world bank document of pollution prevention and abatement

8/19/2019 World Bank Document of 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 PrinciplesIndicators of Pollution Management 13The Environmental Assessment Process 22Types of Environmental Standards 27Principles of Waste Avoidance and Utilization 29Efficient Use of Energy 32

Monitoring Environmental Quality 38

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

Air Quality ManagementAirshed Models 82Removal of Lead from Gasoline 91

Urban Air Quality Management 96

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

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

Management of Hazardous Wastes 144Pollutant Release and Transfer Registers 151

Financing Environment

Pollution Charges: Lessons from Implementation 160

Global and Transboundary IssuesGreenhouse Gas Abatement and Climate Change 169Least-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

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

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

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


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Contents v

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

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

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

Glossary of Environmental Terms 441


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Acknowledgments

ThePollution 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 principalauthors of individual guidelines were JohnDixon, Arundhati Kunte, Magda Lovei, andKseniya Lvovsky. Sari Soderstrom providedthe information in Table 3 of the chapter onIndicators of Pollution Management. The Handbookis based on technical documentsfrom the United Nations EnvironmentProgramme (UNEP) and the United NationsIndustrial Develop- ment Organization(UNIDO) and on numerous commissionedreports by consultants. The documents have

been extensively reviewed by severalgovernments, 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 Handbookand the manyrelated administrative tasks have depended criti-cally on the tireless assistance of Sriyani Cumine(desktop publishing), Clare Fleming, KarenDanczyk, and Virginia Hitchcock (editing),Olivia McNeal, and Luz Rivera.

The Handbookwas developed in collaborationwith UNIDO (Ralph Luken), the Industry andEnvironment Office of the UNEP (JacquelineAloisi de Larderel and Fritz Balkau), and theWorld Health Organization (Dieter Schwela). TheWorld Bank Group is thankful for the generousfinancial support provided by the governmentsof Canada, the Netherlands, and Norway and forthe comments and guidance provided by theUnited States En- vironmental ProtectionAgency (USEPA), by Frank van den Akker(Netherlands Ministry of Housing, Physical

Planning and Environment), and by the WorldHealth Organization in providing technicalcomments and guidance.Special thanks is owed to the German govern-

ment for carrying out an exhaustive review ofthe entire Handbookand 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 publishedEnvironmen-tal Guidelinesto provide technical advice andguidance to staff and consultants involved inpollution-related projects. In the years sincethen, there have been significant changes intechnolo- gies, in pollution management policies

and practices, and in the activities andportfolio of the World Bank Group. ThisPollution Prevention and Abatement Handbookhas

been prepared to update and replace the 1988guidelines.The Handbookis specifically designed to be

used in the context of the World Bank Group’senvironmental policies, as set out in OperationalPolicy (OP) 4.01, “Environmental Assessment,”and related documents.1World Bank Grouppolicy stresses the primacy of the project-specific or site-specific environmentalassessment process in setting the requirementsfor environmental performance. The guidelinescontained in this Handbookare therefore subjectto interpretation in light of the results of theenvironmental assessment.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

sustainable development by focusingattention on the

benefits—both environmental and economic—ofpollution prevention, including cleaner produc-tion and good management techniques.The Handbookconsists of three parts.Part Icontains a summary of key policy les-

sons in pollution management, derived from

practical experience inside and outside theWorldBank Group over the past decade. AlthoughPartI is aimed primarily at government decision-makers, other readers will derive considerable

benefit from a better understanding of theissuesfacing government agencies.Part IIpresents good-practice notes on imple-

mentation of policy objectives, based on experi-ence with World Bank Group projects and onlessons from the policies and practices of otheragencies and organizations in this field.Part IIIprovides detailed guidelines to be ap-

plied in the preparation of World Bank Groupprojects. The guidelines, which cover almost 40industrial sectors, represent state-of-the-artthink-ing on how to reduce pollution emissions fromthe production process. In many cases, theguide-lines provide numerical targets for reducingpol-lution, as well as maximum emissions levelsthatare normally achievable through a combinationof cleaner production and end-of-pipetreatment.The guidelines are designed to protect humanhealth; reduce mass loadings to theenvironment;draw on commercially proven technologies; becost-effective; follow current regulatory trends;

1. The World Bank consists of the International Bank for Reconstruction and Development (IBRD) and its


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concessional-lending affiliate, the International Development Association (IDA). The World Bank Groupincludes, in addition to the IBRD and IDA, the International Finance Corporation (IFC), which focuses oncooperation with the private sector in developing countries, and the Multilateral Investment Guarantee Agency(MIGA). The World Bank’s Operational Policy 4.01 is a conversion of the existing Operational Directive 4.0 andcontains the same 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

Part III can minimize the use of resources and

reduce the quantity of wastes requiringtreatment and disposal. The guidelinesrepresent good environmental managementpractices that can be implemented andmaintained with the skills and resourcestypically available in countries in which theWorld Bank Group operates. The World BankGroup is committed to strengthening manage-ment and technical skills and to supporting thedevelopment of the necessary institutions inthese countries. Where relevant nationalregulations do not exist, the guidelines mayprovide a basis for negotiating site-specificagreements between regulators andenterprises.The Handbookwas compiled by staff members

of the Environment Departments of the WorldBank and the International Finance Corporation(IFC). Contributions and advice came frommany other technical and operational unitswithin the World Bank Group and from outsideconsultants. A number of drafts werecirculated and dis- cussed, including a fullAnnual Meetings edition in September 1997. Theguidelines related to thermal power plantswere the subject of a two-day internationalexpert panel workshop held at the World HealthOrganization (WHO) in Geneva in April 1997.Officials of key borrowing countries, othergovernment and private sector representa- tives,and WHO and Bank experts attended theworkshop.The IFC and the World Bank’s Industry and

