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Public Consultations on the AIIB’s “Draft Water Sector Strategy” Have a Lot of Room for Improvement. So does the “Strategy”.

10 December 2019 Topics:
In July 2019 AIIB President promised to RwB “to be very cautious with hydropower”, it does not show in the Draft Water Sector Strategy

On December 10, 2019 eighteen civil society organizations from 12 countries of Asia, Europe, Africa and the Americas submitted to the AIIB initial comments with a hope to start meaningful consultations on key environmental and social issues specific to river basin management and water infrastructure development. Full text below.

Submission to Consultations on the AIIB “Draft Water Sector Strategy”.

  1. Introduction: Expectations

Ever since discovering that the AIIB intends to develop a strategy for water sector, NGOs hoped that this new document will be more environmentally and socially minded, as well as more strategic and forward-looking, than other sectoral strategies that the AIIB has adopted. We expected that repeatedly producing “strategies”, the Bank may gradually learn to do it in more participatory and responsible way.

Water is a uniting theme for all aspects in human well-being and other multilateral banks clearly recognize that involvement of local communities and preservation of healthy environment are two pillars of modern water resources management. Since the drafting of the Water Strategy coincided with long-awaited revision of the Environmental and Social Framework (ESF), we hoped that this would be used in a coordinated manner to formulate water-related targets for green development and project selection criteria as well as particular water-specific safeguard mechanisms.

Water systems are highly interconnected and we hoped that the proposed strategy, similar to other MDBs, would be based on principles of basin-wide integrated water resources management (IWRM), since the “Energy Sector Strategy” already pledged to “support basin-level hydropower planning, including strategic technical, economic, financial, environmental and social studies” (although this has yet to be implemented in AIIB projects). We believe that basin-wide strategic planning and assessments is an important precondition for project identification.

Given the world-wide rapid decline in freshwater biota under dual pressure of water infrastructure and climate change, we expected that the new strategy would emphasize “nature-based solutions” for water management and climate adaptation, especially given that according to the 2016 Environmental and Social Framework “the Bank recognizes the value of natural infrastructure, such as wetlands, and the importance of enhancing or restoring ecosystem services”.

During the 2019 AIIB AGM at a workshop conducted with companies-leaders of water infrastructure  in Eurasia, the AIIB officials frankly expressed great doubts regarding which path the bank should take, since it is poorly prepared to deal with the complexity of water management projects and hardly can focus on serving the needs of local water users and improving management systems. Bringing more diverse stakeholders to this discussion would be useful for the planning process. So, we hoped that in treating such socially sensitive subject as water, the Bank would be willing to afford a robust and inclusive consultation process on this strategy, with translation of drafts being available in several of the most widely-used languages and that it would hold face-to-face consultations with regional stakeholders and focus groups.

II. Impressions

In late October 2019 the AIIB published “for consultation” its Draft Water Sector Strategy, but did not make any consultation plan public, neither did its public relations or communications department reach out to a broad section of civil society to solicit input. Here we summarize impressions after reading the draft.

Positively, the document “recognizes that water is a finite resource that is renewable only if properly managed” and calls for “maximizing environmental and social outcomes” and states that not “water infrastructure” per se, but “outcomes such as improved water services, better resources management, reduction of flood and drought risks, improved ecosystems and sustainable financing and operation are the ultimate objectives”.

However, the Draft does not discuss at any length the rights, needs and participation of local communities and indigenous people, who supposedly are the primary beneficiaries of these useful outcomes, despite that the AIIB aims to support the Sustainable Development Goals (SDGs). SDG 6 specifically refers to the participation of local communities in water and sanitation management . Although, the text promises that the “AIIB will review its water projects regularly” and the Bank has already approved a dozen diverse projects in water infrastructure, but disappointingly the Strategy developers opted not to draw any lessons from the Bank’s own early interaction with local communities affected by those projects.

Large part of the results framework is related to water supply and affordability is mentioned with regards to the social considerations for the ESF and corporate strategy, but it is unclear how the strategy will ensure that water supply is focused on access (as a human right) vs making water supply palatable and profitable for the private sector, by providing guarantees, PPPs and easements. There is no analysis of how the rights and needs of poor/vulnerable communities will be protected given that the private sector, which the AIIB seeks to “mobilize”, does not have these issues at the forefront.

