The Cost of Inaction in the Middle East and North Africa MNA Countries

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The Cost of Inaction in the Middle East and North
Africa (MNA) Countries

• by
• Sherif Arif
• Regional Environmental Advisor
• Middle East and North Africa Region (MNA)
• The World Bank
• Presented at the 2nd International Expert
  Meeting on Sustainable Consumption and Production
  
• Costa Rica, San Jose 5 September, 2005

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MNA Environmental Strategic Tools

• To increase decision-makers awareness of the
  need to conduct economic assessments to support
  policy formulation, particularly as they relate
  to strategic environmental decisions linked to
  environmental inter-sectoral planning, and
  sectoral planning (energy , water , waste ICZM
  policies)
• Assessment is at two levels
• MACRO LEVEL THROUGH
• COST OF INACTION known as the Cost of
  ENVIRONMENTAL DEGRADATION (COED)
• SECTOR LEVEL THROUGH
• THE ASSESSMENT OF IMPACTS OF ENVIRONMENTAL
  MEASURES IN THE ENERGY , WATER and WASTE SECTORS

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Why Calculating the Cost of Inactions

• It allows comparison between various
  environmental categories (air, water, land,
  forest, waste etc.)
• It represents an indicator of the present
  resource's assets
• It enables comparison with other economic
  indicators
• It enables comparison between the benefits and
  the costs of investing in natural resource
  management
• It raises awareness about environmental
  degradation beyond the environment audience
• It gives environment ministers a tool to
  discuss the importance of environmental
  protection using the same language as ministers
  of finance.

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Mediterranean Environmental Technical Assistance
Program(METAP)

• Established in 1990
• Beneficiaries All Southern and Eastern
  Mediterranean Countries
• Supported by EC, EIB, UNDP, WB, Switzerland
  Finland
• Objective To bring together the Mediterranean
  countries to cope with and reduce the effects of
  environmental degradation.

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COST ASSESSMENT OF ENVIRONMENTAL DEGRADATION

• Objective Estimate the Damage Costs resulting
  from environmental degradation.
• Damage costs include
• Impact on human health and on the quality of life
  (morbidity, mortality, loss in recreational
  value, etc.)
• Impact on natural resources (e.g. impact on
  ecosystem, deforestation)
• Estimates reflect order of magnitude and
  therefore represent an indication of actual
  costs.
• Financed through the Mediterranean Environmental
  Technical Assistance Program (METAP) by the Swiss
  Government
• Conducted by a team of World Bank staff and local
  consultants under the task leadership of Ms Maria
  Sarraf

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The Cost of Environmental Degradationin the MNA
countries Environmental Category Percentage of
GDP
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Damage costs from Air Pollution
Annual damage costs from Air pollution as GDP
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Impact on the poor
Egypt Index of Per Capita Cost of Environmental
Degradation Poor vs Non-Poor.
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Damage Costs in the Energy Sectorin Iran and
Egypt

• Damage costs were based on Western European
  estimates supplemented where possible with local
  studies
• The assessment of damage from air pollution was
  based on ExternE, a methodology used by the EU
  member states applied for power generation and
  transport, Results have been used to support EU
  legislation concerning
• incineration,
• the Large Combustion Plant Directive,
• the EU strategy to combat acidification,
• the National Air Quality Strategies

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Damage Costs in Irans Energy Sector is 2.3 of
GDP

• The main problem in Iran is the growth of
  pollution from private gasoline vehicles

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Iran Sectoral Measures and Price ReformCombined

• The combined effect reduces damage substantially
  below the 2004 value by 2009 in all three cases.
• Even by 2019 the damage is less than in 2004.
• Only the combination of measures and price reform
  will achieve a cleaner environment in 2019 than
  now.
• Price reform by 2009 plus sectoral measures
  provides the cleanest environment over the period.

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Egypt Health Damage Costs due to Transport,
Industry and Burning of Wastes
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Egypt Damage Costs 2010/2011 with Price Reform
Sector MeasuresCompared with Business as Usual
L.E. Million
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EGYPT DAMAGE COSTS RELATED TO WATER QUALITY
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Comparing Inaction with Action Action Cost vs.
Forgone Benefits (health crops fisheries)
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Outcome of the Cost of Environmental Degradation
(COED)

• Within the World Bank, COED has been adopted in
• Asia ( China)
• Africa ( Ghana)
• Latin America ( Columbia)
• Within the MEDA countries, COED was recognized in
  the Athens Declaration of 2002as one of the
  mainstreaming tools for environmental integration
• In the MNA region, COED is used by other donors
  and national agencies in Algeria, Morocco and
  Egypt
• In the Gulf countries, COED is used by ESCWA for
  economic evaluation

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Outcome of COED in Algeria

• The Government decided to provide in 2001 an
  additional US 450 million for environment-related
  investments
• Methodology used in other sectors
• ( cement and coastal zone management)

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OUTCOME of COED in the Energy Sector in Iran

• Damage costs assessment assisted in the policy
  formulation in the forthcoming fourth year
  development plan as follows
• Increase of the energy fuels ( gasoline, diesel,
  and electricity should reach their real market
  values by 2009
• As of March 21 2006, The gasoline price above
  the subsidized quota (10 cents per liter) will be
  2200 Rials/liter ( 25.6 cents per liter). It is
  expected that the price of gasoline should reach
  its market value in 2009.

