arab republic of egypt country environmental...

A WORLD BANK DOCUMENT

ARAB REPUBLIC OF EGYPT

COUNTRY ENVIRONMENTAL ANALYSIS (1992-2002)

APRIL 1S T, 2005

Water and Environment Department The Middle East and North Africa Region

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CURRENCY Currency Unit = LE (Egyptian Pound)

LE 1.00 = US$0.16 US$1.00 = LE 6.18 (2004)

FISCAL YEAR July 1 – June 30

ACRONYMS

AGOSD : Alexandria General Organization for Sanitation & Drainage ANS : Adjusted Net Saving BAU : Business as Usual BCM : Billion cubic meters BOD : Biological Oxygen Demand CAS : Country Assistance Strategy CDM : Clean Development Mechanism CEA : Country Environmental Analysis CEDARE : Center of Environment and Development of the Arab Region and Europe CIDA : Canadian International Development Agency CNG : Compressed Natural Gas COED : Cost Assessment of Environmental Degradation in Egypt COMESA : Common Market for Eastern and Southern Africa CSC : Cost of Saved Carbon DALYs : Disability Adjusted Life Years DANIDA : Danish International Development Agency DBO : Design-Build-Operate DO : Dissolved Oxygen EEAA : Egyptian Environmental Affairs Agency EEC : Energy Efficiency Council EEIS : Egyptian Environmental Information System EEPP : Egyptian Environment Policy Program EER : Energy-Environment Review EGPC : Egyptian General Petroleum Corporation EIB : European Investment Bank EIMP : Environment Information and Monitoring Program EMU : Environmental Management Unit ENSS CDM : Egypt’s National Strategy Study on the Clean Development Mechanism EPAP : Egyptian Pollution Abatement Project EQO : Environmental Quality Objective ERSAP : Economic Reform and Structural Adjustment Program ESCO : Energy Saving Company ESI : Environment Sustainability Indicator ETSF : Environment and Tourism Services Fund ExternE : Externalities of Energy (A Research Project of the European Commission) FINNIDA : Finnish International Development Agency GDP : Gross Domestic Product GEF : Global Environment Facility

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GNI : Gross National Income GOE : Government of Egypt GOFI : General Organization for Industrialization GOGCWS : General Organization for Greater Cairo Water Supply GOSD : General Organization for Sanitation and Drainage GTZ : German Technical Cooperation ICZM : Integrated Coastal Zone Management IMSWM : Integrated Municipal Solid Waste Management IPM : Integrated Pest Management ISWM : Integrated Solid Waste Management JICA : Japanese International Cooperation Agency KfW : Kreditanstalt fur Wiederaufbau (German Construction Bank) LULUCF : Land Use, Land Use Change and Forestry MALR : Ministry of Agriculture and Land Reclamation MDG : Millennium Development Goals MENA : Middle East and North Africa METAP : Mediterranean Environmental Technical Assistance Program MHUNC : Ministry of Housing, Utilities and New Communities MOALR : Ministry of Agriculture and Land Reclamation MOEE : Ministry of Electricity and Energy MOHP : Ministry of Health and Population MOMP : Ministry of Manpower MOTCA : Ministry of Transport and Civil Aviation MPN : Mean Probable Number MSEA : Ministry of State for Environmental Affairs MWRI : Ministry of Water Resources and Irrigation NEAP : National Environmental Action Plan NEES : National Energy Efficiency Strategy NGOs : Non-governmental Organizations NOPWASD : Nationa l Organization for Potable Water and Sanitary Drainage NWRC : National Water Research Center NWRP : National Water Resources Plan O&M : Operation and Maintenance OSP : Organizational Support Program PCF : Prototype Carbon Fund PM : Particulate Matters PPP : Parity Purchasing Power RBOs : Regional Branch Offices (of MSEA/EEAA) SEAM : Strategic Environment and Management Project SFD : Social Fund for Development SGB : State Government Budget TDS : Total Dissolved Solids TIFA : Trade and Investment Framework Agreement UNDP : United Nations Development Program USAID : United States Agency for International Development WWTPs : Wastewater Treatment Plants

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TABLE OF CONTENTS

Page Number

ACRONYMS ii

ACKNOWLEDGEMENTS vii

EXECUTIVE SUMMARY viii

CHAPTERS Chapter 1: Introduction 1

Chapter 2: Environmental Issues and Sustainability in Egypt 6 Chapter 3: Air Quality 19

Chapter 4: Water Quality 37 Chapter 5: Solid Waste Management 62 Chapter 6: Integrated Coastal Zone Management in Egypt 72 Chapter 7: Environment Policies and Institutions 83 Chapter 8: Environmental Expenditures 109

Chapter 9: General Conclusions and Recommendations – The Road Ahead 119 SUMMARY MATRIX 138

TABLES Table 2.1 Status of MDG Achievements in Egypt 7 Table 2.2 Annual Cost of Environmental Degradation Mean Estimate 9 Table 2.3 Egypt Decomposition of National Saving (1970-2001) 11 Table 2.4 Textile and Furniture Industry Exports 17 Table 3.1 Market Prices and Opportunity Costs of Industrial Fuels 24 Table 3.2 Comparison of Market Prices and Opportunity Costs of Electricity 24 Table 3.3 Major Contributors to Local Damage Costs (1999/2000) 28 Table 3.4 Package of Policies from EER Action Plan 31 Table 3.5 Increases in Market Prices of Selected Fuels Required to Generate LE 150 mil/year 32 Table 3.6 Projects with Positive Costs of Saved Carbon (CSC) 34 Table 3.7 Revenues from the International Market for Certified Emission Credit 35 Table 4.1 Pollution Hazard Classification (source NWRP, 2002) 41 Table 4.2 Recurrent Unit Costs and Associated Subsidies in WS&S 44 Table 4.3 Pertinent Institutions and Water Quality Measures 50 Table 4.4 National Plan for Protection of Water Resources in Egypt (2001-2012) 52 Table 5.1 Solid Waste Management Stakeholders 66 Table 5.2 Projected Investment Requirements for ISWMP 67 Table 5.3 Lessons Learned 70 Table 6.1 Tourism Data in Egypt 72 Table 6.2 Major ICZM Issues in the Mediterranean and the Red Sea 76 Table 6.3 Issues and Actions on ICZM in Egypt 82 Table 7.1 Review of the Progress of NEAP of 1992 85

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Table 7.2 EEAA Five-Year Action Plan (2002-2007) 87 Table 7.3 Proposed Actions for Harmonizing the National EIA System with OP 4.01 93 Table 7.4 Line Ministries/National Institutions – Mandated with Environmental Issues 96-97 Table 8.1 Organizations and Ministries included in the Assessment of Budget Expenditures 110 FIGURES Figure 1.1 Economic Growth in Egypt 1 Figure 2.1 Annual Cost of Environmental Degradation 9 Figure 2.2 Annual Cost of Environmental Degradation by Economic Categories 9 Figure 2.3 The Cost of Environmental Degradation-An Indicator for Environmental Sustainability 10 Figure 2.4 Egypt National Savings Effort (1970-2001) 12 Figure 2.5 Overall Rank of Egypt in Sustainability Evaluation – Results Achieved for Various Indicators 13 Figure 2.6 Egypt Regional Poverty (million) (1999/2000) 14 Figure 2.7 Egypt All Environment Categories Per Capita Damage Cost 14 Figure 2.8 Impact on the Poor, Egypt Index of Per Capita Cost of Environmental

Degradation, Poor vs Non-Poor 15 Figure 3.1 Distribution of Subsidies by Sector 25 Figure 3.2 Local Damage Costs by Pollutant, 1999/2000 28 Figure 3.3 Local Damage Costs by Fuel, 1999/2000 28 Figure 3.4 Growth of Environmental Damage in Egypt to 2011 30 Figure 3.5 Damage Costs in 2010/2011 with price reform and Sectoral Measures Compared with Business as Usual (LE million) 33 Figure 4.1 Simplified (Renewable) Water Balance 37 Figure 4.2 Change in Per Capita Share Water with Respect to Population Growth 1897-2025 38 Figure 4.3 Poverty and Access to Water and Wastewater 38 Figure 4.4 Rural/peri-urban Sanitation Lgs far Water Supply 40 Figure 4.5 Groundwater Vulnerability to Pollution (mainly from reuse) 42 Figure 4.6 Institutional Framework of Water Quality Management in Egypt 46 Figure 4.7a-d Damage Cost Due to Water Quality 56-57 Figure 5.1 Projected Waste Generation 2001-2025 62 Figure 5.2 Solid Waste, Hospital Waste and Industrial waste, Three Largest Priorities 69 Figure 7.1 Distribution of Environmental Official Development (1991-2001) Including both Bilateral and Multi-lateral Items 102 Figure 7.2 Distribution of Environmental Official Development Assistance By Sector 102 Figure 7.3 Ongoing Donor Allocation in Specific Sectors 103 Figure 7.4 World Bank Portfolio 106 Figure 7.5 Lending for Environment & Natural Resources Management in Egypt 107 Figure 8.1 Percentage of Environment-Related Investment (1992-2002) 111 Figure 8.2 Environmental-Related Investments by Sector 112 Figure 8.3 Distribution of Investments in NEAP 112 Figure 8.4 Comparison of Damage Costs and Investments in 1999 114 Figure 8.5 Financing of Environment-Related Investments 114

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Attachment 1: Egypt Progress Towards Selected Millennium Development Goals 18

ANNEXES: Annex 2, Table 1 Egypt Trade and Environment Rapid Assessment Summary Table of Results of Export Sectors (High Supply Elasticity) 147 Annex 2, Table 2 Egypt Trade and Environment Rapid Assessment Summary Table of Results of Import Sectors (High Supply Elasticity) 149 Annex 2, Table 2.1 Millennium Development Goals (MDGs) 150 Comparison of MDG of Egypt with other Countries of the Mediterranean 150 Annex 3.1 Summary of Previous Energy Work in Egypt 151 Annex 4.1 Overview of Water Quality Related Laws and Decrees 154 Annex 4.2 Spatial Presentation for Key Water Quality Parameters in the Nile Delta Irrigation System 155 Annex 5.1 Key Characteristics and Data for Solid Waste in Egypt 158 Annex 5.2 Waste Management Donor/Lender Activity 159 Annex 5.3 Solid Waste Management Stakeholders 160 Annex 7.1 Strategic Actions of NEAP 1992 and NEAP 2002 161 Annex 7.2 Principal Environmental Laws, Decrees and Regulations 163 Annex 7.3 Summary of the Egyptian EIA System and Comparison with the World Bank 164 Annex 7.4 EEAA Functions and Responsibilities 169 Annex 8.1 Environment Funds Supported by International Donors and Financing Institutions in US$ Equivalent (million) 170

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COUNTRY ENVIRONMENTAL ANALYSIS

ACKNOWLEDGEMENT

This report could have not been made possible without the excellent collaboration between H.E. The Minister of State for Environmental Affairs (MSEA), the Egyptian Environmental Affairs Agency (EEAA) and the World Bank (WB).

The report was prepared by a team consisting of Messrs/Mmes. Sherif Arif (Regional Environment and Safeguard Advisor and Team Leader), Anders Alm (Senior Environmental Specialist), Dahlia Lotayef (GEF Coordinator), Laila El Baradei (Senior Consultant on Environmental Institutions), Conchita Castillo (Senior Program Assistant for Country Services), Ahmed El Kholi (Senior Environmental Consultant), Tarek Genena (Senior Environmental Policy Consultant), Ahmed Mostafa (Solid Waste Management Consultant), Hany Shalaby (Senior Environmental Consultant), Ahmed Shawky (Water Resources Management Specialist), and Youssef Sultan (Senior Financial Management Consultant).

The team would like to express its gratitude to H.E. Eng. Maged George, Minister of State for

Environmental Affairs, Dr Mamdouh Riad Tadros, former Minister of State for Environmental Affairs, Dr. Mohamed Sayed Khalil, Chief Executive Officer of the Egyptian Environmental Affairs Agency (EEAA), as well as all senior staff and advisors and junior staff of EEAA. The team is also very grateful for all the institutions and their senior staff, and international donors in Egypt that provided valuable information.

The team would like to thank Messrs/Mmes Ellysar Baroudy (METAP Officer), Carol Chouchani Cherfane (Environmental Consultant), Kirk Hamilton (Lead Environmental Economist), Bjorn Larsen (Environment Consultant), Rita Lohani (Junior Professional Associate),) and Maria Sarraf (Environment Economist and Messrs. Nigel Lucas, and Peter Wooders (ERM Consultants) and Yasser Sherif and Ezzat Abdel Hamid (Environics) for providing relevant background documents, information and data.

The team would also like to thank Vahid Alavian (Lead Water Resources Specialist) and Ede Jorge Ijjasz-Vasquez (Senior Environmental Specialist) for acting as peer reviewers for this document.

This report was financed by the Environment Mainstreaming Fund of the World Bank.

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COUNTRY ENVIRONMENTAL ANALYSIS

EXECUTIVE SUMMARY

GENERAL CONTEXT

1. Egypt’s current severe environmental problems are the legacy of the country's economic and social policies of the past four decades. Despite undeniable progress made by the Government of Egypt in protecting the environment, the cost of environmental inaction is a binding constraint for economic growth that Egypt cannot afford to neglect. The two key principles that are essential if Egypt would like to engage into the path of sustainable development are:

• The conservation and development of its own natural resources (oil/gas, water and land); and

• An agreement on a new share of responsibilities between the State, the Producers (or Service Providers) and Beneficiaries in the conservation and development of these resources.

• 2. In the past, the Government of Egypt (GOE) was unilaterally responsible for managing Egypt’ natural resources and directing its economy. This top-down approach has led to many inactions that increased the burden on the State revenues, and affected the quality life led by citizens. The country has heavily invested in the social, educational, agricultural and industrial sectors, which aimed, on the one hand, at employment creation and provision of social services, and on the other hand, at increasing capital investment and enlarging the productive capacity of the economy. Heavy industry, state and collective agriculture, intensive extraction of natural resources, massive subsidies, and trade and exchange rate control, were the key features driving economic policy.

3. In the new era of market-based economy, there is a need for clear articulation between environmental policies with overall economic policy. Environmental benefits should now flow from the deregulation of the economy (started in the 1990s), which aimed at improving the administrative management of the economy, including price and fiscal reforms, trade and foreign exchange liberalization, and aiming at creating an enabling environment for attracting local and foreign investment. Such strategic approach towards sustainable development implies a new way of thinking and working in Egypt. As a private good, the environment is the responsibility of the ordinary citizen through change in his behavior, through his involvement as part of the decision-making process, as well through the private sector which should now be the engine of growth. As a public good, the responsibility lies with the Government through the adoption of environmental policies and incentives, and the financing of environmental investments that are focused primarily to protect the poor. As a global good, the environment should be an incentive for the Government to take advantage of the existing financing mechanisms such as GEF, CDM, PCF in order to improve local environmental benefits and build on overlaps with regional and global benefits.

THE ENVIRONMENTAL CONTEXT

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4. Until 1991, development in Egypt was totally dissociated from the environment. The country was in a state of environmental neglect with serious problems related to lack of water supply and sanitation, land and ecological degradation, air and water pollution as well as municipal, toxic and hazardous agro-industrial wastes. These issues were further exacerbated by weak policies and institutions besides the inadequacy of governance structures. After the successful implementation of the Economic Reform and Structural Adjustment Program (ERSAP), in which large debts were rescheduled in 1991, Egypt attempted to reconcile its development with environmental improvement. In 1992, the Government of Egypt endorsed its first National Environment Action Plan (NEAP) which marked a turning point in tackling the challenge of environment and development in Egypt. NEAP was the first policy instrument that has mobilized efforts and investments of both the Government and international donors towards addressing major environmental issues in this country, and building its environmental infrastructure. An Environment Protection Law was enacted in 1994, and a Minister of State for Environment Affairs was appointed in 1997, as the key spokesperson in the Egyptian Council of Ministers. The Egyptian Environmental Affairs Agency, the official environmental operating agency, has expanded its functions and responsib ilities in all field of the environment. As a result, the state of the environment has improved particularly in the provision of water supply, in waste water treatment and solid waste management, and in decreasing air and water pollution.

5. The report reviews four major environmental issues (air quality, water quality, solid waste and coastal zone management) during the period 1992-2002. It assesses progress, trends, expenditures and challenges so that lessons can be learned for engaging Egypt into the path of environment sustainability beyond 2002. Since that period, a number of notable achievements on addressing these issues were made by the Government of Egypt, MSEA/EEAA and other sector ministries. These achievements were included to the extent possib le, in this report.

6. Despite large public and donor investments during the last decade, totaling LE 231.8 billion including very large subsidies on water, energy and transport amounting approximately LE 200 billion, Egypt continues to face serious environmental issues as extensively described in NEAP update of 2002. Irrespective of whether these investments were fully justified, there is strong evidence that such level of expenditure cannot be sustained. The Egyptian economy is faced now with problems partly because of unfavorable external environment and domestic policies. The environment cannot therefore remain a liability but should become an asset to improve socio-economic development.

A NEW APPROACH TO ENVIRONMENTAL SUSTAINABILITY

7. Egypt made some progress towards achieving its Millennium Development Goals (MDGs) targets. In terms of eradicating extreme poverty and hunger (MDG #1), significant reductions from 1.7% to 0.4 % were achieved for population living below $1/day; however, 17% percent of the population still lives below US$2/day. Improvements in youth literacy and net primary enrollment were made towards achieving universal primary education (MDG #2) though 43% of the population above age 15 is still illiterate. Gender equality (MDG #3) is being promoted with significant improvements in education of females and in job opportunities. Significant reductions in children under 5 mortality rate (MDG #4) was achieved (85.0/1000 to 52.2) and in infant mortality rate (67.8/1000 to 41.8). There are also indications of improving maternal health (MDG #5); however, there are still incomplete data on combating HIV/AIDS and other diseases.

8. At present, the social cost of environmental degradation is already quite significant, and it will continue to increase if policies and institutional measures are not provided first then followed by targeted priority investments. The direct health and resource degradation have been conservatively estimated in a study published by the World Bank in 2002, at LE 14.5 billion or 4.8% of GDP (1999 data) with air, soil and water pollution inflicting the largest damage. The Environment Sustainability Indicator (ESI) of

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48.8, ranks Egypt in the 74th position among the 145 nations. Air and water quality as well as reducing air pollution and water stress all display negative indicator values with environmental health affecting human vulnerability. The Adjusted Net Saving (ANS), which is an indicator of the future status of the resources assets, showed that Egypt maintained modest annual increase of 3.4% of Gross National Income (GNI) in total national wealth. Environment degradation was found to affect mostly the poor rather than the non-poor in Egypt. Furthermore, it is the poor that suffer mostly from indoor air pollution, lack of clean water and sanitation and municipal waste collection and disposal in Egypt. The environmental issues in Egypt are more prevalent in regions with high poverty relevance. These issues are predominantly rural and account for more than 55% of damage cost with urban air pollution accounting for more than 40% of damage costs. The scope and magnitude of these social costs are likely to offset some of the economic growth gains over time, and could undermine the effectiveness of the government economic reform program.

9. With Egypt’s commitment to sustainable development and its attempt to achieve its first target of environment sustainability in the Millennium Development Goals (MDG) No. 7, there is a need to adopt a new approach for clear articulation between environmental policies with overall economic policy, and ensuring that environmental considerations enter the development planning process at an early stage. Such strategic approach towards sustainable development implies a new way of thinking and working in Egypt so as to move from: (i) a focus on inputs (projects, laws) to output-oriented outcomes (impacts of projects and legal changes); (ii) a top-down approach and centralized decision making into a system of information sharing, and improved governance; (iii) a dependence on external assistance to national resources mobilization; and finally (iv) a process of measuring performance to track actions and accommodating learning.

10. It is within this MDG’s framework that the World Bank is assisting the Government of Egypt in preparing a think piece on MDG No. 7 related to environment sustainability in Egypt and entitled the Country Environmental Analysis (CEA) of Egypt. The CEA would offer some new tools for mainstreaming the environment into policies, programs and projects by focusing on four major priority issues that are: (a) causing detrimental impacts on public health and/or serious degradation of key natural resources; (b) resulting in irreversible damage; and (c) requiring multi-sectoral interventions and coordinated policies and efforts. The four major issues are air quality, water quality, solid waste management and costal zone management. They were primarily selected as a result of President Hosni Mubarak’s directives of May 28, 2002. They were also derived from the analysis of the cost of environmental degradation and the environment sustainability indicators.

11. The two main objectives of the CEA are to facilitate mainstreaming of selected environment issues into relevant sector activities for improving development and poverty alleviation, and sustaining the capacity-strengthening process of environmental mainstreaming.

12. Taking into account the achievements, experiences and lessons of the past decade, the CEA is a document for the Government of Egypt, the World Bank, and the international donors’ audience. It attempts to assess environmental policies, trends and priorities as well as financial and institutional capacity in managing environmental resources and risks since NEAP of 1992. It would recommend mainstreaming environmental tools to influence/reshape key sector policies, and define the priority actions that the World Bank should assist Egypt with to help meet its environmental sustainability targets. The CEA will also serve as an input to the forthcoming Country Assistance Strategy (CAS) of 2005-2007, that the Bank will prepare with the Government of Egypt. It will allow the Bank to continue its policy dialogue in the environmental field in Egypt.

Key Environmental Issues, Achievements and Challenges

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Air Quality 13. The degradation of air quality in Greater Cairo and in the metropolitan and secondary cities is one of the most serious environmental issues. Values of pollutant parameters (PM10, SOx, NOx, Lead and Ozone) in Cairo have exceeded the WHO and national ambient concentration limits in certain months. The appearance in November of 1998 of a “Black Cloud” in the skies of Cairo, and the systematic occurrence of these phenomena every autumn, is strong evidence that the capital city is exceeding its allowable pollution loads during certain periods of the year. However, there has been improvement of air quality in the two recent years particularly in PM 10, SOx and Lead. For example, the upper 24 hours ambient concentration of PM 10 decreased from a peak of 280 micrograms/m3 in September 2003 to 190 microgram/m3 in September 2004.

14. Major contributors to air pollution in Cairo are vegetative burning of agricultural residues and municipal waste, public and private transport, lead smelters, fertilizers and cement factories. Similar pattern is also found in Alexandria. Particulate matters (PM10 and PM 2.5), sulfur oxides and nitrogen oxides are the major prevailing pollutants and are the cause of premature mortality of 20,000 people and 483,000 cases of chronic bronchitis and respiratory symptoms.

15. There was no unified strategy to reduce air pollution in Egypt and the Supreme Energy Council has never met since 1982. Despite this policy vacuum, Egypt has had some success in reducing environmental impacts caused by air pollution. There has been a widespread introduction of natural gas in the power and housing sectors. Natural gas utilization reached 99% of total fuel for all power plants connected to the gas grid. Lead in gasoline has been eliminated. Private cars, including taxis, have also been encouraged to switch to natural gas. The construction of the Underground, ring roads and freeways have decreased congestion inside cities, reduced travel time and consequently improved fuel efficiency and decreased pollution. Recently the Egyptian Environmental Affairs Agency (EEAA) formulated a strategy for air quality management in Egypt which was endorsed by its Board of Directors. This strategy was developed through a consultative process with national stakeholders. It mentions the most polluting sectors as energy, transport, industry, agriculture with proposed actions for each one and could be considered as a national strategy when approved by the Government

16. In view of the large health impacts, an in-depth study was subsequently conducted as part of the CEA to quantify the environmental problems induced by the energy and agricultural residues sector, assess the local and global damage resulting from these sectors, and recommend win-win solutions for mitigating adverse environmental impacts.

17. The total damage cost caused by the energy and agricultural residues sectors was estimated to be LE 6.5 billion for 1999/2000 and would increase to LE 8.0 billion/year in the year 2010/2011. One of the causes of these damage costs is the substantial subsidies to all fuels and to certain groups of electricity consumers, especially the residential and agricultural sectors. The total amount of subsidies is of the order of LE 14.5 billion in 1999/2000 and will increase to LE 29.6 billion in 2010-11. In September 2004, the Government increased by 50 % the price of Diesel in an effort to reduce subsidies.

18. Reducing damage costs through price readjustment and through the implementation of the 19 sector policies packages would result in foregone benefits of LE 2.8 billion/year (US$0.6 billion) by the year 2010. Furthermore, the implementation of the policies package would generate LE 3.0 billion/year (US$0.64 billion) by the year 2010; the total revenue from the Certified Emission Credits of the Clean Development Mechanisms (CDM) projects would also generate an additional LE 94.3 million/year (US$20.28 million) by the year 2010. Clearly, this is a “win-win” solution for the energy and transport sectors in Egypt.

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19. Improving air quality is technically and financially feasible if the Government adopts, among others, the recommendations of the EER action plan. Mitigating measures are possible; they are economically and financially attractive for the Government, and would improve both economic growth and the environment.

Water Quality 20. The general assessment of the water quality status of the Nile indicates generally good water quality conditions until the river reaches Cairo. Deterioration in water quality occurs when the Nile divides into the Damietta and Rosetta branches in a northward direction due to disposal of municipal and industrial effluents and agricultural drainage with decreasing flows. In the Nile , Delta confined between these two branches, fecal coliform (FC) bacteria counts are 3-5 times higher than the permissible national standards. For dissolved oxygen (DO) which can be one of the key parameters inferring fishery health/production, concentrations ranging between 2 and 5 mg/l are observed in the northern lakes and the Delta agricultural drains, and also in few locations towards the downstream of the two Nile Delta branches (the standard lowest permissible level being 5mg/l). As for the total dissolved solids (TDS), an indicator of salt concentrations, TDS often exceed the limit above 1000 mg/l due to repeated reuse of drainage water and to presence of saline groundwater in the north. Sources of inferior quality are due to sewerage in rural areas, agricultural and industrial discharges and municipal solid waste management. Groundwater is also vulnerable to deterioration due to percolation of agricultural chemicals and seepage from agricultural drains.

21. Diarrhea diseases caused by poor sanitation facilities/practices, lack of healthy nutrition and domestic-hygiene behavior would lead to an estimated 20% of the overall yearly child mortality for children under the age of 5, especially in rural areas 1 . Child mortality rates, particularly in rural areas, could significantly be higher than the average for other countries with the same income per capita level. 2

22. Egypt’s general performance in water quality environmental aspects has been moderate over the last decade: Access to water supply has reached almost 100% and 80% in urban and rural areas respectively , as witnessed by large investments in the water sector, totaling LE 13.1 billion from 1992-2002. Access to sanitation improved to about 98% for urban areas whereas in rural areas they remained as low as 5%. Industrial effluents along the Nile have decreased. With respect to rural sanitation, the Government, with the assistance of international donors, has also invested in pilot operations, including artificial wetlands and the use of primary waste water treatment for forest plantation. No decision was taken for adopting these non-conventional technologies.

23. All the above investments and activities were made with large subsidies which resulted in providing social benefits to citizens irrespective of their income levels. Municipal water and wastewater services are currently heavily subsidized by the government. Such subsidies amounted to LE 2.5 billion/year for drinking water and LE 2-3 billion/year for irrigation water. These subsidies were not, but will be made explicit in the Government State Budget as declared by the Ministry of Finance, Revenues generated from wastewater tariffs in Cairo and Alexandria are low and insufficient to adequately maintain the existing system, let alone provide for improvements or reconstructions.

24. On another level, the institutional framework is relatively fragmented but is being of improvement especially after the institutional re-organization in the water sector. There are eight ministries directly or indirectly involved in water quality activities for policy, planning, operational

1 Arab Republic of Egypt: Cost Assessment of Environmental Degradation-IBRD report 25175-RGT (June 29, 2002) 2 Global WS&S Assessment, 2000 Report, WHO/UNICEF.

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purposes, research as well as monitoring and regulation activities. Responsibilities and functions are not clear as a result of a fragmented legal framework composed of a total of 26 laws and presidential and ministerial decrees, forming the legal basis of water resources management in Egypt. The Ministry of Water Resources and Irrigation (MWRI) has recognized such fragmentation and is proposing to adopt an integrated approach in water resources. Amongst a number of achievements in that respect, including the scaling up of water-user organizations and the recent establishment of two holding companies, the MWRI has developed in its National Water Resources Plan (NWRP) an approach aiming to stimulate the coordinated development and management of the water resources in Egypt. The MWRI estimated that for the years 2002-2012, additional investments of LE 10.2 billion are needed to improve water quality.

25. Also in 2004, two Presidential Decrees were issued to regulate the WS&S sector under the responsibility of the MHUNC. The first decree relates to the establishment of a Holding Company for Drinking Water and Sanitation and its affiliated companies that include the General Economic Authorities for Drinking Water and Sanitation operating in the Governorates. The second decree covers the creation of the Central Authority for the Drinking Water and Sanitation Sector, and Protection of the Consumer. This decree aims at regulation and monitoring, for quality control and consumer-price control.

26. As part of the CEA, a cost benefit analysis was undertaken to evaluate the full social costs of water quality deterioration and wastewater disposal in Egypt with particular emphasis on rural water and sanitation. Poor water quality was found to affect both people’s health, land productivity and fisheries with damage costs reaching LE 5.35 billion in 2003 or 1.8% of National GDP. This percentage is higher than the figure of 1% of GDP estimated under the cost assessment of environmental degradation. The lower figure takes into consideration the health impact only but did not include impact on land productivity and fisheries. If no actions are taken to improve the water quality parameters, the damage costs could increase to LE 9.5 billion/yr or 3.2% of national GDP. The analysis showed that water quality improvement is not only a function of increasing the investments (e.g., LE 1.0 billion/year). As proven in many countries, “blanket” water/wastewater subsidies can be regressive, thus undermining the equity and efficiency of water quality investments. The total water/wastewater subsidies in Egypt are estimated at LE 5 billion/year. A policy of top-down conventional investments, and blanket-subsidies, may not be sustainable in the long term and will reduce only 30% of damage costs. In fact, this policy could lead to aggravating Government debts. Recently the Government of Egypt has declared its intention to review its policy for blanket subsidy and to replace it with target subsidies and incentives. In order to reduce further the damage costs to 80%, a combination of pricing policies and sector polices are required. The pricing policy would be based on developing a system of gradual cost recovery/cost sharing for improving the water quality services in accordance with increased income, while targeting the subsidies to serve the poor and being transparent by making these subsidies explicit in the State Budget. Sector policies will include the adoption of community driven-and-financed low-cost/unconventional rural sanitation processes, and suggesting a win-win option for addressing rural sanitation that exhibits minimal investments and low forgone benefits.

Solid Waste Management 27. Both air and water quality are also affected by lack of proper collection and disposal of municipal solid waste. Burning of municipal solid waste in urban areas and of agricultural waste in rural areas is a serious source of air pollution. Improper solid waste disposal in the rural areas is a source of surface and groundwater pollution especially in the Nile Delta.

28. Until the autumn of 1998 when the “black cloud” phenomena first appeared, the Government did not have a SWM policy. Now the GOE has adopted for the first time in Egypt the principles of the Integrated Municipal Solid Waste Management (IMSWM). As an urgent action, a fast track-programme to deal with 12 million cubic meters of accumulated waste in major 11 Governorates was implemented.

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The waste was collected and transferred to dumping sites in the desert, for prevention of self ignition and open-burning by the public, as means of disposal. Agricultural waste and residues were also collected; and farmers and consumer associations are encouraged to reuse agricultural wastes as fodders, compost, etc, after necessary treatment. On the other hand, the strategy allowed the international and local private operators to provide integrated solid waste management services, including, collection, transportation, treatment, and disposal services in sanitary landfills for municipal, health care and industrial non-hazardous waste on a Design-Build-Operate (DBO) basis in the urban areas. The system provides financial incentives to the operators through a tax break and custom exemption. It also suggested a cost-recovery mechanism. At present, DBO contracts with private firms, amounting to for LE 475 million/year, are operational in Alexandria, Cairo, Giza, Suez, Aswan Governorates and Luxor and Al-Arish Cities covering 20% of the urban population.

29. The EEAA with the Ministry of Local Development have made major achievements in the rehabilitation and upgrading of existing dump sites to controlled dump sites in some Governorates and in identifying 53 landfill sites. In addition to that, 55 municipal solid waste composting plants have been established with a total cost of 265 million L.E., financed by the State.

30. It is still too early to assess the outcomes and the impacts of such strategy, but there are however signs of positive results: (a) solid waste management services are now provided by the private sector in several governorates with success following an integrated approach that will dispose solid waste; (b) strong leadership and commitment by the Governors and the Governorates to the success of the SWM services; (c) the international and local private sector have penetrated the market of solid waste management services at a reasonable cost; (d) partial cost recovery is being applied; (e) the international donor community has rallied around the implementation of the strategy and provided technical support in a coordinated manner; (f) awareness for improving solid waste management services has increased at all levels; and (g) the Ministry of State for Environmental Affairs / EEAA has produced a series of guidelines related to the effective implementation of ISWM.

31. The strategy has been put at the early stages by several governorates rapidly into implementation with insufficient attention to public awareness, community buy-in, social consideration, and public consultation; and there are some challenges that need to be addressed if the ISWM is to succeed. The most important ones are: (a) a social analysis and assessment should be conducted early in the process to provide appropriate measures for protecting and improving the livelihood of the scavengers; (b) public awareness campaigns and public hearings should be organized to engage the public and increase it willingness to pay for the services (c) capacity at the local level should be strengthened to plan, design, monitor and follow-up the implementation of SW contracts; and (d) risk guarantees for private sector contracts are still lacking and should be developed so that the private sector remains interested into the ISWM services.

32. No sufficient attention was given to the collection and disposal of municipal waste in the peri-urban and rural areas which should be addressed differently from the urban areas. Local action plans are urgently required to deliver effective and affordable management services to the local community using simple and efficient technologies.

INTEGRATED COASTAL ZONE MANAGEMENT 33. The activities in Egypt’s coastal areas are vital for the national economy. Together with the oil industry and income from the Suez Canal, tourism is one of the top three foreign exchange earners in Egypt amounting to US$4.5 billion in 2000 and projected to reach US$10 billion in 20053 and was given

3 www.uktradeinvest.gov.uk

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special attention in this report, notwithstanding revenues accrued from oil and industry. Until the early eighties tourism has been traditionally along the Mediterranean Coast between Alexandria in the West Delta to Port Said in the East Delta, and reserved primarily for Egyptians vacationing in summer. As a result of the Peace Process, new regions have expanded for tourist use along the Mediterranean Coast from Mersa Matrouh to West of Alexandria where tourist compounds and villages, belonging to Egyptian private sectors and professional syndicates, mushroomed for local tourism; on another level, the Red Sea Coast has provided to international tourists diverse and spectacular natural and marine resources attractions. Such growth has created a tremendous pressure on Egypt’s coastal resources with numerous ecological threats.

34. The coastal management problems in Egypt can be divided in three fundamental categories. The first category of ICZM issues is basically related to the development of new land in areas with little or no traditional land-use, but with high marine/coastal values such as those situated along the 1,800 kms of Red Sea coast. The second category of ICZM issues is common on the 1,200 Kms of the Mediterranean coast, and produce extremely complex and inter-linked issues with intensive user conflicts. The coast around the Nile delta has population densities which are among the highest in the Mediterranean region and also include major industries and petrochemicals. The low-lying coastal areas, around the Nile delta also have important agricultural areas and has been affected by the lack of siltation and sea water intrusion as a result of the construction of the High Dam which was beneficial for regulating the water resources of the Nile and for generating electricity. The third category includes issues related to global warming and climate changes. The Nile Delta is geologically unstable, and during the la st 150 years water erosion and subsidence has basically converted the Delta to an eroding coastal plain vulnerable to climatic changes and associated sea-level rise.

35. Achievements towards sustainable integrated costal zone management (ICZM) in Egypt give a mixed picture. Until the early 1990s, the Government adopted a very aggressive development strategy aimed at promoting mass tourism both in the Mediterranean and the Red Sea coasts. New coastal areas have undergone strong tourism growth, along the Mediterranean Coast from Mersa Matrouh to West of Alexandria where tourist compounds and villages, belonging to Egyptian private sectors and professional syndicates mushroomed for local tourism; on another level, the Red Sea coasts have provided to international tourists diverse and spectacular natural and marine resources attractions. Such growth created a tremendous pressure on Egypt’s coastal resources with numerous ecological threats.

36. By the mid-nineties, the Government adopted a different policy for sustainable tourism aimed at promoting environmental conservation and sustainable use of natural resources. However, the rapid development of coastal land resulted in a continuous degradation of coastal areas and an ever increasing threat to pristine areas.

37. Sustainable tourism is handicapped by the fragmentation in the functions and responsibilities divided among eight ministries and the governorates. A National Integrated Coastal Zone Management Plan was prepared but was not implemented. However integrated local costal zone management plans are being prepared in Alexandria and in Suez. EEAA is also preparing an integrated management plan for controlling land–based sources (LBS) of pollution. Tourism can be used to raise funds for ICZM activities, for example, through entrance fees to protected areas. Unfortunately, Egypt’s marine protectorates are only capturing a small portion of their potential, desperately needed revenues.

38. Despite such institutional fragmentation, there has been a change in the attitude of institutions and interest groups towards conservation and preservation of Egypt’s unique marine resources. The Egyptian coastlines are a major source of income to the Egyptian economy. It needs to be managed in a sustainable

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manner by balancing tourism with environmental protection. Egypt policy has changed towards sustainable tourism. This should be demonstrated through concrete actions by applying ICZM to new pristine areas west of Matrouh and along the Gulfs of Suez and of Aqaba.

Environmental Policies and Institutions The Process of Policy Formulation 39. Environmental policy formulation in Egypt has been an evolving process which has been fluctuating with time, modified with major unexpected environmental events and often influenced by the leadership and senior decision makers. There is no effective mechanism, other than the Cabinet of Ministries, for coordinating the policy(ies) formulation processes.

40. Four milestones could be distinguished in the evolution of the environmental policy process in Egypt. The NEAP of 1992 was the first public document that has clearly articulated the environmental issues of Egypt and provided a series of policy, institutional and investment actions to help resolve these issues. A rapid assessment of the results of the actions proposed in the NEAP of 1992, demonstrated a strong emphasis on investments and institutional strengthening with neglect of implementing policy actions particularly those related to input pricing of water and energy and development of market-based instruments for environmental compliance.

41. In 2002, NEAP was updated with UNDP assistance, to delineate Egypt’s agenda for environmental actions over the next 15 years. It is a demand driven national report, developed through a very wide consultation and participation of the different segments of the Egyptian society. It underlies a comprehensive program of policies, institutional and investment actions aimed at establishing the foundations of sustainable development. In contrast to the NEAP of 1992, its update was qualitative in nature as it did not rank the environmental priorities on the basis of cost and benefits and did not provide cost estimates of the strategic actions proposed which could make its implementation difficult. In approving NEAP update of 2002, EEAA Board of Directors reiterated that “The integration of the environmental dimension in all national policies, plans and programs”4 is Egypt’s strategic environmental objective, and recommended the implementation of 11 programs during the next five years, emphasizing the need to introduce strategic planning in MSEA/EEAA.

42. A Presidential Statement on sustainable development was made by President Hosni Mubarak on May 28, 2002, in which he stated that “Environment is not a luxury business, but it is the protection of our natural resources for our generation and generations to come” and that the “environmental dimension should be integrated into the modernization process.” The Presidential Directives were the improvement of freshwater, the development of an air pollution abatement plan, the importance of undertaking EIA in all projects, especially in coastal zones, and implementing the environmental laws and regulations. The President’s directives need to be followed with thorough implementation, monitoring and follow up plans.

The Legal Framework 43. Over the past four decades, Egypt has adopted a substantial body of environmental and environment related laws, decrees and regulations addressing various aspects of environmental protection and natural resources management. The most important environmental unified laws enacted were the Natural Protectorates and Natural Resources Management law No. 102 of 1983 and the Environmental

4 EEAA Web-site (www.eeaa.gov.eg)

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Protection Law No. 4/1994. The latter was enacted as a compromise to satisfy all the parties concerned without giving the real authority to MSEA and EEAA to enforce the provisions of the law.

44. The record in Egypt for implementing and enforcing environmental laws was not very successful. With limited exceptions, violations of environment-related laws went undetected and requirements went often unendorsed especially with the public sector polluting enterprises. The main impediments to effective and meaningful implementation and enforcement of environmental and environment-related laws are due to the fragmentation among regulatory institutions, licensing agencies, police authorities … etc., at both national and governorate levels to the effect that no single institution can apply enforcement actions effectively.

45. Since 2003, there have been substantial efforts made to improve monitoring and enforcement at the national and local levels. Major institutional and organizational reforms have taken place within the Environment and Surface Water Police of the Ministry of Interior. The general directorate for environmental inspections in EEAA was further strengthened. Periodic monitoring and inspections are made by this directorate, especially for controlling air emissions and waste water discharges. Furthermore, the preparation of environmental registers and compliance action plans has increased as a result of the continued monitoring of the various commercial and industrial establishments.

46. The Law No. 4 and its executive regulations require that an EIA be prepared for all new projects as well as the expansions and renovations of existing ones. A system of project screening, EIA preparation, guidelines and review is in place at EEAA which has a qualified department for EIA and which receives on the average 800 EIA reports a month. The EIA system is reliable for the tourism and petroleum sectors as well as with projects financed by international donors and foreign investors. It is often circumvented in mega-projects and the quality of the EA reports for large nationally funded projects needs improvement. Strategic Environmental Assessments are not required by law, but are undertaken on an ad hoc basis by international donors.

47. Any of the features of the Egyptian EIA system are generally compatible with the corresponding features of World Bank Operational Policies (OP 4.01). However, there are differences in certain features such as in the preparation and follow up of the environment management plan, and the consultation, disclosure and dissemination of the EA reports. Public participation is not mandatory in the Egyptian EIA system, and as a result, is not undertaken. Public participation is mainly taking place for overseas funded projects, when required by the international donors and public hearings have been organized by NGOs for debating environmental issues. In general, EIA reports are regarded as confidential documents. There is a widespread view among those involved in EIA in Egypt, that it is a technical and administrative requirement for issuance of permits. , Irrespective of the limitations which it places on decision-making processes, the lack of openness in the Egyptian EIA system limits its on effectiveness by restricting: (i) co-ordination between government departments, (ii) the awareness of public concerns, (iii) the use of public knowledge, and (iv) the actions to improve EIA quality. Since 2004, there have been serious efforts by EEAA to improve the EIA information dissemination through the design of an EIA database. Support is needed for promoting awareness of the potential benefits of consultation and public participation.

The Institutional Framework

48. The number of environment-related institutions in Egypt is seventeen. They could be classified in the following three categories: (a) the national environmental organization represented by the Minister of State for Environmental Affairs, the Egyptian Environment Affairs Agency and its Regional Branch offices which are charged with overall monitoring and regulatory coordination; (b) institutions with specific operational functions on the environment which are performed by environment units in line

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ministries, and by environment management units in the governorates; (c) institutions with environment support role such as universities and research institutes.

49. The Environmental Protection Law provided new mandates for the Egyptian Environment Affairs Agency (EEAA). Given its coordinating and horizontal role among all ministries, EEAA was put under the responsibility of the Council of Ministers, and a minister was assigned to oversee the work of the agency, and chair EEAA Board of Directors. The Chief Executive Officer (CEO) of the Agency is nominated by the Council of Ministers and has a first undersecretary rank. Until the early nineties, the Agency was weak and seriously understaffed. This was due to new EEAA mandates for which the required skills were not readily available in the Egyptian market. Soon after NEAP, several measures were undertaken to enhance the institutional and human resource capacities of the Agency with the help and support of international donors. EEAA is currently a much better-established organization than it was ten years ago.

50. At the regional level, EEAA has decentralized part of its functions to eight Regional Branch Offices (RBO) of which, five were established and strengthened by international donors. At local level, each of the 26 governorates has an Environmental Management Unit (EMU), attached to the Governorates. The organization and operations of the EMUs vary across the 26 governorates. Under the existing institutional framework, the EMUs represent the primary local authority on environmental issues and, in many cases, operate as the monitoring agencies for EEAA’s environmental policies and programs but under the technical supervision of the RBOs.

51. There are on-going efforts, within the context of decentralization and mainstreaming of the environmental management at governorates level, to up-grade these EMUs to General Directorates which would then increase their effectiveness and guarantee a separate budget for their operations. These units would retain their administrative affiliation to the Governorates and would be technically affiliated to EEAA. Successful piloting has taken place in several governorates including Sohag, Damietta, Quena and the Red Sea.

52. At the sector level, many line ministries and/or national institutions have a department or unit mandated with environmental management issues. These vary in terms of their capacities and experiences. However, except for the environmenta l units of MOHP, MOMP, and MOI, they all share two common features: they are relatively newly-established or mandated with environmental concerns, and accordingly, they have limited environmental management capacity and experience. The mechanisms for coordination with EEAA and among each other are unclear.

53. In addition to the environmental infrastructure at the national and local levels, Egypt has a core of well-trained academics and researchers that are involved in the field of the environment. Many universities have environment department and research institutes and their involvement in a consultative capacity or expertise is increasing. Despite such talents no university/or research center offer a degree or develop training in the field of policy analysis and environmental economics which are now required if the ministries are to be involved in strategic planning as stated in their action plan.

54. The private sector is involved in the environment through: (a) providing consulting services for EIA, environmental studies, and environmental engineering principally in the field of water, wastewater, irrigation, industry and energy sectors; (b) financing environment-related investments in tourism, petroleum agro-business, and industrial sectors; (c) operating environment-related activities, as in the solid waste sector and energy conservation and efficiency (ESCOs); and (d) producing environment equipment such as for the wastewater, energy and cement sectors. The private sector is getting more and more environmentally responsible through complying with environmental regulations, especially when it exports its products or is in joint ventures with international firms. Many private companies are

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investing in new and cleaner technologies to increase their profitability while complying with environmental regulations. Some companies have already acquired ISO 14000 and ISO 14001 certification. In order to assist the private sector in environmental diligence, international donors and financing institutions such as KfW, the World Bank, and EIB are also providing concessionary lending through local banks.

Information Dissemination, Coordination, Private and Public Participation 55. A remarkable Egyptian Environmental Information System (EEIS) and Environmental Information and Monitoring Programme (EIMP) were established at EEAA, to assist GOE decision makers to formulate and implement timely and appropriate environmental policies, legislation and programs. The EEIS produces timely and accurate environmental status reports, based on real time data on air and water quality generated by the EIMP. Their diffusion is only limited for highlighting positive achievements; this information is not being used to make sound decisions regarding environmental protection and management. EEAA has also not published the yearly State of the Environment Report as required by the Environment Protection Law.

56. The civil society is becoming increasingly active in the environmental field. Egypt has also a number of NGOs actively participating in the environmental arena. Estimates are that more than 270 environmental NGOs are working on various aspects of environmental management in Egypt, on issues ranging from public awareness and environmental education to waste collection and community self-help programs. NGOs have been increasing involved in project implementation, in public debate and also in ensuring compliance with the environmental laws. Court rulings were also won by NGOs. However, very few environmental NGOs have grass root linkage to influence the public or the community they serve, and their leadership is more important than the nature of their activities. However, NGOs continue to depend primarily on external donor assistance for funding, and find it difficult to sustain their activities depending on local resources.

57. The media is also becoming a major active partner in the protection of the environment in Egypt. All the major newspapers and magazines have their special correspondents in the environment field. They also have a weekly page dedicated to the environmental issues; they do freely report on environmental issues and activities, and do not hesitate to bring to the public the major violations undertaken either by the State or by private and public sector entities. The national and local TV and radio stations have also professional programs and talk shows reported very professionally by very capable staff.

Overseas Development Assistance in the Environment 58. Since the establishment of NEAP of 1992, Egypt has been assisted by 19 international organizations to move forward its environmental agenda. The total amount of donor funds allocated to the field of Environment and coordinated through MSEA/EEAA has almost reached the equivalent of LE 2.4 billion.5 The highest percentage of support (42.9%) was channeled through policy support and environmental management programs (sponsored by USAID6 and Denmark7) while industrial pollution abatement and air pollution together account for 26% of the total support (KfW and the World Bank). The least supported sector/field is solid and hazardous waste management (1.8%). Almost 91% of the total assistance was in the form of grants while only 9% was in the form of loans.

5 Organization Support Program: Report reviewing donor projects implemented in cooperation with EEAA

over the past ten years 1991-2001, August 2001. 6 USAID: Egyptian Environmental Policy Program and Sector Policy Reform III. 7 DANIDA: Environmental Sector Program Support.

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59. In addition to the grants and concessionary loans channeled through EEAA and international donors (USAID, the EU member states, EIB, Japan and the World Bank) provided an on going allocation of US$2.3 billion for three sectors that are considered environment-related investments. These are: water supply and sanitation, irrigation and drainage as well as solid and hazardous waste management.

60. With such a level of assistance, donors have succeeded not only in putting the issue of environment on the GOE’s policy agenda, but also in building the environmental infrastructure at the national level in major sector ministries and at the local level within governorates. They have encouraged the participation of NGOs and local communities in addressing, and resolving, their environmental issues. Without the injection of technical assistance, capacity building, laboratory and monitoring equipment, the environment-related agencies would have not been now in a position to carry out their present functions of environmental management.

61. One major concern that will have to be faced by the GOE is the establishment by donors of large physical assets without ensuring that these assets could be maintained using local resources. This could compromise the sustainability of these projects in the long term in case insufficient local resources would not be available for operation and maintenance of these assets .

62. The World Bank has in its portfolio, 21 active projects totaling an amount of US$680.5 million. Irrigation and agriculture projects constitute 40% of the total portfolio, and environment and natural resources constitute 6.8% (US$47.35 million) of the total portfolio. The components on environment and natural resources in the on-going Bank portfolio are very limited as a result of the portfolio focus.

Environmental Expenditures 63. A review of the expenditures made by the Government of Egypt and international donors and financing institutions showed that the environment-related investments were estimated during 1992-2002 to be LE 31.9 billion, representing 5% of the total investments of LE 847 billion financed by the State. Of the LE 31.9 billion, LE 23.01 billion (72.4% of total investments) is financed by local resources, and LE 7.22 billion as foreign loans and grants 22.6% of total investments) although the last figure could be underestimated as it does not capture all grants made by the donors for EEAA/MSEA.

64. Included in this assessment is the support budget in the form of subsidies. Subsidies mainly cover general transportation in Cairo and Alexandria as well as water supply in some governorates. The total amount of these subsidies is LE 300.0 million/year. Subsidies related to water and electricity are not explicitly stated in the State General Budget. These subsidies are large, of the order of 19-20 billion/year. They consist of energy subsidies, reaching the amount of LE 14.5 billion/year (1999/2000) 8; in drinking water to the amount of LE 2.5 billion/year, and in irrigated water to the amount of LE 2-3 billion/year (Chapter 4). The total amount of implicit and explicit subsidies was estimated at 19.3-20.3 billion/year corresponding to 5.2 % of GDP. Recently, the Ministry of Finance declared that it intends to make subsidies explicit in the State budget.

65. In NEAP 1992,9 environmental investments until year 2002 were estimated at a total of LE 8.2 billion for various sectors and environmental categories. Priorities were given to water and wastewater followed by air pollution and solid waste management. In comparison with the budget expenditures for the same period, the Government spent a total of LE 31.9 billion, i.e., four times the total estimated expenditures in NEAP, with water and wastewater investments estimated at LE 17.4 billion in contrast with LE 4.75 billion in NEAP. With the exception of water and wastewater, there seems to be a

8 Egypt: Energy-Environment Review, Consultant Report, April 2003. 9 National Environment Action Plan of Egypt-May 8, 1992.

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disconnection between environmental priorities and development priorities, indicating that NEAP was not used by the GOE for directing environment-related investments. Also discrepancies between NEAP figures and budget figures are anticipated since it was difficult to reconcile both expenditures by sectors and by environmental categories.