The Draft downplays environmental values from the very first paragraph, acknowledging importance of water for “economic growth, food security and trade”, but failing to do the same for “healthy environment and resilient ecosystems”. Instead the document repeatedly calls for “harnessing water’s productive potential and mitigating its destructive force”, which reflects a refined technocratic approach to development through ‘subduing and mastering Nature’ that has been long abandoned by most international institutions as unsustainable.

Similar to other AIIB strategies this document lacks a clear strategic focus and thus legitimizing opportunistic engagement with any type of water infrastructure. It does not differentiate between “sub-sectors” where use of water is essential for serving specific human need (e.g. sanitation, irrigation, fisheries) and those sectors where use of water infrastructure is just one of the available options which can also be substituted (e.g. hydropower vs. RE in energy sector, inland navigation vs. railroads in transportation sector, etc.). The document offers little insight into water scarcity problems, neglects the need to set limits for alteration in aquatic ecosystems (e.g. environmental flow norms) and avoids mentioning strategic basin-wide planning to regulate competing water uses. The Strategy neither contains specific criteria for selection and design of projects nor sets forth clear intended objectives for AIIB involvement in a given sub-sector (e.g. “water supply” or “water treatment”). Equally worrisome the Strategy does not spell out water-specific safeguard mechanisms, but merely says that the Environmental and Social Framework could “provide a robust structure to ensure the environmental and social soundness and outcomes of Bank operations”. As a result, the strategy is deprived of practical tools to “maximize social and environmental outcomes” at the strategic planning level.

The Strategy calls for engagement with “more complex and institutionally challenging projects, co-financed with other MDBs”, but this can result in collective failure to select and design sustainable projects (e.g. the stalled Nenskra Hydro Project in Georgia). Diluting responsibility for complex projects among many IFIs is a worrying tendency, which was recently exemplified by the AIIB and up to ten other IFIs support to the modest 216 MW Upper Trishuli Hydro project in Nepal, loaded with a diverse array of chronic problems. When questioned by NGOs the  AIIB leaders could not explain the strategic value of involvement in overcrowded, corruption-prone and extremely risky hydropower sector in Nepal, compared to alternative options, such as solar, which now are lagging behind due to lack of funding and technical support.

Based on the Water Strategy document, the AIIB does not appear prepared to measure the strategy implementation progress. Portfolio level outcome indicators favor infrastructure for its own sake (e.g. acres of land protected from floods instead of measuring prevented loss); this crude metric system thus creates perverse incentives for pouring more concrete and spending more money, rather than for efficiency of water use, ecosystem restoration and benefits to humans. Furthermore, nothing is said about process for periodic review and revision of the strategy.

At the same time, the document quite realistically states that the AIIB will have to hire substantial numbers of professional staff to identify, select and supervise diverse projects and maintain a high-level policy dialogue with clients and counterparts. “Opportunities will be provided to staff to develop a multi-disciplinary vision necessary to work effectively across sectors and to ensure well-integrated investment choices ...” This sentence suggests that the current draft of Water Sector Strategy is a placeholder in anticipation of a more comprehensive vision for lending in the water sector.

III. Suggestions:

A.       Consultation process and outcomes

1.    We believe it is necessary to translate the draft Water Sector Strategy into the most widely spoken Asian languages (e.g. Hindi, Tagalog, Thai, Bengali, bahasa Indonesia)  as well as the six official UN languages and to disseminate it widely among potentially interested\affected stakeholders.

2.    The AIIB should clearly define who it classifies as project stakeholders. These should include community and civil society members as opposed to restricting the definition to clients and host governments.

3.      The AIIB should organize regional consultation workshops for CSOs and communities in different parts of Asia, especially for locations where local communities may be affected by water-related projects already identified\approved by the AIIB.

4.     We recommend disclosing the full “public consultation plan” for this strategy.

5.     We request that a response to each comment should be incorporated into a response matrix and presented on the AIIB website along with the finalized strategy. For the last two strategies adopted (transport and sustainable cities) such responses were not posted, which makes us question whether the AIIB considers comments submitted by stakeholders or if these consultations have been reduced to a meaningless formality.

6.     A glossary of terms is needed as vague wording and ambiguous use of terminology complicate reading. For example,  “integrated resource management approach” in the water sector refers not to basin-wide integrated water resources management (IWRM), but rather to “essential connectivity of water to other priority sectors”.

