International Development Association
GOVERNMENTofthe REPUBLIC of ARMENIA
Project Implementation Unit
Agriculture Reform Support Project
Ministry of Agriculture
Environmental Impact Assessment
of the proposed
Rural Enterprise and Small-Scale
Commercial Agriculture Development
(RESCAD) Project
March 10, 2005
1
RESCAD Project: Armenia Environmental Assessment March 10, 2005
Contents
SUMMARY
1. INTRODUCTION AND BACKGROUND
1.1Purpose1
1.2Rural Enterprise and Small-Scale Commercial Agriculture Development Project1
1.3World Bank Environmental Assessment Requirements4
2. POLICY, LEGAL AND ADMINISTRATIVE FRAMEWORK
2.1 Legal and Regulatory Framework 5
2.2 Regional and International Cooperation 7
2.3 Policy Framework 8
2.4 Institutional Setting 9
2.4.1 National Setting 9
2.4.2 Marz and Local Government 10
2.5 Institutional Framework for Environmental Regulation 11
2.6 Institutional Capacity for Environmental Management 12
2.6.1 Ministry of Nature Protection 12
2.6.2 Commercial Banks 14
3. METHODOLOGY
3.1 General 14
3.2 Legal Instrumentation 15
3.3 Public Involvement 15
3.4 Determination of Potential Impacts 16
3.5 Baseline Data 18
3.6 Scoping and Bounding 18
3.7 Criteria for Impact Assessment 18
4. THE ENVIRONMENT
4.1 General 19
4.2 Socio-Economic Environment 20
4.3 Biophysical Environment 21
4.3.1 Physical Geography 21
4.3.2 Landscapes and Ecosystems 21
4.3.3 Agriculture and Land Resources 21
4.3.4 Water Resources 22
4.3.5 Forest Resources 22
4.3.6 Biodiversity 23
4.3.7 Summary of Agriculture Related Environmental Issues 24
5. ENVIRONMENTAL ASSESSMENT
5.1 General 25
5.2 Important Environmental Components 28
5.3 Project Benefits 28
5.4 Potential Impacts – Rural Enterprises 31
5.5 Potential Impacts – Farm Inputs 32
5.6 Potential Impacts – Community Development 33
5.7 Potential Impacts – Extension Services 34
5.8 Potential Cumulative Impacts 34
5.9 Mitigation 36
5.10 Potential Residual Impacts 36
5.11 Environmental Risk 36
6. ENVIRONMENTAL MANAGEMENT GUIDELINES
6.1 General 38
6.2 Management 38
6.3Mitigation 38
6.4Monitoring 41
6.5 Capacity Development 42
7. REFERENCES
ANNEXES
Annex A: List and Description of Environmental Related Laws and Description of Selected Laws
Annex B: Impacts, Causes, Consequences, Mitigation for Agro-processing and other Agribusiness (see list of tables)
Annex C: Impacts, Causes, Consequences, Mitigation for Agriculture (see list of tables)
Annex D: Impacts, Causes, Consequences and Mitigation for Rural Non-Agricultural Activities (see list of tables)
Annex E: Summary of Round Table Discussions with NGOs
Annex F: List of People Visited
List of Tables
Table 3.1:NGOs Represented by NGO Roundtable Discussion
Table 3.2:Description of Rural Enterprises by Broad Category
Table 3.3:Probable Uses of Farm Credit
Table 3.4:Level of Significance of Potential Impacts
Table 5.1:Broad Areas of Environmental Concern by Project Component and Sub-
Components
Table 5.2:Important Environmental Components
Table 5.3:Benefits – Rural Enterprises
Table 5.4:Benefits – Farm Inputs
Table 5.5:Summary of Potential Major Environmental Impacts – Rural Enterprises
Table 5.6:Summary of Potential Major Environmental Impacts – Farm Inputs
Table 5.7:Summary of Potential Major Environmental Impacts – Community Development
Table 5.8:Summary of Residual Effects of Enterprises
Table 5.9: Summary of Probable Residual Effects of Farm Inputs
Table 6.1:Some Agricultural Good Practices – Towards a Protected Environment and Sustainable Agriculture
Table 6.2:Some Good Rural Enterprise Practices – Towards a Protected Environment and Sustainable Rural Development
Tab le 6.3:Summary of Environmental Capacity Building Requirements
Annex B Tables:Impacts, Causes, Consequences, Mitigation for Agro-processing and other
Agri-business
Table B1:Planning and construction of new enterprises
Table B2:Abattoir (meat processing)
Table B3:Meat Packing
Table B4:Vegetable Processing and Canning
Table B5:Tanning
Table B6:Aquaculture
Table B7:Dairy Processing
Table B8:Frozen Food Production
Table B9:Oil Processing
Table B10:Flour Milling
Table B11: Markets
Annex C Tables:Impacts, Causes, Consequences, Mitigation for Agriculture
Table C1:Seed
Table C2: Pedigree Seed
Table C3:Fertilizer
Table C4:Pesticides
Table C5:Pedigree Livestock
Table C6:Livestock for Finishing
Table C7:Land Purchase
Table C8:Tractors
Table C9:Land Preparation
Table C10:Other Farm Implements
Table C11:Small Equipment
Table C12:Irrigation Equipment and Irrigation Maintenance
Table C13:Vehicles
Table C14:Farm Buildings for Stock and Machinery
Table C15:Storage Facilities (fuel, chemicals, grain and other produce)
Table C16:Primary Processing
Table C17:Fencing Materials
Table C18:Fuel, lubricants, etc.