66. As part of or in addition to the State Government Budget (SGB) and the international donors contributions, the Government and the International donors have established 14 environmental protection and environment-related funds for the amount of US$0.5 billion and LE 0.37 billion (1992-2002) totaling LE 3.0 billion.10 Two funds in the amount of LE 366 million are anchored into Egyptian laws and are managed entirely by a public entity outside the SGB. These are the Environment and Tourism Services Fund (ETSF) and the Environment Protection Fund (EPF). Twelve separate environmental and environmental-related funds 11 12 for a total amount of US$0.5 billion were established and have been operational since 1995. All these funds were allocated for different purposes, sectors and recipients, and have different lending conditions and procedures. The Social Fund for Development is the largest financier of environment-related investment projects. The general characteristics of these funds are: (a) they are non-revolving; (b) they are a mixture of grants and loans (too often on a concessionary basis); and c) they are managed for the first time in Egypt by local commercial banks.

67. During the last decade, the total amount of environment-related expenditure has been in the order of LE 231.8 billion with subsidies on energy and water/wastewater covering nearly 80 percent. This level of financing can no longer be sustained with the decline in Government revenues. The Government should pursue the gradual removal in phases of the energy subsidies, and continue to increase the user charges to cover the costs of water, wastewater and solid waste services for industry and the domestic sector. This may not be enough. Economic instruments for levying incentive charges to change the polluter’s behavior should be introduced not as an objective in itself, but as a tool for applying the polluters-pay principle.

General Recommendations -- The Road Ahead A NEW VISION WITH WIN-WIN OBJECTIVES 68. Despite undeniable progress in implementing its National Environmental Action Plan (NEAP) for which a legal and institutional framework was established where important environmental and natural resource projects and programs were financed - Egypt is still at the early stage of its transition to sustainable development. Despite considerable Government efforts, the issue of water and air quality, solid waste and costal zone management remains the most pressing environmental inter-sectoral problems in Egypt. Solutions to these problems should be anchored in the economic, institutional, and social reforms proposed by Egypt within the scope of its free market economy. These solutions should respond to the following two inter-related goals:

(a) Reduction in the prevalence of respiratory and water borne diseases due to poor air and water quality and inadequate collection and disposal of municipal waste; and

(b) Improving the quality of growth of Egypt’s coastal areas.

10 Using an average exchange rate of 1US$ =LE 5.0 11 Egypt-Pollution Abatement Project: Study of Sustainable Mechanisms for Financing of Industrial

Environmental Investments in Egypt, ART Consulting report, 2003. 12 Social Fund for Development-Annual Report, 2000.

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69. The proposed approach to address the priority actions defined below, is essentially based on policy and institutional measures ranging from: (a) rationalization to embody price-signals that induce a switch to environmentally-benign practices (renewable energy for instance); (b), cost for environmental services (sanitation and solid waste management for instance); and (c) development of information systems and strategic environmental assessments (disclosing and disseminating data on inferior water quality, for instance). All such measures are summarized in the Matrix attached to Chapter 9. This matrix describes both objectives and intermediate objectives for the next five years, the proposed policies, institutional and legal measures, the responsibility of different stakeholders as well as the anticipated outcomes resulting from the implementation of these measures. Very few investments are proposed. Such investments should not be a burden on the State budget but should generate revenues on the basis of costs and benefits based on strategic environmental assessments. The priority actions summarized below, consider the environment as public, private and global goods that could generate benefits.

70. The prevention and decrease of air pollution risks can be achieved through the following:

(a) The Government adopting a pricing policy of gradually increasing (the currently-subsidized) price of fuel oil and gas oil, combined with sector policy

(b) Reducing concentration of pollutants of PM10 and SO2 in the transport and agricultural residues sectors;

(c) Increasing the share of natural gas in the industrial sectors (with emphasis on small-and-medium industry) and in the transport sector particularly for city buses and micro buses; and

(d) Using the Clean development Mechanisms (CDM) and the Prototype Carbon Fund to increase revenues from the trading of certified emission credits in order to improve further air quality in urban and rural areas; and

(e) Providing and disseminating through MSEA/EEAA health risks related to air pollution..

71. Applying these win-win policies would not only decrease health damage costs by at least LE 2.0 billion/year in the year 2010, that is a reduction of 33 % of the damage costs but will also generate revenues from the trading of methane and carbon dioxide.

72. The improvement of water quality in rural areas particularly in the Nile Delta will reduce the burden from water-borne diseases as well as improve crop and fishery production. This can be achieved by:

(a The government reviewing gradually its pricing policy in water and wastewater and establishing a cost recovery for at least operation and maintenance;

(b) Improving sanitation in rural areas through the adoption of low cost technologies and through establishing a cost recovery system (in kind and cash), thus fostering community participation in devising, financing, implementing, and overseeing such unconventional undertakings and empowering the water board and water users associations;

(c) Integrating the soil and water quality in the development of regional strategies for optimization of crop production, decreasing salt accumulation through a decrease of total dissolved solids (TDS) in the drainage and irrigation canals in order increase yield production;

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(d) Increasing awareness campaigns through NGOs and the media on the impact of diseases due to bad hygiene and poor water quality; and

(e) Enhancing local environmental benefits by protecting the global environment, using the CDM for land use and land use change and forestry projects, the PCF for improving energy efficiency in the irrigation sector and GEF for combating desertification and land degradation.

73. Improvement of water quality due to rural sanitation and decrease in salinity will both have environmental and economic benefits. The poor water quality resulting from mixing surface and drainage water both contaminated by wastewater create both economic damage due to a decrease in yields and health damage.

74. Both air and water qualities are also affected by lack of proper collection and disposal of municipal solid waste. Burning of municipal solid waste in urban areas and of agricultural waste in rural areas is a serious source of air pollution. Improper solid waste disposal in the rural areas is a source of surface and groundwater pollution especially in the Nile Delta. Adopting an integrated approach to municipal solid waste and agricultural waste management systems can be achieved through:

(a) Re-enforcing the effective and successful implementation of the Integrated Solid Waste Management Strategy in the urban areas with private sector participation, backed with the appropriate legal framework, with a cost recovery system based on a full cost accounting and with incentives for the local private sector and local communities;

(b) Extending solid waste management collection and disposal in the rural areas on a priority basis, by involving NGOs and local contractors;

(c) The provision of an incentive system by the local government to enable the local market for the production of recyclable and agricultural products (feed, fodders and compost) from municipal solid waste, and agricultural residues; and

(d) Protecting the global commons by reducing the emission of methane and carbon dioxide using the CDM/PCF and GEF mechanisms.

75. The improvement of the quality of growth in Egypt’s coastal areas can be achieved through:

(a) Ensuring equilibrium between development of mass tourism and preservation of Egypt’s unique natural and marine resources by applying region-specif ic integrated coastal zone management;

(b) Improving tourism profits by targeting the clients in search of quality environment and in ecology-based products, and charging appropriate fees for the preservation and conservation of these resources;

(c) Increasing awareness campaigns for tourists and operators for protecting the unique marine and natural resources;

(d) Enforcing the existing regulations complemented with local funding mechanisms through the increase of entrance fees and tourist taxes; and

(e) Making use of GEF for protecting the pristine areas in the Red Sea from further degradation.

Towards an Improved Environmental Management System

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76. Achieving the proposed objectives described in the previous sections would require the establishment of strong public institutions and a realignment of institutional responsibilities, necessary to achieve an efficient environment management system on the basis of the recommendations stated above. However, the most important factor in managing the environment is a strong political will. This should be manifested not only by promulgated or documented statements but also by the performance record of the entire Government to engage in environmental sustainability. Egypt has demonstrated its political will by providing clear statements in NEAP and in EEAA action plans. Such statements should, however, be translated into policy as well as institutional and legal changes that would:

(a) increase inter-ministerial coordination on environmental sustainability through the High

Committee on Policies of the Council of Ministers;

(b) strengthen environment-related institutions of MSEA, EEAA and sector ministries;

(c continue and reinforce the basic environmental functions of regional coordination, monitoring and enforcement from EEAA to its Regional Branches Offices (RBOs) and the Governorates’ Environment Management Units (EMUs); and

(d) sustainable private sector development and harness the advocacy and participatory role of civil society.

77. A four-tiered organization is proposed for Egypt. It would involve: (a) a high Committee on policies as a decision forum for environment sustainability at the policy level; (b) MSEA, and the sector ministries as a coherent core for strengthening environmental policies at the national level; (c) EEAA’s existing RBOs as a new decentralized structure at the regional level and the EMUs at the governorate level; and (d) the private sector, civil society, the media and the international donors.

78. In order to fill in the institutional gap in the development of sustainable development policies, it is recommended that the High Committee for Policies of the Council of Ministers be the body responsible for articulating the sustainable development policy of Egypt. This inter-ministerial committee is chaired by the Prime Minister and includes a number of line and sector ministries. When this committee would address sustainable development, it could be enlarged to include the Minister of State for Environmental Affairs, key Governors as well as the head of the Federation of Egyptian Industries, the Egyptian Chamber of Commerce, and selected NGOs. The Minister of State for Environmental Affairs could be the secretary of this committee for all matters related to sustainable development.

79. The Minister of State for Environmental Affairs (MSEA) has responsibly undertaken the environmental functions and but with limited staff and resources has succeeded in putting environment at the core of the Government policy agenda. MSEA office would continue to be a “horizontal” outward structure responsible for formulating environmental strategies and policies that would result in economic growth, poverty alleviation and support Egypt in competing in the global economy while protecting its environment. The role of MSEA will continue to be mostly strategic, going beyond the national environmental issues (i.e. the symptoms) to address the key underlying environmental and social causes of economic growth and poverty alleviation. The Minister’s office will concentrate on national and international interlinking topics of poverty and environment, trade and environment, energy and environment, finance and environment, tourism and environment, climate change and local environment.

80. A Sustainable Development Unit should be established in the office of the Minister of State for Environmental Affairs. This unit will be supported by EEAA staff and be responsible inter-alia to: (a) undertake the appropriate policy and economic analyses for the definition of environmental goals and objectives, and serve as a secretariat for the High Committee on Policies whenever this committee addresses sustainable development issues; (b) evaluate the environmental implications of major economic

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and sectoral policies, and formulate environmental policies and strategies to respond to the MDGs targets; (c) assess policy options for pollution abatement and natural resources management; and (d) establish performance indicators and review the over all progress of NEAP 2002.

81. The Egyptian Environmental Affairs Agency (EEAA) would remain the operating arm of MSEA, and would continue its basic regular functions but would need to further coordinate and work laterally among its sector departments. EEAA departments would realign their role and responsibilities based on the standard environment management functions of: environmental prevention, environmental monitoring and compliance, environmental enforcement of laws, environmental awareness, implementing pilot projects in integrated pollution control and overseeing national and international programs.

82. The major role of the sector ministries would be to implement with MSEA and EEAA’s assistance the sustainable development policies, as applicable to the operations of the specific ministry. The sectoral ministries would have primary responsibility for policy formulation but would delegate the implementation of these investments to the local authorities, User Associations and Water Boards as could be the case for the Ministry of Water Resources and Irrigation. Of particular importance is the strengthening of the Committee of Environment and Trade at the Ministry of External Trade in order to ensure that Egypt does not lose market competitiveness as a result of applying stringent environmental regulations as described in Chapter 2. MSEA and the Ministry of External trade should work in collaboration with the Federation of Egyptian Industries and the Egyptian Chamber of Commerce providing them with information and technical support.

83. The High Level Governorate Committee on the environment as well as RBOs and EMUs will constitute the most cost-effective mechanism to carry out the decentralization of environmental management functions. This high level committee should be the local body to support sustainable development at the local level. The main responsibilities of the RBOs and EMUs are inter-alia to (a) to monitor and enforce environmental laws and regulations on the local level; (b) conduct periodic surveys on the state of the environment; and (c) and advise the governors and local government on all environmental matters.

84. The Private Sector should be an engine of growth for sustainable development. The Government could not continue to provide large scale environment related investments, and should depend on the private sector to play a major role provided that the right policies and incentives exist to create markets for environmental goods and services. This can be accomplished with the help of:

(a) the Government to introduce environmental regulations that allow flexible market mechanisms to achieve environmental objectives, and to introduce good governance, increased transparency as well as access to environmental information;

(b) The private sector through investments, environmental and social responsibility and good environmental management, and to make use of existing incentive mechanisms such as the PCF, CDM and GEF;

(c) The local banking sector to provide long-term loans with flexible repayment facilities;

(d) International donors to assist in formulating market policies and incentives for private sector development;

(e) The sector ministries and the local government to empower the associations and the communities in managing their resources in accordance with local plans developed by the community; and

(f) The private sector introducing environmental accounting in order to ensure sustainable consumption and production

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85. Building bridges with NGOs and civil society will reinforce the bottom-up approach for environmental sustainability. So far many NGOs were vocal but were not influential in changing behavior and policies. Unless civil society and NGOs take initiative and reinforce their advocacy role, limited progress will be achieved towards the transition to sustainable development. NGOs could play a major role at all levels:

At the policy level, NGOs could take the lead in organizing a forum for sustainable development. This forum will discuss the major inter-sectoral environmental issues confronting Egypt, and propose practical recommendations on how to integrate the environment into policies and programs. It will also draw on the lessons from other countries to identify the policies to be considered by the government for meeting the MDGs. International donors could play a major role in supporting this forum;

At the operational level, NGOs should continue to organize and participate in public hearings and consultations on all environmental assessments for national and mega projects. They should be able to have access though the Government and outside the Government’s channels of environmental information analyzing and publishing environmental data and trends, and using the media to provide facts and solutions on the major environmental issues, and organizing national campaigns.

At the local level, NGOs should continue to assist the community they serve in designing and managing their own development plans. They will design and implement awareness campaigns particularly on water resources, water pollution, and hygiene. They should continue to take the lead in participating in the design and implementation of community development projects in the rural areas particularly in the solid waste, sanitation and water resources sector.

86. A stronger partnership with the media could be achieved if its role is further strengthened, as requested by the media itself, through:

• The development of a communication strategy and campaign for MSEA/EEAA to address the major environmental issues

• The development of the necessary communication materials in print, radio, TV, and other media as may be appropriate;

• The provision of training and technical support for developing an outreach and mobilization program for different targeted groups such as the public at large, the decision makers, the investors, … etc; and regularly update the communication and the information based on actual facts

• Conducting periodic assessment and public opinion surveys on the programs and activities offered by the media

•

The Role of International Donors

87. The proposed restructuring of the policy and institutional framework would require a change in the conventional system of donor support in the environmental field. Donor support should be based on: (a) a national environmentally-sustainable strategy anchored in specific social and economic benefits; the proposed strategic measures in this document could constitute the elements of such strategy; (b) quantitative targets to be identified at the outset of each program with emphasis on meeting specific policy and institutional measures in relation to the MDGs; with the provision of an exit strategy built in

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the design of the program; and (c) the extent of the Government to mobilize primarily local resources and revenues. Donor financial support would bridge the gap between the public expenditures and the local resources generated from cost recovery or economical instruments. Donors would be also expected to support projects on the ground that would fulfill sustainable development policies.

88. The World Bank would also assist the GOE in meeting its environmental MDG targets through four mainstreaming tools: (a) A preventive tool of enhancing the quality and effectiveness of countries’ environmental and social assessments and harmonizing the national system with the World Bank safeguard polic ies; (b) an economic tool of demonstrating the economic importance of a clean environment by undertaking: (i) studies to assess the cost of environmental degradation; and (ii) analytical work on identifying linkage between the environment and health, the environment and poverty reduction and the environment and banking; (c) a curative tool of integrating environmental components into the World Bank’s Country Assistance Strategy (CAS) as well as in targeted sectoral projects in water resources management, wastewater management and pollution management; and (d) partnership with international donors and financial institutions in the form of parallel financing of operations and technical support for the MDGs.

89. The success of implementing the CEA will require more than the proposed Bank assistance, which is quite modest compared to the magnitude and severity of the environmental problems. In the end, the GOE needs to be in the driver’s seat and maintain political commitment and a sustainable policy and institutional reforms without which environmental sustainability cannot be achieved in the medium future. Implementing the CEA remains a challenge for both the GOE and the World Bank in order to improve the quality of life and the quality of growth of the Egyptian people.

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CHAPTER 1

Introduction

General Context

1.1 Since its Revolution in 195213, Egypt’s economic regime swayed between a socialist system (with stringent government controls and dominant public sector) and a liberal market-oriented system (with a bigger role for the private business sector). Naturally, different economic policies were implemented under these regimes, all of which have, in general, made considerable progress towards improving the well being of the Egyptian people. But, until recently none has given the due attention to environmental related issues. The main objectives were always to enlarge the provision of social services, increase of the productive capacity of the economy and promote industrial development in order to create enough jobs.

1.2 On the social front, large investments in the education and social sectors led to the improvement of the social indicators14. Between 1970 and 2001, illiteracy fell to 34 percent, primary education enrollment increased from 64 to 88 percent, and life expectancy from 53 years to 67.1 years. On the economic front, Egypt’s historical performance has exhibited sharp swings. This has also been true since the 1990s, when Egypt achieved a success story in the macro-economic stabilization front principally through the Economic Reform and Structural Adjustment Program (ERSAP).

1.3 Macroeconomic adjustment and stabilization efforts, pursued in the 1990s, have considerably redressed internal and external imbalances. Inflation and fiscal deficit to GDP were brought down to the one digit level, current account balance improved (especially in the first half of the 1990s), international reserves built up enormously, and economic growth accelerated in the second half of the 1990s to peak to 5.9% in 1999/2000. However, due to unfavorable external environment, and mainly because of slight progress on needed structural reforms, the Egyptian economy displayed since 2000/01 a weak performance with the growth rate averaging 3.2 percent during 2000/01- 2002/03 compared to an average of 5.1 percent in the period 1995/96- 1999/2000 (see Figure 1.1.). Moreover, concerns have been increasing with regard the growing fiscal deficit and domestic public debt besides foreign exchange rate market instability. Total GDP in 2002 was US$83.7 billion.

1.4 On the other hand, Egypt’s population increased from 36 million in 1973 to 66.4 million in 2002 and could reach 86 million in 2020. The rapid population growth used to be coupled with ambitious development and industrialization policies with no attention paid to the environmental consequences. This has put a heavy pressure on Egypt’s water and land resources and was at the origin of severe air, water 13 Egypt occupies the northeastern corner of Africa and stretches over into Asia, with a total area of about 1,002,000 square

kilometers. It borders Libya in the west and Sudan in the south. In the north its Mediterranean coastline stretches for about 1,200 kilometers, and in the east its coastline along the Red Sea and the Gulf of Suez stretches for about 1,800 kilometers as well. Egypt is divided geographically into four main zones: the Nile valley and the Delta, the Western Desert, Eastern Desert and the Sinai Peninsula.

14 Egypt Country Brief, the World Bank 2003.

Economic Growth Rate in Egypt since 1989/1990

0%

1%

2%

3%

4%

5%

6%

7%

1989 /90 1992 /93 1995 /96 1998 /99 2001 /02

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and soil pollution. Egypt today is paying a heavy price of two decades of environmental neglect which has affected its economic growth and the health of its population. But since the early nineties, the environmental situation has changed with the government’s commitment to addressing environmental issues

1.5 In retrospect, two phases of environment and development evolution can be distinguished in Egypt. The first phase (from the Egyptian Revolution to the end of the 1980s) is a dissociation of the environment from development. This stage of environmental neglect was characterized by the exploitation of Egypt’s natural resources at the expense of a rapid and un-sustained physical development. During that phase, Egypt built its heavy and polluting industries along the Nile and created industrial states starting from Aswan in the South (Kima Fertilizer Company and Misr Aluminium Company) passing by Cairo (Helwan and Shoubra El Kheima) and ending in Alexandria in the North (fertilizers, and refineries). All power plants and heavy industries used heavy fuel with high sulfur content. As a result of the Aswan High Dam, changing Nile silt deposition on land Egypt increased its dependence on fertilizers causing soil pollution and deterioration of surface water and groundwater quality. In terms of environmental institutions, the Ministry of Water Resources and Irrigation (MWRI) was the ministry in charge of implementing the Water Sector Law No. 48/1982, related to pollution control of water resources as well as the Sector Law No. 12/1984, governing the management of water resources in the irrigation and drainage systems. In 1982, the Egyptian Environment Affairs Agency (EEAA) was established as a coordinating body reporting to the Council of Ministers through a minister in charge of environment. EEAA consisted of a core of 15 staff members, and was concerned primarily with the protection of the marine resources in Sinai as well as monitoring water quality. 1.6 The second phase ranging from the early 1990s to date is a transitional phase of reconciliation of environment with development in Egypt. In 1992, the Government of Egypt (GOE) endorsed the first National Environment Action Plan (NEAP) in 1992. NEAP which was prepared with the assistance of the World Bank and international donors marked a turning point in tackling the challenge of environment and development in Egypt. It was the first policy instrument that has mobilized the Government and international donors’ efforts towards addressing major environmental issues in this country and building its environmental infrastructure. Since 1992, Egypt took very important steps towards establishing its legal framework with the promulgation of first Environment Protection Law No. 4/1994 which strengthened the EAAA as the national environmental institution responsible for policy formulation, coordination, monitoring and enforcement. In 1997, recognizing the importance given to the Environment, a Minister of State for Environmental Affairs (MSEA) was established to be the spokesperson of the Environment in the country, to oversee all environmental activities and chair EEAA Board of Directors. Furthermore during 1992-2002, total environment-related expenditures amounted to LE 231.8 billion and including very large subsidies on water, energy and transport amounting approximately to LE 200 billion. Whether these investments were fully justified, there is strong evidence that such level of expenditure cannot be sustained. The Egyptian economy is faced now with economic problems partly because of unfavorable external environment and also due to domestic policies. 1.7 Despite major progress made during the 1990, Egypt is faced with two major challenges: (i) reversing the course of environmental degradation; and (ii) in doing so, ensuring that environment is integrated in policies, projects and programs. Both challenges were recognized by H.E. President Hosni Mubarak in two separate statements. The first one in 1997 in which he stated that “as we approached the 21st century, it is imperative that we change our general attitude towards the environment, “[We must] deal seriously with these problems and enforce environmental regulations strictly and without hesitation.” In May 28, 2002, the President met with 11 ministers and three Governors to discuss the environment strategy in Egypt until the year 2017. The President reaffirmed the importance of the environment by stating “Environment work is not a luxury but a necessity to protect our natural resources for the generation to come.” In doing so, the President laid down in very clear terms, the principles of

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sustainable development through environmental integration in policies and projects, improving environmental governance (NGOs and civil society), strengthening the role of women in environment protection, improving water and air quality as well as securing natural protectorates. 1.8 The President’s directives, which were also included in Egypt’s report presented at the World Summit on Sustainable Development in Johannesburg,15 are fully consistent with the agreement signed at the Summit for implementing the eight Millennium Development Goals (MDGs). It is within this MDG’s framework that the World Bank has assisted the Government of Egypt in preparing a think piece on environment sustainability in Egypt and entitled the Country Environment Analysis (CEA) of Egypt. The CEA would allow Egypt to adopt a new way of thinking of environmental policies and will also offer some new tools for mainstreaming environment into its policies, programs and projects that would be financed from its own resources and with the assistance of international donors. The CEA will also serve as an input to the forthcoming Country Assistance Strategy (CAS) of 2005-2007 that the Bank will prepare with the Government of Egypt and will allow the Bank to continue its policy dialogue in the environmental field in Egypt. In doing so, the CEA pays particular attention to environmental policy analysis and to the economic valuation of environmental resources and of their degradation. 1.9 In contrast to the National Environmental Action Plan (NEAP)16 update which was completed by Egypt in 2002, the CEA does not attempt to address the environmental concerns in a comprehensive manner. It is sharply focused on the sustainability of key environmental issues that are: a) causing detrimental impacts on public health and/or serious degradation of key natural resources; b) resulting in irreversible damage; and c) requiring multi-sectoral interventions and coordinated policies and efforts. It focused primarily on the period of 1992-2002.in order to take advantage of the lessons learned so that Egypt could be engaged in the path of Environmental Substainability.

1.10 These different themes that respond to the above criteria were selected as a result of the President’s directives and the results of the environment sustainability indicators (Chapter 2). These are: air quality, water quality, municipal waste management and coastal zone management. The analysis of these themes does not undermine notable achievements made in the years 2003 and 2004 by the MSEA/EEAA, and sector ministries in addressing these four issues. Since 2002, a number of notable achievements on addressing these issues were made by MSEA/EEAA and sector ministries and are referred to the extent possible, in this report. The CEA does not also diminish the importance of other environmental themes and or activities, such as biodiversity or land degradation for which important progress were also achieved. The CEA, therefore, should be considered as a dynamic document which could be subsequently revised to include other priority themes analyzed from the lens of environmental sustainability. Objectives of the CEA and Methodology

1.11 The two main objectives of the CEA are:

§ To facilitate mainstreaming of selected environment issues into relevant sector activities for improving development and poverty alleviation; and

§ Improve the capacity and strength process of environmental mainstreaming.

15 Arab Republic of Egypt: Country Profile 2002. 16 The Environmental Profile of Egypt and the National Environment Action Plan were prepared in 2002 by the Ministry of

State of Environment in collaboration with UNDP and the Capacity 21 Program.

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1.12 Taking into account the achievements, experiences and lessons of the past ten years (1992-2002), the CEA attempts to assess environmental trends and priorities, policies, and institutional capacity in managing key environmental resources and risks. In particular, the CEA attempts to answer in a sharply focused manner a number of key questions: Have environmental priorities changed over the past ten years? And, if so, what are the current priorities? What are the current national policies when it comes to environment? What is the country’s environmental management capacity? What are the national environmental management needs? Finally, what are the mainstreaming tools for environment to influence/reshape key sector policies; and what are the priority actions that the Bank should assist Egypt with to help meet its targets on environmental sustainability. 1.13 The CEA will draw on past analytical work supported by the Bank, such as the sector strategies and the Country Assistance Strategy (CAS). The CEA will also be guided by the results of the Cost Assessment for Environmental Degradation (COED) in Egypt, the Energy-Environment Review (EER), the Clean Development Mechanism (CDM) study and the Environment and Trade Screening Analysis. All these assessments were based on cost benefit analysis for identification of policies and demonstrate the economic importance for a clean environment. They are considered to be tools for the decision-making process in setting priorities.

1.14 The CEA will also draw upon country-led analyses and strategies such as Egypt’s National Environmental Action Plan (NEAP) update of 2002, its sector strategies in energy, soil and water conservation, and its national sector paper on sustainable development. National documents/reports already reviewed include the Environmental Profile of Egypt, the National Environmental Quality Reports, Environmental Plans and Programs addressing specific issues such as National Solid Waste Management Program and the National Plan for Protection of Water Resources. Recent reports, strategies and studies prepared with the support of international institutions and donor agencies were also consulted. 1.15 The CEA was initiated in October 2002. Interviews were held with top level officials and stakeholders, including H.E. the Minister of State for Environmental Affairs, top level officials within the Ministry of Water Resources and Irrigation, Public Enterprise Companies, governorates’ officials responsible for solid waste privatization programs, selected NGOs representatives, and donor country representatives.

1.16 The first version of this draft was reviewed internally by the World Bank on June 17, 2004. It was subsequently reviewed by MSEA/EEAA on September 9, 2004 and also in two internal workshops on September 11, 2004 and on November 25, 2004. It was further discussed in a consultation workshop in Cairo on December 26-27, 2004, which was attended by 160 representatives from ministries, public sector agencies, research centers and universities, governorates, NGOs, media and the private sector. Comments were received from 12 sector ministries. An addit ional consultation was undertaken on February 27, 2005 with the environment and energy subgroup of the international donors and financial institutions known as the Development Assistance Group (DAG). The relevant comments collected from all these reviews were also incorporated to the extent feasible. CEA Content 1.17 The report consists of the following sections:

• Chapter 2 addresses environmental issues and environmental sustainability in Egypt;

• Chapters 3-6 provide an overview of the policies, institutions, achievements and challenges of the four major environmental issues: air quality, water quality, solid waste management and coastal zone management;

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• Chapter 7 focuses on the achievements since NEAP of 1992, and assesses the policies and institutions of the environment;

• Chapter 8 analyses the environmental expenditures during the period 1992-2002; and

• Chapter 9 provides recommendations on priorities for action by the Government and the World Bank.

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CHAPTER 2

Environmental Issues and Sustainability in Egypt

Overview of the Main Environmental Issues in Egypt 2.1 Egypt’s high rate of population growth and density along the Nile valley and delta coupled with industrial activities concentrated primarily along the river Nile and in the large cities of Cairo and the Delta, has resulted in an increased burden on the country’s limited natural resources, and has adversely affected public health. The main environmental problems faced by the country are:

• Acute water scarcity: Per capita water availability is expected to fall from the current 900m3 for all purposes to about 670m3 in the year 2017. The causes are due to the use of 85 percent of Nile water for irrigation, high network losses in potable water and poor service water coverage in rural areas (see Chapter 4);

• Declining water quality. Water quality in the River Nile and the canals deteriorates in a

northward direction due to the disposal of municipal and industrial effluents and agricultural drainage as well as the decreasing flow (see Chapter 4). Drainage canals are heavily polluted, with average Biological Oxygen Demand (BOD) values reaching 300 mg/l and mean probable number (MPN) of total coliforms being in the range of 8000-10,000 compared to the Egyptian environment guidelines of 20-40 mg/l and 500-1000 (MPN), respectively. While sanitation coverage has been estimated at 97% for urban and 70% for rural households, only a fraction of households with access to sanitation are actually connected to the sewerage system, with rural areas having coverage of less than 5%. As a result, public health is seriously affected. Waterborne diseases are major causes of deaths;

• Land degradation: Annual loss of agricultural land due to urban encroachment is estimated between 15,000 and 30,000 acres. The major causes of land degradation are poor irrigation drainage, soils salinization; inadequate crop rotation and selection, fragmented land tenure and soil erosion. Approximately 35% of agricultural land suffers from salinity resulting in the inability to meet rising food demand;

• Increasing pollution and untreated urban and hazardous waste disposal. The cause of

outdoor pollution are hazardous air emission and water discharges form the heavy metallurgical industries, refineries, cements and power plants as well from an aging transport sector (see Chapters 3 and 5). In addition, 15.3 million tons of municipal solid waste are generated annually of which almost 2.5 million remain uncollected and no appropriate sanitary landfills exist for their disposal. Hazardous waste, agricultural and hospital waste are also mixed with municipal waste in open dumps where burning is the most used method for elimination. Air pollution and water pollution are sources of respiratory and allergic ailments especially among children.

• Poorly Protected Cultural and Natural Heritage. Air pollution, wastewater, uncontrolled

urban encroachment and tourist development as well as large influx of tourists are the major causes of the poorly preserved cultural and historical monuments. About 8% of the total area of Egypt has been declared Protected Areas, and is envisioned to extend to 17% by 2017. The coastal areas along the Mediterranean and the Red Seas have suffered serious

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ecological threat because of rapid development and land sources of pollution (see Chapter 6). Only a small fraction of these invaluable resource areas have in place proper monitoring, conservation and sustainable management systems.

Environment Sustainability in the Millennium Development Goals (MDGs) 2.2 At the Millennium Summit in Johannesburg in September 2000, all nations including Egypt reaffirmed their commitment to working toward a world in which eliminating poverty and sustaining development would have the highest priority, and adopted the Millennium Development Goals (MDGs) as a framework for measuring development progress. Ensuring environmental sustainability is fundamental to achieving the MDGs, as it constitutes the seventh MDG, and progress towards environmental sustainability will contribute to achieve some of the other MDGs through impacts on livelihoods and human health. 2.3 Egypt has made considerable progress towards attaining the social indicators of its MDGs, as shown in Attachment 1. An MDG comparison with other countries in the Region is provided in Annex 2, Figure 1. Egypt improved the literacy, mortality, and health status. Progress to date has been slower on other goals such as poverty reduction, education, gender empowerment and environment. A review made by UNDP on the reporting of the seven MDGs in Egypt17 showed that only the social indicators could probably be achieved, while the other four could be potentially achieved as shown in Table 2.1. UNDP will be assisting EEAA in developing sector specific MDGs and sustainable development indicators are also being developed by EEAA

Table 2.1: Status of the MDG Achievements in Egypt Goals Targets Probably

Achieved Potentially Achieved

Unlikely to be achieved

Lack of Data

1.Eradicate Extreme Poverty and Hunger

X

2.Achieve Universal Primary Education

X

3.Promote Gender Equality and Empower Women

X

4.Reduce Child Mortality X 5.Improve Maternal Health X 6.Combat HIV/AIDS and other Malaria and Other Diseases

X

X (HIV/AIDS)

7. Ensure Environmental Sustainability

X

2.4 The environmental MDG No. 7 comprises three objectives: (i) integrate the principles of sustainable development into country policies and programs and reverse the loss of environmental resources; (ii) halve by 2015, the proportion of people without sustainable access to safe drinking water, and (iii) achieve by 2020 a significant improvement in the lives of at least 100 million slum dwellers. The first objective, which is the main focus of the CEA, is considered the core of the environmental MDG. Two distinctive elements can be identified in that core objective. First, the need to integrate environmental considerations in sectoral policies (environmental mainstreaming), as a fundamental way

17 Reporting on the Millinium Development Goals at the Country Level-Egypt 2002.

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of achieving progress on environmental outcomes. Second, the focus on environmental outcomes themselves, and the associated need for baseline environmental information and environmental monitoring. 2.5 In this chapter, three analytical indictors are used to situate Egypt along the path of environmental sustainability. These indicators are based on an economic approach to sustainability: cost assessment of environment degradation (COED), adjusted net savings (ANS) and the environment sustainability index (ESI). Cost Assessment of Environmental Degradation 2.6 One of the strategic tools for environment mainstreaming is to provide a foundation for defining strategic environmental priorities based on cost benefit analysis for better allocation of scarce government resources, time and capital. A systematic approach is needed to ensure that environmental considerations enter the development planning process at an early stage by taking a multi-sectoral and long-term view of development. Assessing the cost of environmental degradation at the macro and sector level in water and energy provides an opportunity to more explicitly internalize the value of the environment in the social and economic development process. It is the basis of the CEA analysis. Specifically, damage cost assessments can serve as an instrument towards:

• Identification of areas of the environment that impose the largest cost to society;

• Identification of areas that most significantly undermine the social and economic development process;

• Providing a basis for integrating environmental issues in the financial and economic evaluation of investment projects, and sector and economy-wide policies and regulations; and

• Providing a monetary basis for allocation of scarce private and public resources towards environmental protection.

2.7 The cost assessment of environment degradation (COED) in Egypt18 provides a first order macro-economic perspective for mainstreaming environmental management into policy development. The detailed methodology was described in Annex 2 of the original report on the cost assessment of environmental degradation and is not described in this report. No trends before or after this assessment was made, however the present results could be considered as a conservative baseline upon which future COED could be made. The study has been carried out looking at the country-wide cost of degradation in terms of impacts on health and quality of life in the following areas: water, air, soil/land/forest, waste, and coastal zones. Remediation costs were not calculated yet as they largely depend among others parameters, on the level of pollution reduction above the Egyptian standards and the use of the technology for reducing pollution. As shown in Table 2.2 and Figure 2.2, the cost of environmental degradation in Egypt is of the order of 4.8% of GDP (1999 data). Almost two third of the damage cost (3.2% of GDP) is due to impacts on health and the quality of life and one third (1.6% of GDP) is due to degradation of natural resources. Another assessment was made by the Bank in 2004 on the impacts of water quality on health, land productivity and fisheries and is described in Chapter 4. The cost of environment degradation due to water quality was found to be 1.8% of GDP higher than the COED estimate of 07-1.2% of GDP ( para. 4.37).

18 Arab Republic of Egypt: Cost Assessment of Environmental degradation –IBRD report 25175-EGT.( June 29, 2002).

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Figure 2.1. Annual cost of environmental degradation by environmental categories (mean estimate as% of GDP).

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

Air Soil Water Coastal Waste

Figure 2.2. Annual cost of environmental degradation by economic categories (mean estimate as% of GDP).

0 . 0 0 %

0 . 5 0 %

1 . 0 0 %

1 . 5 0 %

2 . 0 0 %

2 . 5 0 %

3 . 0 0 %

3 . 5 0 %

H e a l t h / Q u a l i t y o f l i f e N a t u r a l r e s o u r c e s

2.8 As shown in Table 2.2, urban air pollution, especially in Cairo as well as indoor air pollution constitutes a serious impact on health followed by diarrhea diseases and mortality, affecting primarily children, and due to lack of access to safe water and sanitation, and adequate domestic, personal and food hygiene. The last category is municipal waste management with potential impacts on health from uncollected municipal and industrial waste, hazardous waste and health sector waste. Agricultural soil degradation is the major cause of natural resource degradation and is caused by salinity and erosion. Natural resource degradation is also caused by coastal zone degradation associated with losses in coastal zone tourism due to degradation of coral reefs and coastal water pollution. 2.9 In comparison with other countries of the Middle East and North Africa (MENA) Region, Egypt has the highest cost of environmental degradation and the highest cost due to air pollution as shown in Figure 2.3

Table 2.2: Annual cost of environmental degradation mean estimate

Million EGP per year Percent of GDP

Air 6,400 2.1% Soil 3,600 1.2% Water 2,900 1.0% Coastal zones and cultural heritage 1,000 0.3% Waste 600 0.2% Sub-Total 14,500 4.8% Global environment 1,900 0.6% Total 16,400 5.4%

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Figure 2.3The Cost of Environmental Degradation

An Indicator for Environment Sustainability Environmental Category: Percentage of GDP

0

1

2

3

4

5

6

Tunisia Jordan Lebanon Syria Algeria Morocco Egypt

Per

cent

age

of G

DP

WaterSoilAirCoastal ZoneWaste

2.1%

3.41%3.49% 3.67% 3.7%

4.8%

2.74%

Adjusted Net Savings (ANS) 2.10 Adjusted Net Savings (ANS) is a general environmental indicator that measures the net saving of a country in a macro-economic scale taking into consideration the investments in human resources, depreciation of physical assets, and decrease in natural resources. This indicator is still imperfect as it does not take into account the physical assets and degradation/depletion of groundwater, agricultural soils, etc. While the Gross National Income (GNI) per capita is a widely used measure of current welfare, the adjusted net saving indicates the prospects for future welfare. 2.11 The trends and composition of saving in Egypt from 1970 to 2001 are shown in Table 2.2. Figure 2.4 displays the distinctive features of saving effort in Egypt over 30 years, focusing on gross national saving, net national saving, and ‘adjusted’ net saving, a measure which treats education expenditures as investments and resource depletion as capital consumption. 2.12 Egyptian saving behavior clearly displays four phases. Prior to the 1973 oil crisis, the gross saving rates were low, at 10% of GNI. Post-1973 gross savings jumped to roughly 20% of GNI, a level that has remained fairly constant (with the exceptions noted below). The oil price spike of 1979 did not boost gross saving, but adjusted net saving turned sharply negative, a clear indication that Egypt was consuming its oil windfall. The oil price collapse in 1986 was accompanied by a sharp deterioration in gross saving, while adjusted net saving turned positive, particularly after gross saving rebounded to the 20% level. The first Gulf War in 1991 led to a sharp influx of transfers from abroad, boosting all measures of national saving (domestic saving actually fell). Post-1991 adjusted net saving has settled at less than 10% of GNI – above regional averages, but below the lower middle income country average – with some deterioration evident in 2000 and 2001. Particulate emission damages in 2001 were high by regional and income group standards, at an estimated 1.4% of GNI. By the mid-1990’s education expenditures roughly equaled the value of resource depletion in GNI.

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2.13 As Table 2.3 shows, oil depletion shrank as a share of GNI from roughly 30% in 1980 to less than 5% in 2001, while mineral depletion and net forest depletion have been minor. CO2 damages as a share of GNI are relatively high, but below the region and income-group averages. Investment in human capital has been fairly stable around 4% of GNI, being below regional but higher than income-group averages. 2.14 The broad picture that emerges from these figures is that after consuming oil wealth in the early 1980’s, Egypt has maintained modest annual increases of 3.4% of GNI in total national wealth since then. In comparison with other countries, Egypt ranks as the only MENA country among the middle-income group of nations that have a modest positive ANS.

Table 2.3: Egypt- Decomposition of National Savings, 1970-2001

1970 1980 1990 1999 2000 2001 Gross national saving 9.1 22.0 21.9 18.5 17.3 15.4

Consumption of fixed capital 8.3 7.1 8.3 9.5 9.6 9.6 Net national saving 0.8 15.0 13.6 9.0 7.6 5.9

Education expenditure 4.4 3.3 3.5 4.4 4.4 4.4 Energy depletion 2.1 31.1 11.0 2.1 5.6 4.5 Mineral depletion 0.0 0.2 0.1 0.0 0.0 0.0

Net forest depletion 0.3 0.5 0.5 0.2 0.2 0.2 CO2 damage 0.4 0.7 0.9 0.8 0.8 0.8

Adjusted net saving 2.3 -14.2 4.6 10.3 5.4 4.7 Particulate damages .. .. .. .. .. 1.4

Adjusted net saving * .. .. .. .. .. 3.4

NOTES: SOURCE: WORLD DEVELOPMENT INDICATORS, * - INCLUDING PARTICULATE DAMAGES.

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FIGURE 2.4: EGYPT: NATIONAL SAVING EFFORT, 1970-2001

Source : World Development Indicators

Environment Sustainability Index (ESI)19 2.15 This indicator ranks Egypt‘s sustainability among 145 nations on the basis of five groups of indicators which in turn consist of 68 basic indicators. The five groups of indictors are: the status of environment systems, environment stress and risks, human vulnerability, social and institutional capacity, and global stewardship. In this evaluation, with an ESI of 48.8, Egypt is at rank 74, which indicates low sustainability. 2.16 Figure 2.5 below shows the overall rank of Egypt in this sustainability evaluation as well as the results achieved for the various indicators. Some of these indicators are of high relevance in the CEA context, and they reflect fairly well the situation as described in this Report. The main items in this respect are:

• Air Quality and Water Quality have a negative indicator value. This is definitely a problem for air quality and water quality in both urban and rural areas.

• Reducing air pollution and water stress show also negative indicator value as reflected in the respective indicators;

• Environmental health is affecting human vulnerability; and

19 Esty and Cornelius, at www.ciesin.columbia.edu, 2002.

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-10

0

10

20

30

40

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000

Sav

ing

% o

f GN

I

Gross saving Net saving Adjusted net saving

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• Reducing public choice as indicated by a negative capacity of debate reflect the top-down approach for addressing environmental issues which lead to sub-optimal resource use and related environmental damage. This is a very important issue for the CEA.

Figure 2.5

Poverty and Environment in Egypt 2.17 Environment degradation was found to affect mostly the poor rather than the non-poor in Egypt. Although Egypt made substantial progress by reducing by 80 percent the number of population living under one dollar a day20 (3.1% of total population); however, 29.8% of the population still live under US$2/day. The regional poverty incidence as highlighted in Figure 2.621 shows that rural Upper Egypt displays larger poverty incidence and environmental degradation is also affecting poor rather than non-poor areas as shown in Figure 2.7.

20 Poverty Reduction In Egypt, Diagnosis and Strategy, IBRD No. 242334-EGT (2002). 21 Bjorn Larsen, Presentation at the World Bank, November 20, 2002.

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Figure 2.6Egypt Regional Poverty (million)

total 11 million (1999/2000)(total regional population in parenthesis)

0 1 2 3 4 5 6

(16) Upper Rural

(7) Upper Urban

(20) Lower Rural

(8) Lower Urban

(12) Metropolitan

Figure 2.7Egypt – All Environment Categories

Per Capita Damage Cost

0

100

200

300

400

500

600

All Egypt Upper Rural Upper Urban

PoorNon-Poor

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2.18. Furthermore, it is the poor that suffers mostly from indoor air pollution, lack of clean water and sanitation and municipal waste collection and disposal in Egypt as shown in Figure 2.8

Figure 2.8 Impact on the poor

Egypt: Index of Per Capita Cost of Environmental Degradation –

Poor vs Non-Poor.

0

2 0

4 0

6 0

8 0

1 0 0

1 2 0

U r b a nAir

Indoo rAir

W a t e r Soil Mun.W a s t e

C o a s t a l

P o o r

N o n -P o o r

2.19 On the basis of the above results, it can be concluded that the environmental issues in Egypt are more prevalent in regions with high poverty relevance. These issues are predominantly rural and account for more than 55% of damage cost with urban air pollution accounting for more than 40% of such damage costs. Environment and Trade 2.20 In 2003, Egypt has signed the EU Association agreement which will establish a Free Trade Area over a transitional period of 12 years, and would provide for reciprocal liberalization of all industrial commodities and, to a significant extent, agricultural trade. Egypt is also increasing its trade ties, investment and business opportunities with the United States, as Trade and Investment Framework Agreement (TIFA) has recently been signed being a primary step towards establishing the free trade area between the two countries. Egypt became a member of the COMESA (Common Market for Eastern and Southern Africa) which has great ambitions to set up a Free Trade Area and customs union in the medium term. 2.21 In the last decade or so, the potential for conflict between environmental concerns and international trade has been mounting steadily. In fact, the trade community has been concerned for a number of years about the trade impacts of environmentally related measures. These measures include both domestic and international environmental regulations, which can affect a country’s competitiveness and its export share in foreign markets. 2.22 Exports have played an important and instrumental role in the Egyptian economy, and are expected to have yet more significant contributions. For that, Egypt has been fostering policies to promote its exports and improve its competitiveness in international markets. However, such efforts were

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coupled by the enforcement of more stringent environmental standards both domestically and internationally. 2.23 Export-related firms in Egypt are increasingly burdened by the additional costs for the adoption of a new environmental regulatory measure. These increased costs can negatively affect output and exports and also result in higher volume of imports in the import-related sectors. 2.24 Based on such inherent linkages present between trade and environment and their significance for Egypt, a number of studies were needed to examine these issues more closely. In this context, the rapid assessment of environment impact on trade was introduced for such a purpose. 2.25 Given the importance of trade and environment issues, Egyptian policymakers need empirical guidance to evaluate sector-specific trade impacts of environmental regula tory changes. As part of the MEDPOLICIES initiative under the Mediterranean Environmental Technical Assistance Program (METAP),22 a rapid assessment was used to evaluate the impact of changed environmental regulations on exports as well as on imports. It aims at informing decision makers of the key issues affecting their economies in line with the emerging free trade agreements. The analysis addresses seven main import and export sectors of the Egyptian economy as regard the sensitivity of production and competitiveness to cost changes induced by domestic and foreign environmental regulations. The inputs considered are costs of chemicals, labor, energy, capital and materials. The seven sectors are divided into four export sectors while three are related to imports. The export sectors examined are: textiles, raw cotton, leather, and furniture. Chemicals, paper wood and cork represent the three import sectors examined. 2.26 The main reasons for selecting these export sectors are that the textiles sector in Egypt is being increasingly faced with environmental issues that need to be addressed in order to enhance full export potential. The use of banned dyes and chemicals is the main environmental issue in this sector. On another level, the issue of eco-labeling that is now required as a necessary prerequisite for exports to many countries is yet a further issue for Egyptian textile firms. The main environmental problem facing the leather sector’s potential for increased export share is the use of banned chemicals (such as chromium) and dyes. Moreover, the sector’s industrial effluent is mostly discharged to the public sewers without any treatment. One of the main environmental issues in the raw cotton sector in Egypt is related to the use of chemicals for pest control as well as for increasing productivity in general. In this regard, there is a growing international demand for organic agriculture and the use of integrated pest management (IPM) approach. That is, there is now what is known as bio-cotton, which is becoming a new trend in some international markets. 2.27 The sensitivity analysis in this study is based on the Larson model (2000) 23 for evaluating the impact of environmental regulations on production and trade. The model, which is a simple partia l-equilibrium model, determines the sensitivity of the seven sectors to changes in the cost of a specific input (e.g., water, energy, labor, chemicals) due to compliance with a higher environmental standard. Based on generic input cost increases as result of reducing subsidies, the sensitivity between sectors is assessed (e.g., 10% or 20% increase in the price of water input costs). The model is designed to address a wide range of issues with minimal data requirements in addition to the rapid assessment.

22 See www.metap.org. 23 Evaluating the Impact of Specific Environmental Regulations on Exports; Bruce Larsen (2000)-Land Economics.

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2.28 The results of the sensitivity analysis are provided in Annex 2 and are summarized as follows:

• A twenty percent in the cost of inputs such as labor or energy inputs due to more stringent environmental standards -- imposed domestically or by importers in foreign markets -- will have a small to moderate negative effect (0 to -3%) on the output of the raw cotton, textile, leather & furniture industries. However, the exports of these sectors will be more impacted with the textile and furniture industry exports are more sensitive to an increase in energy prices (that is -2 to -3%) and the raw cotton sector and furniture industry are most sensitive to an increase in labor prices (-16 to –21%) as shown in Table 2.4 below.

20%, w

Table 2.4 : Textile and Furniture Industry Exports

Sector Energy Labor Raw Cotton -2.8% -15.9% Textiles -4.2% -5.0% Leather -1.0% -4.2% Furniture -3.5% -20.8

• 20% increase in the cost of wood inputs for furniture production (possibly due to forestry protection initiatives or an increase in world timber prices to support implementation of forestry principles) could adversely impact Egyptian furniture output by - 8.3% and Egyptian furniture exports by - 83.2%. Such initial assessment should be followed by further studies on the furniture sector so that Egypt competitiveness will not be affected.

2.29 A National Committee on Trade and Environment (NCTF) was established by the Ministry of External Trade to identify the implications of trade policies on the environment that is the “impact of trade on the Environment” approach. Given the complexity and controversy involved in valuating environmental resources and benefits, these studies were more qualitative than quantitative. This committee was also introduced to the MEDPOLICIES study of “impact of the environment on trade.” This committee should be further strengthened by having a permanent secretariat to respond to detailed, forward-looking questions about the impacts which existing and future environmental regulations have on production, trade and economic development. With such kind of analysis, the environment cannot be mainstreamed in the trade sector. Conclusion 2.30 The results of the environmental indicators showed that Egypt economic growth was not accompanied with an improvement in environmental sustainability which remains low. In order to protect the welfare and the quality of life of present and future generations, Egypt needs to address air quality, water quality and waste management issues as shown in the COED and ESI. Since Egypt’s coastal areas are a source of income and growth, the coastal zone management should also be addressed. Furthermore, Egypt needs to focus better on those environmental issues in the rural areas where the poor are mostly affected. The rapid assessment on environment and trade also showed that gradual strengthening of environmental regulations (or gradual enforcement/compliance with environmental standards) for the purpose of improving natural resource management through increase in pricing or decreasing susbsidies may be possible without greatly effecting sector competitiveness except in textile and furniture sectors. A further in depth study should be undertaken in these sectors. The Ministry of

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State for Environmental Affairs/ EEAA could be challenged by the policymakers to respond to detailed, forward-looking questions about the impacts existing and proposed environmental regulations have on production, trade and economic development; however, environmental institutions un Egypt are not prepared for this.