7. Given lack of technical clarity in the text and the many questions it evokes, we believe that the Draft Strategy should be sent for review to several global and regional expert institutions (e.g. IWMI, ARI Griffith Uni, MRC, AGWA, UNECE Water Convention, Ramsar Convention, etc.) dealing with water management, climate adaptation and sustainable infrastructure issues.

                     B.       Strategic planning issues

8.        The strategy needs better alignment with holistic ecosystem thinking. The Draft acknowledges “provision of critical environmental services”, however, it never clarifies systemically what specific services are “critical”, how they relate to water management sub-sectors and infrastructure project planning. The Strategy should explicitly list all water “ecosystem services” and spell out key measures to sustain and restore them, helping countries to relate intended water sector projects and objectives of national biodiversity strategies.

9.     The Strategy should list wild fisheries and aquaculture (or management of aquatic biological resources) as key sub-sectors in water resources management. Development of water infrastructure in Asia without considering aquatic biological resources has already severely threatened major protein sources which are feeding millions of local people.

10.     Under the “Resource Management” project category, the draft strategy proposes to “protect freshwater ecosystem services” by wastewater treatment. The Strategy must also address all other key factors causing decline in freshwater ecosystems, such as flow alteration; habitat degradation; overexploitation of species; spread of invasive non-native species; excessive excavation of sand or gravel and loss of connectivity between aquatic habitats. Investment in water management and infrastructure must focus on reducing and reversing those negative impacts.

11. Any large scale water infrastructure can be usefully designed and assessed only in the context of a wider river basin management plan and\or strategic basin-wide assessment (i.e. see note on hydropower in the Energy Sector Strategy). Therefore Principle 2 calling to “adopt a holistic view of water by promoting an integrated resource management” should explicitly commit AIIB to basin-wide planning and strategic environmental assessments (SEA) and integrated water resource management (IWRM), both presently omitted in the document.

12. Addressing “climate change” and investing in “Resilience”, the AIIB must adopt “integrated flood and drought management” as an approach to reduce risks and losses rather than suggest focusing on stand-alone “physical interventions”.

13. Since the AIIB intends to promote “innovative technologies” (paragraph 16), to sound credible examples of specific “innovative technologies” should be listed, especially from the realm of “nature–based solutions”, which are promoted in the Environmental and Social Framework.

14.  Better “Portfolio level outcome indicators” should be designed to reflect progress in achieving key outcomes, improvements in resource use efficiency, aquatic ecosystem conservation and benefits to local communities, including gender disaggregation and consideration for other vulnerable groups. Same relates to indicators for project outcomes, which in addition should avoid formulating potentially environmentally destructive incentives, such as evaluating flood risk reduction measures by “area protected from floods”.

15. The strategy should prescribe how and when the AIIB will review its water projects and progress of the overall strategy as well of periodicity and procedure for making necessary revisions.

16. Training opportunities provided to build AIIB staff knowledge should include regular mutual learning & consultations with NGOs and CBOs involved in water-related work.

                        C.    Defining Sub-sectors and project selection

17. “Water” is a unifying theme potentially connecting all sectors, but to avoid confusion clear differentiation should be made between project types primarily governed by the water sector strategy (i.e. wastewater treatment and sanitation, irrigation, water supply, etc.) and projects with an impact on water which are also guided by other strategies already adopted by AIIB (i.e. hydropower and multipurpose dams treated by the Energy Sector Strategy; navigation dealt with in Transport Sector Strategy). Exceptions could be cases when the different uses are strategically assessed as parts of integrated river basin management plan.

18. We recommend setting clear limits for what types of water management projects are considered by the AIIB during first 5 years of the Strategy implementation. Water infrastructure is very diverse, therefore for each sub-sector addressed by the Strategy, it should explicitly “set criteria and boundaries related to project adequacy”, including criteria for environmental and social outcomes. The AIIB should design a clear operational framework, safeguard tools and selection criteria to facilitate design and implementation of each priority project type. The finalized Strategy should contain clear lists of project selection criteria for each priority sub-sector to make sure that unsustainable projects do not enter the pipeline.