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Damage costs from Inadequate Waste Management
Annual damage costs from inadequate waste
management as GDP
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Damage costs from Inadequate Waste Management
Annual damage costs from inadequate Waste
Management in million USD
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Solid Waste Sector in the MNA Region Key
Numbers

• The METAP Mashreq and Maghreb countries
• Host about 170 million people, of which more
  than 50 live in urban areas.
• Produces about 40 million tonnes of municipal
  waste per year (254 Kg/cap/y)
• The projected urbanisation and economic growth
  in the region during the coming years is expected
  to result in a waste tonnage increase of 44 by
  2010, equivalent to 55 million tonnes per year.
• In all countries, most of the cities are
  characterised by high population densities and
  rapid growth and suffer from several forms of
  urban pollution.
• Across the region, countries currently spend
  between US 325 400 million annually to manage
  municipal solid waste.

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Solid Waste Sector in the Region Common MSWM
Issues in the MNA Region

• Gaps in SWM policies and strategic planning
• Institutional and legal barriers
• Limited involvement of stakeholders and low
  environmental awareness
• Financial constraints and lack of appropriate
  municipal finance systems
• Deficiencies of technical and management
  capacity at the local and municipal level
• Inadequate cost accounting, financing and cost
  recovery
• Constraints for private sector involvement in
  the SWM market and its performance

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RSWMP OBJECTIVES

• Launched in January 2003
• Ending in March 2006
• Beneficiary Algeria, Egypt, Jordan, Lebanon,
  Morocco, Syria, Palestinian Authority and Tunisia
  
• Supported by European Commission with a grant
  to METAP for of EURO 5.0 million
• Main Objective Promote the adoption of
  sustainable integrated Solid Waste
  Management in the Mediterranean Eastern
  Southern Countries
• Specific Objectives
• Assist target countries in designing, developing
  applying main elements of ISWM
• Promote regional exchanges of information
  experience within the region and capacity
  building in the SWM field
• Lay down the foundation and build up the
  necessary environment and conditions for
  international and regional financial institutions
  to invest in MSWM projects in the region

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Concept of Guidance documents
Concept of Guidance documents
Introduction Users Guide
Glossary of Terms
Decision Makers Support Document
Why is SWM important ?
Policy
Guidelines
Legal Institutional
Finance Cost Recovery
Private sector Participation
Public Awareness Community Participation
Training Manuals
Case Studies
Tools
Explanatory Documents
Training Manuals
Examples
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Development of Regional and National Expertise
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RSWMP Progress Regional Information exchange and
dissemination

• Design and development of a Regional Electronic
  Network (www.metap-solidwaste.org)
• Co organisation with UNDP/EC USWM Project of the
  first Policy Dialogue Workshop on ISWM in Cairo
  in July 2003 (70 participants from national and
  municipal institutions, donors, international and
  local experts, and the eight NCs of the RSWMP).
• Preparation issue of a set of dissemination
  tools (CD ROMs 2 biannual Newsletters project
  brochure technical brochures, etc.)
• Visits of regional experts and exchange of
  experiences among the region (Tunisia Jordan).
  
• Establishment of Electronic database on key
  stakeholders, donors initiatives, applied
  technologies, regional and local expertise, etc.
• Organisation of the Regional NGOs Workshop
• ORGANIZATION OF REGIONAL FORUM ON SOLID WASTE
  MANAGEMENT IN CASABLANCA, MOROCCO IN NOVEMBER
  14-16, 2005

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Understanding the impact of carbon finance on
project financing and financial sustainability
Construction Capital for underlying climate
friendly project
World Bank Emissions Reductions Purchase
Agreement is bankable and additional revenue
commitment helps bring projects to financial
closure
annual payments under carbon purchase agreement
Cash in
annual payments under power purchase or other
source of revenues to underlying project
Debt
Carbon Revenues for 10-21 years
Equity
Operation
Construction
Yrs 0 1 2 3 4 5 6 7 8
.15-20
Cash out
Carbon sales revenues are commonly in the range
from 10-50 of total revenues for power and waste
management projects
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Carbon Economics
   
Increases in Project Rates of Return as a result
of additional revenues from sales of Emissions
Reductions (Carbon) at 4/tCO2e
 
 
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Combining Lending with Carbon Emissions Revenues

• Tunisia
• Integrated Solid Waste Management
• IBRD Loan US 22.2 million
• Carbon Emissions Revenues US 29.4 million
• Egypt
• Egypt-Pollution Abatement Program
• IBRD Loan US 20.0 million
• Carbon Emissions Revenues US 10 million ( est)

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THANK YOU VERY MUCH FOR YOUR ATTENTION