Attachment 1: Egypt’s Progress towards Selected Millennium Development Goals

1990 1995 1999 2000 1 Eradicate extreme poverty and hunger 2015 target = halve 1990 $1 a day poverty and

malnutrition rates Population below $1 a day ( percent) .. 1.7 .. 0.4 Percentage share of income or consumption held by poorest 20 percent .. 9.8 .. 7.7

Prevalence of child malnutrition ( percent of children under 5) 10.4 16.8 10.7 4.0 2 Achieve universal primary education 2015 target = net enrollment to 100 Net primary enrollment ratio ( percent of relevant age group) .. 93.0 92.4 .. Youth literacy rate ( percent ages 15-24) 61.3 65.7 69.0 69.8 3 Promote gender equality 2005 target = education ratio to 100 Ratio of girls to boys in primary and secondary education ( percent) 78.1 76.9 87.7 .. Ratio of young literate females to males ( percent ages 15-24) 72.1 77.3 81.1 82.0 Share of women employed in the nonagricultural sector ( percent) 18.7 16.7 17.1 .. Proportion of seats held by women in national parliament ( percent) 2.2 2.0 .. .. 4 Reduce child mortality 2015 target = reduce 1990 under 5 mortality by two-

thirds Under 5 mortality rate (per 1,000) .. 36.7 36.9 33.824 Infant mortality rate (per 1,000 live births)

67.8 26.9 26.4 Immunization, measles ( percent of children under 12 months) 86.0 89.0 95.0 .. 5 Improve maternal health 2015 target = reduce 1990 maternal mortality by three-

fourths Maternal mortality ratio (modeled estimate, per 100,000 live births) .. 170.0 .. 68.8 (2002) Births attended by skilled health staff ( percent of total) 37.0 46.0 .. 68.7 (2004) 6 Combat HIV/AIDS, malaria and other diseases 2015 target = halt, and begin to reverse, AIDS, etc. Prevalence of HIV, female ( percent ages 15-24) .. .. .. .. Contraceptive prevalence rate ( percent of women ages 15-49) 47.6 47.9 51.7 56.1 Incidence of tuberculosis (per 100,000 people) .. .. 39.0 .. Tuberculosis cases detected under DOTS ( percent) .. .. 25.0 .. 7 Ensure environmental sustainability 2015 target = various (see notes) Forest area ( percent of total land area) 0.1 .. .. 0.1 Nationally protected areas ( percent of total land area) .. 0.8 0.8 .. GDP per unit of energy use (PPP $ per kg oil equivalent) 4.1 4.9 4.9 .. CO2 emissions (metric tons per capita) 1.4 1.6 1.7 .. Access to an improved water source ( percent of population) 94.0 .. .. 95.0 Access to improved sanitation ( percent of population) 87.0 .. .. 94.0 8 Develop a Global Partnership for Development 2015 target = various (see notes) Youth unemployment rate ( percent of total labor force ages 15-24) 26.4 34.4 .. .. Fixed line and mobile telephones (per 1,000 people) 30.2 46.7 82.7 107.7 Personal computers (per 1,000 people) .. 4.3 12.0 22.1

Source: World Development Indicators database, April 2002

24 Egyptian Ministry of Health Statistics

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CHAPTER 3

AIR QUALITY

Background

3.1 For the past five years, there has been continuous public concern related to the degradation of air quality in the major cities of Egypt and, in particular, in Greater Cairo. This concern was sparked by the occurrence of a Black Cloud appearing in the skies of the capital in November 1998. The cause was a thermal inversion climatic phenomenon trapping air pollutants from a multiple of sources in and around Cairo. One major cause attributed this to the open burning of solid waste in general, and agricultural residues in particular. As a result of strong media attention, the Government decided to search for rapid solutions for decreasing air pollution in Greater Cairo. 3.2 The poor air quality was recognized to be one of the major environmental issues for which the National Environmental Action Plan (NEAP) of 1992 recommended a series of policy and investment actions. Only one policy action related to the reduction of lead in gasoline was implemented. Lead in gasoline was subsequently eliminated; other actions such as introducing a tax on gasoline and lowering import duties in new efficient vehicles (see Chapter 7) were not implemented. Other positive actions were undertaken as stated in sections 3.12-3.18 which resulted in partial improvement of air quality. 3.3 The major cause of poor air pollution is that pollutant loads exceeded the allowable limits that can no longer be absorbed in the Cairo atmosphere. It is not yet clear by how much this load limit was exceeded. However, even with a small incremental increase of pollutants helped by thermal climatic phenomena, citizens would feel the effects. Despite major efforts made by the Government, the “black cloud” phenomena have been systematically repeated every autumn season since 1998. Overview of air quality measurements 3.4 Detailed air quality measurements available at the EEAA web- site and published on a monthly basis showed that the level of PM 10 is improving from 1999-2004. In 1998-1999, coarse particulate matter (PM10) concentrations ranged between 145-275 microg/m3, and could reach 850 microgram/m3 in some areas with significant seasonal variations. The upper 24 hours ambient concentration of PM 10 decreased from an average of 280 micrograms/m3 in 2003 to 190 microgram/m3 in 2004. In Cairo, 4-5 out of 11-17 monitoring sites are exceeding the average limit of 70 microgram/m3 . 3.5 According to the Environment Information and Monitoring Program’s (EIMP) annual reports of December 2002, and monthly reports in September 2003 and 200425 on air quality in Egypt, the annual air quality limit value of 60 microg/m3 for SO2 (according to Egyptian Law No. 4) has been exceeded only in four monitoring sites, three of which are in Greater Cairo. Kom Ombo in Southern Egypt exhibits a higher SO2 concentration. Also the WHO limit for NO2 is 40-50 mg/m3. This value has been exceeded at four to six monitoring sites, five of which are in Greater Cairo particularly in the city center, and the residential areas of Maadi , Nasr City. . 3.6 The only source attribution study (SAS) was undertaken by the Cairo Air Improvement Project in 2001 also estimated the contributions of various sources to particulate matters (PM) and volatile

25 Egyptian Environmental Affairs Agency Air Quality Report, December 2003.

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organic compound (VOC) levels in Cairo. No further SAS update was undertaken. The results of the study showed that:

• Vegetation burning is the primary contributor to the five particulate matter (PM2.5) fractions and accounts for 52% of pollution. It is also the number two contributor in the PM10 fraction, which, with desert dusts, contributes to 60% of PM10 pollution;

• Mobile sources are secondary and tertiary contributors to PM2.5 and PM10, respectively. Mobile sources are therefore the second most important contributor to Cairo’s poor air quality;

• Ammonium chloride comes in third position on the list of the most important contributors to poor air quality in Cairo. The main source of this are fertilizer plants; and

• Lead smelters and motor vehicles account for 80% of Volatile Organic Compounds (VOCs) emissions in Cairo’s air.

3.7 In addition to the problem of deterioration of air quality of Greater Cairo, there are a number of well-defined large industrial sources of air pollution scattered around Egypt. These sources have relatively limited geographical impact, but have serious health impacts on communities adjacent to them. Among these are the Iron and Steel and Coke Companies in Tebbin (south of Cairo), the cement factories in Helwan and Tebbin which emit cement dust that could be recycled , the KIMA Chemical Industry in Aswan, the Misr Chemical Industry and the RAKTA pulp and paper mill in Alexandria. 3.8 Indoor air pollution is also critical as young children and housewives spend more than 80 percent of their time in their homes. There is very little air quality monitoring data available for indoor pollution. However, a household survey from 1993 indicates that 30-40% of rural households rely partially on biomass for cooking and heating (biomass fuel use in Egypt is estimated at 3% of total energy consumption).26 In work conducted recently by the UK-funded Strategic Environment and Management Project (SEAM), it was noted that children in some villages of a rural governorate might be showing signs of increased exposure to air pollutants. In rural areas, the use of agricultural residues as fuel in simple stoves can lead to high levels of particulates and other pollutants inside the house that can be especially damaging to the health of young children. This problem is alleviated by the increasing affordability, availability and reliance on commercial energy. This in turn releases agricultural residues from domestic use and alternative means of disposal through open burning which, in turn, generates new problems. Low temperature combustion of wet materials produces many particulates and a wide range of complex chemicals, including tars that are associated with cancer. 3.9 Based on the above, the energy sector and as well as the agricultural residues sector are considered to be the major sources of air pollution in the main and secondary cities of Egypt. The energy sector is of vital importance to Egypt’s economy. It: a) is a major source of income; b) generates a large share of Egypt’s foreign currency receipts; c) has a major impact on Egypt’s balance of payments; d) manages key natural resources, both for the present and for the future; but (e) is a source of pollution. The agricultural sector is also of paramount importance and supports a large part of the popula tion. Approximately 20 million tons of agricultural residues are produced in Egypt every year; the majority is disposed in a manner with low environmental impacts (e.g., animal feed or fertilizer); however, approximately 20% is disposed of using methods which result in high environmental impacts due to the burning of these residues either in the field or in rural homes. Burning in the field is a relatively new

26 Egypt: Assessment of Cost of Environmental Degradation.

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phenomenon in Egypt brought on by a number of factors such as the introduction of combined harvesting, regulations to control pests, and greater availability of commercial energy sources to the rural population. 3.10 The “Black Cloud” (visible particulate matters, of relatively large-sized partic les) which is primarily caused by burning of agricultural residues, occurs at the time of the highest pollution levels of the year. This is in part due to the increased quantities of pollution at this time of year but has more to do with meteorological conditions:

• Cairo suffers from low temperature inversions over prolonged periods. These inversions act as an effective barrier to pollution escaping to the atmosphere; and

• The wind during this period is generally from the Mediterranean Sea (northerly), which brings any pollution from the Delta (Lower Egypt) up the Nile and into Cairo.

3.11 Pollution from the burning of agricultural residues attracts little attention outside the September-January season. Within this period, rice straw, cotton stalks and fruit trees are harvested and their residues are burnt. Rice straw and cotton stalks are by far the most important contributors to pollution in Cairo at this time of year: fruit tree residues are burnt in many locations across Egypt; the burning of dry leaves from sugar cane over the period of December through May has far lower impact on air pollution in Cairo. These residues have been burned for decades without major complaints and the sugar cane plantations are located in Upper Egypt rather than in the Delta. Progress towards reducing air pollution in Egypt

3.12 A large number of projects and studies covering energy and environment have been conducted in Egypt over the past decade. These have either been produced by Egyptian organizations, by donor-funded projects or typically by a combination of the two. A short summary of the projects, their completion dates and their relevant main findings/outputs are given in Annex 4.1. The following general points are made with respect to the work undertaken over the past decade:

• Many of the reports contain details of the socio-economic data driving energy consumption and emissions. The principal omission is consolidated energy balances, disaggregated GDP forecasts and emissions balances for the future;

• There is a lack of data on air pollution and its causes, particularly indoor air pollution. A study on the causes and effects of indoor air pollution is needed. Further work on attribution (linking emissions inventories to pollution and then to impacts) is urgently required for both outdoor and indoor air pollution;

• There is no valuable Cost-Benefit Analysis (CBA) within the set of existing reports with analyses having been conducted on a financial basis only;

• It is difficult to ascertain the precise impacts or sustainability of the studies and projects reviewed. Many of these were undertaken under donor-funded projects and thus their recommendations are of an advisory nature: Egyptian Ministries and policy makers are clearly free to take on or to reject the advice of these programs as they see fit; and

• Many of the studies allude to energy pricing and liberalization / privatization. Clearly, these are major political issues where decisions can be taken only at the highest levels.

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3.13 Despite these gaps, Egypt has had some success in reducing environmental impacts due to air pollution. There has been a widespread introduction of natural gas in the power and housing sectors. Natural gas utilization reached 99% of total fuel for all power plants connected to the gas grid. The efficiency of the transmission and distribution systems has been improved through a program for reducing losses within these networks. Between 1981 and 1999, the total losses in the National United Power System declined from 18% to 13.2% and it decreased further to 12.4 % in 200427. For environmental benefits, all power plants built during the last decade were dual fired to enable substitution of heavy fuel oil by natural gas, and the Ministry of Electricity and Energy elaborated a continuous program for rehabilitating old generating units by ones of higher efficiency. Recently the Egyptian Environmental Affairs Agency (EEAA) formulated a strategy for air quality in Egypt which was endorsed with its board of directors. This strategy was conducted through a consultation process with national stakeholders. It mentions the most polluting sectors as energy, transport, industry, agriculture with proposed actions for each one 3.14 Private cars, including taxis, have been encouraged to switch also to natural gas. By the end of 2001, 50 public and municipal transportation buses and 51,000 cars had been converted to natural gas since 1993 using 250 million cubic meters of natural gas. Compressed natural gas (CNG) conversion in taxis costs now LE 4,000/unit. This amount can be advanced by a local bank and is paid by the taxi driver every time he fills his tank at the gas station. This incentive created by the Government has been successful and should be sustained. Cars have only access to lead- free gasoline and the government has introduced in 2004 an Octane 92 gasoline at a higher price L.E. 1.2/liter than the usual Octane 90 gasoline offered at LE 1.0/liter. With the assistance of USAID-CAIP, the first vehicle emission testing, tune-up and certification system (VET) aiming at the reduction of pollutants and improvement in fuel efficiency is operational in the Governorates of Qalyoubieh and Guizeh where more than 360,000 vehicles were inspected. In accordance of the Ministry of Interior, 85 percent of the inspected cars are complying with the emissions standards. VET will be expanded in Alexandria, Dakahlia and Beni Souef Governorates. 3.15 Furthermore, in order to decrease congestion inside cities and reduce travel times and consequently improve fuel efficiency and decrease pollution, ring roads are being established to avoid passing through cities. Under the BOT system, Egypt has recently started applying it to the transport sector, especially for constructing highways such as the one linking Alexandria with Fayoum. The second Greater Cairo underground Metro line is currently in operation and a third line is under preparation. The underground-electrified mass transit system is expected to decrease travel times, decrease pollution and encourage users of surface modes to shift to this fast transportation facility. 3.16 The international donor community has also supported the Government effort to monitor and reduce air pollution. The Japanese International Cooperation Agency (JICA) supported the preparation of a master plan for the transport sector in Cairo and established in EEAA a regional monitoring laboratory. DANIDA financed the establishment of air quality monitoring stations and provided technical assistance and training. USAID supported CAIP which financed among many activities the source attribution study, the VET and the conversion of buses to CNG. The Canadian International Development Agency (CIDA) provided grants for the conversion of the polluting brick factories of Helwan to natural gas.

3.17 Under the Egyptian Environment Policy Program (EEPP), USAID provided technical assistance to 17 Energy Saving Companies (ESCOs) which outsourced its energy services to an outside company. Projects are undertaken in partnership with financing upgrades in energy reception, distribution, and in some cases, usage, and manage the power infrastructure for its customer. The benefits for the customer company are cost savings as a result of increased efficiency in energy consumption and usage.

27 Communications from the Ministry of Electricity and Energy

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Furthermore, the investment required for upgrading the power infrastructure is kept off balance sheets. The ESCO is remunerated from energy savings realized. Typically up to 80% of the energy savings are paid to the ESCO and 20% to the customer company. USAID expenditures on energy efficiency/clean energy were about US$7.0 million in technical assistance and US$7.0 million in cash transfer. In addition, 118 public sector companies are reported by the Ministry of Investment to have complied with Egyptian environmental regulations for the total investment of L.E. 5.34 million.

3.18 The World Bank financed under the Egyptian Pollution Abatement Project (EPAP), a blend of loans and grants to 11 projects totaling US$19.6 million to reduce air pollution in the fertilizer, chemical, refinery, aluminum and cement industries. UNDP through the Global Environment Facility (GEF), is assisting in the execution of the Fuel Cell Demonstration Project in eight buses as well the introduction of the Hybrid-Electric Transportation Bus Technology in high priority historical sites starting with the Giza Plateau where the ancient pyramids are located. The Canadian International Development Agency (CIDA) is also financing a demonstration project using Canadian technology to reduce the emissions of greenhouse gases (GHG) by converting two-stroke engines used in motorcycles to compressed natural gas (CNG). 3.19 In an attempt to find a solution for reducing the effect of the “black cloud,” MSEA, the Ministry of Agriculture have set up a series of collection trials on the agricultural residues, such as central collection and densification (shredding and baling) mainly for animal feed. The true costs have not been yet established, and they will also bring up some pitfalls inherent in large-scale collection, such as lack of storage sites, problems with pests and vermin or bottlenecks in the system. The Ministry of Local Development has also worked with MSEA to reduce pollution from smelters, cement plants, and bricks manufacturing. A cost benefit analysis on these and other proposed measures (see Table 3.4) indicates that rationalized burning appears to offer the potential to significantly reduce damage costs at low cost. The Institutional and Policy Response to Air quality degradation 3.20 The means and effectiveness of implementation depend on the structures and the capabilities of institutions. There is no unified strategy to reduce air pollution in Egypt. However, there are sector policies in energy, transport and refineries; but these do not adequately adhere to environmental issues in these sectors. Government policy in the area is limited, and activities related to energy efficiency planning and environment control are largely donor- driven. 3.21 The Energy policy is in theory under the Supreme Energy Council. This body brings together the relevant Ministries in the sector under the chairmanship of the Prime Minister. It has proved difficult to obtain agreement within this body, and it has not met since 1982. Consequently, there is a significant policy deficit, particularly with regard to energy efficiency. The policy vacuum has been filled by donor-projects, but this is by no means an adequate substitute for policy. In 1998 an Energy Efficiency Council (EEC) was created, chaired by the organization hosting the meeting in question. It is a voluntary consortium of 12 public and private sector organizations involved in the energy sector. 3.22 The EEC has drafted a National Energy Efficiency Strategy (NEES) by drawing on the resources of its constituent institutions. A draft Framework for the NEES has been prepared for the EEC with technical assistance from USAID. The draft was submitted to the EEC in December 2000 and approved by the EEC membership in May 2001. There is little evidence that the NEES has yet been taken up by policymakers as part of an energy efficiency strategy. 3.23 A major policy constraint that also has a serious impact on the environment is the prevailing subsidies in the energy sector. These subsidies have huge implications for the use of fuel; they encourage waste and they discourage substitution. They also have a significant impact on the state budget. In

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September 2004, the Government increased the price of Diesel by 50% from L.E. 0.4 to L.E. 0.6 /liter. This increase does not apply to the local bakeries. The political pressures to maintain these subsidies are understandable, but the augmented environmental impacts from excessive use impinge on the very people that subsidies are meant to assist. 3.24 The Energy Environment Review (EER)28 commissioned by the World Bank under a Norwegian Trust Fund calculated the subsidies to industrial fue ls to be as shown in Table 3.1 and to electricity as shown in Table 3.2.

Table 3.1: Market Prices and Opportunity Costs of Industrial Fuels

Fuel type Market Price (LE/MMBTU)

Opportunity Cost (LE/MMBTU)

% subsidy

Natural Gas 4.06 8.09 50% Heavy Fuel Oil 4.72 11.3 58% LPG (commercial propane and butane)

4.48 20.8 78%

Diesel 11.69 22.0 47% Gas Oil 11.35 23.4 51%

Table 3.2: Comparison of Market Prices and Opportunity Costs of Electricity

Customer Market Price (Pt*/kWh)

Opportunity Cost (Pt*/kWh)

% subsidy

Industry 17.5 13.5 -30% Agriculture 10.0 14 29% Commercial 33.2 38 13% Residential 10.8 31 65%

*Where 1 Piastre (Pt) = LE 0.01

3.25 Evidently, there are very substantial subsidies to all fuels and to certain groups of consumers of electricity, especially the residential and agricultural sectors. The total is estimated by the EER at LE 14.5 billion in 1999/2000 and will increase to LE 29.6 billion in 2010-11. This corresponds to 2.2 and 3.7 times the estimate of the total damage costs in these years. The figures for electricity are averages and disguise a variety of special cases; the subsidies to poor consumers of electricity are still higher. The distribution of subsidies by consuming sector in 1999/2000 is summarized in Figure 3.1.

28 Egypt: Energy Environment Review, Consultant Report, April 2003.

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Figure 3.1: Distribution of subsidies by sector

The Legal Framework related to Air Quality 3.26 The main legal instrument pertaining to air pollution is in the Environmental Protection Law No. 4 and its Executive Regulations. The provision of the law and its implementation can be summarized as follows:

• The air quality standards are broadly in line with WHO guidelines but are in themselves a restricted policy tool. They are of direct relevance to the establishment of new facilities where air quality is already below acceptable standards or would be brought below acceptable standards by the new development. They are of little help where existing established activities already result in air quality below the permissible standards or where there are so many actors that control is impossible , as in the case of vehicles. In these cases, the environment can only be improved by the exercise of emission standards on existing plants. EEAA is preparing new guidelines that will be incorporated in the revised executive regulations;

• The emission limits for stationary sources established by Decree No. 495/2001 essentially reflect what should be possible with high sulfur fuel oil and existing technology, but they do not provide a stronger drive towards significant improvement. Large improvements in air quality could be achieved by a wider use of natural gas in industry. As demonstrated below, such fuel substitution is generally economic as well as environmentally beneficial;

• The standards for vehic les exhaust standards of 1994 are not applied and not enforceable. Existing limits should relate to the performance expected from a well-tuned engine, and should be achievable by a large majority of vehicles; and

• Burning of agricultural residues is not regulated in Law 4. Article 37 prohibits the burning, disposal or treatment of solid waste except in designated areas distant from housing, industrial or agricultural areas as well as from waterways; and Article 38 defines the specifications, conditions and constraints concerning these designated areas. The local units of the Ministry of Housing, in agreement with EEAA, assign the sites for dumping,

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treatment, or burning solid waste according to the requirements of this article. Revisions to Law 4/94 have been drafted, and once enacted, agricultural residues would be regulated as a solid waste. In effect this would ban open burning in the fields and lead to the collection of residues, either on a decentralized or centralized basis.

Health and Economic Impacts resulting from air quality degradation 3.27 Principal impacts from air pollution are on human health. These impacts are both direct (e.g. respiratory diseases, such as bronchitis and asthma) and indirect (a weakening of the populations’ resistance to other diseases). Apart from reducing the quality of life of the population, these impacts also result in lost economic productivity. These ‘damage costs’ are real and can be quantified. The assessment of the cost of environmental degradation showed that the annual damage from air pollution is about LE 6.4 billion/year corresponding to 2.1% of GDP of 1999 resulting largely from premature mortality of 20,000 persons and morbidity due to 483,000 cases of chronic bronchitis and respiratory symptoms in Greater Cairo and Alexandria. Local damage costs due to the burning of agricultural residues were approximately LE 700 million (US$150 million in 1999/2000). Damages are split almost equally between burning in the field and burning at home. Unless more remedial actions are taken, further economic activity will lead to damage increase by almost 25% in 2010. 3.28 Given the significant social and environmental impacts of energy supply and use, it is reasonable to ask what can be done to mitigate or avoid them, and what it will cost. Impacts may be reduced by switching to cleaner fuels, by being more efficient in the use of energy, by removing pollutants from the fuels, or by cleaning the gaseous products of combustion as they leave the flue or exhaust. 3.29 These measures cannot be studied in isolation. It might be possible to avoid the construction of one power station by introducing energy efficiency measures, but the same set of measures cannot be used to challenge all new power station development. It may be possible to substitute gas for heavy fuel oil in some industry, but maybe not in all. The environmental advantages from using natural gas to substitute for heavy fuel oil may outweigh the benefits to be obtained from export. A holistic vision is needed to find a suitable balance between the need for energy and the preservation of the environment and among all the varied and constrained options available to mitigate impacts of many different types. Such holistic vision as proposed below was based on a strategic environmental assessment in the energy sector that was carried out by EEAA with assistance from the World Bank. The Energy-Environment Review and Clean Development Mechanisms in Egypt 3.30 In view of the very large damage costs due to air pollution, an in-depth study was subsequently conducted to quantify the environmental problems induced by the energy and agricultural residues sector, assess the local and global damage resulting from these sectors and recommend win-win solutions for mitigating adverse environmental impacts. The EER was founded in detailed cost-benefit analysis that used opportunity costs of energy and damage costs to identify policies of genuine economic value to Egypt. In addition to the EER, the Egypt’s National Strategy Study on the Clean Development Mechanism (ENSS CDM) which also was commissioned by the World Bank29, and funded by the Government of Switzerland was published in March 2003. The ENSS CDM was designed primarily as a capacity building tool to enhance awareness and understanding of the flexible mechanisms of the Kyoto protocol and to help develop the national skills needed for Egypt to respond effectively to the opportunities.

29 Egypt: Egypt’s Strategy in CDM, Ernst Basler and Tabbin Institute for Metallurgical Studies, March 2003.

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3.31 The scope of the studies is completely complementary. The EER provides a systematic methodology for assessing environmental damage, for policy assessment and for dialogue with line Ministries using the reduction for damage costs as a basis for prioritizing investments. The prime EER application is to the local environment and to internal discussions among Egyptian institutions -- on an action plan to mainstream the environment into the energy sector. The ENSS CDM provides a preliminary portfolio of projects for implementation under the CDM and arrangements for international dialogue to market and implement that portfolio. The main outcome of both studies presented below is to identify win-win solutions whereby investing in more efficient equipment and processes reduce both environmental impacts and conventional costs. 3.32 The action plan proposed by EER and ENSS CDM are also intended to provide guidelines for implementing NEAP of 2002 in the energy sector. For ambient air quality, NEAP of 2002 recommended five major programs to be implemented by 2017, namely:

• Forming a strategy for controlling pollution and preventing the black cloud episode;

• Managing auto exhausts in urban and rural areas;

• Protect air quality in rural areas;

• Reducing pollution from industrial activities within human settlements; and

• Managing and controlling air pollution from exiting large industrial facilities and electricity power stations.

3.33 The EER therefore chose to assess damage from air pollution in the energy sector by using unit damage costs for the major pollutants, estimated by modifying damage costs derived from Western Europe standards. The European estimates were the product of the long and costly Extern study funded by the Commission of the European Communities that has extended over ten years and is still in progress.30 A first-order estimate of the benefit values for reduction in local pollutants in Egypt was made by scaling these values according to the relative GDP per capita measured at parity purchasing power (PPP). The damage cost values were therefore further calibrated to take into consideration the longer residence times of pollutants in the dry, low wind-speed conditions of most of Egypt.

30 Full details of the methodology of ExternE, the results for all fuel-cycles and the applications to EU legislation and Member

States can be found on www.externe.jrc.es

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3.34 The total damage cost due to the energy and agricultural residues sectors were found to be LE 6.5 billion for 1999/2000. The distribution of damage by pollutant and by fuel is assessed as shown in Figures 3.2 and 3.3.

Figure 3.2: Local Damage Costs by Pollutant, 1999/2000

Total Local Damages = LE 6.5 billion

NOx14%

CO12%

SO2

55%

PM10

19%

Figure 3.3 Local Damage Costs by Fuel, 1999/2000

Total Local Damages = LE 6.5 billion

Gasoline12%

Gasoil23%

Fuel Oil44%

Others21%

3.35 Local damage costs by pollutant, by fuel and by sectors were combined to identify the major contributors. Clearly significant reductions in local damage costs will require reductions in emissions from these sectors. Table 3.3 identifies five key sources of local damage costs. Together these account for over 80% of total local damage costs. Each of the following three areas each account for approximately 20% of local damage :

• SO2 emissions from the consumption of Fuel Oil in Industry;

• SO2, NOx and PM10 emissions from the consumption of Gas Oil in Transport; and

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• SO2 emissions from the consumption of Fuel Oil for Power Generation (which has declined significantly since 1999/2000).

Two further areas account for over 10% of total local damage costs namely:

• CO emissions from Gasoline consumption in Transport; and

• PM10 emissions from the burning of Agricultural Residues in the field at home.

Table 3.3: Major Contributors to Local Damage Costs, 1999/2000

Contributor LE billion % of Total Industry - Fuel Oil - SO 2 1.4 21%

Transport - Gas Oil - SO 2 , NOx, 10 1.2 19%

Power Gen - Fuel Oil - SO 2 1.2 19%

Transport - Gasoline - CO 0.8 12%

Agriculture - Others - PM 10 0.7 11%

Others 1.2 18%

Total 6.5 100% 3.36 The damage assessments of the EER show an estimate for damage from SO2 that is quite high compared to the PM10 value. This in turn derives from unit damage costs that are relatively high for SO2

and NOx compared to particulates. Most studies in Egypt show PM10 to be more important. This is largely a question of methodological choice. There is a choice as to where in the life-cycle of the pollutant the damage costs are attributed. The EER attributes damage costs to the pollutants produced directly in combustion. This procedure ties in damage directly to the source; emissions factors for exhausts are relatively easily available and there is no need to describe how pollutants react and mix to get the final ingested mix. Thus the SO2 and NOx values appear high in comparison to other studies that are based on the ingested concentrations of products: the damage caused by sulfate and nitrate particulates is assigned to the particulate mix in these studies and to the original products of combustion (SO2 and NOx) in the EER. The damage from ozone is also assigned to NOx in the EER study as it is the only precursor among the species included. For this reason, the damage costs of VOCs are not directly represented because they appear in the cost of NOx. Breakdown of damage by pollutant is not a straightforward exercise. 3.37 The EER makes estimates of the evolution of damage in the absence of policies to control it. The pattern is broadly similar to that observed in 1999/2000, with the same key pollutants, fuels and sectors making the major contributions to local damage costs. The impacts are larger, with local damage costs approximately 25% higher, with a total of LE 8.0 billion per year projected for 2010/11.

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Figure 3.4: Growth of environmental damage in Egypt to 2011

Proposed Actions for Reducing Local Damage Costs 3.38 In order to reduce the local damage costs, three complementary alternatives were considered:

(a) Price readjustment; (b) Package of energy policies without price readjustment; and (c) Combined price readjustment and the package of energy policies.

(a) Price Readjustment 3.39 The expected reduction in local damage costs from price readjustment to opportunity cost levels was found to be LE 1.3 billion/year in the year 2010-2011. This represents a reduction of 16% in comparison to ‘business as usual’ (BAU) scenario. The most important reductions in local damage costs are:

• LE 700 million/year due to reduced use of fuel oil (mazut); • LE 400 million/year due to reduced gas oil demand; and • LE 100 million/year reductions from reduced use of natural gas, principally in power

generation. (b) Sector policies without price adjustment 3.40 The EER also developed a package of 19 sectoral measures through a consultative process. Each measure could significantly reduce environmental impacts within the next ten years. Using Cost-Benefit Analysis, the measures were categorized under three headings: (a) “Win-Win,” i.e., cost-effective without including damage cost reductions; (b) Cost-effective to Egypt if reductions in local damage costs are included; and

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(c) Cost-effective to Egypt if reductions in global damage costs are also included. Policies selected and their levels of cost-effectiveness are shown in Table 3.4 below.

Table 3.4: Package of policies from the EER Ac tion Plan Number Full Name Sector Cost

Effective Responsible Agencies/Ministries

1 Mainstreaming of the Environment All A MSEAA/EEAA, ESCO, MOI 2 Demand Side Management Energy Efficiency A Min of Electricity and the Egyptian

Electricity Authority (EEA), Department of Electrical Demand

3 Standards and Labeling Energy Efficiency A Standard organizations 4 Promotion of Industrial Energy Efficiency (Fund) Energy Efficiency A MOI, MOF 5 Promotion of Industrial Energy Efficiency (ESCOs) Energy Efficiency A Industries 6 Fuel Substitution: Fund for Conversion of Industrial Facilities Fuel Substitution A MOE,E MOI, Private Sector 7 Reduction of Transmission and Distribution of Energy Losses Power Generation and

Distribution A Min. of Electricity, and EEA, Electrical

Distribution 8 Promotion of Generation from Wind for Electriccal Energy Power Generation C MOE and the New & Renewable Energy

Authority 9 Exhaust Emissions Standards for Existing Vehicles Transport B MOTAC; Private Sector, 10 Inspection and Maintenance of Vehicles Transport A Ministry of Interior, EEAA 11 Incentives for Conversion of Vehicles to CNG Transport A Ministry of Petroleum. Local banks 12 CNG Microbuses Transport B MOTAC, Ministry of Petroleum 13 Catalytic Converters for New Gasoline Vehicles Transport B MOTAC, EEAA 14 Rationalized Burning of Agricultural Residues in the field Agricultural Residues B MOALR, Governorates, NGOs 15 Centralized Collection of Agricultural Residues Agricultural Residues B MOALR, Governorates 16 Market Enabling of Agricultural Products from Residues Agricultural Residues B MOALR Governorates 17 Briquetting of Maize Agricultural Residues B Private Sector 18 Support for Building Materials using Agricultural Residues Agricultural Residues B Private Sector 19 Promotion of Refinery Energy Efficiency Refineries A Ministry of Petroleum

3.41 There is a wide range of operational policies within Category ‘A’ (which are cost-effective without including reduced local damage costs, i.e., “Win-Win”) and within Category ‘B’ (where the including local damage costs makes the policies cost-effective). Since the burning of the agricultural residues was the major cause of the black cloud, a CBA was undertaken on the proposed policy measures. It was found that rationalized burning is the only immediate solution. Avoided local damage costs will cover the cost of the centralized collection and not the cost of their disposal. There appears also to be no potential for cost effective, reliable energy generation for agricultural residues, and agricultural products appear to be the most cost effective solution in the medium term. Briquetting of residues currently burnt in new, more efficient appliances can be cost effective if local damage costs are included, but converting agricultural residues to building materials has potential for long term; however, in the proposed measures someone has to apply for these schemes. 3.42 If all policies were successfully implemented, local damage costs in 2010/11 as projected by the EER would be reduced by LE 2,155 billion/year and by 2010/11 would be 12% below current levels Five key policies have the potential to reduce local damage costs by at least LE 100 million/year by 2010:

• Policy 6 - Fuel Substitution: Fund for Conversion of Industrial Facilities [LE 805 million/year reduction in 2010/11];

• Policy 4/5 - Promotion of Industrial Energy Efficiency (Fund & ESCOs) [LE 470 million];

• Policy 9 - Exhaust Emissions Standards for Existing Vehicles [LE 430 million];

• Policy 15 - Centralized Collection of Agricultural Residues [LE 205 million]; and

• Policy 13 – Catalytic converters for New Gasoline Vehicles [LE 125 million].

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3.43 The EER demonstrated how programs of financial incentives to energy efficiency and fuel substitution in a context of heavy subsidies can actually be of benefit to the state budget as a consequence of the avoided subsidy. The EER recommended that the Funds under Policies 4, 5 and 6 be designed as revolving Funds in which a portion of the avoided subsidy is returned to the Fund. Such a procedure would require good cooperation within ministries because the immediate state beneficiary from an energy-efficiency investment that saves oil products is Egypt General Petroleum Corporation (EGPC) that either exports more or imports less. This benefit has somehow to be transferred through the state budget back partially to the Fund. This exercise would be facilitated if subsidies were made explicit in the state budget, i.e., if EGPC paid to the state a rent tax on the mineral resource that was then returned to EGPC as an explicit subsidy per unit of domestic sale. 3.44 The above measures that are “win-win” are on the basis of economic costs rather than financial costs and require financial incentives to be provided by the state, the benefits returning to the state as avoided subsidies, i.e., higher revenues in the net trade of petroleum products. The cost of financing the package of policies identified in the project was estimated to be LE 525 million. This is the lowest point on the cumulative net present value of cash flow so it represents the maximum net expenditure by the proposed Fund; this occurs four years into the proposed implementation program. So, at the 10% discount rate assumed, a sum of LE 150 million will be required for each of the four years to finance the program. Some of the sectoral measures are already implemented such as (i) increase in the cost of diesel; (ii) expansion of the use of natural gas, oil, and (iii) inspection of vehicles’ emissions. 3.45 This expenditure is small compared to the subsidies attributed at present to the energy sector. The necessary finance could be raised from very modest increases in energy prices. The two fuels with the largest environmental impacts are gas oil and mazut; those with the largest projected increase in subsidy are residential electricity and LPG. Table 3.5 shows the scale of increases in each of these fuels needed to generate LE 150 million/year. These estimates are based on 1999/2000 consumption levels and will clearly generate a stream of benefits after the end of the four-year period. 3.46 The results show that the package of policies could be easily financed by price increases of any one of the four options considered; a 4% increase in either the price of gas oil or residential electricity would be sufficient, with even lower increases if the prices of more than one option were increased. Even the higher increases indicated for mazut (heavy fuel oil) and LPG would still leave these fuels significantly below their opportunity costs.

Table 3.5: Increases in Market Prices of selected fuels required to generate LE 150 million/year Fuel

Revenue at Market Prices, 1999/2000 (LE million/year)

Increase in prices to generate LE 150 million/year (%)

Gas Oil 3472 4.3% Mazut 813 18% Residential Electricity 3801 3.9% LPG 455 33%

(c) Combined price reform and sectoral policies 3.47 Finally, the EER estimated the impact of a combined program of price reform and sectoral measures. Many of the 19 policies in the package are designed to correct for the impacts of low prices: so there is some overlap. The EER estimates that price readjustment would add a further 30% (LE 650 million/year) of reductions to local damage costs estimates in 2010/11. Even a limited price readjustment program could have major impacts if it concentrates on fuels with high environmental impacts most

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important of which are mazut (heavy fuel oil) and gas oil. The interaction between sectoral policies and price reform can be summarized as shown below:

Savings from sectoral policies by 2010/11 2155 billion LE

Savings from price reform by 2010/11 1300 billion LE

Overlap -650 billion LE

Total reduction from measures and price reform 2805 billion LE 3.48 With the combined price reform and sectoral measures, damage in 2010 is brought to around LE 5200 billion, somewhat less than the 2001 figure. This corresponds to 35% reduction in damage costs. It is therefore appropriate to conclude that a combination of price readjustment and the implementation of the package of policies will result in the highest reduction of damage costs and a net improvement in public health. Figure 3.5 shows the impact of price reform and sectoral measures separately and combined.

Figure 3.5: Damage costs in 2010/11 with price reform and sectoral measures compared with business as usual (LE million)

0

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The Clean Development Mechanism: An additional revenue for reducing green house gases. 3.49 In addition to the economic and environment benefits generated as a result of the adoption of specific energy sector policies with price readjustment, Egypt can also generate additional revenues as a result of the clean development mechanism (CDM) agreed upon under the Kyoto protocol. 3.50 To qualify for CDM status, projects must show “additionality.” The additionality criterion requires that the CDM project truly be additional to what the host country might reasonably be expected to do for itself. A first order indication of additionality would be that projects have a positive Cost of Saved Carbon (CSC) and that their non-adoption at present can be related to technical and information barriers rather than to policy barriers arising from the subsidized prices. 3.51 Table 3.6 shows all projects analyzed by the ENSS CDM that fall into this category. Projects with a CSC between 0-30 $/tC would seem to be the prime options. For example, the Land Use, Land Use Change and Forestry (LULUCF) projects have costs of carbon saved that fall into the appropriate band, and they exhibit definite additionality as they would not be undertaken except for the global climate change benefits. The Ministry of State for Environmental Affairs and the Ministry of Agriculture have already piloted, in 19 locations, the planting of fast growing trees using primary treated wastewater. 3.52 The recovery of landfill gas from municipal solid wastes is also promising. The technology is widely adopted throughout the industrialized world , and is recognized as a technology that is not cost-effective without global benefits. It would seem to be an eminently suitable candidate for CDM funding. The major benefits arise from the capture and flaring of methane. The productive use of methane has high incremental costs and relatively low incremental carbon benefit. So the conversion of gas to electricity is a more problematic step. The option needs to be further analyzed.

Table 3.6: Projects with positive Cost of Saved Carbon (CSC)

Project Initial

Investment (MUS$)

Green House (GHG)

Reduction (Tons C/y)

CSC (US$/tC)

Pay Back Period (PBP)

(Years)

I. Electricity Generation

120 MW Wind farm 113 227000 NA No PBP

Waste Management

Organic Solid Waste Digestion 40 127000 163 No PBP

Land Use, Land-Use Change and Forestry (LULUCF)

Forest Plantations and Shelterbelts Around 10th of Ramadan City

0.473 1,946 12.29 NA

Forest Plantations and Shelterbelts Around Sewage Water Station

0.653 349 32.62 NA

Protecting Main Drainage Canal by Windbreaks

0.151 281 14.11 NA

Sand Dune Fixation in North Sinai 0.170 1,019 7.11 NA

Forestation of Cairo Aswan Highway 0.274 428 17.71 NA

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3.53 The ENSS CDM estimated the share of the international market in carbon credits and the revenues that Egypt might expect in various scenarios. With full implementation of all options the ENSS CDM calculated that Egypt could sell up to 2.6 MtC of credits generating an income of US$20.28 million, assuming a price of 7.8 $/tC (Table 3.7). This amount represents 0.67% of the total market as assessed by the study. Table 3.7: Revenues from the international market for Certified Emission Credit (CERs)

Scenario Quantity sold (MtC)

Revenue (US$ million)

Full (100%) 2.6 20.28 Medium (70%) 1.8 14.04 Low (50%) 1.25 9.75

Conclusion 3.54 The energy and agricultural residues sectors are an important source of financial revenues for Egypt. They are also an important source of pollution, often exceeding national and international standards. Appropriate actions need to be taken to mitigate the increasing and adverse environment impacts on health and resources degradation. The EER and CDM studies showed that such mitigating measures are possible and are economically and financially attractive for the Government. They would improve both economic growth and the environment. 3.55 Reducing damage costs through price readjustment and through the implementation of the policies package would result in foregone benefits of LE 2.8 billion/year by the year 2010. Furthermore, the implementation of the policies’ package would generate LE 3.0 billion/year by the year 2010 and the total revenue from the CERs of the CDM projects would also generate an additional LE 94.3 million/year by the year 2010. It becomes clearer that this is a “win-win” solution for the energy sector in Egypt. 3.56 Through the energy-environment review and CDM processes, significant outcomes can be achieved, including: a more effective energy policy at national and local level; an improved efficacy and coherence in Egypt’s environmental policy; effective due diligence in the implementation of environment and energy investment programs and; financial return for Egypt to offer attractive energy-environment products and to participate in the international GHG offset market. 3.57 In order to implement these policies, it is recommended that Egypt takes a proactive approach towards EER and CDM programs and projects. The Government of Egypt needs to maintain a political commitment and a sustainable reform program on which much of the environmental improvements will depend. The first steps would be to address the market distortions in the energy sector and readjust energy prices of Egypt’s energy products. Parallel to addressing the pricing policies, it is recommended that an energy policy support unit be established within the Ministry of State for Environmental Affairs, to oversee the implementation of the EER and CDM action plans and build capacity in the sector ministries and in Egyptian private companies for project preparation, monitoring and follow up. Domestic resources complemented by support from international donors will also be needed to build the intellectual capacity, raise public awareness, prepare a package of economically attractive projects, and continuously monitor progress of environmental improvement in the energy sector.

3.58 Five key policies each of which has the potential to reduce local damage costs by at least LE 100 million/year by 2010 should be considered as a priority:

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• Fuel Substitution: Fund for Conversion of Industrial Facilit ies [LE 805 million/year reduction

in 2010/11];

• Promotion of Industrial Energy Efficiency (Fund & ESCOs) [LE 470 million];

• Exhaust Emissions Standards for Existing Vehicles [LE 430 million];

• Centralized Collection of Agricultural Residues [LE 205 million]; and

• Catalysts for New Gasoline Vehicles [LE 125 million].

3.59 Egypt should take advantage of the CDM by marketing its projects on Land Use, Land Use Change and Forestry which can result in an increase of Government revenue from the Prototype Carbon Fund.

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CHAPTER 4

WATER QUALITY

Overview of water resources in Egypt 4.1 Egypt is an arid country with limited rainfall. The Nile -Lake Nasser system is considered the only renewable supply source for surface water. At present, this system constitutes 95% of Egypt’s total water resources. Egypt’s allocation of the Nile is 55.5 BCM/a as agreed in the 1959 treaty with Sudan. The rest of Egypt’s water resources is mainly fossil (non-renewable) groundwater in the coastal zones, the desert and Sinai, estimated at some 3-4 BCM/yr. The annual water balance is provided in Figure 4.1. This balance (dating back to 2002) is based on average estimates of “consumptive uses”, as opposed to “gross demands/diversions”. The figure below illustrates the consumptive views of 55.5 BCM/year ( excluding the fossil groundwater (0.5 BCM/y). Such water balance is a simplified version of the demand-based water balance.

Fig. 4.1 National annual water balance

4.2 Egypt’s water requirements are increasing as a result of population increase, rising living standards, as well as the need to foster industrialization and reclaim new lands. Water consumption is about 70% for agriculture; 1.5% for industry; and 3.5% for drinking. The balance estimated at some 25% attributes to, first, the open-water evaporation (5%), and more significantly (20%) the terminal drainage/return-water at the seaward end and desert fringes of the Nile system which largely contributes to the environmental flows spilled into the northern lakes.

Poverty and Access to Water and Waste Water

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Inflow: 55.5 BCM/yr

Terminal drainage: 10.5 BCM/yr

Irrigation consumption: 39 BCM/yr

Open-water evaporation: 3 BCM/yr

M&I consumption: 3 BCM/yr

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4.3 A major challenge facing Egypt is to close the increasing gap between the limited water resources and the escalating demand for water as shown in Figure 2. Available water per capita per annum currently amounts to some 900m³, already below the water poverty index (1000 m³/capita/annum). This figure is expected to fall to 670m³ by 2017, unless demand-oriented and participatory institutional and financial remedies are devised and implemented. Although the declining availability of water resources is an alarming issue, it has not been yet placed on a “crisis” status. Until the mid nineties, Government attention was focused on balancing water and supply demand by exploring and exploiting the available resources. At present, the Government is given more attention to the water quality/quantity nexus to improve its water resources.

Figure 4.2

Source: Environmental Profile of Egypt (2002)

4.4 The limitation in water resources (also exacerbated by the lack of awareness and centralized/inefficient services/finance) befall an imminent burden on water quality, thus compromising both public health and productivity, especially as concerns the poor and the vulnerable. Currently, there are reported serious water quality issues in surface water (and in some areas served by groundwater), especially with regard to drinking water and sanitation in the rural areas. Figure 4.3 shows the relation of poverty to access to water and wastewater in Egypt’s governorates. As expected in Upper Egypt (from Beni Suef Governorate to Aswan Governorate) where poverty is the highest, both access to water and wastewater is the lowest despite large investments made by the Government. It is clear that Upper Egypt has not received so far much attention to improve the basic services to the poor.

Figure 4.3: Poverty and Access to Water and Waste Water

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4.5 The general assessment of the water quality status in Egypt is based on the results of the monitoring activities carried out by the MWRI, including 240 locations for surface water and 205 locations for groundwater monitoring.31 Monitoring of Lake Nasser indicates generally good water quality conditions, albeit nutrients samples indicate a trend towards eutrophic conditions. However, water monitoring data indicate that the water bodies within the River Nile stretching from Aswan in Upper Egypt to the Delta barrages in Lower Egypt are relatively clean in view of their current uses and functions. Most water quality parameters along the main river Nile record values within the standards set by Law 48/1982 (entitled: Protection of the River Nile from Pollution). However, about 40% of the total sites along the Nile recorded Chemical Oxygen Demand (COD) exceeding the standards. The Fecal Coliforms (FC) level/trend along the Nile and Rayahs (principal canals) up to Cairo are within the standards. This is mainly attributed to the Nile/Rayah’s high assimilation capacity. 4.6 Deterioration in water quality of the Damietta and Rosetta branches occur in a northward direction due to disposal of municipal and industrial effluents and agricultural drainage as well as decreasing flows. Monitoring of both branches indicates they suffer from organic pollutants and deficiency of dissolved oxygen. The water quality in the canals depends on the quality of the Nile water at the withdrawal point, and on the canal-flow that decreases along the canal due to irrigation abstractions. Due to domestic and industrial effluents, the quality of the canals gradually deteriorates towards the downstream. Because of the alarming deterioration of water quality in the Nile Delta, the emphasis on this chapter has been in the Nile Delta. 4.7 In the Nile Delta, water quality deteriorates as indicated by the following parameters and illustrated by Figures A1, A2 and A3 in Annex 2:

• Fecal Coliform Bacteria (FC): The average values show that most of the Delta sites exceed the standard being 5000 mean probable number [(MPN)/100 ml] as of Law No. 48/1982. The FC counts are within 20,000 MPN/100ml. The highest values are found in middle Delta while the lowest are in western Delta as shown in Figure A1, Annex 4. Besides the impact on public health, biological contaminants especially FC would also impact badly on livestock health and production as they reach livestock dinking and/or washing water. In addition, the parasites may remain in the animal’s intestines for a long time producing eggs and multiple -parasite generations exerted in the animal’s feces.

• Dissolved Oxygen (DO): The DO is one of the parameters that can infer fishery

health/production. Figure A2, Annex 4, illustrates the spatial variability of average DO (mg/l) concentrations in the irrigation/drainage system of the Nile Delta regions, for 2002/2003. The temporal average at a number of locations in the northern lakes and the Delta drains often lies between 2 and 5 mg/l (while the standard being 7.0 mg/l). The two Rosetta and Damietta branches are also subject to remarkable oxygen deficit at their seaward end.

• Total Dissolved Solids (TDS): It is a good indicator of salt concentrations. TDS ranges from 0-500 in most of the Delta irrigation system. It may exceed the limit only in the northern Delta, and score above 1000 mg/l due to repeated reuse of drainage water and the presence of saline groundwater in the north

31 National Water Research Center, Water Quality Report .

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Major sources and impacts of water pollution 4.8 The sources of inferior water quality in Egypt are sewage from cities/villages, industrial effluents into Nile/canals/drains (especially from large industries), agricultural discharges to the Nile (containing pesticide/fertilizer residues and salts leach out from lands), municipal wastes from village and secondary cities disposed into adjacent waterways, and disposals from inland navigation. Specifically:

Figure 4.4: Rural/peri-urban sanitation lags for water supply

• Amongst these sources, raw sewage is the most critical, especially in the rural areas of the Nile Delta. Wastewater collection and treatment in secondary cities and rural areas lag far behind potable water supply as shown in Figure 4.4 above. Most waterways receive raw sewage either directly from housing units and sewage/sludge emptying trucks, or indirectly through agricultural drains loaded with semi-treated/untreated wastewater. Piped sewage is a point-source pollution to the Nile, drainage water, lakes, and groundwater. 20% of urban and 92% of rural sewages are not covered by sewerage. This widespread discharge of untreated discharges being mostly severe in the Delta, as drainage water is mixed with canal water for reuse purposes (as per the mixing standards provided by Law 48/1982, to guide the official mixing/reuse plants erected at the main canal/drain level). The serious biological pollution in agricultural drains in secondary and tertiary canals impedes implementation of the drainage-reuse expansion policy. Five out of 25 mixing plants in the Delta had to be closed due to excessive pollution. Several others are prone to closure, most importantly, the planned El-Omoum plant.

• Industrial wastewater has potentially been the second crucial source of Nile -system water

pollution. Until the late 90’s some 387 MCM/yr of effluents used to be discharged to the Nile, its canals and drains. Some 34 large industrial facilities discharged polluted effluent into the Nile between Aswan and Cairo, 78 industrial establishments into the drains spilling into fresh waters or into the northern lakes, and 36 establishments discharged into the Mediterranean Sea and the Gulf of Suez. During the past few years, the river Nile was given a special priority and declared a protected zone especially against industrial effluents and a serious campaign was undertaken by MSEA and MWRI to prevent their untreated discharges into these water bodies in compliance with Law 48. However, as of February 2000 ten facilities were still not in compliance with some of the effluent standards set by the law. As firms redirect their effluents to public sewers, municipal wastewater treatment plants (WWTPs) become overloaded and their efficiency

Rural Water Supply

Rural Sanitation

2007 2000 Time

10 1960

90 100

2017

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compromised. Some industries diverted their effluents to adjacent agricultural drains, seriously degrading their water quality, and rendering it unusable.

• Salinisation as a result of drainage reuse has been a cause of productivity losses in the Nile Delta.

The repeated reuse of drainage water raises salinity to 3,000 mg/l or higher in the drains bordering the northern lakes. Water salinity originates and builds up all over the Delta old lands where fertilizers and soil residues are leached out in the absence of well-functioning field (tile) drainage. The annual volume of agricultural drainage discharging back to the Nile system is estimated at 6000 MCM, containing dissolved salts washed from agricultural lands and residues of pesticides and fertilizers. An additional source of salinity is the shallow groundwater interfering with surface drainage water. Surface and ground waters used to exhibit toxicity from agrochemicals while surface waters suffering eutrophication due to the nutrients resulting from the excessive fertilisation and;

• Dumping of municipal wastes in waterways has become a serious and widespread phenomenon,

blocking drainage and irrigation canals. 4.9 Groundwater quality is also vulnerable to deterioration. Sources of potential degradation of groundwater, especially in the Delta aquifers, are manifold including diffuse pollution from agriculture (dissolved salts, pesticides and fertilizer residues), (semi-diffused) leakage of wastewater trenches and (linear-source) seepage from agricultural drains, solid waste dumpsites, and leaching from liquid waste disposal sites (examples of which are numerous, most importantly being the fuel stations where leakage occurs from underground storage tanks and lubrication sites), and direct industrial effluents into groundwater (e.g. Shubra El-Kheima district).

