1-6 Costs and benefits of EIA

Although there are costs associated with undertaking EIA, experience has shown that the potential savings over the life of a project can repay the investment many times over. The savings can be economic (e.g. identification of least cost alternative) as well as environmental (e.g. impact reduction, maintaining other resource use opportunities). Generally the earlier EIA process is introduced in the project cycle, the greater the potential returns. When EIA is integrated into the project preparation phase, environmental design considerations can be introduced in the first place rather than the proposal having to be modified later.

Benefits

The benefits of EIA can be direct, such as the improved design or location of a project, or indirect, such as better quality EIA work or raised environmental awareness of the personnel involved in the project. In these cases, there will be with flow-on effects in their future work. As mentioned above, these potential gains from EIA increase the earlier the process is applied in the design process.

In general the benefits of EIA include:

• Better environmental planning and design of a proposal. Carrying out an EIA entails an analysis of alternatives in the design and location of projects. This can result in the selection of an improved technology, which lowers waste outputs or an environmentally optimum location for a project. A well-designed project can minimise risks and impacts on the environment and people, and thereby avoid associated costs of remedial treatment or compensation for damage.
• Ensuring compliance with environmental standards. Compliance with environmental standards reduces damage to the environment and disruption to communities. It also avoids the likelihood of penalties, fines and loss of trust and credibility.
• Savings in capital and operating costs. EIA can avoid the undue costs of unanticipated impacts. These can escalate if environmental problems have not been considered from the start of proposal design and require rectification later. An ‘anticipate and avoid’ approach is much cheaper than ‘react and cure’. Generally, changes which must be made late in the project cycle are the most expensive.
• Reduced time and costs of approvals of development applications. If all environmental concerns have been taken into account properly before submission for project approval, then it is unlikely that delays will occur as a result of decision-makers asking for additional information or alterations to mitigation measures. Increased project acceptance by the public.

This is achieved by an open and transparent EIA process, with provision of opportunities for public involvement of people who are most directly affected by and interested in the proposal, in an appropriate way that suits their needs.

Costs

It can be difficult to determine the exact costs of an EIA because major projects typically require a large number of investigations and reports, often for closely related purposes (e.g. engineering feasibility studies of hydrology and surface materials). The World Bank notes that the cost of preparing an EIA rarely exceeds one per cent of the project costs and this percentage can be reduced further if local personnel are used to do most of the work. For Bank projects, the relative cost of an EIA typically ranges from only 0.06 per cent to 0.10 per cent of total project costs. The total cost of an EIA might range from a few thousand dollars for a very small project, to over a million dollars for a large and complex project, which has a significant environmental impact and requires extensive data collection and analysis.

Although many proponents complain that EIA causes excessive delays in projects, many of these are caused by poor administration of the process rather than by the process itself. These occur when:

• the EIA is commenced too late in the project cycle;
• the terms of reference are poorly drafted;.
• the EIA is not managed to a schedule;
• the technical and consultative components of EIA are inadequate; and
• the EIA report is incomplete or deficient as a basis for decision making.

Similar considerations apply to the timeframe for the EIA process. Most projects merely require screening and might take only an hour or two of work. Where further EIA work is necessary, the time taken can range from a few days or weeks, for a small irrigation or a minor infrastructure project, to two years or more for a large dam or a major infrastructure project. Generally speaking, the costs and time involved in EIA should decrease as experience is gained with the process and there is a better understanding of the impacts associated with different types of projects and the use of appropriate methods. Over a longer timeframe, the availability of baseline data should also increase.

All participants in the EIA process are ‘stakeholders’, who pursue particular interests and hold different views and preferences. Full public involvement, open to all affected and interested parties, provides the best means of ensuring the EIA process is fair and credible. It allows decision-makers and participants themselves to gain an understanding of the diversity and balance of opinion on the issues at stake. The final decision can then be made in a fully informed and transparent manner, having regard to all the facts and the views by stakeholders and the public at large Section 3 – Public involvement).

In addition, there are a number of specific measures that can help to make the EIA process transparent, accessible and accountable to the public. Examples of measures that reinforce the fairness of the process include:

• requiring the proponent to register all consultants, their expertise and responsibilities with the administering agency;
• publishing these details in the terms of reference and the EIA report;
• making all EIA documents and reports available to the public; and
• publishing reasons for decisions – screening and final approvals – together with requirements and terms and conditions for mitigation and environmental management plans.

Capacity building is the long-term, voluntary process of increasing the ability of a country to identify and solve its own problems and risks, and to maximise its opportunities.

In this context, countries should firstly aim to carry out their own EIAs of proposals. Second, they should aim to use local experts as much as possible when undertaking EIAs of proposals financed by the World Bank and other multilateral lending agencies. Where this is not possible without compromising the quality of EIAs and outside experts must be engaged, every opportunity should be taken to transfer their expertise to local personnel. This strategy will make the implementation of EIA recommendations more effective and strengthen the basis of EIA expertise locally.

Capacity building can be carried out in a number of ways, including institutional strengthening, technical assistance and advice, and EIA training programmes. A systematic, long-term commitment will be necessary to overcome limited capacity of many developing countries to undertake EIA. In addition, this process should be backed by activities to strengthen education and research institutions. EIA-specific training can be done at many different levels and over different periods to meet a variety of needs.

A systematic EIA capacity building programme will need to provide a range of different activities. These could include advice on drafting or strengthening EIA legislation and procedures, improving their application to relevant sectors, such as energy and mining, and strengthening particular aspects of practice, such as public involvement. Pilot projects involving local experts in actual EIAs of proposals can be used to transfer ‘hands on’ knowledge and skills. Supporting activities include developing resource materials and establishing a network of practitioners with experience in EIA or technical analysis.