is the availability of foreign resident supervision engineers. For both projects,the foreign engineers have played a very helpful advisory and supervisory role inupholding quality standards, including environmental measures.

2. Loan 1918-PRC: Southern Sichuan Roads Development

55. The project, approved in September 2002, was partly financed with a loan of$300 million from ADBs OCR. It aimed to promote economic growth and reducepoverty in the southern part of Sichuan Province by lowering the cost of transport,relieving traffic congestion, and improving access in the project area. The projectcomprised (i) construction of a 160-km, four-lane access-controlled toll expressway fromXichang to Panzhihua, including access roads, interchanges with toll stations, tunnels,bridges, administrative stations, and service areas; and (ii) upgrading of 558 km ofcounty and township roads to improve access to poor and minority areas.

56. The project was categorized as A, and an EIA was prepared by domesticconsultants engaged by the EA before ADBs involvement.10 A SEIA was prepared by

ADBs PPTA consultants based on the EIA. As the proposed expressway is a part of theNational Trunk Highway System, the do-nothing alternative and alternative transport

9Separate interviews with ADBs Project Management Unit revealed that ADB is aware of the executing agency(EA) concern and has adopted several measures to address this issue, including (i) allowing increase ofperformance security in the form of bank guarantee, (ii) providing a list of accredited banks for providing theguarantees, and (iii) more stringent prequalification.

10The environmental impact assessment was commissioned by the Sichuan Provincial Communications Department,the EA, and compiled by the Highway Research Institute of the Ministry of Communications.


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modes were only nominally considered, without rigorous assessment in the SEIA fromthe environment point of view. Three alternative routes were considered. Due to thedifficult terrain and complex geological conditions, preference was given to routes thatwould require less tunneling and fewer bridges. This preference, while minimizingproject costs, meant more flat land used and more resettlement required. The SEIA

provides engineering estimates on total excavated materials needed and to be disposedof and lays down the principles for contractors to excavate and dispose of the materials.For each of the main impacts identified, the EMP provided the details on mitigatingmeasures to be undertaken, location and timeframe, and the responsible parties forimplementation and supervision.

57. Overall, the quality of the original EIA and the SEIA/EMP is satisfactory.However, partly due to the limitations of space and format, the SEIA lacks details on thespecific impacts predicted, and the suggested mitigation measures are vague in somecases and phrased more as principles rather than specific measures. This requiresstrong efforts in monitoring during project implementation to ensure that the principleshave been implemented.

58. The OEM met with the EA, Sichuan Panxi Expressway Company Limited, andvisited several project sites near Xichang. The EA officials suggested that, althoughboth ADB and the government have stringent requirements, ADB has paid moreattention to monitoring during construction, and a result, the EA has probably conductedmore frequent monitoring than otherwise (without ADB financing).

59. The site visits revealed that the EA is environmentally minded and has adoptedmeasures that were not envisaged during design to protect the environment whilesimultaneously benefiting local people and the project. Several examples are availableto illustrate this. First, to minimize the impact of the structure on hillsides and woodland

cover, the EA revised the original design of road sections along steep hillsides such thatthe two carriageways are placed at different heights on the slope in order to avoid deepcuts into the slope. Second, the EA tried to maximize the use of waste soil forreclaiming wasteland for agricultural use, e.g., growing fruit trees, which not only savesthe land for waste disposal, but also yields more agricultural land for the local people.Third, the EA helped the local community to dredge the riverbed and use the rubble andsand for road construction. This not only reduced the borrow pits and materialstransport cost, but also reduced the risks of mudflow during rainy season affecting theroad and local people. Fourth, the EA encouraged the exchange of waste soils for fillbetween different contractors to minimize waste soils to be disposed of, even thoughthis could mean increased hauling costs. Finally, the EA revised the original design and

constructed several permanent concrete bridges, as part of the access roads, instead oftemporary bridges as originally envisaged. These permanent bridges will benefit localpeople long after the construction is finished.

3. Loan 2032-PRC: Gansu Clean Energy Development Project

60. The project, approved in December 2003, was partly financed through a $35million loan from ADBs OCR. It aimed to provide clean energy to the Hexi grid and


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targeted the townships of Xishui, Huazhai, and Anyang for rural electrification. Theproject also aimed to provide support for institutional strengthening of the implementingagency. It comprised the construction of a 98-megawatt run-of-the-river hydropowerplant and upgrading power supply to three poor townships for more reliable electricitydirectly from the plant.

