• Environmental Analysis

• Environmental analysis is a field of growing importance in project preparation.

• Underestimation of the environment has resulted in negative outcomes such as poor human health,
social disruption, reduced productivity and, ultimately, the undermining of development. When
considering environmental aspects into project formulation exercises there are a number of issues
that should be taken into considerations, these include:
– A clear understanding of the meaning of Sustainability
– Assessment of the potential environmental impact of the project.
– To suggest ways in which that impact could be reduced at a reasonable cost.
– To formulate mitigation strategies and a plan of action.
• Environmental sustainability of a development project
• The World Commission on Environment and Development (WCED) defined sustainable
development as “development that meets the needs of the present without compromising the ability
of future generations to meet their own needs”.
• Environmental Analysis
• This definition leads to the idea of maintaining environmental capital. We should hand on to future
generation an environmental capital stock at least as valuable as that which we inherited.
• This proposition raises the problem of defining the economic value of a capital stock. To help
resolve the problem and also to provide guidance for the formulators a distinction needs to be
clear among the following:
 Man made capital, which is potentially expandable.
 Critical natural capital, which is priceless.
 Other natural capital, which may be nonrenewable and renewable.
• The implications of the above classifications of capital stock are that the project formulators must
seek to:
 Maintain, if possible increase, the value of man made capital.
 Avoid damage to critical natural capital at all costs.
 Limit exploitation of renewable natural capital to sustainable level.
 Internalize the cost of depleting non-renewable resources through some form of
compensation measures.
• Environmental Analysis
• Stages of environmental assessment
1. Environmental screening
• Not all projects will require a full-scale environmental study; nonetheless, it is important to be
aware of the potential environmental effects of a project. The first stage in the identification and
assessment of environmental impacts is environmental screening. The purpose of this screening
process is to assess the type and complexity of environmental analysis techniques, which are likely
to be necessary.
• Just as with general project screening the process aims to assess the project against simple criteria,
to determine whether more detailed analysis are needed.
• Criteria used in environmental screening may include:
 Location- projects that are being implemented in environmentally sensitive areas are liable
to need further assessment.
 Type of project- projects such as mines and dams are liable to cause a great deal more
damage than social projects.
 Size- larger projects are more likely to require further, more detailed assessment
• Environmental Analysis
• Complexity- a project with a number of disparate components is liable to have a wider range of
environmental impacts, which need careful consideration.
• Data used in the screening process may take the form of general estimations or information
already gathered from any similar projects. There are two possible results of environmental
screening:
• The project can continue as planned with no further environmental impact assessment.
• There is a need to prepare a more detailed preliminary assessment.
2. Preliminary assessment
• The preliminary assessment involves conducting a process of research and utilizing expert advice
in order to achieve three objectives:
– To identify the key impacts of the project on the environment
– To predict and describe the impacts identified above
– To assess the potential importance of these impacts to decision makers.
• Environmental Analysis
• The information gathered during this preliminary assessment will assist the formulators in deciding
whether a project should be cleared, rejected on environmental grounds or submitted to
Environmental Impact Assessment (EIA).
• There are a number of useful checklists produced by different organizations, including the
Ethiopian Environment Authority (EPA) that can help determine the likely level of assessment
required. The formulators are, therefore, advised to refer to the appropriate guidelines or
concerned authority.
3. The meaning of environmental impact assessment
• Environmental Impact Assessment (EIA) is concerned with the identification, prediction and
evaluation of the impacts of proposed project alternatives and measures aimed at eliminating or
minimizing damaging impacts and optimizing beneficial impacts. It is now widely accepted that
those projects which incorporate EIA when necessary are more effective and often less costly.
• Environmental Analysis
• Not all projects require environmental impact assessment to the same degree and intensity.
• Thus the classification of projects to determine the level of assessment is very useful for project
formulation. Many donors/lenders and countries, including Ethiopia have developed four
categories of EIA procedures. These are, named as category A, B, C and D.
• Category “A” projects are those projects and components that have diverse and significant
environmental impacts. These types of projects require full environmental impact assessment.
Dams and reservoirs, mineral development, resettlement and urban development are typical
examples of such projects.
• Category “B” projects are those projects and components that have specific environmental
impacts. As the impact is specific limited environmental analysis is appropriate. Typical examples
of projects that fall under this category are rural water supply and sanitation, renewable energy
and small scale projects.

• Environmental Analysis
• Category “C” projects are those projects that normally not result in significant environmental
impact. These projects do not require environmental assessment. Technical assistance,
consultancy, training and workshops are good examples.
• Category “D” projects are environmental projects. These are projects with a major environmental
focus whose objective can be waste disposal, desalination or wildlife protection etc. Environmental
projects do not require EIA.
• In identifying significant environmental impact assessment, project formulators must consider the
following criteria:
• The length of time and geographical coverage over which the effects will be felt.
• The urgency which refers to how quickly a natural system might deteriorate and how long it takes
to stabilize.
• The degree of irreversible damage to the environment, natural resources and life supporting
systems.

