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Dams and Development E-Paper Contents

p. -1 of 74 BACK | NEXT Home Page of Dams and Development Foreword I. Why an e-paper on dams and development? II. Assessing options III. Participatory processes IV. Social impacts V. Environmental impacts VI. Benefit distribution VII. Dam safety and sustainability VIII. Existing projects IX. Improving governance X. What other organizations say XI. ADB, Dams, and Development XII. References Contact Us

Export Credit Agencies and Bilateral Agencies

The recent process towards harmonizing environmental policies among export credit agencies coordinated by the Organisation for Economic Cooperation and Development (OECD) has removed a number of earlier inconsistencies.

For further information on the Common Approaches and recent initiatives of some ECAs towards the WCD recommendations, see:

• Common approaches for ECA environmental guidelines
• Some examples from ECA guidelines

Common approaches for ECA environmental guidelines

In September 2003, OECD countries announced an agreement to 'strengthen their common approaches for evaluating the environmental impact of infrastructure projects supported by their governments' export credit agencies with a view to ensuring that these meet established international standards'.

Compared to the 2001 Common Approaches, the latest agreement is enhanced in a number of respects:

• Projects should, in all cases, comply with the environmental standards of the host country. When the relevant international standards against which the project has been benchmarked are more stringent, these standards would be applied.
• The relevant international standards are those of the World Bank Group and, where applicable from a geographical viewpoint, those of Regional Development Banks. Members may also benchmark against any higher internationally recognised environmental standards, such as those of the European Community.
• With regard to the most sensitive projects, the environmental standards to be applied will be reported and monitored by the ECG, and exceptional deviations below international standards will have to be justified.
• For the most sensitive projects, ECG members will seek to make environmental information, particularly Environmental Impact Assessment Reports, publicly available 30 calendar days before final commitment.

A full text of the OECD Recommendation on Common Approaches on Environment and Officially Supported Export Credits can be downloaded from the OECD website.

A Study on The Use of Environmental and Social Criteria in Export Credit Agencies' Practices sponsored by GTZ and conducted by ecologic examined the policies of the ECAs from 9 countries. In relation to WCD, it found that:

'In the years since their publication, the WCD recommendations have been a central force behind promoting greater consideration of environmental impacts in evaluating dam projects. However, they have had only limited visible influence on ECAs' environmental guidelines. In the few cases where ECAs. guidelines explicitly mention the WCD recommendations, they are not referred to as strict guidelines, but rather as a general influence to be taken into consideration'.

Initiatives of some Export Credit Agencies related to the WCD report

In July 2003, Coface introduced sector specific guidance for Hydroelectric power stations and large dams. The 'best practice criteria are 'based on the workof the International Commission On Large Dams (ICOLD), the International Energy Agency (IEA),the World Commission on Dams (WCD) and Operational Directives 4.00, 4.01 and 4.30 of the World Bank'. The guidelines include reference to benefit-sharing and environmental flows.

Hermes published guidelines entitled 'Consideration of ecological, social and developmental aspects' in April 2001. Section C2 on transactions and project related questions states that:

'The questions to be answered by the applicant will be posed on a case-by-case and project-related basis and will be updated according to the latest experience and in the light of current knowledge, e.g. the report of the World Commission on Dams (WCD). The answers of the applicant will be analysed and will be taken as a basis for the decision'.

New Environmental Guidelines of the Japan Bank for International Cooperation also drew on the WCD Report and include a number of the elements of the strategic priorities including the importance of environmental and social considerations in assessing alternatives, priority to the prevention rather than mitigation of impacts, early disclosure of information, recognition of the rights of indigenous peoples, agreement with affected people on mitigation measures and an emphasis on improving livelihoods. The Guidelines are supplemented by a checklist for hydropower projects.

In its 2004 Guidelines for assessing environmental and social issues, the Swiss export credit agency ERG has explicitly referenced the WCD recommendations. The section on processes for Category A projects requires an EIA Report to outline how the seven strategic priorities will be addressed in the context of a proposed project.

'In the case of hydroelectric power stations it should also be demonstrated to what extent the recommendations made by the World Commission on Dams will be met. This can take place either by an independent committee of experts or it can be part of the evaluation of the EIA by an independent consultant'

In June 2003, the Overseas Private Investment Corporation of the United States (OPIC) released a consultation draft revision to its Environmental Handbook to accommodate new polices on large dams and forestry. These were released in the revised Environmental Handbook in February 2004. In his preface, OPIC president states:

With respect to large dams, OPIC is articulating its policies to reflect the findings of the most comprehensive report issued to date by key stakeholders involved in the global debate over the appropriate role of large dams: the World Commission on Dams (WCD). Although not all stakeholders subscribe to all of the conclusions of the WCD report, many of the report's recommendations are of value to the investment community, and therefore to OPIC as a development finance agency. OPIC's restated policy should be of value to investors and other organizations that use the WCD report as a primary reference and framework for evaluating prospective hydroelectric and irrigation projects.

The Environmental Procedures and Guidelines of the US Ex-Im Bank were revised in July 2004. Annex A Table 9: Hydropower and Water Resources Management (Dams and Reservoirs) makes reference to the World Bank guidelines and WCD recommendations.

'Ex-Im Bank will evaluate hydropower and water resource projects against the relevant host-country and the applicable international guidelines such as those of the World Bank Group. Project participants also are encouraged to address, to the extent practical, relevant principles contained in the Final Report of the World Commission on Dams.'

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