61. The project is located in the experimental part of the Qilianshan National NaturalReserve, which is divided into three zones: core, buffer, and experimental. It has anenvironmental category A under both the ADB and PRC classifications. Before ADBsPPTA, an EIA was implemented by domestic consultants, the Gansu Provincial Academyof Environmental Sciences, engaged by the EA and was already approved by theenvironmental protection bureau (EPB) as delegated by the State EnvironmentalProtection Administration (SEPA).11 The OEM did not have access to the original EIA butwas presented a copy of a supplementary EIA to assess the environmental impactscaused by cascade development in the Heihe River Basin and by 35-kV and 110-kVtransmission lines for power supply, which were not included in the original EIA. The

OEM found that the supplementary EIA was based on primary survey data (e.g., fishpopulation) and quantitative assessment, and the quality is satisfactory. The SEIAdescribes the impacts during construction and operation, and mitigating measures to beadopted, but fails to address potential macro-level secondary impacts, e.g., the impactof the access road on the fragile local ecosystem due to improved access to areaspreviously inaccessible.

62. EA officials stressed that EIA procedures in the PRC are stringent, and the lawsand regulations are in place. ADBs PPTA environmental consultants were engagedprimarily for translating and reformatting the EIA report into the SEIA. However, the areain which ADB procedures may have had the most value added is public consultationsand people orientation, which have been strengthened because of ADBs participation.However, ADBs 120-day rule for category A projects may have caused delays in loanapproval, especially considering that the domestic EIA process already includedconsultation with project-affected people and local civil society.

63. The OEM visited the project sites. The work started in October of 2003 and wasexpected to be completed about 5 months ahead of schedule. The physicalenvironment of the project sites in the river valley is highly barren, and most naturalvegetation has been destroyed by human activities, with some spotty vegetation on thehillside. Most of the waste soil from digging of the channels was used as constructionmaterial. The remaining waste soil was disposed of at several disposal sites andmanaged well. However, the OEM noted some waste from the living quarters of theconstruction workers was disposed of in the river valley without proper incineration. TheEnvironmental Monitoring Station of Zhangye City is reportedly conducting monitoring ofthe quality of water, air, and noise levels on a seasonal basis and did not detect

11According to executing agency officials, normally a project of this size is subject to the approval of the provincialenvironmental protection bureau (EPB). However, as this project is located in the experimental part of theQilianshan National Natural Reserve, the approving authority rests with State Environmental ProtectionAdministration, which delegated it to the Gansu Provincial EPB.


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significant differences in the indicators monitored.

4. Loan 2116-PRC: Dali-Lijiang Railway

64. The project, approved in December 2004, was financed through a loan of $180

million from ADBs OCR. It aimed to remove a transport constraint to sustainableeconomic growth, thereby helping increase living standards and reduce poverty in theproject area. The project involved constructing 167 km of single-track, standard gauge,Class I railway, reserved for electrification, between Dali and Lijiang, and expanding thecapacity of the existing GuangtongDali line to accommodate additional traffic.

65. The project has an environmental category A rating, and an EIA was prepared bydomestic consultants12 engaged by the EA. The larger project area, which is locatedbetween several major natural reserves and inhabited by a number of ethnic minorities,is rich in cultural and archaeological artifacts. The quality of the SEIA is satisfactory, andthe EMP is detailed, including cost estimates. Total environment-related investment,including tree planting, soil erosion control for embankment, solid waste and wastewatertreatment, and environmental monitoring, was estimated at Y462 million.

66. The OEM visited Yunnan Province but did not have a chance tovisit the project sites. However, based on information gathered at ADBand the Ministry of Railways in Beijing, and written materials providedby the EA, the following were learned. First, some internationalnongovernment organizations learned about the project from the ADBwebsite and expressed concern that the project railways may haveundesirable impacts on the local environment and culture of ethnicminorities. As a result, ADB spent an unusual amount of staff time and

other resources during loan appraisal on ensuring that the project is environmentallyand socially sound. While this caused some delays in project approval, the additionalscrutiny has probably not made much difference in project design and implementation.Second, since the 1990s, the Ministry of Railways has accumulated substantialexperience in environmental management for railways projects, and its environmentalawareness and practices have improved significantly. ADBs involvement has helpedstrengthen environmental monitoring during construction through engaging anindependent monitoring company. Third, the materials provided by the EA highlight thekey point of integrating environmental protection into the full project cycle, includingpreliminary and detailed design, environmental protection clauses written into thecontracts, and the requirement of full-time environmental supervision engineers from the

contractors who are responsible for preparing monthly environmental supervisionreports to be submitted to the EA.

