Can banks ensure eco-friendly economic development? (Issue of the week, May Week # (2006))
Bank lending can be used to mitigate eco risks and ensure compliance
The Sardar Sarovar Project has been in the news, not as a symbol of economic development as it was intended to be, but as that of environmental and social degradation.
The reason is evident. Very large projects, by virtue of their size, implementation and investment objectives, coupled with weak or compromised government policies, can create environmental and social risks.
The Sardar Sarovar project is no exception. It is highly likely that more environmental and social issues would arise in future infrastructure projects too.
In the last few years, two powerful forces have joined hands with the government in realising India's infrastructure dream — the private sector with its managerial and financial resources and keen commercial sense, and the financial system, consisting primarily
of banks and, to a lesser extent, the capital market. This brings us to the pertinent issue — who is to manage environmental risks?
Prudent risk management demands that risks be allocated to parties that can best bear them at least cost.
Can environmental and social risks of infrastructure projects be allocated to stakeholders? If not, who should bear these risks — the government, the private sponsors or the lenders?
It seems only logical that the government and the private sponsors, who conceive, promote and manage large infrastructure projects, also bear the environmental risks. Lenders are mere facilitators.
Yet, in many countries, environmental activists have begun targeting banks in such deals. In one such case in 2001, the Rainforest Action Network (RAN) targeted a banking major for allegedly financing environmentally and socially harmful projects.
It launched a campaign encouraging students and others to boycott the bank's credit cards and other loan facilities. There have been several such actions against banks in other countries as well.
Banks in India have begun to play a key role in infrastructure financing through the project-financing route — the most preferred alternative for project sponsors.
Environmentalists believe that banks need to take legal and moral responsibility for the economic and social consequences of their business practices.
That apart, lenders have economic incentives to ensure that environmental risks are mitigated. Banks typically earn upfront fees for advising on project deals and tying up the financing. They earn income from the funds lent.
Banks would, therefore, want the project to achieve early financial closure, and generate cash flows to service the debt once the project is on stream.
If environmental risks hamper the project's progress, lenders face substantial credit risk, which could translate into reputation risk. In contrast, private sponsors have the real option of abandoning projects with possibly less economic and reputation losses.
Forty-one top international banks have subscribed to the Equator Principles formulated by the IFC in the late 1990s (last revision in February 2006) to ensure that infrastructure projects being financed by these banks reflect socially responsible and environmentally
In adopting these principles, banks undertake to (a) review carefully all project financing proposals from sponsors, and (b) not provide loans to projects where the borrower is unable to comply with prescribed environmental and social policies and processes.
It is imperative that the Reserve Bank of India and banks put in place appropriate measures on the lines of international best practices to ensure that they do not finance environmentally or socially harmful projects. Some of the immediate measures to be initiated
The RBI should devise stringent criteria for environmental assessment of infrastructure projects,
Oversight mechanisms should ensure that banks and institutional lenders involved as advisors or lenders in infrastructure projects, uncompromisingly, adopt these criteria,
Make strict compliance with stipulated environmental and social standards a precondition for financial closure,
These criteria could be on the lines of the Equator principles and customised for Indian projects,
Leading project financing banks in India, to gain international and IFC acceptance, should be encouraged to join the select band of banks following the Equator principles.
The government faces the challenge of striking a balance between economic development and environmental or social degradation.
The onus is, therefore, on the banking system to ensure that the need for economic development does not outweigh the need for environmental protection.
SOURCE : The Hindu Business Line , Wednesday, May 10, 2006
Forest staff working without resources
The officials responsible for safety of forests and ensuring the control over illegal felling of tress are finding it difficult to perform their duties in absence of resources needed for the same.
The Deputy Rangers, forest guards and beat guards deputed in Jabalpur forest circle are performing their jobs by taking risk of their lives. However, the two security chowkis have been established in Jabalpur and the staff there has been equipped with all facilities
but in other places conditions are very serious.
Officers on condition of anonymity revealed that the employees and officials on field are not having wireless sets nor arms. Result of this is that in case if they sight any person doing illegal act they not unable to intimate about the same to the head office
immediately so that help and assistance can be provided to them. Out of limited sources and manpower on many occasions they fail to make arrest.
At the same time it has been also informed that the highly placed officials of forest department have allotted vehicles to their near and dear officers and the officers who are actually in need of vehicles for patrolling in forest areas are deprived of the
vehicles and they move all the way on foot which provides an opportunity to the wood smugglers to easily go ahead with their proceedings.
Officials also inform that the proposal of purchasing new gun is very old and with passage of time it has gone in the cold bag.
The forest team with no arms in hand and wireless when enter in the forest areas there is always risk of wild animals as well as attacks being made by the people.
In recent days only one team of forest officials and employees were attacked by poachers and they faced severe stone pelting. However, in this case Deputy Ranger achieved success in confiscating fresh wood and the vehicle in which it was being carried.
