world bank pollution prevention and abatement

8/19/2019 World Bank Pollution Prevention and Abatement

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Pollution Prevention and Abatement HandboWORLD BANK GRO

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Contents

Acknowledgments vi

Foreword vii

Abbreviations, Acronyms, and Data Notes ix

I. Overview 1

Pollution Management: Key Policy Lessons 3

II. Implementing Policies in Practice 11

Basic Principles Indicators of Pollution Management 13 The Environmental Assessment Process 22 Types of Environmental Standards 27 Principles of Waste Avoidance and Utilization 29 Efficient Use of Energy 32

Monitoring Environmental Quality 38

Setting Priorities Comparative Risk Assessment 45 Economic Analysis of Environmental Externalities 54 The Effects of Pollution on Health: The Economic Toll 63 Public Involvement in Pollution Management 72 Analytical Support for Cost-Effective Pollution Control 78

Air Quality Management Airshed Models 82 Removal of Lead from Gasoline 91 Urban Air Quality Management 96

Water Quality Management Water Quality Models 101 Integrated Wastewater Management 108 Optimizing Wastewater Treatment 114

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Industrial Pollution Management Developing a Culture of Industrial Environmental Compliance 120 Environmental Audits in Industrial Projects 125 Environmental Management Systems and ISO 14000 129 Implementing Cleaner Production 136

Management of Hazardous Wastes 144 Pollutant Release and Transfer Registers 151

Financing Environment

Pollution Charges: Lessons from Implementation 160

Global and Transboundary Issues Greenhouse Gas Abatement and Climate Change 169 Least-Cost Approaches to Reducing Acid Emissions 175

III. Project Guidelines 179

Principles of Industrial Pollution Management 181Monitoring 186

iv POLLUTION PREVENTION AND ABATEMENT HANDBOOK

Environmental Funds 155

Summary of Air Emission and Effluent Discharge Requirements Presentedin the Industry Guidelines 193

Pollutants Airborne Particulate Matter 201 Arsenic 208 Cadmium 212 Lead 215 Mercury 219 Nitrogen Oxides 223 Ground-Level Ozone 227 Sulfur Oxides 231

Pollutant Control Technologies Airborne Particulate Matter: Pollution Prevention and Control 235 Removal of Lead from Gasoline: Technical Considerations 240 Nitrogen Oxides: Pollution Prevention and Control 245 Ozone-Depleting Substances: Alternatives 250 Sulfur Oxides: Pollution Prevention and Control 258

Industry Sector Guidelines Aluminum Manufacturing 261 Base Metal and Iron Ore Mining 267 Breweries 272 Cement Manufacturing 275 Chlor-Alkali Plants 279 Coal Mining and Production 282 Coke Manufacturing 286 Copper Smelting 291 Dairy Industry 295


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Contents v

Dye Manufacturing 298Electronics Manufacturing 302 Electroplating 307 Foundries 312 Fruit and Vegetable Processing 316

Glass Manufacturing 320 Industrial Estates 324 Iron and Steel Manufacturing 327 Lead and Zinc Smelting 332 Meat Processing and Rendering 337 Mini Steel Mills 341 Mixed Fertilizer Plants 345 Nickel Smelting and Refining 349 Nitrogenous Fertilizer Plants 353 Oil and Gas Development (Onshore) 359 Pesticides Formulation 363 Pesticides Manufacturing 367

Petrochemicals Manufacturing 371 Petroleum Refining 377 Pharmaceuticals Manufacturing 382 Phosphate Fertilizer Plants 387 Printing 391 Pulp and Paper Mills 395 Sugar Manufacturing 401 Tanning and Leather Finishing 404 Textiles 408 Thermal Power: Guidelines for New Plants 413 Thermal Power: Rehabilitation of Existing Plants 427 Vegetable Oil Processing 430 Wood Preserving 433 General Environmental Guidelines 436

Glossary of Environmental Terms 441


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Acknowledgments

The Pollution Prevention and Abatement Handbookwas prepared by a team from the World Bankand the International Finance Corporation (IFC),led by Richard Ackermann (subsequently byDavid Hanrahan) and comprising GordonHughes (Part I), David Hanrahan (Part II), and

Anil Somani, Sanjeev Aggarwal, and ArthurFitzGerald (Part III). Among the principal authorsof individual guidel ines were John Dixon,Arundhati Kunte, Magda Lovei, and KseniyaLvovsky. Sari Soderstrom provided the infor-mation in Table 3 of the chapter on Indicatorsof Pollution Management. The Handbook is

based on technical documents from the UnitedNations Environment Programme (UNEP)and the United Nations Industrial Develop-ment Organization (UNIDO) and on numer-ous commissioned reports by consultants. Thedocuments have been extensively reviewed byseveral governments, nongovernmental orga-nizations, industry associations, and individualcompanies, as well as by the World Bank’s In-dustry and Mining Division (IENIM), the IFC,and a World Bank/IFC Steering Committee.Hans-Roland Lindgren and Yasuhide Koga re-viewed the guidelines, with particular atten-tion to consistency with national and EuropeanUnion standards.

The production of the Handbook and the manyrelated administrative tasks have depended criti-cally on the tireless assistance of Sriyani Cumine(desktop publishing), Clare Fleming, KarenDanczyk, and Virginia Hitchcock (editing), OliviaMcNeal, and Luz Rivera.

The Handbook was developed in collaborationwith UNIDO (Ralph Luken), the Industry andEnvironment Office of the UNEP (Jacqueline Aloiside Larderel and Fritz Balkau), and the World HealthOrganization (Dieter Schwela). The World BankGroup is thankful for the generous financial sup-port provided by the governments of Canada, theNetherlands, and Norway and for the commentsand guidance provided by the United States En-vironmental Protection Agency (USEPA), byFrank van den Akker (Netherlands Ministry ofHousing, Physical Planning and Environment),and by the World Health Organization in provid-ing technical comments and guidance.

Special thanks is owed to the German govern-ment for carrying out an exhaustive review ofthe entire Handbook and for hosting two lengthymeetings at which the technical issues were dis-cussed in detail. The involvement of these orga-nizations and of the many individuals whocontributed to the development of the Handbookis gratefully acknowledged.

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Foreword

In 1988, the World Bank published Environmen-tal Guidelines to provide technical advice andguidance to staff and consultants involved in pol-lution-related projects. In the years since then,there have been significant changes in technolo-gies, in pollution management policies and prac-

tices, and in the activities and portfolio of theWorld Bank Group. This Pollution Prevention and Abatement Handbook has been prepared to updateand replace the 1988 guidelines.

The Handbook is specifically designed to beused in the context of the World Bank Group’senvironmental policies, as set out in OperationalPolicy (OP) 4.01, “Environmental Assessment,”and related documents.1 World Bank Grouppolicy stresses the primacy of the project-specificor site-specific environmental assessment processin setting the requirements for environmentalperformance. The guidelines contained in thisHandbook are therefore subject to interpretationin light of the results of the environmental as-sessment.

The guidelines apply to all Bank Group– funded projects approved in principle on or af-ter July 1, 1998, unless the project sponsor candemonstrate that a significant investment hasalready been made (or that a legally bindingagreement has been entered into) on the basis ofthe 1988 guidelines.

The Handbook promotes the concepts of sustain-able development by focusing attention on the

benefits— both environmental and economic—ofpollution prevention, including cleaner produc-tion and good management techniques.

The Handbook consists of three parts. Part I contains a summary of key policy les-

sons in pollution management, derived from

practical experience inside and outside the World Bank Group over the past decade. Although Part I is aimed primarily at government decisionmakers, other readers will derive considerable

benefit from a better understanding of the issues facing government agencies.

Part II presents good-practice notes on implementation of policy objectives, based on experience with World Bank Group projects and on lessons from the policies and practices of other agencies and organizations in this field.

Part III provides detailed guidelines to be applied in the preparation of World Bank Group projects. The guidelines, which cover almost 40 industrial sectors, represent state-of-the-art thinking on how to reduce pollution emissions from the production process. In many cases, the guidelines provide numerical targets for reducing pollution, as well as maximum emissions levels that are normally achievable through a combination of cleaner production and end-of-pipe treatment. The guidelines are designed to protect human health; reduce mass loadings to the environment; draw on commercially proven technologies; be cost-effective; follow current regulatory trends;

1. The World Bank consists of the International Bank for Reconstruction and Development (IBRD) and itsconcessional-lending affiliate, the International Development Association (IDA). The World Bank Group includes,in addition to the IBRD and IDA, the International Finance Corporation (IFC), which focuses on cooperationwith the private sector in developing countries, and the Multilateral Investment Guarantee Agency (MIGA). TheWorld Bank’s Operational Policy 4.01 is a conversion of the existing Operational Directive 4.0 and contains thesame basic principles as the directive. The IFC and MIGA have parallel policies.