Mining Division carried out and coordinateddetailed technical reviews of the relevant indus-try-specific guidelines. Technical backgroundmaterial, as well as advice and comments, were

provided 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 consultation

and discussions with other international fi-

nancing institutions, industry organizations,regulatory agencies, and nongovernmental orga-nizations have taken place. Many commentshave been received and have been incorporatedinto the Handbookto the extent possible. It isintended and hoped that the Handbookrepresents a broad consensus of what isachievable through current good practice inpollution management.This Handbookis envisaged as a living docu-

ment: its implementation will be monitored overthe next year, further industry guidelines will be

issued, and the need for revision will beweighed in the light of the accumulatedexperience. The full text of the Handbookisavailable on the environmental section on theWorld Bank Group’s website(ww w .worldbank.o rg), where any revi- sions oradditional guidelines will be posted.Formal and informal consultations on the

content and application of the Handbookwillcon- tinue, and comments are welcome.Comments should be addressed to theProgram Leader, Urban, Industry and Energy,Environment De- partment, World Bank, or tothe Unit Head, En- vironment and SocialReview, Environment Division, IFC, at theaddress given on the copy- right page.

Andreas RaczynskiDirector

Technical and Environment DepartmentInternational Finance Corporation

Robert T. WatsonDirector

Environment DepartmentThe 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 pulpAIJ Activities Implemented Jointly (Kyoto Protocol)AMD Acid mine drainageAOX Adsorbable organic halidesBAT Best available technologyBATNEEC 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 furnaceBPT Best practicable technologyCAC Command and controlCDM Clean development mechanismCFC ChlorofluorocarbonCIP Clean-in-place (methods)COD Chemical oxygen demandCON Control octane numberCP Cleaner productionCSM Continuous stack monitoringCTC Carbon tetrachlorideDALY Disability-adjusted life yearDCF Directed credit fundDDT DichlorodiphenyltrichloroethaneDMT Dimethyl terphthalateDO Dissolved oxygenDRR Dose-response relationshipDSS Decision Support System for Integrated Pollution ControlEA Environmental assessmentEAF Electric arc furnaceECF Elemental chlorine-free (bleaching)EIA Environmental Impact Assessment

EMS Environmental management systemEPI Economic performance indicatorESCO Energy service companyESP Electrostatic precipitatorsETF Earmarked tax fundEU European UnionFBC Fluidized-bed combustionFCC Fluid catalytic crackingFGD Flue gas desulfurization

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x POLLUTION PREVENTION AND ABATEMENT HANDBOOK

FGR Flue gas recirculationFGT Flue gas treatmentGEF Global Environment FacilityGF Green fundGHG Greenhouse gas

GIS Geographic information systemGJ GigajouleGW GigawattGWP Global-warming potentialHCFC HydrochlorofluorocarbonIARC International Agency for Cancer ResearchIBRD International Bank for Reconstruction and DevelopmentIDA International Development AssociationIFC International Finance CorporationIPCC Intergovernmental Panel on Climate ChangeIPPS Industrial Pollution Projection SystemIRIS Integrated Risk Information System

ISIC International Standard Industrial ClassificationISO International Organization for StandardizationISC Industrial Source Complex (USEPA model)kWh Kilowatt-hoursLCA Life cycle analysisLEA Low-excess-air (firing)LIDAR Light detection and ranging (system)LPG Liquefied petroleum gasMCF Methyl chloroformMCP Marginal production costMIGA Multilateral Investment Guarantee AgencyMON Motor octane numberMOS Metal oxide semiconductor (technology)MSC Marginal social costMTBE MethylterbutyletherMWe Megawatts of electricityNAPAP National Acid Precipitation Assessment ProgramNGO Nongovernmental organizationNO2 Nitrogen dioxideNO

xNitrogen oxide

NPK Nitrogen, phosphorus, potassium (fertilizer)NSPS New source performance standardOD Operational DirectiveODP Ozone depletion potentialODS Ozone-depleting substanceOECD Organisation for Economic Co-operation and DevelopmentOFA Overfire airOTC Over-the-counter (medicines)PAH Polynuclear aromatic hydrocarbonsPAHO Pan American Health OrganizationPBR Polybutadiene rubberPCB Polychlorinated biphenylPFA Pulverized fly ashPFC Perfluorocarbon


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Abbreviations, Acronyms, and Data Notes xi

PIC Product of incomplete combustionPM10 Particulate matter 10 microns or less in aerodynamic diameterPOM Prescription-only medicineppb Parts per billionppm Parts per million

PRTR Pollutant Release and Transfer RegistryRON Research octane numberRRAD Respiratory-related restricted activity daySBR Styrene butadiene rubberSCR Selective catalytic reductionSMEs Small and medium-size enterprisesSMT Surface mount technologySNCR Selective noncatalytic reductionSO2 Sulfur dioxideSO

xSulfur oxide

SPM Suspended particulate matterSSP Single phosphate

TCLP Toxic characteristic leachate procedureTCF Total chlorine-free (bleaching)TEL Tetraethyl leadTEWI Total equivalent warming impactTFP Total factor productivitytpd (Metric) tons per dayTML Tetramethyl leadTOR Terms of referenceTRI Toxic Release InventoryTRS Total reduced sulfurTSS Total suspended solidsTSP Total suspended particulates; triple phosphateUNEP United Nations Environment ProgrammeUNFCCC United Nations Framework Convention on Climate ChangeUNIDO United Nations Industrial Development OrganizationUSAID U.S. Agency for Environmental DevelopmentUSEPA U.S. Environmental Protection AgencyVOC Volatile organic compoundVOSL Value of statistical lifeWAD Weak acid dissociableWHO World Health OrganizationWQO 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

Group.


