report no. 15781 -pak pakistan economic policies...
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Report No. 15781 -PAK
PakistanEconomic Policies, Institutions,and the EnvironmentDecember 15, 1996
Agriculture and Naturai Resources DivisionCountry Department ISouth Asia Region
Document of the World Bank
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CURRENCY EQUIVALENTSCurrency Unit = Pakistan Rupee (Rs.)US$1.00 = Rs. 40.22 (December 1996)
ABBREVIATIONS AND ACRONYMS
ADB Asian Development BankAERC Applied Economic Research CenterAKRSP Agha Khan Rural Support ProgramAUSAID Australian Agency for International DevelopmentBOD Biochemical Oxygen DemandCIDA Canadian International Development AgencyDSEA Drainage Sector Environmental AssessmentDRIP Drainage and Reclamation Institute of PakistanEEZ Exclusive Economic ZoneEIA Environmental Impact AssessmentEPA Environment Protection AgencyEU European UnionEUAD Environment and Urban Affairs DivisionGEF Global Environment FacilityGDP Gross Domestic ProductGSP Geological Survey of PakistanIPM Integrated Pest ManagementIUCN International Union for the Conservation of Nature and Natural
ResourcesJICA Japanese International Cooperative AgencyMEUFW Ministry of Environment, Urban Affairs, Forestry and WildlifeNEQS National Environment Quality StandardsNCS National Conservation StrategyNWFP Northwest Frontier ProvinceODA British Overseas Development AgencyPAEC Pakistan Atomic Energy CommissionPARC Pakistan Agricultural Research CouncilPAD Provincial Agricultural DepartmentPEPA Pakistan Environmental Protection AgencyPEPC Pakistan Environmental Protection CouncilPEPO Pakistan Environmental Protection OrdinancePFI Pakistan Forestry InstitutePID Provincial Irrigation DepartmneitP&D Planning and DevelopmentSDPI Sustainable Development Policy InstituteSMO Salinity Monitoring OrganizationSPCS Sarhad Provincial Conservation StrategyUNDP United Nations Development ProgrammeUNESCO United Nations Educational, Scientific and Cultural OrganizationWAPDA Water and Power Development Authority
Vice President: D. Joseph WoodDirector: Mieko NishimizuDivision Chief/Manager: Ridwan AliStaff Member: Rashid Faruqee
TABLE OF CONTENTS
Chapter Page No.1. ECONOMIC POLICIES AND THE ENVIRONMENT. 1
A. Economic and Demographic Causes of Environmental Problems ............................... ...................................2B. Economywide Policies and the Environment ......................................... .......................................... 4C. Incentive Policies and Institutions for Improving the Environment in Pakistan ........................................... 6
2. MAJOR BROWN PROBLEMS AND THEIR CAUSES .................................................................................. 11A. Industrial Waste Water Pollution .................................................................................. 11B. Domestic Waste Water Pollution .................................................................................. 12C. Motor Vehicle Emissions .................................................................................. 13D. Urban and Industrial Air Pollution .................................................................................. 15E. Marine and Coastal Zone Pollution .................................................................................. 17
3. MAJOR GREEN PROBLEMS AND THEIR CAUSES .................................................................................. 19A. Irrigated Agriculture ................................................................................... 19B. Rainf ed Ag riculture (Barani) ................................................................................... 24C. Forests .................................................................................. 26D. Rangeland ................................................................................... 28
4. INSTITUTIONS FOR ADDRESSING ENVIRONMENTAL PROBLEMS ................. ..................................... 30A. Pakistan's Response to Environmental Issues .................................................................................. 30B. Reasons for Failure to Response Effectively .................................................................................. 38
5. ECONOMIC POLICIES AND INSTITUTIONAL CHANGES FOR IMPROVING THE ENVIRONMENT ..... 42A. Policies for Stimulating Economic Growth and Protecting the Environment ................................................ 42B. Institutional Changes for Stimulating Economic Growth and Protecting the Environment .......................... 47C. Supportive Measures for Improving Policy and Institutional Effectiveness .................................................. 55D. Next Steps .................................................................................. 58
References .................................................................................. 61
This report is based on a field mission to Pakistan in November 1995. The mission consisted of Rashid Faruqee (Task Manager), Derek Byerlee(AGR), and Abdul Qaiyum Sheikh (RMP). The report was prepared by Rashid Faruqee and Jonathan Coleman, in consultation with Pakistanipolicymakers and experts, particularly staff of the Sustainable Development Policy Institute, Islamabad. Background papers for the report werecontributed by Derek Byerlee, and Pakistani consultants, Laiq Ali, Vaqar Zakaria, and Akmal Siddiq. Peer reviewers for the study were MarittaKoch-Weser, Mohan Munasinghe, and Omar Noman.
Tables
Table 1.1 Past and Present Economywide Policies and their Effects on the Environment in Pakistan ...... 6Table 1.2 Energy Subsidy Levels in Pakistan ........................................................................ 7Table 3.1 Estimated Annual Losses Resulting from Natural Resources Degradation, 1988 ..................... 19Table 3.2 Extent of Soil Degradation by Province, 1988 ....................................................................... 19Table 4.1 Environmental Legislation in Pakistan ....................................................................... 31Table 4.2 Division of Responsibility for Natural Resource Management in Pakistan ............................. 37Table 5.1 Roles and Jurisdiction over Environmental Institutions .49
Boxes
Box 1.1 The Effects of Economywide Policies on the Environment: Findings from a Cross-CountryStudy .5
Box 1.2 Direct Versus Indirect Policies, Charges Versus Tradable Permits .9Box 2.1 Disposal of Industrial Waste Water .1Box 2.2 Weak and Unenforced Zoning Policies and Regulations for Location of Industries .12Box 2.3 Domestic Waste Water Treatment in Karachi, Islamabad, and Lahore .13Box 2.4 Growth in Vehicle Sales .14Box 2.5 Vehicle Maintenance and Fuel .15Box 2.6 Air Emissions by Selected Industries .16Box 2.7 Destruction of the Mangrove Forests .17Box 2.8 Threats to Biodiversity in the Greater Karachi Area .18Box 3.1 Natural Resource Degradation and Declining Agricultural Productivity .20Box 3.2 Groundwater Depletion in Quetta .22Box 3.3 Special Problems of Mountain Areas .25Box 3.4 Destruction of Forests in the Northern Areas .26Box 3.5 The Kalam Integrated Development Project in NWFP .27Box 4.1 Institutional Confusion over Soil and Water Management .39Box 5.1 Energy Pricing in Sri Lanka .43Box 5.2 Win-Win Solutions for the Pakistan Textile Industry .43Box 5.3 Use of Market-Based Instruments in Asia .44Box 5.4 Irrigation System Management and Water Markets in Latin America .47Box 5.5 Enforcement of Environmental Standards in Singapore .51Box 5.6 Environmental Protection and National Economic Development Plans in China .52Box 5.7 Coordination of Environmental Initiatives in Singapore .52Box 5.8 Setting Policy Priorities in the Philippines .54Box 5.9 Public Awareness of Environmental Issues and Participation in China .56Box 5.10 Public Participation in Municipal Waste Management in Malaysia .57Box 5.11 Community Participation in Managing Common Property Resources
Evidence from South Asia .57
Figures
Figure 4.1 Structure of Environmental Institutions in Pakistan ........................................... 36
Pakistan: Economic Policies, Institutions, and the Environment
Executive Summary
l. Like most developing countries, Pakistan faces serious natural resource degradation and pollutionproblems. In response to these problems, the government has taken several important steps, including theformulation of the National Conservation Strategy (NCS), the establishment of an environmental cell in thePlanning Commission, the formulation of Plan of Action, and the draft revision of the PakistanEnvironmental Protection Ordinance (PEPO). These initiatives have been useful, especially in raisingenvironmental awvareness. Progress toward protecting the natural resource base and improving theen-ironment has been generally slow, however.
2. T he purpose of this study, prepared with the help of and in consultation with Pakistani experts andinstitutions, is to determine why progress has been slow. It examines how existing economic policies affectincentives for the environment, and why existing institutions have not been effective in implementing theNCS and other environmental initiatives. The study identifies key areas on which environmentalpolicyniakers should particularly focus in order to create appropriate incentives and an institutionalframewvork that is effective, efficient, and capable of implementing the environmental strategy proposed bythe government.
3. Experiences of other countries have shown that nondistortionary economic policies that promoteeconomic growth by improving the allocation of resources also create appropriate incentives for theprotection of the environment. Such "win-win" policies simultaneously promote economic growth andenvironmental protection. Since the 1980s, Pakistan has introduced some market-orientated structuralreforms of the economy aimed at achieving greater efficiency and faster economic growth. By beginning toprovide economic agents with incentives to manage the natural resource base in ways that are moresustainable, to the extent that these policies have been implemented-particularly the deregulation ofprices, the privatization of State-owned enterprises, and trade reform-they have generally had positiveeffects on the environment. Continued vigorous implementation of these reforms will help both growth andthe environment.
4. Focusing only on win-win policies, however, will not ensure sustainable resource use: an economyin which resources are allocated efficiently is a necessary not a sufficient condition for creating appropriateenvironmental incentives, and environment-specific policies are needed to ensure sustainable economicdevelopment and to correct market failures arising from externalities and overexploitation of the naturalresource base (such as a lack of property rights over water resources and rangeland).
5. Two types of policies can be used to deal with environmental problems-command and controlpolicies and incentive- or market-based policies. Command and control policies involve governmentmandating of environmental quality standards on emissions, technology type, or input use. Incentive- ormarket-based policies use prices to try to affect pollution and resource use. Despite the advantages ofmarket-based approaches, control policies have been favored in Pakistan (and elsewhere). Because themonitoring and regulating institutions lack the financial and technical resources to be effective, however,these policies have often failed to achieve results.
6. Effective institutions are also needed for environmental management. The legal foundation forenvironmental management must be complete, an appropriate administrative structure must be put in place,qualified staff must be attracted to the public sector at all levels, and the monitoring and enforcementcapacity of government regulators must be improved. Environmental quality must be measured so thatinspectors can determine whether environmental laws are being violated. Institutions for environmentalmanagement must set objectives and priorities, create mass awareness of environmental concerns, provide
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technical information on environment-friendly technologies for industries, establish environmental policies,and ensure that the environment is considered in policy and investment decisionmaking.
Major Brown Problems and Their Causes
7. Pakistan's brown environmental problems include--industrial waste water pollution, domesticwaste water pollution, motor vehicle emissions, urban and industrial air pollution, and marine and coastalzone pollution. Although data are scarce, it is clear that industrial pollution is growing rapidly and that theadverse health and productivity effects of industrial pollution are significant and worsening. Domesticwaste water pollution is also a major problem, with only 80 percent of urban residents and 45 percent ofrural residents estimated to have access to piped clean water.
8. Economic policy failures, such as underpricing of some energy sources and water, are contributingsignificantly to these problems. Subsidies on electricity and natural gas keep prices below economic levels,underrnining incentives for energy conservation, while underpricing of water leads to inefficient use andwastage. Targeted policies for control levels of industrial and domestic waste water have been ineffective,largely because of the failure of institutions to adequately monitor and enforce the national environmentalquality standards (NEQS).
9. Vehicle emissions represent the greatest source of air pollution, reflecting the rapid growth invehicle use in Pakistan. Economic policy failures, such as the subsidization of polluting energy sources,and institutional failures have contributed to the problem, and regulations aimed at reducing emissions havebeen largely ineffective because of the lack of enforcement and monitoring compliance, the lack ofresources, and corruption.
10. Urban and industrial air pollution is also a problem as evidenced by a 1985 survey that found only3 percent of industrial plants treated their wastes according to commonly accepted international standards.Premature deaths, hospital admissions and sickness caused bv air pollution are estimated to cost $249-$358 million annually (Brandon 1995). Economrnwide policy failures have contributed to urban andindustrial air pollution. Retail prices of electricity and natural gas to residential consumers remain belowthe economic cost of supply, while several incentive-based approaches (such as emissions taxes) have notbeen tried in Pakistan. Regulatory approaches have also failed because of inadequate monitoring andenforcement.
11. The coastal environment has also deteriorated over time, partly as a result of the massive take-offfrom the Indus River for irrigation. Most striking is the depletion of the mangrove forests, which hasadversely affected fish and shellfish nurseries. These problems can be associated with the absence orinappropriateness of policy. Waste water from industrial and domestic sources and agricultural run-offeventually end up in the river systems and ultimately in the sea. As a result, the economic policy failuresthat have led to industrial and domestic waste water have also caused coastal zone problems. No incentive-or market-based policies specifically address problems of marine and coastal zone pollution; onlyregulatory approaches have been used, and enforcement has been weak.
Major Green Problems and Their Causes
12. Green environmental problems affect irrigated agriculture, rainfed agriculture, forests, andrangelands. In irrigated agriculture, waterlogging and salinity dominate the environmental agenda.Although waterlogging has receded, salinity has become more acute, a result of increased tapping ofbrackish groundwater for irrigation. Mining of soil nutrients also threatens the sustainability of irrigatedareas, and agricultural run-off from the indiscriminate and inappropriate use of agricultural pesticides has
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contaminated groundwater and surface water. Economic policy failures, such as the underpricing of waterthat weakens incentives to use water efficiently, have exacerbated many of these problems.
13. The major problem in rainfed areas is soil erosion, which has worsened over the years. Watererosion is the major cause of soil erosion in rainfed areas, and has caused a decrease in agriculturalproduction, deterioration of rangelands and forest reserves, and increased rates of sedimentation in waterreservoirs and channels. Soil erosion by wind has been exacerbated by activities such as overgrazing,burning and felling of plants by local inhabitants, fallowing of land during dry windy periods, andinappropriate cultivation practices. Economic policies, such as subsidies on irrigation water, have providedincentives for farmers to over use water in their production practices, thereby exacerbating the problem ofwaterlogging. Much of the emphasis on controlling soil erosion has been through engineering solutions(such as contours and check dams) and less emphasis has been placed on biological solutions (such ascropping patterns to increase soil cover).
14. Deforestation is estimated to be proceeding at 0.2-0.4 percent a year (IUCN 1989), and currentrates of timber cxtraction are unsustainable. Deforestation leads to water erosion, which causes soil losses,siltation of reservoirs, and inefficiencies in the irrigation system. Economic policy distortions andinstitutional failures-including the lack of property rights in communal forests and the failure of localcommunities to participate in forest management decisions-have exacerbated the problem. Rangelanddegradation is also a major problem, with much of the country's rangeland threatened by overstocking,overgrazing, and overharvesting of the natural vegetation. Economic policy failure, such as therestrictions on exports of meat and live animals, has led to stocking rates higher than would otherwise be,and exacerbated the degradation of rangelands.
Institutions and Legislation that Address Environmental Problems
15. To deal with its environmental problems, Pakistan has enacted several pieces of environmentallegislation, including the PEPO and the National Environmental Quality Standards (NEQS). Recent policyinitiatives have included the NCS, the Plan of Action, the Forestry Sector Master Plan, and the Greening ofPakistan Program. In spite of these initiatives, the government's overall response to environmental issueshas been weak and fragmented.
16. One reason for this weak response is the lack of clarity over who should be doing what. Therelationship between federal and provincial governments is not clearly defined, with environmental issueshandled by both levels of government. Major legislative gaps at the federal level are filled by provinciallaws, particularly on green issues, but the issue of what is the appropriate level of autonomy of theprovincial Environmental Protection Agencies (EPAs) remains unresolved. Greater autonomy may behighly advantageous, especially in allowing provincial EPAs to implement and enforce provincial laws, butunder the PEPO there is a lack of procedures that would enable them to enforce these laws. FewEnvironmental Impact Assessments (EIA)-required by law under the PEPO-are filed because of lack ofunderstanding of the process and confusion over which government institutions are responsible for whichstage of the EIA process. Jurisdictional uncertainties over brown and green issues also weakeneffectiveness. Most environmental institutions and laws deal with brown issues, leaving green issues to behandled by provincial line mninistries with no formal links to other provincial departments or the federalgovernment.
17. Environmental legislation is weak, although the revision of the PEPO has strengthened theOrdinance significantly. The PEPO is largely an anti-industrial pollution law, however, and does not covermany other aspects of the environment. No laws cover the use of pesticides, for example, and the use anddisposal of industrial chemicals goes almost unregulated. Many laws are too imprecise to be implemented
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smoothly, or set standards that are not environmentally sound. In other cases, penalties are too low to actas deterrents.
Economic Policies and Institutional Changes for Improving the Environment
18. Policies for Stimulating Economic Growth and Improving the Environment. Many environmentalproblems are associated with policy-induced economic distortions that create incentives for individuals topollute or use the natural resource base in unsustainable ways. As noted, inappropriate price policies, thatreduce economic efficiency, also provide disincentives for sustainable management of natural resourcesshould be replaced with win-win strategies that promote more efficient and sustainable use of resources.
19. Win-win policies are a necessary but not sufficient condition for effective environmentalmanagement. In addition to economic policies that remove distortions, targeted policies are needed thatdirectly address environmental problems arising from market failures. Environment specific policiesaimed at internalizing the externalities imposed by the use of a resource or the emission of pollution, shouldbe introduced. Proposals from the PEPC to introduce pollution charges to bring industries into compliancewith the NEQS represent a positive development and should be supported.
20. Institutions for Management of the Environment. The lack of property rights and institutions tomanage common property resources is at the root of many of Pakistan's green environmental problems.Without clear rights over common property resources, these resources will continue to be depleted. Effortsto establish local rights over irrigation water should be strengthened (perhaps through water userassociations), and some form of control over stocking rates in open access grazing land should beintroduced where communal and tribal forms of discipline have broken down. Land tenure arrangementsalso need to be modified. Providing security of tenure to tenants-at-will would improve theirresponsiveness to economic conditions and create better incentives for making long-term investments, thusencouraging more sustainable agricultural production practices.
21. The jurisdictional uncertainties between the various environmental institutions must be clarified,and the most effective division of labor between the federal and provincial governments determined, basedon the comparative advantage of each level of government. Jurisdictional uncertainties also need to beresolved for coverage of brown and green issues. Institutional jurisdiction over brown issues is wellestablished, with standards covered by the PEPO and NEQS, and enforcement handled by the PEPA, whichdelegates implementation to the provincial EPAs. Jurisdiction on green issues needs to be clarified.
22. The need to strengthen enforcement and monitoring capability is critical. Support of the provincialEPAs, the main environmental watchdogs in Pakistan, is crucial. Although several World Bank projectshave had some success at improving this capability, monitoring and enforcement remain weak.Responsibility could be shared with other institutions, such as the NGOs, and extraregulatory controlscould be used to encourage pollution abatement.
23. The environmental goals set out in the NCS and the Plan of Action have not been useful in settingan agenda, because the goals have been impractical given Pakistan's technical, economic and institutionalconstraints. Realistic goals and priorities need to be clearly stated in terms of specific and measurablegoals. Based on rough estimates of the magnitude of the economic costs (health effects and productivitylosses) of environmental problems, this report recommends improvement of water management and controlof water pollution, the establishment of new regulations and policy reforms to control air pollution, stricterregulation of industrial pollution, and management of rangelands as the top priorities in Pakistan. It isimportant that in Pakistan further work is done to fine tune these priorities and objectives.
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24. Environmental issues should be mainstreamed, meaning that these issues should be considered atall levels of economic planning and policy. This process has begun only modestly in Pakistan and will haveto be strengthened considerably. Consideration of environmental issues is taking place through two distinctpaths-development of environmental institutions and EIA requirements-but the process has been ratherpatchy, and Pakistan remains quite behind other Asian countries.