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viii POLLUTION PREVENTION AND ABATEMENT HANDBOOK

and promote good industrial practices, whichoffer greater productivity and increased energyefficiency.

The application of the guidelines set out in PartIII can minimize the use of resources and reduce

the quantity of wastes requiring treatment anddisposal. The guidelines represent good environ-mental management practices that can be imple-mented and maintained with the skills andresources typically available in countries in whichthe World Bank Group operates. The World BankGroup is committed to strengthening manage-ment and technical skills and to supporting thedevelopment of the necessary institutions in thesecountries. Where relevant national regulations donot exist, the guidelines may provide a basis fornegotiating site-specific agreements betweenregulators and enterprises.

The Handbook was compiled by staff membersof the Environment Departments of the WorldBank and the International Finance Corporation(IFC). Contributions and advice came from manyother technical and operational units within theWorld Bank Group and from outside consultants.A number of drafts were circulated and dis-cussed, including a full Annual Meetings editionin September 1997. The guidelines related to ther-mal power plants were the subject of a two-dayinternational expert panel workshop held at theWorld Health Organization (WHO) in Geneva inApril 1997. Officials of key borrowing countries,other government and private sector representa-tives, and WHO and Bank experts attended theworkshop.

The IFC and the World Bank’s Industry andMining Division carried out and coordinateddetailed technical reviews of the relevant indus-try-specific guidelines. Technical backgroundmaterial, as well as advice and comments, wereprovided by the United Nations EnvironmentProgramme (UNEP), the United Nations Indus-trial Development Organization (UNIDO),

WHO, and several bilateral agencies, includingthose of Canada, Germany, the Netherlands,Norway, Sweden, and the United States.

In addition, extensive informal consultationand discussions with other international fi-

nancing institutions, industry organizations,regulatory agencies, and nongovernmental orga-nizations have taken place. Many comments have

been received and have been incorporated intothe Handbook to the extent possible. It is intendedand hoped that the Handbook represents a broadconsensus of what is achievable through currentgood practice in pollution management.

This Handbook is envisaged as a living docu-ment: its implementation will be monitored overthe next year, further industry guidelines will beissued, and the need for revision will be weighedin the light of the accumulated experience. Thefull text of the Handbook is available on the envi-ronmental section on the World Bank Group’swebsite (www.worldbank.org), where any revi-sions or additional guidelines will be posted.

Formal and informal consultations on the con-tent and application of the Handbook will con-tinue, and comments are welcome. Commentsshould be addressed to the Program Leader,Urban, Industry and Energy, Environment De-partment, World Bank, or to the Unit Head, En-vironment and Social Review, EnvironmentDivision, IFC, at the address given on the copy-right page.

Andreas Raczynski Director

Technical and Environment Department International Finance Corporation

Robert T. Watson Director

Environment Department The World Bank

http://www.worldbank.org/http://www.worldbank.org/


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Abbreviations, Acronyms, and Data Notes

ACM Asbestos-containing materialsADP Air-dried pulp AIJ Activities Implemented Jointly (Kyoto Protocol) AMD Acid mine drainage AOX Adsorbable organic halides BAT Best available technology BATNEEC Best available technology not entailing excessive cost BOD Biochemical oxygen demand. In this Handbook, BOD is understood to refer to BOD5 ,

BOD measured over five days.BOF Basic oxygen furnace BPT Best practicable technology CAC Command and control CDM Clean development mechanism CFC Chlorofluorocarbon CIP Clean-in-place (methods) COD Chemical oxygen demand CON Control octane number CP Cleaner production CSM Continuous stack monitoring CTC Carbon tetrachloride DALY Disability-adjusted life year DCF Directed credit fund DDT Dichlorodiphenyltrichloroethane DMT Dimethyl terphthalate DO Dissolved oxygen DRR Dose-response relationship DSS Decision Support System for Integrated Pollution Control EA Environmental assessment EAF Electric arc furnace ECF Elemental chlorine-free (bleaching) EIA Environmental Impact Assessment

EMS Environmental management system EPI Economic performance indicator ESCO Energy service company ESP Electrostatic precipitators ETF Earmarked tax fund EU European Union FBC Fluidized-bed combustion FCC Fluid catalytic cracking FGD Flue gas desulfurization

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FGR Flue gas recirculationFGT Flue gas treatment GEF Global Environment Facility GF Green fund GHG Greenhouse gas

GIS Geographic information system GJ Gigajoule GW Gigawatt GWP Global-warming potential HCFC Hydrochlorofluorocarbon IARC International Agency for Cancer Research IBRD International Bank for Reconstruction and Development IDA International Development Association IFC International Finance Corporation IPCC Intergovernmental Panel on Climate Change IPPS Industrial Pollution Projection System IRIS Integrated Risk Information System

ISIC International Standard Industrial Classification ISO International Organization for Standardization ISC Industrial Source Complex (USEPA model) kWh Kilowatt-hours LCA Life cycle analysis LEA Low-excess-air (firing) LIDAR Light detection and ranging (system) LPG Liquefied petroleum gas MCF Methyl chloroform MCP Marginal production cost MIGA Multilateral Investment Guarantee Agency MON Motor octane number MOS Metal oxide semiconductor (technology) MSC Marginal social cost MTBE Methylterbutylether MWe Megawatts of electricity NAPAP National Acid Precipitation Assessment Program NGO Nongovernmental organization NO2 Nitrogen dioxide NOx Nitrogen oxide NPK Nitrogen, phosphorus, potassium (fertilizer) NSPS New source performance standard OD Operational Directive ODP Ozone depletion potential ODS Ozone-depleting substance OECD Organisation for Economic Co-operation and Development OFA Overfire air OTC Over-the-counter (medicines) PAH Polynuclear aromatic hydrocarbons PAHO Pan American Health Organization PBR Polybutadiene rubber PCB Polychlorinated biphenyl PFA Pulverized fly ash PFC Perfluorocarbon


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Abbreviations, Acronyms, and Data Notes xi

PIC Product of incomplete combustionPM10 Particulate matter 10 microns or less in aerodynamic diameter POM Prescription-only medicine ppb Parts per billion ppm Parts per million

PRTR Pollutant Release and Transfer Registry RON Research octane number RRAD Respiratory-related restricted activity day SBR Styrene butadiene rubber SCR Selective catalytic reduction SMEs Small and medium-size enterprises SMT Surface mount technology SNCR Selective noncatalytic reduction SO2 Sulfur dioxide SOx Sulfur oxide SPM Suspended particulate matter SSP Single phosphate

TCLP Toxic characteristic leachate procedure TCF Total chlorine-free (bleaching) TEL Tetraethyl lead TEWI Total equivalent warming impact TFP Total factor productivity tpd (Metric) tons per day TML Tetramethyl lead TOR Terms of reference TRI Toxic Release Inventory TRS Total reduced sulfur TSS Total suspended solids TSP Total suspended particulates; triple phosphate UNEP United Nations Environment Programme UNFCCC United Nations Framework Convention on Climate Change UNIDO United Nations Industrial Development Organization USAID U.S. Agency for Environmental Development USEPA U.S. Environmental Protection Agency VOC Volatile organic compound VOSL Value of statistical life WAD Weak acid dissociable WHO World Health Organization WQO Water quality objective

The references and sources of information provided at the end of chapters and guidelines are notintended to be comprehensive. Unless otherwise specified, the source of all tables is the World Bank

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Pollution Prevention and Abatement HandbWORLD BANK GRO

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PART I

OVER VIEW


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Pollution Management: Key Policy Lessons

Progress toward bringing about a cleaner environment has relied on a philosophy of pollutioncontrol. This has involved sometimes costly measures and controversial political decisions. Asa result, developing countries, poor communities, and financially constrained enterprises haveoften argued that the environment is an expensive luxury that diverts resources from more

productive uses. This perspective is giving way to a new paradigm stating that neglecting theenvironment can impose high economic and even financial costs, while many environmentalbenefits can in fact be achieved at low cost. For this to work, however, we need to better under-stand what motivates those responsible for pollution and their responses to different regula-tions, incentives, and other pressures. Moreover, we can no longer afford to view the environmentas a technical issue to be addressed independently from overall municipal and industrial stra-

tegic decisionmaking. The new approach can be summed up by the expression: environmentalmanagement, not just pollution control.

