ASi" kUCTURE FlOR DEVELOPMENT

I Box. 4.9 Icroaigenviironmental. concerns early in planning: some recent lessonts
'from SriLnk
Over the -past decade, developing. countries,.and the researthes and environmnental experts, the study deter.
-World Bank itseZ, have begun to require comprehenisive mined long-term development options for the 5ector,
envirnmental assessments (MAs) ~as. a routine compo-.. incorprating. envirnmental concerns. Alternative
nent of .prmject development. This reuirement has. strategies were compared, taking into account system
foncd a bteinertoofevomntal dcerns cost, biodJiversity, health-effects, .system-reliability, and,
into poetdesignk, with appropriate attention to mitiga- greenhouse. gas emissions. The technique of multition
options. But-a project4evel EA is best at dealing: attribute -decision atnalYsis, whichleritsaayi of
with proj1ect-level mitigationjissues Without considera-: tradeoffs between -objectives~, is-particularly. useful in
dion of environmental issues at- the long-term planning such assessments when economic valuationi of environstage,
itis doubtful that project-level. EAs can steer the; mnental externalities proves difficult
deveopmnt f a ectr aongenvioronmentally sustain- Fyom, the analysis, the study identified the set of
able paths,Freaml,beas
pactsof hdropantsare
the environmental im-
-quite diffeent from those of -
"nndominated" options that was better than the others
in at least oeattribute (such as cost, emissions reliabil-
* Themal gn&rnin. th quetioni of ho~w air pollution ity) but no wojrse int the other attributest This set repreimpacts
are tradedcf ih nnaio-eae impacts sents thi. options that decsionmakers need to consider
-fall well outside the domain of project EAs. Although and induded, for example, notonly alternative fuel corn-
-_the.incremental effect of a single plant-can be rational-.
fred uiteeasil, wht ma ter ste oerl impact of
binations in power plants but also supply-side efficiency
improvements int the transmission -and distribution systhe
sequence bfd plants ini a power sector investment' tern and demand-sde management options, such as the
program.
~~~~~~~~~~~iniroduction-of
compact fluorescent lighting.
A recent World Bank study of thie Sri Lankan po-wer. Following this,study, such new methods of evaluasector
examnehd ways of bringing consideration of envi- tion have begun-to be institutionalized in the Sri Lankan
wonmental issues into the early stages of poe etri- utilitys planning cycle. In 1993, for the first time, the*
vestmentplanning and of dealing with the basic issues of study for planning expansion of generating capacity incompaning
very different kinds of.environnmental ho- duded aVsstematic eamination ofdemand-side-manpacts
associated wihdfeet technlogies. Working agement and privatization options, as well as an envi-
7with the Sri Larnkan generationt utility and a group of .ronmental overview of conventional supply options.
ment of thte econom3ic and fmandial-risics is often pacts are identified antd assessed. Experience with
criticaL Because of the inherentt uncertainity in fore- evrn ntlassessments demonstrates that infracas-ts
of future conditions,: projects should be se- structure projects are least likely to impose stress on
lected on the basis of careful sensitivity analysis. the environument if such assessments occur early
Planning forecasts -in the World Bank's appraisal of; and influence the design of individual projects-not
infrstrutureprojects have sometimes overesti- just the selection of a particular project from a set of
mated dem-and (Chapter 1). High demand forecasts alternatives. In Sri Lanka a recent power planning
lead to larger facilities, resulting in the selection of study involved not only selecting from among vanmore
capital-intensive investment options. Tech-. ous fossil fuel and other generating options, but also
niques that facilitate risk analysis in complex infra- paying attention to the need for energy conservastructur
projects, such as applying multicriteria tion (Box 4.9).
methods or drawing on financial options theory, are As the scale of hinfastructur projects grows,
currnty. being developed,
environmental consequences become increasingly
E,wiromnental
~~~~~ ,~~.significant
A study of several large World Bankfunded
projects in Brazi (representin total ap-
ASSESSING ENVIONMENTA IMPACt. Envirorkment- proved Bank financing of $1.15 billion) examined
tal regulation and promotion of the efficient use of environmental consequences and emphasized that
ifatructure help reduce adverse consequences environmental assessments should take a. broad
from existing infrastructur, issues ththv en perspective capable of recognizing regional effects
explored in detail by World Development Report 1992. and induced economic impacts, as well as the po-
More options'are* available with new projects, al- tential consequences of broad economic conditi-ons
though investment decisions can be consistent with. for the project Moreover, even though large investenvironmental
objectives only if environmnental im- ment programs mybe broken down into subcom-.
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