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Pollution Prevention and Abatement HandbWORLD BANK GRO

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PART I

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Poll"tion #anagement$ %ey Policy &essons

Progress toward bringing about a cleaner environment has relied on a philosophy of pollutioncontrol. This has involved sometimes costly measures and controversial political decisions. As a result, developing countries, poor communities, and financially constrained enterpriseshave often argued that the environment is an expensive luxury that diverts resources frommore productive uses. This perspective is giving way to a new paradigm stating thatneglecting the environment can impose high economic and even financial costs, while manyenvironmental benefits can in fact be achieved at low cost. For this to work, however, we needto better understand what motivates those responsible for pollution and their responses todifferent regulations, incentives, and other pressures. Moreover, we can no longer afford toview the environment as a technical issue to be addressed independently from overall

municipal and industrial strategic decisionmaking. The new approach can be summed up bythe expression: environmental management, 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 toenvironmental

management ,using a broad mix of incentivesand pressures to achieve sustainableimprovements. This involves:

•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 andman- agement rather than just control ofemissions

•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, notmechanisms.Governments need to set clearobjectives for environmental issues, related tooverall development and growth goals,

before focusing on specific sector actions orinstitutional changes. These objectives arefrequently set out in terms of human health,productive resources, and con- servation ofecosystems.

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 particulatesresultingfromincomplete combustion) andlack of clean drink-ing waterare among the most important prob-lems. It is easy to tell whether policies affectingthese issues have been effective, and it ispossibleto gain considerable political capital from ad-

dressing them. Decisionmakers should thereforeaim to set concrete goals that mean somethingtothe public and politicians and then focus theirattention on achieving real progress. This strat-egy will succeed only if progress toward meet-ing the goals is regularly monitored and thestrategy is revised in response.

First do those things that are a high priority and thatare also inexpensive and easily implemented.Environmental policies often affect problemsand people in unforeseen ways. Problems areoften claimed to be critical even though theyhave little impact on human health or onsensitive ecosys- tems. Conversely, seriousissues (e.g., dust pollution) may go unnoticed.Problems that are relatively easy to solve but

have large demonstrable benefits (e.g., removinglead from gasoline, switching home heatingfrom coal to gas) are sometimes ignored in favorof concentrating on complex problems thatrequire very large amounts of resources toaddress (e.g., nuclear cleanup). Some of thethinking on these issues is influenced by the

priorities of industrial countries that havealready solved many of the “simpler”problems with which developing countriesstill have to grapple.

Cooperative approaches are essential.Adversarial systems of environmental manage-ment typically do not work well over asustainedperiod. Developing and implementing effectiveenvironmental strategies requires cooperation

between enterprises and other polluters,

regional

and local authorities, and national agencies. En-vironmental authorities must, at a minimum,


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ensure the acquiescence and understanding ofmost of those whom they seek to regulate,whether in the private or the public sector. Acar- rot-and-stick approach will still benecessary, but the carrot may be theopportunity to participate in critical decisions,rather than ill-directed financial assistance.Similarly, penalties for poor environmental

performance may be expanded to includepublic exposure and social stigma, as well asfinancial levies.

Information is power; share it.In many countries, formal regulations are diffi-cult to implement, yet there is public demandfora cleaner environment and for more responsible

behavior on the part of enterprises. Severalcoun-tries are therefore experimenting with schemes

to make the environmental behavior of enter-prises 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)canachieve much through informal pressures.

Set realistic standards.Strict standards, per se, often do not lead to acleaner environment. In some cases, initial com-pliance deteriorates—for example, pollutioncon-trol equipment is installed but is subsequentlypoorly maintained or is bypassed. In manycases,there is no enforcement culture, and the strictstandards are ignored altogether.Where new projects are being developed, the

key to sound environmental performance lies ina comprehensive environmental assessment(EA)that must be carried out before any project de-sign work is started and that should be based onclose collaboration with local authorities andthecommunity. The EA identifies the relevant emis-sion levels and other measures necessary to en-sure that the proposed project does not causesignificant environmental harm. To the extentthat the EA represents a genuine effort to reacha broadly accepted plan of action, the subse-quent environmental performance can be ex-pected to be far better than if the project issimplyrequired 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 andplants, national agencies should focus on the

broad framework of priorities and instrumentswhile devolving responsibility for detailedstrategy and regulation to regional and local

bodies wherever possible. This may be

frustrating at times, but lack of local political oradministrative commitment will sabotagepolicies imposed from above as much as wouldresistance from those who have to comply withthem.The overall legal and institutional framework

should cover legislation that establishes special-ized regional agencies such as water basin au-thorities or that gives national or subnationalagencies powers to inspect premises, collectdata, and impose various penalties. The lack ofsuch a legislative framework has caused seriousprob- lems in countries where provinces orstates have attempted to introduce dischargefees to recover the costs of dealing with waterpollution and to provide an incentive forpolluters to reduce their discharges.

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 wouldlead to cost-effective overall improvement inquality. (See Box 1 for a checklist of the kindsof ques- tions that might be asked.) Market-

based instru-

Box 1. Strategic Choices for Cost-EffectiveMunicipal Wastewater Investments: Sample Chec!list

• 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 benefitsfrom different kinds of investments in other parts of the river basin? Note that a leastcoststrate!y for achievin! improved ambient water "uality may involve different #or no$technolo!ies at different locations%

• Has the most costeffective technolo!ybeen used to achieve the desiredimprovement in ambient water "uality?

• Has an economic analysis been done to assessthe benefits #in terms of ambient water "uality$that could be achieved by phasin! ininvestments over, say, &' 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

case and will often involve lengthy negotiations.The key to success is to keep the solutions assimple as possible, and to ensure transparencyand ac- countability on the part of all thoseinvolved. In poor countries or communities, theneed to devolve responsibility to the local levelmay sometimes be even more important thanin wealthier communities. Experience showsthat local communities are willing and able toorganize effectively to provide basic urbanservices (a reliable drinking water supply, basicsanitation, solid waste collection, and so on) ataffordable cost and in a sustainable manner, ifmunicipalities or higher-level governmentauthorities provide appropriate 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

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6 OVERVIEW

environmental policymakers and those whomthey regulate. Yet common sense tells us thatany attempt to enforce uniform environmentalpolicies throughout large, diverse countrieswill be doomed to failure. Indeed, the whole

point of decentralization is to permit differentpolicy responses to differences in prioritiesand problems. The dilemma is usually resolved

by establishing a default or minimum set ofincentives, standards, and other interventions.Default requirements apply whereversubnational authorities do not introduce explicitamendments, which may, subject to certainrestrictions, be either stricter or more relaxedthan the defaults. Minimum re- quirementsimply that no subnational authority ispermitted 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 suchcore requirements.