Change the Emphasis

Environmental progress over the past 40 yearshas relied on a philosophy of pollution control. Awide range of control technologies has been de-veloped, and it is now technically possible togreatly reduce or entirely eliminate discharges

of the major pollutants. However, this approachis yielding decreasing benefits per unit of expen-diture in the rich industrial countries, and thenecessary preconditions for implementing pol-lution control measures do not exist in many de-veloping countries. At the same time, somecountries fear that pollution control is an expen-sive luxury that will divert resources from moreproductive uses.

The emphasis is shifting to environmental man-agement, using a broad mix of incentives and pres-sures to achieve sustainable improvements. Thisinvolves:

• Definition of environmental policies in termsof goals rather than inputs

• More explicit consideration of and referenceto priorities

• Greater decentralization, especially with re-spect to the implementation of policies

• Promotion of improved performance and man-agement rather than just control of emissions

• Adoption of cost-effective strategies ratherthan specifying particular control measures.

This chapter summarizes the main issues thathave emerged in the course of operational workthroughout the world.

Work with Agreed Priorities

Start with clear goals and objectives, not mechanisms.Governments need to set clear objectives for en-vironmental issues, related to overall develop-ment and growth goals, before focusing onspecific sector actions or institutional changes.These objectives are frequently set out in termsof human health, productive resources, and con-servation of ecosystems.

An effective environmental strategy requires clear priorities.

In many countries, the task of improving envi-ronmental performance on the ground is unnec-essarily complicated by a reluctance to defineenvironmental priorities and to articulate clearstrategies that address them. Often, this reflectsa lack of political commitment to environmentalpolicies. Yet effective environmental manage-ment depends on making choices. These choicesform the basis for developing targets that can be

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4 OVERVIEW

understood and assessed by communities andthe public as well as by specialists. Withoutsuch an effort, the policy process is likely to becaptured by special interest groups, whetherthese be committed to narrow environmental

goals or to industrial growth without regard forits consequences.

Agree on priorities. Dirty air (especially fine particulates resulting from incomplete combustion) and lack of clean drinking water are among the most important problems. It is easy to tell whether policies affecting these issues have been effective, and it is possible to gain considerable political capital from addressing them. Decisionmakers should therefore aim to set concrete goals that mean something to

the public and politicians and then focus their attention on achieving real progress. This strategy will succeed only if progress toward meeting the goals is regularly monitored and the strategy is revised in response.

First do those things that are a high priority and thatare also inexpensive and easily implemented.Environmental policies often affect problems andpeople in unforeseen ways. Problems are oftenclaimed to be critical even though they have littleimpact on human health or on sensitive ecosys-tems. Conversely, serious issues (e.g., dust pol-lution) may go unnoticed.

Problems that are relatively easy to solve buthave large demonstrable benefits (e.g., removinglead from gasoline, switching home heating fromcoal to gas) are sometimes ignored in favor ofconcentrating on complex problems that requirevery large amounts of resources to address (e.g.,nuclear cleanup). Some of the thinking on theseissues is influenced by the priorities of industrialcountries that have already solved many of the“simpler” problems with which developingcountries still have to grapple.

Cooperative approaches are essential. Adversarial systems of environmental management typically do not work well over a sustained period. Developing and implementing effective environmental strategies requires cooperation

between enterprises and other polluters, regional and local authorities, and national agencies. En- vironmental authorities must, at a minimum,

ensure the acquiescence and understanding ofmost of those whom they seek to regulate,whether in the private or the public sector. A car-rot-and-stick approach will still be necessary, butthe carrot may be the opportunity to participate

in critical decisions, rather than ill-directed finan-cial assistance. Similarly, penalties for poor envi-ronmental performance may be expanded toinclude public exposure and social stigma, as wellas financial levies.

Information is power; share it. In many countries, formal regulations are difficult to implement, yet there is public demand for a cleaner environment and for more responsible

behavior on the part of enterprises. Several countries are therefore experimenting with schemes

to make the environmental behavior of enterprises public. The evidence is very encouraging, suggesting

as it does that enterprises value their public im- age and are willing to take steps to preserve it. The lesson: an informed public (or regulator) can achieve much through informal pressures.

Set realistic standards. Strict standards, per se, often do not lead to a cleaner environment. In some cases, initial compliance deteriorates—for example, pollution control equipment is installed but is subsequently poorly maintained or is bypassed. In many cases, there is no enforcement culture, and the strict standards are ignored altogether.

Where new projects are being developed, the key to sound environmental performance lies in a comprehensive environmental assessment (EA) that must be carried out before any project design work is started and that should be based on close collaboration with local authorities and the community. The EA identifies the relevant emission levels and other measures necessary to ensure that the proposed project does not cause significant environmental harm. To the extent that the EA represents a genuine effort to reach a broadly accepted plan of action, the subse- quent environmental performance can be expected to be far better than if the project is simply required to meet independently established strict standards.

Where existing facilities are to be rehabilitated, an environmental audit will provide the neces-


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sary information on which to base cost-effectivemeasures to significantly upgrade environmen-tal performance.

Devolve Responsibility

Delegate responsibility downward as far as possible.The division of responsibility for environmentalpolicy and regulation will depend on historical,social, and legal factors. Just as environmentalauthorities should not attempt to micromanagethe decisions of individual enterprises and plants,national agencies should focus on the broadframework of priorities and instruments whiledevolving responsibility for detailed strategy andregulation to regional and local bodies whereverpossible. This may be frustrating at times, but

lack of local political or administrative commit-ment will sabotage policies imposed from aboveas much as would resistance from those who haveto comply with them.

The overall legal and institutional frameworkshould cover legislation that establishes special-ized regional agencies such as water basin au-thorities or that gives national or subnationalagencies powers to inspect premises, collect data,and impose various penalties. The lack of such alegislative framework has caused serious prob-lems in countries where provinces or states haveattempted to introduce discharge fees to recoverthe costs of dealing with water pollution and toprovide an incentive for polluters to reduce theirdischarges.

Think strategically at the level of the river basin orairshed. Where there are few significant sources of pollu-tion in a river basin or airshed, it is fairly easy toreach agreements with the polluters to improvetheir performance. Where the river basin orairshed encompasses a large metropolitan areawith numerous sources, a range of instrumentsshould be applied, tailored to the capacity of thevarious implementing agencies. First, thereshould be a clear understanding of the contribu-tion of different sources to water or air qualityand of the options at each source that would leadto cost-effective overall improvement in quality.(See Box 1 for a checklist of the kinds of ques-tions that might be asked.) Market-based instru-

Box 1. Strategic Choices for Cost-Effective Municipal Wastewater Investments:A Sample Checklist

• Have measures been taken to reduce domestic

and industrial water consumption?• Has industrial wastewater been pretreated?• Is it possible to reuse or recycle water?• Can the proposed investment be analyzed in a

river basin context? If so, have the merits of thisinvestment been compared with the benefits fromdifferent kinds of investments in other parts ofthe river basin? Note that a least-cost strategyfor achieving improved ambient water quality mayinvolve different (or no) technologies at differentlocations.

• Has the most cost-effective technology beenused to achieve the desired improvementin ambient water quality?

• Has an economic analysis been done to assessthe benefits (in terms of ambient water quality)that could be achieved by phasing in investmentsover, say, 10 or more years?

ments are useful but should be kept as simple aspossible.

It may also be useful to allow enterprises tonegotiate with each other to agree on cost-effec-tive measures for achieving quality improve-ments in a given watershed or airshed.Appropriate solutions will vary from case to caseand will often involve lengthy negotiations. Thekey to success is to keep the solutions as simpleas possible, and to ensure transparency and ac-countability on the part of all those involved. Inpoor countries or communities, the need to de-volve responsibility to the local level may some-times be even more important than in wealthiercommunities. Experience shows that local com-munities are willing and able to organize effec-tively to provide basic urban services (a reliabledrinking water supply, basic sanitation, solidwaste collection, and so on) at affordable cost and

in a sustainable manner, if municipalities orhigher-level government authorities provide ap-propriate incentives.