4.10 Groundwater pollution hazard is however a function of vulnerability as shown in Figure 4.5 of pollutant type and load (Table 4.1). The groundwater quality in the reclamation areas in the Nile basin is relatively deteriorating as indicated by a number of groundwater quality parameters. High nitrate and sulphate concentrations have been observed in several priority areas. Pollution is often close to areas where groundwater is extracted for drinking. The groundwater quality outside the priority areas in the Nile basin often exceeds the critical values for iron and manganese. Discharges to the desert fringes may pollute deep/fossil groundwater. The non-renewable groundwater at the Nile -valley desert fringes and oasis are potentially affected by disposal of treated/semi-treated domestic/industrial wastewater.

Table 4. 1: Pollution hazard classification (source NWRP,32 2002)

Vulnerability Pollution Load Low Medium High

Low Low Low Medium Medium Low Medium High

High Medium High High

32 National Water Resources Project (Dutch-funded; ongoing project), of the Planning Sector, MWRI.

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Figure 4.5: Groundwater vulnerability to pollution (mainly from reuse)

4.11 Inferior water quality compromises public health, the overall national economy (productivity and added costs of service provision), income of the poor, the ecosystem and natural resources. 4.12 Effect on public health. It is estimated that 20% of child mortality rates every year can be related to poor water quality, especially in rural areas. This mortality rate attributes to diarrhea diseases caused by inadequate water quality for drinking/domestic uses, poor sanitation facilities/practices, and lack of healthy nutrition and domestic -hygiene behavior. Child mortality rates, particularly in rural areas, are significantly higher than the average within other countries with the same income per capita level.33 Diarrhea disease incidences have been considerably frequent although 87% of the population (97% in urban areas and 77% in rural) has access to safe water; however, these incidences are attributed to poor hygiene, lack of sanitation, and lack of wastewater treatment. The morbidity rate for intestinal infections in public and central hospitals in 2003 was respectively 14.81% for men and 11.9% for women34. In 2003, 11,500 case of viral hepatitis was reported. The Nationa l Control of Diarrhea Disease Program has only relatively contributed to reducing child morbidity and mortality in the past decade, especially in avoiding the deadly dehydration symptom.

33 Global WS&S Assessment, 2000 Report, WHO/UNICEF. 34 Egyptian Ministry of Health Statistics

Low

Medium

High

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Egypt’s current capacity to address water-related environmental issues: opportunities and challenges 4.13 Egypt’s general performance in water-related environmental aspects has been moderate over the last decade:

• Access to water supply has reached almost 100% and 80% in urban and rural areas respectively as witnessed by large investments in the water sector totalling LE 13.1 billion from 1992-2002 ( chapter 8). These compare favourably with countries of the same income, despite local problems of water quality due primarily to lack of rural sanitation.

• Access to sanitation improved to about 98% for urban areas, while remaining as low as 5% for rural access. The government, however, plans to improve sanitation in the uncovered areas and to expanding urban-sewage treatment.

• Industrial effluents along the Nile have decreased. Many public sector firms continue to discharge in drainage canals firms though most newly-established industries are equipped with at least primary effluent-treatment plants.

4.14 On the financing/pricing side, municipal water and wastewater services are currently heavily subsidized by the government and amount to LE 2.5 billion/year for drinking water and LE 2-3 billion/year for irrigation water. These subsidies are not explicit in the Government State Budget. Estimates are given in Table 4. 2 for delivery cost, level of subsidy, and revenue raised. In the municipal areas outside of Greater Cairo and Alexandria, the subsidy level is almost 75 percent. Low recovery of costs from consumers reduces revenues generated that water and wastewater agencies can use to repair leaks and improve services. The public municipal water and wastewater agencies are caught in a vicious cycle of low tariffs and poor service. Revenues generated are insufficient to adequately maintain the existing system, let alone provide for improvements or reconstruction. Although they were meant to be autonomous on O&M costs, economic authorities are not legally capacitated to adjust rates. Rates are generally set by local or governmental councils. Today, water and sewerage services are charged at much less than cost. Until recently (prior to establishing the WS&S holding company), Governors had the authority to set water prices up to a ceiling of LE 0.23 per cubic meter. This ceiling is below actual cost by a factor of 3-4, yet not all Governors have utilized this authorization.

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Table 4.2: Recurrent unit costs and associated subsidies in WS&S

System NOPWASD¹ (Municipalities)

GOGCWS² (CAIRO)

AWGA³ (ALEXANDRIA)

LE per m³ Estimated Capital, O & M costs 1.0 1.1 NA Subsidy 0.8 0.9 NA Average User Fee5 0.2 0.2 0.3 Rate: piastre per cubic meter 4.5 15-25 15-25 25-35

Notes: 1. National Organization for Portable Water and Sanitary Drainage. 2. General Organization for Greater Cairo Water Supply. 3. Alexandria Water General Authority. 4. Wastewater tariff is 20% of water tariff for Cairo and 35% for Alexandria. 5. These are applicable to the residential units, which have water meters. Those who do not have meters, or their

meters are not working, pay a fixed monthly charge for water consumption (LE 5-20 monthly/unit). The charge changes with house area.

4.15 Noteworthy are the considerations below:

• There is a pronounced regional bias in WS&S service coverage towards the major cities in the Delta and along the Suez Canal. Cities in Upper Egypt have been neglected, and they have only recently begun to implement sewerage systems. There is almost no sewerage in rural areas although rural population densities and sizes are high.

• Appropriate policies for penalizing non-paying customers are not in place; and the government and public sector institutions often evade paying their water bills.

• Improvements in revenue collection at the governorate level do not result in increased budgets for O&M as an incentive. In addition, sanitary drainage has been defined as an urban public service, and accordingly no institutions/agency has taken responsibility for drainage in rural areas..

• The significantly low user-charges levied in both of the water supply and irrigation sectors undermine any para-state or private-sector capability to maintain existing facilities or to expand the service. Not mentioning the financial sustainability of the facilities, the environmental sustainability of these sectors is at stake. As elaborated above, the high water supply coverage together with the low sewerage coverage especially in the rural areas, and the lack of maintenance of existing sewers and treatment plants eventually impact on public health and on the entire economy, and particularly, on the disadvantaged poor.

4.16 In many rural/peri-urban areas, water vendors supply potable water to households having standpipes that can no longer be used for drinking due to diffusion of wastewater into groundwater. Vendor prices are already more than ten times higher than piped-water prices. As for sanitation, poor farmers already pay as much as 10% of their income for wastewater removal from cesspools, which indicate their willingness to pay for a better service-provision option. Hence, there is a legitimate opportunity to foster Private-Public Partnership (PPP) even in rural/peri-urban Water Supply and Sanitation (WS&S). Due to high groundwater tables in the delta, some communities opted for self-finance localized sewerage systems.

4.17 The cost of water treatment and distribution has not been fully borne by industrial users due to government subsidies supporting O&M costs for both water and wastewater treatment. Water-supply

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costs are insignificant compared to overall plant operating costs, and as such, industries have little incentive to conserve water and often tend to dilute their effluent discharges. On average, industries are billed one Egyptian Pound per cubic meter for water, which depending on the location, is approximately 70-80 percent of the full cost to provide water, not including wastewater treatment. 4.18 Furthermore, several ministries are directly or indirectly involved in water quality activities for planning, operational purposes, research, monitoring and regulation activities. The main ministries/agencies are:

- Ministry of Water Resources and Irrigation (MWRI)

- Ministry of State for Environmental Affairs/ Egyptian Environmental Affairs Agency (MSEA/EEAA

- Ministry of Health and Population (MHOP)

- Ministry of Agriculture and Land Reclamation (MALR)

- Ministry of Industry and the General Organization for Industrialization (GOFI)

- Ministry of Scientific Research

- Ministry of Housing, Utilities and New Communities (MUNC)

- Ministry of Local Development, and Organization for Development of Egyptian Villages (ORDEV)

4.19 The institutional framework for water quality management could be schematically presented in Figure 4.6 as follows:

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Figure 4.6: Institutional framework of water quality management in Egypt

4.20 The main and foremost problem regarding water quality and pollution in Egypt is the absence of an integrated coordinated approach that is policy driven and takes into account agreed priorities. There is no joint strategy or action plan that coordinates the different tasks of the involved ministries and institutions. The redundancies and split respons ibilities between the different ministries, particularly in applying the different laws and in ensuring monitoring and compliance need to be mainstreamed. 4.21 The government has however been very keen to establish autonomous “holding companies” in most of the service sectors, with the goal of reducing the recurrent fiscal burden on the government, while improving efficiency and sustainability of O&M services. In 2004, two presidential decrees were issued, regulating the WS&S sector under the responsibility of the MHUNC. The first decree, 135 for 2004, is concerned with the creation of a Holding Company for Drinking Water and Sanitation and its affiliated companies that include the General Economic Authorities for Drinking Water and Sanitation operating in the Governorates. The company will seek new financial resources to sustain the O&M budget and relief the burden on the government. The company is however challenged by the political resistance to raising tariffs and by the need to write-off/restructure the overhanging debt or, for the longer term, to foster full corporatization. The second Presidential Decree, 136 for 2004, covers the creation of the Central Authority for the Drinking Water and Sanitation Sector, and Protection of the Consumer. This decree aims at regulation and monitoring, for quality control and consumer-price control. Also the establishment of two holding companies for the South Valley and West Delta and for Northern Sinai ushers a reform towards autonomy of service delivery in the newly reclaimed lands. The holding companies are challenged by the need to write-off the domestic debts.

LawsMoHUNC (Law 93-1962)

MWRI (Law 48-1982)EEAA (Law 4-1994)

StandardsInland water MWRI

Drinking water MoHPCoastal water EEAA

EnforcementMWRI/Min. of InteriorEEAA / Water Police

Legal aspects

Ambient waterInland: NWRC and EHD

Coastal: EEAANRC/NIOF (spec.projects)

EffluentsCompliance:MoHP

Monitoring

Preventionagro-chemicals MALR

licencing MWRIenv.action plan EEAA

TreatmentMunicipal: NOPWASD/GOSD/AGOSD/Governorates/ORDEV

Industrial: GOFI/facilities

Distribution/ReuseMWRI

Pollution control

Water quality management

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The Legal Framework for Water Management

4.22 A total of 26 laws and presidential and ministerial decrees form the legal basis of water resources management in Egypt, and are summarized in Table A1 in Annex 4. The most important are Law No. 48/1982 for protection of the river Nile and waterways from pollution, Law No. 12/1984 on irrigation and drainage, and Law 4/1994 on Environmental Protection. Generally, the laws related to municipal/industrial effluents are characterized by being inflexible and punitive with stringent standards that cannot be enforced. The legislation related to the irrigation/agricultural sector is scant. The MWRI assessed the present laws and recognized that:

- There is a need to integrate Laws No. 4 and Law No. 48 into one unambiguous environmental law covering the entire environment with enough flexibility and clarity on institutional matters. The use of function-related ambient standards is presently not possible according to Law 48/1982;

- Pollution prevention and non-conventional sanitation/treatment should be added to these laws, as they currently consider only conventional treatment;

- The enforcement of the present effluent standards in Law No. 48/1982 is not practically achievable, requiring at least the introduction of compliance plans, but preferably differentiated standards based on Best Available Technology;

- Although the principle of cost recovery is possible in the present legal framework, the implementing entities, such as Economic Authorities, are not legally capacitated to adjust the rates to achieve autonomous cost recovery. Rates are still generally set by local or governmental councils;

- The Ministry of Health has enacted law 108/1995, regulating the standards of potable water.

- Within the scope of the USAID-financed EPIQ/WPRP35 project, extensive attention has been given to improvement of Law No. 48/1982 and Law No. 12/1982. In 1999 considerable efforts have been made to propose improvements to Law 48. Unfortunately, discrepancies in insights between the different ministries proved to be insurmountable (MOH canvassing for stricter standards, and others for more lenient standards). It does not seem realistic to assume that Law 48 or Law 4 will be altered easily.

- With respect to Law 12/1984 related to Irrigation and Drainage and Licensing of Groundwater Wells, the EPIQ project has in 2000 prepared a draft for a revised law, integrating Law 213 of 1994 related to Water User Organizations into Law 12, after extensive discussions with stakeholders. The draft law will also establish a legal basis for various levels of user organizations in all land categories, and for the role of the private sector in water management. It will further include groundwater and treated wastewater being unconventional water sources (as of NWRP, 2002). This law has not been enacted yet, as it is currently awaiting the inter-ministerial revision process.

35 Environmental Policy and Institutional Strengthening Indefinite Quantity Contract Water Resources; Water Policy Reform

Activity.

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Water quality monitoring and identification of priority areas and pollutants 4.23 The development of sustainable monitoring programs started in the nineties. Gradually more emphasis was placed on pollution parameters besides salinity. Good monitoring programs are established by the NWRC/MWRI, the Ministry of Health and EEAA. Coordination between these institutions is needed for the efficient monitoring and for data dissemination to concerned institutions. Currently, responsibilities and implementation of monitoring programs being complex and several overlapping activities exist. There is also a serious shortage of environmental health statistical data. Enforcement is also weak, where mostly licensed discharges are those monitored, while the majority of dischargers do not have a license. Actual enforcement in the case of public facilities (publicly-owned industries and municipal discharges), which comprises the majority of pollution sources, is almost non-existent due to the lack of funds and to employment considerations. 4.24 Priority pollutants. In 1993, a thorough research by the National Water Resources Center considered that the most critical water quality parameters are as follows (in the order of their significance): pathogens, pesticides, trace elements/heavy metals, and salinity (which are however seen as a “parameter”, not a “pollutant”). At present, pathogens in particular remain insufficiently tackled. 4.25 Priority areas for action. A Task Force was appointed by MWRI to draft the water quality priorities/strategies. The priority areas were identified as the larger urban conglomerates, where high bacteriological and chemical pollution levels are encountered together with highly populated areas increasing the dose-exposure probability. The Nile was not considered so seriously polluted except for the two Delta branches that exhibited high levels of pathogens and toxic substance. The drainage system was of high concern. High priority areas are:

- Within the Eastern Delta: Greater Cairo and Greater Mansourah; - Within the Middle Delta: Tanta, Mansourah, Mahalla and Samanoud; and - Within the Western Delta: Greater Alexandria.

4.26 Areas intending to use drainage water for irrigation were also considered of high priority. The groundwater system was given an overall priority; water standards should be met for the intended use, which is mainly drinking water (NWRP, 2002).

Achievements in the national planning towards improved water quality

4.27 Despite these challenges, the Ministry of Water Resources and Irrigation (MWRI) has recognized the need to adopt an integrated approach in water resources, and has developed in its National Water Resources Plan (NWRP) an approach aiming to stimulate the coordinated development and management of the water resources in Egypt. This horizontal approach consists of certain measures with the involvement of the different stakeholders in implementing and incorporating these measures. MWRI has proposed a redefinition of the responsibilities and functions of the different stakeholders. 4.28 Table 4.3 provides an overview matrix of the above defined roles of stakeholders in the implementation of the various measures of NWRP for Water Quality and Institutional Measures. The implementation matrix for the NWRP translates the strategy into specific actions and assigning clear responsibilities for carrying out the involved activities. The matrix horizontally specifies the concrete actions that have to be taken: These are divided among stakeholders who will take the lead in the implementation of the action shown in the Table as ?; the stakeholders that have an important say in the implementation of the measure but is not the first responsible shown in the Table as O, and the

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stakeholder that need to be consulted shown in the Table as X. On the other hand, the matrix vertically shows that MWRI is responsible for the largest number of measures, as can be expected from NWRP. The second largest entity is MHUNC because of the construction of water and wastewater treatment plants and reduction of leakage losses in the drinking water systems. In addition, the private sector is important because of its expected investments in modern irrigation systems and the collection and pre-treatment of industrial wastewater. The delineation of responsibilities and measures are a good start, though in the Egyptian context it will be difficult to implement and administer if there is no political will from the senior decision makers to ensure that water quality management should be approached inter-sectoraly.

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Table 4. 3: Pertinent institutions and water quality measures (MWRI/NWRP, 2003)

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4.29 On the operational management side , MWRI has moved beyond the visions of decentralized management to on-the-ground application via forming Water User Associations (WUAs), Water Boards, and para-state Integrated Water Resources Management districts. Work on about 2,800 WUAs has been initiated in the delta as part of the World-Bank/KfW assisted Irrigation Improvement Project. Bottom-up modalities of community participation have been more upfront in recognizing the water pollution in rural areas and the dire need to resolve it through proactive measures. Donors including the World Bank envisage assisting MWRI on the legislative and financial arrangements whereby bottom-up user-groups could help secure the community-driven resources needed to tackle water pollution and other externalities at the branch-canal command level besides improving O&M at this level. The best candidate for this so far has been the Water Boards since they operate at the branch canal level which captures multi-sector users and could be backstopped by representation from the Ministry of Water Resources and Irrigation (being mandated for water quality management and monitoring), NOPWASD/MoHUNC (being mandated for overseeing sanitation services), and the Ministry of Local Administration (being entitled to help raise local revolving funds). The challenge is to empower the Water Boards through backstopping by these Ministries (and/or by water-related NGOs and consultants) thus enabling them to assume a multi-disciplinary regulating body at the community level, with a legal personality and creditworthiness to: • Sub-contract the private sector (through the various PPP models);

• Deal with donors as a lending intermediary; and

• Raise revolving funds for a community-level financial autonomy (at least on O&M).

Piloting low-cost/unconventional technologies

4.30 The Government, with the assistance of international donors, has also invested in pilot operations for rural water and sanitation. Economics of scale make conventional wastewater collection and treatment cost prohibitive in small/sparse rural settlements. Several alternatives that vary in efficiency and cost have been piloted in Egypt. For instance, upgrading the self-purification capacity of open drains (by construction of in-stream wetlands or by aeration gabions) proved to be a viable non-conventional approach. EEAA has initiated design and construction of a 20 hectares engineered wetland, which has been in operation since March 2004. The GEF/UNDP funded the project to treat 25,000 m3 per day of drainage water as a demonstration for a low-cost technique to protect the ecology of Lake Manzala and the Mediterranean. 4.31 Other low-cost and unconventional technologies are also being piloted in Egypt’s rural areas, including the application of double septic tanks, small-bore sewers, biogas technology, gravel bed hydroponics (GBH) system, and bioremediation. As implied above, scaling up these pilots requires improved financial and institutional arrangements. 4.32 The MWRI/MALR horizontal-expansion policy also pertains to reusing treated wastewater to reclaim about 250,000 acres, with some emphasis on new lands in Upper Egypt, Middle Egypt, Suez Canal cities (Ismailia and Suez) , Alexandria , and Cairo. The MSOEA also plans a major national program for the reuse of primarily-treated wastewater, exclusively for irrigating trees along roads, greenbelts around cities, landscape and timber forestry/production. The program targets to reuse 2.4 BCM/yr of treated wastewater to irrigate 400,000 acres at a cost estimate of L.E. 4.9 billion. The first phase targets 82,940 acres, served with 72 treatment plants. Already accomplished are pilots in 19 locations. The entire program focuses on protecting water and land resources from pollution, provision of greenbelts, and improving air quality. The financing mechanism/viability and the impact of using 2.4 BCM of water out of the yearly national-water-balance should however be studied. A consensus on plantation selection is

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also needed amongst MOSEA, MWRI, MOHUNC, and MOHP. The reuse of treated wastewater could be socio-economically viable for cities at the desert fringes and for which no other beneficiaries being envisaged in availing from the (primary treated) wastewater. 4.33 But much remains to be done: There is a need now to rationalize the investments proposed by MWRI in order to improve the water quality on socioeconomic criteria. Investments in water quality continue to be based mainly on engineering and technical grounds, without due emphasis on the economic and financial criteria. MWRI developed a “National Plan for the Protection of the Water Resources of Egypt” (2001-2012). The plan elements, cost and the lead national institution are presented in the following Table 4.4 in which the largest share is attributed to the Ministry of Housing Investment Plan and New Communit ies.

Table 4.4: National Investment Plan for protection of the water resources of Egypt” (2001-2012)

Action Lead National Institution Cost LE Million

Treatment of industrial discharges to waterways and groundwater (only publicly

owned industries).

Ministry of Public Sector Enterprises Holding Companies

Industries

3,000

Municipal wastewater treatment facilities for cities and Markaz only (not villages).

Ministry of Housing Utilities and Urban Communities

5,605

Upgrading, Operating and Maintaining National water quality monitoring network.

Ministry of Water Resources and Irrigation 292

Coverage of Irrigation and drainage canals passing through residential areas.

Ministry of Water Resources and Irrigation 1300

Awareness Campaigns. Ministry of Water Resources and Irrigation 3 Total 10,200

4.34 The above plan and investment assessment are based on the assumption that resources are or would be available. They are mainly estimated on the basis of sector-specific requirements and/or “cost effectiveness” analysis, rather than comprehensive multi-sectoral cost-benefit (CBA) of improving water quality nationwide. No insights as to the socio-economic implications of the various options for water quality improvement were undertaken. Rural sanitation was not addressed and the proposed estimate for awareness companies appears under-estimated. Generally, no choices were considered as to whether it will be more prudent to:

• Pay for the consequences of the problem (to establish new wastewater treatment plans or repair infrastructures);

• Remedy the problem (to pump more surface water or groundwater);

• Attempt to minimize the problem (treatment of industrial discharges and pollution abatement); and

• Undertake any of the above, but also factoring in the forgone opportunity benefits of not perusing a more efficient allocation of water within and/or across the different sectors of the economy, including industry, irrigation and drainage.

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Towards a full social accounting for water

4.35 Full accounting measures are, however, essential for evaluating decisions in order to minimize Egypt budgetary expenditures while maximizing the sustainability of its water resources. As part of the CEA, a study was undertaken to demonstrate a framework towards evaluating the full social costs of water use and disposal in Egypt with particular emphasis on rural water and sanitation. Its objectives are twofold: first to apply the environmental economics tool of cost-benefit analysis (CBA) to better incorporate the full social costs of alternative policies and investments into decision-making; and second, to provide estimates of full social costs within an evaluation of several policy options that may be considered for the water quality improvement in Egypt. Various options were considered (described below) centering around: (1) Business as Usual (BAU); (2) centrally-planned actions as of the National Plan for the Protection of the Water Resources of Egypt; and (3) the latter in addition to the measures required to control rural water pollution (assuming both partial and full coverage). 4.36 For each option, the study has factored in:

(a) water quality processes (also factoring in the assimilative capacity of the water resources system) thus calculating three key at-recipient parameters: Fecal Coliforms (FC) (besides using “exposure-risk” parameters)36 to infer health benefits; Dissolved Oxygen (DO) for fishery production benefits; and Total Dissolved Solids (TDS) for crop production benefits; (b) corresponding “dose-response” for estimating the fishery/crop losses, and the corresponding “exposure-risk” for estimating the disease incidences36; (c) the monetization of the response/incidence (i.e., assessment of forgone benefits); and (d) the weighing of the (discounted) forgone benefits against the (discounted) expenses respective to each of the three inaction/action options.

4.37 With regards to the option of Business As Usual (BAU), the damage cost assessment undertaken for water pollution was revised to include additional forgone benefits of:

• using polluted water which is income/welfare related, e.g., crop/fishery/livestock production losses due to critical pollutants such as salinity and toxic ity, as well as well-being related, e.g. from water-related diseases, food chain contamination, and occupational health impacts;

36 Agricultural damages were estimated at the “Consumer and Producer Surplus”, forgone as a result of the quantity produced/marketed losses due to the high TDS concentration (using FAO yield-to-salinity production functions). Health damages were based on relating the diarrhea incidence rates to the risk factors associated with the level of "water, sanitation and hygiene", as these factors are determined by the following transmission pathways: 1.Transmis sion through ingestion of water; 2. Transmission caused by lack of water linked to inadequate personal hygiene; 3. Transmission caused by poor personal, domestic, or agricultural hygiene; 4. Transmission through contact with (through bathing or wading) containing organisms such as Schistosoma ; 5. To certain extent, transmission through vectors proliferating in water reservoirs or other stagnant water or certain agricultural practices; 6. Transmission through contaminated aerosols from poorly managed water systems. Thereof, six exposure scenarios were considered, each is associated with a combination of different levels of water supply, sanitation, and hygiene. Thus, each scenario reflects a different fecal-oral pathogen exposure. Populations were grouped up according to their level of water and sanitation access, and each group was attributed a different relative risk (obtained from the literature) of contacting the disease. Hence, the total respective incidence rates of diarrhea were estimated.

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• cost of avoiding the usage of polluted water such as: (1) added cost of pumping groundwater when surface drainage water is too polluted to be reused; and (2) forgone benefits when farmers unofficially/directly reuse highly-saline water from secondary drains and when official drainage reuse from main drains (which ensures a mixing with fresh water to dilute salinity) is halted as these main drains are heavily polluted by untreated sewage. The study included the additional costs of the erected hydraulic, mechanical and electrical facilities that became idle due to the halting of a number of drainage reuse schemes.

4.38 The following three action scenarios were considered:

• The Central Action Scenario. This action scenario is based on the existing MWRI investment plan. This involves the construction of several centralized, traditional, wastewater treatment plants and associated collection (and pumping) systems in urban areas. Effectively, this scenario means that the entire urban population will have access to sewerage (100% urban sewer coverage in all governorates). The situation with respect to the rural population does not change except in relation to water quality improvements associated with the additional urban treatment capacity.

• The Central + Decentralized Action Scenario. This scenario is based on a combination of the

existing MWRI investment plan (that is the Central Action scenario) with additional investments in low-cost, sanitation and treatment plants rural areas. This involves the construction of the same centralized, traditional, wastewater treatment plants in urban areas BUT without expanding the associated urban collection systems. The savings in urban collection system costs (60%) is used to construct the low-cost rural systems. The low-cost systems include, among other technologies, enhancing self-purification of open drains through the construction of in-stream wetlands or by aerating gabions, facultative ponds (lagoon treatment), cesspits and/or low-cost collection systems (small-bore sewers, biogas technology, gravel bed hydroponics systems, and bioremediation are some other examples). During the interim (until collection systems are implemented) wastewater would need to be transported by vacuum tankers from cesspits and intermediate collection points to the treatment plants. This adds a certain risk with tankers (not taken into account in the cost/damage assessments) which will need to be managed through improved monitoring and enforcement of tanker activities (e.g., to prevent illegal discharges at points other than the treatment plants). Under this scenario, the status of sanitation access in Urban areas is maintained at current rates of coverage in each governorate; however, in rural areas the percentage of the population with access to sewers becomes 85%, and those with another form of sanitation access (e.g. cesspits, latrines, low-cost treatment plants, etc.) reach 15%; none of the rural population are left without any form of sanitation. Effectively, this means that slightly over an additional 11 million rural people are provided with some sort of improved sanitation at the expense of connecting all of the urban populations.

• The Full Coverage Scenario. Under such scenario the entire urban and rural population

provided with sewers and treatment at the end of the pipe. The proportions of populations with specific types of sanitation access remain unchanged. Water quality is not affected. This simply involves delivering hygiene awareness raising / promotion programs to the entire population, thus only limiting “exposure”, and therefore, the disease incidence.

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Results of the study 4.39 The results of the study showed in Figure 4.7 a that the forgone benefits (or damage costs) are estimated at a total of L.E. 5.35 billion in 2003 or 1.8% of National GDP which is significantly higher than the initial estimate of LE 2.1-3.6 billion or 0.7-1.2% of GDP for water pollution in the Assessment of Cost of Environmental Degradation (World Bank, 2003). It should be noted that: (1) slightly different impact categories were included in the two studies; (2) methods are also slightly different, (3) the initial study covered the entire country and not just the Nile Delta area as in this study, and (4) the benefits assessment in both studies did not scrutinize the added value of avoid ing ecosystem deterioration, nor the incremental costs of treating the polluted water. Analysts could therefore argue that the overall cost of water pollution may exceed the estimates provided in this chapter. Nevertheless, the estimates provided in this chapter could still serve as the low benchmarks against which water quality improvements/investments can be planned. 4.40 The forgone benefits in 2014, factoring population growth, if no further actions are taken would reach as high as L.E. 9.5 billion/yr or 3.2% of national GDP. On average, during the period 2003 to 2014 the costs of inaction are roughly 7.4 billion LE/year (undiscounted). As for the intervention corresponding to the National Plan for the Protection of the Water Resources of Egypt (Central Action) which would cost about 1 billion LE/year, it would only reduce the damages in 2014 to 6.7 billion LE/yr, i.e. only a decrease of 30%. For the intervention corresponding to the national plan but adapted to include community driven-and-financed low-cost/unconventional remedies for rural areas (Central + Decentralized Actions including improved hygiene), carried out at a total cost of 2-2.5 billion LE/yr, the value of the damages avoided will be reduced by an additional L.E. 2.5 billion/yr in 2014 (see Figures 4.7 b to f below).

4.41 The above results suggest that the win-win option (i.e., that exhibits minimal expenditure cum forgone benefits) is the latter, where government central/sectoral plans for the urban/district areas are augmented with community driven-and-financed unconventional plans for controlling rural water pollution. The results exemplify the payoff of applying a comprehensive Environmental Quality Objective (EQO) approach that can assist decision makers in revisiting and adjusting the effluent/ambient standards across polluters/water-bodies, on the basis of analyzing the user-specific functions and assimilative capacities of different receiving water bodies. The adjusted standards may be more enforceable, as the treatment/prevention actions (cost) will be more objectively justified, and can be financed through a decentralized "polluter-pays" policy which could be applied to polluting industries provided the cost of water is not subsidized. Further, as the EQO approach closely links the "at-source prevention/treatment polluter" to "at-recipient forgone benefits," it may provide (a fairness) basis whereby immense prevention/treatment costs are shared between polluters and beneficiaries (especially for non-point sources such as agricultural residues).

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Figures 4.7a: Damage Costs Corresponding to Different Levels of Water Quality and Hygiene

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Figure 4.7 b and c: Loss of health benefits.

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Figure 4.7 d: Foregone benefits due to loss in fisheries

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Figure 4.7 e and f: Foregone benefits due to loss of agriculture

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Conclusion 4.42 The water quality of surface and groundwater is deteriorating. Its adverse impact affects both the health and productivity of its land with damage costs reaching L.E. 5.35 billion (2003) or 1.8% of

Actions and Associated Foregone Benefits (Damage Costs remaining) Agriculture/infrastructure Losses

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National GDP. The Government, with the assistance of international donor community, has made progress in improving water quality, and is now ready to adopt a horizontal approach for managing its water resources in an integrated manner. These efforts should be continued but supplemented by additional measures at the policy, institutional, investment and information levels. 4.43 On the policy level, it should be recognized that the driving force for water quality improvement is not an increase in investments only (LE 1.0 billion/year) while maintaining the current level of water/ wastewater subsidies of LE 4.5-5.5 billion/year. The analysis shows large damage costs of LE 6.7 billion/year, and indicates that such policy is not sustainable in the long term. In fact it could lead to deepening the Government debt. In order to decrease the damage costs due to poor water quality, the Government should consider two complementary policies; a pricing policy and sector policies. The pricing policy would be based on a system of cost recovery / cost sharing for improving the water quality services, of targeting the subsidies to serve the poor and of being transparent by making these subsidies explicit in the State Budget. The “polluter-pays “principle advocated by the local legislation and by the Rio Summit cannot be considered in Egypt as long as the true price of water/waste water is not applied. 4.44 Sector policies should be based on setting priorities on the basis of the magnitude and severity of water quality and carrying out cost benefit analysis on these policies. Our preliminary conclusion indicates that Government and non-government water quality investments and programs need to be reallocated to the priority pollutants (being mainly pathogens and salinity) and by priority areas being the Delta drains and the two Nile Delta branches because of the high population / health and productivity impacts of water pollution. They will entail that preparation of water quality improvement plans should be decentralized on a regional basis and an inter-ministerial consensus be reached on the selection of crops (and other potential uses) of treated wastewater, and on the respective level of treatment based on financial and economic cost and benefits analysis. A sector regional environment assessment will be a very useful tool to address the environment and socio-economic impacts on these policies. This decentralization will have an impact on the present institutional and legal framework as well as on the selection of the investments. At the institutional level, MWRI role will focus primarily on establishing the policies and the incentive structure of targeting subsidies by handing-over specific investment and O&M roles to decentralized (multi-stakeholder) entities and empowering the Water Boards. 4.45 At the legal level, such decentralization will also require the adoption of a different approach in amending the present legal framework and ensuring compliance and enforcement, a solution should be found to consolidate the existing Law No. 48/1982 and Law No. 4/1994. Meanwhile, the MWRI cannot be judge and party. It should consider delegating to MSEA’s regional branch offices the responsibility of monitoring and enforcement. Furthermore until the proposed Law 12 on Irrigation and Drainage (assigning O&M responsibilities to water user groups) is amended, considerable cross-sectoral awareness/efforts are needed to expedite enactments of laws, bylaws, and deregulations, required to effectuate the water quality management national/regional plans. 4.46 Given the current scant enforcement of (stringent) environmental-related laws/standards that are based on ambient or developed-country objectives, there is a dire need to divert towards a full social accounting for water, and to pilot then scale -up Environmental-Quality-Objective (EQO) approaches in designing and implementing standards. The challenges associated with fostering the EQO approach would include minimizing the related transaction costs, fostering inter-ministerial consensus, and ensuring flexibility in amending the legislation/bylaws whenever needed. 4.47 Conventional investments in improving the water quality through the construction of wastewater treatment plants in rural areas would be rather costly (and therefore uneconomic al in reducing damage costs). The CBA indicates that the low-cost/unconventional technologies being currently piloted in the rural areas (e.g. construction of in-stream/engineered wetlands, aeration gabions, double septic tanks,

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small-bore sewers, biogas technology, gravel bed hydroponics systems, and bioremediation) are cost-effective in reducing the socio-economic “damages” from water pollution. Thus, there exists a socio-economic rationale for scaling-up the application of such technologies. The scaling-up may, however, tailor these technologies to the international good practice and community-level prevalent practices. To this end, technology choice should be based on stakeholder participation at all levels. Community-targeted awareness and technical-backstopping programs are needed where such technologies are to be scaled up. Their financing should be based on cost-sharing arrangements between the local- and community-level polluters and beneficiaries, both in kind and cash. 4.48 Finally, there should be forceful and periodic information sharing in the media about the water quality situation in Egypt. Egyptian citizens at all levels , especially farmers, are entitled to know the magnitude and severity of the water quality situation in their land, or in their neighborhood. It is only through dissemination of the right information that the credibility and trust could be built between the community, the local and national government.

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CHAPTER 5

SOLID WASTE MANAGEMENT

Solid Waste Management Overview 5.1 Egypt generated an estimated 15.3 million tons of municipal solid waste in 2001 (Annex 5.1). It also generates annually 20 million tons of agricultural waste, 6.2 million tons of special waste of which 0.3 million tons is hazardous waste, 4 million tons of demolition waste and 130,000 tons of medical waste. 88 percent of collected waste is disposed of in open dumps in urban areas, or left in the streets or dumped in drainage canals in rural areas. Composting of 8 percent of the organic waste is practiced; however, it has not generally been sufficiently treated. Some recycling activities are undertaken in some cities (particularly Cairo). Burning waste at site or as a result of aerobic decomposition (self ignition) in open dumps were common methods of waste disposal. Until 1998, smells of burning wastes were not felt in the metropolitan city of Cairo. The appearance of the black cloud in the autumn of 1998 over Cairo has in fact made of solid waste management a national issue that requested the Government immediate intervention. The collection and disposal of medical waste is either financed through the Ministry of Health or included in privatization contracts. Collection and disposal of hazardous waste is not being undertaken. There is only one sanitary landfill for the disposal of hazardous waste in Alexandria, but it has not been operational. 5.2 Organic content of the municipal waste is about 60%. Non-organic waste such as paper/paperboard, glass, and plastics constitutes 27% of the waste ; the balance of 13% constitutes other types of waste. There is a la rge gap in the coverage of solid waste collection, ranging from 30-95% in urban and metropolitan areas, and from 0-25% in rural areas. Until recently, waste collection in all cities (with the exception of Alexandria) and towns left large areas (up to 70 percent) un-serviced or under-serviced. 5.3 Increase in population growth; per capita income and the rapid rural migration have led to an increase of waste generation. As shown in Figure 5.1, assuming the same population growth, the total amount of munic ipal solid waste generated is projected to grow between the years 2002-2025 from 15.1 million tons in 2001 to 32.7 million tons with an average growth rate of 3.2 percent. Approximately 75 percent of this quantity is generated in urban centers, a proportion that will grow as some of the population continues to migrate to cities.37 5.4 Based on actual contract price agreed with the private sector, delivery of Integrated Solid Waste Management (ISWM) services for urban communities was estimated to cost LE 600 – 700 million per year. Considering rural areas constitute about 57% of the population. That puts an additional SWM services costs of approximately LE 800-930 million and totaling to about LE 1.5 billion/year. Assuming a 70 percent coverage, delivering these services will cost the economy LE 1.0 billion/year.

37 METAP/Regional Solid Waste Management, Egypt Country Report 2003.

Figure 5.1: Projected Waste Generation 2001 - 2025

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Solid Waste Management pre -1998: Institutional and Legal Framework 5.5 Until the autumn of 1998, solid waste disposal was not a pressing issue and as a result the Government did not have a policy on SWM. Collection and disposal of solid waste were the responsibility of the governorates which used their scarce public fund to improve waste collection. The two governorates of Cairo and Giza were an exception. The Government established Greater Cairo and Giza Cleansing and Beautification Authorities for managing municipal solid waste collection and disposal. It also provided a subsidy amounting to 10 million/year38 for the last ten years in addition to the proceeds of a 2% monthly levy on the controlled rental value of housing units, which did not exceed LE 1.0-1.5 per year. Such amount was totally insignificant. 5.6 Solid waste collection and disposal are regulated by Law 38 of 1967 and the Environment Protection Law No. 4/1994 which are both in effect. Law No. 38/1967 addresses waste management specifically and includes provision that: (a) the local administration agencies are responsible for waste collection and disposal, and provide licensing for waste collectors and contractors; (b) provision for occupants of buildings to set out waste for collection which was not enforced; and (c) a levy of 2 percent of the rental value. A penalty of LE 100 may be imposed for violation of the law; however, because of its insignificance, this penalty was rarely enforced. 5.7 Consistent with the terms of Law No. 38/1967, the municipality, or the Cleansing and Beautification Authorities (Cairo and Giza) were responsible for street cleaning and servicing municipal refuse containers, operate dump sites and composting plants or supervise their operation by private sector. Door-to-Door collection for high-income neighborhoods in Greater Cairo, Giza, and to a much lesser degree, in Alexandria and few other cities was well performed by the strong indigenous garbage collectors of 40,000-60,000 families, popularly known as the Zabbaleen community39 which has provided these services since 1930. The Zabbaleen system was extremely reliable. Waste was collected daily and each household paid a monthly fee of LE 1-5. In the largest Zabbaleen settlement in El Mokattam (in the outskirts of Cairo), each family sorts the collected waste, recyclable materials sold to local entrepreneurs, and organic materials are used as pig feed. The privatization policy of the Government had an adverse effect on the livelihood of this community. Since the Zabbaleen could not collect more than 10% percent of the waste in Egypt, the Cleansing and Beautification Authorities contracted national private companies for providing solid waste management services particularly in larger cities. The terms of payment is based on annual payment received from the local municipalities in addition to a monthly fee that was collected from the generator. Moreover, national private sector companies were established in the tourist cities, and improved solid waste collection and transportation significantly. 5.8 Due to the nature of solid waste composition in peri-urban and rural areas (high organic content, and very low non-organic or recyclable waste), national private companies and the Zabbaleen were not interested in collecting their waste. Accordingly, the responsibility of SWM in those areas rests with the municipality, and the local governorate. In general, the rural governorates manage their solid waste problems in an unsafe manner, hygienically and environmentally. Organic waste is fed to farmers’ animals, residual wastes (organic and non-organic) are dumped alongside waterways, drains, deserted lands, and neighboring dumping sites, which are set on fire, in order to prevent flourishing of insects, rats, etc, and prevent solid waste accumulation. Municipalities remove accumulated solid waste from time to time, inefficiently, and operating at a loss.

38 State General Budget 1992-2002. 39 Mounir Neamatallah, Zabbaleen Environment and Development Program, the Mega-Cities Publication MCP-018D,1998.

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5.9 For peri-urban and rural areas, the municipalities were responsible for collection and transportation of solid waste. Despite the fact that those areas comprise about 57% of the total population in Egypt, and are the most affected by solid waste problems, solid waste management for those areas was seriously under serviced. However, NGOs were very active in those areas, and have introduced composting, locally made plastic crushers and cloth grinders (recycling purposes). This tended to gradually encourage recycling and composting activities. 5.10 Approximately 20 million tons of agricultural residues are produced in Egypt each year. Sugar cane, maize, wheat and rice are the main contributors to residue production, with cotton and vegetables also important. Much of these are disposed of in a manner with low environmental impacts (e.g., as animal feed or fertilizer). However, a significant fraction of the residues (approximately 50%) are disposed in methods which result in high environmental impacts as explained in Chapter 3. Principal among these are:

• The burning of residues in the field, causing local and national air pollution; and

• The burning of residues at home, causing significant indoor air pollution and consequent health impacts.

5.11 Burning in the field is a relatively recent phenomenon, brought about by a number of factors (e.g., the introduction of combine harvesting, regulations to control fire risks and pests, greater availability of commercial energy sources to the rural population). The burning of residues at home, using traditional stoves, ovens and water heaters, is in decline; however, it still imposes serious impacts on a large part of the rural population. Integrated Solid Waste Management Phase (1998 to date) 5.12 As a result of the social discontent from the black cloud phenomena, the GOE acted responsibly, and applied for the first time in Egypt the principles of Integrated Municipal Solid Waste Management (IMSWM) by adopting two approaches: The first one was an urgent solution; collection and transfer of approximately 12 million cubic meters of accumulated wastes from 11 major Governorates, which presented a major source of air pollution, due to self ignition, or set on fire by the public as a means of disposal, to dumping sites in the desert. Concerning agricultural wastes and residues, the MSEA and MALR has provided the Municipalities with the appropriate equipment for collection, shredding and compaction of agricultural wastes. The bales formed were transferred to storage destinations by the municipalities, for avoiding on site burning. Moreover, the MALR carried out training programs, in order to educate and encourage farmers and NGOs for the reuse of agricultural wastes and residues after necessary treatment, as fodder, compost, land conditioners, etc. The second approach was a systematic one, comprising the following actions:

(1) establishing a joint ministerial committee co-chaired by the Ministry of State of Environmental Affairs (MSEA) and the Ministry of Local Development (MOLD) to coordinate implementation of the strategy;

(2) preparation of the National Strategy for IMSWM which was structured around five policy directives: (a) strengthened supportive capacity of central government; (b) "delegation" of solid waste management to the private sector; (c) application of the polluter pay principle; (d) application of the principle of attaching an economic value to wastes as being recoverable resources; and (e) enhanced public awareness and community participation in waste management systems;

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(3) establishing a cost recovery system for SWM services on the basis of a fee proportional to the electricity consumption and charged to the electricity bill; the amount ranged between LE 1-12 per household and is even higher for commercial and industrial enterprises;

(4) providing a tax break for at least 5 years and custom duties exemption of the SWM equipment as well as guaranteeing payment of private sector contracts in case of non-payment by the governorates; cost recovery is being implemented in Alexandria and Cairo.

(5) delineating the responsibilities of different stakeholders as shown in Table 5.1, and empowering the governorates for the implementation of all SWM activities in various localities under their jurisdiction. This responsibility can be presumed through their own infrastructure or indirectly by private sector contracting. In principle, every governorate will have a landfill site; however, in practice some will not, but are expected to negotiate use of a landfill in a neighboring governorate;

(6) providing technical assistance and guidance by the international donors and organizations in a coordinated manner to fill in the knowledge gap, and strengthen the capacity of the governorates in the planning, implementation, monitoring and follow up of SWM services. Annex 5.2 provides a summary of international assistance; and

(7) enhancing public awareness and participation, through information dissemination of all related-SWM issues. Central government and governorate planning shall be integrated and shall foster a "Government-Public-Private-Community Partnership." The Government will undertake enhancing measures for public awareness, education and training, information", and NGOs will play a major role for enhancing public awareness, education and training.

5.13 As shown in Table 5.2, the strategy estimated the implementation cost to be LE 170 million as capital investments and annual operating costs of LE 809 million/year serving 26 governorates (divided among three priorities). These estimates were based on average unit costs provided by local experts and were not calculated on the basis of proper analytical accounting and cash flow estimates. Since the government did not have the local resources, the strategy indicated that it will provide an initial capital investment cost and the private sector will bear the annual operating costs. It also assumed that 100 percent of cost recovery will be reached in 2010. 5.14 The strategy also fixed very ambitious objectives that were not properly analyzed on the basis of costs and benefits. It foresees an increase by the year 2010 of the collection and disposal coverage of 90 to 99 percent for large cities respectively and a collection coverage of 70 percent for small villages. It also assumes that 50% of waste generated to be composted, 20% of waste to be recycled; 50% of waste to be source separated. Given the recent trend in the implementation of this strategy, these indicators may not be realistic.

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Table 5.1: Solid Waste Management Stakeholders

Institutional Leve l Stakeholder

STAKEHOLDER IN SWM

Ministry of Agriculture and Land Reclamation

Setting public policies, legislations, national and regional strategies, integrated action plans, implementation, guidelines for planning, contracting and management, training and human resources, monitoring and inspection for agricultural solid waste.

Ministry of Housing All the above for Construction and demolition waste. Ministry of Industry All the above for industrial solid waste. Ministry of Health and Population

All of the above for Healthcare solid waste.

Ministry of Local Development

All of the above for all types of wastes.

National

(EEAA) All of the above for all types of wastes, in cooperation / coordination with MOLD.

Governorates All Governorates Setting national and regional strategies and integrated action plans,

implementation of the system, training and HRD, monitoring and inspection.

Greater Municipalities

All Greater Municipalities

Implementation of the system, training and HRD, monitoring and inspection.

Municipalities All Municipalities Implementation of the system, training and HRD, monitoring and inspection.

NGOs Solid waste management services (public awareness, MSW treatment, recycling)

International Contractors

Integrated Solid waste management Projects(collection, transportation, treatment, recycling, disposal for municipal, health care waste)

National Private Contractors

Solid waste management Projects (collection, transportation, treatment, recycling, disposal for municipal, health care waste)

International Donors Solid waste management services (assisting Governorates in tendering procedures, contracting, planning, management, etc.)

Private Sector contractors, Consulting firms

Consulting Firms Solid waste management services (assisting Go vernorates in tendering procedures, contracting, planning, management, etc.)

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Table 5.2: Projected Investment Requirements for ISWMP*

Institutional level

Actions Projected investment requirements ( LE Million )

National SWM activities, including: rehabilitation/close up of existing dumps, construction of composting plants, technical assistance and capacity building. Agricultural waste management program.

145 (Capital investment)

25( Capital investment) 25 (annual operating costs)

Governorates ISWMP for first priority Governorates (Cairo, Alexandria, Giza, Qaluobia, Gharbaya, Monofya, Aswan, South Sinai, Hurgada, Fayoum, Luxor).

543 (annual operating costs)

ISWMP for second priority Governorates (North Sinai, Suez, Dakahleya, Port Said, Sharkeya, El-Behira, Wadi Al-Gadid, Marsa Matrouh).


ISWMP for third priority Governorates (Ismailia, Damietta, Kafr El-Sheikh, Beni Suef, Minia, Asuit, Sohag, Qena).


* According to National Strategy for ISWM (2000) for Urban & Peri-urban areas in 26 governorates. Strategy Implementation 5.15 Once approved by the Council of Ministers, the strategy was put into implementation by several governorates with insufficient attention to public awareness, community buy-in, social consideration and public consultation. Generic tender documents were quickly prepared and released for international bids. Alexandria was the first governorate to have awarded a 15-year contract to a French group for an integrated solid waste management services including collection and disposal of medical wastes. After more than 18 months of contract negotiation, the design-build-operate (DBO) contract is fully operational, waste management services significantly improved and are greatly appreciated by the public. Landfill sites were adopted as the most appropriate disposal mechanism municipal waste. Subsequent DBO contracts were competitively awarded to Spanish, Italian, and Kuwaiti operators for three out of four districts in Cairo, two urban districts in Giza as well as Suez , Aswan Governorates and Luxor and Al-Arish Cities, for a contract duration of 15 years. The amount of DBO contracts were LE 475 million/year covering 20% of the urban population. 5.16 The EEAA with the MOLD have made extensive work in the rehabilitation/upgrading of existing dumping sites to controlled dumping sites in Cairo, Giza and Qalubiah Governorates. These Governorates contribute to approximately 50% of the total quantity of solid waste generated in Egypt. 5.17 A total of 56 municipal solid waste composting plants have been established by the Ministry of Local development costing the GOE 265 million L.E, and manufactured by the General Organization for Military Production. These plants are covering all the country, however, many of them are not operating satisfactorily, due to lack of technical expertise and operational know-how within the municipalities, as well as technical drawbacks on the design of the plants. However, the private sector has shown great interest and the Government started the privatization of the composting plants through leasing non-operating composting facilities to National private sector, at a leasing cost of up to US$1500 per month. 5.18 Using Geographical Information System (GIS), and the minimum siting criteria established by EEAA, the EEAA has identified 53 landfill sites. Each Governorate will have a landfill site, however, in practice some will not, but are expected to negotiate use of a landfill in a neighboring Governorate. 5.19 It is too early to assess the outcomes of the implementation of such strategy. However, there have been positive achievements:

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(a) The private sector is providing integrated solid waste management services, including

collection, transportation, treatment and ultimate disposal to sanitary landfills for municipal, health care and non-hazardous industrial wastes, on a design, build operate basis (DBO) in the urban areas.

(b) The international and local private sector has penetrated the market of solid waste management services at reasonable cost;

(c) The reformed sector (such as the Zabbaleen or scavengers) have now been interpreted as part for the private sector labour force as well as allowed to form a company for municipal solid waste collection and transportation of one of the four districts of Greater Cairo.

(d) Strong leadership is provided by the Governors and their staff who are committed for the success of the SWM services;

(e) Partial cost recovery has been applied through fee proportional to electricity consumption and charged on electricity bill. However, this mechanism has been terminated recently by the High Supreme Court. Currently the GOE is investigating other most appropriate cost recovery mechanism;

(f) The international donor community has rallied around the implementation of the strategy and provided technical support in a coordinated manner;

(g) Awareness for improving solid waste management services has increased at all levels; and

(h) The Ministry of State of Environmental Affairs/EEAA has compiled a series of guidelines related to the effective implementation of SWM (regarding sitting of recycling and treatment facilities, landfill design and operation, upgrading of uncontrolled dumping sites to controlled dumping sites). These guidelines represent a good beginning in establishing a sound environmental basis for waste management activities

5.20 There has also been success stories of excellent SWM practices involving the rural communities NGOs. Qena Governorate has succeeded to provide SWM services using local resources and contractors mainly as a result of the local leadership and the public -private partnership that was successful in this governorate. NGOs have created community development centers for solid waste sorting and recycling in Cairo. Menia and Fayoum governorates, in cooperation with local NGOs and private sector firms, have organized several awareness initiatives including holding workshops, do-and-do-not campaigns, and competition among neighborhoods and schools. In the Menoufia governorate, two villages, Kafr Abdo and Kafr Wahba are implementing a self-financing project for waste collection, and have covered polluted, rat infested waterway with soil, and turned it into a garden. 5.21 The Government has yet to decide on how best it should dispose of agricultural residues for which it allocated to Ministry of Agriculture an annual operating cost for LE 30 million. The Government has considered a large number of policy measures, such as using these residues as a: (i) source of energy conversion; (ii) agricultural products; or (iii) building materials. Many trials demonstration have been financed by MSEA and the Ministry of Agriculture, such as shredding, bailing and animal feeds; but none were nationally adopted due to lack of market information and cost-benefit analysis on the investments proposed. The most cost effective solution proposed by the Energy-Environment Review (EER) Study conducted by the World Bank40 showed that the present free collection of residues and the transport to a centralized land fill site or just disposed of in a desert area, is financially expensive as the costs are unlikely to be borne by the farmer. The only immediate solution is

40 Egypt: Energy -Environment Review, Consultant Report, April 2003.

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rationalizing the burning; and the use of residues of agricultural products appears to be the most cost effective use in the medium term. Collection and disposal of agricultural waste required a totally different approach and system from the one adopted for municipal waste. 5.22 The collection and disposal of waste in rural areas (in which 57% of the population lives) should be carefully analyzed, and an action plan prepared in the form of a Strategic Environment Assessment (SEA), especially that solid waste is considered a number one priority in a survey in 19 governorates41 which was conducted by the Environment Department Unit of the Social Fund for Development. In a scale of 1-8, Solid waste, hospital waste and industrial waste are the three largest priorities as shown in Figure 5.2. In view of the importance given by the rural inhabitants, and given the severity of pollution, it will not be inappropriate that a crisis emerges so that rapid curative measures are put in place. Already the Social Fund for Development (SFD) has been providing assistance through its Public work and environmental programs for collection and disposal of municipal solid waste. The Social Fund can play a major role in assisting in the development of a solid waste strategy in rural areas.

