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notification, exchange of information, and agreed-upon consultation on the potential environmental effects of activities under their control or jurisdiction which are likely to significantly affect other States or areas beyond national jurisdiction.

Principle 12

When information provided as part of an EIA ́indicates that the

environment within another State is likely to be significantly affected by a proposed activity, the State in which the activity is being planned should, to the extent possible:

(a) notify the potentially affected State of the proposed activity;

(b) transmit to the potentially affected State any relevant information from the EIA, the transmission of which is not prohibited by national laws or regulations; and

(c) when it is agreed between the States concerned, enter into timely consultations.

Principle 13

Appropriate measures should be estabished to ensure implementation of EIA procedures.

Note

1/ In this document an assessment of the impact of a planned activity on the environment is referred to as an environmental impact assessment (EIA).

STATEMENT OF

R. AUGUSTUS EDWARDS III

DEPUTY ASSISTANT ADMINISTRATOR FOR

EXTERNAL AFFAIRS

U.S. ENVIRONMENTAL PROTECTION AGENCY

BEFORE THE

SUBCOMMITTEE ON HAZARDOUS WASTES

AND TOXIC SUBSTANCES

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE

June 16, 1988

Protection

Agency's

Good morning, Mr. Chairman. I am pleased to be here this morning to discuss the Environmental experience with the National Environmental Policy Act (NEPA) and our views concerning the environmental impact of projects funded by multilateral development banks (MDBs) in developing countries. Late in 1987, EPA's Director of the Office of Federal Activities, Richard Sanderson, appeared before this Subcommittee to testify to our success in achieving the NEPA goal of having Federal decision-makers consider environmental issues early in We now see environmental

the

decision-making

process.

evaluations being Woven into the fabric of government

initiatives at all

levels, and in situations where the

environmental connection may be real but not obvious.

institutionalization

This

of the consideration of environmental

impacts is a development that we at EPA and our colleagues at CEQ have witnessed over the past 18 years; it has not always been easy, but we are convinced beyond any doubt that the quality of Federal decision-making is better for having done it.

We

now

the

evolution of this

type

of

look forward to thinking--to its wider acceptance at the international level. from learned much

However,

answers.

believe we

we have

our domestic experience, enough perhaps to admit that we do not know all the I would like to proceed to give you our thoughts regarding the application of NEPA-like procedures to international development activities, and will conclude with a few general recommendations.

Multilateral Development Banks provide substantial loans to nations world-wide for large and small development projects, many of which have significant impacts on the environment. Our concern today is whether potential adverse environmental effects, means to mitigate those effects, and possible alternatives are sufficiently assessed before these projects are funded by MDBs.

In the past, MDBS were guided in many instances by a narrow interpretation of economic development. But in the long run, all

of us now realize, economic decisions

are

sound only if they

include adequate consideration of the environment.

Further,

project funding should take into account the needs of the future.

The direction of

orientation of

investments, exploitation of resources, and technological

development should be made

consistent with future as well as present needs, as has been expressed by the U.N.-based World Commission on Environment and Development.

In the recent past there has been a growing awareness of the need to bring proposed projects under environmental scrutiny.

People and governments are increasingly aware that what happens elsewhere on the globe can have an effect on our part of it, whether it is the effect of forest destruction on global warming, or nuclear fallout from the Chernobyl catastrophe. Man's ability to alter his environment is growing too.

The road

A number of projects which have received MDB funding have been criticized as having harmful environmental impacts, which in some cases also affected the economic viability of the projects. For example, the Anchicaya hydroelectric dam in Columbia, which received a World Bank loan, became unusable after only 7 years due to siltation and has since been abandoned. The Polonoreste project in Brazil received $ 434 million in World Bank loans between 1981 and 1984 and involved construction of a 1,500 km highway through unpopulated Amazonian rain forest. resulted in increased logging, displacement of native peoples and destruction of rain forest as a result of intensive settlement. Due to failures to adhere to environmental stipulations, the World Bank suspended loan disbursements for a time, but these were subsequently renewed. A similar project in Acre, Brazil, became controversial after it was found that construction of the road had started before the Inter-American Development Bank had begun its environmental assessment.

Projects such as those just described convinced the United States, as well as other donor nations, that environmental concerns need to be integrated much more effectively into MDB decision-making. Over the last few years, several initiatives

have been made to better incorporate environmental analysis in project

assistance

decision-making.

While

defer I

to my

colleagues from the Departments of State and Treasury to provide details, I understand that the following efforts are being made.

The Working Group for Multinational Assistance (WGMA), where Treasury, AID and several other agencies participate in the review of about 500 MDB projects per year, has been operating This group advises the Assistant Secretary Development Banks in instructing U.S.

over the last decade.

of the Treasury for

Executive Directors to the Banks. In the past few years, this group has become more alert to environmental concerns.

While we

have not been a participant in the Working Group, ΕΡΑ was recently invited to become an active member, and we look forward to contributing to the decision-making process.

The AID Early Project Notification

process was

established in 1982 to identify key policy and design issues, including environmental issues, in MDB projects at an early stage. This process has been enhanced to focus more effectively on environmental issues, and an informal interagency group (State, Treasury, AID) has evolved, which meets weekly to examine specific projects. We are pleased to be a part on that process now, and hope to be in a position to offer technical advice very early in the project cycle.

The Appropriations Acts for 1987 and 1988 codified emphasis on environmental concerns in the "Early Project" process. They required AID to explore developing a cooperative "Early Project"