25. In terms of institutional development, several improvements have recently been made. The PEPCnow meets regularly and is increasingly active in environmental policymaking. A separate Ministry for theenvironment has been established-the Ministry of Environment, Urban Affairs, Forestry, and Wildlife-and environmental cells in the Planning Commission and provincial Planning and DevelopmentDepartments (P&D) are becoming more influential. Although these institutional changes represent positivedevelopments, new measures need to be adopted to strengthen coordination among institutions, improveprofessional expertise and provide technical equipment lacking particularly in the provincial EPAs, andstrengthen and centralize the capability for policy analysis. Mainstreaming environmental issues can alsobe achieved by strong implementation and enforcement of the EIA requirements. EIA requirements featureprominently in the Draft Act, but future implementation and effectiveness are doubtful without theintroduction of a transparent system that clearly defines regulations.
26. Supportive Measures for Improved Policy and Institutional Effectiveness. Given the lack ofexperience of EPA staff, training is crucial Each implementing agency should immediately undertake anassessment of its training needs and develop appropriate training plans. Training should also emphasize in-house training for staff by consultants with extensive experience in pollution prevention, EIA techniques,enforcement, and environmental management approaches.
27. The role of research and technology in developing solutions to environmental problems has beengrossly neglected in Pakistan. No research agency has a mandate to undertake environmental research, andresearch on natural resource issues has not been a priority within the line ministries until recently. Oneway of sponsoring research on the environment would be to establish a competitive research grant programthat would be open to all research agencies in the country. The competitive grants scheme could also beused to fund pilot schemes to field test and demonstrate sustainable agricultural practices.
28. The need to strengthen mass awareness about environmental issues is urgent. Mass awarenessprograms should include seminars, radio and television programs, newspapers and magazine articles,announcements on billboards and posters, and other means. Local organizations and experts need to berecruited to produce the required materials and to publicize them through appropriate local media. Bothfederal and provincial governments and NGOs and local community groups should be supported incontinuing their work on improving the understanding of environmental issues at the local level.
29. In order to achieve greater public participation in natural resource management, some type ofdecentralization of decisionmaking to the local level is needed. Future efforts to decentralize naturalresources management will require stronger links between the federal and provincial governments and localgovernments and local organizations. Supply-led programs-often financed by donor support channeledthrough the federal and provincial governments-must be replaced with demand-led approaches, with localgovemments, NGOs, and community organizations demanding and purchasing needed services from higherlevels of government or the private sector. Demand for this kind of change can be encouraged throughincreasing public awareness of environmental issues so that local organizations recognize their stake innatural resource conservation.
30. This document will serve as the basis for further discussions with the government and otherstakeholders in developing a detailed agenda for further work and action. This will be done through aseries of workshops, seminars and consultations with Pakistanis. The discussions will fall into three policy
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and institutional changes recommended by the report-policies for stimulating economic growth andprotecting the environment, institutional changes for stimulating economic growth and protecting theenvironment, and supportive measures for improving policy and institutional effectiveness.
Economic Policies and Institutions for an Improved EnvironmentStrategy Components Type of actions (illustrative) Timing of implementationPolicies for improvedeconomic growth andenvironment.
a. Policies for both improved Remove government subsidies on irrigation water. Short terrneconomic growth and Remove government subsidies on electricity and natural Medium termenvironment. gas. Medium term
Encourage development of water markets. Medium termLift export ban on live animals and meat. Short termRemove price support on sugarcane.
b. Targeted policies for an Short termimproved environment. Implement pollution tax to encourage compliance with
NEQS.
Institutions for improved Strengthen implementation & enforcement of EIA Short termeconomic growth and requirements. Medium termenvironment. Improve system of land registration. Short term
Establish priorities and set realistic goals. Short teimClarify jurisdiction between provincial and federalenvironmental institutions. Short teniClarify institutional jurisdiction over brown and green Medium termissues. Short termIncrease technical expertise and equipment of provincialEPAs. Meditum termEncourage NGOs participation in environmentalenforcement and monitoring.Explore extraregulatory approaches to enforcement.
Supportive measures for Assess training needs and develop appropriate training Short termimproved policy and plans. Medium temiinstitutional effectiveness. Establishing competitive research grant program. Medium term
Reorient agricultural research and extension to farmingsystems approaches. Short termExtend mass awareness campaign of MEUFW to provinces. Short ter.Engage NGO and private sector in creating environmentalawareness.
Note: Short term 1-3 years; medium term 3-5 years, long-term more than 5 years
1. ECONOMIC POLICIES AND THE ENVIRONMENT
1.1 Like most developing countries, Pakistan faces serious environmental problems. Rapid populationgrowth (of more than 3 percent a year since the early 1970s) and impressive income growth (of about 6percent a year) have put enormous pressure on the country's natural resource base and have significantlyincreased levels of pollution. Between the mid-1960s and the mid-1990s, for example, the availability ofwater for agriculture more than doubled and the cultivated land area expanded by almost 50 percent.Because few idle natural resources now remain untapped, future economic and population expansionportends increased pressure on the country's natural resource base and worsening environmental problems,some of which have already reached critical levels. Rapid expansion in industrial production andurbanization have led to increased levels of waste water pollution, solid waste, and vehicle emissions thathave resulted in serious health problems in many areas of the country.
1.2 Soil erosion and salinity have caused crop yields to decline in some areas on what were previouslysome of the most productive soils in Pakistan. Forests are being depleted, especially in the Northern areas,as land is cleared for livestock fodder and fuelwood. Rangelands are increasingly becoming degraded,some irreversibly, as a result of uncontrolled grazing of livestock, and the marine environment has beenaffected by industrial pollutants and increasing levels of salinity as a result of upstream irrigation. Thecountry's rich flora and fauna species are being depleted, with some species in danger of extinction.Meanwhile, about 60 percent of infant mortality is caused by waterborne diseases, a consequence of anunclean domestic water supply.
1.3 A recent study (AERC 1995) indicates that many of the current environmental problems willworsen over time, unless intervention takes place. For example, by year 2038 the AERC report estimatesthat close to one-third of the population (154 million people) will be without access to safe water(compared to 48 percent of the population today) under certain assumptions about future economic andpopulation growth. The report also estimates that over the same time frame, the number of people withoutsanitation could reach 72 million, while the level of municipal waste could increase five-fold.
1.4 In response to environmental concerns, the government of Pakistan prepared its NationalConservation Strategy (NCS) in March 1992. That report sets forth goals for natural resourceconservation and use, and includes a ten-year investment plan for addressing environmental issues. Thegovernment has also formulated a Plan of Action, covering the period 1993-98, and is about to enact anew national environmental law, which will revise the 1983 Pakistan Environmental Protection Ordinance(PEPO), the dominant piece of environmental legislation. Development of this legislation is beingcoordinated by the federal Environmental Protection Agency (EPA), which is consulting with thegovernment, the provinces, industry groups, and other relevant professionals. Although the current draftlaw is seen as a significant improvement over the existing legislation, many local experts indicate that itcovers only some environmental problems facing the country and should be expanded.
1.5 The NCS has been useful, especially in raising awareness of environmental problems amonggovernment institutions. Following the release of the report several institutional improvements were made,among them the establishment of an NCS implementation unit in the Environment and Urban AffairsDivision (EUAD) and the creation of an Environmental Section, mandated to integrate environmentalconcerns in economic development planning, in the Planning Commission. The Sustainable DevelopmentPolicy Institute (SDPI) was set up on the basis of NCS recommendations to provide economic and policyanalysis for sustainable economic development, and most of the provinces have created environmental cellsin their Planning and Development (P&D) Departments in order to screen investment projects for theireffects on the environment.
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1.6 Following early successes in implementing the NCS, however, progress now appears to befaltering. Discussions with government officials and local experts in the field suggest that progress inirnplementing the recommendations of the NCS has stalled because of several major factors. First, notenough attention has been given to government policies that provide incentives for individuals to pollute theenvironment and exploit natural resources in an unsustainable manner. The NCS focused on investmentprojects but did not suggest specific policies for creating economic incentives for individuals to behave inways that are supportive of the natural resource base. Moreover, many of the recommendations of theNCS are very broad, and include no evaluation of costs and benefits or recommendations onimplementation. Second, institutions set up for managing the environment, such as the EPAs, appear to beweak and incapable of implementing an appropriate environmental strategy or coordinating the actions ofdonors to help protect the environment. This institutional failure is largely the result of the lack oftechnical expertise within the institutions, which was recognized but underestimated by the NCS. Third,the goals set by the NCS may have been overambitious given technical, economic, and institutionalconstraints Pakistan faces. Fourth, the role of the private and nongovernmental (NGO) sectors has notbeen defined. Finally, many attributed slow progress to a lack of political commitment to sustainableenvironmental improvement. Delayed or deferred decisions have led to disconcertingly slowimplementation of donor-funded projects, including the World Bank project on Environmental Protectionand Natural Resource Conservation. Environmental cells have been set up in only a few public agenciesand departments (such as the Water and Power Development Authority (WAPDA) and P&D NWFP),where effective Environmental Impact Assessment (EIA) procedures are being followed, largely as theresult of an Asian Development Bank-funded project.
1.7 To address these concerns, this study evaluates how economic policies (and in some cases theabsence of economic policies) have affected the environment, assesses what policies or areas warrantspecial attention to improve environmental protection, and analyzes the existing institutional framework,identifying the factors that have led to its failure to implement effectively the projects and policiesrecommended in the NCS and the Plan of Action. The study recommends institutional changes that wouldimprove the effectiveness and efficiency of the environmental agencies, and would facilitate implementationof the ambitious environmental strategy proposed by the government. It also proposes ways in whichenvironmental considerations could be brought into the mainstream of economic policy and management.
1.8 The study focuses on both brown and green issues, examining problems affecting water pollution(domestic and human waste water, industrial waste water discharge); air pollution (vehicle emissions,urban air pollution, industrial emissions); and marine and coastal zones; irrigated and rainfed agriculture;forests; and rangeland. For each of these issues, the study describes the major problems; evaluates the roleof economic incentives in creating the problems; assesses the effectiveness of the oversight institutions,especially in terms of setting appropriate policies and enforcing regulations; and recommends policy andinstitutional changes for improving the environment.
A. Economic and Demographic Causes of Environmental Problems
1.9 Environmental problems are caused by a variety of economic and demographic factors, includingmarket failures, policy failures, poverty, and population growth, all of which have been important inPakistan.
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Policy and Market Failures
1.10 Environmental problems are often caused or exacerbated by inappropriate policies that provideincentives for practices detrimental to the country's natural resource base. In Pakistan, for example,subsidies on some agricultural inputs have caused damage to the environment. Especially damnaging hasbeen the provision of irrigation water at prices substantially below the cost of delivery, a policy that hasincreased waterlogging, led to the loss of many mangrove forests in the coastal areas, and diminishedbiodiversity (NCS) (see chapters 2 and 3 for more detailed discussion on these issues). The former policyof subsidizing agricultural chemicals led to excessive use of pesticides. The policy of providing energy(such as electricity and natural gas) at below-market price provides incentives for residential andagricultural users to overuse the natural resource base.
1.11 Environmental problems often arise because decisions about natural resource use and pollution aremade without taking into account the full costs of environmental damage to society at large. Marketmechanisms sometimes fail to allocate natural resources efficiently or to reflect the social value of theenvironment. Many of the green environmental problems in Pakistan reflect market failures associated withopen access or common property resources. In Balochistan, for example, the rangeland, which is commonproperty, has become severely degraded over time. Because the costs of the degradation are shared amongall users, there are no private incentives to conserve the land for the future, unless strong communityorganizations are able to enforce sustainable practices.
1.12 Markets also fail when there is a market for some but not other uses for a resource. Deforestationin some areas of Pakistan, for example, has occurred because the nonmarket benefits of soil conservationhave frequently been ignored. Markets may also fail to reflect the social value of the environment whendecision-makers lack access to information about environmental effects or low-cost ways of avoidingenvironmental degradation (such as the use of Integrated Pest Management).
Poverty and Population Growth
1.13 Poverty and population growth have contributed to the degradation of the environment in Pakistan,wvhere they have caused soil degradation, deforestation, rangeland degradation, marine and coastal zonedamage, and many forms of urban and industrial pollution. People dealing with day-to-day survival tend tohave short time horizons and favor consumption today over consumption tomorrow. Poor people also findit more difficult to make investments in natural resource conservation that provide positive returns in thefuture. Short time horizons are not innate characteristics, however, but are the outcome of policy andinstitutional and social failures (Mink 1993).
1.14 Poverty and environmental degradation are closely connected because poor farmers face very highproduction and financial risks, often the result of misguided policy interventions in factor and productmarkets or insecure land tenure. Many poor farmers are unable to afford the mechanisms available forcoping with risks, such as selling stored crops, credit, and crop insurance, and have limited access toextension and market information. In many cases, producers have no choice but to overexploit theavailable natural resources.
1.15 Of course, the cause and effect relationship between poverty and the environment works in bothdirections. A poor and fragile environment can be a major cause of poverty. Agricultural productivitv onseverely eroded or waterlogged soils is generally low; as forests become depleted, labor productivitydeclines as more time is spent collecting fuelwood. In addition, environmentally induced health problems,such as intestinal diseases from unsafe drinking water, disproportionally reduce the working capacity andproductivity of poor laborers. Health expenditures increase as a result of environmentally induced diseases,and the costs of cleaning up and preserving environmentally damaged areas can be substantial.
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1.16 Population growth can also contribute to environmental degradation. Since Independence in 1947,Pakistan's population has risen from 30 million to 124 million, an increase of more than 3 percent a year.Construction of housing and infrastructure to support this growing population has had a significant effecton the environment, and rnigration to urban areas has increased urban pollution. Moreover, as thepopulation increases, greater demands are placed on the productive agricultural land to meet food needs.Greater use of productivity enhancing technology and management practices can mitigate the environmentalproblems of population growth. Yield improvements from excessive use of chemical fertilizers, pesticides,and irrigation water create environmental problems of their own, however.
1.17 To prevent environmental degradation, appropriate policies and institutions must be put in place sothat the true costs (both private and social) of economic activities are bome by decision-makers. Suchpolicies and institutions include those that correct market failures, help define property rights, and providefor strong and consistent enforcement of regulations. Institutions must be flexible, because improvementsin technology, changes in tastes, and new environmental investments mean that the relationship betweendevelopment and economic growth and natural resources is constantly changing.
B. Economywide Policies and the Environment
1.18 Policymakers in many developing countries are increasingly concerned with the effects ofeconomywide policies on incentives that affect natural resources and the environment'. Box 1.1 describesthe relationships between economywide policies and the environment experienced by other countries. Itshows that market reforms are good for growth and generally good for the environment. There may,however, be unintended side effects of economywide policies that are bad for the environment and requireadditional corrective policies.
1.19 What has been Pakistan's experience? Table 1.1 describes some of the economic andenvironmental effects of both past and present economic policies in Pakistan. The table looks at the presentand past policies without making any judgment on their appropriateness. As discussed in chapter 5, someof these policies have been distortionary, and have adversely affected both overall economic growth and theenvironment.
1.20 Despite terms of trade that have heavily favored industry, Pakistani agricultural production hasincreased as a result of an increase in both crop yields and area under cultivation. But some of the policiesthat spurred this growth have been damaging to the environment, either because they were not economicallyappropriate (the pricing of water, for example), or not accompanied with corrective policies forenvironmental protection. Irrigation of the Indus Basin, for example, has increased salinity and sodicity ofthe soil, and destroyed many of the riverine forests and associated flora and fauna species. The system hasalso led to the loss of many mangrove forests in the coastal areas and to an associated decline inbiodiversity and the fishing economy. Agricultural run-off from fields to which chemicals have beenapplied incorrectly or inappropriately has raised the levels of toxics in the waterways. Had appropriatepolicies been adopted, agricultural growvth could have been achieved with less damage to the environment.
1.21 Policies favoring industrialization can have adverse effects on the environment unless measures aretaken to protect the environment. This has been the case in Pakistan and, as further discussed later,industrial pollution is a serious problem in the country.
1 Munasinghe (1993) distinguished two types of economic policies that affect the environment: economywide policies (whoseeffects on the environment are often indirect or unintended) and targeted environmental policies that deal directly withenvironmental problems and natural resource use.
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Box 1. 1. The Effects of Economywide Policies on the Environment: Findings from a Cross-Country Study
Economywide policies adopted to address economic and social concerns have imnportant implications for the enviromnent. Arecent World Bank report (1994a) investigating the ways in which economywide policies interact with the environment drewthe following conclusions:
L. The removal of price distortions and the promotion of market incentives are generally good for both economic growth andthe environment. For example, a reduction in subsidies on fertilizers would likely lead to more efficient use of resources andreduce surface and groundwater pollution; improving land tenure rights on rangeland would both increase the productivity ofthe lands and decrease the rate at which it is being degraded.
2. Economywide policy reforms may cause uninltended sicde effects whien other policy, market, or institutional distortionspersist. For example, exchange rate devaluation designed to bolster exports and improve external balances is generally goodfor economic growth. However, the policy could lead to increased industrial pollution if other distortionary policies, such assubsidies on energy, remain in place.
3. Economywide policies aimed at stability are generally good for the environment, because instability underminessustainable resource use. Instability leads to shorter time horizons on the part of decisionmakers at all levels, lower inflationrates lead to clearer pricing signals and better investment decisions by economic agents.
4. In the short run, economywvide adjustmvnt programs can Slave negative effects on the environment. Reductions in publicsafety net expenditures or trade liberalization could lead to a decline in incomes and an increase in poverty in the short run.Experiences across developing countries have shown that, particularly in rural areas, higher levels of poverty could forcefarmers to increase pressure on the environment and to overexploit the natural resource base.
5. Economywide policies are likely to have longer-lasting effects onz the environment through employment and incomedistribution changes. By alleviating poverty, economywide policies that generate economic growth and employment willreduce pressures on the country's natural resource base and curtail overexploitation of the environment. Although economicgrowth could strain the natural resource base, policies that increase efficiency of resource use and better value scarce naturalcapital will ultimately benefit the environment.
1.22 Freer international trade tends to increase investment in new technologies, which embody cleanerprocesses to meet higher environmental standards in countries to which Pakistan exports. This has notbeen significant so far, but is likely to become important in the future with trade liberalization and morevigorous implementation of the GATT's Uruguay Round agreements on sanitary and phytosanitarystandards2. Exchange rate policies can affect the environment through the agricultural sector.Devaluation, for example, increases the prices of imported goods, and causes substitution away fromimported products. In Pakistan, exchange rate devaluation led to higher prices for imported fertilizers andchemical inputs, which, together with changes in subsidy policies, led to changes in the pattern of input use.
1.23 Policies aimed at achieving fiscal balance can affect the environment through many direct andindirect channels. Spending cuts could also have both positive and negative effects on the environment. InPakistan, the removal of some subsidies on some energy sources (such as electricity for residential andagricultural users) provided financial incentives to increase the efficiency of energy use, and is generallybeneficial to the environment. By contrast, cuts in spending on safety net prograns for the poor will likelyharm the environment, because consumption may' be supplemented by increased exploitation of naturalresources, including fish, rangeland, and forests.
2 Environmentalists often argue that trade liberalization can lead to the displacement of domestic industries, as pollutingindustries move across international borders to regions in which environmental regulations are less stringent.Environmentalists also claim that more open market access and international trade may force countries to reduce theirproduction costs by lowering environmental standards. These arguments are not tenable because gains from liberalization aregenerally significantly higher than the associated environmental costs, and environmental protection costs are minordeterminants of comparative advantage.