Adapt Solutions to Circumstances

Identify the target group: is it the top third or thebot- 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, hopingthat the laggards will gradually improve bylearning from the example of their peers. Thisstrategy is most likely to be effective whencompetition and social pressure provide astimulus for improvements in operational aswell as environmental performance. Even then,progress tends to be limited for the worst thirdof plants, and the only solution may be to forcethem out of business.The alternative option of setting minimum

emission standards and concentrating on plantsthat fail to meet them tends to lead to anadversarial style of regulation. Often, thisunder- mines attempts to encourage the betterplants to improve their performance. Fewagencies have the resources or political supportto 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 attention

needs 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 damagingemis- sions. This is accompanied byarrangements to monitor the effectiveoperation of controls and to assess their impacton the critical indicators of environmentalquality. Even such a straightfor- ward scenario,however, allows ample scope for difficulties,ranging from disagreements about who should

bear the costs to how the results of monitoringshould be interpreted.More typically, it will be necessary to negoti-

ate with many sources, each of which — evenwith good will—will have many reasons todelay or modify the strategy proposed. Theoutcome will be some balance between (a) a

bottom-up con- sensual approach in whichagreements about targets for each source arelaboriously reached on an individual or acollective basis (as in Japan or the Netherlands)and (b) a top-down approach based on somecombination of emissions standards andeconomic 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 minimumrequire- ments be adjusted regularly (as part of atrans- parent permit system) to reflect the

average performance of enterprises, ratherthan being determined by technical criteria. Thegoal would be a system of regulation based onyardstick competition, which has the desirableproperty of encouraging a continuous searchfor cost-effective improvements whilepenalizing 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. Thelat- ter include implementing appropriatetechnolo- gies at the outset, applying simple yeteffective maintenance, and setting upmonitoring systems to ensure goodperformance and management.

Promote Good Management

Internalize environmental management.Significant and lasting environmental improve-ments will not come until the objectives and re-

quirements of environmental protection areinternalized in the behavior of polluters, whetherthese be enterprises, organizations, orindividuals.

Rely on incentives—both financial and social— wherever possible.Pollution control policies have relied heavily ontechnological standards. Even where these stan-dards are effective, they tend to be an expensiveway of meeting environmental goals. Market in-centives that reward good environmental man-

agement offer an alternative strategy, but theymay be resisted on grounds of fairness and be-cause of uncertainty about the level of reductionof total emissions. In practice, any differences

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

and

public participation can have a significantimpact on 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 thepros- pect of environmental improvement atlittle or no cost. Yet diffusion of such practicesis often frustratingly slow, and the resulting

benefits are modest. The problem, once again, isone of management capacity. The enterprises

best placed to adopt and benefit from many”win-win” opportunities are likely to beamong those that already have the bestenvironmental performance. The same

management constraints and weaknesses thatlead to poor performance mean that the costs ofinnovation 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 categoriesof enterprise:

•Large enterprisesthat tend to produce differen-tiated products, possess ample managementand technical skills, enjoy access to world as

well as domestic markets, and have a timehorizon 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 and

adopted some or all of the precepts of goodmanagement 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 enterprisesthat 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 betheir primary concern, so that they tend to be

risk averse when it comes to changing theiroper- ating methods. While the quality oftheir output may influence their customers,they tend to compete primarily on price. Thepainstak- ing process of building up areputation for high quality is usually beyond

both their resources and their time horizon.Few of the conditions that promote theadoption of good management practicesapply, and the firms’ environmentalperformance 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 verydifferent responses from different enterprises.Still, it should not be assumed that even themost so- phisticated firms in the first group willeasily or rapidly adopt many ”win-win”opportunities. For many, the economic gainsmay simply be too small to justify the bother,unless there are other incentives. Improvedmanagement capacity in small and medium-

size enterprises will yield substantial benefits,and assistance toward this end will result infinancial and environmental rewards — provided that assistance does not sim- plycompensate for poor management actions in thepast.In other words, technical solutions to improve

efficiency and environmental performanceshould come as a result of managementdecisions, not be a substitute for them. Thisimplies that subsidies to promote cleanerproduction — in the form of grants for hardwareor of centers which provide technical advice — will rarely achieve their intended purpose.

However, demonstration projects that serve asconcrete examples may provide useful lessonsfor enterprises that do not want to be the firstto 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 operatedenterprises or, at least, of state-ownedenterprises operated on a commerciallyindependent basis. Rectifying this situation

depends on fundamental changes in incentivesand on the resolution of conflicting objectivesamong those responsible for supervis- ing suchenterprises. 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 the

environmental 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 allthe long-term infrastructure decisions necessaryto meet the environmental objectives agreed atthe outset.

Reward Good Behavior? PenalizeBad Behavior?

Money is often not the limiting factor.Our understanding of what is required to im-prove the environmental behavior of utilitiesandenterprises is changing. It had been generallyassumed that violations of regulations occur be-cause of lack of resources to invest in pollutioncontrol. Increasingly, it is accepted that realityismore complicated. Often, investments to complywith regulations are often made, but controls

arethen switched off or bypassed, or poor plantmanagement negates whatever pollution controlmeasures may have been put in place. The ques-tion is, therefore, whether improvements in en-vironmental performance really depend oninvestments in pollution control.To what extent should pollution abatement be

subsidized? Are lines of credit an effectivemecha-nism for reducing pollution? Who shouldfinance

investments by public authorities? Experience


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with a broad range of projects throughout theworld 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 bewasted.

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 theirfinan- cial performance and operationalmanagement. Subsidies, low-interest credits,and any other assistance will do nothing tochange this harsh reality and will just bethrowing good money after bad. The advice tosuch enterprises must be to straighten out theiroverall performance and then focus onenvironmental concerns, which will already belessened because of the benefits of bet- teroperational 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 performanceand by limited managerial or technical capacity.

