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PPP TOOLKIT for Improving PPP
Decision-Making Processes
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Sector: State Highway  |  Module 2: Work through the PPP process

Full feasibility study and PPP due diligence

Social and environmental feasibility

Infrastructure projects will often have significant social and environmental impacts arising from their construction and operation, which can be both positive and negative. The impacts may include flow-on effects beyond the immediate project area and beyond the people directly associated with the project (secondary impacts).

Social impacts on communities affected by the project include, for example, requirements for resettlement and the associated impact on quality of life and livelihoods, and impacts related to environmental alteration (eg on health and livelihoods)

Environmental impacts on the project location and in associated areas (eg downstream, ground water or ambient air) include effects on environmental resources due to alterations or pollutants

It will often by a mandatory regulatory requirement for assessments of social and environmental impacts to be carried out during infrastructure project development. The scope of social and environmental studies can cover:

  • Quantifiable social and environmental costs and benefits
  • Non quantifiable social and environmental costs and benefits
  • Options for mitigating adverse impacts and the cost of mitigation.

The secondary effects should be included in the assessment. Public consultation is often a part of the social and environmental feasibility process.

The analysis should identify what type of social and environmental impact studies are needed, and the type of permits and licenses required, and should take into account health and safety standards. This information will assist the sponsor with the preparation of tender documents if the project is taken to market, and will assist bidders with the preparation of risk minimising bids.

The final assessment of environmental and social costs and benefits is an input to the economic assessment of the project. Therefore, in addition to being a requirement from a legal and regulatory perspective, the social and environmental analysis is an important part of the assessment of the project’s overall welfare impact, as captured in the economic analysis.

Case study example
The Vadodara Halol Toll Road case study was a benchmark example of how environmental and social safeguards measures could be included as part of the contractual obligation of the concessionaire. The project was designated by the World Bank as a 'best practice' example for its environment risk mitigation and social rehabilitation plan in India.

Environmental Clearance and EIA

Under Central Government regulation, Environmental Clearance (EC) must be gained for all physical infrastructure projects that meet certain thresholds. These include projects in all of the five sectors covered by this toolkit.

An Environmental Impact Assessment (EIA) report is often a key requirement as part of the process of gaining Environmental Clearance. In the recent past an EIA has been a particularly stringent requirement for road related projects (such as Highways). EIA is governed within the EC process.

In some cases a preliminary EIA is carried out at the feasibility stage and a complete assessment takes place during procurement. In other cases the full EIA will be carried out as part of or in parallel to the feasibility study.

Depending on the regulatory regime, final approval may depend on the EIA being satisfactory and that there are no major adverse environmental impacts which can not be mitigated. The whole environmental clearance process can take a year depending on the complexity of the project. This must be factored into the PPP development plan.

Environmental Clearance is regulated at the Centre by the Ministry of Environment and Forests (MoEF), which is the nodal agency. The requirements are specified in MoEF’s draft Environmental Impact Assessment Notification (2006) (the Notification was modified in 2009 but remains in the draft stage). Environmental Clearance is mandatory under the Notification.

In addition to formal environmental impact analysis, environmental laws and regulations may also require:

  • Mitigation plan
  • Environmental monitoring plan
  • Approvals from the State Forest Department or Central / State Pollution Control Boards, if required

Click here for more details of the environmental analysis and safeguard requirements in India

Social impact analysis / social feasibility

Social Impact Assessment (SIA) is  a  process  that  provides  a framework  for  prioritizing,  gathering,  analyzing,  and  incorporating  social  information  and participation  into  the  design  and  delivery  of  projects. It ensures that infrastructure project development is:

  • informed and takes into account the key relevant social issues, and
  • incorporates a participation strategy for involving a wide range of stakeholders

At the micro-level, SIA impacts on individuals, at the meso-level it impacts on collectives (eg, groups of people, institutions, and organizations) and at the macro-level it impacts on social macro-systems (eg, national and international political and legal systems).

The stages in Social Impact Assessment are:

  • Describe the relevant human environment/ area of influence and baseline conditions
  • Develop an effective public plan to involve all potentially affected public
  • Describe the proposed action or policy change and reasonable alternatives
  • Scoping to identify the full range of probable social impacts
  • Screening to determine the boundaries of the SIA
  • Predicting Responses to ImpactsDevelop Monitoring Plan & Mitigation Measures

Ideally the SIA should an Integral part of other assessments as shown below.

SIA in relation to other assessments

Social analysis in the roads and transportation sectors
In the road sector, social analysis has been essential to identifying various kinds of road users and in assessing cost recovery mechanisms, beneficiary assessments and willingness to pay. In urban transport, it is the basis for affordability issues and creating the appropriate technological solutions to deal with the social and physical realities of those living in urban conglomerates. In ports and inland water transport, social analysis has been important in determining whether productivity improvements will be championed or opposed by powerful labour groups and operators

Social assessment facilitates the achievement of social development goals within the transportation sector so that:

  • The access of the poor and vulnerable in transportation infrastructure and services is expanded and improved
  • Poor people’s assets (homes and communities) and capacities (education and willingness to work) are enhanced through improved and affordable access
  • Capabilities of communities to participate in the design and operations of transportation services are strengthened
  • Adverse risks that people, especially the poor and the vulnerable, may disproportionately shoulder are reduced or mitigated
  • Public accountability is improved as is the ability of remote people to participate in the political process, and
  • Policy reform is facilitated by the results of social analysis, which in many cases provides a social framework of support for making difficult choices

Click here for more details of the social impact analysis and safeguard requirements in India including details of the National Resettlement and Rehabilitation Policy 2007.

 

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