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Special Evaluation Study on Environmental Safeguards
Completed 2006

In response to a request from the Development Effectiveness Committee of the Asian Development Bank's (ADB) Board of Directors, the Operations Evaluation Department (OED) has undertaken a special evaluation study (SES) of ADB's Environment Policy with respect to environmental safeguards. This SES was originally included in OED's 2008 Work Program but was brought forward to 2006 to enable the update of the Environment Policy, led by the Regional and Sustainable Development Department (RSDD), to consider its findings. The SES has, therefore, been completed under strict constraints on both the time and resources.

  Summary of Findings

ADB's Environmental Policy has been found to be relevant to ADB's activities and the needs of its developing member countries (DMCs). There is evidence that ADB's involvement in projects sometimes added value in terms of improving environmental performance at the project level. However, such value addition varies markedly from country to country, from project to project, and in different aspects of environmental assessment. There is also evidence that the 2002 Environment Policy has provided additional impetus to the improvement of the environmental safeguards toward greater clarity, more emphasis on assessment of project alternatives, and improved monitoring, notwithstanding the fact that there are still major weaknesses in all these areas. The current environmental safeguard procedures have been effective in avoiding major significant adverse environmental impacts from ADB's programs and projects.

However, the efficiency and sustainability of ADB's current procedures are questionable due to high transaction costs and limited benefits. The main cause of this is the uniform application of a single set of procedures to all DMCs, which is no longer an effective response to the needs of DMCs or the growing resource constraints faced by ADB. There would be merit in revising the Environment Policy and associated procedures to address the changing situation in DMCs. This would likely be focused on the need for greater flexibility in procedures, recognition of the need for alignment with national systems, a shift to an emphasis on capacity building rather than project focus, and a shift in emphasis from procedural compliance to results delivery and cost effectiveness.

  Key Issues

• The "one size fits all" approach is not effective, failing to add value in many cases.
• There is an overemphasis on procedural compliance and not enough attention paid to results delivery.
• There is a perverse incentive for ADB lending decisions to be actively directed to avoid financing projects that might trigger environmental procedures.
• Environmental safeguards and environmental enhancement are two sides of the same coin, and one should not be overemphasized at the expense of the other.
• "Mainstreaming" but also "marginalizing" environmental specialists.
• Poor technical quality of environmental impact assessments.

  Recommendations

Several recommendations were made based on the findings of the SES for consideration in the policy update led by RSDD. These include

• review of the 2002 Environment Policy and potential refinement;
• strengthening organizational effectiveness;
• improving the quality of ADB's environmental assessment process and lowering transaction costs to make it more cost-effective;
• improving the partnership with NGOs and civil organizations on environment;
• moving toward adoption of improved country systems and harmonization with other development partners in selected DMCs; and
• preparing an implementation plan for the revised Environmental Policy.