41 Social Fund for Development, Annual report 2000.

Figure 5.2

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5.23 On the other hand, there are important lessons learned as a result of insufficient planning and preparatory work that should have occurred prior to the rapid implementation of the strategy. These are summarized on Table 5.3 as follows:

Table 5.3: Lessons Learned

SWM COMPONENT

LESSONS LEARNED

Policy, Legislative, Institutional

• Adoption of a broad national SWM strategy at the most senior decision-making level has been an effective catalyst to enhanced SWM and has led to enhanced collaboration between government agencies in support of ISWM. Such collaboration should be continued for developing the institutional and legal framework.

• Risk guarantees for private sector contracts are still lacking, and therefore, the private sector has been showing little interest and in some cases withdrawing from involving in Egyptian market, waiting to evaluate performance of current SW contracts.

Planning • Local authorities that were involved in privatization of SWM services should take the time necessary to adequately prepare for the privatization initiative by carrying the necessary feasibility and sensitive analysis to determine the most efficient contractual arrangement. A lack of preparation in previous contracts has resulted in delays, unmet expectations, cancellation of bids, and high transaction costs.

• There are significant opportunities for local authorities to enhance waste management services cost-effectively, through commercializing existing public services if they have the proper knowledge base as well as the analytical and financing skills, which are still lacking.

• An Environment and Social Impact assessment should be conducted at the planning stage of the privatization process so as to avoid the environment and especially social problems that are being encountered now. Among the social issues are the change in the livelihood of the Zabbaleen community and the social resistance of the low and middle class to pay for SWM services in Cairo. An environmental issue that was created in the aftermath of privatization in Cairo is waste sorting and scavenging that sometimes take place in the operators’ bins on the streets.

Financing & Cost Recovery

• Collection of a SWM service fee on top of the electricity bill is an effective cost recovery mechanism. However, its success depends mainly on: public participation, acceptance and willingness to pay, and detailed financial analysis of the different segments of the SWM process should be undertaken to determine the tipping fee, expected revenues and the level of implicit government subsidies.

Private Sector Participation

• Privatization of SWM can result in rapid improvement in SWM services at affordable cost. At present, the operators have offered a moderate price per ton for SWM in order to penetrate the market. With the devaluation of the Egyptian pound and the fact that implementation barriers are encountered by operators, such prices will increase as part of contractual re-adjustment, as operators intend to increase their profits after settling into the market.

• The integration of the informal sector in the privatization of the solid waste sector from the planning phase, is essential for the success of the new integrated approach, as well as prevention of serious social problems.

Public Awareness & Public Participation

• A participatory approach to build a consensus in the communities, municipalities, and the government is necessary prior to the start up of the privatization process. It is equally important to take into account the social and cultural specifics of the Egyptians and influence their behavior through well designed and professional media campaigns.

• EEAA must maintain its credibility by ensuring that EIAs are prepared and are publicly disseminated during the preparation phase of any SWM project.

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Conclusion 5.24 Egypt is experiencing a rapid change as a result of the improvement of integrated solid waste management services. By taking into consideration the lessons learned from the early experience, the following actions will be required:

• The establishment of a comprehensive legal framework that set up basic principles, legally binding, and requirements to specify achievable and phased objectives and timing for integrated solid waste management enhancement. Regulatory guidelines and standards for implementation should be flexible and adaptable to local conditions with community participation. Incentive systems, cost recovery and risk guarantees should be clearly defined;

• The strengthening of the institutional framework with clear roles and responsibilities for action at

the local level, taking into account the formal sector. A regulatory function for compliance with the EIA provisions and environmental standards should be reinforced at MSEA/EEAA to protect public health, and environmental resource quality; and

• Preparation of an action plan for the collection and disposal of municipal solid waste in the peri-

urban and rural areas to deliver effective and affordable management services to the local community using simple and efficient technologies.

• Developing a cost recovery mechanism that is sufficient to cover the financial costs of the

existing and upcoming SWM contracts, as well as acceptable by the public is essential. This will assist the GOE to successfully progress in the Integrated SWM approach it overtook since 1998, and solve gradually the persistent problem of SWM throughout the country

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CHAPTER 6

INTEGRATED COASTAL ZONE MANAGEMENT (ICZM) IN EGYPT

Introduction

6.1 The economic activity in Egypt’s coastal areas is vital for the national economy. Together with the oil industry and income from the Suez Canal, tourism is one of the top three foreign exchange earners in Egypt amounting to US$4.5 billion in 2000 and projected to reach US$10 billion in 2005. 42 From 1992-1997, the tourism industry was booming, with foreign exchange receipts averaging 4.1% of GDP and tourism growing by more than 11% per year.43 After the Luxor incident of 1997 which caused tourism to plunge for two years, it revived again. Tourism in 2001 reached 4.6 million visitors with a decline from the 5.5 million in the year 2000, spending US$4.5 billion. The number of tourists visiting Egypt is almost similar to Tunisia though the latter does not have the rich cultural and historical antiquities that Egypt has. Notwithstanding the impact of oil, industry and agriculture in the costal zones, this chapter essentially deals with the cause and effect of coastal zone management related to tourism.

6.2 Table 6.1 provides information on the number of hotels, tourist villages (including the number of rooms), the number of tourists and tourist nights in Egypt for the years 2000 and 2001 as provided by the Ministry of Tourism. A comparison with the 1981/1982 is also given.

Table 6.1: Tourism data in Egypt

Item 81/82 2001/2002 Indicator Number of hotels, tourist villages and floating hotels (hotel & village)

243 1030 More than 4 fold increase compared to 81/82

Number of rooms in hotels, tourist villages and floating hotels (thousand)

18.1 117.3 About 7 fold increase compared to 81/82

Number of tourists (million) 1.4 5.3 About 4 fold increase compared to 81/82

Number of tourist nights (million) 9.6 32.7 More than 3 fold increase compared to 81/82

6.3 The coastal areas have an economic effect. Tourism brings growth especially in the construction sector, services and agriculture. The socio-economic importance of the coastal areas is further illustrated by the City of Alexandria, one of the most important industrial areas in Egypt and home to 40% of Egypt’s total industrial production and 57% of the country’s port capacity, as well as an important tourist city with incredible cultural heritage, both above and below the water. Tourism also has a socio-economic effect as it absorbs now about 12% of the workforce and could also cause further employment opportunities.44

6.4 Until the early eighties, internal tourism has been traditionally along the Mediterranean Coast between Alexandria in the West Delta to Port Said in the East Delta, where Egyptians used to send their

42 www.uktradeinvest.gov.uk 43 Arab Republic of Egypt, Poverty reduction in Egypt: Diagnosis and Strategy, IBRD report No. 24234-EGT 44 www.euromonitor.com

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vacation in summer. As a result of the Peace Process, new regions have undergone strong tourism growth: along the Mediterranean Coast from Marsa Matrouh to West of Alexandria where tourism compounds and villages, belonging to Egyptian private sectors and professional syndicates mushroomed for internal tourism; and the Red Sea Coast which provided to international tourists diverse and spectacular natural and marine resources attractions. Such growth created a tremendous pressure on Egypt’s coastal resources with numerous ecological threats. Major ICZR Issues in Egypt 6.5 The 1,200 kilometers long Mediterranean coast of Egypt contains a spectacular mixture of economic , cultural and environmental assets. While the western part of the Mediterranean coastline is relatively sparsely populated with rain-fed agriculture and grazing as major land-use as well as tourism, the coast around the Nile delta has population densities which are among the highest in the Mediterranean region. The low-lying coastal areas, around the Nile delta also have important agricultural areas. The high population density and economic development has created serious environmental impact such as pollution hot spots, indiscriminate construction in coastal areas, coastal erosion, etc. The eastern coastline is again sparsely populated with small scale agriculture, fishing and tourism. 6.6 The Red Sea coast of Egypt is about 1,800 kilometers long with relatively few traditional communities scattered along the coast. Preservation of these assets is key for economic growth in this competitive sector where environmentally sound tourism is becoming a strong selling argument demanded by an increasing number of visitors. Negative perception, due to environmental degradation, can rapidly erode the base for economic growth and fortunately, the highest political level in the Red Sea realize that if not for the spectacular marine life, many tourists would choose other destinations.

6.7 Marine and coastal biodiversity in Egypt is very rich, but under constant threat from development. Today, Egypt has 24 declared protected areas, and is planning to increase this number to 40 by the year 2017. Ten of these protected areas are on the coast, five on the Red Sea coast and five on the Mediterranean. The entire coastal line from Taba to Ras Mohammed along the Gulf of Aqaba has been declared as a natural protectorate.

Causes, Effects and Challenges in ICZM 6.8 Coastal management problems in Egypt can be divided in three fundamental categories. Each of these categories and the specific driving forces involved, need to be addressed.

6.9 The first category of ICZM issues is basically related to the development of new land in areas with little or no traditional land-use, but with high marine/coastal values, such as in the 1,800 kms of Red Sea coast. The extraordinary beauty and biodiversity resources of beaches, coral reefs, mangroves, salt marshes and intertidal zones in the Red Sea provide world class diving opportunities and have created a rapidly developing tourism industry which has become a cornerstone for the vital tourism sector in Egypt. The conflict here is mainly with nature conservation interests as development is often based on strong pressure by a single or a few demographic and tourist policies or the exploration of oil. Although driven by strong economic interests (tourism, land speculation, oil exploitation, etc.), sufficient political will, adequate land-use planning and enforcement can still produce efficient ICZM activities at the local level.

6.10 The second category of ICZM issues is common on the 1,200 Kms of the Mediterranean coast, and contains extremely complex and inter-linked issues with intensive user conflicts between thousands of years of traditional use of coastal space and resources and new development pressure. While the western part of the Mediterranean coastline is relatively sparsely populated with rain-fed agriculture and

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grazing as major land-use as well as tourism, the coast around the Nile delta has population densities which are among the highest in the Mediterranean region. The low-lying coastal areas, around the Nile delta also have important agricultural areas and have been affected by the lack of siltation and sea water intrusion as a result of the construction of the High Dam which was beneficial for regulating the water resources of the Nile and for generating electricity. .

6.11 The high population density and economic development have created serious environmental impacts such as pollution hot spots, indiscriminate construction in coastal areas, coastal erosion, etc. The eastern coastline is again sparsely populated with small scale agriculture, fishing and tourism. Driving forces for these problems in coastal areas are related to wide-ranging macro-economic policies, at least partly external, and often located far from the affected coastal strip itself but with serious downstream impacts. Examples are water resource management in the up-stream Nile, pollution from urban conglomerations such as Cairo, and agricultural practices (irrigation, use of agro-chemicals, soil erosion) in the watershed. Remedial measures would need to consist of far-reaching policy reforms, enforcement of existing regulations, and investments to improve water quality. However, lag time between putting these measures in place and positive impacts on the coast may be extensive.

6.12 The third category includes issues related to global warming and climate changes. A major factor defining the situation on the Mediterranean coast is the Nile. During the last 7,000 years, the Nile delta has been building up in a construction phase and provided great potential for socio-economic development, agriculture, fishing and other human activities, in a surrounding hostile desert environment. However, the delta is geologically unstable and during the last 150 years water regulation, erosion and subsidence have basically converted the delta to an eroding coastal plain vulnerable to climatic changes and associated sea-level rise. Most of the land within 50 kilometers from the coast is less than 2 meters above sea-level, protected only by a 1 – 10 kilometers wide coastal sand belt. Significant socio-economic values and about 15% of Egypt’s GDP is generated in these low-lying coastal areas and the implications on economic growth and societies of the 50 cm sea level rise are catastrophic.45 6.13 A preview of the implications of sea-level rise can already be observed by the present coastal erosion and retreat of the delta, which are further maximized by human interventions such as reduced sediment input, groundwater extraction and hard civil engineering work in the coastal strip. The difficult situation because of the demand for water in Egypt must be addressed by linking water policy with long-term strategic policy for restricting future development in low lying coastal areas, use of coastal protection measures or retreat. During the last decade, the Government has allocated LE 1.2 billion (see Chapter 8) on coastal protection, such as sand replenishment of the beaches in Alexandria and halting coastal erosion. In the last 5 years, the city of El Arish has seen national tourism decline. This town was known for its three colors: yellow (desert), blue (sea) and green (palm trees forming a wall on the beach and giving it a superb scenery). Nowadays all the palm trees are decaying, because of the erosion of the coastline that has been regressing to the extent that the roots of the palm trees are now exposed to the wave action. These trees were at least 10 meters away from the shoreline. Protective measures to stabilize the coastline may be part of a short-term solution to protect specific coastal assets and infrastructure, but must be part of careful land-use planning and set-back construction zoning.

45 UNEP, GRID.

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Environmental issues

6.14 The major environmental and costal issues are summarized in Table 5.2 below showing the sharp contrast between the northern and southern coast of Egypt. Among the major issues are:

6.15 Degradation of water quality due to land-based pollution is a major problem in the Mediterranean coastal areas. The Environmental Monitoring and Information Program (EMIP) conducts periodic water quality monitoring for the marine water along the entire Mediterranean coast. The latest report of 2003 showed that marine water in specific sites between Alexandria in the west delta to Damietta in the east delta and not to exceed 5 percent of the coast line, is highly contaminated with coliform bacteria with a mean probable number (MPN)/100 ml, ranging from 500 to 100,000 (permissible is 100-500 MPN/100ml). Similarly, concentrations of ammonia and nitrate, which are indications of discharge of wastewater exceeded their permissible concentrations along the Alexandria coastal line and in the coastal cities of Damietta and Port Said. Part of the Alexandria coastal line also has high levels of phosphate Already degraded water quality at the northern coast has impacted on tourism which led to the intensive development of beach resorts to extend along 300 Kms west of Alexandria where the water quality parameters are within permissible concentrations. However, popular beaches in Alexandria continue to be used for bathing for the working class which cannot afford to spend its vacation in the recreational facilities west of Alexandr ia. Industrial and urban wastewaters are being discharged into the major lakes of Burullus Marriout and Manzala . Eutrophication phenomena in the lakes and open sea have been reported and the lakes are losing their attraction as recreational resorts which negatively affect the livelihood of the local population.46

6.16 Ship-generated operational pollution and maritime accidents are a major threat to the marine and coastal environment due to the traffic through the Suez Canal, which in FY 2002-03 was transited by in 14,610 vessels, totaling 499 million tons. In addition, the oil pipeline connecting the Red Sea with the Mediterranean in Ain Sukhna (in which one of the most prestigious resorts are located) with a capacity of about 3 million barrels per day generated a lot of oil tanker traffic, mainly from Saudi Arabia in the Red Sea and to Europe in the Mediterranean. Ship-generated pollution occurs from operational (intentional) discharges from commercial vessels of oily bilges and ballast water, sewage and solid waste as well as accidental oil spills. Garbage and oil pollution by recreational boating can be a problem locally in addition to coral damages by anchoring.

46 National Environmental Action Plan, 2002.

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Table 6.2: Major ICZM issues in the Mediterranean and Red Sea

ICZM issues Mediterranean coastline Red Sea coastline Economic development

Important commercial, industrial and petrochemical development and extensive agriculture in the Nile delta.Extensive government-promoted tourism by development of new coastal land. The area of Alexandria, initially planned to attract international tourism has instead become a very popular area for national mass tourism. Economic growth limited by an “over- development” of tourism infrastructure, secondary homes used only for short periods, extensive land speculation and user conflicts. Reduced attractiveness due to pollution of coastal waters have spread development of high class secondary homes to new pristine areas west of Alexandria and the Gulf of Suez.

The Gulf of Suez produce about 60% of Egypt’s oil and is also one of the world’s busiest shipping areas. The beautiful and pristine coastlines are targeted for international tourism attracting enormous private sector investments in hotel infrastructure. About 165,000 rooms already exist and 25,000 are under construction while hotel occupancy in Cairo, Alexandria and Luxor is stagnant. Tourism in Hurgada has multiplied 20 times in a few years and Sharm el Sheikh developed from only two hotels in1987 to a world class resort area today. About 120 km of coastline between El Quseir and Mersa Alam is earmarked for considerable tourism investment with most plots already sold and about 7, 000 rooms built.

Coastal land-use Highest population density in the Mediterranean with extensive land demand for urban and tourism development. Agricultural productivity in the northern delta is declining due to soil erosion and salinization. Land reclamation is common for agricultural extension in natural wetland and for aquaculture production.

Tourism development is requiring extensive coastal space. Major natural assets and attractions, such as panoramic coastlines, beaches and coral reefs, are being encroached and replaced by mile after mile of resort constructions and degraded by numerous visitors.

Biodiversity The largest wetlands in the Mediterranean and very important for migratory birds.

Coastal/marine habitats among the richest in the world with about 200 coral and several endemic species.

Pollution from land-based sources

Severe pollution in the lakes in the delta and around Alexandria. The cumulative volume of wastewater discharged from the Alexandria area is 9 million cubic meters/day - equal to the Nile outflow from the Rosetta outlet. Bacterial contamination frequently exceeds (in about 50% of the samples)47 EU and national standards.

Pollution hot spots exist in the Gulf of Suez and local sewage discharges occurs from municipalities and tourism development along the coast.

Coastal erosion/ modification of coastline

Nile delta is an eroding coastal plain with accelerated coastal erosion (exceeding 100 meters per year in some locations), reduction of wetland size, and landward incursion of saline groundwater. The Town of Alexandria, which has grown from about 370,000 inhabitants in 1905 to more than 4 million today, extends along 100 km of coastline saturated with civil engineering work.

Land filling, dredging, building within the 200 meters set-back zone are preventing public access to the shoreline. Sixty percent of tourism infrastructure along a 30 kilometer coastal strip in Hurgada was built on filled land, directly on the shoreline or even on flat reefs

Sea level rise The threat of sea level rise on the coastal Nile delta is of global significance.48 In the Alexandria Governorate, a 50 cm rise in sea-level would flood 51% of the area, affect 50% of the population, and cause the loss of 93% of the agriculture and 65% of the industry.49

47 Environmental Monitoring and Information Program (EMIP). 48 UNEP, GRID. 49 El Raey, et al, 1995 Potential impacts of accelerated sea level rise on Alexandria Governorate, Egypt.

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Existing GOE ICZM Policies, Achievements and Challenges 6.17 Achievements towards sustainable ICZM in Egypt give a mixed picture. Until the early 1990s, the Government adopted a very aggressive development strategy aimed at promoting mass tourism both in the Mediterranean and the Red Sea Coasts. The Ministry of Housing and New Communities financed a multi-million development of full-fledged tourist villages and resorts along the western Mediterranean coastal line (such as Marakia and Marina) aimed primarily at international tourism which did not materialize. As a result, large villas and apartments were sold to the upper middle and high class of the Egyptian society at modest prices which further escalated as a result of land speculation. The establishment of the government sponsored resorts led to the construction of multiple villages managed by the different professional syndicates and private sector developers. There was no land use planning and no environment impact assessment was undertaken. 6.18 A similar situation of a different caliber was undertaken in development of the Red Sea resorts centered in and around the town of Hurghada. Development was made with private sector participation which was provided in 1993 with incentive of a 10-year tax exemption, low cost land and ownership right for foreigners. This has subsequently encouraged the private sector to invest in more that 700 projects. In the 1980s, the Tourism Development Authority under the Ministry of Tourism was providing investment opportunities at the Red Sea and Aqaba Bay. The construction of the first hotels built in Hurghada did not have any setbacks, and have destroyed the coastal coral reefs. They were not subjected to any EIA. Subsequently, the TDA adopted EIA guidelines for the establishment of tourist resorts which were followed by operators. As of today, no follow up is made on the mitigating measures after construction of large scale hotels and resorts were completed. 6.19 By the mid nineties, the Government adopted a different policy for sustainable tourism supported primarily by USAID under its Red Sea Sustainable Tourism Initiative (RSSTI).50 This policy calls for the conservation and sustainable use of the Red Sea land and marine resources. Sustainable Tourism would promote environmental conservation and promote the sustainable use of natural resources and be also a catalyst for economic and local community development. As a result, TDA prepared land use plans for 100 kms new pristine areas and environmental management system being implemented in selected Red Sea tourism properties leading to environmental improvements. Under the GEF-financed Red Sea Project, traffic marine and warning systems in order to protect the coral reefs, were put in place by the International Marine Organization to control traffic in the Red Sea. 6.20 Today, the importance of coastal areas for the economy of Egypt is also recognized by local governorates, NGOs, local communities, the hotel industry and tour operators. Everybody realizes now that without the conservation of the living tapestry of corals and exotic fish, international tourism will not grow. On the other hand, the rapid development of coastal land still persists, resulting in a continuous degradation of coastal areas and an ever increasing threat to pristine areas. Concrete and sustained management actions have not been implemented at a speed required by present development. To be successful, an ICZM initiative needs to become operational and sustainable over a long period of time, and provide a mechanism to encourage participation and attract resources from stakeholders. The political will to implement the protection of Egypt’s precious coastal resources and implement ICZM must be translated and reflected by actions and resource allocation.

50 Egyptian Environmental Policy Program, USAID.

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6.21 There is a general recognition that ICZM should address environmental and developmental challenges in the coastal area in a holistic way. The fundamental purpose is to maintain, restore or improve specific qualities of coastal ecosystems and associated human societies on local, regional or national scales. A simple four order framework has been described by Olsen51 (see Box 5.1) which is being used to describe the ICZM process in Egypt. The major goal is to reach the fourth order level, but the discussion below shows that Egypt still remains in the first order phase, trying to establish the enabling conditions for a national ICZM program. This is quite common, and according to Sorensen, the majority of nations lie primarily in the first order outcomes. It is not surprising that Egypt still remain in this category, the important challenge is for Egypt to complete these first order measures in an incremental and orderly manner, and trying to balance now the tremendous development in coastal areas with environmental conservation through voluntary compliance with the developers and the hotel industry. In case of non compliance, MSEA should make public the name of violators, and apply subsequent terms of law actions.

Enabling Conditions

6.22 Constituency: The Egyptian Environmental Affairs Agency (EEAA) is responsible for Egypt’s Sea and Coastal Zone policies, while different authorities are responsible for their implementation. The Ministry of Defense and EEAA are the main controlling and monitoring agencies. The Ministry of Water Resources and Irrigation with its Shore Protection Authority is responsible for shoreline management. The Ministry of Transport is responsible for maritime transport and international shipping. The Tourism Development Authority, Fisheries Development Authority and Egyptian General Petroleum Corporation are among the main users of coastal zones. The Governorates have an important role in managing coastal areas at the local level. There is serious fragmentation within all institutions, and it is not clear which agency is responsible for what. Recently there has been increased coordination between the Ministries of Petroleum, Tourism, and the Governorate of South Sinaii concerning oil exploraiton. These has been also cooperation between the Coastal Protection Authority and EEAA for the protection of the Mediterranean coastline against erosion and infraction by developers. 6.23 Formal governmental mandate with necessary authority: The Environmental Law No.4/1994 provides important provisions for ICZM as well as provisions for Environmental Impact Assessments (EIA). Half of the articles of this law deal with protection of marine resources. The law is quite detailed on certain coastal aspects, such as pollution from ships which is covered by more than 20 articles; it is rather unspecific on others. Pollution from land-based sources and near-shore land use, for example, is

51 Stephen. B. Olsen, Frameworks and indicators for assessing progress in integrated coastal management initiatives, Ocean &

Coastal Management 46 (2003), p 347-361.

Box 1: Framework for Evaluating Progress in ICZM (Olsen, 2003)

a) First Order – Enabling Conditions:

1. Constituencies that actively support ICZM initiative

2. Formal governmental mandate with necessary authority

3. Resource allocation 4. A plan of action 5. Institutional capacity

b) Second Order – Changes in behavior 1. Changes in behavior of institutions and interest

groups 2. Changes in behavior affecting resource use 3. Investment in infrastructure supportive of

ICZM policies and plans c) Third Order – result harvest or actual improvements

1. Improvement in coastal ecosystem qualities 2. Improvements in coastal societal qualities

d) Fourth Order – sustainable coastal development 1. A desired and dynamic balance between social

and environmental conditions is achieved

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covered in only six articles. Passing the Environmental Law sends important signals about the government policy regarding coastal development, but so does the implementation and enforcement of the law. Discrepancy between the objectives of the law and the actual impact in the areas regulated is wide which highlights the need for strengthened enforcement capabilities. Law 102/1983 related to the natural protectorates and to the management of natural resources is being stalled as it only applies to the coastal protection of the Mediterranean sea 6.24 Resource allocation: Most coastal zone projects in Egypt have been financed by the international community with minor, often “in-kind,” governmental contributions. This is a common phenomenon in the region as a whole and a general major weaknesses of any ICZM initiatives for two reasons. First, it is probable that coastal zone management has not yet gained sufficient political acceptance and status, failing to generate sufficient government resources for effective implementation. Second, as international financing is something that is almost expected in coastal zone management, countries tend to divert their funds to other uses. For example, regular funding for all protected areas in Egypt52 consist of the modest amount of LE 2.7 million Egyptian pounds per year. For the establishment of three protectorates in the Gulf of Aqaba a total of LE 18 million and € 12 million from the European Commission (1986-2001) was assigned. In 1986, the Government established the Tourism and Environment Services Fund (see Chapter 8) to finance inter-alia, the Ministry of Tourism plan from a 6.25% imposed tax on the sale of the airline tickets sold locally. Additional fund could be raised for ICZM activities, for example through an increase in entrance fees in protected areas. Unfortunately, Egypt’s marine protectorates are only capturing a small portion of their potential, desperately needed revenues.53 6.25 Plan of Action: The “Integrated Coastal Zone Management in Egypt – Towards an Egyptian Framework ICZM Programme” was developed in 1996. Within the framework ICZM Plan, four national strategies would be developed on shore protection, coastal land-use, coastal and marine water quality, and coastal and marine resource preservation. Although priority issues in ICZM are scientifically well known and documented, the National ICZM Plan has not been finalized and management actions are lacking.

6.26 At least three local ICZM plans have been developed. Under the GEF-funded Red Sea Coastal and Marine Resource Management project a Coastal Zone Management Action Plan for the coastline from Hurgada to the Sudanese border was finalized in 1998. A Coastal Area Management Program (CAMP) project in Fuka-Matrouh was done between 1992-1999 which included an ICZM plan for a 70 – 100 km long area of the Western Mediterranean coast. The Gulf of Aqaba Environmental Action Plan was prepared by the Government of Egypt, the Egypt Private Sector, the EU and the World Bank between 1997 and 2000. The others are being initiated by EEAA for Suez and Alexandria. USAID has been supporting the Tourism Development Authority within the Red Sea Sustainable Tourism Initiative (RSSTI) to strengthen their environmental capacity to manage tourism development. Recently a US$ 1.7 million contract has been signed between Delft Holland and the Ministry of Water Resources and Irrigation MWRI and Coastal Protection Authority for the coastal zone management of the north coast of Egypt in order to conduct research on coastal erosion, pollution prevention, and resorts (tourism) development management. EEAA is also preparing an integrated management plan for controlling land –based sources (LBS) of pollution.

6.27 Institutional capacity: The Environmental Law assigns the Egyptian Environmental Affairs Agency (EEAA) as the lead agency for ICZM in Egypt. A National ICZM Committee was set up by a Ministerial decree in 1994 amended by the Ministerial Decree number 200/96 to include sixteen top rank representatives of all concerned ministries, e.g. EEAA, Ministries of Public Works and Water Resources, Housing, Development and New Communities, Agriculture, Maritime Transportation, Tourism, 52 First National Report of Egypt to the Convention on Biological Diversity. 53 Egyptian Environmental Policy Program Support Unit, Red Sea Marine Protectorates Revenue Generation Options, 2003.

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Planning, Scientific Research and Technology, Defense, Local Government, Electricity and Energy and NGO representative. The ICZM committee is a coordinating body without major regulatory/administrative power or funding to actively promote ICZM issues. With its 14 mandates, it was, inter-alia, expected to coordinate all coastal activities between the competent authorities towards ICZM, drafting guidelines, preparing an ICZM plan, studying and evaluating all major projects to be executed in the coastal zone, and resolving conflicts between ministries or other governmental bodies while reaching a final decision. The ICZM committee has reportedly met about ten times in eight years, and is presently inactive. The inactivity of this inter-agency committee means that the policy dialogue and consistency analysis between governmental stakeholders with different visions of the use of coastal areas is reduced, with apparent risk for continuous single sector and fragmented approaches to coastal management. The Committee’s responsibility to carry out EIA review of development projects in coastal areas is not implemented.

Behavioral changes

6.28 Changes in behavior of institutions and interest groups: The goal of ICZM is to achieve sustainable use of coastal resources. Economic sectors may have other goals, but at least for the tourism sector, a well-balanced development protecting the basic foundation assets such as beaches, attractive coastline, clean water and coral reefs should be conceived as a win-win strategy. As a consequence, mainstreaming of ICZM objectives into the tourism sector has shown some success in awareness building. In the Red Sea, at the highest political level, tour operators and many developers are aware that without the natural marine and coastal resource, a large fraction of the visitors would go elsewhere. The Governor of South Sinai has imposed a zero tolerance policy for collecting and/or destroying coral reefs. 6.29 Changes in behavior affecting resource use: A concrete example on mainstreaming environmental considerations into the tourism sector is the different construction pattern consisting of low-rise, bungalow type resorts in Sharm el Sheikh. Extensive use of floating docks instead of fixed constructions avoids alteration of the coastline, and protects near-shore corals. The new tourist village of El Gouna, (north of Hurghada) balances both development and environment protection, and is fully managed by the private sector. 6.30 Investment in infrastructure supportive of ICZM policies and plans: Actions to combat land-based industrial pollution have advanced and, according to EEAA a total of approximately LE 360 million Egyptian pounds have been invested in pollution abatement at 34 industrial establishments polluting the Nile in 2000/2001. GEF is funding the construction of an artificial wetland at Lake Manzala as a demonstration project for sewage treatment. The Tourism Development Authority (TDA) is financing infrastructure development for tourism, and has the authority to acquire and sell tourism development lands and retain the income as well as charge fees for assessing and monitoring environmental impacts of tourism development projects. The agency has established an environmental unit to encourage developer compliance, and promote investments in a more environmentally-sound infrastructure. GEF is also considering financing an integrated water and land management for Lake Marioutt as part of the World Bank financed Egyptian Pollution Abatement Project II.

Improved coastal conditions

6.31 There are still few signs of general improvement of environmental conditions in Egypt’s coastal areas. Undeveloped coastal areas, agricultural land and natural habitats are rapidly urbanized or converted through tourism development, water quality degradation is becoming critical, in particular in coastal lakes and nearshore waters, serious coastal erosion is affecting the Mediterranean coastline, and biodiversity protection remains an issue where improvement is needed. The significantly increased

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marine fisheries production on the northern coast, from about 10,000 tons per year in the late 1960s to about 80,000 tons in the early 2000s, should not be interpreted as a sign of environmental improvement. On the contrary, it is probably due to high discharge of nutrients from urban wastewater and agricultural drainage. Conclusions

6.32 Based on the analysis of the present state of ICZM, it is concluded that Egypt is still in the early stages of sustainable development for its coastal areas. There has been some achievements in trying to balance development with environmental protection in Gouna and Sahl el Hassheesh (north and south of Hurghada). Egypt still remains in the first order stage of putting in place enabling conditions, with certain success in changing behaviors, such as mainstreaming environment into the tourism sectors, particularly in the Gulf of Aqaba (Sharm El Sheikh and Ras Muhammed). These enabling conditions should be completed first and followed by an incremental approach towards achieving the higher measures. The focus should be on pristine areas that have not been touched by development. These areas are the coastline between Salloum on the Libyan borders and going eastward to the city of Marsah Matrouh. In the Red Sea, still some pristine areas are from Abou Souma to the Sudanese Border, and along the Gulf of Aqaba. A summary of challenges regarding enabling conditions and behavioral changes is provided in Table 6.3

6.33 The recommendations of achieving higher measures, are explained in Chapter 9, and will include the preparation of strategic action plans at the policy and program levels for any new pristine coastal area, the consolidation of the institutional and legal framework, and the initiation of a cost recovery mechanism capable of ensuring the conservation of Egypt’s natural resources.

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Table 6.3: Issues and Actions on ICZM in Egypt

ISSUES Actions Constituencies that actively support ICZM initiative

Increase awareness building among ICZM stakeholders to encourage their active participation, support and contribution to local ICZM initiatives

Formal governmental mandate with necessary authority

Enforcement of existing regulations complemented with non-regulatory policy instruments (economic incentives and awareness building) and voluntary agreements

Resource allocation

Establish local funding mechanisms to reduce the dependence on external donor support which does not allow a sustainable implementation of national ICZM goals

Plan of action Conclude the national ICZM plan and start implementation.

Fir

st O

rder

– E

nabl

ing

Con

diti

ons:

Institutional capacity

Strengthen existing institutional setup and concentrate ICZM responsibilities under one agency. The National ICZM committee should be reactivated and its mandate refocused.

Changes in behavior of institutions and interest groups

Improved land-use planning of development in coastal areas with valuable biodiversity resources or vulnerable to erosion and sea-level rise

Changes in behavior affecting resource use

Far-reaching policy reforms required to reduce land-based pollution from point and non-point sources (eg. use of fertilizers in agriculture)

Seco

nd O

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– C

hang

es in

be

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or

Infrastructure investment supporting ICZM policies

Major investments in water pollution abatement and coastal erosion protection required

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CHAPTER 7

Environment Policies and Institutions

The Evolution of the Environment Policy Process

7.1 Environmental policy formulation in Egypt has been an evolving process which has been fluctuating with time, modified with major unexpected environmental events and often influenced by the leadership of senior decision makers. Environmental policies in Egypt have always been embedded as part of sector policies by a number of line ministries including the Ministries of Health and Population, Agricultural and Land Reclamation, Water Resources and Irrigation, and others. There is no effective mechanism, other than the Council of Ministries, for coordinating the policy(ies) formulation processes. In some cases, environmental policy decisions are made at the highest levels of the government. This is the exception, however, rather than the rule, for there are only a few examples where environmental policy decisions were taken at the highest levels of the government and usually to address an environmental crisis such as the air pollution episodes over Greater Cairo.

7.2 Four milestones could be distinguished in the evolution of the environmental policy process in Egypt:

NEAP of 1992;

MSEA Policy directives in 1998;

NEAP update of 2002; and

President Mubarak’s statement of May 28, 2002.

The National Environment Action Plan of 1992

7.3 The NEAP of 1992 is the first public document that provided the tools for ensuring that “If Egypt’s economic growth becomes a sustainable one … protecting the environment, among other aspects, is one of the key imperatives imbedded in the concept of sustainable development.” The main trust of NEAP of 1992 was to improve the incentives for environmental management through appropriate pricing of inputs to encourage conservation, recovery and recycling. A number of actions, policy and institutional as well as investment programs in water and land, air quality, solid waste management, protecting Egypt’s heritage, and strengthening environmental institutions were envisaged.

7.4 A rapid assessment of the results of the actions proposed in NEAP of 1992 shown in Table 7.1 demonstrated a strong emphasis on investments and institutional strengthening with a neglect of implementing the policy actions particularly those related to pricing of water and energy and development of market-based instruments for environmental compliance. The only policy actions that were completed were the reduction of lead in gasoline (which has in fact been eliminated), establishment of full coverage system on cost recovery for solid waste in the cities of Cairo and Alexandria and establishment of licensed companies in solid waste management.

7.5 In the water and land sectors, prices of fertilizers and pesticides were increased; however, no progress was achieved in imposing water charges in the agriculture and industrial sectors. As recently as May 2004, a Presidential decree was issued to establish the Holding Company for Drinking Water and

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Sanitation with the objective of purification, desalination, transport, and distribution of potable water and collection, treatment and safe disposal of wastewater as well as setting up a clear water pricing strategy based on levels of water consumption.

7.6 Substantial progress was achieved in the solid waste sector as anticipated in NEAP. This was due to a concrete policy development implementation consisting of a combination of policy, institutional, information and investments. Using an improved “solid waste management formula” that could be owned by all stakeholders, many inter–sectoral issues could be resolved.

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Table 7.1: Review of the Progress of NEAP of 1992

Policies & Institutional Actions Status Investment Programs Status

Water & Land Water & Land Increase fertilizer & pesticide prices. Pollution control in large and small scale industries 1997.

Introducing system of water charges & water rights. Pollution control in small scale industries.

Increase water charges to industrial & large users . Improvement of urban water supply, sanitation & sewage disposal. Operating water supply & wastewater treatment plans on commercial basis. Reduce ongoing discharge of untreated wastewater.

Surface water management. Quality management of ground water resources. Information system Developing to improve planning.

Monitoring information systems aquifers surface waters. Master planning to develop management options.

Preparation of peri-urban maps for soil and land use. Developing a land use plan by dividing Egypt into environmental regions to facilitate planning, monitoring, assessment & follow up of projects.

Pilot project for El-Khanka dune stabilization.

Multi-purpose tree planting pilot project.

Research farm for drainage and sewage reuse.

Air Quality Air Quality

Total phase out of energy subsidies.

Introduce tax on gasoline after 1995.

Reduce lead in gasoline. Certificate stating vehicle met required emission standards.

Improve policies which facilitate traffic flow. Reduce import duty on vehicle spare parts. Set lower import duties on vehicles with low emissions.

Solid Waste management Solid Waste management

Full coverage for management of municipal waste. Specific to each type of urban, peri-urban, and rural. Earmarked surcharges on environmentally hazardous products. Industrial hazardous waste management system development. Full coverage of industrial hazardous waste treatment and hospital wastes. Elaboration of municipal solid waste management plans.

Establishment of licensed companies for waste management. Establish improved collection systems for urban areas.

Creation of guidelines and strategies for waste management. Establishment of improved collection systems for rural areas.

Equipment for additional composting plants.

Incineration of infectious hospital waste, before 1995.

Decomposition of municipal and agricultural waste for generation of biogas and compost.

Protecting Egypt's Heritage Protecting Egypt's Heritage Use tourism revenue for protecting and conserving the resource. Operational autonomy for the management of each site. Marketing and revenue raising plan for several of protected areas and cultural heritage sites.

Preparation of comprehensive management plans for high priority cultural heritage sites.

Introduce regular monitoring of site condition. Natural protected areas management plans.

Train staff in surveying, drawing, recording, and conservation. Strengthen the oil spill response capability of Costal Shores and Marine areas.

Develop ties with NGO's and private sector to promote conservation of the cultural and natural heritage.

Strengthening Environmental Institutions Strengthening Environmental Institutions

Strengthen inspection and enforcement capabilities. Strengthen the existing institutional set -up for environmental management through creating a powerful central executive body. Creating a Policy Planning Unit. Training Education.

Completed Partially Completed Not Completed

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The Policy Directives of Ministry of State for Environmental Affairs

7.7 In 1998, the newly-appointed Minister of State for Environmental Affairs issued a seven-point policy directives framework. These policy directives were at a relatively high level of generality and included:

• Fostering partnerships, coordination and collaborative work between different segments of society at the national level;

• Fostering partnerships at bilateral, regional and global levels;

• Implementation of Law 4/1994 for the protection of the environment;

• Development and upgrading of natural protectorates and protection of biodiversity;

• Support to institutional capacity building in EEAA, its regional branch offices and environmental management units;

• Support to sustainable environmental management systems; and

• Operationalization of market based instruments in the field of environmental protection.

7.8 These directives represented a very good start towards establishing an environment management system based on specifics programs and outputs that would enable the Ministry of State of Environmental Affairs (MSEA) and Egyptian Environment Affairs Agency (EEAA) to set specific targets and report the achievements of these targets. Reporting on progress of each of these directives was described in two annual reports for 1999/2000 and 2000/2001. No additional reporting was subsequently published. Given the interest of the Minister in developing policies, USAID-financed in 1999 the first environment structural adjustment program, the Egyptian Environment Policy Program (EEPP) that provided a US$170 million cash transfer to the Egyptian Government for developing specific policies by the Ministries of Petroleum, Tourism and Environment. These policies include inter-alia the promotion of economic instruments for environmental management; support the decentralization of environmental responsibilities, inspection and voluntary compliance and strategic environmental planning. With such assistance as well with the DANIDA-funded organization Support Program, MSEA/EEEA have now a number of studies and guidelines that will enable them to take the necessary actions, provided they have the human resources and the right skill mix which are still a drawback that need to be addressed.

The NEAP Update of 2002

7.9 Parallel to the policy directives, MSEA initiated in 1999 an update of NEAP of 1992, by EEAA’s Capacity 21 Unit, with sponsorship from UNDP. Both the Prime Minister and Minister of State for Environmental Affairs note in their forewords that the goal of sustainable development linking development with environmental protection is key to Egypt’s future. NEAP process employed “a participatory, consultative, gender anchored, holistic planning modality to create an enabling environment” and received the approval of all affected line Ministries; its status as an ‘Action Plan’ confirms this view.

7.10 The updated version is designed to represent Egypt’s agenda for environmental actions over the next 15 years. It is also designed to complement and integrate with existing sectoral plans for economic growth and social development. It can be viewed as an impressive diagnostic document with qualitative analysis of the environmental issues but with little quantitative analysis for setting priorities. NEAP consists of a plan of strategic actions as stated in Annex 7.1, covering the period to 2017 and, in some cases, beyond. Strategic actions in NEAP of 1992 are also reflected for comparison but have not been

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followed up or commented upon in NEAP update so as to make use of the lessons learned before proposing new strategic statements. In contrast to NEAP of 1992, its update did not provide any cost estimate of the strategic actions proposed, which could make its implementation difficult. Rather, NEAP cites a large number of financing sources both external and internal, but defers the preparation of concrete targets and detailed plans to “a near future” along with appropriate legal instruments to support implementation.

7.11 In approving NEAP update of 2002, EEAA Board of directors reiterated that “The integration of the environmental dimension in all national policies, plans and programs”54 is Egypt’s strategic environmental objective. In fulfilling NEAP recommendation, the Board approved a five-year action plan (2002-2007) that specifies in table 7.2 the policy measures to be implemented through 14 programs as well as the projects to be implemented together with the necessary legislative developments and in collaboration of the sector ministries and institutions both public and private. Eleven programs are under implementation. This action plan intends to institutionalize the strategic planning within the Ministry and the Agency. Recently EEEA has been focusing on new policy directives, emphasizing more the implementation of environmental projects that a have sound impact on population health and foster new foreign investments in the environment through Egyptian private sector participation.

Table 7.2: EEAA Five-Year Action Plan 2002-07

Programs Policy Measures

1. Integrated Solid Waste Management Achieve sound management of solid waste and healthcare waste in all governorates of Egypt.

2. Protecting the River Nile and Water Resources Improve quality of water resources by controlling industrial waste.

3. Improve Air Quality of Greater Cairo Reduce concentrations of dust and lead in Cairo air. 4. Environmental Education, Training and Awareness Increase public awareness of environmental problems and

develop human resources within the field of environment. 5. Environmentally Friendly Industrial Cities Identify environmentally friendly cities in order to

increase competitive advantage. 6. Environmentally Friendly Technology Transfer Promote the use of environmentally friendly technology

in all economic activities. 7. Environmental Information Systems Enhance the use of information technology, especially in

the field of environmental management. 8. Environmental Management Provide the support for the adoption and implementation

of integrated systems for environmental management in various activities.

9. Nature Conservation Conserve national biodiversity. 10. Capacity Development of EEAA and RBOs Support the institutional structure of environmental

management at the national level. 11. Environmental Financial Mechanisms Facilitate funding of environmental projects.

Attract local investment to the environmental sector. 12. Green Area Expansion Support governorates and NGOs in establishing nurseries

and carrying out greening projects. 13. Environmental Inspection Encourage institutional commitment to environmental

laws. 14. International Environmental Commitments of Egypt Implement Egyptian commitments to environmental

agreements at international and regional levels.

54 EEAA Web-site (www.eeaa.gov.eg)

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7.12 One challenge for institutionalizing strategic planning will be to analyze the cost and benefit of the above actions proposed to justify the priorities for intervention before putting them in operation through specific programs and projects. The conclusions and the recommendations of the CEA were designed to provide details required for concrete policy development and implementation for the first three major EEAA policy measures related to air quality, water quality, and solid waste management.

President Mubarak’s Statement on Sustainable Development

7.13 A promising step towards the realization of a stronger GOE commitment at the highest levels materialized in May 28, 2002 when President Mubarak called a top level ministerial meeting to discuss the Environmental Strategy for Egypt for the coming twenty years, (up to 2017). The meeting was attended by the Egyptian Prime Minister, in addit ion to 11 ministers and 4 governors. The President indicated that the “Environment is not a luxury business, but it is the protection of our natural resources for our generations and other generations to come.” He also reaffirmed the integration of national efforts to modernize the agriculture, industry, and service sectors, and that the “environmental dimension should be integrated into the modernization process.” Clear Presidential directives ensued as a result of the meeting. The most important of those were:

• Strong commitment towards the finalization of the fresh water improvement Program through controlling industrial discharges according to the set phased plan presented to the President, and stricter monitoring of all what may influence the quality of drinking water;

• Development of a plan for air pollution abatement and consistent monitoring of air pollution levels in big cities;

• Stress on the importance of environmental impact assessment studies for all projects, and prohibiting the establishment of any project that may negatively impact the environment, especially near tourism development areas and coastal zones; and

• Developing the monitoring and follow-up bodies and units to ensure the rapid implementation of programs, environmental laws, regulations and international environmental protection protocols and conventions.

7.14 The President’s statement was unequivocal about sustainable development and the need to integrate the environment into the development policies, projects and programs. It also sets the priorities of intervention to which the Government should be committed. Although the President’s Statement was followed up by ministerial meetings and establishment of inter-sectoral committees, a holistic plan needed to be prepared to put in action the President’s directives.

The Environmental Legal Framework

7.15 Over the past four decades, Egypt has adopted a substantial body of environmental and environment related laws, decrees and regulations addressing various aspects of environmental protection and natural resources management. .Environment protection was included in several sectoral laws which authorized the ministries to monitor their own polluting industries, rendering therefore their application of these laws to be dysfunctional as each sector ministry (Petroleum, Electricity, industry and Water Resources and Drainage) became judge and party at the same time The Table in Annex 7.2 presents principal environmental laws, decrees and regulationsIn 1983, and just after the establishment of EEAA in 1982, Law No.102 for Protected Areas and Natural Resources Management was enacted. However, it

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wasn’t until 1994 that a unified law dealing with all the media of the environment (Air, Land and Marine Water) and with the various sources of pollution was promulgated.

7.16 The enactment of the Environment Protection Law No. 4 of 1994, which was prepared in 1989, addressed several significant legislative gaps in the legal framework for environmental protection neglected by the earlier sector laws such as water pollution, hazardous substances and waste, and waste management laws. It also introduced for the first time the notion of development. It has, however, acted a compromise to satisfy all the parties concerned without giving the real authority to MSEA and EEAA to enforce the terms of the law. For example, the Ministry of Water Resources and Irrigation is still responsible for implementing Law No. 48 of 1992 on the protection of the Nile and its waterways which was not cancelled as originally envisaged in the earlier versions of the draft law, and as such, MSEA/EEAA has little control, if any, on land pollution and on water quality. In addition to that, some standards such as the pollution control standards of Law 48/1982 are too stringent to be attainable, and thus may be unenforceable.

7.17 The law restructured EEAA, and provided it with broad authority, among other things to regulate air pollution, control hazardous substance and waste management, and control discharges to marine waters. Furthermore, the Law gives EEAA an array of tools for implementing and enforcing these provisions, including traditional regulatory controls based on command and control (e.g., emissions’ standards for air pollutants), inspection and punitive enforcement (e.g. penaltie s, closures, and imprisonment authorities); and other voluntary tools providing incentives such as economic and financial instruments, establishment of an Environment Protection Fund, an Environmental Impact Assessment system (EIA), and compliance monitoring system (e.g., record keeping requirements),. One positive unprecedented aspect of this law is that it allows any citizen, organization and/or any moral person to report and challenge at court any violator of this law including sector ministries and governorates.

7.18 The record in Egypt for implementing and enforcing environmental laws was not very successful. With limited exceptions, violations of environment-related laws went undetected and requirements went often unendorsed especially with the public sector polluting. The main impediments to effective and meaningful implementation and enforcement of environmental and environment-related laws are due to the fragmentation among regulatory institutions, licensing agencies, police authorities, etc, at both the national and Governorate levels of government, to the effect that no single institution can take enforcement actions effectively. This fragmentation of responsibilities necessitates a high degree of inter-agency coordination for effective management; yet, few formal mechanisms for such coordination exist,

7.19 In addition, Law No. 4/1994 requests the inspectors of EEAA and other administrative concerned authorities to report to the authority to which they belong any violations of the provisions of the law, which in its turn shall instruct the establishment owner to rectify such violations If he fails to do so within 60 days, EEAA in in co-ordination with the concerned authority shall then take the necessary legal procedures , i.e., reports the violation to the police, presents it to the district attorney, and, where the case warrants further action, brings a legal action to court. In order to improve its performance, the Ministry of Interior has introduced changes in the organizational structure of its Environment and Surface Water Police, as well as in the responsibilities of their general departments to become a specialized authority responsible for the protection of the environment, in its broader sense. The Egyptian legal system doesn’t however, with its tremendous backlog of cases and lack of experience with complex environmental issues, support timely and effectively the enforcement of the law.

7.20 The MSEA is considering amendment to the existing law in order to mitigate some of its weaknesses. EEAA has already prepared, with the participation of and in full consultation with concerned authorities involved in the inspection and enforcement of environmental regulations, and after 5 years of practical enforcement of Law 4/94 (after the completion of the grace period of 3 years granted by the law

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to existing establishments), a detailed study on the weaknesses, gaps, procedural impediments, overlapping aspects with other enforcement mechanisms and priority sections to be amended in the executive regulations. For example, pollutants concentrations will be substituted for pollution loads in order to overcome dilution by many polluting enterprises. Compliance monitoring will be decentralized at EEAA regional branches and the environment management units that were established in the Governorates will also have a monitoring and reporting role. Burning of wastes will be prohibited, and a penalty for lack of submission of an environment impact assessment and failure to keep yearly environmental records in each establishment, will be imposed.

7.21 Despite its weaknesses, the enactment of this law had many positive impacts. It allowed civil society to have a voice heard in the press, in the media and in public hearings concerning environmental issues. It also enabled NGOs to monitor compliance and even win court cases against the State. It provides international donors with legal assurance for financing environmental investments. It also created a market for local and international consultants that specialized in environmental impact assessment and in the preparation of compliance action plans for polluting industries that requested a grace period for originally complying with the terms of the law. It introduced the provision of environmental services in the private sector particularly in water, wastewater, solid waste management and industrial pollution control.

Environmental Impact Assessment (EIA) System in Egypt

7.22 The legal basis for EIA is established by Law No. 4 of 1994. It is implemented through its Executive Regulations, issued by Prime Ministerial Decree No. 338 of 1995. These came into full force in 1998, at the end of the grace period granted by the law to existing establishments at the time of enactment of the executive regulations.