12Prepared by the Second Survey and Design Institute of the Ministry of Railways.


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5. Loan 2175-PRC: Jilin Water Supply and SewerageDevelopment

67. The project, approved in July 2005, is partly financed through a loan of $100million from ADBs OCR. It aims to enhance the urban environment and public health

through better wastewater management and increased supply of high-quality water, andto improve the quality of surface- and groundwater resources in and downstream of theproject cities. The project will benefit more than 4 million urban residents. There arethree main subcomponents, which involve upgrading or constructing wastewatertreatment plants and pipeline and auxiliary systems in three cities: Changchun,Liaoyuan, and Mehekou.

68. The project has an environmental category A, and an EIA was prepared bydomestic consultants engaged by the EA.13 The project is essentially an environmentalimprovement. The SEIA contains a quantitative assessment of both positive andnegative impacts but is quite vague about how to deal with one of the main pollutants

from wastewater treatment, viz., sludge, even though it lists several options for sludgedisposal and composting (to produce fertilizer).

69. At the time of the OEMs visit, the work had not started. The OEM was able tomeet with the EA and one of the implementing institutions of the EIA, the Jilin Academyof Environmental Sciences (JAES). The meeting with the EA revealed that contractsinclude detailed environmental protection measures to be undertaken by thecontractors. The consulting service for project supervision also includes environmentalspecialists for monitoring environmental measures during project implementation.

70. Another main point from these meetings was ADBs limited value added in theEIA process due to the fact that the main work of EIA was already completed beforeADBs PPTA. The PPTA consultants simply translated and reformatted the EIA toproduce the SEIA. JAES was asked to assist the ADB consultants withoutcompensation. A suggestion was made that, in the future, ADB should considerengaging the original EIA implementing agency as the domestic environmentalconsultants under PPTA for preparing a SEIA.

71. JAES commented on ADBs public consultations as being more comprehensiveand people oriented than the PRC procedures. For example, the PPTA consultantsconducted public hearings to solicit views from key stakeholders. In contrast, under thePRC requirements, JAES only conducted a questionnaire survey of the affected people.JAES felt that the public hearing approach is more advantageous than a questionnairesurvey, since the survey respondents can only give comments on predesignedquestions, while the attendees at public hearings can present their views in an open andfree manner. ADBs approach pays more attention to protecting disadvantaged groups.

13Prepared by the Northeast Municipal Engineering and Research Institute, Songliao Institute of WaterEnvironmental Science, and the Jilin Academy of Environmental Sciences.


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6. Summary of PRC Case Studies

72. Over the last decade or so, the PRC has made significant progress in improvingits legal and institutional framework for environmental safeguard and enhancement.This was partly achieved with assistance from major development partners, particularly

ADB and the World Bank, in the form of both TA and investment projects. In a patternthat forms a strong contrast to the other three countries selected for review, all sixprojects selected in the PRC have an environmental category A, and the PRC has amuch larger percentage of category A projects compared with the other countries. Thequality of the projects visited is satisfactory to excellent, and environmental protectionmeasures generally follow international good practices.

73. A typical scenario for ADB-supported projects in the PRCis that EIA has already been undertaken and approved by SEPAor the provincial EPB before ADBs involvement. The main tasksof ADBs PPTA environmental consultants are to translate the

original EIA report into English and format it according to ADBrequirements to produce a SEIA/SIEE report. ADBs main valueadded, as acknowledged by several EAs, has been in the area ofstrengthening public consultations with affected people andstakeholders. Most officials interviewed felt that ADBs PPTAs

have not contributed much to improving environmental safeguards and enhancement.Some felt that the resources should have been better spent on examining one orseveral unresolved issues facing a particular project in a more in-depth manner, asidentified by the original EIA, rather than the current one size fits all approach, whosemain objective is to produce a SEIA for ADBs project approval process.