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1.24 Private sector development and policies aimed at privatizing government-owned industries mayalso affect the environment. During the early 1970s, many industries were nationalized in Pakistan.Nationalization was a disaster for the environment because it led to industrial inefficiency, including theoveruse of polluting technology, and provided few incentives to conserve. Reversal of this policv throughprivatization with strictly enforced standards for environmental protection should prove beneficial to theenvironment.
Table 1.1. Past and Present Economywide Policies and Their Effects on the Environment in PakistanPolicy area Policy instruments Outcome _ __ - --
Economic Environmetaliv
Agricultural Support prices Increased cultivable area Change in soil qualit,policies Input subsidies Increased crop yields Chantge in agricultural
Public expenditures on agricultural Increased irrigation water use run-ottiinfrastructure Increased fertilizer and chemical use Changce in rate of
defoiestation
Industrial Controls on industrial imports and Increased industrial output Increased ijidustria[policies exports of raw materials Increased energy use iemission
Increased industrial wastewater pollution
Trade and Removal of quantitative restrictions Higher returns to efficient sectors Change in use patterns ofexchange rate Lowering of tariffs (cotton, for example) agricultural inputspolicies Exchange rate devaluation Changes in agricultural output pattern Chanlge in land use
Change in energy cost patternsChange in rate oft
=__________________________________ deforestation _
Fiscal balance Broadened tax base Increased rate of economic activity More efficienk r esourceReduction in agricultural input Decreased agricultural input use usesubsidies Increased energy conservation Lowel air and wvai;rReduction in energy subsidies Decreased research and extension polluio'eu velsReduction in rural development Increased poverty levels Decreased soil!elimination of some poverty safety degiadatrk anl<nets agricultural ruii-off
Private sector Sale of public enterprises Increased industrial production and Change ir industrialdevelopment Promotion of private sector efficiency pollution
promotion _Redistribution Land reform Changes in income and consumption Change in pattern of landof income and Labor protection laws patterns usewealth Social and safety net programs !a/ Some of these outcome assume that no corrective measures were taken.Source: Based on Noman 1988, Shafik and Bandyopadhyay 1992, Munasinghe 1993, and World Bank 994a.
1.25 Redistribution of income and wealth has an effect on the environment. By giving ownership tofarmers, land reformn helps protect the environment because it enables the cost of land use to be fully borneby decisionmakers and eliminates the externality that leads to overexploitation. Becattse the laws inPakistan were very lax and easy to circumvent, past land reforms did not bring about the desired change inland tenure and did not have any effect on environmental protection.
C. Incentive Policies and Institutions for Improving the Environment in Pakistan
1.26 As noted, non-distortionary economic policies that stimulate economic growth bv improving theallocation of resources generally create appropriate incentives for the protection of the enviromnent. Suchpolicies are referred to as "win-win" policies in that economic and environmental objectives are jointlyachieved with the use of the same policy instruments. Policies for sustained development thus can build onthe positive links between development and the environment.
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Economic Policies That Create Incentivesfor Improving the Environment
1.27 The scope for policy reforms that promote income growth, poverty alleviation, and environmentalimprovement is very large in Pakistan. Since the 1980s and particularly in recent years, Pakistan hascarried out significant structural reform of the economy. Such reforms aim at altering the organization ofthe economy in order to achieve greater efficiency and economic growth, largely by moving toward a moreopen, market-orientated economy (World Bank 1995a). By providing economic agents with incentives tomanage the natural resource base in ways that are more sustainable, market-orientated policies havegenerally had positive effects on the environment. These win-win policies-particularly the deregulation ofprices, the privatization of State-owned enterprises, and trade reform-should be supported andstrengthened.
1.28 The structural adjustment program eliminated many agricultural price subsidies. The subsidy onagricultural chemicals was removed, for example, and the subsidy on fertilizers is now very small. As aresult, the markets for chemicals and fertilizers have become more efficient, private sector involvement inthe production and distribution of these agricultural inputs has increased. At the same time, farmers faceincentives to use less of these inputs, which in turn has led to slower rates of pollution resulting from lessagricultural run-off into the groundwater aquifers (see chapter 3).
1.29 Opportunities for other win-win price policies remain unexploited. Irrigation water charges do notcover the operation and maintenance of providing service, and farmers thus receive large subsidies onwater. The cheap water has provided incentives for farmers to over irrigate, leading to water wastage andsevere soil degradation as a result of the leaching of nutrients from the soil. The pricing of electricity andnatural gas is another area in which win-win opportunities are being missed. A recent study (World Bank1995b) estimated the weighted average tariff across all users at 90% of the long-run marginal cost, withlarge subsidies going to residential users and agricultural users-both paying about 50% of the long-runmarginal cost (table 1.2). The current system of tariff thus involves heavy cross-subsidization acrossusers, with commercial users paying more than twice the long-run marginal cost. Subsidies also remain inthe gas sector, with residential users and some industrial users (especially the fertilizer industry) payingsignificantly less than production costs. Again there is cross-subsidization among users with commercialand many industrial users paying more than the border price. Removing energy subsidies requires carefulanalysis, however, since it could cause many poor households to shift to other forms of fuel, such as wood,dung and coal, which may be more environmentally damaging.
Table 1.2. Energy Subsidy Levels in PakistanCategory Electricity Natural gas
Tariff as % of long-run Retail price as % ofmarginal cost border price
Residential 51 77Commercial 223 133Tubewells 50Bulk supply 123Industrial 123 118
Fertilizer 18-31Weighted average 90 96Source: World Bank 1995b
1.30 Privatization is also a win-win policy because it can help reduce fiscal deficits-especially ifproceeds from privatization are used to reduce the government debt-and it can lead to more efficient useof inputs and to the introduction of new technologies that are generally cleaner than the old ones. Privatefirms must be required to comply with pollution control laws and regulations; the extent to whichprivatization benefits the environment thus depends on the government's monitoring and enforcement
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capacity. Although these capabilities are weak in Pakistan, private firms can nevertheless be encouraged toemploy environment-friendly production practices through the use of market-based incentives, such as theproposed pollution tax, or through other forms of control, such as pressure from NGOs.
1.31 Rationalizing the trade regime and liberalizing external payments increases economy efficiency,speeds up economic growth, and reduces poverty. It is also likely to provide incentives for better naturalresource management. These reforms have encouraged production of products in which Pakistan has acomparative advantage, such as cotton yams and threads, textiles, and leather products. Although in somecases additional policies may be required to ensure that growth in these sectors does not cause additionalpollution, for the most part trade policy in Pakistan has benefited the environment.
1.32 Focusing only on win-win policies will not ensure sustainable resource use: an economy in whichresources are allocated efficiently is a necessary not a sufficient condition for creating appropriateenvironmental incentives, and environment-specific policies will be needed to ensure sustainable economicdevelopment. For example, removing trade barriers is the correct economic policy for encouragingeconomic growth. However, if through liberalization polluting industries are given incentives to expandproduction, trade policy reform may not be beneficial for the environment. Specific policies are needed toprovide owners of polluting industries with incentives to comply with necessary environmental qualitystandards. Finally, strong institutions for overseeing regulating and monitoring polluters; enforcing theenvironmental laws; providing information and knowledge to industrial and agricultural producers; andcreating mass awareness in the population at large are needed.
Targeted Policies Directed at Improving the Environment
1.33 As mentioned above, win-win economic policies are necessary but not sufficient to achievesustainable development. In many cases, targeted environmental policies are required and justified, often tocope with market failures that cause externalities and overexploitation of the natural resource base. Thisargument is supported by a recent study of economic reforms and the environment in Pakistan (AERC1995), which developed economic models (both at the macro and sectoral level) in which levels of keyeconomic variables were linked to indicators of resource degradation and pollution. The study showed thateconomic reforms reduce the number of people exposed to environmental risks associated with unsafedrinking water and inadequate sanitation, but increases urban population and the generation of municipalwaste. Economic reforms also increase aggregate emissions of air pollution. The study argued that unlesscorrective measures are taken, the income, water, and sanitation benefits of economic reforms will be offsetby environmental degradation related to congestion, solid waste, and air pollution.
1.34 Two types of targeted policy can be used-command and control, and incentive- or market-basedpolicies. Within these two categories, policies can be either direct or indirect (box 1.2). Command andcontrol policies involve government mandating of environmental quality standards on emissions, technologytype, or input use. Incentive-based policies use prices to try to affect pollution and resource use.
1.35 Market-based approaches to regulations that mandate the behavior of decision-makers arepreferable to regulatory approaches, because policies that use economic incentives are often less costly.Taxing industrial emissions, for example, provides an incentive for firms to invest in cleaner technologiesand gives firms with lower pollution abatement costs an advantage over firms with higher pollution controlcosts. Regulations leave these decisions to the regulators, who are rarely informed about relative costs andbenefits in industry. Moreover, market-based policies that price environmental damage affect all polluters,in contrast to regulations, which affect only those firms that comply. Market-based policies send the rightlong-term signals to resource users, and provide polluters with an incentive to use technologies that aremost cost effective at reducing environmental damage. Regulations that mandate standards give pollutersno incentive to go beyond the regulated standard. Regulations also require monitoring and enforcement,
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and governments must be prepared to prosecute violators. In many developing countries, includingPakistan, the necessary monitoring and enforcement capability is weak.
Box 1.2. Direct Versus Indirect Policies, Charges Versus Tradable Permits
Direct environmental policies target specific activities known to damage the environment (examplesinclude industrial and vehicle emissions standards). Because such policies involve pollution measurement andmonitoring they are generally costly, especially if resource users are numerous and dispersed or difficult to locate.Direct policies (whether or not market based) are most appropriate when environmental damage is caused by large,highly visible enterprises, such as industrial and mining operations. Indirect policies (such as taxes on pollutingindustrial inputs) are useful when the monitoring and enforcement capabilities of regulatory authorities are weak(as they are in Pakistan).
Environmental policies can affect the price of the resource (as in the case of a tax) or restrict the use of theresource (as in the case of logging permits, emissions standards, or land zoning). Quantity-based controls arepreferred when certain levels of pollution or resource use should not be exceeded (radioactive or toxic wastes, forexample). Enforceable zoning laws may be more reliable than differential property taxes in preserving uniquehabitats, such as wetlands, sensitive shorelines, and coral reefs. Among market-based policies, the choice betweencharges and tradable permits depends largely on monitoring and enforcement capability. Tradable permits tend tobe more difficult to administer than charges, which can usually be handled through the existing fiscal system.
1.36 The NCS recommended that several market-based policies be adopted. These included increasingwater charges to all farmers, phasing in capital and environmental cost recovery, providing special taxincentives for recycling, and keeping the prices of fuel high to promote fuel efficiency and reduceemissions. Despite these recommendations, no market-based instruments are used in Pakistan, which reliesalmost exclusively on command and control methods.
1.37 Current policies are also quantity based, in that they specify the amount of pollution or resourceuse, thereby fixing the level of environmental damage, and direct, in that they target specific activitiesassociated with environmental damage (such as industrial and vehicle emissions through the NationalEnvironmental Quality Standards [NEQS]). Direct and regulatory approaches are not likely to be costeffective, and environmental improvements in Pakistan have probably been achieved at a higher cost thanthey would have had economic incentives been used.
1.38 The command and control approach can play an important role in controlling pollution inindustries in which there is little competition betveen firms, especially when the technologies for controllingpollution or resource use are relatively uniform and can easily be specified by regulators. Land use isanother area in which regulation may be more effective than market-based approaches. Zoning laws inrural areas can be used to try to slow the conversion of agricultural land or preserve ecologically sensitivelands; urban zoning can be used to protect city residents from the adverse effects of industrial air pollution.
Summary
1.39 Economic policies that help eliminate market distortions generally stimulate growth and improvethe environment. Through its structural adjustment program, Pakistan has made a good beginning inintroducing win-win policies, including privatization, trade reforms, and market liberalization, and thesepolicies should be continued and strengthened. Such policies are not sufficient to ensure sustainableresource use, however, and additional policies targeted at specific environmental problems are also needed.Environment-friendly policies, such as the tax on industrial pollution, need to be adopted to ensure that theimproved economic incentives do not conflict with the need to use natural resources in ways that aresustainable.
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1.40 Overall the government's environmental policy has failed to achieve its intended goals. Significantprogress has been made at identifying the major environmental problems and their causes, and institutionshave been established to tackle at least parts of the problems identified. But recently progress has falteredand environmental institutions have failed to monitor and regulate natural resource use and pollutionadequately. According to government officials and local experts, progress has slowed largely because ofthe incentive structures created by existing policies and institutions. Economywide policies havediscouraged conservation and pollution prevention, while the regulatory structure has failed because ofinadequate enforcement and monitoring capability.
1.41 Many of Pakistan's environmental problems can be associated with economywide policies thathave had indirect and unintended effects on the environment. Specific policies aimed at the environmenthave failed because the government has relied almost exclusively on regulation, and policymakers havegenerally ignored market-based approaches, which can be more effective.
1]
2. MAJOR BROWN PROBLEMS AND THEIR CAUSES
2.1 This chapter briefly describes the nature and range of Pakistan's major brown environmentalproblems and shows that many of these problems are caused by failures of policies and institutions.
A. Industrial Waste Water Pollution
2.2 The level of industrial pollutants emitted is growing at a very rapid pace in Pakistan and theadverse health and productivity impacts are significant and worsening. Indiscriminate discharge ofindustrial waste water is causing serious environmental problems, among them contamination ofgroundwater, including water drawn for drinking; contamination of sea water, affecting aquatic life anddrinking water; and contamination of rivers, particularly in areas with low levels of mixing, such as harborsand estuaries. Unless policies are changed, environmental degradation as a result of industrial waste wateris likely to accelerate as the manufacturing sector-already the single largest user of commercial energy inPakistan-continues to grow.
2.3 Much of the technology used by industry in Pakistan was acquired at a time when energy priceswere artificially low and environmental impacts were not considered. Pollution from this technology isoh .efore higher than it is in many industrial countries. Industries with high levels of water contaminationin Pakistan include textiles, leather, paper and board, sugar, fertilizer, and cement, which together accountfor 80 percent of total water consumed.
2.4 Adequate disposal of industrial waste water in Pakistan is quite rare as discussed in box 2.1.Waste water drainage practices employed by industry vary greatly, although the most common practice isto drain effluent into natural surface drainage channels. Drainage into unlined open ponds followed byevaporation is also practiced by some industries located in canal-irrigated areas. Seepage from suchdrainage ponds raises the water table and contaminates the groundwater. Drainage into irrigation canalshas also been observed at some of the textile units located south of Lahore.
Box 2.1. Disposal of Industrial Waste Water
Because substantial up-front investments are required to design and construct process control and drainage systemsto segregate contaminated effluents from clean streams, effluent water treatment facilities in Pakistan industry arerare. A few such plants have been installed by some multinationals in the fertilizer, paper, pesticide, andpharmaceutical industries. Application of in-plant control and waste minimization are also rarely practiced byindustry. The common practice is to combine contaminated and uncontaminated process water and storm waterinto one drainage system.
2.5 No comprehensive current data exist on either total industrial pollution loads or pollutionintensities in Pakistan. Levels of six types of industrial pollutants-toxics, heavy metals, BOD pollutants,and suspended solid water pollutants, particulates, sulfur dioxide air pollutants-increased between six-and tenfold between 1963 and 1988, during which time GDP grew by a factor of three. This rate of growthof pollution output was typical of Southeast Asian countries but above the rate of growth in India, wherepollution grew at about the same rate as GDP.
2.6 Economywide policy distortions have contributed significantly to the problems of industrial wastewater. A subsidy on electricity and natural gas use keeps prices below economic levels, underminingincentives for energy conservation (World Bank 1995b). Pakistan is gradually moving toward a more
rational system of energy pricing, wlhich has had a p.:int- -i'fect on energy efficiencv. Other resources,however, including water, remain underpriced, leading to ineificient use and wastage. Because access togroundwater is free and water is made available to industries at a low price, industries have very littleincentive to conserve water. As a result., water usage levels are ten times higher in some industries inPakistan than they are in industrial countries.
2.7 Targeted policies aimed at addressing indusirial vA astv water have focused on the NEQS. To date,however, these have not been enforced. A new svsteni based on the "polluter pays" principle used in someindustrial countries, is being discussed by the governmuent and NGOs. Under the policy effluent chargeswould be imposed based on pollutant loads and the quaniti:. -f wvater wasted (more discussion of thisproposal is given in chapter 5). Other potentially ef1,kctive taigeted policies, such as economic incentivesfor industries to acquire environment-friendly technolog- 1w,, noi3t been introduced. Fiscal incentivescould be highly effective in creating an environmenit cr.onducix e inwards investment in pollution abatementequipment, use of improved technology, input mininwz,itJ)k, anU s\astc reduction. Suclh fiscal incentives,geared towards the improvement of the industrial sector's prodiction processes, could be introduced withthe aim of encouraging voluntary complianic with the N1 QS
2.8 Institutions have also failed to adequately addrcss tihe problems of industrial waste water pollution.Zoning policies and regulations for industrial location exist, bult, as elaborated in box 2.2, are not clearlydefined or regularly enforced. Regulatory approaches to control industrial waste water have generallyfailed because monitoring and enforcement has not beeo undertaken.
B. Domestic Waste Water Poilutior
2.9 Waste water is disposed of in several Nva.- " box 2.3 for comparison of water treatmentpractices in three major cities). Often it is dumped iJO Open drains, strearns or ponds, shallow pits, orseptic tanks connected to open drains (many leading ouw dn-ed> to agricultural land); less often it isdumped into sewers. Household refuse is also dumped inito streamns and drains, which over time havebecome overloaded. Direct disposal of municipal wY.aste wvater into streams not only reduces groundwaterquality, but also disturbs the aquatic ecosystems, depletes aquatic resources, and affects agricultural usesof the surface water. Another problem is the decisio-ni o4i municipal waste water for farm use prior totreatment. Once on the farmn soil, waste water can combine with unconsumed pesticides to createcomplexes that can pose serious health dangers when consumed. Moreover, soils irrigated by untreatedmunicipal waste water become enriched in salts and qu ,ckly become unproductive for cultivation.
Box 2.2. Weak and Unenforced Zoning Policies and RegwuaniOavoi6 !.,o-alion or Industries
Historically, zoning policies and regulations for siting industries irn PalLstan have not been clearly defined. Severalcities including Badami Bagh in Lahore and SITE in Kailrdleii. hne grown around industrial areas that wereoriginally located well outside city limits. The effect ont the en-vironiner. was not considered in planning the newindustrial developments. Government agencies -- such as ( apit,l Development Authoritv in Islamabad, whichis responsible for regulating the development of urban areas-- specify zones in which industries can be establishedand define the type of industrial activities that are perm-lissible in tiese zones. Such regulations are frequentlyviolated, however, and in certain cases exceptions are allowcd by tiie government. An example is the location of acement plant in an area that was originally designated as a residential area in the Islamabad Master Plan.Violations in other major cities in Pakistan arc also comnmon, Faisalabad, where textile dyeing operations arecarried out in predominantly residential areas. beir,g one o- the eIOrSt xamples
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Box 2.3. Domestic Waste Water Treatment in Karachi, Islamabad, and Lahore
In Karachi, two 20 mnillion gallon per day trickling filter facilities, established in the 1960s, and 5-million gallonper day aerated lagoons, constructed in 1985, can meet only 50 percent of waste water treatment demand. Theseplants are poorly designed, operated, and maintained, and suffer from shortages of parts, lack of trained manpower,and the presence of industrial effluent sewer lines. Work to upgrade the plants for an ultimate treatment capacityof 160 million gallons per day is in progress and the use of treated sewage for irrigation of fodder crops is beingtested.