It is better to allocate resources to outreach,training, and technical assistance activities thanto provide privileged access to finance. Thereare circumstances in which a targeted(unsubsidized) line of credit may be a usefuland justifiable comple- ment to a broad actionprogram implementing a package of measuresthat includes real incentives and effectiveregulatory intervention. However, most generallines of credit simply represent the triumph ofhope over experience.

Users of the services provided by public utili-ties should be expected to pay prices that aresuf- ficient to cover any investment costsinvolved. It may be sensible and efficient forsuch agencies to draw on a general public

investment pool, but the objective should be toensure that they have individual access tofinancial markets as high- quality borrowers.Investments in pollution controls should befinanced either by borrowing or by the use ofdepreciation funds, not out of current revenuesfrom taxes or service charges. If utilities findthat they may be unable to recoup the

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 beused as an excuse to defer or divert necessarymea- sures to implement appropriateactions, nor should the enterprises be exemptfrom the regu- lar requirements ofenvironmental 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 veryshort — not more than two years. This criterionwill minimize the danger of financing redundantor wasteful measures to achieve goals that might

be better met in some other way. Providingfinance for projects that produce such rapid andlarge benefits should not delay any move toprivatize the enterprise, and little will be lost if adecision is made to close all or parts of the plantsconcerned.


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10 OVERVIEW

Box ". Management of In#ustrial $ollution:Suggestions for Enterprises% &overnments%an# External 'onors

Enterprises

• (ood environmental practice is )ust !oodmana!e ment* environmental problems areoften a symp tom of inefficiency and waste of resources%

• +ocus on plant housekeepin!, maintenance, andmana!ement% ould you sit on your plant floor? If not, why not, and what can you do about it?

• Involve your staff and workers% -nvironmentalprob lems are often occupational healthproblems% .e fine clear !oals, providetrainin!, and monitor performance%

• +ocus on those environmental investmentsthat

can be financed out of cash flow% /his ensures

that environmental mana!ement is seen as partof the overall operatin! costs of the enterprise%

&overnments

• Identify critical problems, and focus political, human, and financial resources on priorities% /hiswill ensure that the !reatest impact will be madeon the most important problems%

• (et the external incentives for enterprises ri!ht%.ecisions on taxes and the like may be more important than environmental re!ulations% .on0t ne!lect pollution char!es% 1inistries of financeshould think of taxes as a way of chan!in!behavior, not )ust !eneratin! revenues% (et all

ministries to fol low consistent policies%

• 2e realistic in drawin! up environmental re!ulations% 3ure coercion has not worked and will notwork% Ne!otiate realistic tar!ets with industriesand plants* then insist that these tar!ets be met% 4llow ade"uate time for compliance%

• 5tren!then environmental a!encies* developtheir technical and monitorin! capabilities*encoura!e them to understand industries%3rovide advice as well as enforce permits%.ecentralize responsibil ity to re!ionalauthorities wherever possible%

External #onors

• +ocus on those issues where welldirected effortscan accelerate chan!e% 2roadenvironmental pro!ress will come lar!ely as aresult of economic chan!e%

• 1assive new investment may not be the solution*

it may add to the problem% /he pursuit of invest

ment pro)ects may distract mana!ementattention from smaller but practical improvementsand !oals% Investment pro)ects should be thereward for bet ter mana!ement, not anincentive to attempt to brin! it about%

• 4void soft loans to enterprises #as distin!uishedfrom national !overnments$% 4pply stricteconomic criteria in assessin! pro)ects% (rantsmay have a role where there are lar!e externalbenefits that cannot be achieved by other means%

• -nsure that consultant studies and technical

assistance have clear ob)ectives and are directed toward specific needs of enterprises or

!overnments%

Recognize the need for reasonable transitionarrangements.Concerns about fairness are valid,

but only if a fair outcome is seen as one thatimposes uniform obligations — emissionreductions or control technologies — on allsources. Any focus on environmentalmanagement must emphasize oppor- tunitiesrather than obligations. Initial differences incapital equipment, age of plant, and the likethat give rise to different opportunities decay asmanagers respond to the new policy framework.Thus, fairness only requires adequatetransitional arrangements, not a permanentcommitment to inappropriate policyinstruments.

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 waysthat cities are run, enterprises are managed,and people lead their daily lives. The emphasis

must now be on making environmentalmanagement and performance part of the basiccriteria by which the success of any operation orprocess is measured. A number of practicalsuggestions are summarized in Box 2.


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Effective July 1

PART II

I#P&#NTIN' PO&ICI( IN PRACTIC


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Effective July 1

)A(IC PRINCIP&(

(TTIN' PRIORITI(

AIR *+A&IT #ANA'#NT !ATR

*+A&IT, #ANA'#NT I ND+(TRIA&

PO&&+TION #ANA'#NT FINANCIN' NVIRON#NT

'&O)A& AND TRAN()O+NDAR I((+(


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Effective July 1

Indicators o- Poll"tion #anagement

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 otherenviron- mental issues on a large scale (national or regional) and for monitoring Bank projects. This chapter provides a framework to assist in the selection of appropriateindicators for pollution projects and discusses the issues that must be considered. It provides examples of commonly used indicators of air and water pollution.

World Bank involvement in pollution control

and urban environment projects forms asignificant share of a growing environmentalportfolio (61% of a lending portfolio that hasalmost doubled since 1992). As investments inthis area grow, it becomes increasinglyimportant to develop quan- titative measures ofthe effect of such investments on theenvironment, in this case air and water. There istherefore a heightened need to use envi-ronmental performance indicators (EPIs) formonitoring the success of investments in meet-ing the stated objective of pollutionmanagement.