19. Projects on “upgrade and expansion of existing infrastructure” often perpetuate substantial environmental and social impacts of dams (or other infrastructure), which may thus extend the life of poorly conceived or built projects for decades. The AIIB needs to develop a responsible framework to assist clients in improving social and environmental performance of upgraded projects, otherwise “modernized” facilities will continue to exert negative impacts and the AIIB will be partly responsible for that. For example, in regards to dams, especially hydropower, such framework may address facilitation to fish migration; restoring environmental flows, ecological requirements to temperature regime; basin-wide ecological optimization of water management schemes, public consultations on full-spectrum of dam impacts, etc.

20.      The AIIB’s investment focus in ‘water services’ which includes rehabilitation, upgrading & improving existing water infrastructure, might also include decommissioning infrastructure projects that are no longer viable or needed and maximizing social, economic and environmental benefits resulting from that.

 D. Strategy and Water-specific Safeguards

21. Lack of understanding among engineers and financiers on how infrastructure affects freshwater ecosystems has led to major losses of freshwater biodiversity globally. We believe that the Strategy should describe typical negative impacts of water infrastructure projects on freshwater biodiversity, and include guidance on specific measures to address, prevent and mitigate those impacts.

22. Since the draft acknowledges that water is a finite resource dependent on good management, the strategy should promote adequate participatory cumulative impact assessment (CIA) in conjunction with basin-wide river management planning.

23. The strategy must incorporate an objective to not exceed carrying capacity of aquatic ecosystems at basin-wide and local scale which sets limits to alteration of ecosystem processes and prevents loss of biodiversity. Presently the draft fails to mention any specific standards and tools, such as environmental flow norms, preservation of migratory paths, etc. (e.g. 2018 Environmental flows Handbook for Hydropower published by the WB Group)

24. Safeguards listed in Paragraph 19 cannot guarantee that social and environmental impacts from water infrastructure investments would be “assessed, mitigated and monitored through dedicated instruments”. The Environmental and Social Framework (ESF), has yet to be updated to include specific instruments to address impacts on water ecosystems adequately. Therefore the Strategy should specify what safeguard measures should be developed and added to Environmental and Social Framework and other AIIB mechanisms to prevent and mitigate water infrastructure impacts.

25. Water ecosystems are increasingly scarce and fragile, with ever increasing human competition for exploitation of their diverse resources. Therefore destructive uses, which have clear alternative options, should be phased out to give way to more compatible activities and those which have no viable alternatives. The draft strategy and the accompanying paper hint that the AIIB is still interested in supporting greenfield storage-based hydropower (including those which may be described as “multipurpose” dams), and inland navigation infrastructure, both of which are not practical or sustainable in today’s ecological, climate and economic realities of Eurasia. Both hydropower and inland navigation can be in most cases easily substituted by less destructive alternative technologies meeting the same human needs. Instead of wasting resources on those usually unsustainable projects we would recommend that the AIIB puts their development on hold, or, better, inscribes them on the exclusion list of the ESF.

List of organizations submitting the comments:

Dimiter Koumanov, Balkanka, Bulgaria
Kate Geary, Bank Information Center Europe, UK
Alexey Zimenko, Biodiversity Conservation Center, Russia
Peter Jansen, Both ENDS, The Netherlands
Anatoly Lebedev, Bureau for Regional Outreach Campaigns – BROC, Russia
Nataša Crnković, Centar za životnu sredinu/ Friends of the Earth Bosnia and Herzegovina
Doug Norlen, Friends of the Earth US
Heike Drillisch, GegenStroemung – CounterCurrent, Germany
Manana Kochladze, Green Alternative, Georgia
Joshua Klemm, International Rivers, US
Alexander Kolotov, Plotina.Net, Russia
Paul Guy HYOMENI , Réseau Camerounais des des Droits de l’Homme (RECODH), Cameroon
Eugene Simonov, Rivers without Boundaries International Coalition
Himanshu Thakkar, SANDRP, India
Sergei Vorsin, Taraqqiet, Tajikistan
Petru Botnaru, Terra-1530, Moldova
Nora Sausmikat, Urgewald.org , Germany
Wawa Wang, Verein für sozial-ökologischen Wandel, Germany

For additional information, please, contact Eugene Simonov, Coordinator, Rivers without Boundaries International Coalition (RwB) simonov@riverswithoutboundaries.org

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