Table C19:Veterinary Services
Annex D Tables: Impacts, Causes, Consequences and Mitigation for Rural Non-Agricultual Activities
Table D1:Non-renewable Resource Extraction
Table D2:Renewable Resource Extraction
Table D3:Manufacturing
Table D4:Trade
Table D5:Transport
Acronyms
ARSPAgriculture and Rural Support Project
BSAPBiodiversity Strategy and Action Plan
BSEBovine Spongiform Encepalophathy
CAPCommunity Action Plan
CISCentral Independent States
CJCreizfeldt-Jakob disease
DoEEDepartment of Ecological Expertise
EAEnvironmental Assessment
EIAEnvironmental Impact Assessment
FSUFormer Soviet Union
GoAGovernment of Armenia
GMOGenetically Modified Organism
HYVHigh Yielding Variety
IBRDInternational Bank for Reconstruction and Development
IEC Important Environmental Components
IPMIntegrated Pest Management
MoNPMinistry of Nature Protection
NEAPNational Environmental Action Plan
NGONon-Government Organization
PFIParticipating Financial Institution
PMUProject Implementation Unit
PMUProject Management Unit
RESCADRural Enterprise and Small-Scale Agriculture Development Project
TAPTechnology Assessment Program
NRMPRNatural Resource Management and Poverty Reduction Project
SFMSustainable Forest Management
EMPEnvironmental Management Plan
DoEEDepartment of Ecological Expertise
SUMMARY
- Environmental assessment - purpose
The purpose of the environmental assessment is to ensure that the Project meets the requirements of the World Bank as set out in Operational Directives 4.01 for Category B projects.
The assessment consists of four main components: i) a review and summary of relevant legislation and the adequacy of the legislation to ensure environmental protection as it relates to the Project; ii) an analysis of probable impacts, mitigation and residual impacts of agriculture and agribusinesses including agro-processing, rural enterprise other than agriculture,and community development activities that would qualify for Project loan financing; as well, analysis of extension services; iii) an analysis of the capacity of the Government of Armenia (GoA) and lending institutions, to recognize and address impacts of any activity for which a loan is being requested; and, iv) guidelines for environmental management of the project.
- The Project
The objectives of the proposed Rural Business and Small-Scale Commercial Agriculture Development project (RESCAD) is to improve the ability of Armenia’s farmers and rural entrepreneurs to access markets and increase employment opportunities by stimulating market-oriented private and public investments in rural areas.
The proposed project seeks to fill the gap between rural producers and higher end markets by assisting value-added business initiatives. Although agricultural production remains mostly semi-subsistence in nature, there is evidence that farmers and processors are moving towards vertical integration down the supply chain. There is an increasing demand from individual farmers, producer associations, and small and medium enterprises for advisory services, marketing support and financial assistance.
The major focus of the proposed Project would be to support the continued development of commercial activities in the rural areas by improving market linkages, product quality, competitiveness and capacity of Armenian rural entrepreneurs and producers. The Project will have a three-tiered approach by addressing critical gaps at the farm level, at the community level, and at the rural business and agro-processor level.
At the time of this environmental assessment the Project was in the preparation phase and although the following description of the Project in terms of Project components is not likely to change in any significant manner before Project approval, some of the details of the components may require modification.