74. A related issue is the role, or lack thereof, of domestic consultants in the ADBPPTA consultant team for implementing the original EIA. Typically, ADBs PPTAengages separate international and domestic consultants, who request inputs fromoriginal EIA consultants without any compensation. If ADB continues to provide PPTAson preparing SEIAs, ADB should consider giving preference to engaging the originalEIA consultants as the domestic environmental consultants in the PPTA team.

75. Several other less universal but, for some, equally important issues have beenidentified. ADBs 120-day disclosure rule has increasingly become one of manydeterring factors for EAs to use ADB financing. As virtually all the EIAs have alreadyincluded some form of public consultation before ADBs SEIA, the EAs felt that the 120-day rule is a double penalty and causes unnecessary delay.

76. ADBs least-cost bid evaluation was partly blamed in several expresswayprojects for causing problems during project implementation, including reduction ofenvironmental protection measures due to low budget, project delays, and quality-related issues.

ADBs main valueadded has been in

the area ofstrengthening

public consultationswith affectedpeople andstakeholders.


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77. Finally, the two meetings with SEPA indicated that, since ADBs reorganization in2002, with the original Environment Division dissolved, SEPA finds it difficult to contactADB for assistance. The good working relationship that the previous EnvironmentDivision developed with SEPA, particularly at the macro policy and institutional level,has been substantially lost. ADBs involvement with the PRCs environmental protection

is mostly confined to project-level assistance, which, as seen through this evaluation,has provided limited value added.

IV. Viet Nam

78. Viet Nam was ADBs 7th largest borrower over the decade between 1996 and2005, averaging $288.5 million per year or 5% of ADBs lending total. Of the fourcountries selected for case studies, Viet Nam is the only one that is eligible for low-interest concessionary Asian Development Fund (ADF) loans. Since 1997, ADB hasapproved 27 category A and category B public sector loans, of which only two werecategory A and the rest were all category B.

79. The two projects selected are both environmental category B. The only activeenvironmental category A project, Phuoc Hoa Water Resources Management Project,approved in 2003, has not started implementation and was not selected for in-depthcase study.

1. Loan 1855-VIE: Second Red River Basin Sector Project

80. The project, approved in November 2001, is a sector loan of $70 million fromADBs ADF, designed to establish integrated water resource management in the RedRiver Basin and to improve priority infrastructure for water service delivery in the poorer

provinces of the basin.

81. The project has an environmental category B. IEEs were prepared for the initialcore irrigation projects by a team of international and domestic consultants. The qualityof the IEEs is generally satisfactory. The IEEs identified environmental impacts relatedto the location of the subprojects (e.g., encroachment into sensitive areas) changes inlocal hydrology and impacts related to project construction (e.g., erosion control) andoperation (e.g., water quality, ground water hydrology). As all the core subprojects werefor rehabilitation of existing infrastructure, the location impact and impact fromoperations were considered minimal. Mitigating measures were recommended forpotential adverse impacts during construction. For noncore subprojects prepared at a

later stage, however, no separate IEEs were prepared. Instead, IEEs were included aspart of the feasibility studies for the subprojects, which were conducted by domesticconsultants and reviewed by international consultants.

82. The OEM visited two subprojects on rehabilitating and improving existingirrigation infrastructure. Both subprojects were recently completed and appeared tohave been operating satisfactorily. According to the EA officials, the facilities havecontributed to the local peoples welfare significantly by providing reliable and


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inexpensive water for irrigation (rice yield reportedly increased by as much as 40% inrecent years), aquaculture, and mini hydropower generation. On environmentalmanagement and monitoring, the main potential risk may be erosion from slopes. In onesubproject visited, the soil for building the dam was taken from a slope immediately nextto the dam, and no engineering or biological measures were taken to control potential

landslides. The EA officials informed the OEM, later confirmed by the responsible ADBofficer, that neither ADB nor anyone else had conducted any environmental monitoringduring and after construction. With respect to impact during operation, the IEE mentionsthe possibility of increased water pollution from increased use of pesticides associatedwith higher yields. The EA officials suggested that total use of pesticides in the regionhas decreased by half in recent years due to integrated pest management programs.However, as there is no monitoring done on water quality, the exact impact is unknown.

2. Loan 1888-VIE: Provincial Roads Improvement Sector

83. The project, approved in December 2001, is also a sector loan

of $70 million, from ADBs ADF, to be used for improving roads in 18provinces in northern Viet Nam to allow better access for the rural poorand to connect districts and communes to provincial cities and to thenational highway network. It is financing more than 80 segments ofprovincial roads in various locations, with a total length of about 1,400km.