7.23 The Law No. 4 and its executive regulations require that an EIA be prepared for all new projects as well as the expansions and renovations of existing ones. Provisions within the law also cover pollution control of existing activities, including monitoring of environmental impacts by owners of activities who have to keep environmental registers as specified by the Egyptian Environmental Affairs Agency. EEAA is responsible for checking the accuracy of these in coordination with the Competent Administrative Authorities. Sectoral ministries and Governorates are the Competent Administrative Authorities for EIA in Egypt, as they possess the executive powers in relation to development authorization. Additionally, they are required by Law No. 4 and its executive regulations to conduct the screening of projects. The Central EIA Department of EEAA is responsible for supervising the screening process, managing the review of EIA reports (either by undertaking reviews itself or by assigning independent bodies or individuals to do so), taking decisions on the acceptability of EIA reports, and giving an opinion on the development and proposals for mitigation measures. EEAA also has the responsibility for issuing EIA guidelines.

7.24 General guidelines for EIA were issued by EEAA in 1995 with assistance from DANIDA. These describe in detail the procedures for EIA as identified in Law No. 4 and its executive regulations. They describe the screening method which is based on three lists of project types: white list projects with minor environmental impacts; gray list projects which may result in substantial environmental impacts, and black list projects for which complete EIA is mandatory due to the magnitude and nature of their potential impacts. The guidelines include two screening forms, form A for white list projects and form B for gray list projects. For gray list projects, EEAA may require a “scoped EIA,” whose scope is specified by EEAA on the basis of the information presented by the developer in form B. These general guidelines also include a general outline of the content of a full EIA report, and brief sectoral guidelines which define the content of EIA reports for establishments that need full EIA. Both the Support for Environmental Assessment and Management (SEAM) project funded by the UK Department for

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International Development (DFID) and the Organization Support Program (OSP) funded by DANIDA assisted EEAA in the development of sectoral guidelines in the forms of terms of references to be provided to consultants and operators.

7.25 Although the EIA process has been anchored as part of the issuance of permit system by the competent authority, the EIA system revolves around a project and does not include the preparation of regional/sectoral environment assessment as in the case of establishment of new industrial zones or cities.

7.26 Several ad-hoc regional/strategic environmental assessments have been conducted to address key environmental issues (e.g. coastal zone development, industrial development in Helwan, relocation of industry from Gamaleya Islamic quarter, the El-Kawthar industrial city in Sohag and part of the Gulf of Suez development). These have been funded by international various sources, and some have been influential in changing development policie s and plans. The coastal zone assessment for example resulted in EEAA development guidelines which are being used effectively.

7.27 The EIA system suffered at the early stages of its implementation from some administrative and management shortcomings such as the centralization of the decision making in EEAA central organization and the lack of specialized trained human resources. As of 2002, the regional branch offices of EEAA (RBOs) have been delegated the responsibility of reviewing of Category A projects (white list projects), and it is planned to delegate Category B projects (gray list projects) to fully established and staffed RBOs. The system continues however to suffer from other shortcomings : (a) lack of penalties for violations of the EIA requirements for an operator that did not prepare an EIA, (b); (b) poor technical capacities of the relevant licensing authorities for screening and approving the EA reports; (d) perceived lengthy life cycle for EIA approval which could be extended to two years instead of 60 days, mostly in case the applicant does not provide adequate documentation or respond to EEAA comments and observations in a timely manner ; (e) emphasis in reporting on the performance of the EIA system on quantity rather than quality of the EA reports; (f) disconnect between the EIA system and the monitoring and follow up on the environment mitigating measures after the EIA report is approved, and (g) absence of EIA report for National and/or Mega projects unless they are co-financed by international donors or by foreign investors. 7.28 In 1999, the Mediterranean Environmental Technical Assistance Program (METAP) conducted a thorough assessment of the EIA system to assess its compatibility with international norms, and develop an action plan for further improving the quality and effectiveness of the state system so as to achieve standards of best international practices.55 Annex 7.3 provides a comparison between the Egyptian EIA system and that of the World Bank environmental assessment as described in its operation policy OP 4.01.

7.29 Many of the features of the Egyptian EIA system are generally compatible with the corresponding features of World Bank operational policy (OP 4.01). However, there are differences in certain features, which are proposed in Table 7.3. The most fundamental one is related to the absence of consultation and public participation in the EA preparation and review process.

7.30 Public participation is not mandatory in the Egyptian EIA system, and as a result is often ignored. Public hearings are held mainly only for overseas funded projects. In general, EIA reports are regarded as confidential documents. There is a widespread view among those involved in EIA in Egypt that it is a technical process, to be entrusted entirely to professionals.

55 METAP EIA Institutional Strengthening Project, www.metap.org

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7.31 There was some evidence of movement towards greater openness. The Governorate of Cairo has scheduled public hearing on environmental issues in Helwan and in Cairo. These have served a useful purpose in identifying public concerns. Governorates are permitted to retain copies of EIA reports, to enable them to discharge their responsibilities for compliance monitoring. Some developers have voluntarily involved NGOs in EIA studies. Such cases appear to be the exception, however.

7.32 Irrespective of the limitations which it places on decision-making processes, the lack of openness in the Egyptian EIA system limits its own effectiveness by restricting coordination between government departments, the awareness of public concerns, the use of public knowledge, and actions to improve EIA quality. Despite the training workshops organized for the different actors involved in the EIA system, including NGOs and consultancy firms, additional support is still needed for promoting awareness of the potential benefits of consultation and public participation.

Table 7.3: Proposed Actions for Harmonizing the National EIA System with OP 4.01

Requirements Suggested actions

1 Public participation Regulations or enforceable procedures should specify consultation with affected groups and NGOs during both the scoping and the review stages in the EIA process.

2 Access to EIA reports Mandatory requirements should be introduced for access to EIA reports by affected groups and NGOs.

3 Environmental management plans

The requirement for an EMP should be made mandatory, and its content include three components: a mitigating plan, a monitoring plan and an institutional strengthening plan.

4 Implementation monitoring The legal requirements for reporting by the developer and monitoring by EEAA need to be implemented more fully than at present.

5 Content of EIA report Existing guidance should be given greater legal force. 6 Pollution control Pollution control measures should be specified in greater detail, for example

by reference to the World Bank’s Pollution Prevention and Abatement Handbook. Use of relevant measures should apply to those grey list and white list projects to which they are applicable, as well as to black list ones.

9 Guidelines Further guidelines are needed to give developers and consultants fuller guidance on potential impacts and appropriate impact prediction techniques.

10 Trans-boundary and global impacts

Regulations or enforceable procedures should specify the study of trans-boundary and global impacts.

The Environmental Institutional Framework in Egypt

7.33 There are 17 environment-related institutions in Egypt. They could be classified in the following three categories: (a) the national environmental organization represented by the Minister of State for Environmental Affairs, the Egyptian Environmental Affairs Agency (EEAA) and its eight Regional Branch Offices (RBOs) which are charged with overall monitoring and regulatory coordination; (b) institutions with specif ic operational functions on environment which are performed by environment units in line ministries, and by environment management units (EMUs) in the governorates; and (c) institutions with environment support role. These are the universities and research institutes.

The Minister of State for Environmental Affairs and the Egyptian Environmental Affairs Agency

7.34 The Environmental Protection Law provided new mandates for the Egyptian Environmental Affairs Agency. Given its coordinating and horizontal role among all ministries, EEAA was put under the responsibility of the Council of Ministers, and a Minister was assigned to oversee the work of the

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agency and chair EAAA Board of directors. The Chief Executive Officer (CEO) of the Agency is nominated by the Council of Ministers and has a First Undersecretary rank. The CEO oversees the day-to-day management of the agency and ensures that the policies and guidelines provided by the Board are implemented. The detailed functions of EEAA are attached in Annex 7.4. Its main responsibilities were merely of a coordinating role and development of legislation, standards, studies, and projects. EEAA was not responsible for developing environmental policies in accordance with the terms of the law. Being part of the Council of Ministers structure, EEAA did not have a separate state budget until 1998.

7.35 Until the early nineties the EEAA was weak and seriously understaffed. This was due to new EEAA mandates for which the required skills were not readily available in the Egyptian market as a whole, such as skills required for reviewing environmental impact assessment studies, hazardous waste management, industrial inspection, etc., and the GOE has put a freeze on the employment of its civil servants, forcing EEAA to appoint temporary staff and local consultants on the basis of annual contracts. At present, of the total human resources available temporary staff constitutes 70% of the total staff.

7.36 Soon after NEAP, several measures were undertaken to enhance the institutional and human resource capacities of the Agency, among which were:

• the implementation of a number of donor supported projects aiming at enhancing the institutional capacity of the Agency, most significant among these being the DANIDA-funded Organization Support Program (Phases I & II);

• the appointment of junior employees to the various departments to fill in the shortage in human resources;

• the establishment of the Technical Cooperation Office for the Environment (TCOE), a separate entity outside EEAA approved-organigram and reporting to EEAA CEO. TCOE was staffed with young and dedicated professionals that carried the responsibility of following up with the donors on NEAP programming, preparing projects for donor funding and be the main liaison office between the donors, EEAA, sector ministries and governorates. Until 1999, TCOE was supported and funded by international donors. In addition, TCOE was also requested to provide technical assistance to the main agency; and

• the appointment of representatives of donors which established offices with local staff inside EEAA.

7.37 In 1997, as result of the formation of the new cabinet, a new position of the Minister of State for Environmental Affairs was created. By virtue of the Presidential Decree No. 275 of 1997, the Minister of State for Environmental Affairs (MSEA) took charge of day-to-day management of EEAA, with the CEO acting under his/her delegation of authority. The Minister of State also appointed advisors with duties that mirrored many of those to be implemented by the different offices of EEAA. This may have contributed to redundancies and lack of clarity in the chain of command.

7.38 EEAA is currently a much better established organization than it used to be ten years ago. Departments are better performing their functions, staff are more experienced and confident with their responsibilities, needed departments have been established and staffed (such as the Inspection Unit and the newly-established industrial unit) and Regional Branch Offices have been established, staffed, equipped and are operational. EEAA succeeded also to incorporate the TCOE as part of its organigram into a department of international affairs & technical cooperation and a department of planning and follow up, established a “Public Services Office” whose function is to handle public complaints, and lately established a Sustainable Development Unit.

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7.39 One major weakness lies in the lack of enforcement and compliance with the terms of the law. The establishment by the Minister of Environment Decree No. 132/2003 of the General Department for Inspection within EEAA and directly reporting to the Head of the Environmental Management Sector, has been supported in terms of capacity building by several projects, such as the EEIS, EEPP, and EPAP. In the same context, general industrial inspection manuals and provision of on-the-job training were developed. The General Department for Inspection sets inspection policies, carries out several inspections in emergency situations where complaints are blatant and is responsible for inspection planning, coordination, and reporting to the executive management of EEAA. The General Department for Inspection at EEAA commenced operations as an Inspection Unit with no official administrative status, as per the official organigram of EEAA approved by the Central Authority for Organization and Management. It also started with a mandate that all inspection tasks be compiled within the authorized Inspection Unit. At present, EEAA faces a serious shortage in the number of inspectors; the overall number of inspectors at EEAA (centrally) is limited to 14 inspectors hired by virtue of temporary contracts. Staff of the existing Regional Branch Offices (RBOs) conducts inspections as well. However, the total number of inspectors both centrally and regionally do not exceed 50 inspectors covering all activities (industry- tourism- waste, etc.) and in all governorates.

7.40 From the establishment of the Inspection Unit in the year 2000, up to June 2002, 500 law-violating establishments were taken to court, 25 of which reconciled with the Agency, 150 cases are still being investigated, and nearly 150 cases received a verdict. However, in 90% of the cases ruled, the fine imposed did not exceed L.E. 1000, that is the lowest minimum fine mandated by virtue of the Environmental Protection Law. The personnel of the Inspection Unit attributed this to the judges that are not fully aware of the extent of the environmental damage caused as a result of these violations. Relatively weak penalties led to the exacerbation of the violations. Establishments’ owners found it much easier and cheaper to pay the fine than to rectify or control the polluting activity.

7.41 At the local level, each of the 26 Governorates has an Environmental Management Unit (EMU). The organization and operations of the EMUs vary across these Governorates. Under the existing institutional framework, the EMUs represent the primary local authority on environmental issues and, in many cases, operate as the executing agencies for EEAA’s environmental policies and programs. Most EMUs have received training from capacity building projects supported by a number of donors. To be able to perform their functions effectively and promote decentralization, all EMUs would need to be raised to a higher institutional level, a General Directorate level, which would then increase their effectiveness and guarantee a separate budget for their operations. These units would retain their administrative affiliation to the Governorates and would be technically affiliated to EEAA. The EMUs also still need additional staff, training, office and technical equipment. Successful piloting, supported by donor funded projects, has taken place in several governorates including Sohag, Damietta, Quena and the Red Sea.

Line Ministries 7.42 At the sector level, many line ministries and/or national institutions have a department or unit mandated with environmental management issues, these are shown in Table 7.4 below. These environmental departments/units vary in terms of their capacities and experiences. However, except for the environmental units of MOHP, MOMP, and MOI, they all share two common features: they are relatively newly-established or mandated with environmental concerns, and accordingly have limited environmental management capacity and experience. Some ministries, by virtue of their mandate, have a mainstreamed approach towards environmental issues, such as MOWRI, MOLD, and MOH. The mechanisms for coordination with EEAA and those applied within various ministries are however

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unclear. It is also interesting to note that the Ministry of Foreign Affairs by virtue of its international and diplomatic responsibilities follows very closely all matters related to sustainable development.

7.43 Table 7.4 provides a brief overview on the responsibilities of the different line ministries in the field of the environment, the environmental institutions and/or divisions within these ministries, and their affiliated concerned departments.

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Table 7.4 Lines Ministries /National Institutions – Mandated with Environmental Issues

Ministries National Institution

Affiliated National Institution or Division

Environmental Department or Unit

Environmental Management Responsibility

Ministry of Health and Population (MOP)

Central Department for Environmental Affairs

- General Department for Environmental Health,

- - General Department for

Environmental Monitoring

- General Department for food inspection - General Department for occupational and industrial medicine

- Setting environmental health policy and regulation

- Prevention and control of environment-related health problems and diseases through environmental health officers.

-

- Operating the National Air Pollution and the River Nile Water Quality Networks

- Monitoring water quality for drinking and domestic purposes.

- Monitoring the municipal and industrial effluents through sampling

National Water Research Center

Climate Change and Environmental Institute

- Protecting all public water resources in Egypt

- Regulating and controlling sources of water pollution

- Operation of the national surface and groundwater monitoring networks

- Issue regulations setting water quality standards and discharge limits

- Facility inspection and reporting violations to the police

Coastal Protection Authority

Protection of coastal line against erosion and seawater intrusion

Ministry of Water Resources and Irrigation

Water Quality Management Unit

Policy development, decision support system and monitoring


Solid Waste Management Unit

Overview the privatization process of solid waste management services in the Governorates

Ministry of Tourism Tourism Development Authority

Environmental Unit

Ministry of Industry (MOI)

General Organization for Industrialization

Ministry of Housing General Organization General Department for - Provision of water

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Utilities and Urban Communities

for Sanitary Drainage Control of Industrial Discharge

supply, sewage collection and treatment and solid waste management

- Planning and construction of new industrial cities.

- Preparing land use/physical plans.

Ministry of Interior Environment and Surface Water Police Traffic Departments

- Special police force for enforcement of law 48/1982 and law 4/1994

- Implementation of the Vehicles Emissions Inspection, according to Law 4/94,

Ministry of Manpower (MOMP)

General Department for Occupational Health and Safety

General Department for Occupational Health and Safety

Ministry of Agriculture & Land Reclamation (MALR)

Agriculture Research Center

- Management and conservation of agricultural land, wildlife, and biological resources.

- Preventing soil stripping and protecting land from degradation.

- Regulating the purchase, importation and handling of pesticides.

Ministry of Electricity and Energy

Egypt Electricity Holding Company

General Department for Environmental Studies Environmental Affairs Departments within the affiliated companies and stations

- EIAs of electricity projects - Periodic environmental audits and reviews - Management of monitoring and inspection programmes - Implement environmental compliance plans - Collaboration with environment-related organizations

Ministry of Petroleum Egyptian General Petroleum Cooperation

Deputy Chairman for Environment

Deputy Chairman for Environment

Ministry of Foreign Affairs

Department of Environment and Sustainable Development Affairs

Sustainable Development

Egyptian Universities and Research Institutes 7.44 In addition to the environmental infrastructure at the sector and local levels, Egypt has a core of well-trained academics and researchers that are involved in the field of the environment. All major

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universities have undergraduate and graduate programs in environmental engineering and/or public health. The major research centers such as the National Research Center of the Egyptian Academy of Scientific Research and Technology, the Agriculture Research Center of the Ministry of Agriculture and Land Reclamation and the National Water Research Center of the Ministry of Water Resources and Irrigation have a caliber of well-trained staff and excellent computer and laboratory facilities.

7.45 Many universities and research staff members are also providing consulting services either through their specialized research centers, or through the establishment of private consulting firms which have flourished through contracting with international donors and with sector ministries. It is also common practice in Egypt to call upon the academic and research staff to be part of national commissions to assist in the resolution of emergency environmental issues and/or to find rapid solutions to mitigate the impacts of these issues. The solutions proposed are always of a high technical / engineering quality, though the socio economic dimension is not often considered. Despite such talents, no university/or research center offer academic syllabi or training programs in the field of policy analysis and environmental economics which are now required if EEEA is to be involved in strategic planning as stated in its action plan.

Information Dissemination and Coordination

7.46 Egypt has established a system of environmental information at the Council of Ministers’ level and at EEAA level. The Council of Ministers has established the Information for Decision-Support Center, a specific entity that is responsible for collecting and analyzing information that will support the decision-making process in all government entities.

7.47 The Environment Protection Law No. 4 of 1994 requires EEAA to publish on a yearly basis a State of the Environment Report, and to collect and publish national and international information related to the environment on a periodical basis in cooperation with information centers of other agencies. Although the Law was issued ten years ago, and that private consulting offices have been contracted to develop the State of the Environment Report, no single report was published.

7.48 The Egyptian Environmental Information System (EEIS) was established at EEAA to assist GOE’s decision-makers to formulate and implement timely and appropriate environmental policies, legislation and programs. The EEIS produces timely and accurate environmental status reports, used to inform the Cabinet, others in Government and the public. The EEIS is also used to assist in developing environmental projects and policy options, and in monitoring and enforcing compliance with environmental regulations; however, the information generated is not in the public domain. The EEIS produces these reports using the data generated by the Environmental Information and Monitoring Program (EIMP) which produces real time data on air pollution from 43 air quality monitoring stations connected on line in a network and covering the major Egyptian cities. EIMP also produces annual reports on the pollution of marine water on the Mediterranean coast. These reports are for internal circulation only.

7.49 The annual and monthly reports on the status of air pollution and marine water pollution are for internal circulation only. This information is valuable given that EEAA generates real time data from 43 air quality monitoring stations distributed all over Egypt and is also taking regular sampling of the marine water on the Mediterranean coastline. In recognition of the importance of establishing an information and management system for the identification, registration, categorization and management of hazardous chemicals, MSEA/EEAA developed a comprehensive system for hazardous substances. Efforts were directed towards the collection of data from different sources, which included producers, users, importers, and distributors of chemicals.

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7.50 MSEA and EEAA have made substantial efforts generating environmental information; however, their diffusion is only limited to positive achievements. Furthermore this information is not being used to make sound decisions regarding environmental protection and management.

Public Participation and the Role of Media 7.51 The general public in Egypt is becoming increasingly active in the environmental field, as a result of its increased awareness about environmental issues. Over the last decade, the public’s role has been switching from a passive one to a more pro-active role. The media has contributed largely to this increased awareness and to change in behavior. All the major newspapers carry out weekly reports on environmental activities, and do not hesitate to bring to the public the major violations undertaken by the State or by private violators. TV reporting is also frequent especially in cases of environmental crises and serious environmental violations. The Government has sought to increase public awareness by establishing several media programs established during the past five years, developing an environmental journal and Green Message for journalist, and implementing an environmental awareness campaign to enforce Law No. 4/1994. Despite all these efforts, public opinion is not yet significant to influence the policy formulation process and to create a significant responsible behavioral change towards the environment.

7.52 A stronger partnership with the media could be achieved if its role is further strengthened, as requested by the media itself, through:

• The development of a communication strategy and campaign for MSEA/EEAA to address

the major environmental issues • The development of the necessary communication materials in print, radio, TV, and other

media as may be appropriate; • The provision of training and technical support for developing an outreach and mobilization

program for different targeted groups such as the public at large, the decision makers, the investors, … etc; and regularly update the communication and the information based on actual facts


The Role of civil society in the Environment in Egypt

7.53 Egypt has a number of NGOs actively participating in the environmental arena. Estimates are that more than 270 environmental NGOs are working on various aspects of environmental management in Egypt, on issues ranging from public awareness and environmental education to waste collection and community self-help programs. However, very few environmental NGOs have grass root linkages to influence the public or the community they serve. NGOs have been increasingly involved in project implementation, in public debate and also in ensuring compliance with the environmental laws. Court rulings were won by some of them. NGOs can be classified into three main types: The first type are those concerned with the field of the environment as a whole and cover various issues, such as the Arab Office for Youth and the Environment and the Friends of the Environment Association in Alexandria; the second type are those who concentrate on particular environmental issues, such as the Association for the Development of Services in Zamalek, and the Association for the Protection of the Environment which specializes in community development for solid waste management services and in particular with the Zabbaleen community while the third type is the scientific societies and research institutes, such as the Egyptian Society for Marine Sciences and Technology and the Egyptian Association for Toxic Sciences.

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7.54 Most of NGOs are prominent because of the leadership who is a recognized figure in the Egyptian society, rather than the nature of the activities NGOs undertook. NGOs leaders are usually called upon to provide their views and advice but they have not inf luenced the policymakers, and are not yet agents of change.

7.55 Law No. 4/1994 recognizes the importance of NGOs in environmental management, requiring three representatives from the NGO community on the Board of EEAA and providing authority for NGOs to bring legal action to enforce its environmental requirements. MSEA and EEAA are encouraging NGOs to take a more active role at the grass root level, and serve their communities. A special unit was established at EEAA to enhance NGO collaboration. MSEA/EEAA is also co-financing with NGOs community type projects, and provided LE 3.5 million for 140 projects to be implemented by 140 organizations. Many international donors have also provided direct assistance to NGOs to design and implement community-driven projects. This has enabled many NGOs to develop their own technical and managerial capacities at the local level. However, NGOs continue to depend primarily on external donor assistance for funding including, and find it difficult to sustain their activit ies with the local resources.

7.56 In addition to environmental NGOs, three national councils are also playing a major role in promoting the environment. The National Council for Woman (NCW), the National Council for Motherhood and Child Care and the Supreme Council for Youth and Sports.

7.57 NCW is entrusted to empower women to play an effective role as major contributors in the social renaissance. The standing committee within the NCW on Health, Population and Environment follows up and evaluates the implementation of public policies relating to environment and health on women issues. The NCW is drafting a proposed five-year plan to be submitted to the relevant authorities. This plan will be taken into consideration when drafting the gender component within the Comprehensive National Development Plan. The plan includes all aspects of society such as education, health, social security, environment, labor force and the media. The NCW is establishing a documentation center to collect information, data, and studies on women as well as conduct its own studies and researches in this area. The studies may include areas related to gender issues such as the impact of structural adjustment programs on women, the impact of environmental degradation on women, environmentally sounds technologies suitable for small industries, and a program to involve Egyptian women engineers and technologies in developing environmentally friendly technologies for rural areas. The World Bank is also providing grants to strengthen the role of women in monitoring environmental activities (see Chapter 9).

7.58 The National Council for Motherhood and Child Care and the Supreme Council for Youth and Sports have been planning programs and projects to develop skills and raise environmental, cultural and social awareness of the Egyptian Youth sector. MSEA is also organizing summer jobs for youngsters in projects that will benefit the environment.

The Role of the Private Sector in the Environment

7.59 The Five-Year Development Plan (1998-2002) calls for expanding the ownership base for companies previously operating under the public enterprise sector and allowing unrestricted opportunity for the private sector to maximize its role in enhancing socio-economic development.

7.60 The private sector is involved in the environment through: (a) providing consulting services for EIA, environmental studies, and environmental engineering principally in the field of water, wastewater, irrigation, industry and energy sectors; (b) financing environmental- related investments in tourism, petroleum, agro-business, and industrial sectors; (c) operating environment-related activities, such as in

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the solid waste sector and in the energy conservation and efficiency field (ESCOs); and (d) producing environmental equipment for wastewater, energy and cement sectors for example.

7.61 The private sector also receives concessionary financing from the different environmental-related funds (Chapter 8, Sections 8.13-8.26), established either by the Government or by International Donors. The Social Fund for Development, for example, through its Environment and Development Department (EDD provides soft loans for projects where environmental and social dimensions are considered. The EDD is active in producing guidelines for pollution prevention and control, and has a controlling role to guarantee that subprojects are not detrimental to the environment. 7.62 The private sector has been encouraged to participate in energy-related projects as part of the national privatization program. Through the Build-Operate-Own-and-Transfer (BOOT) system, the first three power generation plants were established in Sidi Kreir, Suez and Port Said. Most activities in agriculture and tourism sectors are also financed by the private sector. The private sector has recently proposed to enter into a private-public partnership in the irrigation sector in the West Delta with a potential assistance from the World Bank and KfW.

7.63 The private sector is starting to become environmentally responsible by complying with environmental regulations, especially when it exports its products or is in joint ventures with international firms. Many private companies are investing in new and cleaner technologies to increase their profitability while complying with environmental regulations. Some companies have already acquired ISO 14000 and ISO 14001 certification. In order to assist the private sector in environmental due diligence, international donors and financing institutions, such as KfW, the World Bank, and EIB are also providing concessionary lending through local banks.

Overseas Development Assistance in the Environment 7.64 Since the establishment of NEAP of 1992 Egypt was assisted by 19 international organizations to move its environmental agenda forward. Of these organizations, nine were bilateral and included: Canada (CIDA), Denmark (DANIDA), Finland (FINNIDA), Germany (GTZ and KfW), Italy, Japan (JICA), Switzerland, the United Kingdom (DFID) and the USA (USAID). The eight multi-laterals included the Arab Fund for Economic and Social Development, the European Union, the European Investment Bank, the Center for Environment and Development of the Arab Region and Europe (CEDARE), the Global Environmental Facility (GEF), the Mediterranean Action Plan (MAP), the Mediterranean Environmental Technical Assistance Program (METAP), The United Nations Development Program, the Ozone Multilateral Fund and the World Bank.

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7.65 The total amount of donor funds allocated to the field of Environment and coordinated through MSEA/EEAA reached nearly the equivalent of LE 2.4 billion.56 These amounts are distributed among 51 environmental programs and projects about half of which are still ongoing. Figure 7.1 presents the distribution of the official development assistance (ODA) by environmental donors, with USAID providing the largest assistance.

0

200

400

600

800

1 , 000

1 , 200

million

1 Donor Agency

Figure 7.1 Distribution of Environmental Official Development Assistance By Donor

( 1991 - 2001 ) Including Both Bilateral and Multilateral Donors

United Sates of America ( USAI

D ) Denmark - Danid

a The World Bank Ozone Multilateral Fund in Montreal Germany - KF

W - GTZ - FE

S Global Environment Facility - GE

F Canada - CID

A The European Union - E

U United Kingdom - DFI

D Japan - JIC

A The United Nations Development Program - UNDP Italy Finland

- Finnida

Switzerland METAP II The Arab Fund for Economic and Social Development

7.66 Figure 7.2 shows the volume of assistance allocated to each environmental field/sector. As indicated, the highest percentage of support 42.9% was channeled through the policy support and environmental management programs (sponsored by USAID57 and Denmark58) while industrial pollution abatement and air pollution together account for 26% of the total support. The least supported sector/field is solid and hazardous waste management being 1.8%. Approximately 91% of the total assistance was in the form of grants, while only 9% was in the form of loans.

7.67 In addition to the grants and concessionary loans channeled through EEAA, international donors provided an on going allocation of US$2.3

56 Organization Support Program: Report reviewing donors projects implemented in cooperation with EEAA

over the past ten years 1991-2001, August 2001. 57 USAID: Egyptian Environmental Policy Program and Sector Policy Reform III. 58 DANIDA: Environmental Sector Program Support.

0

200

400

600

800

1 , 000

1 , 200

Millions L

. E .

Environment Sector

Figure 7.2 Distribution of Environmental Official Development Assistance By

Sector Policy Support Industrial Pollution Abatement Air Pollution Abatement Protection of the Ozone Layer Institutional Support and Capacity Buildin g Natural and Cultural Resource Manageme nt Environmental Monitoring Land & Water Resource Management Environmental Awareness and Support to NGOs Coastal Zone Management Solid and Hazardous Waste Manageme nt

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billion for three sectors that are considered environment-related investments. These are: water supply and sanitation, irrigation and drainage and solid and hazardous waste management. USAID is the largest financier in the urban water supply and sanitation with no contributions from the World Bank in this sector . All donors have also invested in agriculture and/or irrigation for the amount of US$ 840 million. Japan and Finland have also invested in solid waste management and hazardous waste management in Alexandria respectively.

Figure 7.3: Donor Allocations in Specific Sectors

7.68 With such a level of assistance, the donors succeeded not only in putting the issue of environment on the GOE’s policy agenda but in building the environmental infrastructure at the national level in major sector ministries as well as at the local level in the governorates. They have stimulated the participation of NGOs and local communities in addressing and solving their environmental issues. Without the injection of technical assistance, capacity building, laboratory and monitoring equipment, the environmental related agencies would not be now in a position to carry out their present functions of environmental management 7.69 On the Egyptian side, the Technical Cooperation Office for the Environment (TCOE), which was a separate entity outside EEAA, was established by UNDP and responsible for NEAP implementation and follow-up. In 1999 MSEA issued a policy directive for international cooperation in the field of the environment delineating its functions and responsibilities as:

• Coordinating the different donor agencies in order to achieve the maximum benefit and avoid duplication of efforts;

• Ensuring the presence of the element of sustainability in all projects and programs; • Steering cooperation with developed nations to areas where they possess comparative

advantages;

Ongoing Donor Allocations for Major Sectors

0200400600800

1000120014001600

USA

EU M

embe

r State

s EIBJa

pan

World Ba

nk Total

US

$ m

illio

n Water supplyand Sanitation

Agriculture andIrrigation

Solid andHazardousWaste

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• Maximizing the utilization of indigenous capabilities especially in areas where there are abundant highly qualified national experts;

• Emphasizing the importance of experience and technology transfer particularly in areas where Egypt may still be considered a newcomer, such as Hazardous Waste Management and Environmental Impact Assessment (EIA);

• Encouraging capacity building efforts as being an essential component in all cooperation programs;

• Developing partnerships and new cooperation patterns that would benefit all parties involved, such as the Gore-Mubarak Partnership between USAID and Egypt, and the Egypt Environmental Initiatives Fund (EEIF) established in cooperation with the Canadian International Development Agency (CIDA) whereby new innovative participatory relations are established between NGOs and the private sector; and

• Cooperating with other developing countries in order to benefit from shared experiences; including the initiation of experts' exchange programs and training courses in the different areas of specialization where the developing country may have a comparative advantage.

7.70 As a result of this ambitious policy decision, the TCOE was replaced by a Department for International Affairs and Technical Cooperation within EEAA, giving this agency a difficult and complex role of facilitating coordinating and/or implementing environmental activities amounting to LE 2.4 billion with very limited staff. EEAA technical departments are now more involved the implementation of donor-funded projects, and the staff from the International Affairs and the Technical Cooperation Department is doing its best efforts to ensure the sustainability of these projects. No detailed business plan was prepared in order to support the implementation of these directives which looked good on paper but could not be fully implemented with EEAA limited regular staff 7.71 Due to such lack of human resources within EEAA, many projects and activities continued to be outsourced by the donors to international/ local staff to assist in the management and supervision of their projects outpacing therefore EEAA capacity to deliver. Nevertheless, institution-building projects helped strengthen the re-structured EEAA in improving its skills and in establishing laboratories and information systems in order to perform its environmental responsibilities at the national and local level. It also demonstrated the tangible benefits of improved decentralized environmental management and provided tools to the governorates in environmental planning and monitoring. 7.72 There is also an excellent cooperation and collaboration with Government agencies and among donors who kept each other informed through the establishment of a subcommittee on environment so as to maximize their contribution and avoid overlapping between the different programs. One major concern that will have to be faced by the GOE is the establishment by the donors of large capital assets without ensuring that these assets could be maintained, in the long term, using local resources. It is not yet clear how these projects will be sustained once donor funding will cease. This could compromise the sustainability of these projects if local resources were not made available for the operation and maintenance of these assets. 7.73 Many donors have now changed their strategies so that environment is no longer a priority per se but a cross-cutting theme which should be addressed as part of development with action-oriented objectives consistent with the Millennium Development Goals. Many donors such as USAID have included the environment as a core of economic growth, facilitating trade and partnership. Others such as DANIDA and FINIDA have signaled a decrease in their level of grant assistance now that Egypt has been classified as middle -income country. Japan and Germany are maintaining/increasing their environmental assistance, and multilateral environmental agreements (CDM, PCF and GEF) could be viewed as additional financial resources for environment support. Recognizing the change in donor strategies,

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Egypt needs to have its own strategy for mobilizing local resources to sustain these large capital assets, and finance its own environmental investments. The Role of the World Bank 7.74 Since 1991, the Bank has played a major role in the field of environment and natural resources. It provided assistance with a team of international donors, the GOE in preparing NEAP of 1992 which led to substantial technical and financial assistance from the international donor community in the field of the environment. From 1992-1995, the Bank role in the environmental field was very modest. It was re-activated as a result of the publication in December 1995 of the first MNA environmental strategy.59 As a result of this strategy, the Bank approved in December 1997 the first stand alone environmental project, The Egypt-Pollution Abatement Project,60 a US$35 million IBRD loan and IDA credit whose objective is to strengthen the enforcement capacities of environment related institutions, and to establish technical and financial mechanisms for supporting pollution abatement investments. This project was co-financed by FINNIDA with a grant of US$6.0 million equivalent. Since then, the Bank, through activities financed by the Mediterranean Environmental Technical Assistance Program (METAP), was able to be involved in the policy dialogue and provide support to MSEA/EEAA.

7.75 The Country Assistance Strategy of June 200161 considers the environment as cross cutting among three types of interventions that support higher and sustained growth (supporting macroeconomic stability, phased restructuring of the banking and corporate sectors, and improved infrastructure for greater competitiveness). The Bank's lending, at least under the base case scenario, would be targeted for poverty reduction (basic education and health, social protection and safety net, and rural poverty), and also for having an indirect poverty reduction impact. These would include interventions that may have major indirect benefits for the poor in terms of promoting broad-based growth, developing poor areas, initiating dialogue on governance and community development issues, and building effective institutions. 7.76 As a result of CAS, the Bank re-oriented its environmental support to Egypt along the following four key areas which are intended to enhance environmental mainstreaming efforts:

(a) Enhancing the quality and effectiveness of Egypt’s environmental impact assessment through capacity building and technical support to EEAA;

(b) Demonstrating the economic importance of a clean environment by undertaking: (i) studies

to assess the cost of environmental degradation at both macro and micro levels; and (ii) analytical work on identifying linkage between environment and trade, environment and energy; and environment and poverty reduction. All these studies were financed by METAP and the Bank trust funds for environment and social sustainable development (TFESSD) for a total amount of US$2.1 million;

(c) Integrating an environmental component into targeted sectoral projects in irrigation,

agriculture, and rural development, and also integrating global environmental issues into Bank operations, including the protection of biodiversity in the Red Sea Tourism Project and the Matrouh II Natural Resources Management Project; and

(d) Developing an electronic environmental profile for Egypt.

59 MNA Environment Strategy - Towards Sustainable Development, IBRD ___ 60 Egypt Pollution Abatement Project, IBRD Report No. 17065-EGT. 61 Egypt -Country Assistance Strategy-IBRD document 22163-EGT.

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The On-Going World Bank Portfolio 7.77 The World Bank has in its portfolio 21 active projects totaling the amount of US$680.5 million. Irrigation and agriculture constitutes 40% of the total portfolio, and environment and natural resources constitute 6.8% (US$ 47.35 million) of the total portfolio.

Figure 7.4: World Bank Portfolio

050

100150200250300

Agr

icul

ture

/Irrig

atio

n

Edu

catio

n

Hea

lthN

utrit

ion/

Pop

ulat

ion

Soc

ial P

rote

ctio

n

Indu

stria

lP

ollu

tion

and

Nat

ural

Res

ourc

es

Rur

alD

evel

opm

ent

US

$ ( m

illio

n)

7.78 Figure 7.5 shows the environment and natural resources components in the on-going Bank portfolio which are very limited as a result of the characteristics of the portfolio itself. The irrigation/agriculture projects have an environment component as part of the environment management plan, and address primarily the monitoring of water quality. Improving water quality in these projects has not been a realistic objective since irrigated water is often polluted by rural wastewater. The East Delta Agricultural Services Project and the Egypt-Pollution Abatement Project are the only projects that have addressed water quality improvement through the financing of a wastewater treatment plants. With the exception of EPAP and the Matrouh II Projects, there were no environmental or NRM indicators included in these projects

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Figure 7.5: Lending for Environment and Natural Resources Management in Egypt, as compared to Total Bank Lending in Egypt, FY1994-2004, as of April 6, 2004 (includes GEF Projects)

040

29

0

23

68

25

0 0

17 0

121

80

172

75

142

550

50

0

50 27

341

0

100

200

300

400

500

600

FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04

Co

mm

itm

ent

Am

ou

nt

($ M

illio

ns)

Environment and Natural Resources Management

Total Bank Lending in Egypt

Conclusion

7.79 Egypt has made significant progress in environmental planning and in shaping up its institutional and legal infrastructure with the assistance from the international community. However, NEAPs were not used primarily to set up priorities and to move forward the policy reform agenda as originally contemplated. Although the Government is committed to sustainable development, there are not sufficient elements in place to ensure such transition from environmental protection to environmental sustainability. This will require:

- a modification in the present institutional and legal framework to create favorable conditions for a decentralized and outward looking economy for which Egypt is committed;

- a resolution about the responsibilities and accountabilities within MSEA/EEAA;

- an emphasis on policy measures that can be justified in terms of cost and benefits;

- a focus on few environmental priorities which are demand-driven and for which outputs can be measured;

- a requirement that strategic or project specific environment impact assessment should precede major inter-sectoral policies and programs and all investment projects which have negative environmental impacts financed irrespective of financing source;

- an openness in the diffusion and dissemination of positive and negative information of environmental issues in Egypt;

- development of EEAA work plan to include human, financial and technical resource requirements, ensuring the long-term sustainability through the implementation of procedures for acquisition of environmental information, quality standards and maintenance of environmental information;

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- better coordination and association of line ministries, local government, civil society and the private sector in designing and implementing policies and programs; and

- a national strategic approach to donor collaboration is needed. Donor funding should be linked to financial and technical performance on the ground, and the provision of technical assistance, knowledge and experience sharing, targeted towards achieving the MDGs. Donor-funded projects should gradually be integrated in the Egyptian system to ensure sustainability once these projects are completed. An exit strategy should be defined at the onset of the support programs.

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CHAPTER 8

Environmental Expenditures

Introduction

8.1 This chapter reviews the expenditures made by the Government of Egypt and international donors and financial institutions since the publication of the National Environmental Action Plan (NEAP) in 1992. The purpose of the review is threefold: (a) to estimate the investments made in the field of environment protection; (b) to assess whether these investments were compatible with the development and environmental priorities during the period 1992/1993 to 2001/2002; and (c) to ascertain the sustainability of financial resources. 8.2 The investments assessed are limited to Chapter 3 (Bab 3) of the State General Budget which is composed of: (a) the Egyptian administrative authority’s budget including cash contribution made by international donors and financing institutions. This budget is managed by the National Investment Bank (NIB) which provides the appropriate budget in the form of local credits; (b) the service authorities’ general budget which is funded through the State General Budget but offer free services to the citizens and are nonprofit oriented; and (c) the local administration budget (governorates, secondary cities and villages) representing investment projects financed by the state to improve the citizens’ living standards.

8.3 The review of environmental expenditures was made on the basis of published records from the State General Budget (SGB). Many difficulties were found to separate what are environment-related investments from what is non-environmental. A further difficulty was encountered in reconciling the grants provided by donors who may not have been posted in the State General Budget since, as shown below, the Ministry of State for Environmental Affairs (MSEA) and the Environmental Affairs Agency (EEAA) did not have a separate budget before 1997. The estimates for the period 1992-2002, provided below, should be treated as orders of magnitude. Trends in expenditures are more important than the accuracy of the figures. 8.4 The expenditures which were included in our analysis are for environment-related investments made in the sectors of water supply, wastewater, land improvement and reclamation, roads pavements, rural electrification and renewable energy, coastal protection against erosion, environmental research in ministries and institutes, and support to the Ministry of State of Environmental Affairs which received its first allocated budget in 1997. The expenditures were taken from the budget allocated to the following organizations and ministries (Table 8.1).

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Table 8.1: Organizations and ministries included in the assessment of budget expenditures

Environmental Categories Sector Ministries and Authorities Water General Organization of Potable Water, Drinking Water Organizations in

governorates Wastewater National Authority for Wastewater, General Authorities in Aswan, Minia, Beni

Souef, Fayoum, Dakahlia, Gharbiya and Sharkiya Land General Organization for Land Improvement, General Organization for

Northern Sinai Region Energy Rural Electrification, and New and Renewable Energy Roads General Authority for Roads and Bridges Coastal Protection General Authority for Coastal Protection, Egyptian Harbor Authorities Research Funds EEAA, Desert Research Institute, Agriculture Research Institute, Water

Research Institute, Building Research institute, Development Research Miscellaneous Organization of Physical Planning, Tourism Development, Cairo City Cleaning

and Beautification Authority, Giza City Cleaning and Beautification Authority 8.5 Included in this assessment is the support budget in the form of subsidies. Subsidies are mainly for general transportation in Cairo and Alexandria as well as for water supply in some governorates. The total amount of these subsidies is LE 300.0 million/year. Subsidies related to water and electricity are not explicitly stated in the State General Budget. These subsidies are of the order of LE 19-20 billion/year. They consist of subsidies in energy for the amount of LE 14.5 billion/year (1999/2000)62; in drinking water for the amount of LE 2.5 billion/year; and in irrigated water for the amount of LE 2-3 billion/year (Chapter 4). The total amount of implicit and explicit subsidies is estimated to be 19.3-20.3 billion/year corresponding to 5.2% of GDP. 8.6 Other environment-related investments financed by the economic general authorities were excluded. These authorities are state-owned, non-profit-making and are not included in the State General Budget. These authorities are managed by a Board of Directors, and their budget is issued by a presidential decree. As these authorities are paid for the service they provide, their profits revert to the SGB, and in case of deficits, they are also supported by the SGB. The Ministry of Investment had an overall portfolio of L.E. 2 billion over the period 1994-2004 for environmental in itiatives. Private sector, profit-making companies also invest in environmental projects, thus contributing to the overall improvement of the environment in Egypt. Investments made by 55 companies amounted to L.E. 1.5 billion. 63 8.7 The SGB analysis shows that environment-related investments were estimated during 1992-2002, to be LE 31.9 billion, representing 5% of the total investments of LE 847 billion financed by the State. The environment-related budget increased threefold from LE 1.6 billion in 1992 to LE 5.1 billion in 2002. This corresponds, as shown in Figure 8.1, to 1.0-1.3% of GDP which has been relatively constant over ten years.

62 Egypt: Energy-Environment Review, Consultant Report, April 2003 63 Source: Ministry of Investement, Comments on Draft CEA Report, January 2005..

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0.0%

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Percentage of Enviroment-Related Investments to the State General Budget

Percentage of Enviroment-Related Investments to theGDP

8.8 Figure 8.2 shows the distribution of investments made by Egypt during the last ten years in the different sectors. Of the total investment of LE 31.9 billion, LE 13.1 billion was spent on water supply, LE 5.05 billion on land improvement, LE 4.62 billion on rural electrification and renewable energy, and LE 4.27 billion on wastewater, totaling 84.8% of the budget. Investment in water supply clearly dominates compared with the budget of other sectors. While the trend of investments in water supply, land and energy increased by fivefold, fourfold and threefold respectively, reflecting the Government priority to invest in basic services in water and in agricultural/irrigation expansion, investments in wastewater were maintained at an average of LE 0.4 billion a year. This indicates the low priority given by the Government for tackling one of the major sources of water pollution, particularly in rural areas. Furthermore, investments in coastal pollution were small in the first five years (LE 40-50 million), but increased by twofold (LE 160-200 million) in view of the increased coastal erosion in the northern coast (See Chapter 6)

Figure 8.1: Percentage of Environment-Related Investment, 1992-2002

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8.9 In NEAP 1992,64 environmental investments until year 2002 were estimated at a total of LE 8.2 billion for various sectors and themes as shown in Figure 3.4. Priorities were given to water and wastewater followed by air pollution and solid waste management. In comparison with the budget expenditures for the same period, the Government spent a total of LE 31.9 billion, i.e. four times the total estimated expenditures in NEAP, with water and wastewater investments estimated at LE 17.4 billion in contrast with LE 4.75 billion in NEAP. With the exception of water and wastewater, there seems to be a disconnection between environmental priorities and development priorities, indicating that NEAP was not used by the GOE for directing environmental-related investments. Also discrepancies between NEAP figures and budget figures are anticipated since it was difficult to reconcile both expenditures by sectors and by environmental categories.

8.10 The source of expenditures for these sectors comes primarily from the State Budget as shown in Figure 8.4 totaling LE 23.01 billion (72.4% of total investments). Foreign loans and grants from international financial institutions and donors amount to LE 7.22 billion (22.6% of total investments),

64 National Environment Action Plan of Egypt-May 8, 1992.

Figure 8.2 Environment-Related Investments by Sector

0.00 1.00 2.00 3.00 4.00 5.00 6.00

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Figure 8.3: Distribution of Investments in the NEAP of 1992

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heritage

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showing the dominance of the State in financing environment-related investments. However, foreign assistance is dominant in the case of environmental management coordinated by MSEA which only had a separate budget of LE 20.7 million as of 1997/1998. Its investment budget slightly increased to LE 23.3 million and LE 25.5 million in budget years 2000 and 2001 respectively, but was decreased to LE 20.2 million in 2002. 8.11 The environmental management “soft” investments were principally driven by international and bilateral contributions totaling LE 2.4 billion during the last ten years (see Chapter 7). Assuming an average of LE 200 million/year, the ratio of donors to Government contribution on environmental management projects is 10:1, as opposed to 1:5 on environment-related projects in basic infrastructure. The continuous reliance on donor contribution in the form of grants and soft loans for environmental management is a risky undertaking considering that Egypt is now classified as a middle-income country which would limit its access to grants from some bilateral donors and that additional operations and

maintenance resources would be required to sustain the free capital assets provided by these grants at a time when Government revenues are in decline.

Figure 8.5Financing of Environment-Related Investments

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Figure 8.4

Comparison of Damage Costs and Investments in

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8.12 Finally, considering that the cost of environmental degradation in Egypt in 1999 was estimated at LE 14.5 billion or 4.8% of GDP, the environmental expenditures seem to be of the order of LE 4.4 billion or 1.2% of GDP showing a ratio of foregone benefits/costs of 3.3:1. This may indicate that without these large investments made by the Government, the damage costs could have been even higher. However, it seems as shown in Figure 8.4 above, that the allocation of these budgets favors primarily the protection of natural resources and is not consistent with the distribution of damage costs which reflect primarily the health protection. Environmental Funds

8.13 In addition to the State Government Budget (SGB) and the international donors contribution, the Government and the International donors have established 14 environmental protection and environmental-related funds in the estimated amount of US$0.5 billion and L.E 0.37 billion (1992-2002) totaling LE 3.0 billion65). Two funds for the amount of LE 366 million, are anchored into Egyptian laws, and managed entirely by a public entity outside the SGB; its proceeds are generated from levies, taxes and other charges. These are: the Environment and Tourism Services Fund (ETSF) and the Environment Protection Fund (EPF).

8.14 Twelve others were established with the assistance and financing of international financing institutions (such as the World Bank and EIB) and bilateral donors (CIDA, DANIDA, FINNIDA, KfW, and USAID) and the Social Fund for Development (SFD) under its Public Work and Community Development Programs. The first eleven funds are managed by commercial banks and provide concessionary lending to private and public polluting enterprises, NGOs and SMEs. The Social Fund for Development (SFD) is a separate legal entity and provides a concessionary financing in water, wastewater, and solid and hospital waste management services as well as environmental activities for NGOs and for MSEA/EEAA. At least US $ 338.0 million 66 were allocated by the major donors of the SFD. USAID also provides under its commodity import program (CIP) soft credits for importing US goods, which could be used for environmental purposes; however, no reporting was provided on the use of the environmental financing activities. The Environment and Tourism Services Fund (ETSF) 8.15 In 1986, the Government issued Law No. 1.1 for increasing the State resources. It was subsequently re-issued as Law No. 5 of 1986 related to an increase in state resources purchase of international airline tickets in local currency by imposing a 25% tax. The ETSF was allocated 25% of this increase which amounted to 6.25%. The objective of the ETSF is to finance the plan of the Ministry of Tourism for the preservation and improvement of archaeological sites, as well as pollution control projects by MSEA. 8.16 The ETSF is managed by a committee chaired by the Minister of Finance67 and composed of the Ministers of Culture, Rural Development, Tourism, Administrative Development, Council of Ministers and MSEA. MSEA acts as the secretary of this committee. There is no management and organizational structure pertaining to this Fund. 8.17 ETSF generates its fund from the proceeds of the 25% of the increase in the resources tax, i.e., 6.25% of the price of an international ticket purchased in local currency. Since its establishment in

65 Using an average exchange rate of 1US$ =LE 5.0. 66 Egypt-Social Development Fund, Annual Report 1999. 67 Decree form the Council of Ministers no. 3214 of 1997.

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1985/1986, the total ETSF revenues amounted to LE 379.5 million. 68 Its initial revenue in 1985/1986 was LE 14.5 million and increased to LE 42.9 million in 2001/2002. The net balance as of 30 April 2003 is LE 7.5 million, indicating that up to date fund expenditures are LE 372 million. Since the establishment of NEAP in 1992, the total revenues of this fund amounted to LE 232.5 million. ETSF acts as support fund and does not have a balance sheet. Its revenues are kept in a special account and allocations are made on a project-by-project basis on demand from the Ministers, recommended by the Ministerial committee, and approved by the Prime Minister. There are general guidelines for the use of this fund but no pre-allocations are made by sectors, or by ministries or governorates on the basis of a pre-approved business plan. However, in accordance with the published report of the Environment Protection Fund (EPF) for FY 2000-2001,69 EEAA share in ETSF is “not less than one half” of its proceeds. However, these revenues are not reflected in the EPF balance sheet. 8.18 Environment projects financed by ETSF include the establishment of green parks, city cleansing and solid waste management, improvement and cleaning of beaches, wastewater, and treatment of renal diseases, pollution control and participation in conferences. The Ministry of Tourism used ETSF to finance projects related to wastewater on tourist sites, waste from ships, wastewater, electrification of Luxor and Aswan airports and street sweeping and cleaning. 8.19 Despite its large revenues, ETSF operates as a slush fund to subsidize and/or support financial gaps of projects that could not be financed by sector ministries and/or governorates. This will provide a wrong signal as it offers free public money to projects for which no financial or economic analysis was made. In the absence of clear and transparent operating plans, management procedures and proper financial management, the ETSF cannot contribute to the sustainable management of environmental resources.