Suggested project components and activities comprise: (i) small rural business support, including improved financial services and small grants for technological innovations; (ii) farm-focused development support, including strengthening the decentralized agricultural extension system, the provision of management and business advice, improving livestock services, and improving planting material production capability; and (iii) community-focused economic development. The Project would work primarily through existing institutions, and would build on the experience of the ongoing Bank-funded rural projects, especially the ARSP.
- Regulatory framework
The main legislative framework for environmental management and relevant to the RESCAD Project are the Law on Principles of Environmental Protection (1991) and the Law on Environmental Expertise (1995).
The Law on Principles of Environmental Protection establishes the obligation of the State to care for the environment, prescribes the institutional framework for environmental management, and sets out the principles, approaches and instruments for environmental protection. The Law has a minimum normative value and has been used as an environmental policy document.
The Law on Environmental Expertise is currently being revised to provide a more comprehensive environmental expertise law and to bring it in line with western environmental review laws. It is currently (January 2005) in its third draft and is known as the Law of the Republic of Armenia on Environmental Review (Environmental Expertise).
This law establishes a framework to define impacts of intended activities on environment, assess feasible alternatives, minimize negative consequences and ensure public involvement. It contains a list of activities subjected to the expertise process. The State Agency for Environmental Expertise, within the Ministry of Nature Protection (MoNP), is responsible for carrying out the relevant procedures.
There are no fewer than a dozen other relevant laws dealing with various aspects of the environment. In addition, Armenia is signatory to 15 conventions relating to aspects of the environment. The most significant of these are the conventions relating to ozone depletion, desertification and biodiversity.
Armenia also cooperates with its regional neighbors on a number of environmental issues and programs.
- Institutional arrangements - EIAs
The Department of Ecological Expertise (DEE) within the MoNP is responsible for environmental assessment and the following figure summarizes the procedure to be followed when a proponent wishes to proceed with a particular activity.
Schematic Indicating Process of Development Proponent Receiving Environmental Approval
The proponent is responsible for ensuring that an environmental assessment is prepared for his proposal. This is conducted by the Department of Environmental Expertise which has a staff of ten scientific specialists. The proponent pays for this service. The examination is often done in collaboration with the local Marz government representatives. Each project submitted will receive a response (yes or no) from the DEE within 120 days. In accordance to the legislation the general public is informed of the proposed project and has an opportunity to comment on the project, particularly regarding environmental effects. The DEE takes public input into account before preparing its final report.
Once the environmental certificate signed by the Minister has been issued the proponent is allowed to proceed with the development. The DEE will conduct periodic inspections (monitoring) of the project to ensure that all standards agreed to are maintained.
- Enforcement responsibilities and capacity
The Law on Environmental Expertise is not properly implemented and does not reflect the actual procedure which is followed. Contribution of independent experts and NGOs is minimal and public hearings are never held. Apart from lack of implementation, the Expertise law is also incomplete. Assessment criteria, requirements for preliminary environmental studies and the procedures for public hearings still need to be developed.[1]
According to the Director of the Environmental Inspectorate, the staff comprising the ecological expertise are well qualified and sufficient in number to address the cases for which they are responsible. However, in the case of environmental monitoring “the existing system (for air and water quality monitoring) is equipped with outdated technical equipment which produce results within a 25-30% error margin.
- Agriculture related environmental issues
Armenia has a number of environmental issues either directly or indirectly related to agriculture and as such are relevant to this Project. A number of environmental problems are as a result of past and current agricultural activities and as such the Project must take care in not only exacerbating the situation but also in promoting activities that will be environmentally enhancing and to overcome some of these past mistakes. Agricultural and rural enterprises can also indirectly result in negative environmental effects. The issues are listed below:
- Groundwater pollution – chemicals including agricultural
- Surface water pollution – chemicals including agricultural
- Water losses – irrigation systems
- Soil salinization and alkalination – irrigation systems
- Water logging – irrigation systems (drainage)
- LakeSevan fisheries destruction – over fishing, pollution, and loss of breeding habitat (lake source streams unsuitable due to irrigation pressures)
- Biodiversity losses (including pressure on relatives of domestic crops, fruit trees and medicinal plants)– grazing and deforestation
- Soil erosion – overgrazing and deforestation
- Soil fertility losses – cultivation practices
- Land contamination – industrial wastes
- Environmental health and hazards – food contamination and exposure to pollutants
In addition to these issues there are others related to other components of the proposed Project. For agro-processing and other agribusiness enterprises, major concerns relate to effluent discharges and their impact on water quality, water use, disturbance of significant sites for biodiversity and cultural protection, and general health and safety issues. Another concern is the introduction of alien species and their effect on biodiversity, especially endemic species. A case in point is the existing aquaculture operations based on the North American indigenous rainbow trout (Salmo gairdreri) which if it escapes (and if it hasn’t already done so), can disrupt natural aquatic systems.