• Environmental Analysis
• When conducting the process of EIA there are clearly defined stages or procedures which should
be taken into consideration. These are:
• Identifying of the various potential impacts of the project on the environment.
• Predicting of the extent of the environmental changes.
• Assessing of whether or not the identified and predicted changes are of any environmental
significance.
• Planning of mitigation measures or alternatives that could reduce the project’s environmental
impacts.
• EIA will lead to an eventual decision to accept, reject or modify a project.
• If the project is seen to have a potentially serious impact on the environment then it is necessary
to prepare an environmental management plan (EMP) with the requirement of financial
expenditure.
• Environmental Analysis
• Assessment of mitigation measures, strategies and costs
• Where potentially negative environmental impacts have been identified as a result of assessments
outlined above, it is necessary to consider ways in which these impacts can be overcome. This
involves suggesting various measures and strategies to avoid, reduce or overcome these impacts.
These various measures and strategies can be defined as forms of mitigation. A general overview
of the various types of measures, include to:
• Avoid negative impacts- redesign the project to avoid those areas with the potential to cause
significant environmental impact. The most extreme example of this strategy is to abandon the
project altogether because the potential impacts are too serious. This is an extreme example,
other avoidance strategies may include: changing the project’s location; establishing buffer zones
around sensitive ecosystems; avoiding transport routes with the potential to disrupt local
populations and related activities; and deciding to exclude a certain project component because of
its potential impact.
• Environmental Analysis
• Reduce negative impacts- this involves introducing mitigation measures to reduce the impact of
existing activities. Reduction activities could include: treatment plants to reduce pollution;
landscaping and using local materials to reduce the visual impact of new structures; scheduling
project activities during the dry season to reduce
• Compensate for negative impacts- in some instances it will not be possible to avoid or reduce
environmental impacts entirely. If this is the case then it will be necessary to include compensation
for affected populations. This compensation could be financial or in the form of a compensatory
project which aims to produce benefits for affected people.
• It is essential that mitigation measures be planned in a coherent and integrated manner to ensure
that they work effectively in combination and do not simply transfer the negative impact to
another area. In projects where serious environmental impacts have been identified it will be
 necessary to collate these mitigation strategies in the form of an environmental management plan
(EMP).
• Environmental Analysis
• Environmental valuation techniques
• Valuation of environmental effects includes the measurement of environmental costs and benefits.
There are various methods of estimating environmental costs and benefits. These methods can be
categorized as:
• Objective Valuation (OV) methods that are based on physical relationships describing cause and
effect to value the physical effect.
• Subjective Valuation (SV) methods are based on subjective assessment derived from real or
hypothetical market behavior.
• Valuation techniques can also be divided between those that attempt to:
• Value both costs and benefits that can be included in an overall cost and benefit calculation.
• Concentrate on the cost side and might be used in either in cost effectiveness analysis or in some
other form of analysis.
• Environmental Analysis
• The various approaches to the valuation of environmental effects are described below:
• Those that attempt to based on “OV” include:
 Effect on production or changes in productivity approach involves the estimation of the
effect of an environmental change on production in the affected/proposed project area. It is
mainly applicable in projects affecting natural resources such as forests, fish and soil.
Determining the physical effects of a project on the environment and estimating the values
of the effects are a straightforward approach to estimate the costs of environmental
mitigation.
 Lose of Earnings Approach includes the valuation of human life and cost of illness
approaches. This applies particularly to air and water pollution. The methodology involves
calculating the loss of earnings through sicknesses or premature deaths.
 Replacement cost and compensation approach, which take into account environmental
damage by compensating or replacing/restoring the damaged asset. These techniques are
applicable where the cost of restoration/compensation is less than the value of the
resources destroyed.
• Environmental Analysis
• The SVa methods include:
• Hedonic methods attempt to value a particular environmental state based on surrogate markets.
These markets use ‘property value approach’ (e.g. housing) and ‘wage differential approach’ (e.g.
labor). In property value approach, environmental impacts are derived from changes in values. The
wage differential is used to estimate the costs associated with the risk of ill health or death at
work. These methods are applicable where market efficiencies are strong to justify the
assumptions, which will be unlikely for developing countries.
• Contingent valuation techniques which are used to establish ‘willingness to pay’ for
environmental improvement or ‘willingness to accept’ environmental damage.
• It is not possible to provide exhaustive lists/methods of valuation techniques. It is up to the
formulators to select those techniques applicable to a project under consideration.
• Whatever strategy is chosen, it will be necessary to consider the associated costs and who has the
responsibility to provide funds to cover these costs.
• Environmental Analysis
• Environment management plan (EMP)
• The Environmental Management Plan (EMP) sets out the various mitigation measures and related
monitoring and institutional arrangements to be carried out to reduce the environmental impact
of a project. An EMP is not required for all projects, but if serious potential impacts were identified
during EIA. Relating this to the project categorization for EIA mentioned above an EMP should be
prepared for:
– All Category ‘A’ projects.
– Some Category ‘B’ projects.
• A project’s environmental management plan should consist of the following components:
• Mitigation: potential mitigation strategies are identified from the categories described in EIA as
mentioned above.
• Monitoring: the EMP must set out arrangements for monitoring of potential impacts and
mitigation measures throughout the implementation and operational phases of the project cycle.
• Institutional Arrangements: this may relate to the establishment of environmental units with the
specific task of implementing the EMP.
• Environmental Analysis
• Implementation Schedule and Costs.
• The EMP must provide:
 A project implementation schedule for all aspects of mitigation, monitoring and
institutional arrangements.
 A detailed breakdown of the costs related to the implementation of mitigation,
monitoring and institutional arrangements.
• These costs should be integrated into total project costs tables.
• The environmental management plan should be integrated into the overall implementation plan,
budget and project analysis.
• It should not be seen as a separate, external component, but rather as an integral part of the
project as a whole.