In Islamabad, a 5-million gallon per day activated sludge plant was constructed in 1962 and another plantof the same capacity awaits commissioning. Sludge bulking has often been reported at the old plant, indicatinginadequate aeration. Important operational parameters such as sludge age and return sludge values are neithermonitored regularly nor reported.
In Lahore, city sewage that had received only primary treatment was routinely pumped into the Ravi Riveruntil recently. After years of experimentation with low-cost facultative and maturation ponds, the Institute ofPublic Health Engineering has recommended the use of such ponds at six different locations around the city.Performance of the pilot facultative ponds was satisfactorv, suggesting successful outcomes with the full-scaleplant.
2.10 Only 80 percent of the urban and 45 percent of the rural population is estimated to have access toclean water in Pakistan, and migration to the cities is putting pressure on inadequate urban water andsanitation facilities. Pollution has led to the spread of water-related infections: more than 40 percent of thehospital beds in Pakistan are occupied by patients with water-related diseases, such as cholera, typhoid,hepatitis, diarrhea, dysentery, yellow fever, and malaria, and about 60 percent of infant mortality isassociated with water-related infectious and parasitic diseases.
2.11 Brandon (1995) estimated that providing improved water and sanitation services to all segments ofthe population now underserved would reduce the incidence of water-related diseases by 47-71 percent,and yield an economic value of $461-1,252 million a year, depending on the assumed value of life-yearslost to premature death and sickness. A recent World Health Organization (WHO) study found thatimproved water supply and sanitation produced a median reduction in illness and a median reduction indeath of 65 percent. Because high income groups are more likely to have access to clean water supplies orto be able to purify their water or to purchase bottled water, the incidence of water-related illness falls withincome.
2.12 Problems of domestic water disposal tend to stem from distortions due to economywide policies,failure of targeted environmental policies, and institutional failures. Uneconomic water pricing exacerbatesthe problem in urban areas, where a flat rate is charged or water is provided free of charge, a policy thatboth encourages the wasteful use of water and eliminates incentives for suppliers of water services toupgrade their water supply, treatment, and disposal facilities. In rural areas, waste water is used as acheap, nutrient-rich source of supplemental irrigation, so that the need to invest in treatment facilities is notrecognized. Targeted policies to control domestic waste water have not developed.
2.13 In terms of institutional weaknesses, municipalities are generally poorly managed, underfinanced,and technically unable to provide adequate water and sanitation services to a large portion of urbandwellers.
C. Motor Vehicle Emissions
2.14 Vehicle emissions represent the greatest source of air pollution in Pakistan, reflecting the rapidgrowth in vehicle use. Growth has been especially strong within the past decade as described in box 2.4.
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Motor vehicle emissions account for about 90 percent of total emissions of hydrocarbons (smog),aldehydes, and carbon monoxide. Other emissions include lead, which can cause mental retardation inyoung children; sulfur dioxide (the precursor to acid rain); and nitrogen oxides.
2.15 Economic factors that have led to increased vehicle emissions include the growth in population anddisposable income, the mass production of affordable vehicles, the deterioration of alternate modes oftransportation, and the need to travel longer travel distances as a result of urban sprawl have led to theincrease in vehicle emissions. Although petrol prices are high, encouraging fuel efficiency, car owners arefor the most part unable to respond to the incentive to conserve gas because of the lack of alternatives:maintenance and tune-up facilities and public transportation are inadequate, and cleaner or less expensivefuels have only recently been available in Pakistan. A subsidy on diesel fuel provides incentives to switchconsumption to diesel, which is more polluting than many alternative energy sources.
Box 2.4. Growth in Vehicle Sales
The total vehicle pool in Pakistan has increased by 11 percent a year over the past five years. The trendtoward individualized transport is apparent in the growth of each subcategory: the number of cars rose by 10percent, motorcycles by 14 percent, light trucks by 18 percent, and heavy trucks by 9 percent. Meanwhile, thenumber of buses grew by only 6 percent.
The local production base for motor vehicles has expanded in recent years, and 60,000 scooters andmotorcycles, 20,000 tractors, 80,000 passenger cars and four-wheel drive vehicles, 500 heavy buses, and 2,000heavy trucks are manufactured or assembled in Pakistan each year. The growth in vehicle sales has had a positiveeffect on the age composition of vehicles in Pakistan-more than half of all automobiles are less than six years oldand only a quarter are more than ten years old-and the average level of emissions per vehicle has probably fallenas a result. The enormous growth in the number of vehicles suggests that total emissions have risen, however.
2.16 A study by the Applied Economic Research Center (AERC 1995) noted that increased vehicleemissions result from economic growth. Therefore, additional policies are needed to ensure that thebenefits from economic growth are not offset by the costs of increased pollution. Targeted policies havebeen introduced in Pakistan, but are ineffective because of institutional failures. For instance, restrictionsare placed on vehicle emissions under the 1965 Motor Vehicle Ordinance and 1969 Motor Vehicles Act.However, even the rudimentary compliance with these laws is not enforced in any meaningful way.Regulations go unenforced because of difficulties monitoring compliance, because of lack of resources, andbecause of corruption. A new enforcement strategy must therefore propose institutional reform of the legal,administrative, and police departments.
2.17 The absence of emissions regulations, the lack of enforcement of motor vehicle fitness regulations,and owners' lack of capital to purchase replacements mean that old vehicles stay on the roads longer. Theresults is that the average vehicle in Pakistan emits 20 times more hydrocarbons, 25 times more carbonmonoxide, and 3.6 times more nitrous oxides than the average vehicle in the United States (box 2.5).
2.18 A start has been made in providing better vehicle maintenance facilities to the driving publicthrough the GEF-funded fuel efficiency improvement program, which will set up modern gasoline anddiesel engine diagnostic and tune-up centers in major urban centers in Pakistan. The project seeks todemonstrate the economic viability of such technology in the hope that such centers will be set upthroughout the country. Immediate attention also needs to be paid to expanding and improving the publictransportation system, currently patronized by only the lowest income groups; improving intercity railways;and enforcing regulations on excessive emissions from vehicles in all category groups.
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Box 2.5. Vehicle Maintenance and Fuel
Motor vehicles in Pakistan currently consume an estimated 1.4 million tons of gasoline and 3.5 milliontons of diesel fuel. Gasoline is used largely by private passenger cars (40 percent), two-wheelers (17 percent), andtaxicabs (13 percent). Diesel fuel is used by heavy trucks (60 percent), buses (27 percent), passenger wagons (11percent), and light trucks (3 percent). Passenger and freight traffic on Pakistani roads are expected to continue togrow at annual average rates of 6 percent and 8 percent, respectively.
Regular gasoline, which has a lead content of 0.42 grams per liter, is used in older cars and in two- andthree-wheelers and other two-stroke engines. The abolition of the regular grade is being considered by thegovernment in response to the declining demand and the need to check its use in the adulteration of the premiumgrade, which is 15 percent more expensive. Gasoline is taxed much more heavily than diesel, providing a strongincentive for gasoline-driven vehicles to conserve fuel and creating a favorable market for technologies thatimprove fuel efficiency. Alternative cleaner fuels are only now beginning to be introduced into the market. Aftermany years of operating two experimental CNG stations in the public sector, the government has recently allowedthe private sector to set up its own such stations, and two more are already operational. The government has alsorecently allowed the import of LPG and the sale of low-lead gasoline.
D. Urban and Industrial Air Pollution
2.19 The level of air pollution is not known because very little information is available on industrialemissions in Pakistan. Industry indiscriminately releases carcinogens (such as asbestos and soot),radioactive substances arising from nuclear waste and other manufacturing, and particulate matter andnoxious fumes (such as carbon monoxide, sulfur dioxide, and hydrogen sulfide) into the air, and air qualityis declining. A 1985 survey found that only 3 percent of industrial plants in Pakistan treated their wastesaccording to commonly accepted international standards.
2.20 Air pollution primarily affects urban areas, where the density of industry and vehicles preventspollutants from being dispersed. Urban air pollution consists of particulate, sulfur dioxide, carbonmonoxide, nitrogen dioxide, ozone, hydrocarbons, and heavy metals (such as lead). Street air samplestaken in Karachi in 1971 showed carbon monoxide levels of 3-35 parts per million; a 1982 study foundlevels of 6-40 parts per million. In Lahore carbon monoxide emissions increased from 1-10 parts permillion in a 1974 sample to approximately 30 parts per million in 1984. Other available air qualitymeasures include 1982 lead concentrations for Karachi of 0.013-0.24 micrograms per cubic meter andparticulate concentrations of 425-629 micrograms per cubic meter-concentrations that are consistentwith international guideline. The massive population growth in urban centers that took place during thepast decade coupled with the liberalization of the economy and increased infrastructural and industrialactivity has probably increased air pollution since 1982, making the establishment of systematic monitoringand measurement activity critical.
2.21 In rural areas, air quality is not normally a problem, except near noxious and large discharges ofpollutants. Most cement plants in Pakistan have not installed equipment to control dust emissions, forexample, and pose a nuisance and potential health hazard to surrounding residents. Large fuel-burningsources, such as thermal generating stations and industries that burn coal for steam boilers, create localizedproblems from deposition of particular ash matter and sulfur compounds, especially if the coal used has ahigh sulfur content (as does much of Pakistan's indigenous coal) (box 2.6).
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Box 2.6. Air Emissions by Selected Industries
Pakistan has no fuel quality standard for coal, and sulfur dioxide and particulate emissions from local coalare high. The bulk of Pakistan's brick industry operates on low-quality local coal, and will not be able to meet theNEQS, application of which would result in the closure of industry based on local coal. Technologies such asfluidized bed with injection of dolomite and limestone, which can be used to control emissions from burning low-quality coal, cannot be used in the brick industry. Alternatives include switching to gas or upgrading local coal byremoving sulfur before the coal is put in the brick kiln.
Emissions from the sugar industry are caused by bagassed fired boilers, an outdated technology. Dryingof bagasse with boiler flue gas can improve the efficiency of boilers and reduce emissions. Installation of high-efficiency boilers would reduce emissions and allow the sugar industry to increase output. Given the tariffs onpower, however, the sugar industry has no incentive to invest in power generation.
Data on particulate emissions cannot be directly tied to fuel use, as other nonfuel factors play a role.Based on the types of technology used, however, particulate emissions in the brick, sugar, and cement sector areestimated to exceed local and international standards. Emissions from brick kilns are high in sulfur andparticulates, and cause serious air quality problems in winter, when wind speeds arc low. In the cement industry,about 25 percent of industrial capacity is not equipped with adequate dust control equipment. Residents of theTaxila valley have been exposed to high dust levels as a result of wind conditions and topography that favoraccumulation of dust in the valley. Residents of Islamabad have complained about dust emissions from the steelindustry located in the Islamabad industrial area. Sulfur dioxide emissions from sulfuric acid plants, ammoniafrom fertilizer units, and H2S from gas purification operations have also been reported to exceed safe levels.
2.22 Little information is available on the extent of environmental damage caused by industrialemissions, although observations close to major cities and industrial complexes indicate that the problemsare severe. In the Kala Shah Kaku industrial complex outside Karachi, gaseous emissions are believed tohave adversely affected crops downwind. About 2,000 premature deaths, 6.4 million hospital admissionsand sicknesses requiring medical treatment, and 418,000 cases of minor sicknesses are estimated to becaused by air pollution in Pakistan each year. The total economic cost of this illness and death is estimatedat $249-$358 million, depending on the economic value assigned to the loss of life (Brandon 1995).
2.23 Economywide policy failures are directly related to air pollution. Air typically becomes pollutedbecause the social costs of emissions are not fully taken into account by decisionmakers motivated byprivate profit, and because state enterprises, which may not be profit maximizing, fail to internalize theenvironment. As was the case for industrial and urban waste water problems, such market failure suggestsa need for government intervention through targeted environmental policies.
2.24 Retail prices for nontradable energy products, such as electricity and natural gas, remain below theeconomic cost of supply. In addition, cross-subsidies-particularly for residential and agricultural use ofelectricity, and residential and fertilizer-sector use of natural gas-inflate demand, preventing consumersfrom taking necessary energy conservation measures, and eliminating incentives to private sector investors(World Bank 1995b).
2.25 Several incentive-based approaches that have been used effectively in other countries-includingemissions taxes, tradable pollution permits, and economic incentives for industnes to acquire environment-friendly technology-have not been tried in Pakistan. Instead, the government has relied on regulatoryapproaches, which can be effective only if they are adequately monitored and enforced. Because provincialEPAs, which are responsible for monitoring and enforcement, are poorly equipped in terms of bothequipment and trained staff, regulation has been largely ineffective, and industries are more or less free topollute at will.
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E. Marine and Coastal Zone Pollution
2.26 The coastal environment has changed over time, partly as a result of the massive take-off from theIndus River for irrigation and extensive pollution, particularly around the Karachi area. Most striking isthe reduction in the mangrove forests, which has adversely affected fish and shellfish nurseries.Construction of barrages has reduced the size of fish catches and reduced the sediment load reaching theocean, causing coastal erosion and higher levels of marine turbidity, which in turn have affected marineflora and fauna (box 2.7).
Box 2.7 Destruction of the Mangrove Forests
The mangrove stands of Pakistan have been severely depleted by the artificial deprivation of fresh waterfrom the Indus River. Mangrove stands occur on 40 percent of the 0.8 million acres of Pakistani swamps, wheretheir cover has been so reduced that they may now be called remnant stands. On the Pakistani coast, the standshave been damaged by overuse by fishermen and by camels, grazing by whom is believed to be the prime cause ofmangrove decimation there. Mangroves have virtually disappeared from the Mekran coast, where they arehypothesized to have been fed by the Indus River itself or by one or more of its distributaries then flowing out ofthe Baluchistan coast. Mangrove losses occurred as the Indus shifted eastward. On the Sindh coast, mangrovesare used for fuelwood and fodder for domestic cattle, and decimation of the fields is severe. The IUCN isreforestiing the mangrove swamps with saplings, which are also being planted in the Karachi harbor backwaters,and an active research program has been planned by the Forestry Sector Master Plan.
2.27 For the most part. marine and coastal zone pollution in Pakistan is limited to Karachi, a city of 8million people that accounts for about 45 percent of the country's industry. All of the city's industrialwaste, effluents, and domestic sewage, and all of the agricultural run-off from the hinterland and the IndusRiver find their way, untreated, into the sea. The Karachi nuclear power plant discharges liquid wastes andheated water into the ocean. Most coastal pollution is confined to the Karachi area, particularly to theharbor (Manora Channel), where most forms of pollution are evident. The Manora Channel is polluted bya varietv of sources, including domestic effluents, oil wastes from resident vessels and the estimated 2,500ships that Visit the port annually, scrap metal and rust from the shipbuilding yards, oil and liquid wastesfrom fish processing plants, and all forms of industrial waste from Karachi's industrial areas (box 2.8).
2.28 Oil pollution is also a problem: of the 4 million tons of oil imported in 1986, 20,000 tons arebelieved to have leaked into coastal waters. In addition, the coastal zone of Pakistan is threatened by oilpollution arising from other countries, particularly those of the Gulf of Oman and the Persian Gulf.Elsewhere in Pakistan the beaches and coastal waters are relatively free from pollution, although instancesof heavy metal pollution, oil slicks, tar on beaches, and sewage pollution have been reported.
2.29 Many marine and coastal zone problems can be associated with the absence or inappropriatenessof policy. Waste water from industrial and domestic sources and agricultural run-off eventually end up inthe river systems and ultimatelv in the sea. As a result, the economic policy failures that have led toindustrial and domestic waste water have also caused coastal zone problems. No incentive- or market-based policies specifically address problems of marine and coastal zone pollution; only regulatoryapproaches have been used, and enforcement has been weak.
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Box 2.8. Threats to Biodiversity in the Greater Karachi Area
A serious threat to Pakistan's marine ecosystem is posed by the construction of power plants inside creeksand backwaters of the coast, especially in the Greater Karachi area. Some environmentalists have recommendedthat enclosed bodies of water, such as bays, lagoons, backwaters, and creeks, be off limits to power plants becausehot water discharges from the plants may prove lethal to marine organisms, which already live close to theirmaximum temperature tolerance point in the tropics and subtropics. Another threat to biodiversity is thedevelopment of seafront real estate on mangrove swamps or marshy land. Sand mining from exposed beaches andfelling of mangroves contribute to loss of habitat and biodiversity. Developmental activities such as theconstruction of oil piers at Port Qasim and the construction of the Korangi Fish Harbor in Sindh and the Pasni FishHarbor in Balochistan also reduce biodiversity. Such projects are too important economically to be abandonedbecause of their effect on the environment, however.
Summary
2.30 The major causes of brown environmental problems in Pakistan are inappropriate incentives andthe failure of institutions designated for protection of the enviromnent. Uneconomic pricing of natural gas,for example, has contributed to all forms of industrial and urban pollution. Institutional weakness hasundermined the implementation of programs, the regulation of pollution sources, and the enforcement ofenvironmental legislation. Financial and resource constraints plague the design of facilities, such assanitation and treatment plants, the public transportation infrastructure, and waste disposal mechanisms.
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3. MAJOR GREEN PROBLEMS AND THEIR CAUSES
3.1 Pakistan contains at least six major natural resource systems: irrigated agriculture; rainfed, orbarani agriculture; forests; rangeland; fisheries;, and systems focused on preserving biodiversity (wildlife).Each system has different resource management and conservation problems3. The area affected and theestimated production loss for each major problem are shown in tables 3.1 and 3.2.
Table 3.1. Estimated Annual Losses Resulting from Natural Resource Degradation, 1988Problem Percentage of area affected Annual loss
(millions of dollars)Soil degradation 350
Salinity and sodicity 16a 213Waterlogging 9a 79Erosion 9a 44Nutrient depletion 12b 9Unclassified - 7
Deforestation IOC 30Rangeland degradation 125Total 515- Not available.a/ Irrigated area onlyb/ All agriculturec/ Forest area loss, 1981-90.Source: Government of Pakistan 1991; Brandon 1995.
Table 3.2. Extent of Soil Degradation by Province, 1988(thousands of hectares)
Punjab Sindh NWFP Balochistan Northern PakistanAreas
Total area surveyed 20,625 9,222 9,139 19,141 3,685 61,812Water erosion 1,904 59 4,282 2,635 2,282 11,172Wind erosion 3,804 639 36 280 - 4,760Salinity and sodicity 2,667 2,110 48 502 - 5,328Waterlogging 696 625 92 142 - 1,554Nutrient degradation 1,580 246 296 96 - 2,218Flooding 915 763 276 598 5 2,557Ponding 691 - 245 - - 936Note: "-" stands for Not available.Source: Mian and Mirza 1993
A. Irrigated Agriculture
3.2 Eighty percent of Pakistan's cultivated area, or 17 million hectares, is irrigated, and irrigatedagricultural accounts for more than 90 percent of agricultural output and 22 percent of national GDP.Pakistan has the largest contiguous canal irrigation system in the world, with over 1.6 million kilometers ofcanals, branches, distributaries, field channels, and watercourses. Forty percent of the total water supplyis lost in the canals and watercourses before reaching the farm gate. Total availability of irrigation water at
3 In order to focus on the other major systems, fisheries and wildlife have been excluded from this study.
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the farm gate is estimated at 105 million acre feet, of which 60 percent is supplied by canals, 35 percent bythe more than 300,000 private tubewells, and the remaining 5 percent by public tubewells (Mohtadullah,Rehman, and Munir 1992). Most of the system is unlined, however, and since the 1970s water fromprivate tubewells has accounted for a growing share of total water supplies. In many regions of the centralPunjab as much as 70 percent of irrigation is supplied by tubewells, particularly in the rabi season.