The Environment Protection Fund.70 8.20 Established as a result of the Environment Protection Law No. 4 of 1994 and its executive regulations, the Environmental Protection Fund (EPF) was established with an objective “to stimulate environmental investments and support the environmental, social and economic policies in the pursuit of sustainable development.” NEAP of 1992 provided the general framework under which EPF is to pursue its objectives. 8.21 The proceeds of the EPF are both in international and local currency and generated from the compensation for shipping accidents, fines levied for any harm caused to the environment and violations of the environment, nature reserves and protected areas entrance fees and aid and donations. From its inception in 1995 to mid-2000, the EPF was only an account managed by EEAA. During fiscal year 2001 the fund was restructured with an established management and organizational structure, clear operation procedures and three major expenditure categories: Support to MSEA/EEAA expenses and the Fund’s own administrative costs, a reserve account for environmental disasters and pollution from unknown sources, and financing a limited number of environmental projects in the form of grants and interest rate subsidies, through the competitive project programs (CPP) and public tenders. The Fund publishes its balance sheet which is reviewed by an independent chartered accountant 8.22 Since its inception in 1995 until 2000, the funds annual revenue was about LE10 million a year. These revenues increased to LE 11.81 million in 2001/2002. EPF annual revenues cannot be considered reliable as the source of these revenues is not stable and cannot be projected accurately. During FY 2001-

68 Internal MSEA memo. 69 MSEA/EEAA: Environment Protection Fund, Annual Report 2000-2001, page 3. 70 MSEA/EEAA: Environment Protection Fund, Annual Report 2000-2001.

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2002 for instance, these exceeded LE 73 million of which over LE 50 million were generated by “compensation for environmental damage” only. Other sources of income that never appeared in EPF’s income statement although stipulated in the executive regulations are “amounts allocated in the state budget to subsidize the fund” and “proceeds from tax on air tickets.” EPF officials explained that these proceeds were collected by the Ministry of Finance, and routed to the Environment and Tourism Services Fund. According to EEAA figures, this fund showed a balance as low as LE 1.2 million year ending June 2003.

8.23 DANIDA was the only bilateral donor that channeled, in the context of its Environment Support Programme, its funds through the EPF, which in turn, forwards the equivalent of these funds in LE upon the request of the “Environmental Compliance Office (ECO)” at the Federation of Egyptian Industries, and the Governorates of Aswan and Beni-Suef. ECO provides concessionary lending to small and medium enterprises for adopting cleaner production in the textile, food, chemical and metallurgical sectors, while the Governorates provide funding for community demonstration projects.

8.24 Although the Fund prepares an annual operating plan which is approved by EEAA Board of Directors chaired by MSEA, the Fund’s priorities, forms and level of support vary from year to year. It is too early to assess whether the Fund responds to the purpose for which it was established, as its financing was mostly to support MSEA/EEAA activities. The EPF is also challenged by the existing rules and regulation of the commercial banks through which it operates. If the Fund is to respond to its original objective of “supporting environment, social and economic policies,” it should be provided with more autonomy from EEAA, follow a clear and transparent implementation of its operational procedures and enhance its resources to enable its effective role in supporting sustainable environmental investments. This will be addressed in Chapter 9 on recommendations.

Donor-Supported Funds 8.25 Twelve separate environmental and environmental- related funds 71 72 for a total amount of US$0.5 billion were established and have been operational since 1995. All these funds were allocated for different purpose, sectors and recipients and have different lending conditions and procedures as shown in Annex 8.1. The Social Fund for Development (SFD) is the largest financier of environment-related investment projects. The general characteristics of these funds with the exception of the Social Fund for Development are: (a) they are non-revolving; (b) they are a mixture of grants and loans (too often on a concessionary basis); and c) they are managed for the first time in Egypt by local commercial banks. The involvement of the local banking sector in managing environmental investments, resulted in four positive outcomes: (i) it created a general awareness among the banking community about compliance with the environment protection law; (ii) it established a core of expertise in the banking sector for understanding and assessing environmental and pollution control investments; (iii) it increased competition among the different banks for managing these funds; and (iv) it enabled the local banking sector with the technical assistance provided, to market the environmental investments with its individual clients in order to move toward compliance with existing environmental regulations. 8.26 These funds may have served their purpose by providing cheap financing for supporting investments in pollution control, water supply and sanitation which otherwise would have not occurred. Environmental awareness has increased as a result of implementation of various environmental financing packages. However, at present end users are still reluctant to make environmental investments which do not have a financial return. Furthermore, compliance with Law No. 4 of 1994 is weakened by the lack of 71 Egypt-Pollution Abatement Project: Study of Sustainable Mechanisms for Financing of Industrial

Environmental Investments in Egypt, ART Consulting report, 2003. 72 Social Fund for Development-Annual report, 2000.

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strict enforcement of regulations. In the medium and long term ranges, the multiplicity and proliferation of these funds are not sustainable nor are they the appropriate solution for addressing the environmental issues of Egypt. These funds may in fact delay the adoption by the government of an environment policy based on a combination of command-and-control approach and adoption of economic instruments. If the Government finds it necessary to provide financial incentives to the market, it should consolidate all these funds into one national revolving fund which will reward environmental performance based on an approved benchmarking system to be set up and disclosed by MSEA. International donors should in fact coordinate better their role and assist in the development and operation of a sustainable fund which would focus on performance and outcomes rather than financial inputs and projects’ outputs.

Economic Instruments 8.27 Under the environment Protection Law No. 4 of 1994, product charges and positive tax incentives are allowed although the legislation does not allow for levying incentive charges to change the polluter’s behavior.

8.28 The Government has in fact levied product charges such as the 6.25% tax increase on the price of airline tickets as the main source revenue for the ETSF. It also imposed a tax in 1995 of LE 5 per metric tons of cement in order to pay for monitoring services, chemical analyses and control of dust emissions in the public sector cement factories. It also introduced a charge for the collection and disposal of solid waste and for wastewater treatment in the cities of Cairo and Alexandria. Similarly, the Government has waived payment of custom duties for solid waste equipment provided by international contractors for the cities of Cairo and Alexandria and also gave their tax brake for 10% in accordance with Investment Law No. 8. These products charges and incentives are made on an ad-hoc basis in order to respond to crisis situation or to fill in a financial gap that cannot be supported by the state budget. On many occasions, the SFD is the source of additional environment-related investments or bridging the financial gaps of the investment budget of the governorates. 8.29 Carefully designed economical instruments, coupled with appropriate environmental policy formulation and strong enforcement of the regulation, could lead to reduction of pollution levels and encourage the industry to move towards compliance with environmental standards. A number of studies were made by the World Bank,73 USAID74 and DANIDA75 in order to assist MSEA in establishing economic instruments. The major conclusions of these studies showed the majority of options considered for pollution charges were judged unsustainable, because of: (a) a lack of competition within a polluting sector, as these sectors are dominated by very large public sector companies (fertilizers, iron and steel, chemicals) and there are too few actors for an economic instrument to be applied; (b) there is a limited range of marginal abatement costs in the polluting sectors which operate with very small but old technologies; (c) there is uncertainty in the future of specific sectors as a result of imports and external competition; and finally (d) there is a lack of sufficient data to carry out the financial return from the application of a specific economic instrument. Finally, the existing administrative structure for collecting and managing revenues render the adoption of market based instruments unworkable at present.

8.30 In order for an economic instrument to be implemented in Egypt, the following requirements should be met: (a) Law No. 4 of 1994 should be amended to enable MSEA to levy incentive charges; (b) MSEA should present the charges as one tool of its enforcement tools, i.e. that MSEA intends to enforce the law and levy fines on polluting establishments; (c) MSEA should also commit itself that any revenue

73 EPAP: Economic Instruments for Industrial Pollution Control in Egypt: Findings and Recommendations,

ERM consultants report- June 1998. 74 Egyptian Environment Policy Program. 75 Organization Support Project.

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raised for industry will be used to achieve the environment objectives of these industries and these revenues cannot be deviated for a different purpose; and (d) MSEA should raise public awareness about the importance of health impacts. Even with the absence of conventional economic instrument, the Government should pursue the gradua l removal of the energy subsidies (see Chapter 3) and continue to increase the user charges to cover the costs of water, wastewater and solid waste services for industry and the domestic sector. Conclusion

8.31 The review of environmental expenditures showed that Egypt has allocated a substantial amount of LE 31.9 billion of its local resources for financing environment related projects (equivalent to 1% of GDP). Egypt has benefited greatly from the Overseas Development Assistance of donors which collectively provided about LE 2.4 billion to improve environmental management. However, it appears that from the expenditure point of view, there is a disconnection between environmental priorities in NEAP and development priorities of the Government undermining therefore the importance of NEAP in ensuring that the environment is mainstreamed in the productive sector of the economy.

8.32 The situation is further aggravated by the large blanket subsidies in the water and energy sector amounting to LE 19.3 billion-20.3 billion/year (US$3.1 billion/year in 2004) which are putting pressure on the state budget, and have not resulted in changing consumer and producer behavior. The proliferation of the environment related funds for the amount of LE 0.9 billion is likely to distort the market in the longer term, once they would have achieved the purpose for which they were established and which is usually specific to a certain phase in the environment work (e.g. industrial pollution funds established to support industries during the grace period of Law4/94). This would encourage the local banking sector to rely on cheap financing instead of using its own money to stimulate the market of environmental services and on lend to the private sector for environmental investments. Such use of fund will also delay the application of the polluter-pay-principle.

8.33. In the short term these subsidies should be justified on the basis of well defined objectives; they should be limited in magnitude and time. In the long term, policies should be in place so that the subsidies reduction would result in increasing the Government budget to finance its social program and provide additional incentives for the private sector to be fully involved in environmental services. 8.34 The challenge is not to increase government investments. The challenge is to meet certain socioeconomic criteria by, first, prioritizing and reallocating this investment, and second, by devising a financial management system and implementing it on the basis of clear pr iorities and well-defined outcome through the mobilization of local resources instead of depending primarily on grants from the international donor community.

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CHAPTER 9

General Conclusions and Recommendations

The Road Ahead

9.1 In order for Egypt to embark into the path of sustainable development, changes are needed in the way it manages its socio-economic and environmental resources, and decides upon the related priorities. In previous chapters, it was shown that the cost of environmental inaction is a binding constraint for economic growth that Egypt cannot afford to neglect. The two key principles that are essential if Egypt would like to engage into sustainable development are:

• The conservation and development of its own natural resources (oil/gas, water and land); and

• An agreement on a new share of responsibilities between the State, the Producers (or Service Providers) and Beneficiaries in the conservation and development of these resources.

9.2 In the past, the Government of Egypt (GOE) was unilaterally responsible for managing Egypt’s natural resources and directing its economy. This-top down approach has led to much inaction that increased the burden on the State revenues and affected the quality life of the citizens. In the new era of market-based economy, there is a need for clear articulation between environmental policies with overall economic policy. Environmental benefits would flow from the deregulation of the economy (initiated in the 1990s) which aimed at improving the administrative management of the economy, including price and fiscal reforms, trade and foreign exchange liberalization, and aiming at creating an enabling environment for attracting local foreign investment. Such strategic approach towards sustainable development implies a new way of thinking and working in Egypt. As a private good, the environment is the responsibility of the ordinary citizen through change in his behavior, and his involvement as part of the decision-making process, as well through the private sector which should now act as the engine of growth. As a public good, the responsibility lies with the Government though the adoption of environmental policies and incentives as well as the financing of environmental investments that are focused primarily to protect the poor. As a global good, the environment should be an incentive for the Government to take advantage of the existing financing mechanisms such as GEF, CDM and PCF in order to improve local environmental benefits and build on overlaps with regional and global benefits. The recommendations provided in this chapter were designed to look at the environment not from a degradation perspective but from opportunities for economic growth. 9.3 Despite undeniable progress in implementing its National Environmental Action Plan (NEAP) for which a legal and institutional framework was established and important environmental and natural resource projects and programs were financed, Egypt is still at the early stage of its transition to sustainable development. An overview of Egypt’s performance towards sustainable development showed that:

• Ownership of the sustainable development process is unclear. Despite strong political declarations, there is presently an institutional gap in the development of policies and strategies related to sustainable development as opposed to environmental protection which is entrusted to MSEA/EEAA. Apart from the conceptual commitment to sustainable development principles, there is no clear vision how the country could embark onto the path

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of sustainable development especially amid Egypt’s commitment to implement its MDGs. At present, there is neither a legal nor an institutional framework capable of establishing links at the outset between social and economic policy decisions and the quality of the country’s environmental resources. A “horizontal” system should be developed for a global and integrated reflection on sustainable development and the environment. Such system requires the explicit commitment of the entire government, and a participatory approach for setting priorities and making choices. The institutional and legal framework should thus be modified to rapidly adapt to the needs of a new era characterized by: (i) a competitive economy for creating jobs where the private sector plays a major role; (ii) the use of incentive mechanisms; and (iii) a better integration of economic growth objectives into environmental sustainable management and, in parallel, a better cross-sectoral coordination; and finally (iv) an increased role of municipalities, local organizations, civil society and the private sector in the management of environmental problems, each at its scale.

• The NEAP process could not be used to set priorities at the national level. NEAPs of

1992 and its 2002 Update have provided an extensive state of the environment analysis, identified a number of environmental issues confronting the country and proposed a very ambitious implementation program. However, NEAPs were not used as an instrument for setting environmental priorities based on a comparison of costs and benefits. Rather, they provide a qualitative and quantitative assessment of impacts on the environment and natural resources in order to meet the technical requirements and interests of particular sectors or agencies.

• Mainstreaming environment into sector policies has not been fully introduced. The

sector policies prepared by the ministries are independent of one another. The preparation of sectoral plans, such as the National Plan for Protection of Water Resources, the Integrated Coastal Zone Management Plans, and the Integrated Solid Waste Management Plans are generally well documented on a technical level. However, the economic and financial evaluations are critically scant. Currently, there are more than 20 policies developed under the USAID-funded Egyptian Environment Policy Program (EEPP) waiting to be transformed to strategies and objectives and then to outputs and outcomes. They are so far unreachable goals.

• The present legal framework is not conducive to facilitate environmental

mainstreaming. Egypt is still using the command and control regulations in its legal framework requiring the establishment of strong monitoring and enforcement systems which are still weak, and with stringent standards that cannot be met. EEAA has completed the revision of these standards and will request the Government to amend the executive regulations of the Environment Protection Law # 4. With its transition to a market economy and its opening to globalization, the legal framework should be reformulated to reward compliance through self monitoring and self control instead of imposing non-collectable fines on polluters; to provide financial incentives for adoption of clean technology; to revise the stringent standards that cannot be achieved into a adaptable guidelines that facilitate trade and direct foreign investments; to use the strategic environment assessment and the environment impacts assessment as decision tools in the formulation of policies and improvement of project design, and finally, to facilitate disclosure and dissemination of environmental information to attract markets. A progress in amending the legal framework was made: Law No. 8 related to the Investment Law has been amended to include environmental industries and more specifically solid waste management industry.

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• Furthermore, the institutional framework needs to be streamlined, shared and decentralized. Inter-Ministerial Cooperation on environmental matters is quite in its form and quality. Coordination between the different ministries, decentralization to regional branches and governorates units, definitions of new functions and responsibilities between the national and local government and civil society are important topics that many ministries individually or collectively should come to terms with. Coordinated actions between economic, sectoral ministries and local government are irregular, but should be improved if inter-sectoral issues are to be resolved. A positive example is in the partial resolution of solid waste management issue; it is only when the whole Council of Ministers was politically behind this issue and when the Ministries of Local development, MSEA/EEAA and the governorates worked together as a team that a solution could be found. Such a system of inter-institutional synergies should not be short-lived, and only became active during crisis management. Rather, it should be sustained; as such exemplary cases exist already in the governorates of Alexandria and Quena. If environmental conditions have largely improved in these governorates, it is because there was strong leadership committed to change; an understanding between the local government and the citizens on the preservation of local resources, and a voluntary agreement on a new definition of responsibilities to be shared between the local government, the private sector and the ordinary citizen. Another positive example is the pilot implementation of a new institutional/organizational set-up through which the Environmental Management Units in the Governorates are administratively affiliated to the Governorates and technically affiliated to MSEA/EEAA. That was only implemented because of a strong leadership and voluntary agreement between the Governorates and MSEA/EEAA.

• Yet public investments are still considered to be solutions for improving the

environment. There is still a strong emphasis on investments as a remediation for environmental problems with less impressive progress on policy reforms. Implicit and explicit subsidies on water, wastewater and energy sectors amount to 5.2% of GDP (2002). Egypt’s environmental problems have emerged as having a clear link, and in many cases their origin, in past policy and institutional choices, including, fiscal and incentive systems faced by consumers, producers, and government agencies. At present, prices of goods do not capture the true costs of production. The policy of direct and indirect subsidies for critical inputs stimulates pressure on Egypt’s 's natural resources and encourages the development of those sectors of the economy that have no comparative advantage in international terms. Since the prices of key inputs such as energy and water are low, the wrong signals are sent to the producers and policymakers as resources are allocated to increase the production of subsidized inputs. On the other hand, whenever pricing and sectoral policies are inter-linked, they lead to long-term economic and environmental benefits. Examples of such win-win solutions have been provided in Chapters 3 and 4 concerning the improvement of water and air quality.

• With large environmental expenditures but less impressive outcomes. Public

expenditures in the field of environment reveals a considerable attention granted by the Government in financing during the last ten years, an amount of LE 31.9 billion, complemented by twelve environmental-related funds for LE 0.9 billion and supplemented by a yearly subsidy of LE 20 billion/year (at current LE). This amounts to a total expenditure in the last decade of an order of magnitude of LE 231.8 billion with subsidies on energy and water/wastewater covering nearly 80 percent. This level of financing can no longer be sustained with the decline in Government revenues which could not be used to finance additional basic environmental services such as water supply, sanitation and waste management in rural areas or in social sectors. Under such circumstances, Egypt has no

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alternative but to proceed with public expenditure efficiency based on output performance, impose the recovery of services and resource utilization costs, increase its revenues from environmental investments and internalize the environmental degradation costs.

PROPOSED GOALS AND ACTIONS TOWARDS SUSTAINABLE DEVELOPMENT

9.4 Despite considerable efforts, the issue of water and air quality, solid waste and coastal zone management remain the most pressing environmental inter-sectoral problems in Egypt as also identified in EEAA action plan of 2002 (see Chapter 8). This situation has been in the past linked to the economic and social development process of the country. Therefore, solutions aimed at remedying constraints and limitations should be integrated in the economic, institutional, and social reforms proposed by Egypt within the scope of its free market economy. These solutions must respond to the following two inter-related goals, namely:

• Reduction in the prevalence of respiratory and water borne diseases due to poor air and water quality and inadequate collection and disposal of municipal waste and;

• Improving the quality of growth of Egypt’s coastal areas. 9.5 The appropriate objectives to respond to these goals are now anchored in a macro and micro-economic analysis performed as part of the CEA. Damage costs were estimated and used as a tool to identify measures proposed below, and to bring to the discussion table stakeholders of different persuasions, including members of civil society and agencies, like the Ministry of Finance, and others.

9.6 The proposed approach to address the priority actions defined below is essentially based on policy and institutional measures ranging from: (i) rationalization to embody price-signals that induce a switch to environmentally-benign practices (renewable energy, for instance); (ii) cost for environmental services (sanitation and solid waste management, for instance); and (iii) development of information systems and strategic environmental assessments (disclosing and disseminating data on inferior water quality, for instance). All such measures are summarized in the Matrix attached to this Chapter. This matrix describes the objectives, intermediate objectives for the next five years, the proposed policies, institutional and legal measures, the responsibility of the different stakeholders as well as the anticipated outcomes as a result of the implementation of these measures. Very few investments are proposed, and they should not be a burden on the state budget but should generate revenues on the basis of costs and benefits resulting from strategic environmental assessments. The priority actions summarized below, consider the environment as a public, private and global goods that could generate benefits.

9.7 The prevention and decrease of air pollution risks can be achieved by:

• The Government adopting a pricing policy of gradually increasing (the currently-subsidized) price of fuel oil and gas oil, combined with sector policy after completing the necessary studies related to social impacts and commensurate with the income levels;

• Reducing concentration of pollutants of PM10 and SO2 in the transport and agricultural residues sectors;

• Increasing the share of natural gas in the industrial sectors (with emphasis on small-and-medium industry) and in the transport sector particularly for city buses and micro buses;

• Using the Clean development Mechanisms (CDM) and the Prototype Carbon Fund to increase revenues from the trading of certified emission credits in order to improve further

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air quality in the urban and rural areas through the use of Clean Development Mechanism and the Prototype Carbon Fund;

• Providing and disseminating through MSEA/EEAA factual information on air pollution and its health risks.

9.8 Applying these win-win policies would not only decrease the damage health costs by at least of LE 2.0 billion/year in the year 2010, i.e., reduction of 33% of the damage costs, but will also generate revenues from the trading of methane and carbon dioxide from solid waste landfills and from CDM projects on land use, land use change and forestry.

9.9 The improvement of water quality in the rural areas particularly in the Nile Delta will reduce the burden from water-borne diseases as well as improve crop and fishery production. This can be achieved by:

• The government reviewing gradually its pricing policy in water and wastewater and establishing a cost recovery for at least operation and maintenance;

• Improving sanitation in rural areas through the adoption of low cost technologies and through establishing a cost recovery system (in kind and cash), thus fostering community participation in devising, financing, implementing, and overseeing such unconventional undertakings and empowering the water board and water users associations;

• Integrating the soil and water quality in development of regional strategies, for optimization of crop production;

• Decreasing salt accumulation through a decrease of total dissolved solids (TDS) in the drainage and irrigation canals in order to increase yield production;

• Increasing awareness campaigns through NGOs and the media on the impact of diseases due to bad hygiene and poor water quality; and

• Enhancing local environmental benefits by protecting the global environment using the CDM for land use, land use change and forestry projects, the PCF for improving energy efficiency in the irrigation sector and GEF for combating desertification and land degradation.

9.10 Improvement of water quality due to rural sanitation and decrease in salinity will both have environmental and economic benefits. The poor water quality resulting in mixing surface and drainage water both contaminated by wastewater create both economic damage due to a decrease in yields and health damage.

9.11 Both air and water quality are also affected by lack of proper collection and disposal of municipal solid waste. Burning of municipal solid waste in urban areas and of agricultural waste in rural areas is a serious source of air pollution. Improper solid waste disposal in the rural areas is a source of surface and groundwater pollution especially in the Nile Delta. Adopting an integrated approach to municipal solid waste and agricultural waste management systems can be achieved through:

• Re-enforcing the effective and successful implementation of the Integrated Solid Waste Management strategy in the urban areas with private sector participation, backed with the appropriate legal framework, with a cost recovery system based on a full cost accounting and with incentives for the local private sector and local communities;

• Extending solid waste management collection and disposal in rural areas on a priority basis, by involving NGOs and local contractors to carry out community development projects for

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the production of recyclable products, feed, fodders and compost from municipal solid waste and agricultural waste;

• Developing and raising awareness of the public and farmers for the proper disposal of municipal solid waste and agricultural waste, and implications of unsound behavior;

• The provision of an incentive system by the local government to enable the local market for the production of recyclable and agricultural products (feed, fodders and compost) from municipal solid waste, and agricultural residues; and

• Protecting the global commons by reducing the emission of methane and carbon dioxide using the CDM/PCF and GEF mechanisms.

9.12 The improvement of the quality of growth in Egypt’s coastal areas can be achieved through:

• Ensuring equilibrium between the development of mass tourism and the preservation of Egypt’s unique natural and marine resources by applying region-specific integrated coastal zone management;

• Improving tourism by targeting the clients in search of quality environment and in ecology-based products as well as charging appropriate fees for the preservation and conservation of these resources;

• Increasing awareness campaigns for tourists and operators for protecting the unique marine and natural resources and public consultation on the coastal use;

• Enforcing the existing regulations complemented with local funding mechanisms through the increase if entrance fees and tourist taxes; and

• Making use of GEF for protecting the pristine areas in the Red Sea from further degradation.

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Towards an Improved Environmental Management System 9.13 Achieving the proposed objectives described in the previous sections would require the establishment of strong public institutions which could: (a) build on the positive links between the environment and development and ensuring equitable income growth; and (b) establish sound policies, regulations and economic incentives which would integrate environmental considerations in the decision-making process. Such objectives cannot be attained in the long term unless a series of measures are first implemented in the near term to build up these institutions in Egypt. 9.14 A realignment of institutional responsibilities is necessary to achieve an efficient environment management system on the basis of the recommendations stated above. However, the most important factor in managing the environment is a strong political will. This should be manifested not only by promulgated or documented statements but also by the performance record of the entire government to engage in environmental sustainability. Egypt has demonstrated its political will by providing clear statements in NEAP and in EEAA action plans. Such statements should, however, be translated into policy, institutional and legal changes that would:

(a) Increase inter-ministerial coordination on environmental sustainability through the High Committee on Policies of the Council of Ministers;

(b) Strengthen the environment-related institutions of MSEA, EEAA and the line sector ministries;

(c) Continue and reinforce the basic environmental functions of regional coordination, monitoring and enforcement from EEAA to its Regional Branches Offices (RBOs) and the Governorates’ Environment Management Units (EMUs); and

(d) Support sustainable private sector development and harness the advocacy and participatory role of civil society.

9.15 A four-tiered organization is proposed for Egypt. It would involve: (a) the High Committee on Policies as decision forum for environment sustainability at the policy level; (b) MSEA, EEAA and the sector ministries as a coherent core for strengthening environmental policies at the national level; (c) EEAA existing regional branch offices as a new decentralized structure at the regional level and the EMUs at the governorate level; and (d) The private sector, civil society and the international donors..

Increasing Inter-Ministerial Coordination on Sustainable Development

9.16 In order to fill in the institutional gap in the development of sustainable development policies, it is recommended that the High Committee for Policies of the Council of Ministers be the body responsible for articulating the sustainable development policy of Egypt after further studies are completed. This inter-ministerial committee is presided by the Prime Minister and includes a number of line and sector ministries. When this committee would address sustainable development, it could be enlarged to include the Minister of State for Environmental Affairs, key Governors of Cairo, Qaliyoubiah, Guizeh, Alexandria, Red Sea, Aswan and Quenah, and South Sinai as well as the head of the Federation of Egyptian Industries, the Egyptian Chamber of Commerce, and selected NGOs. The Minister of State for Environmental Affairs could be the secretary of this committee for all matters related to sustainable development.

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The Committee will be responsible for:

• Identifying or providing oversight of sustainable development policies. Approving major changes in existing sustainable development policies and/or new policies, and establishing and approving environmental goals and priorities for sector ministries in relation to national priorities of economic growth and poverty alleviation.

• Providing the necessary oversight and coordination of government activities in the implementation and follow up on Egypt’s progress towards achievements in the Millennium Development Goals (MDG).

• Reviewing and approving major economic activities affecting the development, conservation and exploitation of natural resources.

• Approving investment priorities in the field of environmental and natural resources protection and preservation; reviewing and approving ministerial plans and programs and ensure that environment is integrated in these plans; proposing financial allocations and determining the necessary economic instruments for environmental and natural resources protection.

• Approving for enactment, new or revised legislation to be able to support Egypt in competing in the global economy while protecting its environment. Revising environmental protection legislations that would enable Egypt to compete in the global economy.

9.17 There are examples in Arab countries on the establishment of high councils or inter-ministerial commission on sustainable development and environment protection. The establishment of a National Commission on Sustainable Development is operational in Tunisia. It is presided by the Prime Minister and included line and sector ministries. The State Secretary in charge of the Environment who is of a ministerial rank (equivalent to a Minister of State in Egypt) acts as a secretary for the Commission with a special office within the Ministry, the Tunisian Observatory for Environment and Sustainable Development is the secretariat for this Commission. A High Commission for Environment and Sustainable Development was established in Algeria but is not fully functional as it does not have a proper technical or administrative secretariat. Instead, Sustainable Development Policies are discussed in subcommittees of the Conseil National Economique et Social (CNES), which acts as a think-tank, and includes public and private figures. In Saudi Arabia, a Ministerial Committee for the Environment (MCE) was established by Royal Decree, and chaired by the Second Deputy Premier and Minister of Defense and Aviation. The MCE is the highest environmental authority in the Kingdom and has been designed to address the policy and sectoral issues at the national, regional, and international levels; it coordinates and follows up environmental activities within the Kingdom. The Ministry of State for Environmental Affairs 9.18 As stated in Chapter 7, the Minister of State for Environmental Affairs has responsibly undertaken the environmental functions and with limited staff and resources succeeded in placing the environment at the core of the Government policy agenda. The ambiguity in the involvement of the Minister and EEAA Chief Executive Officer in a day-to-day management of the environmental activities, could infringe upon the exercise of their policy and strategic functions which are different but complementary. The Minister’s office would continue to be a “horizontal” outward structure responsible for formulating environmental strategies and policies that would result in economic growth, poverty alleviation and support Egypt in competing in the global economy while protecting its environment.

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9.19 The role of the Minister’s office should be mostly strategic, frontward looking and going beyond the environmental issues (i.e., the symptoms) to address the key underlying environmental and social causes of economic growth and poverty alleviation. In addition to overseeing the application by EEAA of its national environmental policies, the Minister’s office will concentrate on national and international interlinking topics related to poverty and environment, trade and environment, energy and environment, finance and environment, tourism and environment, climate change and environment. It will oversee, inter-alia, the implementation by the policy and institutional measures of cross-sectoral issues of air and water quality as well as waste and coastal zone management which are the major causes of environmental degradation. MSEA’s challenge will be to identify the economic instruments to enable the Government, and the private sector to rely on local resources to sustain environmental investments and activities, and to supplement there resources by revenues generated from the trading of environmental commodities on the international market, and form the different international funds attached to international agreements and conventions. These functions cannot be undertaken by EEAA which is essentially an inward coordinating and operating national environmental agency and has not yet had an inter-ministerial mandate to help move the sustainable development agenda of the country. 9.20 A Sustainable Development Unit should be established in the office of the Minister of State for Environmental Affairs. This unit will be supported by EEAA staff and will: (a) undertake the appropriate policy and economic analyses for the definition of environmental goals and objectives as well as serve as a secretariat for the High Committee on policies whenever this committee will address sustainable development issues;(b) carry out strategic environmental assessment of national priorities to determine their compatibility with environmental and sustainable development priorities; (c) evaluate the environmental implications of major economic and sectoral policies and formulate environmental policies and strategies to respond to the MDGs targets; (d) evaluate policy options for pollution abatement and natural resources management; and (e) establish performance indicators and review the overall progress of NEAP 2002.

The Egyptian Environmental Affairs Agency (EEAA)

9.21 EEAA would remain the operating arm of the Minister of State for Environmental Affairs. It would continue its basic regular functions but would need to further coordinate among its sector departments such as the Environmental Management Sector, the Environmental Quality Sector, The Nature Protection Sector, the Planning and Follow-up Department, the Information and Computer Department, the Environment Protection Fund Department, and supervise the work of the RBOs and EMUs. 9.22 The following functions are proposed to improve the performance and coordination of the different EEAA departments:

(a) The Environment Management Department should now adopt the principles of Integrated Pollution Control. This department should identify and prepare policies related to integrated pollution control, develop environmental quality objectives (EQO) commensurate with the state of the local environment and based on data generated from the environment quality department, advise on best available technologies, provide regulations and guidelines for integrated solid waste management, propose recommendations for complying with international environmental regulations , and for removal of environmental barriers to trade, besides making the EIA system operational and mandatory with regular follow up on the implementation of EIA mitigating measures. The inspection general directorate should be further reinforced and strengthened. This directorate could

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implement pilot projects to test new technologies and/or clean technologies and/or remove the institutional and financial barrie rs for market penetration;

(b) The Environment Quality Department should be responsible for environmental monitoring of compliance at the national level using its central laboratories and the Nationwide Environment Information Program. This department could use such monitoring network to take decisions on preventive and curative measures, and advise the environment management department and sector ministries on industrial sitting, and tourism resorts levels of pollution loads;

(c) The Nature Protection Department should be able, among its responsibilities for protected areas, to develop natural resources trends, articulate strategies and policies for their management, support the application by governorates of an integrated regional costal zone management plans, and follow trends and development of coastal erosion in the Nile Delta. This department will ensure that land use plans would not adversely affect Egypt’s natural and protected area resources and that the Integrated Coastal Zone Management is implemented as proposed in Chapter 6 is being implemented;

(d) The Technical Support and Environmental Disasters Management Unit should prepare plans for natural and environmental disasters, such as oil spills and chemical accidents, and follow up on the implementation of the mitigating measures;

(e) The Environment Protection Fund Department will continue to be a viable instrument to target resources to environmental programs and projects. This Fund should be able to raise and generate revenues from economic instruments to be established (pollution taxes, pollution fees, fines, and others) based on the "polluter pays principle" (PPP) with the objective of influencing polluters' behavior. Fund disbursement should be output based to stimulate the market, and generate income as a result of its use. New environmental funds established through EEAA (see Chapter 8) should be consolidated with the EPF which should be managed on a commercial basis by one or more local banks and based on sound banking discipline and strict technical and financial criteria;

(f) The Information and Computer Center Department will manage the Egyptian

Environment Information System and serve as a decision support system for ministries, agencies and clients. This unit will be the central source of environmental data that should be in the public domain, and be a gateway for easy access to national and international database for a wide range of users. This unit will be responsible for issuing the annual report on the state of the environment;

(g) The International Relations and Cooperation Unit would oversee international and inter-sectoral programs focusing on the development of institutional and policy measures for their effective implementation by the ministries, governorates or the private sector. This unit will be responsible for following and implementing conventions, develop policies for international cooperation and partnership and maintain donors coordination;

(h) The Planning and Follow Up Unit should be responsible for formulating EEAA policies, preparing annual business plans based on NEAP of 2002 and on the recommendations of EEAA Board, conducting periodic evaluation and follow up on EEAA action plans, and providing feedback in terms of annual reports on EEAA achievements and challenges;

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(i) The Climate Change Unit would be responsible for all energy environment activities. This unit will oversee the implementation of the Energy-Environment Review Action Plan as well as the CDM, GEF and other mechanisms established by international conventions. This unit could assist in building a portfolio of projects with local and global benefits; and

(j) The Environmental Information and Public Awareness Department should carry out the collection, analysis and dissemination of technical information, and ensure participation of NGOs, civil society and affected groups in the decision-making process. The awareness program should be used for the dissemination of information concerning the EIA process, promotion of integrated pollution control, and strengthening ownership of the implementation of NEAP.

9.23 MSEA and EEAA should review its recruitment policy so that its regular staff be maintained and the major part of the contracted staff be regularized. Without additional human resources, training, and financial incentives, no substantial progress could be achieved to strengthen the environment management system in Egypt. EEAA should also supplement its staff with different skills mix in policy, in financial and economic analysis, in environmental economics and in environmental law. It would also continue to call upon the expertise of the universities and research centers to help in the implementation of its functions and to transfer knowledge and expertise to its staff.

Sector Ministries 9.24 The major role of the sector ministries would be to implement with MOE and EEAA’s assistance the sustainable development policies, as applicable to the operations of the specific ministry. The sectoral ministries would have primary responsibility for environmental-related investments in their respective sector, but would delegate the implementation of these investments to the local authorities, User Associations and Water Boards as could be the case for the Ministry of Water Resources and Irrigation. Ministries would ensure that environmental-related investments are properly operated and maintained. In order to assume this role, sector ministries should have the flexibility of either establishing an Environmental Management Unit (EMU) or designing an existing department/division to be the focal point for all environmental activities and provide inter-departmental links. The EMU or the assigned environment department should report directly to the Minister’s office, the design of the EMU should emphasize a structure and staffing patterns which are the most effective given the mandate of the organization to effectively implement its environmental responsibilities. Of special importance is the strengthening of the trade and environment committee at the Ministry of Foreign Trade in order to ensure that Egypt does not lose market competitiveness as a result of applying stringent environmental regulations as described in Chapter 2. MSEA and the Ministry of External trade should work in collaboration with the Federation of Egyptian Industries and Chambers of Commerce, and provide them with information and technical support. The High Level Governorate Committee and the Regional Branch Offices and Environment Management Units

9.25 A high level committee on environment was established in each Governorate. This high level committee should be the local body to support sustainable development at the local level. The RBOs and EMUs would continue to constitute the most cost-effective mechanism to carry out the decentralization of environmental management functions. A number of proposals supporting the role of the RBOs and EMUs were prepared by DANIDA Organization Support Program (OSP), by USAID-financed Egyptian Environment Policy Program (EEPP), and by the Finnish/World Bank-financed Egyptian Pollution Abatement Project. The main responsibilities are to monitor and enforce environmental laws and

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regulations on the local level, conduct periodic surveys on the state of the environment and advise the governors and local government on all environmental matters, review the yearly environmental record prepared by each establishment as part of self monitoring, review and approve EIA reports for gray projects and follow up on their mitigating measures, coordinate environmental activities in the region and in the respective governorate in accordance with the governorate environment action plans (GEAP), and be responsible for local education awareness. 9.26 Decentralization of environmental functions would require strengthening the staff through external training or local training by the local universities and research institutes, and increasing gradual responsibilities with the assistance of local experts from the local universities. This would require establishing a process of rigorous and regular review of the performance of the RBOs and EMUs by EEAA.

The Role of the Private Sector

9.27 The private sector should be an engine of growth for sustainable development. The Government could not continue to provide large scale environment related investments, and should depend on the private sector to play major role provided that the right policies and incentives are developed to create markets for environmental goods and services.

This can be accomplished by:

(a) the Government to introduce environmental regulations that allow flexible market mechanisms to achieve environmental objectives and introduce good governance, increased transparency and access to environmental information;

(b) the private sector to promote through investments, environmental and social responsibility and good environmental management, and to make use of existing incentive mechanisms such as the PCF, CDM and GEF;

(c) local banking sector to provide long term loans with flexible repayment facilities;

(d) international donors to assist in formulating market policies and incentives for private sector development;

(e) sector-ministries and the local government to empower the associations and the communities in managing their resources in accordance with local plans developed by the community.

(f) the private sector to introduce environmental accounting in the industrial sector in order to ensure sustainable consumption and production.

9.28 With the right policies in place, the private sector should be able to invest or manage urban investments in the water, wastewater, irrigation, solid waste and transport sectors. The local community and water boards and association should take over the responsibility of managing their local infrastructure. This will allow the Government to target its investments to serve the poor in the rural and peri-urban areas.

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The Role of the Media

9.29 The role of the media should be further strengthened. Changes can only occur if they are accompanied by public pressure which could be communicated through the newspapers, radios and TV stations by well informed and factual media reporting. Such strengthening will be further enhanced by:

• Developing a communication strategy and campaign for MSEA/EEAA to address the major

environmental issues • Developing the necessary communications materials in print, radio, TV, and other media as

may be appropriate; • Supporting thre media and the press through traning and technical support for developing an

outreach and mobilization program for different audiences such as the public at large, the decision makers and the investors, and update regularly the communication and the information based on actual facts


The Role of Local NGOs and Civil Society

9.30 Building bridges with NGOs and civil society will reinforce the bottom-up approach for environmental sustainability. So far many NGOs were vocal but were not influential in changing behavior and policies. Unless both the civil society and NGOs take initiative and reinforce their advocacy role, limited progress will be achieved towards the transition to sustainable development.

9.31 The NGOs could play a major role at all levels. At the policy level, NGOs could take the lead in organizing a forum for sustainable development. This forum will be in the form of a think-tank of Egyptian experts selected on the basis of their managerial and technical expertise, substantial national and international experience and leadership. It will discuss the major inter-sectoral environmental issues confronting Egypt, and propose practical recommendations on how to integrate environment into policies and programs. It will also draw on the lessons from other countries to identify the policies to be considered by the government for meeting the MDGs. It will track down progress towards the implementation of NEAP, and publish good practice and challenges. It will also act as a sounding board for the Council of Ministers on environment sustainability. International donors could play a major role in supporting this forum.

9.32 At the operational level, NGOs should continue to organize and participate in public hearings and consultations on all environmental assessment for national and mega projects. This would require receiving training and technical support on reviewing EIAs and on public consultation and disclosure. They should be able to have access through the Government and other channels of environmental information, analyzing and publishing environmental data and trends, and using the media to provide facts and solutions on the major environmental issues, and organizing national campaigns.

9.33 At the local level, NGOs should continue to assist the community they serve in designing and managing their own development plans. They will design and implement awareness campaigns particularly on water resources, air pollution and solid waste management, water pollution, and hygiene. They should continue to take the lead in participating in the design and implementation of Community development projects in the rural areas particularly in solid waste, sanitation and water resources sector.

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The Role of the International Donors

9.34 The proposed restructuring of the policy and institutional framework would require a change in the conventional system of donor support in the environmental field. Now that Environment, after the Johannesburg Summit has become a cross-sectoral theme, donor support will be needed to assist Egypt in meeting its MDGs. USAID has already refocused its support toward helping Egypt to reach its environmental objectives related to economic growth and/or poverty alleviation. Other donors are orienting their environmental programs to other key ministries such as Ministry of Water Resources and Irrigation. Donor support should be based on:

a) A National Environmentally Sustainable Strategy anchored in specific social and economic benefits. The proposed strategic measures in the document could constitute the elements of such strategy;

b) Quantitative targets to be identified at the outset of each program with emphasis on meeting primarily specific policy and institutional measures in relation to the MDGs. Donors support should continue to be bundled with technical assistance, knowledge and experience sharing, and an exit strategy should be designed as part of the program definition and approval. A structured learning program on policy analysis and environmental economics should be included in all environmental program support; and

c) The Government should mobilize local resources and revenues to be the principal financiers of programs and projects. Donors’ financial support should be to bridge the gap between public expenditures and local resources generated from cost recovery or economical instruments. Donors would also be expected to support projects on the ground that would fulfill sustainable development policies.

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The Role of the World Bank

9.35 The Bank’s overall approach for supporting the implementation of the CEA will focus on addressing critical constraints and providing the enabling conditions for truly mainstreaming the environment in both the lending portfolio and the government’s policies and programs, and will be guided by the key operating principles consistent with the MNA Regional Strategy, namely:

a) Sharing knowledge. By focusing on three areas where the Bank has comparative advantage and global experience in mainstreaming the environment (including global environment, if and when applicable) with the aim of encouraging policy and institutional reforms: (i) the use of economic criteria and valuation of externalities; (ii) the linkage between environment and poverty reduction, energy and environment, women and environment, and banking and environment; and (iii) the strengthening of the decision-making process in water quality, solid waste management, and rural water and sanitation sectors. This work is already ongoing through the following activities:

• A Socio-Economic Study for Water Quality Management in Egypt.76 The purpose of this study is to assist the Ministry of Water Resources and Irrigation (MWRI) and other water- and environmental-related institutions in applying the environmental economics tool of benefit-cost analysis (BCA) to better incorporate the full socio-economic costs of alternative options/investments into decision-making on water quality management;

• Establishing and strengthening the capacity of an environment economic group in 1-2 selected ministries.77 The purpose is to strengthen the capacity in environmental economics to enable sector ministries to take policy decisions based on cost and benefit analysis;

• Water Resources - Implications for Income and Health of the Poor.78 The objective of this activity is threefold: (1) improve the understanding of linkage between poor small-scale farmers and water resources in Egypt; (2) identify measures available to mitigate impacts on the poor of water resources issues; and (3) foster local, national and regional partnerships and awareness. The study was initiated by the Minister of State for Environmental Affairs and will cover two Egyptian villages in the Delta and South of Egypt where the project will be implemented;

• Environmental Monitoring and Compliance in Rural Egypt.79 The objective of the activity is to promote development by strengthening environmental monitoring and compliance in Egypt at the local level with major emphasis on the role of rural women in environmental protection. This activity is implemented by the World Bank institute (WBI) and the Association for the Protection of the Environment, an Egyptian NGO;

• Energy and Environment.80 The objective of this activity is to follow up on the Action Plan of the Energy-Environment Review and the CDM study, and identify investment projects in the energy, irrigation and waste management sectors that could be financed by the Prototype Carbon Fund and GEF but blended with the forthcoming Bank operation on EPAP;

76 Activity financed under the World Bank Environment Mainstreaming Fund. 77 Activity to be partly financed by the World Bank’s Development Grant Facility. 78 Activity Financed under the Norwegian Trust Fund for Environment and Social Sustainable Development. 79 Activity Financed under the Norwegian Trust Fund for Environment and Social Sustainable Development. 80 Activity Financed under the Norwegian Trust Fund for Environment and Social Sustainable Development.

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• Banking and Environment.81 The objective of this activity is to assist local banks in managing the new risks and exposures in relation to environmental regulations and management, and provide a regional perspective on reasonable and transparent environmental regulations that support environmental quality objectives and private sector development and growth. This activity is implemented in cooperation with the International Finance Corporation of the World Bank Group;

• Monitoring and Information Dissemination for Regional Water Quality Management.82 The aim of this activity is to enable the National Water Research Center (NWRC) of the MRI to assist eight countries of the Mashreq and Maghreb countries to improve water quality monitoring and dissemination of information through the provision of relevant data and information to appropriate institutions and organizations for informed decision making and actions;

• Solid Waste Management Activity.83 Egypt is one of the eight beneficiaries of the regional capacity building initiative entitled “METAP Regional Solid Waste Management in Mashreq and Maghreb Countries” which is financed by the European Union. This activity aims particularly at: (a) providing tools to national and sub-national (i.e. regional and/or municipal) institutions to plan, design, implement, operate, and manage Integrated Solid Waste Management systems through the preparation of capacity development modules, development of operational guidelines, and organization of national and sub-national training courses; and b) promoting exchange of information and experiences within the MNA region in the field of solid waste. A national activity for developing a strategy for plastic recycling for which tender preparation is underway.

• Rural Water Supply and Sanitation study.84 This sector study will review the status of Rural Water and Sanitation in Egypt, identify the institutional, legal and financial constraints and propose recommendations for policy and institutional reforms and for investments.

b) Using high impact strategic lending . By capitalizing on analytical and advisory activities planned for FY05-07, three priority sectors from the CEA with potential for significant contributions to increase economic growth and poverty outcomes will be supported:

• Water Quality-Integrated Irrigation Improvement. The Bank intends to be involved in developing a portfolio of environment-related projects in Egypt aimed particularly at improving water/wastewater quality. In FY05, the Integrated Irrigation Improvement Project will envisage integration and management of water resources and improvement of water quality on a pilot scale. The West Delta Irrigation Infrastructure (FY07) would support the implementation of an innovative partnership with the private sector for the management of water resources in the West Delta region, incorporating environmental objectives and components into the design of both institutional reforms and investment operations. There will also be emphasis on water demand management especially on improving water conservation and economic returns. The Rural Water and Sanitation Project (potential for FY07) aims to improve the water supply and sanitation services in rural poor areas of Southern Egypt.

81 Activity financed through METAP by the Swiss Development and International Cooperation. 82 Activity financed through METAP by the Swiss Development and International Cooperation. 83 Activity Financed through METAP by the EC-SMAP II. 84 Activity financed by the World Bank.

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• Air Quality and Waste Management. The Bank will also be designing a follow-on

project, the Egyptian Pollution Abatement Project (EPAP II) whose objective is to reduce pollution generated by point-source/industrial entities in the region of Alexandria and other northern governorates, in order to limit impacts on public health as well as on ecological systems. The project will introduce for the first time in Egypt, environmental benchmarking at the plant, industrial sector, governorate and ministerial levels, and introduction of environmental performance disclosure as an appropriate market-based instrument. EPAP II will provide three financial windows for investments in : (i) pollution control in the urban and industrial and petroleum sector and in small and medium enterprises in Alexandria; (ii) environment services aimed particularly at stimulating private sector enterprises in manufacturing pollution control equipment, and in managing and operating sanitary landfills for solid waste and hazardous waste; and (iii) projects with local and global benefits that can be supported by GEF, CDM and PCF. The Bank will also be co-financing with GEF, the Solar Thermal Hybrid Project whose objective is to contribute to improving the economic attractiveness of solar thermal technology globally. The project will create global learning effects that will contribute to a reduction in costs for the solar thermal technology over the long-term.

• Enhancing the World Bank’s Operation Effectiveness in Egypt by relying gradually on the national environmental and social impact system. This enhancement will consist of: (a) adopting a more efficient safeguard system based on upstream considerations in the planning of policies, programs and projects and on predictable environmental guidelines for private sector development. This will require: attaining complementarity of the World Bank and Egypt’s environmental review and resettlement procedures by identifying systemic issues as explained in Chapter 7 (EMP preparation and follow up, consultation and disclosure) and agreeing on short-and medium-term solutions for modifications to existing procedures, policies and legislations; (b) pilot testing of the simplification procedures in Egypt by the harmonization of the national systems with the World Bank policies in EA and in involuntary resettlement in the irrigation and agriculture sector; and (c) establishing through METAP, a well structured learning program for the use of strategic environmental assessment (SEA) as a decision-making tool.

c) Responding flexibly and quickly by building on the momentum and the “space” created by

the CEA process, the Bank would stay the course of its dialogue with GOE on issues related to overall environmental sustainability and implementation. In this regard, Egypt’s Business Plan for FY05-07 has already provided a total amount of US$150,000 for supporting the policy dialogue on institutional development, mainstreaming tools and follow up on the CEA recommendations.

d) Partnership by continuing and strengthening Bank collaboration with donors, local stakeholders and NGOs, particularly in the following areas:

• With the five METAP Partners (EC, EIB, UNDP, Finland and Switzerland) and

focusing on harmonizing approaches and providing technical assistance in environmental economics, environmental assessment, coastal zone management, and banking environmental management, solid waste, and water quality management; and

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• With bilateral and other institutions and partners of Egypt, through parallel financing operations with EIB, the Japanese Bank for International Cooperation (JBIC), GTZ/KFW, FINNIDA, GEF and PCF, and through support and collaboration with all the environmental donors in Egypt and particularly with the European Commission, CEDARE85, CIDA, DANIDA, DFID, USAID, UNDP and UNEP as well as local and international environmental NGOs.

The World Bank Business Plan for FY05 9.36 The Bank’s work program in the environment for FY05 consists of:

a) Mainstreaming the environment into CAS by including major CEA recommendations;

b) Conducting a wide consultation in Egypt with national and local government agencies, universities and academics, members of civil society and NGOs, and the private and public sector representatives on the content and recommendations of the CEA;

c) Initiating 1-2 follow up activities from the CEA, on the full social cost accounting for water quality, and on the follow up of the energy-environment review through building a portfolio of GEF, CDM and PCF projects that can be blended with the World Bank’s future operations;

d) Continuing the simplification process of the harmonization of the safeguard policies with the national system;

e) Continuing the implementation of EPAP, focusing on the sustainability of financial mechanisms;

f) Completing the preparation of the Solar Thermal Hybrid Project;

g) Preparing the EPAP II; and

h) Continuing the major studies on poverty and environment, women and environment, and the METAP activities in the field of environmental economics, environmental assessment, environment and finance, and water quality and solid waste management.

General Conclusion

9.37 The success of implementing the CEA will require more than the proposed Bank assistance, which is quite modest compared to the magnitude and severity of the four priority environmental problems. Eventually, the GOE needs to be in the driver’s seat and maintain political commitment, a sustainable policy and institutional reforms without which environmental sustainability cannot be achieved in the medium future. This will require time, patience and perseverance. However, because environmental sustainability requires a long-term commitment and an integrated/systematic approach, its greatest benefits will be reaped throughout the longer term. It would be therefore shortsighted to try to justify the continuation of Bank’s assistance based only on its expected immediate tangible benefits, important as these may be. Bank assistance should therefore continue to be a long-term, forward-looking program that would help build Egypt’s capacity in engaging into policy and institutional reforms to help achieve its environmental MDG.

9.38 Since the early 1990s the Bank has been an irregular environment policy interlocutor in Egypt. Now that the Bank has agreed to assist its client countries in meeting their targets of environmental

85 CEDARE - Center for Environment and Development for Arab Region and Europe.

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sustainability, its catalytic presence is needed for addressing the root causes of inadequate environmental management in the four priority areas identified in the CEA, integrating environmental concerns into decision making through strategic environmental assessments; and providing tools for environmental policy analysis and linking project preparation to investment. Through the Bank’s association in the CEA process, significant outcomes can be achieved, including: (a) an improved public sector efficiency and environmental governance, through better planning and priority setting of environment-related institutions based on sound cost benefit analysis and participation of civil society; (b) lower environmental health risks through the development of health-related and poverty-related prevention and mitigating measures in Egypt’s selected portfolio of projects; and (c) adopting a more efficient safeguard system based on upstream considerations in the planning of policies, programs and projects and on predictable environmental guidelines for private sector development.