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).An indicator ’s main defining characteristic isthat it quantifies and simplifies information ina manner that promotes the understanding ofenvironmental problems by bothdecisionmakers and the public. Above all, anindicator must be practical and realistic, given

the many constraints faced by thoseimplementing and monitoring projects.EPIs can help quantify impacts and monitor

progress. The goals are to assess how project ac-tivities affect thedirectionof change in environ-mental performance and to measure themagnitudeof that change. Indicators that allow aquantitative evaluation of project impacts areparticularly useful, since they provide moreinformation than just whether the project isimproving 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 ofadverse impacts might indicate whether theharm is justified, given the other benefits of theactivity or project in question.

Indicator Typology

In the past, monitoring of Bank projects focusedoninputs(resources provided under the project)andoutputs(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 precipitatorsinstalled, rehabilitation of the water supplynetwork, in- troduction of substances with lowor no ozone- depleting potential, andswitching of the fuel used in power plants);these would evolve from the design phase ofthe project. In addition to often being undulyrigid, such a project-centric approach focuses

attention too narrowly on the process ofimplementing projects rather than on theresults. Increasingly, it is being realized that theultimate assessment of the performance of apollution-related project should be based on itsimmediate and longer-term effects onparameters such as air and water quality. Theemphasis is therefore moving toward thedefinition ofout- come indicators(to measure theimmediate results of the project) and impactindicators(to monitor the longer-term results).Theinputandoutputin-


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13


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14 IMPLEMENTING POLICIES: BASIC PRINCIPLES

dicators relate more to project process; theout-comeandimpactindicators relate to the overalleffect on the environmental resource, such asthe quality 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 emis-sions of particulate matter

• Impact(longer-term results): reductions inam- bient 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 aconceptualization by the Organisation forEconomic Co-operation and Development(OECD 1994), three aspects of theenvironmental problem are distinguished: the pressurethat causes the problem (for ex-ample, emissions of sulfur dioxide, SO

2); the re-

sultingstateof the environment (for example,ambient concentrations of sulfur dioxide in theair); and theresponseto the problem (forexample,regulations requiring the use of low-sulfur coalto reduce emissions and ambient levels of sul-fur dioxide). The pressure and state indicatorsmeasure project outcomes and impacts, respec-tively.The pressure variable describes the underly-

ing cause of the problem. The pressure may bean existing problem (for example, soil erosion incultivated uplands or air pollution from buses),or it may be the result of a new project or invest-ment (for example, air pollution from a newther-

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 inanalyzing pollution (for example, particulateconcentrations in air or biochemical oxygendemand in water bodies). For natural orrenewable resources, other measures are used:the extent of forest cover, the area underprotected status, the size of an ani- malpopulation, or grazing density. Most EPIs relateto 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, forexample, by increasing institutional capacity tomonitor environmental problems and enforceenviron- mental laws. Because Bank projects arethem- selves considered to be responses toenvironmental problems, the followingdiscussion focuses on the use of pressure andstate indicators to monitor project outcomesand impacts.The relevant question is: what immediate and

long-term impacts will the project have oncausal factors (pressures) and the condition(state) of the environmental problem? It isimportant to look at immediate outcomes thatreduce pressures, as well as at the longer termimpact—otherwise the project may beincorrectly blamed (or credited) for aworsening of (or improvement in) the state ofthe environmental resource.

Choosing EnvironmentalPerformance 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 factorsthat must be borne in mind when doing so.Given the limited experience in this field, thediscus- sion is necessarily preliminary and islikely to be revised on the basis of lessonsderived from actually 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.The appropriate responses will differ dependingon whether, for example, erosion is caused byde- forestation or by inappropriate farmingpractices, and so will the EPIs. Likewise, itmakes a differ- ence whether erosion is aconcern because of sedi- mentation indownstream reservoirs or because itundermines agricultural productivity. Again,the EPI best suited to the specific situationshould be chosen. Where the environmentalconsequence is not an explicit project objective

but a by-product of project activities, theenvironmental assessment (EA) process canaid in understanding the possible impacts andhence in selecting the appropriate 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 projectand the overall state that is of concern. Forexample, airshed modeling may be required toquantify the relationship between a particularpoint source and ambient air quality.

Level of Measurement

Indicators of state and pressure can both bemeasured at various levels. The objective ofquanti- fying project benefits (or costs) will beaided if indicators are selected as close to the

project objective as possible. This isparticularly true when the environmentalfunction of concern plays an importanteconomic function (air quality as an input intohealth; water quality as an input intoagriculture, fish production, or humanconsump- tion; soil quality as an input intoagricultural production). For example, in thecase of land degradation, indicators ofachievable yield are more useful than indicatorsof soil depth. Well- chosen indicators wouldspeak directly to the problem of concern and,

in most cases, would give direct measures ofproject benefits (if the project is alleviatingproblems) or costs (if the project is causingthem). The further the chosen indicator is fromthe economic end point, the more difficult itwill be to evaluate the returns to the 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. Theaffected area may not coincide with the nationalterritory, making national-level measuresinappropriate. (Where feasible, however, it ishighly desirable that project-level indicators becomparable to national-level indicators.) Theremay also be lags before project effects are felt.Changes in the long- term status of

biodiversity, for example, often only manifestthemselves over time scales much longer thanthose 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 andthe cost of collecting them. These tradeoffs willob- viously vary across technologies and willdepend heavily on institutional capacity.Certain indicators that are extremely simple orinexpensive to collect may be inadequate forvarious reasons. The case of air pollutionprovides an example of the tradeoffs that mustoften be made in selecting EPIs. Ideally, theproject’s impact on morbidity and mortality

would be measured, since reducing theseindicators is generally the intended result.Morbidity and mortality them- selves can bemeasured, but establishing a clear link betweenthem and either ambient pollution levels (a stateindicator) or any given source of emissions (apressure 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 sourcehas been established as contributing

significantly to total 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 positivechange in a state indicator or a diminution of apressure indicator is usually considered anindication of success, as long as it can be shownthat it is not the result of nonproject factors orrandom effects. (It may be necessary toestablish baseline levels for preprojectconditions and follow up with measurementsover extended periods to ascer- tain trendswith confidence.) The appropriate comparison,however, is generally not with the

10

aging, smaller particles), and with ambientlead.Damage to structures, forests, and agriculturalcrops tend to be primarily linked with sulfur di-oxide 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 dif-ficult because of substantial uncertainties aboutthe exposure of different population groups topollutants, their response to different levels ofexposure, and the cumulative nature of damage.It is common, therefore, in gauging a project’simpact, to fall back on monitoring indicators ofambient concentrations or of emissions, depend-ing on the project’s potential contribution tocorrecting the overall problem. The most com-

monly used indicators of air pollution emis-sions and concentrations are listed in Table 1.These indicators may need to be supplemented

by additional EPIs, depending on local condi-tions.