However, the culprits escaped from the site. This was an example of one case, similar cases occurs every other day. The officials on condition of anonymity revealed that if they are provided with vehicles and other equipment they can exercise 100 per cent control
over illegal felling of trees.
SOURCE : Deccan Herald, Saturday, May 13, 2006
Cheeping pheasants in Delhi Zoo (May Week # (2006))
Delhi Zoo has undertaken a unique project to protect the pheasants. Selected by the World Pheasant Association (WPA) to house and run its breeding and conservation programme, the zoo has had its first major success with the pheasants this season.
It has recorded the birth of young ones of red jungle fowl (20), silver (5) and Edward's pheasant (5). The zoo also houses ringnecked pheasants and golden pheasants.
The pheasants are barometers of the health of all major terrestrial habitats. The group that has some of the most beautiful and threatened birds in the world is also among the most useful birds known to man. However, with their numbers dropping steadily, there
is an urgent need to conserve and push up their figures, say experts.
"`The Delhi Zoo through the project aims to develop and promote the conservation of pheasants. The Central Zoo Authority (CZA) is funding the project and we have created an exclusive zone for the birds. The WPA is providing technical assistances under the programme,"
said zoo director D.N. Singh. Under this programme, the zoo has marked out an exclusive section with specially made enclosures -- closed to the public -- that allows the birds the right environment and enables close supervision.
"India has 17 pheasant species of which eight are listed on the endangered list. These are a group of very useful birds. In fact, the red jungle fowl is being used in several research projects and with the threat of the avian flu looming large the world is
re-looking at these birds now. The conservation and breeding of these beautiful group of birds is essential," said WPA (India) president Samar Singh.
SOURCE : The Hindu, Tuesday, May 02, 2006
Haryana launches vulture conservation project (May Week # (2006))
Royal Society for the Protection of Birds assures funding for the scheme
A Memorandum of Understanding (MoU) relating to conservation and breeding of vultures was signed on Tuesday between the Haryana Forests Department and the Bombay Natural History Society (BNHS) in the presence of Haryana Minister of State for Forests Kiran Choudhary.
According to Ms. Choudhary, the Haryana Forests Department had spearheaded vulture conservation efforts in collaboration with BNHS, the country's oldest conservation organisation, with active support of the Union Ministry of Environment and Forests.
The Forests Department would ensure smooth running of the project by providing land and giving necessary permission and clearances while BNHS would organise the funding.
The Royal Society for the Protection of Birds of the UK has assured funding to BNHS for running the project for at least 15 years, she added.
Ms. Choudhary said extensive research carried out at the Vulture Conservation Breeding Centre had established that most of the vultures in India died due to the use of Diclofenac, a non-steroidal anti-inflammatory drug given to cattle.
She said Prime Minister Manmohan Singh had assured her recently that a meeting of the relevant ministries would be convened soon to take a positive decision in this regard.
She claimed that that the pioneering work done by the Centre in identifying a safe drug, Meloxicam, which could be given to cattle, was of great significance. It would go a long way in saving the vultures from extinction.
SOURCE : The Hindu, Wednesday, May 03, 2006
Forest Rights Bill to be given final shape (May Week # (2006))
The Scheduled Tribes (Recognition of Forest Rights) Bill, 2005, which had encountered tremendous opposition from conservationists along with some reservations expressed by the Ministry of Forest and Environment, will be finalised by the joint parliamentary
committee on May 8.
The Bill will be taken up for consideration during the Budget session of Parliament which is going to meet on May 10 after a recess.
''The Bill is being given final shape and will be cleared by the JPC on May 8,'' member of the committee Brinda Karat said.
The proposed legislation recognises the forest rights of forest dwelling scheduled tribes who have been occupying the land before October, 1980. Each forest dwelling nuclear family will be entitled to the land it was occupying provided it was not more than
Under the Draft Bill, forest- dwelling families get 12 forest rights which include the right to live in the forest, self cultivate, and use minor forest produce. However, they have been prohibited from activities like hunting and trapping.
The extent of forest rights that may be given to each eligible individual or family will be determined by the Gram Sabha.
Communities who depend on the forest for survival and livelihood, but are not forest dwellers or scheduled tribes, have been excluded from the purview of the Bill.
The land to a forest dwelling family may be allocated in all forests , including core areas of national parks and sanctuaries.
However, this right would be provisional for five years, within which period the titleholder would be relocated and compensated. If the relocation does not take place within five years, the person will get permanent right over the land.
The legislation is being brought in to give due recognition to the forest rights of tribals, not recorded while consolidating state forests, during the British rule and also after independence.
Supporters of the Bill argue that tribal communities have lived in forests for centuries, and granting them formal right over forest land, was just correcting a historical wrong.
SOURCE : The Tribune, Saturday, May 06, 2006
Massive destruction of forests in M.P. (May Week # (2006))
Survey of Narmada watershed says river undergoing changes
· `There had been progressive reduction in the flow of Narmada over the years'
· `It would be possible to walk across the river at several places in the State by 2025'
The Vice-Chairman of Madhya Pradesh Janadhikar Parishad, Anil Madhav Dave, on Monday released a report which says that there has been massive destruction of forests in the Narmada catchment area and this was leading to excessive silting and huge reduction in
the river's water carrying capacity. The report was prepared by him on the basis of an aerial survey.