3.3 In the 1950s and 1960s, waterlogging and salinity posed major hazards for irrigated agriculture.In most areas, the threat of waterlogging has receded since the 1970s, when the Salinity Control andReclamation Project (SCARP) tubewells were installed and drainage was improved. The problem ofsalinity has become more acute in recent years, however, as a result of increased tapping of brackishgroundwater for irrigation, and salinity poses the greatest danger to Pakistan's most important naturalresource. How soil degradation impacts agricultural productivity is discussed in box 3.1.
3.4 Salinity and sodicity (hereafter referred to as salinity) and waterlogging dominate theenvironmental agenda in irrigated agriculture. Other problems include soil productivity losses andexcessive use of agricultural inputs, especially chemicals.
Waterlogging, Salinity, and Groundwater Management
3.5 Salinity is partly the result of naturally occurring geological processes and depends on the soilmaterial, landform, relief, climate, and land use. In Pakistan, salinity has almost certainly increased as aresult of the canal irrigation system as water containing dissolved salts from the lower parts of the soilprofile seep from the canal system, and evaporate from the surface of adjoining soils. Excessive percolationof water from the canal system, evaporation of saline groundwater, inadequate availability of water fromrains or irrigation to meet the leaching requirements of the soil, and irrigation from tubewell pumping withlow-quality groundwater with high salt concentrations (something that is common in the SCARP areas)also increase salinity.
Box 3.1. Natural Resource Degradation and Declining Agricultural Productivity
Mounting indirect evidence suggests that resource degradation in irrigated areas is retarding agriculturalproductivity growth. Byerlee and Siddiq (1994) showed that despite a tripling of fertilizer inputs, increasedirrigation, and the adoption of dozens of new varieties, yields of high-yielding varieties of wheat in the Punjabhave been stagnant for over 20 years. Using growth decomposition analysis, they found that after accounting forthe expected effects of new seeds, water, and fertilizer, yields declined, especially in the period since 1975. Theyidentified four major causes of this stagnation; cropping intensity and increased reliance on monocropping; use oflow-quality groundwater; low fertilizer efficiency as a result of uneven or inappropriate application and reduceduse of organic manure; and increased weed and disease losses.
Using more comprehensive data on all crops and inputs, Ali and Valesco (1993) found preliminaryevidence that total factor productivity is stagnating in several of the major irrigated cropping systems, especiallythe rice-wheat system of both the Punjab and the Sindh. When correction is made for a proxy for technologicalchange, the production function in irrigated agriculture was found to be shifting downward over time, indicating adeclining quality of the resource base. These results-which are being updated and expanded in a current WorldBank research project-indicate the urgency of monitoring environmental problems in irrigated agriculture andtaking immediate measures to arrest apparent resource degradation.
3.6 Estimates of the extent of waterlogging and salinity in Pakistan vary. Using soil survey reportsfrom 1965-88, Mian and Mirza (1993) estimated that 2.8 million hectares (16 percent) of irrigated land inPakistan is affected by salt and 1.55 million hectares are waterlogged (water table within 1.5 meters of thesurface). WAPDA has estimated that 2.12 million hectares of land are waterlogged, and Sandhu (1993)
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estimates that an additional 40,000 hectares per year are lost to waterlogging. These reports are based onoutdated information; regular monitoring of waterlogging and salinity using standardized assessmentcriteria is needed so that more accurate estimates can be made.
3.7 The most neglected problem is that of tertiary salinity from the low-quality groundwater providedby tubewells. Surveys have shown that three-fourths of tubewells provide brackish water that is unfit oronly marginally fit for agriculture. The cost of salinity in terms of reduced yields is hard to evaluate.Using farm-level data, Siddiq (1994) estimated that yield losses in wheat as a result of sodic irrigationwater were 9 percent and 20 percent in two different locales in the central Punjab. Other experts haveestimated that crop yields are reduced by about one-third for crops grown on slightly saline areas and thatyields on moderately affected areas are reduced by about two-thirds. Crop production of any kind isdifficult on highly saline soils.
3.8 Much of the problem of salinity caused by low-quality tubewell water can be reduced through theuse of gypsum, and the government has tried to popularize gypsum use by farmers through provision of asizable subsidy. A similar program was very successful in the Indian Punjab, where the problem of salinityhas been drastically reduced through the use of subsidized gypsum. There are no data on the effects of thePakistani program. Field experience indicates, however, that in most instances, influential farmers appearto be the main beneficiaries of the subsidies. Moreover, application of gypsum to fields has not alwaysfollowed disbursement of subsidies, because of rent-seeking behavior. Despite these problems, marginalreturns from gypsum application to rice-wheat rotation far exceed its cost (Siddiq 1994). Given theprofitability of the practice, direct subsidization of gypsum should be halted. In 1991, a total of Rs. 100million was spent on the program, while between 1989 and 1995, the government spent over Rs.332 millionin the Punjab alone. These funds should be used to finance prograns that increase awareness of thebenefits of gypsum application by farmers and provide extension information on its efficient use. Oncedemand is created, gypsum should become easier to obtain and less expensive.
3.9 Concems about groundwater quality have been raised repeatedly over the past three decades butlittle effort has been made-by the provincial or the federal government, or by any of the multilateral aidagencies that invest heavily in the irrigation sector of the Indus Basin during the 1960s and 1970s-tomonitor the effects of salinity of groundwater on soil resources and crop productivity. In the absence of apublic agency with an official mandate to monitor the effects of salinity, provincial irrigation departmentsshould be legally mandated to do so.
3.10 A critical issue in any discussion of salinity and waterlogging is the effect of water pricing policyon the efficiency and use of water. The subsidy on canal water has been substantial in recent years,accounting for more than 50 percent of the subsidy on operation and maintenance costs; the subsidy ismuch higher if measured in terms of the opportunity cost of water or against the cost of tubewell water.The underpricing of wvater and the basing of charges on the area irrigated in a season rather than on thequantity of water applied eliminates incentives to use water efficiently and has aggravated waterlogging andsalinity (Ahmad and Kutcher 1992). The structure of water pricing provides no incentives for using canalwater efficiently, and discourages investments in water conservation, such as drip or sprinkler irrigationsystems (Noman 1994). All of these problems are linked to the lack of property rights on canal water.Although some canal water is unofficially exchanged and traded, rights to canal water are not officiallyrecognized and there is no well-developed market to allocate canal water to its most efficient uses.
3.11 Use of tubewell water is also distorted by economic policy. Tubewell drilling and electricity aresubsidized, and electricity prices for tubewells are based on the area irrigated in a season regardless of thevolume used. Although tubewell water is widely traded at a price several times higher than that of canalwater, there are no restrictions on the drilling of tubewells. In areas of limited groundwater, this means thatthere is no way of regulating or influencing through property rights the overexploitation of groundwater.
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One area of the country where this problem is particularly severe is in Balochistan, as illustrated in box3.2.
Box 3.2. Groundwater Depletion in Quetta
Although groundwater is a renewable natural resource, it is rapidly being depleted in Balochistan.Depending on the source of data, water tables are dropping in the Quetta valley at a rate of 0.3-3 meters per year(WAPDA 1981; van Gils and Baig 1992). Several social, economic, and technical factors have causedgroundwater depletion in the province. The transformation of the groundwater extraction technology from slow-flowing karezes (traditional underground tunnels used to tap groundwater) to fast-running tubewells is the mostimportant factor. Public policy, or the lack thereof, has also contributed to the problem by failing to enforce thetubewell licensing policy and by providing electricity at a flat rate, thereby discouraging more efficient use ofirrigation water. Progressive power charges that increased the cost of groundwater would force fruit and vegetablefarmers to adopt water conservation strategies, such as drip irrigation. Population pressures and the breakdown oftraditional grazing rights in the rangeland and forests have led to a reduction in groundwater recharge to a third ofits potential because of degradation of natural vegetation. The long-run sustainability of groundwater resources inthe Quetta valley can be ensured only when appropriate policies are coupled with human and animal populationcontrol measures.
3.12 On the output side, prices of major crops continue to be distorted through trade policy and pricesupports. Domestic sugarcane prices, for example, have regularly been set above imnport prices,encouraging the domestic production of sugarcane, a crop with high water requirements. Factor pricedistortions that artificially encourage capital intensiv-, techniques lead to the adoption of productionmethods that do not reflect factor endowments (Noman 1994). Subsidies or targeted credit for tractors andthreshers have displaced labor, for example. The resulting environmental stress can be alleviated byproviding more rural employment by removing the policy induced distortions in favor of highly capitalintensive methods. Employment creation may also be the most effective strategy for reducing pressure onfragile soils in the mountain areas of northern Pakistan.
3.13 Institutional obsolescence in the management of the irrigation system also contributes toenvironmental degradation. Public spending on irrigation has been declining by 4 percent a year (Ahmadand Kutcher 1992), and continuous underinvestment in operations and maintenance has reduced theefficiency of the irrigation system which experiences regular breaches, excessive seepage, and limited watersupplies for the tail reaches of distributaries. The shortage of funds has also led to underinvestment inestablishing new drainage systems, which are central to resolving the waterlogging and salinity problems.Drainage is certainly a public good and will remain so beyond the farnufield, where most of the drainageinvestments are needed (World Bank 1 994b).
3.14 Resolution of the environmental problems facing Pakistan's water resources requires theimplementation of fundamental changes in water pricing and in institutional structures to improve theefficiency of allocating water and maintenance. Radical new institutional structures have been proposed,including the devolution of water management to farmers organizations, and the establishment of publicutilities to operate and price water further up the system (Ahmad and Faruqee 1995). In the longer run,Pakistan must recognize full property rights for irrigation water, and allocate water through markets byvolumetric measuring. Many issues-especially the initial allocation of the rights in an equitable manner-will need to be resolved before such a system can be implemented.
3.15 There is also a need to establish a central agency to provide regular and up to date information onthe state of land and water resources in irrigated areas. Under the current institutional framework,information and awareness of the problems of waterlogging and salinity is institutionally dispersed both at
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the federal and provincial levels. There is no central monitoring over time of the extent of the problems;partly as a result, there is no sense of urgency with respect to resolving the problems.
Other Soil Productivity Problems
3.16 The mining of soil nutrients associated with a decline in organic matter and the extraction of othernutrients at a rate greater than their replacement through additions of inorganic and organic sources ofnutrients threaten the sustainability of irrigated areas in Pakistan. In much of the irrigated area, farmersplant a single rotation, such as cotton-wheat and rice-wheat, without introducing a rotation crop or usingorganic manures. Indeed, there is evidence that cropping patterns have become less diverse as the area offodder crops and pulses has fallen. Declining organic matter and declining yields for the same input levelhave been found in on-farm trials of the Soil Fertility Institute in the Punjab. Intensive monocroppedagriculture without the timely application of micro and macro nutrients may also be causing other as yetunrecognized soil problems.
3.17 Part of the problem stems from the lack of research (until recently) on integrated soil nutrientmanagement. This lack of research is in part a legacy of the green revolution, which emphasized theapplication of higher doses of chemical fertilizers, encouraged by fertilizer subsidies, and paid almost noattention to complementary ways of maintaining soil fertility.
3.18 With the removal of fertilizer subsidies, the need to promote organic sources of nutrients throughfarmyard and green manures, to diversify rotations to include legumes, and to employ other environment-friendly practices, such as conservation tillage, has grown. The Pakistan Agricultural Research Councilhas only very recently initiated a bio-organic approach to agriculture that emphasizes organic sources ofnutrients, including green manures, farmyard manure, composting, and microbiological approaches.Although these technologies are being extended, little research has been done on back up, especially on thefine tuning of these technologies needed to take account of the socioeconomic situations of small farmers.More research, especially participatory research with farmers, must be undertaken to develop appropriatemethods for integrated nutrient management.
Pollution from Agricultural Chemicals
3.19 In many countries, the indiscriminate use of agricultural chemicals, such as fertilizers andpesticides, has contaminated ground- and surface water. Also, excess nutrient loading as a result offertilizer run-off can lead to uncontrolled algae growth. Pesticide run-off causes an increase in the numbersof dead fish (such as on the banks of the Kabul River in certain seasons), and pesticide residues are ofparticular concern because they are assimilated into the environment at a slow rate, and accumulate in fishand animal tissue. Increased intensities of nitrates in groundwater wells are converted into more toxicnitrites in the stomachs of adults and infants, and are known to cause blood disorders in infants. Otherrisks from agricultural chemicals include contamination of shallow wells used for drinking water in villagesand cities, and pesticide residues on grain and vegetables products in markets.
3.20 Agricultural chemical use in Pakistan's irrigated agriculture has expanded rapidly over the pasttwenty years. The most serious agricultural chemical problem stem from the rapid increase in pesticideuse, from less than 1,000 tons in 1980 to more than 20,000 tons in 1993. Pesticide use was initiallystimulated by subsidies, discontinued in 1985, and by a major government and private sector campaign toinduce small cotton farmers to use pesticides in the wake of the pest epidemic of 1983. In Pakistan, overUS$300 million are spent on crop protection annually. Of the total expenditure, over 50 percent is spent oninsecticides alone, 90 percent of which is applied to cotton. In spite of the fact that the use of pesticides hasgrown over the past decade, the average application in Pakistan is still less than one-third the applicationsapplied in the United States and Australia.
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3.21 The widespread use of often dangerous pesticides on the cotton crop is associated with severalpotential health hazards, including contamination of workers who apply it (three quarters of producers usea back-pack sprayer and no protective clothing), harvesters (all of whom are women), soil and groundwaterused for drinking, and consumers of agricultural products. Very few data are available to document theextent of these various health hazards. Jabbara and Mallick (1994) summarized evidence from blood teststhat shows that as many of one third of cotton workers in Pakistan have been exposed to dangerous levelsof pesticides. Other studies have noted unacceptable levels of pesticide residues on at least 20 percent ofsamples of vegetables in urban markets.
3.22 The exclusive reliance on pesticides to reduce pest losses is unsustainable as pest populationschange and some pests develop resistance to commonly used pesticides. Resistance to pesticides hascaused the cotton crisis of the past two years, in which losses from curl-leaf virus have sharply reduced thecotton harvest and even threatened supplies to the domestic textile industry. Short-run success inincreasing cotton production over the past decade has come at the price of long-run sustainability.
3.23 Integrated pest management (IPM) is widely advocated as a means of reducing pesticide use anddeveloping more sustainable production systems through the employment of a range of practices to combatpest populations. Despite the magnitude of the environmental and health problems associated with highlevels of pesticide use on some crops, Pakistan has been a latecomer to the practice of IPM, and has beenreactive rather than proactive. In the past two years, considerable research has been conducted on IPM incotton, and various practices-from introduction of resistant varieties to pest scouting to culturalpractices-have been devised to reduce pesticide use significantly. The campaign to reach farmers,spearheaded by the PARC, will be initiated only next season, however, with a modest target of only 4,000hectares. IPM is a knowledge-intensive practice that requires good extension service and is facilitated byliterate farmers. Both are deficient in Pakistan and unless major emphasis is placed on promoting IPM itwill be decades before pesticide use is reduced significantly.
3.24 The most widely used agricultural chemical is chemical fertilizer more than 2 million tons of whichare used a year. The limited data available reveal little evidence of pollution hazards from fertilizers.Because of the potential for problems, however, especially as the levels of fertilizer use continue to rise, theeffects of fertilizers should be monitored.
B. Rainfed Agriculture (Barani)
3.25 About 20 percent, or 4.3 million hectares, of the total cultivated area in Pakistan is rainfed(barani). Rainfed agriculture is particularly important in northem Punjab and NWFP. Many of the naturalresource issues affecting irrigated areas, particularly the use of agrochemicals and the decline in soilproductivity, also affect rainfed areas, although usually to a lesser degree.
3.26 The major problem in rainfed areas is soil erosion, which has worsened over the years aspopulation pressure, poverty, and stagnant yields have forced more people onto marginal areas to meetfood, fodder, and fuelwood needs. Water erosion is the major cause of soil erosion in rainfed areas. Theintensity of this problem varies with the topography of the area, soil texture and structure, cultivationpractices, and intensity of rainfall. The most commonly observed forms of water erosion are sheet and rillerosion, which affect the Potowar area, and gully and riverbank erosion.
3.27 Water erosion is an age-old problem of the upland areas that has been exacerbated by developmentover the last three decades. About 11 million hectares of land are slightly or severely affected by watererosion problem in Pakistan, particularly in NWFP, where one-third of rainfed area is classified asseriously affected by water erosion (box 3.3).
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Box 3.3. Special Problems of Mountain Areas
More than 60 percent of the land area in NWFP is mountainous and thus extremely susceptible to watererosion. About 0.6 million hectares of the land in the provincial watersheds is used for agriculture, almost all of itfor grazing. The maintenance and upkeep of the NWFP watersheds affects all of Pakistan because large irrigationand hydroelectric dams can be supported only in the long-run with better management of upstream areas.
3.28 Removal of vegetative cover for forage and fuel; loosening of previously stabilized loess surfacesin an effort to bring more land under cultivation; repeated shallow mechanized tillage, encouraged by cheapcredit for tractor purchases, that has created a hard pan beneath the top soil restricting moister infiltrationand inducing rainfall runoff, inappropriate terracing and ineffective field embankments allowing mud slidesand torrential flows; and lack of crop cover as a result of bare fallowing, removal of organic matter, androdent damage aggravate the problem of rainfall run-off (Mian and Mirza 1993).
3.29 Water erosion has serious environmental consequences in both the short and long term, including acontinued decrease in the depth, fertility, and extent of productive soils; a decrease in agriculturalproduction; continued deterioration of rangelands and forests reserves; increased rates of sedimentation inwater reservoirs and channels, affecting their maintenance cost and life span; and adverse effects on thetransportation infrastructure (roads, railways, bridges).
3.30 Soil erosion by wind is predominant in the sandy arid areas of Pakistan, mainly in the Thal andCholistan Deserts in the Punjab, the Thar Desert in the Sindh, and the Kharan Desert in Balochistan, anddepends on the nature of the soil, the wind velocity, the soil moisture, and the land relief. Dry fallow fields,saline soil surfaces, and loose dust in village and town streets supply large amounts of material that istransported to distant places by winds. Like water erosion, wind erosion occurs naturally but has beenexacerbated by development activities, including overgrazing, burning and felling of plants by localinhabitants, cultivation on sand ridges, fallowing of land during dry windy periods (a common practicebecause of irrigation water shortages in the Indus plain), and untimely tillage and excessive loosening oftopsoil of dry fallow fields. One of the major problems caused by wind erosion is that good agriculturalland becomes buried with sand, causing soil productivity to decline. Sand also decreases the potential ofrangelands, depletes good agricultural land as fertile portions of soil are blown off.