84. The project has an environmental category B, and an IEE is to be carried out foreach of more than 80 road contracts. This is implemented by a team of consultants ledby international consultants who are also responsible for project supervision. Theconsultants have worked out detailed guidelines on environmental assessment

integrating both government and ADB procedures and have developed standard legalclauses for environmental management to be included in the contracts for allcontractors. However, in view of the large number of road segments, it appears thatADBs IEEs, together with social safeguard measures, have added substantialtransactional costs to the overall cost of the project. 14

85. The quality of the roads completed is generally satisfactory in accordance withClass V road standards in Viet Nam. However, environmental protection appears to beproblematic in some areas in terms of slope protection and dumping of constructionwastes. Compared with Loan 1855, which has virtually no monitoring program, thesupervision consultants for this project are conducting monitoring of the environmental

practices of the contractors as part of overall project supervision. Although an externalmonitoring entity, the Development Research and Consultancy Center, has beenengaged, external monitoring has been mostly on social rather than environmentalissues. It has been suggested by the international consultant that ADB-financed roadsprobably have better quality and environmental measures than government-financed

14As one indicator for the transaction costs, total project implementation consultancy, which includes project

supervision, preparation of initial environmental examination, resettlement plans, and ethnic minority developmentplans, exceeds $7 million, more than 10% of the loan amount.


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roads of the same class. However, the main concern of the OEM is the generally lowstandards of Class V roads in terms of road safety and environmental protection. Giventhe limited budget for the project, it is possible that Class V may well be the mostappropriate option for the type and low volume of traffic on these roads for theforeseeable future. Another issue that may potentially affect project administration and

operation is the scattered nature of the roads financed under the project, i.e., more than80 segments across the northern provinces. This may potentially have an adverseimpact on environmental management, as most of the contracts are small in value, andmonitoring of contract implementation becomes difficult.

3. Summary of Viet Nam Case Studies

86. Compared with the other three countries, Viet Nam has relatively weakinstitutional capacities for carrying out and reviewing EIAs. In contrast, Viet Nam iscurrently undergoing tremendous economic growth, which imposes great demand onsuch capacities. Viet Nam has committed to working with its development partners toharmonize its environmental and social safeguard procedures, but the challenges

remain daunting, given the significant gaps between the safeguard systems of thegovernment and those of the development partners, and its weak institutional capacitiesin terms of EIA preparation, monitoring, and implementation.

87. The two projects visited are both low-budget ADF sectorloans. They have provided an important dimension to thisevaluation by highlighting issues related to environmentalmanagement of ADF projects. Typically, the subprojects weresmall in budget and were carried out using low designstandards. Environmental protection was often accorded lowpriority. The IEEs made some general recommendations

concerning mitigating measures but were vague on the costimplications. With limited budget, the choice of the government,with ADBs consent, was clearly to build more subprojects toachieve greater economic impact. ADBs Viet Nam ResidentMission has no environmental specialist/consultant specializedin environmental safeguard monitoring. In comparison, the Viet Nam Mission of theWorld Bank, with a portfolio roughly double that of ADB, has a team of threeenvironmental specialists working on environmental safeguard and managementissues. The World Bank may also have implemented its environmental classificationsystem more stringently than ADB: of its 36 existing and planned projects in Viet Namwith environmental category A or B, 16 (44%) are category A (compared with 2 category

A out of 27 category A and B projects for ADB).

88. Overall, while Viet Nams environmental safeguard system is in its early stage ofdevelopment, ADBs value added to the environmental safeguards and management ofthe two ADF projects visited appears to be limited.15 As ADB is working with the

15It should be acknowledged that ADB has played a lead role among the development partners and donors in theongoing efforts towards harmonization of safeguard procedures.

ADBs value added tothe environmentalsafeguards andmanagement of thetwo ADF projectsvisited appears to be

limited. ADB must look

for ways to strengthenits own environmentalcapacities, particularlyat the Viet NamResident Mission.


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government and the other development partners to harmonize their safeguard systems,ADB must look for ways to strengthen its own environmental capacities, particularly atViet Nam Resident Mission.

case study: key findings from country studies on environmental safeguards

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