Water Pollution

Industrial and agricultural chemicals andorganic pollutants from agro-based industriesare signifi-


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cant source of surface water and groundwaterpollution. Acidification of surface waters fromair pollution is a more recent phenomenon andis a threat to aquatic life.Understanding of the impact of water quality

on human health and aquatic life has improvedenormously in recent years. Two broadmeasures of water quality have come to bewidely used (see Table 1): oxygen levels ordemands in the water, and concentration ofheavy metals. A measure of pollutantconcentrations could be re- garded as apressure when measured in a stream that feedsinto a lake or as a state when measured in thewater body fed by the stream. Used to-gether, these indicators provide a rough butuse- ful picture of the overall health of the water

body and of the threats to it.The procedures required in measuring water

quality 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 fewproblems when flow is at its peak but may havea major impact 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 ofproject- level monitoring, but determining theeffect of a project 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 primaryagricultural production are among the mostdramatic potential impacts. Althoughmonitoring global climatic effects is impracticalat the project level, emis-

(a)le 1. Selecte# Environmental $erformance In#icators for ir an# Water$ollution an# for &lo)al Environmental $ro)lems

3roblem

4ir pollution

ater pollution

(lobalenvironmentalproblems

3ressure indicators

-missions3articulates5ulfur dioxide6ead

.ischar!es of industrialwastes

2iochemical oxy!endemand #27.$Chemical oxy!endemand #C7.$Heavy metals

Climate chan!e-missions of !reenhouse !ases #carbondioxide, methane$

5tratospheric ozone-missions of ozonedepletin! substances#chloroflurocarbons*halons* hydrochlorofluorocarbons

5tate indicators

4mbient concentrations3articulates5ulfur dioxide6ead

Concentrations of pollutantsin water bodies

2iochemical oxy!endemand #27.$Chemical oxy!endemand #C7.$Heavy metals

Comments

/he same indicators can serve asmeasures of pressure or state, dependin! on where they aremea sured8at the smokestack or in the ambient air%

5ee comment on air pollution%

1easurin! the impact of specific pro)ects on a !lobalproblem is un realistic%


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1 8

(a)le ". Matrix of *epresentative Environmental $erformanceIn#icators

7utcome or pressure

Impact or state

-nvironment sector

+orestry

2iodiversity

6and "uality

4ir pollution

ater pollution

(lobal environmentalproblems

Institutionalcapacity

#measures the immediate outcome$

9ate of deforestation3er capita wood consumptionIncentives for forest clearin!

-ncroachment into natural habitats6e!al and ille!al huntin! offtakes:pstream pollution sources

Nutrient removal in excess of fertilizer applications and natural re!eneration-rosion rates

-missions of;3articulates #/53 or 31&'$5ulfur dioxide6ead

.ischar!es of human and industrial wastes+ecal coliform counts2iochemical oxy!en demand #27.$

Chemical oxy!en demand #C7.$Heavy metals

Climate chan!e-missions of !reenhouse !ases#carbon dioxide, methane$

5tratospheric ozone-missions of ozonedepletin!substances #C+Cs, halons, etc%$

#measures the lon!term environmental impact$

.eforestation 4rea of forest

3reservation of intact forest areas 4rea of roadless forest+orest fra!mentation indexatershed protection

3roportion of watershed with appropriate cover

4rea of natural habitatHabitat fra!mentation index3roportion of habitat ad)oinin! incompatible land uses3opulation status of selected indicator or!anismsChan!es in the bio!eochemistry of soils and waterways

Nutrient level #of nitro!en, phosphorus, potassium, and othernutrients, dependin! on the specific crops bein! !rown$5oil depth7r!anic matter content/otal factor productivity #/+3$

4mbient concentrations of;3articulates #/53 or 31

&'$

5ulfur dioxide6ead

Concentrations of pollutants in water bodies+ecal coliform counts2iolo!ical oxy!en demand #27.$

Chemical oxy!en demand #C7.$Heavy metals

-xistence of environmental laws and a!encies 4ctive non!overnmental or!anizations #N(7s$Number of trained staff in environmental a!enciesNumber of laboratory facilities

Comments

/he appropriate state indicatorsdepend on the ob)ective* pressureindicators are often similar acrossob)ectives, but the appropriateresolution chan!es #for example, toa focus on particular watersheds$%

5pecial attention needs to bedevoted to identifyin! and monitorin! the state of critical naturalhabitats

4ppropriate indicato rs are very sitespecific%

/he same indicators can serve asmeasures of pressure or of state,dependin! on where they aremeasured%

/he same indicators can serve asmeasures of pressure or of state,dependin! on where they are

measured%

1easurin! the impact of specificpro)ects on a !lobal problem isunrealistic%

Note; /his table provides examples of -3Is used in the ma)or cate!ories of environmental problems that are normally encountered in 2ank work* it is not meant to be exhaustive% 3ro)ect effects are!rouped accordin! to whether they are primarily pressure indicators #e"uivalent to the pro)ectlinked outcome measures$ or measures of chan!e in the overall state #e"uivalent to impact indicators$% 5inceinput and output indicators are already measured by 2ank pro)ects, they are not listed in the matrix below% -xamples of such indicators are best provided with a specific pro)ect in mind% 5ee /able < for examples of input and output indicators for the 6ithuania 5iauliai -nvironment 3ro)ect%