3.31 Policies and institutions have provided incentives for farmers to cultivate more land to intensifytheir production practices, thereby exacerbating the rate of soil damage and degradation. Much of theemphasis on controlling soil erosion has been through engineering solutions in the form of contours, bunds,and check dams, usually implemented through programs of the Ministry of Agriculture. Less emphasis hasbeen placed on biological solutions involving cropping patterns to increase soil cover, conservation tillage,and use of vegetative contours and barriers. The National Agricultural Research Council is now testingsuch approaches in a pilot program. The appropriate merging of engineering and biological solutions willrequire substantial participatory research and strong linkages between research and development.Community-based approaches are also needed. To reduce bare fallowing in the Potwar plateau, forexample, farmers will have to abandon their traditional system of farming (the do fasla-do sala system), inwhich fallow land is treated as common grazing land. Property rights will also need to be defined in orderto implement more effective soil conservation programs. In the Swat valley, for example, much of the steepland is farmed by Gujars, who have traditional tenancy rights to the land, which is owned by the Puktoonsof the valley. Because they do not own the land, the Gujars have little incentive to invest in soilconservation methods such as terracing and leveling.
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C. Forests
3.32 Forests occupy only about 5 percent of the land area in Pakistan, and only one-third of the forestsare productive in terms of timber extraction. Forests nevertheless plays an essential role in the country'seconomy because of their importance as sources of fuelwood and grazing land. Almost a third of thenation's energy needs are met by fuelwood, and forests are used for grazing a third of the country'slivestock. Catchment forests prolong the lives of the Tarbela and Mangla reservoirs, which are vital forgeneration of hydroelectric power and regulating water supply to the largest irrigation system in the world.
3.33 Over 4.2 million hectares of natural forests, of which 1.9 million hectares is coniferous forest areconfined mainly to the northern hilly areas of Pakistan. Scrub forests, riverine forests, and mangroveforests are found in the Punjab and the Sindh. Planted forests include irrigated plantations, riverine forests,linear plantations along roads and canals, and farm trees (trees raised on agricultural farms). Farm forestryrepresents the largest source of wood, contributing more than 50 percent of total annual growth, 80 percentof timber, and 90 percent of fuelwood harvested in Pakistan. These forests also provide shelter fromdesiccating winds and sand, allowing marginal lands to be put to productive use; supplement and stabilizefarmers' income; and provide farmers with fruits, fiber, fuel, fodder, small timber, green manure, mulch,honey, tannin, and leaves for sericulture. Decomposed tree leaves add nutrients to soil and some trees fixnitrogen. Productivity of these plantations has been falling over the years because of shortage of irrigationwater, invasion by thorny shrubs, and inadequate operations and maintenance funds.
3.34 No reliable figures are available on how the area and health of the natural forests in Pakistan haschanged over time. These deficiencies in base data indicate the need to establish a system for monitoringthe status of the forest resources. Regular satellite imagery of the entire forest area, as practiced in India,would be a useful beginning. The data that are available suggest that deforestation is proceeding at 0.2-0.4 percent per year (IUCN 1989), and that current rates of timber extraction are unsustainable. TheForestry Sector Master Plan's estimate the annual sustainable growth of forests at 14.4 million cubicmeters, only half of the estimated annual consumption of 29.5 million cubic meters. Wood production willhave to be increased almost fourfold to meet consumption levels anticipated in 2018.
3.35 Forest depletion leads to water erosion, which causes soil losses, siltation of reservoirs, andinefficiency in the irrigation system. This problem is most severe in the northern valleys (see box 3.4 forfurther details), where migratory herdsmen and residents of the area have caused substantial destruction.The influx of Afghan refugees into the western border areas has placed additional strains on alreadyoverextended resources, and threatens to change the forest and rangeland ecosystem permanently.Deforestation is also a problem in the densely populated Indus Basin, where demand for housing land andcrop land is increasing and large livestock herds have been introduced.
Box 3.4 Destruction of Forests in the Northern Areas
Uncertainty about the constitutional status of the Gilgit Subdivision and lack of land settlement in theregion caused destruction of forests in the Northern Areas. In 1992 a ban was imposed on all felling, cutting,conversion, and transporting of timber in order to reduce destruction of the forest in the region. In an attempt toprevent the practice of harvesting timber in excess of sustainable yields the government extended the ban onlogging countrywide. Such bans are difficult to enforce, however, and the resulting increase in timber pricesprovides incentives for illegal timber harvesting.
3.36 The construction of dams and barrages also restricts the flow of fresh water to coastal regions,reducing the diluting affect of the Indus River in the delta mangrove areas. As a result, sea water hasraised salinity levels in the mangrove forests, which have become dominated by a single salt-tolerant tree
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species where there were once eight species. The discharge of wastes near mangrove forests and thegrazing of mangrove vegetation by uncontrolled herds of camels have led to severe damage, including thetransformation of several islands along the Sindh coast into barren wastelands.
3.37 Shared ownership of the forests is an important problem in Pakistan, where most forests are ownedpartly by the government, partly by communities, and partly by individuals. Reducing deforestationrequires establishment of ownership rights. Policies are required to incorporate the true social value offorests. In NWFP, the Guzara forests are privately owned by local landowners, who can cut timber fromthese forests for their domestic requirements but cannot sell timber without permission from the provincialgovernment. Failure to reforest, overexploitation by contractors, and liberal exercise of traditional rightshave resulted in considerable deforestation of the Guzara forests in the Murree Hills and AJK as elaboratedin box 3.5.
Box 3.5. The Kalam Integrated Development Project in NWFP
The Kalam Integrated Development Project in NWFP demonstrates the kind of commitment that isrequired to develop sustainable forest management. Begun in 1981 with funding from the Swiss DevelopmentCorporation, the project initially focused on forest conservation and sustainable forest harvesting through trainingof local people in timber harvesting. Over time, the need for a broader approach to reach these objectives wasrecognized. The project has studied the use of fodder production to relieve pressure on grazing of forest lands,reforestation with mixed species for both fuel and timber production, and income generation in agriculture throughthe production of high-valued crops, such as potatoes and vegetables. Other components of the project haveincluded the generation of electricity through small hydroelectric plants (a substitute for wood fuels) and socialdevelopment, especially the education of girls.
The project has developed a highly participatory approach through the establishment of village-basedorganizations responsible for such activities as developing a village land use plan and policing timber movementsout of the area. As these village organizations have grown, the project is seeking to develop higher levelorganization in the form of an NGO that can contract needed technical guidance once foreign funding of theproject is terminated.
3.38 Establishing policies that do not distort the value of alternative uses for forest areas is alsoimportant. Artificially maintaining high agricultural output prices and low input prices, for exarnple,increases the attractiveness of agricultural production and encourages the conversion of forests into farmland. Institutions are also required to increase awareness of sustainable development of forest resources.Forestry extension needs to be restructured and forestry products marketing boards need to be established.
3.39 Government polices have provided disincentives for afforestation. The sapling subsidy, forexample, which was designed to create incentives to plant trees, crowded out provision of saplings by theprivate sector, limiting the overall supply of saplings available to producers. Because of this problem, arecent report recommended that the subsidy be eliminated (Faruqee 1995).
3.40 Deforestation is also the result of poor forest management. Most natural forests are classified asstate forests and the protection, timber extraction, and reforestation of these forests is vested in the ForestDepartments. Revenues generated from timber sales are credited to the Treasury, however, and thedepartments responsible for forest management receive operational funds through annual budgetappropriations that cover only a fraction of their requirements. As a result, needed replanting andmaintenance are not carried out, resulting in deforestation and deterioration of the existing forests. Localcommunities have traditional rights in state forests, which increases pressure on forest resources as thepopulation grows. Deforestation also takes place indirectly when regeneration efforts fail because ofexcessive grazing and inefficient supervision.
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3.41 The role of local communities in managing forest resources should be expanded. Traditionallylocal communities have not been consulted in forest management decisions and forest revenues have notbeen shared with local residents. Projects in NWFP have successfully demonstrated that communities caneffectively protect forests and manage communal lands, however. These projects encourage local land useplanning and assist the local population with the development and implementation of management plans toincrease and sustain the privately and jointly owned forest, rangeland, and farm land for their benefits.Local communities in the region receive 60-80 percent of revenues from harvested timber. Other donor-funded projects have attempted to turn over control over both the harvesting of timber and reforestation tolocal people.
D. Rangeland
3.42 Most of Balochistan-30 million hectares, or 86 percent of the total area-is covered byrangeland, 80 percent of which is believed to be degraded. Much of the rangeland is threatened byoverstocking, overgrazing, and overharvesting of the natural vegetation; and many of the ranges in Pakistanare populated by more animals (mostly sheep and goats) and people than they can support. Rangeland isdamaged by deterioration and degradation. Range deterioration is caused mainly by climatic events, suchas droughts. Losses are temporary and the productivity of the rangeland is renewed when more favorableclimatic conditions return. Range degradation occurs when land becomes less productive because ofmismanagement during drought years. Measures such as reducing stocking and frequencies until regrowthof palatable species reaches acceptable levels are required to remedy the condition; the return to morefavorable climatic considerations is insufficient to restore the range.
3.43 In some parts of Pakistan, rangeland has become so badly degraded that the vegetative cover hasbecome inedible or has disappeared altogether. Soil damage is a problem on such lands and degradation isso extensive that significant economic investment is required to restore productivity. Rangelanddegradation is extensive in Balochistan, where two-thirds of all rangeland is classified as having lowproductivity and most of the damage is believed to be irreversible damage leading to desertification.
3.44 Most of the rangeland in Pakistan is either privately or tribally owned, or has open access; about 2percent of rangeland is publicly owned. Population pressure, changing socials structures, andcommercialization of livestock enterprises have caused traditional tribal systems for controlling grazing tobreak down, leading to overgrazing and severe overstocking.
3.45 Resolution of the problem of rangeland degradation requires a more accurate assessment of boththe number of livestock and the status of the rangelands. Approximately 18.4 million small stock arebelieved to graze on the rangeland, about three times the sustainable grazing capacity. Current livestockpopulation numbers will have to be reduced, something that has been difficult to achieve in the past. Inaddition to land tenure and ownership issues, sustainable rangeland management may also be affected bygovernment policies aimed at influencing the domestic price of meat (such as ban on exports of meat andlive animals). Improvement of livestock productivity through improved veterinary services and extensionshould accompany any efforts to reduce livestock numbers. Research the technical, social, and institutionalaspects of range management will be an important part of developing sustainable solutions to rangelanddegradation.
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Summary
3.46 Waterlogging and salinity have reduced productivity in irrigated agriculture in Pakistan. Inaddition to poor drainage, both problems can be attributed largely to economic policy failures, such as theunderpricing of water, which weakens incentives to use water efficiently. In rainfed areas the majorproblem is soil erosion, which has resulted largely from policies and institutions that have providedincentives for farmers to cultivate more land to intensify their production practices. Deforestation has ledto water erosion, which causes soil losses, siltation of reservoirs, and inefficiencies in the irrigation system.Government policies have provided disincentives for afforestation, and poor management, lack of propertyrights in communal forests, and the failure of local communities to participate in forest managementdecisions have exacerbated the problem. Rangeland degradation is also a major problem, requiring a moreaccurate assessment of the number of livestock and the status of the rangelands. Lack of long-termproperty rights by local tribes has led to the loss of control over grazing in their communities.
3.47 Important inter-dependencies between the major natural resource systems exist, and must beconsidered in developing strategies on green issues. Sustainability of irrigated systems, for example,depends on watershed management, much of which would be classified as part of the forestry system.Population pressure on marginal fragile environments might be alleviated through productivityenhancement in agricultural areas, which encourages out-migration from marginal areas. Importantinterdependencies between brown and green environmental issues also exist, particularly in the case ofwater resources. Water pollution affects farmers as well as consumers, and competition for scarce watersupplies often brings farmers and growing urban populations into conflict. These interdependencies pointto the need for institutional mechanisms that recognize the interrelationships among environmentalproblems and that foster coordination among the various institutions dealing with a particular problem.
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4. INSTITUTIONS FOR ADDRESSING ENVIRONMENTAL PROBLEMS
4.1 The institutional response to natural resource management problems remains fragmented inPakistan, where a patchwork of environmental institutions, laws, and other initiatives tackle only parts ofthe problem. Jurisdictional uncertainty over environmental concerns, legislative weaknesses, limitedmonitoring and enforcement capability, failure to meet Environmental Impact Assessment (EIA)requirements, and absence of market-based approaches have resulted in an inadequate institutionalresponse. This chapter reviews the institutional response to environmental problems in Pakistan andidentifies some of the reasons institutions have been ineffective.
A. Pakistan's Response to Environmental Issues
4.2 Pakistan has responded to its environmental problems by passing laws, establishing governmentagencies, and accepting technical assistance from donors, including the World Bank. Despite its efforts,degradation of the environment continues, as regulations are ignored or circumvented.
Legislation on Environmental Issues
4.3 Pakistan Environmental Protection Ordinance. Environmental legislation is dominated by thePakistan Environmental Protection Ordinance of 1983 (PEPO). The ordinance "provides for the control ofpollution and preservation of the living environment" in Pakistan and its territorial waters. PEPO wasdesigned to establish an environmental policy and management structure that enables both federal andprovincial legislatures to enforce environmental standards. The ordinance provides the statutory authorityfor the establishment of the Pakistan Environmental Protection Council (PEPC) and the PakistanEnvironmental Protection Agency (PEPA), and lays out their powers and functions. PEPO also establishesthe legal requirement to submit ELA for projects that are "likely to adversely affect the environment." Thestatements must include information on the effects of the project on the environment, the proposedtreatment works, and the steps planned to minimize any adverse effects on the environment (Government ofPakistan 1993a).
Draft Pakistan Environmental Protection Act, 1996
4.4 PEPA has drafted amendments to the 1983 ordinance, which have been circulated for comments tofederal legislators, provincial governments, NGOs, the private sector, academic institutions, and otherrelevant groups (Government of Pakistan 1996). The Draft Act is similar to the Ordinance and outlinespowers and functions of PEPC, PEPA, and the provincial EPAs. The Act provides for (among otherthings) broad rule and regulation making powers of environmental institutions; public participation in ELAsand approval of activities following submission of EIAs; the creation of provincial EPAs; formulation ofenvironmental policies; the establishment of environmental tribunals, magistrates, and sustainabledevelopment funds; substantially greater enforcement and more detail on right of entry powers (comparedwith the PEPO); and penalties and the power to launch prosecution proceedings against heads ofgovernment agencies and local authorities.
4.5 Although the Draft Act is an improvement over the Ordinance, a recent World Bank mission (mid-term review of the ENRC project) identified a number of weaknesses. A major problem is the lack ofprocedural detail and descriptions of regulatory mechanisms that are normally specified in environmentalprotection legislation (specifications of mechanisms and prescription of procedures are left to theregulations). Omitted from the Act, for example, are detailed procedures for pollution control, ELAs,appeals, and public participation. Third party rights in ELAs and pollution control need to be defined, andthe use of sustainable development funds needs to be carefully considered (subsidizing the installation ofpollution control equipment, for example, violates the polluter pays principle and may only serve to prop up
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inefficient industries). Under the Draft Act delegation of powers to provincial EPAs is not prescribed, butis handled through notification in the Government Gazette. Such a mechanism creates problems ofsubsequent delegation to divisional or district officers in the provinces, and may require provincial EPAs toenact their owns laws.
Other Environmental Acts and Ordinances
4.6 Other federal and provincial laws also cover pollution control, natural resource use, andconservation (table 4.1). The Factories Act of 1934 and the Motor Vehicle Ordinance of 1965-neither ofwhich has been enforced effectively or consistently-include provisions aimed at controlling air and noisepollution. Marine pollution is partly controlled under the Ports Act of 1908, which prohibits discharge ofballast and garbage into a port to ensure safe shipping. The Territorial Waters and Maritime Zones Act of1976, which established a 200-mile Exclusive Economic Zone (EEZ) off the coast, protects the marineenvironment and prevents marine exploitation. The Agricultural Pesticide Ordinance of 1971 requires thatpesticides be registered, and places controls on pesticide use. The Forest Act of 1927 prohibits the clearingof forests for cultivation and grazing and the removal of forest products in reserves or protected areas (buthas failed to control deforestation). Legislation for the conservation of wildlife and the protection ofthe national parks includes separate provincial Wildlife Protection Acts of 1974. These acts have beensuccessful in protecting some species, such as the green turtle and the Indus dolphin, but have failed toprotect others.
Table 4.1. Environmental Legislation in PakistanProblem Legislation Enforcing agency Offenses covered
Water Pakistan Penal Code, 1860 Provincial government Fouling a public spring or reservoirpollution
Factories Act, 1934 Ministry of Industries Disposing of untreated industrial waste inwater bodies
Karachi Joint Water Board Karachi Joint Water Contaminating the water supply of waterOrdinance, 1949, and Karachi Board Authority works or water tanksJoint Water Board Rules, 1956Sindh Fisheries Ordinance Sindh Fisheries Provincial Discharging untreated sewage and
____________ L_____________________ _ :Department industrial waste in waterAir pollution Pakistan Penal Code, 1860 Provincial governments Vitiating the atmosphere in any way so as
to make it noxious to human healthThe Motor Vehicle Ordinance Traffic police Emissions of smoke, grits, sparks, ashes,of 1965, and Motor Vehicle cinders, oil, or other noxious substancesRules, 1969 from vehicle.
Noise pollution The Motor Vehicle Ordinance Traffic police Driving a vehicle without a silencer,of 1965, and Motor Vehicle using horn with shrill alarning soundsRules, 1969West Pakistan Regulation and Local government Use of loudspeakers near courts,Control of Load Amplifiers hospitals, offices, schools, or to inciteOrdinance, 1965 sectarian violence or to cause annoyance
Toxic or Pakistan Penal Code, 1860 Provincial government Negligent conduct with respect tohazardous Pakistan Nuclear Safety and poisonous substanceswaste pollution Radiation Protection Acquisition, manufacture, construction,
Ordinance, 1984 operation of nuclear installation; dealingin nuclear material unless under license;discharge of nuclear waste; trading inradiation-contaminated food; entry ofnuclear powered vehicles in Pakistan
Solid waste No relevant legislationpollution
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Table 4.1. Environmental Legislation in Pakistan (cont'd.)Problem Legislation Enforcing agency Offenses covered
Marine The Ports Act, 1908 The Port Qasiin Authority Discharge of ballast or garbage into a portpollution
Pakistan Territorial Waters Ministry of Pollution of Port Qasim Areaand Maritime Zones Act, 1976 Communications and Port
AuthorityPollution of The West Pakistan Fisheries Provincial Fisheries Destruction of fish; capture of certainfisheries Ordinance, 1961 Department species of fish below a certain size;
harvesting of certain species in specifiedperiods; harvesting in fish sanctuaries
The Balochistan Sea Fisheries Balochistan Fisheries Operating unlicensed fishing craft orOrdinance, 1971 Department fishing equipment in Balochistan;
destruction of fish or plankton; fishing inspecified areas
Pesticides and No relevant legislationfertilizers pertaining to fertilizer use Ministry of Food and Marketing unregistered pesticides
Agricultural Pesticides AgricultureOrdinance, 1971 Pesticide laboratoriesAgricultural Pesticides Rules,1973
Forest The Forest Act, 1927 Ministry of Food and Clearing of forests for cultivation, grazing,conservation Agriculture, Forest hunting, removing forest produce,
Division quarrying, felling and lopping and tappingof trees, branches etc. in reserved orprotected areasDefacing trees and timber, and alteringforest boundaries
West Pakistan Firewood and Burning of firewood and charcoal inCharcoal Act, 1975 factories, brick kilns and lime kilnsThe Cutting of Trees Act, 1975 Cutting and felling of trees in the five
mile belt along the external frontier ofPakistan without written approval of localformation commander
The NWFP Hazara Forest Act, NWFP Forest Department Similar to Forest Act, 19271936The NWFP Ordinance, 1980 NWFP Forest Department Extraction of timber and forest produce
without government approval
Wildlife The Sindh Wildlife Protection Sindh Forest Department Unlicensed hunting of wild animals;conservation Ordinance, 1972 hunting of protected animals; possessionand national of wild animals or meat of protectedparks animals; hunting in sanctuaries or national
parks; polluting water of park or settingfire to sanctuary, introducing exoticspecies in parks
Punjab Wildlife Protection Punjab Forest Department As aboveAct, 1974Balochistan Wildlife Balochistan Forest As aboveProtection Act, 1974 DepartmentNWFP Wildlife Protection Act, As above plus capture of hawk and falcon1974, and Rules, 1977
Preservation of The Antiquities Act, 1975 Local government Destruction, damage, or defacement ofcultural antiquitiesheritage
The Punjab Special Premises Local governmentPreservation Ordinance, 1985
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National Environmental Quality Standards
4.7 In August 1993, National Environmental Quality Standards (NEQS) were established for Pakistan.All new industries were to comply with the standards by July 1994; existing industries have until July 1996to comply. The NEQS specify end of pipe standards for industrial and municipal effluent and airemissions, as well as smoke and noise standards for motor vehicles. The standards for industrial gaseousemissions define allowable rates for sixteen pollutants; these rates apply uniformly to emissions from alltypes of industrial sources. The standards for liquid municipal and industrial effluents identify thirty-twocharacteristics of municipal and industrial effluents that affect environmental quality. The approach usedby PEPA is to establish effluent standards or guidelines, and to set a maximum allowable concentration forvarious pollutants at the point of wastewater discharge. The limits or rates apply uniformly to the releaseof pollutants from all types of industrial and municipal sources.