Mr. Dave had taken off from here on March 27, starting on his 2,056-km journey by air to conduct a survey of the entire Narmada watershed in Madhya Pradesh. He was the co-pilot along with Capt. Vijay Kumar Mishra during the flight.
Releasing the report, Mr. Dave said the Narmada river was going through rapid changes due to large-scale degradation and destruction of forests in its catchment area. "The survey findings are shocking and a cause for concern but there is no need to be excessively
alarmed,'' he said, adding that urgent steps were needed to arrest the continuous and rapid degradation of forests. He also referred to the Forest Survey of India report that indicates that a huge forest cover had been lost in districts like Mandla, Dindori,
Mr. Dave said there had been progressive reduction in the flow of Narmada over the years. On the basis of available data, he said that barring 1994-95 and 1999-2000 there had been a continuous drop in the total flow of water in the river from 1990-91 onward.
"If the same trend continues, it would be possible to walk across the river at several places in the State by 2025," he said. He said the destruction of forests was most glaring in the Badwani and Nimad area of western Madhya Pradesh. "Going beyond Dewas,
especially flying over Dhar and Jhabua districts, one finds that vast forest tracts have completely vanished and one gets the impression as if one was flying over the Nile Delta and there was desert all around." Mr. Dave said he had decided to release his
report through the media in order to build up public awareness.
SOURCE : The Hindu, Tuesday, May 09, 2006
Blue Lady more toxic than Clemenceau: Greenpeace (May Week # (2006))
If one thought Clemenceau was carrying enough toxic wastes to make environmentalists fret and fume, make way for S.S. Norway, or Blue lady as it more popularly known as. Some more trouble can be anticipated for the Indian ship -breaking industry as the
end-of-the-life passenger cruise ship has been bought by Alang-based Reagent Shipping for $17 million and environmentalist are once again gearing up to oppose the entry of one more "hazardous waste carrier" into India.
Asking the Indian Government and the industry to find a solution and develop a sustainable ship-recycling policy and facility, NGO Greenpeace today urged them to take the opportunity presented by the current situation to transform the ship-breaking industry
" Our aim is not to run after every hazardous waste carrying ship that heads for ship-breaking yards of India nor are we against the ship-breaking industry.
But for clean ship breaking to become a reality, the government and ship-breakers must develop a policy and action plan to ensure an economically viable and environmentally sustainable future of the industry," Greenpeace activist Ramapati
Considering that fact that in the next five to six years as many as 2,200 single hull oil tankers will phase out (and this figure does not include passenger, cruise and other ships) and the European Union is seeking to make shipping safer, it makes business
sense for developing countries like India to have environmentally sound management facilities for ship recycling.
Having taken ship-breaking issue very seriously, the EU is creating road map for a safe and sustainable way to handle end-of-life ships.
The EU is also exploring possibilities to develop a comprehensive policy on ship recycling, including setting up of pre-cleaning facilities, setting up of dismantling facilities in Europe.
"If stakeholders in India, led by the government, do not rise to the occasion now and secure Alang's place in the new evolving world order in the shipping industry, the loss will be irretrievable and India will no longer be a destination of choice for the recycling
of ships," warns Mr Ramapati.
This Blue lady, a passenger cruise ship that was launched on May 11, 1960, is at present being towed to a ship-breaking yard in Alang in Gujarat where it is expected to reach on May 23.
Greenpeace says that the Blue Lady will bring with itself over 900 tonnes of asbestos and other toxic materials such as globally banned and cancer-causing chemicals such as polychlorinated biphenyls (PCBs). S.S. Norway was crippled following a boiler room explosion
in Miami three years ago.
In relation to the much-controversial French warship Clemenceau, which was turned back to France, S.S. Norway has three times more toxic wastes, Mr Ramapati says.
The 11-storey high ship, originally belonging to Malaysian owners Star Cruise, is among the 50 "dirtiest" ships in the world, which was even refused entry by Bangladesh.
A letter of the Bangladesh Ship Breakers Association (BSBA), circulated by the Greenpeace, says: It has come to the noting of BSBA that one passenger ship S.S. Norway has come in the international market which is seriously contaminated and carrying dangerous
" I would like to indicate it very clearly that if any member of BSBA purchase that ship for scrapping purposes, his documents shall not be forwarded to the government authorities for permission," states the letter, dated January 28, 2006, signed by BSBA President
Zafar Khan. Following this, the Bangladesh MoEF made a decision to take necessary action to ensure that the S.S. Norway (even if it has changed its name) does not enter Bangladesh.
Turning back of Clemenceau was a major victory for Greenpeace, Mr Ramapati says, adding that "turning back a dirty ship only raises an alarm. The attempt should be to find a clear-cut solution"
SOURCE : The Tribune , Wednesday, May 10, 2006