9.39 Implementing the CEA remains a challenge for both the GOE and the World Bank in order to improve the quality of life and the quality of growth of the Egyptian people.

138

Summary Matrix of the CEA Objectives and Recommendations

Field Objectives Intermediate objectives Accompanying and Policy Measures (Responsibility)

Institutional/Legal Measures (Responsibility)

Expected Impacts

Air Quality Reduction of burden due to respiratory diseases.

- Reduce concentration of PM10 and SO2 in transport and agricultural residues sectors.

-Undertake health surveys and cross sectoral assessments of key sources of respiratory health problems (MOH, MSEA/EEAA). - Limit exhaust emissions standards for new and existing vehicles (MOH, MSEA/EEAA). -Rationalize burning of agricultural residues as a short term measure (MSEA/EEAA, Ministry of Agriculture).

- Establish level of emission standards to be linked to standards of vehicles with tuned engines (MSEA/EEAA). - VET phased in governorates with highest population densities, higher income and of taxis of old models years (Min. of Interior, Governorates, Private Sectors), and install catalytic converters in vehicles - Establish decrees from Ministry of Interior specifying which governorates will be subject to standards for old and new vehicles (Ministry of Interior, MSEA/EEAA). - Use CAIP monitoring systems to analyze weather conditions, advise whether burning should take place or not, and assess effectiveness (MSEA/EEAA).

- Additional cost effective measures for reducing air pollution health risks - Local damage savings of LE 430 million/year in the year 2010 - Local damage saving of LE 125 million./year

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Expected Impacts

- Increase the share of natural gas in industry and in transport.

- Establish centralized collection for agricultural residues (Ministry of Agriculture, Governorates). - Increase the price of gas oil by 4.3% and of mazut by 18% to encourage switching to natural gas, and to generate for each an additional revenue of LE 100 million/year (Ministry of Petroleum).

- Establish enforcement mechanisms through persuasion and communication network to relay to farmers the restrictive burning days. (MSEA/EEAA, Governorates, private Sector, NGOs). - Identify and establish sites for disposal of agricultural residues (Governorates). - Initiate a phased- program beginning with areas close to roads and good transport links (Governorates, MOA). - Establish a collection system for payments for collectors and transporters of residues (Ministry of Local Dev). - Establish a revolving industrial natural gas conversion (INSG) fund for industrial facilities through the Social Fund or the Environment Protection Fund (MSEA/EEAA, Min. of Petroleum). - Expand in the establishment of ESCOs in conjunction with the INSG fund (Min. of Industry, Electricity, Private Sectors). - Expand the current CNG conversion program to cities and intercity taxis , and to cover microbuses using the current scheme of the Commercial International Bank (Ministries of Transport, Petroleum, local banks).

- Local damage savings of LE 205 million/year in the year 2010 - Local damage savings of LE 805 million/year in the year 2010 - Local damage savings of LE 470 million/year in 2010.

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Expected Impacts

- Use the CDM and Prototype Carbon Fund mechanisms to increase revenues from the trading of certified emission credits in order to improve further air quality.

- Take a Council of Minister’s decision to implement the recommendations of the Energy-Environment Review Study and Clean Development Mechanism Study (MSEA/EEAA, Councils, Ministers).

- Establish in EEAA climate change unit staff to oversee EEAA action plan and CDM projects - Establish a CDM commission within MSEA/EEAA as a policy and implementing support unit for appraising and disseminating the techniques and the approach to be proposed as well as marketing projects that could benefit from CDM and PCF (MSEA/EEAA, Industries, local banks).

Minimum increase in revenues will be LE 10 million/year.

Water quality

Reduce the burden of water-borne diseases and improve crop production.

- Improve the sanitation in rural areas through the adoption of low cost –non conventional technologies.

- Establish pricing policy based on a system of cost recovery/ cost sharing for improving the water quality services, and use the damage costs as the basis for determining target subsidies to the poor (MIWR, MOHNC). - Assess impacts of the future change of the price and subsidy policy on the changes induced on water quality use and diversification of crops (MIWR, Ministry of Agriculture).

- Prepare regional water quality management plans on the basis of strategic/regional environmental assessment (MWRI, MOA).

- Focus MWRI role towards establishing the policies and the incentive structure of targeting subsidies. De-centralize investment and O&M roles to multi-stakeholder entities and empowering the Water Boards (MWRI, Water Boards).

- Re-adjustment of investment programs and levels regarding rural sanitation based on damage cots - Damage costs could be reduced by LE 200 million/year by the year 2014

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Expected Impacts

- Integrate the soil and water quality in the development of regional strategies, for optimization of crop production. - Decrease salt accumulation (TDS) to increase yield production.

- Re-allocate water quality investments to the priority pollutants (being mainly pathogens and salinity) and by priority areas (Delta drains and the two Nile Delta branches) because of the high population/health and productivity impacts of water pollution (MIWR & Governorates). - Improve water quality drainage through an integrated approach of mitigating the adverse effects from poor sanitation (MIWR & MHNC). - Reach inter-ministerial consensus on the selection of crops (and other potential uses) of treated wastewater, and on the respective level of treatment based on

- Consolidate the existing Law No. 4 and Law No. 48, so that monitoring and enforcement is made at the local levels by EEAA/RBOs (MSEA/EEAA, MWRI).

- Raise awareness and provide periodic information in the local media on the water quality situation in the main irrigation an drainage branches and canals (NGOs and Society, MWRI).

- Encourage the effective participation of farmers’ groups and local government in the orientations and selections of appropriate sanitation technologies concerning the improvement of water quality and create conditions for better

- Definition and approval by the farmers’ groups of satisfactory development projects for their revenues based on an improved water quality and preservation of resources with a possible compensation for temporary loss of profit - Trade off between the priorities of the agricultural water- development and soil resources. -Economic optimization of land productivity - Damage costs could be reduced by LE1.1 billion/year by the year 2014

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Expected Impacts

financial and economic cost and benefits analysis (MWRI, Ministry of Agriculture, MSEA/EEAA, MOH).

-

involvement of users in the management of their resources (Farmer’s Association, NGOs, Governorates). - Develop mechanisms for observation and permanent monitoring and surveillance of the environment and natural resources (for instance GIS), serving as a basis for the scientific interpretation of simulated future changes (MWRI, MSEA/EEAA). - Put at the disposal of every user all of the information and data on the nature and quality of the waters and soils as well as constraints and incentives for crop production (MSEA/EEAA, MWRI, NGOs).

Solid Waste Management

- Adopt an integrated approach to municipal solid waste and agricultural waste management system.

- Support and re-enforce the effective and successful implementation of ISWM strategy in urban areas with private sector participation.

- Establish a regulatory authority capable of developing performance benchmarks, indicators for contracting and licensing / permitting, and periodic review of ISWM issues (MSEA/EEAA, MOH).

- Strengthen the supportive capacity in SWM for EEAA and MOLD, in SWM planning, waste reduction technologies and public awareness; and for the governorates and municipalities in cost accounting, resource mobilization and contract negotiation and monitoring (MSEA/EEAA, MOLD, Governorates).

- Increase the number of cost effective contracts. - Improve coverage of municipal solid waste collection and disposal with cost recovery.

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Expected Impacts

- Extend solid waste management collection and disposal in rural areas with public -private sector participation.

- Develop a cost recovery system based on a transparent cost- accounting system and the willingness of users to pay (Governorates, International Donors, Private Sectors). - Consider the State guarantee of private sector contracts , based on the solvency of the municipality services and on revenues from cost recovery (MOF, CBE, Local banks) - Adopt a design-build-operate system as a preferred form of contracting for the integrated solid waste management system (Private Sector Governorates).

- Carry out environmental and social impact analysis on the SWM system prior to issuing tenders, and include mitigating measures in the tender documents (MSEAA/EEAA, Governorates, Int. Donors). - Resolve the social situation of the Zabbaleen through consultation, voluntary agreement and fair compensation (MOLD, Private Sectors, NGOs). - Regulate the ISWM by a sector law, with the necessary standards, guidelines adaptable to Egyptian conditions including segregation of municipal waste from medical waste and special wastes, the provision of incentive systems for waste minimization, affordable cost recovery system based on cost accounting and the establishment of risk guarantee for both governorates and operators (MSEA/EEAA, MOLD, Private Sectors). - Enhancing through the media public awareness and community participation aimed at rewarding behaviors through provision of financial incentives (NGOs, Civil Society, Int. Donors, MSEA/EEAA).

- Livelihood of scavengers and Zabbaleen improved. - Cost effective collection and disposal of municipal and agricultural waste - Local damage costs savings up to LE 45 million/year by 2010.

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Expected Impacts

- Preparation of regional action plans for priority areas for rural waste collection and disposal (Governorates, International Donors).

- Development of inter-communality and raise the awareness of farmers as to the proper disposal of municipal solid waste and agricultural waste, and implications of unsound behaviors (Local councils, NGOs, Governorates). - Involve NGOs and local contractors to carry out community development projects for the production of recyclable products, feed, fodders and compost from municipal solid waste and agricultural waste (Farmers, NGOs, Private Sectors, Governorates).

Integrated Coastal Zone Management

- Improve the quality of the Egyptian coasts’ economic growth.

- Ensure equilibrium between the development of mass tourism and preservation of Egypt’s unique natural and marine resources. - Improve tourism profits by targeting clients in search for a quality environment and of ecology-based products that meet with their expectations.

- Prepare an action plan for collection and disposal of municipal waste in rural areas with greatest health impacts (MSEA/EEAA). - Market enabling for the production of agricultural products (feed, fodders and composts) from residues which would otherwise be burnt in the filed or at home. Target subsidies for products which may be reduced over time (Min. of Agriculture,

- Undertake tourism’s strategic environmental assessments (SEAs) for three regions: West of Matrouh to Lybian borders, Sahl El Hasshesh to Sudanese borders, pristine areas along the Gulf of Suez and Gulf of Aqaba (TDA, Min. of Tourism, MSEA/EEAA, Governorates). - Consolidate the responsibility of ICZM issues into one lead agency. The mandate for the national ICZM Commission is revised and the Commission is reactivated with a more operational focus (ICZM Commission, Governorates).

- Decrease in number of villages with mass tourism. - Increase in revenues from tourism development taxes, beach and harbor charges, entry fees to protected areas, and recreational activity permit fee

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Expected Impacts

MSEA/EEAA). - Develop of land-use plans in pristine coastal areas on the basis of strategic environmental assessments (SEAs) (TDA, MSEA/EEAA, Int. Governorates). - Develop maximum absorption capacities (tolerance threshold) of tourist activities, while taking into account constraints identified through regional environmental audits (Ministry of Tourism, MSEA/EEAA). - Determine of economic optimums including the value added expected from a better quality of the general environment trough the application of integrated costal zone management (Min. of Tourism, Governorates). - Develop a set of non-regulatory/economic policy instruments to provide incentives to better practices in coastal areas

- Increase and intensify awareness building among ICZM stakeholders to encourage their active participation, support and contribution to local ICZM initiatives (NGOs, Private Sectors,Tourism Operators). - Enforce existing environmental regulations and follow up on the mitigating measures included in the environment impact assessments (MSEA/EEAA)..

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Expected Impacts

and raising local funds for ICZM activities (Ministry of Tourism, MOF, MSEA/EEAA).

Improved Environmental Management System.

Adapt economic policies to sustainable development.

- Integrate the environment dimension in sectoral policies by developing mainstreaming tools for decision making. - Improve the Environment Management System.

- Establish environment units in key ministries with responsibilities and functions and appropriate resources and skill mix. Establish and implement mechanism for cost recovery for water reuse, energy and sanitation. - Propose that sustainable development be addressed by the High Committee on Policies of the Council of Ministers.

- Oversee or implement the different measures in the four priority areas above. - Strengthen the human resources capacity in policy and economic analysis. - Strengthen the office of the Ministry of State for Environment Affairs. - realign EEAA functions and responsibilities - Harmonize law No 48 with law No 4, and make EA mandates for all projects in the “black list” - call upon experts 7 universities and institutes to fill gaps on EEAA/MSEA human resources - Support private sector development - Harness the role of NGOs and civil society.

Establishment of four-tiered organization structure capable of overseeing the progress of achieving the environment sustainability MDG No. 7

147

Annex 2: Table 1

EGYPT TRADE AND ENVIRONMENT RAPID ASSESSMENT SUMMARY TABLE OF RESULTS OF EXPORT SECTORS

(High Supply Elasticity)

CHEMICALS LABOR ENERGY CAPITAL OTHER**

INPUT CATEGORIES PRICE INCREASE PRICE INCREASE PRICE INCREASE PRICE INCREASE PRICE INCREASE

EXPORT SECTORS 20% 50% 20% 50% 20% 50% 20% 50% 20% 50%

a -1.15 -2.89 -4.16 -10.4 -3.47 -8.66 -2.31 -5.78 -12.71 -31.76 Change in Output dY/Y b -1.04 -2.59 -3.74 -9.36 -3.12 -7.79 -2.08 -5.2 -11.44 -28.59 c -0.79 -1.98 -2.84 -7.11 -2.37 -5.93 -1.58 -3.95 -8.69 -21.73

TEXTILES a -4.62 -11.55 -16.63 -41.58 -13.86 -34.65 -9.24 -23.1 -50.82 -127.1 Change in Exports dE/E b -4.16 -10.4 -14.97 -37.42 -12.47 -31.19 -8.32 -20.79 -45.74 -114.4 c -1.66 -4.16 -5.99 -14.97 -4.99 -12.47 -3.33 -8.32 -18.3 -45.74 a -2.3 -5.78 -6.93 -17.33 -1.16 -2.89 -3.47 -8.66 -9.24 -23.1 Change in Output dY/Y b -2.1 -5.19 -6.24 -15.59 -1.04 -2.59 -3.12 -7.79 -8.32 -20.79 c -1.48 -3.69 -4.44 -11.09 -0.74 -1.85 -2.22 -5.55 -5.92 -14.79 FURNITURE A a -23.1 -57.75 -69.3 -173.25 -11.55 -28.88 -34.65 -86.63 -92.4 -231 Change in Exports dE/E b -20.79 -51.98 -62.37 -155.93 -10.39 -25.99 -31.19 -77.96 -83.16 -207.9 c -3.99 -9.99 -11.99 -29.99 -1.99 -4.99 -5.99 -14.99 -15.99 -39.98 a -2.3 -5.78 -2.77 -6.93 -0.69 -1.73 --- --- -12.71 -31.76 Change in Output dY/Y b -2.1 -5.19 -2.49 -6.24 -0.62 -1.56 --- --- -11.44 -28.59 c -1.55 -3.88 -1.86 -4.65 -0.47 -1.16 --- --- -8.53 -21.32 LEATHER a -11.55 -28.88 -13.86 -34.65 -3.47 -8.66 --- --- -63.53 -158.8 Change in Exports dE/E b -10.39 -25.99 -12.47 31.19 -3.12 -7.79 --- --- -57.17 -142.9 c -3.52 -8.81 -4.23 -10.57 -1.06 -2.64 --- --- -19.38 -48.45 a -7.85 -19.64 -10.63 -26.57 -1.85 -4.62 --- --- -0.99 -2.48 Change in Output dY/Y b -7.07 -17.67 -9.56 -23.91 -1.66 -4.16 --- --- -0.89 -2.24 c -5.27 -13.18 -7.13 -17.83 -1.24 -3.1 --- --- -0.67 -1.67 RAW COTTON

a -39.27 -98.18 -53.13 -132.80 -9.24 -23.1 --- --- -4.97 -12.42 Change in Exports dE/E b -35.34 -88.36 -47.82 -119.5 -8.32 -20.79 --- --- -4.47 -11.18 c -11.98 -29.95 -16.21 -40.52 -2.82 -7.05 -1.52 -3.79

NOTE: a represents exports case 1.A (the simple model) b represents exports case 1.B (with 10% efficiency improvements) c represents exports case 1.C (with international price adjustments) Figures based on assumption of a high supply elasticity scenario of 1.5 for each sector.

OTHER ** represents regulated inputs as follows Cotton for Textiles sector Wood for Furniture sector Raw Hide for Leather sector Seeds for Raw Cotton sector

148

Annex 2: Table 2 EGYPT TRADE AND ENVIRONMENT RAPID ASSESSMENT

SUMMARY TABLE OF RESULTS OF IMPORT SECTORS (High Supply Elasticity)

IMPORT SECTORS PAPER WOOD & CORK CHEMICALS INPUT CATEGORIES PULP WOOD ENERGY PRICE INCREASE PRICE INCREASE PRICE INCREASE 20% 50% 20% 50% 20% 50%

a -18 -45 -13.9 -34.7 -4.5 -11.3 Change in Output dY/Y b -14.4 -36 -11.1 -27.7 -3.6 -9

c -11.9 -29.7 -10.7 -26.6 -2.7 -6.7 a 12 30 1.5 3.9 5.5 13.8

Change in Imports dE/E b 9.6 24 1.2 3.1 4.4 11 c 5.1 12.7 0.9 2.2 1.9 4.7

NOTE: a/ represents imports case 1.A (the simple model) b/ represents imports case 1.B (with 20% efficiency improvements) c/ represents imports case 1.C (with international price adjustments) Figures based on assumption of a high supply elasticity scenario of 1.5 for each sector.

150

Annex 2: Millennium Development Goals

Table 2.1: Comparison of MDG of Egypt with other countries of the Mediterranean*

Years 1999 or 2000 (unless indicated) MDG

Tunisia Morocco Egypt Jordan Lebanon Turkey France Spain

1 Eradicate Extreme Poverty

Population with less than $1 per day (%) 2% in 95 2% in 90 3,1% in 95 2.0% in 95 * 2,4 in95 * * Part of revenues for the 20% poorest segment 5,7% in 95 6,50% 9,8% in 95 7.6% in 95 * 5,8 in 95 7,2% in 95 7,5 in 90

Childhood Malnutrition in(% of children less than 5 years 9% in 95 9,5% in 90 4% 6.4% in 95 3 in 95 8,3 * *

2 Access to Primary Education Access to schools (% of concerned age) 98,20% 74,50% 92,30% 93,60% 70,9 96,2 in 95 100,10% 102,2

Percentage of students reaching fifth years (%) 92,10% 81,90% * 97,70% 91,3 94,9 in 95 98% 100 in 90

Youth literacy (% age 15-24) 93,40% 67,40% 69,80% 99,10% 95,2 96,5 * 99,8

3 Promote Gender Equality and Empower Women

Rate of girls/boys in primary and secondary education (%) 93% 77,90% 87,70% 96,50% 99,7 78,1 in 95 95,1 97,8

Rate of literacy of girls/boys (% ages 15-24) 91,60% 76,60% 82% 100% 95,7 95,2 * 100 Seats occupied by women in Parliament (%) 21% * 11% 1% in 95 3 23 * 99

4 Reduce Child Mortality Rate

Mortality rate before 5 years (per 1 000) 30,2 59,6 52,2 30,3 30 46,2 5,9 6,2 Mortality rate at birth (pour 1 000 ) 25,8 46,6 41,8 25,3 25,5 34,5 4,4 3,9

Vaccination against measles (% less than one year 84% 90% 95% 94% 88 80 * 93

5 Improve Maternal Health Maternal Mortality ( per 100.000 succeeded ) 70 in 95 390 in 95 170 in95 41 in95 130 in 95 55 in95 20 in 95 8 in95

Birth delivery with qualified staff (% of total) 82% 40% in 95 46% in95 97% in95 89 in 95 81 99% in95 *

6 Combat HIV /AIDS, Malaria and Other Diseases Use of contraceptive (% of women between ages 15 and 49 y) 60% in 95 50% in 95 56,10% 50,3% in 95 61% in 95 63,9 70,7% in 95 *

Morbidity due to tuberculosis(for 100.000 habitants) 37 119 39 11 24 38 16 59

Cases of detected tuberculosis (%) 79% 90% 25% 33% 72% * * *

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Table 2.1: Comparison of MDG of Egypt with other countries of the Mediterranean

Years 1999 or 2000 (unless indicated)

MDG in Selected Mediterranean Countries

Tunisia Morocco Egypt Jordan Lebanon Turkey France Spain

7 G Ensure Environment Sustainability

Forest (% of total area) 11,35% 6,80% 0,10% 1% 3,5 13,3 27,90% 28,8

Protected Areas (% of total area) 1,30% 0,70% 0,80% 3,40% 0,5 1,3 13,50% 8,5 GDP for energy consumption (PPP 1000 $ par TEP) 7,4 10 4,9 3,8 3,3 5,9 5,3 6,1

Emissions of CO2 (tons per habitant) 2,4 1,2 1,7 3 3,9 3,2 6,3 6,3 Access to potable water (% of population) 92% 82% 95% 96% 100 83 * *

Access to sanitation (% of population) 81% 75% 94% 99% 99 91 * * 8 Establish Global Partnership for Development Telephone lines ( land and mobile) (for1.000 habitants) 95,6 132,8 107,7 151,2 407,4 525,5 1.072,5 1.030,5 Personal computers (for 1.000 habitants) 22,9 12,3 22,1 22,5 50,1 38,1 304,3 142,9

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Annex 3.1 Summary of Previous Energy Work in Egypt

Name of Report Date of Completion

Funding Agency

Relevant Main Findings/Outputs

National Action Plan on climate change.

August 1999

SNAP Description of proposed mitigation actions and their projected impacts. Procedures for Cross-Sectoral implementation and proposed out reach activities.

Initial National Communication to the United Nation Framework Convention on Climate Change.

July 1999 Global Environment Facility

Description of the National Circumstances. Estimation of Egypt GHG emissions and sink. Identification of Possible mitigation options for reducing GHG. Vulnerability assessment and adaptation measures to climate change negative effects. Identification of Policies and measures to mitigate climate change effects.

Policies, Strategies and Programmes for the Electric Energy Sub Sector Renewable Energy and Energy Efficiency in Egypt.

January 2001 DANIDA Description of the current institutional framework. Overview of the power sector and its restructuring. Identifying the role of the energy sector in social development and poverty alleviation. Identification of the role of the private sector in future investment plans.

Base Line Survey of the Energy Sector in Egypt.

August 1999 Danish International Development Assistance (DANIDA )

Overview of the Energy Sector including both the supply and demand sub-sectors. Identification of the assistance needs within the Energy Sector. Analysis of some cross cutting issues such as awareness, R & D, environmental impacts and decentralization.

GHG Mitigation and Technology Assessment.

May 1997 United States Country Study Programme (USCSP)

In-depth financial, environmental, social and economic assessment of seven proposed Energy Efficiency Technologies.

The Status of The Environment and Energy Sector in Egypt.

August 1999 Global Environmental Facility

Greenhouse Gases (GHG) Emissions from the Energy and Waste Sectors in Egypt 1999/ 2000.

April 2001 Preparation of the inventory was carried out by the national efforts.

Estimation of GHG emissions from the Energy and Waste Sectors for the year 1999/2000.

Arab Republic of Egypt: Infrastructure Sub–Committee - Background Report on Electric Power.

September 2000

IBRD (International Bank for Reconstruction and Development)

Description of the financial situation of EEHC and the distribution companies. Description of the electricity sector organization and structure. Identification of the electric energy generation BOOT projects.

Study on the Transportation System and the National Road Transportation Master Plan.

October 1993 Japan International Cooperation Agency (JICA)

Reviewing and analysis of existing data and information. Formulation of socio -economic framework. Transport demand forecast. Formulation of a master plan for the national road network and road transportation system.

UNEP Greenhouse Gas Abatement Costing Studies Case Study on Egypt.

1995 Finland. GHG emissions inventory for Egypt for the year 1990. GHG abatement technologies. Abatement costs.

Draft’s Egypt Strategy on CDM.

2002 Swiss Government

Review of existing Egyptian and international studies. Current and projected GHG emissions and reduction / avoidance potential in Egypt. International GHG offset.

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Funding Agency


Egypt Prerequisites for CDM participation. CDM options for Egypt.

Electricity Pricing Strategy Study.

January 1992 Review of load forecast. Review of least cost generation development programme. Economic cost of gas in the power sector.

Energy Planning of the Transport Sector in Egypt in the Context of Environmental Concerns. (Doctor of Philosophy in Chemical Engineering By Eng. Hamed Korkor).

Sept. 1999 Transport sector structure and main characteristics. Effect of transport sector on the environment. Energy saving and economic effect of energy conservation in transport sector.

The Energy Efficiency Council.

2000 Energy efficiency and its impacts on natural resources, economic development and environment protection

A Framework for the Egyptian National Energy Efficiency Strategy.

March, 2001 USAID Enhance the competitiveness of Egyptian industries and reduce greenhouse gases emissions. Reduce of national energy consumption per unit of economic output.

Law Number 4 for 1994 for the Environment and its Executive Regulations.

1994 Enhancement and improvement of the Environment on the national level

Operating Plan for the Year 2001/2002 Environmental Protection Fund

2001/2002 Enhancement of air quality, water quality, Waste Management and nature conservation.

Ministry of State for Environmental Affairs Summary Profile of Initiatives

2000/ 2001

Annual Report 2000/ 2001, Ministry of Electricity and Energy.

2000 / 2001 This Annual Report reflects the trends in economic and social progress of Egypt

Egyptian Environmental Policy Programme.

2003 (planned) USAID Promotion of energy efficiency, within the Egyptian Energy Sector.

Updating of the National Oil Spill Contingency Plan.

1998 DANIDA Oil spill contingency plan

Industrial Waste Management and Energy. Conservation for Aswan Fertilizer Company (KIMA).

2006 (planned) DANIDA Promotion of energy efficiency, within the Egyptian Industrial sector.

The Environmental Profile of Egypt.

2002 GEF/ UNDP Energy Profile Effect of energy uses on the air quality. Profile of the transport sector

The National Environmental Action Plan of Egypt 2002 – 2017.

2002 GEF/ UNDP Energy Profile Effect of energy uses on the air quality. Profile of the transport sector National Energy Efficiency Strategy. Climate Change and Egypt response to systematic problems.

Cairo Air Improvement Project: 1999 Source

Dec. 2000 USAID Impact of various sources such a, motor vehicles and oil combustion

154


Funding Agency


Attribution Study. Implementation of Renewable Energy Technologies Project. Opportunities and barriers, Egypt Country Study.

Sept. 2000 DANIDA Renewable energy technology applications Barriers and removals

Energy In Egypt 1999/2000

Energy and national economy. Primary energy resources. Energy production. Energy consumption. Energy balance. Energy and GHG.

Annual Report 1999,"Ministry of Petroleum"

Petroleum Conventions. Exploration activities. Production activities. Training and human resources. Petroleum and Environment

Business People for an Energy – Efficient Economy

USAID Energy efficiency benefits. Energy consumption figures. Investment Potential within energy sector.

Energy Conservation and Environmental Project (ECEP)

USAID Expansion of the private sector through cost effective energy use. Decreased rate of growth for GHG emissions. Creation of a more environmentally sound power sector.

155

Annex 4.1 (Table A1): O verview of water quality related laws and decrees

Level of legislation No/Year Topic Law 93 1962 Liquid waste discharge into public sewers Presidential Decree 421 1962 Ratifying Marpol convention Ministerial Decree MHUNC

649 1962 Implementation of law 93/1962

Presidential Decree MPWWR

2703 1966

High committee for water (Ministry of Health)

Law 38 1967 Bathing and Washing in Streams Law 72 1968 Prevention of oil pollution of sea water Ministerial Decree MPWWR

331 1970 Executive committee of water

Law 74 1971 Clearance of Weeds and Dead Animal Disposals in Streams

Presidential Decree 961 1972 Permanent committee for control of sea water pollution by oil

Law 27 1978 Control of potable water sources Law 57 1978 Treatment of ponds, marshes and swamps Ministerial Decree MoHP 7/1 1979 Specifications of potable water Law 27 1982 Public water resources for drinking water and domestic

use Law 48 1982 Protection of river Nile from pollution Ministerial Decree MPWWR

170 1982 Establishing High committee of the Nile

Ministerial Decree MOI 380 1982 Technology & pollution Presidential Decree 631 1982 Establishing an Environmental Affairs Authority under

the presidency of the Council of Ministers Ministerial Decree MPWWR

8 1983 Implementing Law 48/1982

Law 12 1984 Irrigation and drainage and License of Groundwater Wells

Ministerial Decree MPWWR

43 1985 Regulation of drainage & waterways

Prime Minister Decree 1476 1985

Executive committee for Industrial drainage to the river Nile

Ministerial Decree MPWWR

9 1988 Amendment of provisions of decree 8/1983

Ministerial Decree MHUNC

9 1989 Drainage of wastewater (related to 93/1962)

Law 4 1994 Environmental Protection including tasks EEAA Law 213 1994 (follow up of law 12/ 1984) on Water Users’

Organizations; Law 256 1994 Wastewater Quality Guidelines for Irrigation.

156

Annex 4.2: Spatial presentation for key water quality parameters in the Nile Delta irrigation system

Fecal Coliform Bacteria (FC)

4.19 FC standards from Law 48/1982 being 5000 MPN/100 ml. The average values show that most of the sites exceed the standards. The FC counts are within 20,000 MPN/100ml. The highest values are found in middle Delta while the lowest in western Delta as shown in Figure (A1). Besides the abject impact on public health, biological contamina nts especially FC would also impact badly on livestock health and production as they reach livestock dinking and/or washing water. In addition, the parasites may remain in the animal’s intestines for a long time producing eggs and multiple-parasite generations exerted in the animal’s feces.

Figure A1. Fecal Bacteria Counts in the irrigation system of the Nile Delta, Year 2002/2003

Total Dissolved Solids (TDS)

4.20 TDS concentration is a good indicator of salt concentrations. TDS ranges from 0-500 in most of the Delta irrigation system. Only in the northern Delta, it may exceed the limit and score above 1000 mg/l due to repeated reuse of drainage water and to presence of saline groundwater in the north. There is also significant discrepancy between eastern and western-Delta concentrations as shown in Figure (A2).

157

Figure A2. TDS concentrations in the irrigation system of the Nile Delta, Year 2002/2003

Dissolved Oxygen (DO)

4.21 Dissolved Oxygen (DO) is one of the parameters that can infer fish health/production. DO exceeding 5.0 mg/l guarantees healthy and abundant production. If DO falls between 5.0 and 2.0 mg/l, physiological impacts and strain build up in the fish body causing laziness and thus poor productivity. If DO falls below 2.0 mg/l, mortality occurs leading to an ample loss of production. The average for the three Delta regions is still around the standard (7.0 mg/l). However, a number of locations along the Delta drains, in the northern lakes, and at the downstream reaches of the two Nile Delta branches are subject to remarkable oxygen deficit. Figure (A3) illustrates the spatial variability of average DO (mg/l) concentrations in the irrigation/drainage System of the Nile Delta, in the year 2002 & 2003.

158

Figure A3. DO Concentrations in the irrigation system of the Nile Delta, Year 2002/2003

159

Annex 5.1: Key characteristics and data for solid waste in Egypt

SW Criteria Unit 1990s a

data 2000s b

data

MSW Generated Million tons/year 10 15.3 Accumulated SW million tons 5.0 9.7 Material Composition of MSW

Food waste (%) Paper/Paperboard (%) Plastic (%) Glass (%) Metal (%) Other (%)

46 c 21 4 2 2 25

60 10 12 3 2 13

Waste Type MSW (urban) MSW (rural) Agricultural Construction/Demolition Industrial Healthcare Clearing of waterways

6 4

4 (0.5 hazardous)

9.1 6.2 16.5 4.0

6.2 (of which 0.3 hazardous)

0.13 29.4

Per Capita MSW Generation

Rural (kg/day) Urban (kg/day)

0.3 d 0.6-0.8

0.5 - 0.7 0.6 - 1.0

MSW Collection Coverage1

Rural (%) Urban (%)

0 (low income rural) to 90 (high income urban)

0 - 25 30 - 95

SWM % Composted % Recycled % Landfilled % Uncontrolled dumping

8 2 2 88

Public sector SWM expenditure

(million US Dollars) Estimated 1998 Estimated annual 2003/2008

100

2000 Sanitary Landfills under planning

No. of sites 1 53

Composting plants No. of plants 5 (foreign manufactured / 1980s)

56

MSW Generation Growth

percent/year 2.8 3.4

* To be achieved by year 2010, according to National Strategy for ISWM developed in 2000. a According to National Environmental Action Plan (1992). b Egypt Country Report, GTZ/ERM/GKW, 2004. c Figures given are for Cairo only. Source: Project in Development and the Environment: Comparing Environmental Health

Risks in Cairo (1994), as quoted in “Social Development Issues, Solid Waste Management Strategy Dakahleya,” a report by Dr. Laila Iskandar and Dr. Inas Salama (Community Institutional Development), 1996.

d Source: Project in Development and Government Comparing Environmental Health Risks (1994) as quoted in “Dakahleya Solid Waste Management Strategy” (SEAM Project), 1999.

160

Annex 5.2: Waste Management Donor/Lender Activity

Donor/Lender AME N AME OF THE PROJECT PROJECT

START/FINISH D ATES PROJECT

LOCATION PROJECT O BJECTIVES

USAID Support for SWM activities, particularly privatization of waste management (part of EEPP II)

Start: Sept. 1999 Cairo, Qalubyia, Alexandria

Privatization of waste management services

KfW Support for privatization of waste management services in Kafr El Sheik and/or Qena Governorates

Kafr El Sheik, Qena Governorates


GTZ Support for privatization of waste management services


Netherlands ISWM in Fayoum Fayoum Preparation of SWM plans, support for privatizatio n of waste management services, investment in fleet, transfer station and landfill.

UK Dept. for Int. Dev.

Support for Environmental Assessment and Management II (SEAM II), particular focus on waste management

Start: mid 2000 Finish: 2004

Sohag, Qena, Dam ietta, Dakahleya

Environmental management and planning systems, poverty alleviation, community participation/ awareness

Finland Solid Waste Management Project Hazardous waste management

Beni-Suef Alexandria

Enhancement of solid waste management facilities, provision of waste disposal site. Construction of a sanitary landfill

EU Landfill identification project ND National Identification of landfill sites to serve the country. EU Landfill identification project Start: March 1999

Finish: 2002 Cairo Recommendations for management of industrial hazardous waste

generated in Greater Cairo EU Integrated Industrial Solid Waste

Management Start: May 01 Finish: 2003

6th of October City

Integrated waste management system for managing industrial solid wastes

Italy Egyptian-Italian Environmental Cooperation Project - Component 5: Solid Waste Management Project in El-Minya Governorate

Mid-2002 - 2004 El-Minya Governorate

Enhancement of solid waste management in El-Minya Governorate.

UNDP/CEDARE/MEDCITIES

Mediterranean Urban Waste Management Project financed by the EC-SMAP 186

2000-2003 Alexandria Provision of Technical assistance and capacity building as well establishment of a citizens’ complaint center at the Alexandria Governorate

METAP/ World Bank

Regional Solid Waste Management Project financed by SMAP II

2002-2005 National Development of SWM guidelines and a strategy for plastic recycling.

Canada Composting project Start: 2002 North Sinai Governorate

Implementation of composting

Social Fund for Development

Public Work Program and Environment department

Start 1999 Governorates Financing of collection and disposal of medical, industrial and municipal waste

86 The Short and Medium Environment Action Program is a financial instrument of the European Commission

161

Annex 5. 3: Solid Waste Management Stakeholders

Institutional Level Stakeholder

S TAKEHOLDER IN SWM

Ministry of Agriculture and Land Reclamation

Setting public policies, legislations, national and regional strategies, integrated action plans, implementation, guidelines for planning, contracting and management, training and human resources, monitoring and inspection for agricultural solid waste.

Ministry of Housing All the above for Construction and demolition waste. Ministry of Industry All the above for industrial solid waste. Ministry of Health and Population

All of the above for Healthcare solid waste.


All of the above for all types of wastes.

National

(EEAA) All of the above for all types of wastes, in cooperation / coordination with MOLD.

Governorates All Governorates Setting national and regional strategies and integrated action plans,

implementation of the system, training and HRD, monitoring and inspection.

Greater Municipalities All Greater Municipalities

Implementation of the system, training and HRD, monitoring and inspection.

Municipalities All Municipal Implementation of the system, training and HRD, monitoring and inspection.

NGOs Solid waste management services (public awareness, MSW treatment, recycling)

International Contractors

Integrated Solid waste management Projects(collection, transportation, treatment, recycling, disposal for municipal, health care waste)

National Private Contractors

Solid waste management Projects (collection, transportation, treatment, recycling, disposal for municipal, health care waste)

International Donors Solid waste management services (assisting Governorates in tendering procedures, contracting, planning, management, etc.)

Private Sector contractors, Consulting firms

Consulting Firms Solid waste management services (assisting Governorates in tendering procedures, contracting, planning, management, etc.)

162

Annex 7.1: Strategic Actions of NEAP 1992 and NEAP 2002

Fertilizers and pesticides Fertilizers and pesticides Water & Land Water & Land Introducing system of water charges & water rights Increase water charges to industrial & large users

Economic instruments: private sector participation through financial packages for industrial compliance, adopting polluter pay principle,

Tax incentives and loans for environmental management Information system Developing to improve planning Minimize water losses: use of pipelines to transfer water in new land,

Groundwater development strategies: continuous monitoring and evaluation of groundwater aquifers

Reuse of agricultural drainage water: increasing amount of drainage water reuse

Harvesting of rainfall and flash floods water Establishing institutional body for management of Egyptian lakes

Mixing of fossil and renewable energy sources Encouraging farmers to adopt integrated pest management

Developing a land use plan by dividing Egypt into environmental regions to facilitate planning, monitoring, assessment & follow up of projects.

Upgrading informal settlements in and outside urban areas

Air Quality Air Quality Total phase out of energy subsidies Reduce sulfur content of oil fuel used by diesel engines Introduce tax on gasoline after 1995 Force taxis to only use CNG fuel within urban areas by 2005 Reduce lead in gasoline Prohibit use of two -stroke motorcycles using an oil/petrol mixture as fuel

Certificate stating vehicle meets required emission standards. Reduce custom duties on spare parts for CNG vehicles Improve policies which facilitate traffic flow Reduce taxes on private cars using CNG-CNG fuel stations

Reduce import duty on vehicle spare parts. Set lower import duties on vehicles with low emissions Remove scattered industries within urban areas

Use low sulfur fuel and natural gas for industries located within 2 kilometres of inhabited areas.

Make EIA precondition for licensing new industries Develop air emission policies Formulating strategy for controlling pollution and SMOG episodes Develop public awareness of air pollution costs Public awareness to encourage public participation in air quality protection Set solid waste recycling program Minimize open incineration of agricultural waste Recycling agricultural wastes and impose taxes on pesticide usage Locating, planning, erecting and managing sound ecological industrial zones Upgrading and relocating lead smelters/foundries outside residential areas Developing parks to protect environment and enhance quality of life Increase supply of natural gas to power stations Reduce identified dust emissions for all dust discharge points Building capacities of air pollution experts Prohibit use of materials containing asbestos Public awareness campaign of indoor smoking, misuse of pesticides Impose noise measurements for moving vehicles Introduce noise limits in legislation and penalties for noise pollution Solid Waste Management Environmentally Sound Management of Solid Wastes Full coverage for management of municipal waste User charges for solid waste collection and disposal Earmarked surcharges on environmentally hazardous products

Environmental managing for hazardous medical waste Full coverage for industrial hazardous waste treatment and hospital wastes Managing hazardous industrial solid wastes Establishment of licensed companies for waste management

Creation of guidelines and strategies for waste management Managing agricultural waste Protecting Egypt's Heritage Protecting Egypt’s Heritage

163

Use tourism revenues for protecting and conserving resources Comprehensive management of national protectorates Improving natural protectorates networks for urgent ecological systems Marketing and revenues raising plan for several of protected

areas and cultural heritage sites Application of technologies to manage and conserve natural protectorates Introduce regular monitoring of site condition Establish Egyptian Natural History Museum Train staff in surveying, drawing, recording, and conservation Establish centre for rare plants and animals threatened by extinction Develop ties with NGO's and private sector to promote conservation of the cultural and natural heritage

Develop medical plants adapted to arid ecological systems. Training school teachers on environmental awareness

National program for managing Egypt’s Heritage Combating Desertification and Managing Drought North Coastal Belts: participation of all pertinent stakeholders

Nile Valley and Reclaimed Desert Areas: establishment of GIS based information system

Introduction of tile drainage system

Oasis and Southern Remote desert areas: Design of efficient and properly targeted environmental campaigns

Eastern Desert Land: Establish appropriate institutional structures Land use planning for combating desertification in Northern Coastal Areas Combat sand encroachment and active sand dunes Protecting Egypt’s Marine Environment Integrating coastal and marine management into national development plans Establish comprehensive monitoring program Hiring and training staff for coastal zone management and EIA Upgrading treatment plants to accommodate excess wastewater flows

Strengthening Environmental Institutions Institutional Building and Legislation Strengthen inspection and enforcement capabilities.

Strengthen the existing institutional set-up for environmental management through creating a powerful central executive body

EEAA: Creating enforcement unit, strategic action, policy statements, compelling monitoring institutions to work with it, develop range of funding options, and specific percentage of the annual budget of the GOE to allow to carry out their assigned roles

Creating an environmental information centre

Ministries with Environmental Responsibilities: improving the management of infrastructures and services

Creating a Policy Planning Unit

Training Education NGOs: technical assistance, supporting them in mobilizing resources and participation of NGOs

Labour Unions and Syndicates: participate in environmental and development activities with local community

Research Institutes: Developing sophisticated information networks for exporting industries to strengthen the environmental performance

Obtaining Compliance with Environmental Laws and Regulations Integrating Environment into Education Environmental Training

Raising Public Awareness: replicate the Green Corner project in all the Governorates

Completed Partially Completed Not Completed

164

Annex 7.2: PRINCIPAL ENVIRONMENTAL LAWS, DECREES AND REGULATIONS

165

Annex 7.3: Summary of the Egyptian EIA system and comparison with the World Bank

Egyptian EIA system World Bank procedures EIA LEGISLATION AND PROCEDURES

1 Enabling legislation for EIA Law No 4 on Environmental Protection 1994

OP 4.01 1999 • EIA is the process that is specific

to each specific operation, both category A and category B projects.

• Any report resulting from the process is an EA report.

2 Detailed legislation for EIA Executive Regulations 1995 (Prime Minister’s Decree 338)

BP/GP 4.01 1999

3 Formal provisions for SEA

None Definitions of sectoral and regional EIA are provided. Sectoral and/or regional EIA is required when the project “is likely to have cumulative or regional impacts.”

4 Local government EIA legislation or procedures

None -

5 Sectoral authority EIA legislation or procedures

Tourist Development Authority has issued review criteria for tourist projects

-

6 General and specific guidelines Guidelines for EIA drafted by EEAA in 1995, include report content for each sector. Detailed guidance issued for several project types.

EA sourcebook and updates 1991-2000. Pollution Prevention and Abatement Handbook 1999.

ADMINISTRATION OF EIA 7 Main administrative body for

EIA Egyptian Environmental Affairs Agency

Regional Environment Unit

8 Competent authority for environmental acceptability

EEAA: makes recommendations to sectoral and local competent authorities

Director, Regional Environment Unit

9 Revie w body for EIA

EEAA: uses independent consultants as reviewers

WB regional environment unit (BP)

10 Sectoral authority responsibilities

Initial screening according to lists. Final project approval

N/A

11 Local government responsibilities

Governorates act as CAA for certain types of project

N/A

166

Egyptian EIA system World Bank procedures 12 Other bodies responsible for

planning approval Competent Administrative Authorities and Governorates

N/A

13 Method of co-ordination with other planning approval bodies

Occasional meetings, registered letters

- Internally with environment department anchor

- Externally with national environmental agencies and concerned ministries/entities

- For risky projects Quality Assurance and control unit (QACu) of the environment anchor of WB

14 Method of co-ordination with pollution control approval and regulation

Pollution control is part of the EIA system. For discharges to water it is also regulated by the Ministry of Irrigation and Water Resources. Standards are defined in Law 4.

Use of Pollution Prevention and Abatement Handbook Available as guidance. The EA may recommend alternative emission levels and approaches to pollution prevention and abatement of the project. Exceptions should be rare.

STAGES OF EIA Screening

15 Screening categories Three screening lists: black list, full EIA: grey list, approval with conditions or scoped EIA: white list, approval with conditions

• EA is the process that is specific to each specific operation, both category A and category B projects.

• Any report resulting from the process is an EA report.

• Screening categories : A, B, C and IF

16 Screening method

Lists, plus individual screening based on screening forms.

Individual screening for significance, with illustrative lists (BP, GP) and on the basis of sourcebooks

Scopin Scoping 17 Scoping method Individual scoping by

proponent for black list projects, based on sectoral guidelines. Reviewed by EEAA, including site visits. Scoping by EEAA for grey list projects.

- Based on EA TOR for category A projects

- Approval of WB - EA TOR after scoping

167

Egyptian EIA system World Bank procedures ConteCContent of EIA study

18 Content of EIA report As World Bank (sectoral guidance)

- executive summary - policy, legal and administrative

framework - project description - baseline data - prediction and assessment of

environmental impacts and mitigation - analysis of alternatives - environmental management plan - list of EIA report preparers - record of consultations - references and supporting data (Annex B)

19 Requirements for non-technical summary

Non-technical and executive summary

Executive summary (Annex B)

20 Requirements for considering alternatives

Study required (sectoral guidelines only)

Is a policy requirement as “EA evaluates a project’s potential environmental risks and impacts in its area of influence, examines project alternatives….

21 Requirements for environmental management plans

Mitigation management plan and monitoring plan required (guidelines)

Specifically required in the OP and also included as Annex C. OP strengthens and clarifies the role of the EMP by specifically listing EMP as a component of the category A project EA report, and specifically citing EMP provisions related to the implementation of the EA.

22 Requirements for transboundary impacts

None Compliance with all international treaties Specified. The Bank does not finance project activities that contravene country obligations under relevant international environmental treaties and agreements.

23 Requirements for global impacts None Compliance with all international treaties Specified. The Bank does not finance project activities that contravene country obligations under relevant international environmental treaties and agreements.

Review, public participation and decision-making

24 Method for review of content and substance of EA reports submitted

Comparison with content specified in guidelines, plus ad hoc review by independent reviewers. Review criteria for tourist projects.

Comparison with ToR (BP) Consistency with TOR as specified in the guide for preparation and review of EA reports for MENA region

168

Egyptian EIA system World Bank procedures 25 Requirements for public

participation Guidelines request public consultation during the EIA study.

? For all category A and B projects the borrower consults project-affected groups and local NGOs.

? For category A projects, consultation occurs twice:

- shortly after screening and before EA TORs are finalized (scoping)

- once a draft EA report is prepared

Arrangements for access to EIA reports

No formal provisions. Access is given to scientific institutions for research purposes

Disclosure : Mandatory for A and B projects. The borrower provides relevant materials in a form and language that are understandable….: 1) For Category A projects: prior to project appraisal: ? Same as OP. ? EA available at the Bank’s Infoshop. 2) For category B projects. EMP is disclosed prior to appraisal: ? Borrower’s permission to release the

EA report is still required.

27 Decision-making authority

Opinion given by EEAA on environmental acceptability, prior to project approval by CAA.

integrated with appraisal of project design and economic analysis (BP) Regional Environment Unit

28 Provisions for appeal Permanent appeal committee

Follow-up 29 Requirements for follow-up and

monitoring Developer maintains records, EEAA undertakes follow-up inspections

Reports submitted to WB by borrower, supervision visits by WB (¶20, BP)

EIA CAEIA CAPACITY 30 Expertise for conducting EIA Internal EEAA guidance

on the selection of consultants

Independent EA experts retained by proponent, independent international panel for major issues (¶4) for category A. EA is responsibility of borrower.

31 No. of EIAs conducted Approx. 200 full EIAs per annum, plus approx. 7000 grey and white list submissions

-

32 Approx. no. of EIA firms and individuals

Small number of consultancy firms, large number of individuals

-

169

Egyptian EIA system World Bank procedures 33 Foreign consultants used? In some WB and

international projects -

34 Universities/ institutes with EA technical expertise

Approx. 6 universities -

35 Universities/ institutes with EIA systems expertise

Being developed in the American University at Cairo and in Suez Canal University

-

36 Training provisions Numerous internationally funded EIA courses, plus well-established training programs in universities

-

37 Other EIA capacity-building programs

DANIDA, DFID, USAID, others

-

170

Annex 7.4 : EEAA Functions and Responsibilities

Preparation of draft legislation and decrees relevant to fulfilling the objectives of the Agency and consideration of proposed legislation that is related to the protection of the environment. Preparation of studies related to the state of the environment of the country, and formulation of the national plan for the protection of the environment. This would include environmental protection projects and their estimated budgets as well as the environmental maps of urban areas and areas planned to be developed. In addition, it shall set the necessary norms that need to be followed when planning and developing new areas as well as targeted norms for old areas. Establishment of norms and conditions to be complied with by owners of projects and establishments before the start of construction and during the operation of these projects. Compilation of a list of agencies and national institutes as well as qualified individuals who could contribute to the preparation and execution of environmental protection programs, and the preparation and implementation of the projects and studies undertaken by the Agency. Carrying out of field follow-up of compliance to norms and conditions to be followed by agencies and establishments. Also, it shall undertake the procedures stated in the law against those who violate these norms and conditions. Establishment of necessary norms and standards to assure compliance with the permissible limits of pollutants and to ensure that these norms and standards are followed. Collection and publication of national and international information related to the environment on a periodical basis in cooperation with information centres of other agencies. It shall evaluate and utilize this updated information in environmental management and planning. Setting of principles and measures for environmental impact assessment of projects. Preparation of the Environmental Contingency Plan in the manner stated in Article 25 of Law 4 and coordination with the competent agencies for the preparation of programs for confronting environmental disasters. Preparation of a plan for environmental training and supervision of its implementation.

171

Annex 8.1: Environment Funds supported by International Donors and Financing Institutions In US$

equivalent (million)87

Donor and Fund’s name Purpose On-lending Amount

Technical Assistance

Total Fund Amount

Allocated amount

Disbursed amount

World Bank/FINNIDA Egypt-Pollution Abatement Project (EPAP)

To provide financing for pollution abatement projects in private and public sector enterprises

35.0 5.688 40.6 38.4 25.6

EIB Pollution Abatement Facility

To finance pollution abatement projects of industrial and productive sector enterprises

6.0 - 6.0 6.0 6.0

KfW a) Public Sector

Program

b) Private Sector Program I

c)Private Sector Program II

Improve environmental impact situation of Egypt’s public sector industries and utilities To promote profitable industrial companies with acceptable environmental standards To promote environment related investments in Egypt’s private sector

30.6 38.5 34.9

3.6 1.2 1.9

34.2 39.7 36.8

26.13 39.7 3.94

12.27 35.1 3.0

CIDA a) Environment

Management Technologies

b) Environment Initiative Fund

c) Environment Enterprise Fund

d) Climate Change

Support environment investments in SME Support to NGOs and community development based projects Support to new business and expanding green projects Conversion of Brick factories of Helwan from Mazout to Natural Gas

6.5 1.61

4.55 1.54 3.08 1.61

11.05 1.54 3.08 3.22

DANIDA Support to the Environment Protection Fund

To provide support for cleaner production in SMEs

11.1

4.96

16.06

87 All conversions were made in US$ at the following rate: 1 EURO=US$ 0.83, 1 US$= 1.3 CAN$ 88 Grant from FINNIDA.

172

USAID Development Credit Authority

To provide partial guarantee to industrial firms, and tourist development for gas conversion and energy efficiency

10 10

Social Fund for Development

To provide on lending for water supply, wastewater, municipal, medical and industrial waste

338 339

Total * 512.0 28.04 540.04

* Total amount may differ by + or –15% due to exchange rate fluctuations.

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