4.8 Industry has criticized the NEQS, arguing that the standards reflect international conditions andare not relevant to Pakistan. Industry critics have noted, for example, that the current sulfur dioxide levelsprescribed in the NEQS are not achievable by power plant operations because of the high levels of sulfur inthe fuel oil supplied by Pakistan State Oil.
Recent Policy Initiatives
4.9 National Conservation Strategy. In 1989 the EUAD-in collaboration with a leading NGO, theInternational Union for the Conservation of Nature and Natural Resources (IUCN)-began work on theNational Conservation Strategy (NCS). Formulation of the NCS involved the participation of governmentofficials, political leaders, NGOs, journalists, business leaders, academics, and intellectuals. The documentwas approved by the Cabinet in March 1992, and presented to the donor community at the ConsortiumMeeting one month later.
4.10 The NCS report is divided into two parts. The first part of the report describes the current state ofthe natural resource base and its utilization, and evaluates environmental policies and institutions. Thedescriptive analysis of the country's environmental problems forms the basis for the second part of thereport, the prescriptive component. This part of the NCS contains legal, technical, institutional, andeconomic recommendations aimed at achieving three broad policy goals: conservation of natural resources,development, and greater efficiency in the use and management of resources. The NCS also contains aplan for investing Rs. 150.7 billion (in 1987-88 prices) in projects to be implemented over a ten-yearperiod. While noting the importance of incentives, the NCS ignored price policies.
4.11 The core of the strategy is made up of actions in fourteen key policy areas: maintaining soils incropland, increasing irrigation efficiency, supporting forestry and plantations, restoring rangelands andimproving livestock, protecting water bodies and sustaining fisheries, maintaining biodiversity, increasingenergy efficiency, developing and deploying renewable resources, preventing and abating pollution,managing urban waste, supporting institutions for common resources, integrating population andenvironment programs, and preserving the country's cultural heritage. Maintaining soils in cropland,preventing and abating pollution, and increasing energy efficiency were identified as the most importantpriorities. For each of the fourteen areas, the NCS suggests specific areas for investment, identifies theimplementing agencies, and estimates the total investment cost. To increase irrigation efficiency, forexample, the NCS calls for Rs. 18.3 billion of investment in four areas-irrigation system rehabilitation,command water management, on-farm water management, and improved water harvesting in torrent-irrigated areas-to be implemented by WAPDA, the PIDs, and the Provincial Agricultural Departments.
4.12 Plan of Action, 1993-99. Realizing that the NCS investment plan was overambitious, thegovernment initiated a formal review of government-financed actions. This review, prepared by EUAD,
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resulted in the Plan of Action, which reconmmended Rs. 19.8 billion in investment in projects to beimplemented over the five-year period 1993-98 (Government of Pakistan 1993b). The Plan of Action waspresented at the Donors Conference in Islamabad in January 1993, and was later included in its entirety asthe environment segment of the Eighth Five Year Development Plan (1993-98).
4.13 The Plan of Action proposed a four-component agenda: strengthening technical, regulatory andparticipatory institutions; formulating a communications campaign for mass awareness; creating asupportive framework of regulations and economic incentives; and implementing projects in the NCS'sfourteen core areas. The policy actions were aimed at strengthening the institutional structure that hascreated and perpetuated the environmental crisis; the projects were designed as remedial actions in the formof restorative and protectionist environmental investments.
4.14 SWECO Report. Pakistan has neither the financial resources nor the institutional capability toimplement all of the proposed environmental actions in the NCS and the Plan of Action. To help identifypriorities, a Swedish consulting firm, SWECO, was contracted. In consultation with the World Bank andlocal officials, SWECO formulated priorities for environmental actions and provided a plan forimplementing the NCS and Plan of Action by setting priorities for policy actions to strengthen institutions,provide legal and economic incentives, and develop a mass media campaign (SWECO 1993). To increaseirrigation efficiency, for example, the report recommended that the price of water be ralsed immediately toimprove water utilization, and that all eight investment projects suggested by the NCS be implemented inthe medium- to long-term.
4.15 Forestry Sector Master Plan. A Forestry Sector Master Plan (FSMP) was prepared to integratethe objectives of the government forestry departments and local communities, and to establish a cohesiverural energy policy. In addressing the problem of high demand for fuelwood, the FSMP looked atafforestation to increase the supply of fuel and fodder needs; a switch to altemative energy, such as solarand wind energy; and the introduction of bio-gas plants and small generators. Involvement of the localpopulation in afforestation, management and decisionmaking over their own environment was stronglyemphasized in the plan.
4.16 Sarhad Provincial Conservation Strategy. In August 1991, the government of NWFP invited theIUCN to help it develop an action plan for sustainable development and environmental management. Anenvironmental section and IUCN unit were established in the P&D Department to prepare a strategy. TheSarhad Provincial Conservation Strategy (SPCS) identified fourteen high-priorit) areas of activity,including air pollution, water pollution, soil conservation, management and regeneration of renewableresources, and cleaning of the Kabul River as a pilot project. It also identified areas for further study. TheSPCS has become the official environmental policy document for conservation of natural resources imNWFP.
4.17 Greening of Pakistan Program. A crash program of greening Pakistan has recently been launchedby the PEPC, with support from many public sector autonomous and semiautonomous organizations,banks, industrial establishments, provincial Forestry Departments, the army, and NGOs. All companiesgenerating thermal power have been asked to plant 4 hectares for each megawatt of energy generated, andcommitments to plant 200,000 hectares (200 million trees) have been obtained. A project to establish2,400 hectares of nurseries to produce 600 million seedlings at a cost of Rs. 600 million over the next threeyears has also been approved as part of the project. Seedlings will be supplied to the various organizationsat cost. If successful the efforts will double the area planted annually.
4.18 The greening of Pakistan must be measured not only in terms of quotas ot seedlhngs planted butalso in terms of sustainable institutions and incentives to plant and maintain trees. The program is gettingextensive publicity and is seen as a high-priority program. The program must be synchronized with the
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regular afforestation programn, and responsibility for maintaining the forests and extracting timber must beclearly defined if the program is to be sustainable.
Institutions Responsiblefor Environmental Issues
4.19 Environmental issues in Pakistan are handled by both federal government and provincial agencies.Some NGOs and women's groups have also added environmental issues to their agendas.
4.20 Federal Government Agencies. The Ministry of Environment, Urban Affairs, Forestry andWildlife (MEUFW) (fornerly the Environment and Urban Affairs Division) is the main federal institutionresponsible for planning activities and formulating policy associated with pollution, environmentalprotection, and resource conservation. Established to implement PEPO, MEUFW coordinates the activitiesof other federal ministries, working closely with PEPA and the provincial EPAs, and acting as thesecretariat for the PEPC. Within MEUFW, an NCS implementation unit is responsible for executing theNCS policy and investment program. The unit was also responsible for putting together the Plan of Action,in consultation with the provinces.
4.21 Three other major federal institutions-PEPC, PEPA, and the environmental cell in the PlanningCommission-also handle environmental issues. PEPC, chaired by the nominee of the prime minister, isthe highest environmental policymaking body in Pakistan, and has broad responsibilities for environmentalprotection and promotion of sustainable development. PEPC's functions are to supervise implementation,enforcement and administration of national environmental legislation; approve national environmentalpolicies and standards; coordinate the integration of sustainable development into national plans andpolicies; and provide guidelines for conservation of biodiversity and environmental protectionconsiderations in natural resource management. Members of the council include federal and provincialministers responsible for the environment, the federal secretary dealing with the environment, and otherfederally appointees. This institutional structure is summarized in figure 4. 1.
4.22 PEPA is responsible for framing and implementing regulations to control environmentaldegradation. Originally established to be the secretariat of PEPC, PEPA is attached to MEUFW, operatingas its technical, legal, and enforcement arm. PEPA is also responsible for establishing guidelines on howimplementing agencies should undertake EIA procedures during planning, for reviewing and sanctioningEIAs of major projects, and for setting the NEQS.
4.23 Following the NCS an environmental wing was established in the Planning and DevelopmentMinistry. The unit is responsible for ensuring that environmental concems are incorporated in developmentpolicy, five-year plans, annual development plans, and investment allocation programs within federaldepartments.
4.24 Several federal agencies are involved in development of the country's natural resources. TheMinistry of Water and Power (MWP) and the Water and Power Development Authority (WADPA) areresponsible for development of water resources. WAPDA also houses an environmental cell supported byan ADB-sponsored project. The Ministry of Communications is responsible for enforcing the TerritorialWaters and Maritime Act of 1976, which covers some types of water pollution. The Ministry of Food,Agriculture, and Cooperatives (MINFAC) is responsible for researching the effects of pesticides (althoughin practice very little is being done in this area). Other federal bodies with environmental responsibilitiesinclude the Pakistan Atomic Energy Commission (PAEC), the Geological Survey of Pakistan (GSP), thePakistan Forestry Institute (PFI), and the Pakistan Agricultural Research Council (PARC).Responsibilities for natural resource management at various levels of government are shown in table 4.2.
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Figure 4.1. Structure of Environmental Institutions in Pakistan
NGOs and Women's Organizaitons Pakistan Environmental Protection Council (PEPC) Private Sector
Sheri, SCOPE SDF, SDPI, TRC, PIEDAR, Establishes national policyKAWWS, Shirkat Gah(. Ensures enforcement of PEPO and environmental standards New firms
Ensures envirornental issues incorporated in plans and policies Industry orgamzations
Pakistan Environmental Protection Agency
. Technical, legal, and enforcement anm of MEUFW Ministry of Environmental, Urban Affairs, Ministry of Planning & DevelopmentTadvises PEPC Forestry and Wildlife (MEUFW)
. Establishes National Environmental Quality Ministry responsible for the environment Environmental WingStandards (NEQS) Secretariat for PEPC Ensures incorporation of enviromnental concerns in
. Assists MEUFW in drafting legislation . Coordinates among other federal ministries development policy, five-year plans and investment
. Oversees provincial EPAs in monitoring and Responsible for 1983 Ordinance and 1996 Draft Act allocation programs in Federal departmentsimplements PEPO provisions . Serves as clearing house for EIAsAssists provincial EPAs in their review of ElAs NCS Implementation Unit
Provincial Planning & Development Dept.
Environmental Cell. Scrutinizes projects
Provincial Environmental Protection Agencies Federal Line Ministries
. Power delegated by PEPA to implement PEPO Ministry of Food, Agriculture and CooperativesVets ElAs Plant Protection Department
. Monitors environmental standards Ministry of Water and PowerEnvirornmental cell in WAPDAENERCON
Ministry of Petroleum and Natural ResourceMinistry of Science and Technology
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Table 4.2. Division of Responsibility for Natural Resource Management in PakistanResource Federal government Federal agencies Provincial Local
government governmentagencies agencies
Public Land1. Agricultural land/ Board of Revenue
cultivable waste2. Forests/Rangeland Forest Department Guzara Forest
cooperatives3. Residual land Survey of PakistanRenewable resource1. Soils Ministry of Food and Soil Survey of Pakistan Soil Conservation
Agriculture Departments2. Water Ministry of Water and Water and Power Irrigation
Power Development Authority Departments3. Forests Ministry of Food and Forest Departments
Agriculture4. Wilderness products Ministry of Food and National Council for Wildlife Departments
Agriculture Conservation ofWildlife
Source: NCS.
4.25 Provincial Agencies. The major responsibility for managing and protecting forests, agriculture,and water lies with the provincial government in Pakistan. Provincial line departments are responsible fordevelopment works and play a role in environmental protection. The Provincial Irrigation Departments(PIDs) and Provincial Agricultural Departments (PADs) are responsible for operating and managing muchof the country's water resources.
4.26 Provincial EPAs have been established in every province to deal with urban and industrialpollution. The provincial EPAs approve major projects, such as thermal power plants, and monitoremissions and other environmental effects of very large industrial installations. Because of understaffingand lack of adequate technical equipment the EPAs are not able to evaluate EIAs properly or to fulfill theirmonitoring and enforcement role. The provincial EPAs are also weak because PEPA has not fullydelegated the statutory authority required to enable the EPAs to enforce federal environmental laws(including PEPO) actively.
4.27 Recently environmental cells were established in the provincial Planning and Development (P&D)Departments. These cells are responsible for reviewing provincial development plans and activities,including screening of projects to determine their effects on the environment and reviewing and sanctioningthe completed EIA. NWFP was the first province to establish an environmental cell, and that cell wasinstrumental in developing the Sarhad Provincial Conservation Strategy. P&D Departments in otherprovinces have also established environmental cells but they are generally understaffed and unable toadminister the EIA process as envisaged by the NCS.
4.28 NGOs and Women 's Groups. NGOs have not traditionally been active on environmental issues inPakistan, where environmental advocacy remains in its infancy. Community development NGOs and theprint media have recently adopted the environment as a high-profile issue, however. Few nationalenvironment-related NGOs operate in Pakistan, although several subnational groups do exist. The WorldWildlife Fund and the International Union for the Conservation of Nature and Natural Resources (IUCN)have been active in raising awareness and encouraging debate on environmental issues since the late 1970s.
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4.29 Several women's organizations function in Pakistan-some very small and local, others operatingat the national level. Women's organizations are involved mainly in establishing development activitiesthrough projects and programs, providing social services to the poor, conducting research anddisseminating information on women and development, and promoting the legal and social rights of women.Some women's groups -such as the Karachi Administrative Women's Welfare Society, which has workedon garbage disposal, tree planting, road building, and sanitation problems-.have added environmentaleducation and conservation to their program agendas. Most of the established organizations are urbanbased and respond to urban problems, such as water supply, waste disposal, and improving theenvironment in major cities. In rural areas, the only women's organization that is well established is thewomen's wing of the Sindh Rural Workers Cooperative Organization.
World Bank and Other Donor Assisted Environmental Projects
4.30 Several World Bank projects have direct or indirect links to the environment. The EnvironmentalProtection and Resource Conservation Project, the Punjab Forest Sector Project, and the Punjab UrbanDevelopment Project are aimed at strengthening environmental institutions through training and technicalassistance, especially in the areas of monitoring and enforcement. Other projects, such as the PunjabUrban Development Project and the Sindh Environment Project, include an investment program forimproving water and sanitation facilities in the major cities. Addressing problems of the greenenvironment, the Environmental Protection and Resource Conservation Project and the Balochistan NaturalResource Management Project contain subprojects to rehabilitate and repair damage done to naturalresources such as watersheds, rangelands, and wildlife populations; the Punjab Forest Sector DevelopmentProject provides for development of timber plantations and improved research and extension for promotionof farm forestry.
4.31 Other donors have been active in environmental issues for several years The NCS was supportedby the Canadian International Development Agency (CIDA), which continues to support its implementationthrough capacity development of four key institutions-the NCS unit in MEUFW, the environment sectionof the P&D Division, IUCN, and the Sustainable Development Policy Institute (SDPI). CIDA alsoprovided seed money for the preparation of the Sarhad Provincial Conservation Strategy (SPCS), whichhas continued to be supported by the Swiss Development Corporation. The Dutch have funded theenvironmental profiles of NWFP and Balochistan and have recently approved funding for the developmentof a Balochistan Conservation Strategy. The Norwegian govemment has supported AKRSP's forestryprogram, IUCN's coastal ecosystem program, a women's forest training program, and an environmentalplanning and management training at Peshawar University. The German government has supported thepromotion and distribution of fuel efficient stoves and has funded studies of solid waste disposal inPeshawar. The United Nations Development Program (UNDP) is involved in capacity development,management planning of Maragallah Hills, and bioconservation through rural community development; it isalso supporting MEUFW in controlling use of ozone depleting substances and in preventing climaticchange. Other important donors include UNESCO, the Asian Development Bank (ADB), the EuropeanUnion (EU), the British Overseas Development Agency (ODA), the Australian Agency for IntemationalDevelopment (AUSAID) and the Japanese Intemational Cooperative Agency (JICA).
B. Reasons for Failure to Response Effectively
Jurisdictional Uncertainties
4.32 Lack of clarity over who should be doing what has contributed to the ineffectiveness ofenvironmental institutions in Pakistan. Although in principle PEPC is in charge of all environmental
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issues, the green and brown issues are handled differently. The discrepancy between principle and practicemay also have contributed to the weakness of the overall management of the environment.
4.33 Federal Versus Provincial Jurisdiction. The relationship between federal and provincialgovernments is not clearly defined in Pakistan, and environmental issues are handled by both levels ofgovernment. Major legislative gaps at the federal level are filled by provincial laws, particularly on greenissues. Whether federal law should be expanded or provincial laws should continue to be used to deal withlocal problems remains unclear. The federal Forest Act (1927), for example, has been adopted by theprovinces, which have revised it to suit specific provincial characteristics (such as the recognition ofcommunity rights). As a result, forest management and conservation are handled by the provinces.Policymakers in Pakistan need to determine whether there is a need for a federal forest law that applies toall the provinces, and is administered, monitored, and enforced through a federal institution, such as PEPA.
4.34 A related issue is the appropriate level of autonomy of the provincial EPAs. Greater autonomywould allow the local agencies to implement and enforce the laws, something they cannot do under PEPO.While a strong argument can be made that the provincial EPAs should not be fully autonomous and that thefederal EPA has an important role to play in coordinating among provincial agencies, setting minimumstandards, conducting environmental research, and assisting in developing federal laws, greater degree maybe advantageous, especially in strengthening the ability of the provincial EPAs to implement and enforcethe laws and to litigate. The major constraint under the current system is the lack or absence of suchprocedures in the PEPO that would enable the provincial EPAs to enforce the laws. Confusion ofjurisdiction over specific environmental problems, such as soil and water management, also limits theeffectiveness of the provincial EPAs (box 4.1).