Set goals and objectives at a national level, but allowlocal flexibility in implementation. The notion of a “level playing field” within acountry has a very strong intuitive appeal to both


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6 OVERVIEW

environmental policymakers and those whomthey regulate. Yet common sense tells us that anyattempt to enforce uniform environmental poli-cies throughout large, diverse countries will bedoomed to failure. Indeed, the whole point of

decentralization is to permit different policy re-sponses to differences in priorities and problems.The dilemma is usually resolved by establishinga default or minimum set of incentives, stan-dards, and other interventions. Default require-ments apply wherever subnational authorities donot introduce explicit amendments, which may,subject to certain restrictions, be either stricter ormore relaxed than the defaults. Minimum re-quirements imply that no subnational authorityis permitted to adopt less demanding policies— although, in practice, such variation may occuras a result of differences in enforcement behav-ior. The extent of such default or minimum re-quirements varies greatly across countries, buteverywhere they tend to include measures fordealing with the most sensitive environmentalissues. In all countries, it will be the responsibil-ity of national authorities to propose and brokeragreements on the extent and nature of such corerequirements.

Adapt Solutions to Circumstances

Identify the target group: is it the top third or the bot-tom third? The reality that good management is a necessarycondition for good environmental performanceposes a dilemma in devising environmental poli-cies. One option is to focus on raising the stan-dards of the best third of all polluters, hoping thatthe laggards will gradually improve by learningfrom the example of their peers. This strategy ismost likely to be effective when competition andsocial pressure provide a stimulus for improve-ments in operational as well as environmentalperformance. Even then, progress tends to be lim-ited for the worst third of plants, and the onlysolution may be to force them out of business.

The alternative option of setting minimumemission standards and concentrating on plantsthat fail to meet them tends to lead to anadversarial style of regulation. Often, this under-mines attempts to encourage the better plants toimprove their performance. Few agencies havethe resources or political support to enforce emis-

sion standards strictly for more than a limitednumber of plants at a time, especially if frequentmonitoring of operational performance is re-quired. As a result, reducing emissions from theworst plants may be a lengthy process with much

backsliding.

Define targets, not solutions, with an emphasis onoperational practices and good housekeeping. At the level of enterprises and plants, the em-phasis must shift to environmental performanceviewed as one dimension of overall operationalefficiency and quality management. The objec-tive should be the consistent attainment of tar-gets and, over time, the progressive reduction ofemissions that are linked to important indicatorsof environmental quality. The focus of attentionneeds to be more on operational practices, goodhousekeeping, and the training of workers thanon the technological and design specifications ofpollution controls.

Make full use of compliance agreements as an essen-tial tool in dealing with large polluters. The achievement of environmental targets maystart with the installation of new controls at thesources responsible for the most damaging emis-sions. This is accompanied by arrangements tomonitor the effective operation of controls andto assess their impact on the critical indicators ofenvironmental quality. Even such a straightfor-ward scenario, however, allows ample scope fordifficulties, ranging from disagreements aboutwho should bear the costs to how the results ofmonitoring should be interpreted.

More typically, it will be necessary to negoti-ate with many sources, each of which—even withgood will—will have many reasons to delay ormodify the strategy proposed. The outcome will

be some balance between (a) a bottom-up con-sensual approach in which agreements about tar-gets for each source are laboriously reached on

an individual or a collective basis (as in Japan orthe Netherlands) and (b) a top-down approach

based on some combination of emissions stan-dards and economic incentives.

Use yardstick competition to improve environmental performance over time. The nature of the relationship between environ-mental agencies and those regulated may mean


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that the best approach is a combination of mini-mum requirements and market incentives. Insuch cases, it is critical that the minimum require-ments be adjusted regularly (as part of a trans-parent permit system) to reflect the average

performance of enterprises, rather than beingdetermined by technical criteria. The goal would be a system of regulation based on yardstick com-petition, which has the desirable property of en-couraging a continuous search for cost-effectiveimprovements while penalizing laggards, per-haps heavily.

Prevention is often less expensive than after-the-factmeasures. For the same environmental benefits, retrofittingexisting plant has been found to be three to fivetimes as expensive as up-front measures. The lat-ter include implementing appropriate technolo-gies at the outset, applying simple yet effectivemaintenance, and setting up monitoring systemsto ensure good performance and management.

Promote Good Management

Internalize environmental management. Significant and lasting environmental improvements will not come until the objectives and requirements of environmental protection are

internalized in the behavior of polluters, whether these be enterprises, organizations, or individuals.

Rely on incentives—both financial and social— wherever possible. Pollution control policies have relied heavily on technological standards. Even where these standards are effective, they tend to be an expensive way of meeting environmental goals. Market incentives that reward good environmental management offer an alternative strategy, but they may be resisted on grounds of fairness and be-

cause of uncertainty about the level of reduction of total emissions. In practice, any differences

between policies based on standards and those based on incentives are not large for particular industries or sources. The real advantage of re- lying on incentives lies in their flexibility and cost savings when emissions from many industries and sources have to be reduced. Incentives need not be financial; the provision of information and

public participation can have a significant impacton the behavior of some polluters.

Recognize that ”win-win” options are not costlesswhen management is the critical constraint.

The adoption of ”win-win” options such ascleaner production techniques, waste minimiza-tion, and energy efficiency seems to offer the pros-pect of environmental improvement at little orno cost. Yet diffusion of such practices is oftenfrustratingly slow, and the resulting benefits aremodest. The problem, once again, is one of man-agement capacity. The enterprises best placed toadopt and benefit from many ”win-win” oppor-tunities are likely to be among those that alreadyhave the best environmental performance. Thesame management constraints and weaknessesthat lead to poor performance mean that the costsof innovation are likely to be relatively high andthe benefits low for laggards.

Improved management is the best ”win-win” option,especially for small and medium-size enterprises. It is helpful to think in terms of two categories ofenterprise:

• Large enterprises that tend to produce differen-tiated products, possess ample managementand technical skills, enjoy access to world aswell as domestic markets, and have a time

horizon for their business decisions of at leastfive years. Because the quality of their prod-ucts is often a central aspect of their competi-tive strategy, these enterprises are concernedto build up and maintain a reputation for reli-ability and high standards. Achieving andmaintaining such a reputation means thatmanagers are used to focusing on the goodhousekeeping aspects of production that arecharacteristic of many ”win-win” opportuni-ties. Of necessity, they have learned andadopted some or all of the precepts of good

management outlined above. Thus, good en-vironmental performance simply becomes an-other dimension of the continuous process ofimplementing efficiency and quality improve-ments that is required to compete on qualityof output as well as on price.

• Small and medium-size enterprises that typicallyproduce undifferentiated products and ser-vices for local or domestic markets, with very


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8 OVERVIEW

limited management and technical resources,short time horizons, and little experience ofhow to upgrade the quality and efficiency oftheir production. Simple survival may be theirprimary concern, so that they tend to be risk

averse when it comes to changing their oper-ating methods. While the quality of their out-put may influence their customers, they tendto compete primarily on price. The painstak-ing process of building up a reputation for highquality is usually beyond both their resourcesand their time horizon. Few of the conditionsthat promote the adoption of good manage-ment practices apply, and the firms’ environ-mental performance will reflect the generalweaknesses of their management and opera-tional practice.

The contrasting circumstances of the enter-prises in the two groups highlight the fact thatwhat may appear to be a clear ”win-win” oppor-tunity to an outsider may prompt very differentresponses from different enterprises. Still, itshould not be assumed that even the most so-phisticated firms in the first group will easily orrapidly adopt many ”win-win” opportunities.For many, the economic gains may simply be toosmall to justify the bother, unless there are otherincentives. Improved management capacity insmall and medium-size enterprises will yield

substantial benefits, and assistance toward thisend will result in financial and environmentalrewards—provided that assistance does not sim-ply compensate for poor management actions inthe past.

In other words, technical solutions to improveefficiency and environmental performanceshould come as a result of management decisions,not be a substitute for them. This implies thatsubsidies to promote cleaner production—in theform of grants for hardware or of centers whichprovide technical advice—will rarely achieve

their intended purpose. However, demonstrationprojects that serve as concrete examples may pro-vide useful lessons for enterprises that do notwant to be the first to try new approaches.

Recognize that privatization or corporatization is of-ten the best and only solution to the environmental

problems of state-owned enterprises. Experience suggests that the environmental per-

formance of state-owned enterprises is oftenworse than that of privately operated enterprisesor, at least, of state-owned enterprises operatedon a commercially independent basis. Rectifyingthis situation depends on fundamental changes

in incentives and on the resolution of conflictingobjectives among those responsible for supervis-ing such enterprises. Privatization (or at least fullcorporatization) is almost always the best andoften the only way of addressing the problems.Nonetheless, privatization is no panacea.