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1 9

(a)le +. ,se of E$Is in the ithuania Siauliai Environment $roect

7utput #!oods andInput services produced by the pro)ect*

#resources provided details to be determined at 7utcome7b)ectives for pro)ect activities$ =detailed desi!n> phase$ #direct outcomes of pro)ect activities$ 9isks Impact

9educe pollutantloads from the5iauliai area intothe :pper 6ielupe

river basin

Improve the "uality,reliability, and costof water supplyand wastewaterservices in 5iauliai

Improve re!ionaland local environmental "ualitymonitorin! andenforcementsystem in the :pper 6ielupe river basin

I29. loan #:5@%A'million$2ilateral !rants#:5B%D million$

(overnment #:5E%@million$1unicipal #:5'%Dmillion$

4ll funds wil l beutilized for procurement of e"uipment,works, consultants,and technicalassistance #trainin!$%

9ehabilitated sewer network9ehabilitated wastewatertreatment plantNew wastewater treatment plant

3ollution control measures at pi!farms3ollution control measures for a!ricultural runoff

9ehabilitated e"uipmentNew e"uipment9estructured water utility/rained people

1onitorin! and laboratorye"uipment7ther e"uipment/rained people1ana!ement plans for industrialpollution reduction and slud!e-mer!ency mana!ement plan

4mount of treated wastewater increased fromD',''' cubic meters per day #m


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sions of greenhouse gases (GHGs) give an indi-cation of the pressures being generated. Themost commonly used indicator in this area issome measure of carbon emissions (or othergases that contribute to global warming) or a

measure of the percentage reduction in carbonemissions from some base scenario. Whenmultiple GHGs are involved, the global-warming potential can be used as a weightingfactor.

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. Heretoo, monitoring global effects is impractical, sowork focuses on measuring changes in pressureresult- ing from project activities. Theconsumption and hence the emissions of ODSscan be used as a measure of the pressures beinggenerated by economic agents. At the nationallevel, production, net of exports and withimports added, can be taken as a proxy for thecountry’s contribution to the problem. At theproject level, the project’s contribution tonational production and consumption can beused as a proxy.

Health Dimensions

Climate change and ozone depletion havenumer- ous health repercussions that are only

beginning to be understood in a manner thatallows for pre- ventive measures. For example,climate change can directly cause injury anddeath related to tem- perature extremes, storms,floods, and forest and brush fires. Climatechange can also have a number of indirecteffects that collectively cause even more serioushealth problems, such as an increase in malariadue to a spread of mosquito habitat,malnutrition due to desertification anddroughts, aggravation of diarrheas linked towater pollution and of respiratory diseaseslinked to air pollution, and mental andphysical stress caused by storms and floods. TheIntergovernmental Panel on Climate Change(IPCC) has concluded that the overall healtheffects of climate change and ozone depletionare 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 pressure

indicators for global environmental problems;

no state indicators are provided, since it isunrealistic to hope to link any specific projectwith changes in the state of global problems.Addi- tional details on climate change and ozonedeple- tion problems can be found in recentpublications of the World Bank’s GlobalCoordination Divi- sion (World Bank 1995a,1995b).

Examples

Practical implementation of pollution indicators

in World Bank projects is just beginning. Oneexample that presents a complete set ofproposed indicators is the Lithuania SiauliaiEnvironment Project (see Table 3).

References and Sources

Adriaanse, Albert. 1993. Environmental Policy Perfor-mance Indicators. The Hague: Ministry ofHousing, 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 theContext 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. Reportof 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 ofAir Pollutants: A Method with anApplication to Jakarta.” Policy ResearchWorking Paper 1301. World Bank, PolicyResearch Department, Washing- ton, D.C.


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World Bank. 1993a. “Operational Directive 4.01:Envi- ronmental Assessment.” World BankOperational Manual.Washington, D.C.

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

————. 1994. “Operational Directive 10.04:Economic Evaluation of Investment Operations.”World Bank Operational Manual.Washington, D.C.

————. 1995a. “The Decision Support Systemfor Industrial Pollution Control.” Draft.Environment Department, 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 CoordinationDi- vision, Washington, D.C.

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


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Effective July 1

T.e nvironmental Assessment Process

The Pollution Prevention and Abatement Handbookis intended to be used principallyas input to the World Bank Group’s environmental assessment (EA) processes. Thischapter outlines the key features of the EA procedure for World Bank projects. TheInternational Fi- nance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) follow the same overall policies but have somewhat different environmentalanalysis and review procedures. (For details, contact IFC’s or MIGA’s EnvironmentalUnit.)

In recent years, environmentally sustainable de-velopment has become one of the most impor-tant challenges facing development institutionssuch as the World Bank. Accordingly, theBank has introduced a variety of instrumentsinto its lending and advisory activities.Environmental assessment (EA) is one of themost important of these tools.The purpose of EA is to enhance projects by

helping prevent, minimize, mitigate, or compen-sate for any adverse environmental and socialimpacts. Development institutions and many

developing 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 the

process of conversion to an Operational Policy,OP 4.01. EA is designed to be a flexible processthat makes environmental considerations an in-tegral part of project preparation and allows en-vironmental issues to be addressed in a timelyand cost-effective way during projectpreparation and implementation.The primary responsibility for the EA process

lies with the borrower. the Bank’s role is to ad-vise the borrower throughout the process, tocon-

firm that practice and quality are consistentwith EA requirements, and to ensure that theprocess feeds effectively into projectpreparation and implementation.

Stage 1: Screening

To decide the nature and extent of the EA to becarried out, the process begins with screening atthe time a project is identified. The project teamdetermines the nature and magnitude of thepro- posed project’s potential environmental

and social impacts and assigns the project toone of three environmental categories.

Category A:a full EA is required. Category Aprojects are those expected to have “adverse im-pacts that may be sensitive, irreversible, and di-verse” (OD 4.01), with attributes such as directpollutant discharges large enough to cause deg-radation of air, water, or soil; large-scale physicaldisturbance of the site or surroundings; extrac-tion, consumption, or conversion of substantialamounts of forest and other natural resources;

world bank document of pollution prevention and abatement

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