- Environmental assessment
The overall environmental effect of the sub-projects resulting from the main development components and sub-components of the Project will be positive. Farm, agri-business, and other rural business loans will result in improved agricultural production and marketing, and in general, improved socioeconomic conditions of the rural population. Other aspects of the Project including the community development component, extension services and others, will all contribute to an improved socio-economic environment in the rural areas. The Project will further contribute to the country’s food security, hopefully contribute to the generation of foreign exchange through increased agricultural exports, and mostly the Project, through the various financed activities, will significantly contribute to the alleviation of rural poverty. In the past 15 years rates of chemical inputs in agriculture have been significantly reduced, resulting in cleaner watercourses, lower levels of soil contamination and relatively chemical free food, although residues in soil and water, and their effects, still remain. The Project could lead to an increase in the use of farm inputs but mitigation measures, extension services and training associated with the Project should minimize any potential impacts associated with these inputs. To some extent, it is presumed that some of the industries under the former Soviet regime which created significant environmental problems and which have since ceased operating, may be refurbished, or new replacement activities introduced that are expected to operate more efficiently and without the major environmental contamination of the past. Current environmental regulations, particularly through the revised legislation on Environmental Expertise which will provide for the need for more comprehensive environmental assessments of projects, should prevent a return to the serious environmental issues of the past.
The major potential impacts associated with the eight rural enterprise categories include water and air quality deterioration, loss of biodiversity and impacts on biophysical resources, including forest cover losses and soil erosion. Of the eight categories, extraction industry, construction and manufacturing industries will contribute to the most significant impacts. Although the extraction enterprise category (a category that is included but in all reality probably not one that will likely be associated with the RESCAD Project) is probably and currently represented by a few individual activities. Nevertheless, the industries of this category have the potential to cause more environmental damage than all of the other enterprise groups taken together. The trade enterprise group will comprise of many individual businesses but generally, the impact of this group is negligible. Even a cumulative impact within the entire trade category is likely not to have a negative impact as significant as the potential impact that one extractive enterprise or a poorly designed and operating agro-processing centre could create.
The mining and manufacturing sectors generally produce wastes that are disposed of in the form of effluents that flow into surface watercourses, seepage into groundwater, emission gases that are released into the atmosphere and solid wastes that are disposed of in municipal and unorganized waste sites. These wastes could include a wide range of gaseous, solid and liquid compounds ranging from water vapour to highly toxic materials. Such wastes would pose a threat to groundwater supplies, air quality, aquatic ecosystems, and ultimately to human health.
Aquaculture development and commercial fishing can lead to the loss of species and the modification of aquatic ecosystems. In Armenia, rainbow trout (Salmo gairdreri) is an exotic species raised under artificial conditions. If stocks were to escape from captivity it could result in a serious impact on other indigenous species. The species can be very predatory. This is particularly important with regard to the LakeSevan ecosystem and its fishery.
The major potential impacts associated with the 19 potential agricultural inputs for small and medium scale farms relate to water and soil quality, soil erosion, salinization and resource loss.Increasing pesticide applications can lead to pesticide residue (including heavy metals) build up in the soil. Pesticides and fertilizers can migrate to both surface waters and groundwater resulting in contamination of these two sources and leading to damaged aquatic ecosystems and threatened health to downstream users. HYV seeds will demand further applications of chemical inputs, thus exacerbating the problem. Livestock rearing in large numbers and in closed conditions, results in a concentration of animal waste that can contaminate both groundwater and surface waters. In the case of the former, public health is at risk, in the case of the latter, aquatic ecosystems and, possibly public health, are both at risk. Livestock expansion, particular for farms in the hills and near the mountains, can lead to pressure on common public lands including forests. Loss of biodiversity and soil erosion can occur if livestock and pastureland are not managed effectively and if livestock numbers are not controlled.