Careful consideration must be given to theenvironmental obligations to be met by priva-tized enterprises, especially where these enter-prises are responsible for providing environ-mental services. The most important require-ment is that a clear plan for achieving environ-mental objectives in the most cost-effectivemanner (e.g., in a river basin context) must be arequired part of the bidding process prior toprivatization. The successful bidder must thenalso be given the responsibility for making all thelong-term infrastructure decisions necessary tomeet the environmental objectives agreed at theoutset.

Reward Good Behavior? Penalize Bad Behavior?

Money is often not the limiting factor. Our understanding of what is required to improve the environmental behavior of utilities and enterprises is changing. It had been generally assumed that violations of regulations occur because of lack of resources to invest in pollution control. Increasingly, it is accepted that reality is more complicated. Often, investments to comply with regulations are often made, but controls are then switched off or bypassed, or poor plant management negates whatever pollution control measures may have been put in place. The ques-

tion is, therefore, whether improvements in environmental performance really depend on investments in pollution control.

To what extent should pollution abatement be subsidized? Are lines of credit an effective mechanism for reducing pollution? Who should finance investments by public authorities? Experience with a broad range of projects throughout the world suggests the following answers.


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In general, governments should not subsidizeinvestments in pollution abatement by profitableenterprises. The ”polluter pays” principle isclearly applicable, and the incentive effects ofsuch subsidies are almost wholly undesirable.

Any exceptions to this broad precept must reston the existence of unusual and very specific ex-ternal benefits. Lack of commitment or of effec-tive regulatory oversight merely strengthens thecase for not providing subsidies, since it impliesthat the resources will almost certainly be wasted.

Improve financial performance and operationalmanagement. Unprofitable state-owned enterprises face manyproblems of more importance (to their manage-ments) than their environmental performance.The best way of solving their environmentalproblems is through improvements in their finan-cial performance and operational management.Subsidies, low-interest credits, and any other as-sistance will do nothing to change this harsh re-ality and will just be throwing good money after

bad. The advice to such enterprises must be tostraighten out their overall performance and thenfocus on environmental concerns, which will al-ready be lessened because of the benefits of bet-ter operational practices.

Lines of credit for industrial pollution abate-ment are rarely an effective way of promoting

better pollution management. The beneficiariestend to be large enterprises with access to othersources of credit. For such recipients, finance isnot the critical constraint in implementing effec-tive measures to reduce pollution. Small andmedium-size enterprises may face more seriousfinancial constraints, but these pale by compari-son with the problems caused by lack of com-mitment to good environmental performance and

by limited managerial or technical capacity. It is better to allocate resources to outreach, training,and technical assistance activities than to provide

privileged access to finance. There are circum-stances in which a targeted (unsubsidized) lineof credit may be a useful and justifiable comple-ment to a broad action program implementing apackage of measures that includes real incentivesand effective regulatory intervention. However,most general lines of credit simply represent thetriumph of hope over experience.

Users of the services provided by public utili-ties should be expected to pay prices that are suf-ficient to cover any investment costs involved. Itmay be sensible and efficient for such agenciesto draw on a general public investment pool, but

the objective should be to ensure that they haveindividual access to financial markets as high-quality borrowers. Investments in pollution con-trols should be financed either by borrowing or

by the use of depreciation funds, not out of cur-rent revenues from taxes or service charges. Ifutilities find that they may be unable to recoupthe borrowing costs by increasing service charges,there is a question as to whether the investmentsare really justified.

Close down or privatize industrial dinosaurs;

don’t use environmental concerns as an excuse forrestructuring.

The argument for subsidies appears especiallystrong for industrial dinosaurs, handicapped byan inheritance of outdated capital equipment,excess labor, and poor operational practices.However, such subsidies are likely to be misdi-rected to investment in new equipment, whereasimprovements in operational performance andgood housekeeping would bring about efficiencyas well as environmental gains. The remedy for

both the economic and the environmental prob-lems of such plants is either privatization or clo-sure. Environmental concerns should not be usedas an excuse to defer or divert necessary mea-sures to implement appropriate actions, norshould the enterprises be exempt from the regu-lar requirements of environmental policies.

Set requirements for old plants that reflect their eco-nomic life. To the extent that exceptions are made to thisgeneral rule, the implicit payback period for anyexpenditures, taking account of both economicand environmental benefits, should be very

short—not more than two years. This criterion willminimize the danger of financing redundant orwasteful measures to achieve goals that might be

better met in some other way. Providing financefor projects that produce such rapid and large ben-efits should not delay any move to privatize theenterprise, and little will be lost if a decision is madeto close all or parts of the plants concerned.


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10 OVERVIEW

Box 2. Management of Industrial Pollution:Suggestions for Enterprises, Governments,and External Donors

Enterprises

• Good environmental practice is just good manage-ment; environmental problems are often a symp-tom of inefficiency and waste of resources.

• Focus on plant housekeeping, maintenance, andmanagement. Would you sit on your plant floor? Ifnot, why not, and what can you do about it?

• Involve your staff and workers. Environmental prob-lems are often occupational health problems. De-fine clear goals, provide training, and monitorperformance.

• Focus on those environmental investments that

can be financed out of cash flow. This ensures thatenvironmental management is seen as part of theoverall operating costs of the enterprise.

Governments • Identify critical problems, and focus political, hu-

man, and financial resources on priorities. This willensure that the greatest impact will be made onthe most important problems.

• Get the external incentives for enterprises right.Decisions on taxes and the like may be more im-portant than environmental regulations. Don’t ne-glect pollution charges. Ministries of finance shouldthink of taxes as a way of changing behavior, not just generating revenues. Get all ministries to fol-low consistent policies.

• Be realistic in drawing up environmental regula-tions. Pure coercion has not worked and will notwork. Negotiate realistic targets with industries andplants; then insist that these targets be met. Allowadequate time for compliance.

• Strengthen environmental agencies; develop theirtechnical and monitoring capabilities; encouragethem to understand industries. Provide advice aswell as enforce permits. Decentralize responsibil-ity to regional authorities wherever possible.

External donors

• Focus on those issues where well-directed effortscan accelerate change. Broad environmentalprogress will come largely as a result of economicchange.

• Massive new investment may not be the solution;

it may add to the problem. The pursuit of invest-ment projects may distract management attention

from smaller but practical improvements and goals.Investment projects should be the reward for bet-ter management, not an incentive to attempt tobring it about.

• Avoid soft loans to enterprises (as distinguishedfrom national governments). Apply strict economiccriteria in assessing projects. Grants may have arole where there are large external benefits thatcannot be achieved by other means.

• Ensure that consultan t studies and technical

assistance have clear objectives and are di-rected toward specific needs of enterprises orgovernments.

Recognize the need for reasonable transition arrangements.Concerns about fairness are valid, but only if afair outcome is seen as one that imposes uniformobligations—emission reductions or controltechnologies—on all sources. Any focus on envi-ronmental management must emphasize oppor-tunities rather than obligations. Initial differencesin capital equipment, age of plant, and the likethat give rise to different opportunities decay asmanagers respond to the new policy framework.

Thus, fairness only requires adequate transitionalarrangements, not a permanent commitment toinappropriate policy instruments.

Mainstream Environmental Concerns

The broad concepts of sustainable developmentare now universally accepted. In practical terms,the challenge is to find ways to integrate pollu-tion prevention and abatement into the ways thatcities are run, enterprises are managed, andpeople lead their daily lives. The emphasis mustnow be on making environmental managementand performance part of the basic criteria by

which the success of any operation or process ismeasured. A number of practical suggestions aresummarized in Box 2.


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Effective July 1

PART II

IMPLEMENTING POLICIES IN PRACTICE


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Effective July 1

BASIC PRINCIPLES

SETTING PRIORITIES

AIR QUALITY MANAGEMENT WATER

QUALITY MANAGEMENT I NDUSTRIAL

POLLUTION MANAGEMENT FINANCING E NVIRONMENT

GLOBAL AND TRANSBOUNDARY ISSUES


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Effective July 1

Indicators of Pollution Management

The definition and selection of environmental performance indicators is still at an early stage,but the use of indicators is increasing, both for tracking trends in pollution and other environ-mental issues on a large scale (national or regional) and for monitoring Bank projects. Thischapter provides a framework to assist in the selection of appropriate indicators for pollution

projects and discusses the issues that must be considered. It provides examples of commonlyused indicators of air and water pollution.

World Bank involvement in pollution control and

urban environment projects forms a significantshare of a growing environmental portfolio (61%of a lending portfolio that has almost doubledsince 1992). As investments in this area grow, it

becomes increasingly important to develop quan-titative measures of the effect of such investmentson the environment, in this case air and water.There is therefore a heightened need to use envi-ronmental performance indicators (EPIs) formonitoring the success of investments in meet-ing the stated objective of pollution management.

Environmental Performance Indicators

An indicator is “something that provides a clueto a matter of larger significance or makes per-ceptible a trend or phenomenon that is not im-mediately detectable” (Hammond et al.1995). Anindicator ’s main defining characteristic is that itquantifies and simplifies information in a man-ner that promotes the understanding of environ-mental problems by both decisionmakers and thepublic. Above all, an indicator must be practicaland realistic, given the many constraints faced

by those implementing and monitoring projects.EPIs can help quantify impacts and monitor

progress. The goals are to assess how project ac-tivities affect the direction of change in environ-mental performance and to measure the magnitude ofthat change. Indicators that allow a quantitativeevaluation of project impacts are particularlyuseful, since they provide more information than

just whether the project is improving or degrad-ing the environment.

Information on the magnitude of a benefit is

required to determine whether it is worth theresources being expended to achieve it. Similarly,information on the magnitude of adverse impactsmight indicate whether the harm is justified,given the other benefits of the activity or projectin question.

Indicator Typology

In the past, monitoring of Bank projects focusedon inputs (resources provided under the project)and outputs (the immediate goods or services

provided by the project). Input indicators can bespecified in terms of overall funds earmarked,specific tasks to be funded, and funding agen-cies. Output indicators relate to specific actionstaken (such as electrostatic precipitators installed,rehabilitation of the water supply network, in-troduction of substances with low or no ozone-depleting potential, and switching of the fuelused in power plants); these would evolve fromthe design phase of the project. In addition tooften being unduly rigid, such a project-centricapproach focuses attention too narrowly on theprocess of implementing projects rather than onthe results. Increasingly, it is being realized thatthe ultimate assessment of the performance of apollution-related project should be based on itsimmediate and longer-term effects on parameterssuch as air and water quality. The emphasis istherefore moving toward the definition of out-come indicators (to measure the immediate resultsof the project) and impact indicators (to monitorthe longer-term results). The input and output in-

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14 IMPLEMENTING POLICIES: BASIC PRINCIPLES

dicators relate more to project process; the out-come and impact indicators relate to the overalleffect on the environmental resource, such as thequality of an airshed or a water body.

For example, a loan to control dust emissions

from cement plants might specify the followingindicators:

• Input (project-specific resources): financial ($Xmillion); technical assistance

• Output (goods and services produced): number of electrostatic precipitators and fabric fil- ter systems installed

• Outcome (immediate results): reduced emissions of particulate matter

• Impact (longer-term results): reductions in ambient concentrations of particulate matter; fewer health problems from respiratory dis-

eases.

Outcome and impact indicators should forman integral part of assessing the success of anenvironment sector project. Formulating effectiveoutcome and impact indicators, however, re-mains a major challenge.

Framework

Considerable work has been done to come upwith a coherent framework within which to as-sess the positive or negative effect of human ac-tivity on the environment. In a conceptualization

by the Organisation for Economic Co-operationand Development (OECD 1994), three aspects ofthe environmental problem are distinguished:the pressure that causes the problem (for ex-ample, emissions of sulfur dioxide, SO

2); the re-

sulting state of the environment (for example, ambient concentrations of sulfur dioxide in the air); and the response to the problem (for example, regulations requiring the use of low-sulfur coal to reduce emissions and ambient levels of sulfur dioxide). The pressure and state indicators measure project outcomes and impacts, respec- tively.

The pressure variable describes the underly- ing cause of the problem. The pressure may be an existing problem (for example, soil erosion in cultivated uplands or air pollution from buses), or it may be the result of a new project or investment (for example, air pollution from a new ther-

mal power plant, or loss of a mangrove forest because of port development). Whatever thecause, pressures affect the state of the environ-ment and then may elicit responses to addressthese issues.

The state variable usually describes somephysical, measurable characteristic of the envi-ronment. Ambient pollution levels of air or wa-ter are common state variables used in analyzingpollution (for example, particulate concentrationsin air or biochemical oxygen demand in water

bodies). For natural or renewable resources, othermeasures are used: the extent of forest cover, thearea under protected status, the size of an ani-mal population, or grazing density. Most EPIsrelate to easily measured state variables.

The response variables are those policies, in-vestments, or other actions that are introducedto solve the problem. Bank projects that haveimportant environmental components can bethought of as responses to environmental prob-lems. Such projects can affect the state either di-rectly, by way of ex-post cleanup activities, orindirectly, by acting on the pressures (for ex-ample, by providing alternative income sourcesfor farmers who would otherwise clear forests).In some cases, projects also seek to improve re-sponses to environmental problems, for example,

by increasing institutional capacity to monitorenvironmental problems and enforce environ-mental laws. Because Bank projects are them-selves considered to be responses to environ-mental problems, the following discussionfocuses on the use of pressure and state indica-tors to monitor project outcomes and impacts.

The relevant question is: what immediate andlong-term impacts will the project have on causalfactors (pressures) and the condition (state) of theenvironmental problem? It is important to lookat immediate outcomes that reduce pressures, aswell as at the longer term impact—otherwise theproject may be incorrectly blamed (or credited)

for a worsening of (or improvement in) the stateof the environmental resource.

Choosing Environmental Performance Indicators

Choosing appropriate EPIs is a difficult task. Nouniversal set of indicators exists that would be


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Indicators of Pollution Management 15

equally applicable in all cases. The diversityof environmental problems, of the contexts inwhich they arise, and of the possible solutionsto them is simply too great. This section dis-cusses how task managers might proceed to

select EPIs for their projects and the factors thatmust be borne in mind when doing so. Giventhe limited experience in this field, the discus-sion is necessarily preliminary and is likely to

be revised on the basis of lessons derived fromactually applying EPIs.

Link to Project Objectives

The process of selecting EPIs must necessarilystart from a precise understanding of the envi-ronmental problems being addressed and of

project objectives. Vague or overly broad objec-tives such as “reducing erosion” or “protecting biodiversity” are of little assistance in selectingEPIs and may well indicate that the project orcomponent itself is not very well thought out. Theappropriate responses will differ depending onwhether, for example, erosion is caused by de-forestation or by inappropriate farming practices,and so will the EPIs. Likewise, it makes a differ-ence whether erosion is a concern because of sedi-mentation in downstream reservoirs or becauseit undermines agricultural productivity. Again,the EPI best suited to the specific situation should

be chosen. Where the environmental consequenceis not an explicit project objective but a by-prod-uct of project activities, the environmental assess-ment (EA) process can aid in understanding thepossible impacts and hence in selecting the ap-propriate EPI.

Pressure versus State Indicators

The goal of EPIs is to monitor and evaluate envi-ronmental impacts arising from Bank-supportedactivities. This implies a need to measure twodimensions of the environmental problem: thestate of the environment and any changes in thatstate, and the contribution—direct or indirect— that the project is making to those changes. Indi-cators of both pressure and state are thereforetypically required to properly evaluate projectimpact. Indicators of pressure alone are ofteninsufficient because the link between a given

pressure and the consequent effect on the stateof the environment may be ambiguous or of un-known magnitude.

An important factor in the design or assess-ment of a project is to determine as accurately as

possible the relationship between the project andthe overall state that is of concern. For example,airshed modeling may be required to quantifythe relationship between a particular point sourceand ambient air quality.

Level of Measurement

Indicators of state and pressure can both be mea-sured at various levels. The objective of quanti-fying project benefits (or costs) will be aided ifindicators are selected as close to the project ob-

jective as possible. This is particularly true whenthe environmental function of concern plays animportant economic function (air quality as aninput into health; water quality as an input intoagriculture, fish production, or human consump-tion; soil quality as an input into agricultural pro-duction). For example, in the case of landdegradation, indicators of achievable yield aremore useful than indicators of soil depth. Well-chosen indicators would speak directly to theproblem of concern and, in most cases, wouldgive direct measures of project benefits (if theproject is alleviating problems) or costs (if theproject is causing them). The further the chosenindicator is from the economic end point, themore difficult it will be to evaluate the returns tothe project.

Spatial and Temporal Coverage

Careful thought needs to be given to the appro-priate spatial and temporal coverage of EPIs.Project activities might have an impact beyondthe area in which the project is active. The affectedarea may not coincide with the national territory,making national-level measures inappropriate.(Where feasible, however, it is highly desirablethat project-level indicators be comparable tonational-level indicators.) There may also be lags

before project effects are felt. Changes in the long-term status of biodiversity, for example, oftenonly manifest themselves over time scales muchlonger than those of typical Bank projects.


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Feasibility and Cost

To be effective as an aid to decisionmaking, EPIsmust be limited in number and should highlightessential factors concisely. They must also be

practical and realistic in terms of the costs in-volved. This may lead to tradeoffs between theinformation content of various indicators and thecost of collecting them. These tradeoffs will ob-viously vary across technologies and will dependheavily on institutional capacity. Certain indica-tors that are extremely simple or inexpensive tocollect may be inadequate for various reasons.The case of air pollution provides an example ofthe tradeoffs that must often be made in select-ing EPIs. Ideally, the project’s impact on morbid-ity and mortality would be measured, since

reducing these indicators is generally the in-tended result. Morbidity and mortality them-selves can be measured, but establishing a clearlink between them and either ambient pollutionlevels (a state indicator) or any given source ofemissions (a pressure indicator) remains ex-

preproject situation but with the counterfactualsituation: what would have happened in theabsence of the project? An increase in a pres-sure indicator could still be considered evi-dence of success if the pressure would have

increased even faster without the project. Insome cases, control groups can be used to mea-sure conditions in areas not affected by theproject; in others, statistical techniques areneeded to estimate what would have happenedwithout the project.

Air Pollution

A wide variety of airborne pollutants are of con-cern from the point of view of health and envi-ronmental impacts. A number of site-specific

studies have examined pollution risks, and al-though results vary, there are some importantconsistent findings. Health problems have typi-cally been associated with airborne particulates,measures of which include total suspendedparticulates (TSP) and particulate matter of 10

tremely difficult, despite recent progress in this microns or less in diameter (PM , the more dam-

area (Ostro 1994). The only feasible solution inmost such situations is to fall back on indicatorsof ambient concentrations or, if the source has

been established as contributing significantly tototal pollution, of emissions.

Interpreting EPIs

Once an indicator has been selected and mea-sured, it must still be interpreted. Emphasis hasincreasingly shifted toward performance indica-tors that measure changes relative to a goal es-tablished by environmental policy. Such anexplicit reference to goals is important to put theproject’s impact in perspective. Once the projectis under way, the emphasis is usually on varia-tions in the indicator over time. A positive changein a state indicator or a diminution of a pressureindicator is usually considered an indication ofsuccess, as long as it can be shown that it is notthe result of nonproject factors or random effects.(It may be necessary to establish baseline lev-els for preproject conditions and follow up withmeasurements over extended periods to ascer-tain trends with confidence.) The appropriatecomparison, however, is generally not with the

10

aging, smaller particles), and with ambient lead. Damage to structures, forests, and agricultural crops tend to be primarily linked with sulfur dioxide and with ground-level ozone.

Even though the ultimate objective of a project might be to mitigate damage to human health, monitoring such effects directly is extremely difficult because of substantial uncertainties about the exposure of different population groups to pollutants, their response to different levels of exposure, and the cumulative nature of damage. It is common, therefore, in gauging a project’s impact, to fall back on monitoring indicators of ambient concentrations or of emissions, depending on the project’s potential contribution to correcting the overall problem. The most com- monly used indicators of air pollution emissions and concentrations are listed in Table 1. These indicators may need to be supplemented

by additional EPIs, depending on local conditions.

Water Pollution

Industrial and agricultural chemicals and organicpollutants from agro-based industries are signifi-


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cant source of surface water and groundwaterpollution. Acidification of surface waters from airpollution is a more recent phenomenon and is athreat to aquatic life.

Understanding of the impact of water quality

on human health and aquatic life has improvedenormously in recent years. Two broad measuresof water quality have come to be widely used(see Table 1): oxygen levels or demands in thewater, and concentration of heavy metals. A mea-sure of pollutant concentrations could be re-garded as a pressure when measured in a streamthat feeds into a lake or as a state when measuredin the water body fed by the stream. Used to-gether, these indicators provide a rough but use-ful picture of the overall health of the water bodyand of the threats to it.

The procedures required in measuring waterquality indicators are problem specific and aregenerally well understood. Sampling methodsdiffer depending on whether the water body ofinterest is, for example, a lake or a stream. Tim-ing of measurements is often an issue, since con-centrations can vary substantially as the flow

varies; a given pressure may cause few problemswhen flow is at its peak but may have a majorimpact at times of low flow.

Global Environmental Problems

Measuring the impact of projects on global envi-ronmental problems such as climate change ordamage to stratospheric ozone poses significantproblems of scale. No single project is likely tohave any measurable impact on these problems.Measuring the state of the problem, therefore,does not generally fall within the scope of project-level monitoring, but determining the effect of aproject on pressures is feasible.

Climate Change

Climate change is linked to a number of impor-tant effects on the global life support system. Sea-level rise and shifts in primary agriculturalproduction are among the most dramatic poten-tial impacts. Although monitoring global climaticeffects is impractical at the project level, emis-

Table 1. Selected Environmental Performance Indicators for Air and Water Pollution

and for Global Environmental Problems

Problem

Air pollution

Water pollution

Global

environmentalproblems

Pressure indicators

EmissionsParticulatesSulfur dioxideLead

Discharges of industrialwastes

Biochemical oxygendemand (BOD)Chemical oxygendemand (COD)Heavy metals

Climate change

Emissions of green-house gases (carbondioxide, methane)

Stratospheric ozoneEmissions of ozone-depleting substances(chloroflurocarbons;halons; hydrochloro-fluorocarbons

State indicators

Ambient concentrationsParticulatesSulfur dioxideLead

Concentrations of pollutantsin water bodies

Biochemical oxygendemand (BOD)Chemical oxygendemand (COD)Heavy metals

Comments

The same indicators can serve asmeasures of pressure or state, de-pending on where they are mea-sured—at the smokestack or in theambient air.

See comment on air pollution.

Measuring the impact of specific

projects on a global problem is un-realistic.


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18

Table 2. Matrix of Representative Environmental Performance Indicators

Outcome or pressure Impact or stateEnvironment sector

Forestry

Biodiversity

Land quality

Air pollution

Water pollution

Global environmentalproblems

Institutional capacity

(measures the immediate outcome)

Rate of deforestationPer capita wood consumptionIncentives for forest clearing

Encroachment into natural habitatsLegal and illegal hunting offtakesUpstream pollution sources

Nutrient removal in excess of fertilizerapplications and natural regenerationErosion rates

Emissions of:Particulates (TSP or PM10)Sulfur dioxideLead

Discharges of human and industrial wastesFecal coliform countsBiochemical oxygen demand (BOD)Chemical oxygen demand (COD)

Heavy metalsClimate change

Emissions of greenhouse gases(carbon dioxide, methane)

Stratospheric ozoneEmissions of ozone-depletingsubstances (CFCs, halons, etc.)

(measures the long-term environmental impact)

Deforestation Area of forest

Preservation of intact forest areas Area of roadless forestForest fragmentation indexWatershed protectionProportion of watershed with appropriate cover

Area of natural habitatHabitat fragmentation indexProportion of habitat adjoining incompatible land usesPopulation status of selected indicator organismsChanges in the biogeochemistry of soils and waterways

Nutrient level (of nitrogen, phosphorus, potassium, and other nutrients,depending on the specific crops being grown)Soil depthOrganic matter contentTotal factor productivity (TFP)

Ambient concentrations of:Particulates (TSP or PM10)Sulfur dioxideLead

Concentrations of pollutants in water bodiesFecal coliform countsBiological oxygen demand (BOD)Chemical oxygen demand (COD)Heavy metals

Existence of environmental laws and agencies Active nongovernmental organizations (NGOs)Number of trained staff in environmental agenciesNumber of laboratory facilities

Comments

The appropriate state indicatorsdepend on the objective; pressureindicators are often similar acrossobjectives, but the appropriateresolution changes (for example, toa focus on particular watersheds).

Special attention needs to bedevoted to identifying and monitor-ing the state of critical naturalhabitats

Appropriate indicators are very sitespecific.

The same indicators can serve asmeasures of pressure or of state,depending on where they aremeasured.

The same indicators can serve asmeasures of pressure or of state,depending on where they aremeasured.

Measuring the impact of specificprojects on a global problem isunrealistic.

Note: This table provides examples of EPIs used in the major categories of environmental problems that are normally encountered in Bank work; it is not meant to be exhaustive. Project effects aregrouped according to whether they are primarily pressure indicators (equivalent to the project-linked outcome measures) or measures of change in the overall state (equivalent to impact indicators). Sinceinput and output indicators are already measured by Bank projects, they are not listed in the matrix below. Examples of such indicators are best provided with a specific project in mind. See Table 3 forexamples of input and output indicators for the Lithuania Siauliai Environment Project.


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19

Table 3. Use of EPIs in the Lithuania Siauliai Environment Project

Output (goods and Input services produced by the project;

(resources provided details to be determined at Outcome Objectives for project activities) ―detailed design‖ phase) (direct outcomes of project activities) Risks Impact

Reduce pollutantloads from theSiauliai area intothe Upper Lielupe

river basin

Improve the quality,reliability, and costof water supplyand wastewaterservices in Siauliai

Improve regionaland local environ-mental qualitymonitoring andenforcementsystem in the UpperLielupe river basin

IBRD loan (US$6.20million)Bilateral grants(US$8.54 million)

Government (US$7.6million)Municipal (US$0.4million)

All funds wil l beutilized for procure-ment of equipment,works, consultants,and technicalassistance (training).

Rehabilitated sewer networkRehabilitated wastewatertreatment plantNew wastewater treatment plant

Pollution control measures at pigfarmsPollution control measures foragricultural runoff

Rehabilitated equipmentNew equipmentRestructured water utilityTrained people

Monitoring and laboratoryequipmentOther equipmentTrained peopleManagement plans for industrialpollution reduction and sludgeEmergency management plan

Amount of treated wastewater increased from40,000 cubic meters per day (m3/d) to 50,000m3/d.Pollution level reduced at the treatment plants’

outlets and at other locations At mouth of Lielupe River

Nitrogen reduced from 250 metric tonsper year (t/y) to 18 t/yPhosphorus reduced from 56 t/y to 15 t/y

At wastewater treatment plantBOD reduced from 1000 t/y to 200 t/ySuspended solids reduced from 1,000t/y to200 t/yNitrogen reduced from 500 t/y to 360 t/yPhosphorus reduced from 75 t/y to20 t/y

Pollution levels from agricultural pilot sites andpig farms reduced at selected points down-stream (baseline to be determined).

Improved drinking water qualityDecreased iron contentSofter, potable water

Reduced number of breaks and trouble callson:

Water supply and distribution system

Wastewater collection and conveyancesystem (baseline to be determined)

Adequate operating ratio (< 85%) Adequate working ratio (< 70%) for thewater utility

Regular and accurate monitoring ofwater qualityRegular enforcement visits at pollutionsources (quantified definitions to bedetermined when drafting manage-ment plans)

Problems withavailability of localfunding

Outcome dependenton ability to adjusttariffs

Revenue collectiondifficultiesPolitical difficultieswith organization-al restructuring(staff reduction)Potential coordi-nation difficultiesbetween con-cerned parties

Lower health carecosts (by X%)Increased tourismrevenues (by Y%)

Increased inter-national politicalgoodwill (measuredthrough...)

(Baselines to bedetermined)


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sions of greenhouse gases (GHGs) give an indi-cation of the pressures being generated. The mostcommonly used indicator in this area is somemeasure of carbon emissions (or other gases thatcontribute to global warming) or a measure of

the percentage reduction in carbon emissionsfrom some base scenario. When multiple GHGsare involved, the global-warming potential can

be used as a weighting factor.

Stratospheric Ozone

The ozone layer blocks ultraviolet radiation thatis harmful to humans and all living things. Thedegradation of the ozone layer is precipitated byozone-depleting substances (ODSs) such as chlo-rofluorocarbons (CFCs) and halons. Here too,

monitoring global effects is impractical, so workfocuses on measuring changes in pressure result-ing from project activities. The consumption andhence the emissions of ODSs can be used as ameasure of the pressures being generated by eco-nomic agents. At the national level, production,net of exports and with imports added, can betaken as a proxy for the country’s contributionto the problem. At the project level, the project’scontribution to national production and con-sumption can be used as a proxy.

Health Dimensions

Climate change and ozone depletion have numer-ous health repercussions that are only beginningto be understood in a manner that allows for pre-ventive measures. For example, climate changecan directly cause injury and death related to tem-perature extremes, storms, floods, and forest and

brush fires. Climate change can also have a number of indirect effects that collectively cause evenmore serious health problems, such as an increasein malaria due to a spread of mosquito habitat,malnutrition due to desertification and droughts,aggravation of diarrheas linked to water pollu-tion and of respiratory diseases linked to air pol-lution, and mental and physical stress caused bystorms and floods. The Intergovernmental Panelon Climate Change (IPCC) has concluded thatthe overall health effects of climate change andozone depletion are likely to be wide ranging and

negative and that developing countries will behardest hit and most constrained in finding op-tions to prevent or adapt to changes.

Table 2 provides several examples of pressureindicators for global environmental problems; no

state indicators are provided, since it is unrealis-tic to hope to link any specific project withchanges in the state of global problems. Addi-tional details on climate change and ozone deple-tion problems can be found in recent publicationsof the World Bank’s Global Coordination Divi-sion (World Bank 1995a, 1995b).

Examples

Practical implementation of pollution indicatorsin World Bank projects is just beginning. One

example that presents a complete set of proposedindicators is the Lithuania Siauliai EnvironmentProject (see Table 3).

References and Sources

Adriaanse, Albert. 1993. Environmental Policy Perfor-mance Indicators. The Hague: Ministry of Housing,Physical Planning and the Environment.

Hammond, Allen L., A. Adriaanse, E. Rodenburg, D.Bryant, and R. Woodward. 1995. Environmental In- dicators: A Systematic Approach to Measuring and Re-

porting on Environmental Policy Performance in the Context of Sustainable Development. Washington, D.C.: World Resources Institute.

Hettige, Hemamala, Paul Martin, Manjula Singh, andDavid Wheeler. 1995. “The Industrial PollutionProject System.” Policy Research Working Paper1431. World Bank, Policy Research Department, Washington, D.C.

IPCC (Intergovernmental Panel on Climate Change).1994. The Radiative Forcing of Climate Change. Report of IPCC Working Group 1. Geneva: World Meteo- rological Organization and United Nations Environ- ment Programme.

OECD (Organisation for Economic Co-operation andDevelopment). 1994. Environmental Indicators. Paris.

Ostro, Bart. 1994. “Estimating the Health Effects of AirPollutants: A Method with an Application to

Jakarta.” Policy Research Working Paper 1301.World Bank, Policy Research Department, Washing-ton, D.C.


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World Bank. 1993a. “Operational Directive 4.01: Envi-ronmental Assessment.” World Bank Operational

Manual. Washington, D.C.

————. 1993b. Portfolio Management: Next Steps— AProgram of Action. Washington, D.C.

————. 1994. “Operational Directive 10.04: EconomicEvaluation of Investment Operations.” World BankOperational Manual. Washington, D.C.

————. 1995a. “The Decision Support System forIndustrial Pollution Control.” Draft. EnvironmentDepartment, Washington, D.C.

————. 1995b. Monitoring Environmental Progress: AReport on Work in Progress. Washington, D.C.

————. 1995c. “Monitoring and Evaluation Guide-lines for ODS Phaseout Investment Projects.” Draft.Environment Department, Global Coordination Di-vision, Washington, D.C.

————. 1995d. “Monitoring and Evaluation Guide-lines for GEF Global Warming Investment Projects.” Draft. Environment Department, Global Coordina-tion Division, Washington, D.C.


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Effective July 1

The Environmental Assessment Process

The Pollution Prevention and Abatement Handbook is intended to be used principally asinput to the World Bank Group’s environmental assessment (EA) processes. This chapteroutlines the key features of the EA procedure for World Bank projects. The International Fi-nance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) followthe same overall policies but have somewhat different environmental analysis and review pro-cedures. (For details, contact IFC’s or MIGA’s Environmental Unit.)

In recent years, environmentally sustainable de-

velopment has become one of the most impor-tant challenges facing development institutionssuch as the World Bank. Accordingly, the Bankhas introduced a variety of instruments into itslending and advisory activities. Environmentalassessment (EA) is one of the most important ofthese tools.

The purpose of EA is to enhance projects byhelping prevent, minimize, mitigate, or compen-sate for any adverse environmental and socialimpacts. Development institutions and manydeveloping countries have introduced EA re-

quirements and regulations into their develop-ment activities. Their experience to date showsthat EAs often do provide these benefits.

EA at the World Bank

In 1989, the Bank adopted Operational Directive(OD) 4.00, “Annex A: Environmental Assess-ment.” EA became standard procedure for Bank-financed investment projects. In 1991 thedirective was amended as OD 4.01. It is in theprocess of

world bank pollution prevention and abatement

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