4.35 Green Versus Brown Issues. In most provinces, the institutional response to environmental issueshas focused on brown issues: the mandates of the PEPC, the EPAs, and the environmental cells of the P&DDepartments are clear on pollution but vague on conservation. The role of the provincial EPAs is toimplement the PEPO, a pollution ordinance. Because the PEPO does not cover green issues (except in itsrequirements for EIAs), EPAs have focused exclusively on brown issues; green issues have been handledby provincial line ministries that have no formal links with other provincial departments or the federalgovernment.
4.36 Although there may be merit in unifying environmental policy and management, extending theauthority of the provincial EPAs, which have proved unable to enforce regulations on pollution, wouldprobably not improve compliance with green regulations. An alternative focal point to oversee thecompliance with the green regulations would be desirable.
Box 4.1. Institutional Confusion over Soil and Water Management
Many institutions in Pakistan are mandated to monitor and address the problem of salinity, andcoordination among them is weak. In the Punjab alone nearly a dozen institutions research, monitor, andimplement solutions to the problem of salinity. At the federal level the Salinity Monitoring Organization (SMO) ofWAPDA, the International Waterlogging & Salinity Research Institute, the Water Resources Institute of theNational Agricultural Research Center, the Pakistan Council of Research in Water Resources, and the Drainageand Reclamation Institute of Pakistan (DRIP) all work on soil and water management. Despite these efforts, noreliable and consistent data on the extent and trends in soil salinity and waterlogging are available, suggesting theneed for a flagship federal committee to coordinate research and facilitate cooperation among federal andprovincial agencies.
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Inadequate Legislation
4.37 The legislative response to environmental problems has been weak in Pakistan, and much neededlegislation is lacking. PEPO is basically an anti-industrial pollution law, and ignores other aspects ofenvironmental protection (except for stipulations in the penal code on nuclear safety and the negligent useof poisonous substances). No laws cover the use of fertilizers, and the use and disposal of industrialchemicals goes almost unregulated. No laws cover river water pollution or marine pollution from land-based pollution, coastal construction, waste disposal, and the increase in the number of vessels.
4.38 Laws that do exist are often inadequately implemented. Since enactment of the AgriculturalPesticide Ordinance, which was intended to prevent indiscriminate use of pesticides, the government hascanceled the registration of only six chemicals; nine others were withdrawn by manufacturers to preemptpossible government action. Other laws set standards that are environmentally unsound. To meet theNEQS, for example, a firm can dilute its effluent. Because the amount of fresh water used is not regulated,dilution allows a firm to comply with the industrial waste water inexpensively-and without reducing thevolume of effluent.
Lack of Political Commitment
4.39 Recent changes suggest that the overall level of commitment in Pakistan is increasing, at least inpart as a result of increased voter interest in environmental issues. The PEPC, which did not meet for yearsafter its authorization in PEPO, now meets regularly, and meetings generate wide interest and participation.The environment now has its own ministry, headed by the prime minister, which is being strengthenedunder the World Bank Environment and Natural Resource Conservation Project. The federal budgetaryallocation for the environment has grown rapidly in recent years, from Rs. 60 million in 1993-94 to overRs. 500 million proposed for 1996-97. The trickle down effect of these allocations is negligible, however,because there is very little visible action at the provincial district and local levels (except NWFP).
4.40 Despite these positive developments, the government's commitment to environmental issuesremains in question. The environment is still received as an unimportant area by bureaucrats, who avoidbeing posted to departments or line agencies responsible for the environment. The result is that very littlegets done. Although the Environment Section of Punjab Province was created in 1992, no permanentSection head has been appointed, and the section has been led by nine different acting heads. The Pakistanand Balochistan Environmental Protection Agencies are grossly understaffed, and have experiencedenormous turnover at the highest levels (the present Director General of the Balochistan EnvironmentalProtection Agency is the fourth since the agency was created in 1992). The Punjab EnvironmentalProtection Agency, with close to 300 officials, has very little operational budget, resulting in poor lawenforcement. The environmental institutions in Pakistan are young and need technical assistance badly.Although some donor-funded projects provided for technical assistance, the government was unable toprocure the training for more than two years because of cumbersome procedures; progress on theenvironmental projects was severely hampered as a result. Other evidence that calls into question thegovernment's commitment to the environment is the weak monitoring and enforcement of environmentallaws, and the failure to insist on the EIA requirements, as required by law.
4.41 Limited Enforcement and Monitoring Capability. The federal and provincial EPAs and theenvironmental sections in the federal and provincial Planning Departments are responsible for implementingenvironmental law in Pakistan. Lack of resources and limited technical capability severely hamper theirability to do so. The monitoring institutions are new, understaffed, and poorly equipped. The federal EPAhas delegated its powers to provincial EPAs to monitor the emissions and effluent from different types ofindustries. Because of inadequate resources, the only monitoring that is carried out is self monitoring byproject proponents, who then report their results to the appropriate EPAs on a regular basis. These
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measures are then used to assess compliance with the NEQS. Technical expertise is also lacking and thereis a shortage of trained staff in environmental science. Pakistan also lags far behind other countries interms of its overall research and technology outputs, and very few institutions focus on environmentalscience. As a result, analytical capacity to examine various options for tackling environmental problems islimited. The most rigorous analysis currently undertaken is that required for completion of investmentprograms. Other options-including price policies, institutional changes, and technology-are notexamined analytically. Under current law, even policy changes are not subject to EIAs, so that thegovenument could, for example, introduce a subsidy of pesticides without going through any environmentalhurdles.
4.42 Failure to Meet EIA Requirements. Assessing the environmental effects of major capitalinvestments and projects is very important for environmental and natural resource preservation, especiallyin a rapidly growing country. Few EIAs-required by law under PEPO-are filed, however, because oflack of understanding of the process and confusion over which government institutions are responsible forwhich stage of the EIA process.
4.43 One problem is that there has been no consensus on where EIA capacity should be built. The EIAprocess involves several steps. First, there is a need for scoping and screening projects to determinewhcther ElAs are required, and if so, what form the EIA should take (projects that are likely to havesubstantial environmental consequences might be subjected to more stringent EIA procedures than projectslikely to have very little impact). Second, the ETAs must be prepared according to a specific set ofguidelines and procedures. Third, once the EIAs have been completed, they must be reviewed to make surethey have been properly prepared and that appropriate mitigating actions have been identified. Fourth,compliance monitoring is required during project implementation to ensure that the mitigating actions areactually put in place. Fifth, the guidelines and procedures governing how EIAs are prepared must beoutlined and disseminated. Currently, responsibility for each of these steps remains unclear.
4.44 Donor pressure from the ADB has led to implementation of the EIA procedures by theenvironmental cells of WAPDA, which screen and scope WAPDA projects to determine if an EIA isneeded, set terms of reference for the EIA, and review and evaluate the results of the EIA. The activities ofthis cell are independent of all other provincial and federal environmental institutions and are motivatedlargely by donor pressure.
Summary'
4.45. To deal with its environmental problems, Pakistan has enacted several pieces of environmentallegislation and undertaken many policy initiatives. In spite of these efforts, the government's overallresponse to environmental issues has been weak and fragmented. A major reasons for this weak response isthe lack of clarity over who should be doing what. Also few Environmental Impact Assessments (EIA)-required by lawv under the PEPO-are filed because of lack of understanding of the process and confusionover which government institutions are responsible for which stage of the EIA process. Jurisdictionaluncertainties over brown and green issues also weakens effectiveness. Environmental legislation is weak,with the PEPO largely an anti-industrial pollution law that does not cover many other aspects of theenvironment. Many laws are too imprecise to be implemented smoothly, or set standards that are notenvironmentally sound. In other cases, penalties are too low to act as deterrents.
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5. ECONOMIC POLICIES AND INSTITUTIONAL CHANGES FOR IMPROVING THEENVIRONMENT
5.1 This chapter identifies economywide and environment-specific policies and institutional changesthat would improve incentives for sustainable use of the natural resource base. Policymakers at the highestlevel of government in Pakistan have indicated their appreciation of the potential benefits to theenvironment of these changes, and have already adopted some of the recommended measures. Fertilizersubsidies have been reduced, a tax on pollution has been proposed, and public awareness has beenheightened, for example. These efforts should continue and be strengthened in the future. Progress inother areas, such as the clarification of property rights, has been slow, largely because policy changesinvolve losses by powerful stakeholders. Economic analysis to demonstrate, both qualitatively andquantitatively, the benefits of such policy changes and wide dissemination of the results could help putpressure on the government to act.
A. Policies for Stimulating Economic Growth and Protecting the Environment
Reforming Distortionary Economic Policies for Improving the Environment
5.2 Many environmental problems are associated with policy-induced economic distortions that createincentives for individuals to pollute or use the natural resource base in unsustainable ways. Pricedistortions in the agricultural sector, in particular, have reduced economic efficiency and provideddisincentives for sustainable management of natural resources (Faruqee 1995). As noted in chapter 3, thesubsidy on canal water prices leads to inefficient use of water, and contributes to the waterlogging andsalinity problem in irrigated agriculture. The structure of water and electricity prices, which are based onflat rates per hectare rather than on volume, also distorts usage. Distortions in agricultural prices may alsolead to cropping patterns that are both inefficient and environmentally harmful, such in the case ofsugarcane. Subsidies also have more subtle effects. Tractor use in Pakistan grew in part because of theavailability of subsidized credit for tractor purchases. The use of tractors with inappropriate implementshas contributed to soil degradation, including soil compaction and soil erosion in some areas. Subsidies onenergy sources cause inefficient usage and increase urban and industrial air pollution (see box 5.1).Granting of public lands for development by private firms is also associated with environmental damage.
5.3 Pakistan clearly has made important strides in reducing economic distortions. Since structuralreforms were introduced in the 1980s, subsidies of many agricultural products and factors have beenreduced and some have been eliminated. Fertilizer (potash) subsidies have declined from Rs. 2,423 millionin 1988/89 to Rs. 79 million in 1994/95; over the same period subsidies on wheat and sugarcane declinedfrom Rs. 7,286 million to Rs. 3,435 million. The edible oil subsidy, which amounted to Rs. 2,848 millionin 1988/89, and subsidy on pesticide have been eliminated. All of these win-win strategies encourage moreefficient use of resources by eliminating or reducing price distortions, which in turn provide incentives formore sustainable use of natural resources.
5.4 In some cases, however, tradeoffs may be necessary. Subsidies on natural gas, diesel fuel, andelectricity, which cause serious distortions for the environment, may relieve pressure on other resources,especially forests. If subsidies are to be used for this purpose, targeted subsidies, such as the provision ofnatural gas subsidies to residents in the juniper forest areas of Balochistan, should be used. Even wheresubsidies are used to address specific natural resources conservation issues, a coherent and broadly-basedpolicy should be adopted. Standard guidelines that apply nationally should replace ad hoc procedure nowemployed in donor-assisted projects.
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Box 5.1. Energy Pricing in Sri Lanka
In Sri Lanka, electricity has been priced well below the incremental cost of future supplies. Studies haveshown that eliminating power subsidies by raising tariffs closer to the long-nm marginal cost of power generationwould encourage more efficient use of electricity. A World Bank study (1994a) found that electricity prices in SriLanka to reflect the long-run marginal cost is associated with an unambiguously favorable impact on theenvironment. Moreover, pricing reforms were found to have better economic and environmental impacts thanpurely technical approaches to demand-side management, such as promoting the use of energy-saving fluorescentlights. Of course, a combination of both pricing and technical measures provides the best results.
5.5 Win-win scenarios can also be achieved in the industrial sector through the introduction of newtechnology. Many examples can be found, particularly in the textile and cement industries, where changesin the production process provide cost savings, and reduce the level of waste in the production process (box5.2). Why have such technologies not been widely adopted, given the high social and private rates ofreturn? Several explanations have been advanced for the apparent existence of market failure. First, firmsmay lack knowledge and information about the likely benefits of technology adoption. Second rates ofreturn may be positive only in the medium- and long-termi, which are heavily discounted in an environmentof economic uncertainty. Third, technological change requires management changes, the returns to whichare uncertain (especially for early adopters). To correct this market failure, the government should providefirms and industries with information on both the private and social benefits of adopting new technologies.
Box 5.2. Win-Win Solutions for the Pakistan Textile Industry
Pakistan's textile industry uses starch based sizing compounds, which contribute to about 50 percent ofthe organic load from processing operations. By using synthetic sizing materials, such as polyvinylacetate (PVA),it is possible to remove the sizing film in a sizing recovery unit. Water used in the washing of cloth is alsorecovered through this process. A size recovery unit for 800 kg of fabric per hour has an installed cost ofapproximately Rs. 30 rmillion and a pay back period of less than three years.
The effluent of the mercerizing process is highly alkaline and needs to be neutralized by adding acidsbefore disposal. Considerable volumes of salts are generated in this process, resulting in additional load oneffluent treatment plants. Caustic recovery units are available that can recover up to 65 percent of the total volumeof caustic used in the mercerizing process. For large textile units the pay back period is as short as eighteenmonths.
5.6 Amelioration of the serious environmental problems affecting Pakistan's major natural resource-its irrigated land and water supply-requires implementation of fundamental changes in institutionalstructures to improve the efficiency of allocating water and maintaining the irrigation system. To dateefforts to remove economic distortions in water markets have largely failed. Radical new structures,including the devolution of water management to farmers organizations, and the establishment of publicutilities to operate and price water further up the system, have been proposed (Ahmad and Faruqee 1995).In the longer run, full property rights should be assigned to irrigation water, and water should be allocatedthrough markets by volume-based pricing. Establishment of such property rights, especially the initialallocation of rights in an equitable manner, requires resolution of many issues, which should be addressedimmediately in order to improve the management of a Pakistan's key natural resource.
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Implementing Targeted Economic Policies to Address Environmental Problems
5.7 Policies that directly address environmental problems associated with market failures must beintroduced. The externalities imposed by the resource use or pollution emission could be internalizedthrough the introduction of more market-based approaches to environmental management. Other countries,including the industrialized countries and countries in Latin America, have used market-based instrumentssuccessfully (Huber, Ruitenbeek, and Seroa da Motta 1996), and they are increasingly being adopted inAsia as well (box 5.3).
5.8 Both price increases and fiscal instruments can stimulate technological adaptation that favorsgreater efficiency and reduces pollution. Taxes and subsidies can be used both to encourage investment inenvironmental conservation and to penalize environmental degradation. This forn of governmentintervention may be justified on public good grounds, since the private rates of return from such projectsare likely to be substantially below the social rates of return because the benefits accruing cannot beinternalized by investors. Projects designed to treat pollution or to protect natural ecology often have lowprivate rates of economic return.
Box 5.3. Use of Market-Based Instruments in Asia
In China, several tax policies aimed at improving the environment were implemented in the 1990s.Based on the principle of "polluter pays," taxes were levied on the discharge of industrial pollutants. Sulfurdioxide discharge levies have been collected in two provinces and nine cities, and the revenue is being used fortreatment of acid rain and sulfur dioxide pollution. Taxes are also used as incentives for development ofenvironmental protection projects. Currently, the government has exempted environmental protection projectsfrom taxes on fixed asset investments. Tax incentives are also being provided on the production of environmentalprotection products and products for the comprehensive utilization of industrial wastes (including solid, liquid, andgas waste).
In Japan, special depreciation measures have been formulated for specified facilities for pollution controlat the national level. These measures are applied to facilities that are effective in preventing pollution, asdetermined by the Minister of Finance. In the first year, in addition to ordinary depreciation (of about 10 percent),a firm can write off an additional 21 percent as special depreciation for pollution control. At the local level,property taxes for facilities related to pollution control may be exempt or subject to reduced rates, depending on thefacility concerned. Firms that extend or establish new pollution control facilities may also be exempt from speciallandholding taxes and eligible for reduced urban planning taxes and business taxes. Subsidies for research anddevelopment on pollution control have been provided by the government, and loans to small- and medium-sizedindustries for commercialization of new domestically produced technology are also available at favorable rates.The government also sponsors joint research and development with the private sector, and manufacturers ofpollution control equipment also receive government support.
In Korea, a parastatal organization that helps to construct and operate waste management facilities (theEnvironmental Management Corporation) offers low-interest loans to small- and medium-sized companies forpollution abatement and provides technical assistance. Over the last decade, this organization invested 60 billionWon in building six industrial waste water treatment facilities, and roughly 220 billion Won in more than 2,200small- and medium-sized companies for constructing pollution abatement facilities. Other financial incentivesinclude accelerated depreciation and reduced import duties for pollution abatement equipment.
5.9 The application of emissions trading and markets to facilitate environmental protection is not yetappropriate in Pakistan and is likely to remain so for sometime. The prerequisites for such a system-detailed knowledge of waste discharge, established ambient environmental quality standards, and asophisticated environmental protection administration-have not been adequately established in Pakistan.
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5.10 Pakistan has recently embarked on the use of market-based instruments with proposals from thePEPC to introduce pollution or effluent charges in order to bring industries into compliance with theNEQS. The proposals were drafted in response to concerns that the NEQS on existing industrial unitsshould be enforced not through coercive criminal procedures but through a market approach. The currentproposal calculates the pollution or effluent based on the pollution load (that is, the volume of pollutioncarried in their effluent). This charge would be high enough to induce industry to introduce cleanerproduction processes (that is, the net cost of clean-up wvould be less than the effluent charges). Such acharge would ensure that firms that introduce cleaner technologies do not suffer relative to firms thatpersist in using production methods that cause more pollution. Because of the weakness of monitoringcapability, it was proposed that in the early years, pollution charges would be based on a technical estimateof normal emissions from various industries. Under the proposal, individual firms would have to prove thatthey generated less pollution than the estimated amount. Firms that could do so would receive tax rebatesor reimbursement of the excess pollution charge.
5.11 The key to success of this proposal is to ensure that the pollution charge will be collected in fulland on time. To do so, a collection authority must be appointed and the schedule of payments must bemade as transparent as possible. Collection could be undertaken by various authorities, including theCentral Board of Revenue, PEPA, or other industry associations, and could be facilitated by establishing ageneral fund into which pollution charges would be paid. Funds could then be used to provide necessaryservices, such as better information on pollution abatement technology, to industry. Alternatively, anindustrial trust fund could be established for clean-up, training, information, provision of credit facilitiesfor purchase of "cleaner" production technology, and background research on industrial issues faced by theindustry of the firm paying the charge.
5.12 Before an effluent charge can be implemented, the government must set a level of charge to belevied, determine which components of the NEQS will be monitored, decide whether or not the chargeshould be industry specific, establish a procedure for increasing the effluent charge in the future, and put inplace an effective and efficient system for collection of pollution charges.
5.13 Unless the Pakistan government changes its approach, no future strategy for irrigation anddrainage will succeed. Any water service that is not a public good should be commercialized and laterprivatized. Only with market-determined incentives for irrigation and on-farm drainage is a sustainedimprovement in performance possible. The government needs to consider taking steps that will removebarriers to a free market in water. Most important, the government will have to draw up enforceableproperty rights to water, without which any attempt to legalize and commercialize water markets would befutile. Property rights and legalized markets will make the opportunity cost of water transparent, leading togreater efficiency in use.
5.14 The long-term option for the government will be to define individual water property rights, whichare necessary to ensure equity in distribution. This would address the problems of tailenders (that is, thoseat the tail end of the system who receive little or no water), while relieving pressure on ground waterresources. As a first step toward individual water rights, Pakistan may like to aim for communal rights,which are locally and administratively easier to establish. User organizations could then translate thesecommunal rights into enforceable individual rights of their members. In establishing water markets, muchcan be learned from other countries. Successful water markets in, for example Chile, demonstrate not onlyfeasibility but also the substantial gains available.
5.15 The move toward commercial water markets requires major institutional changes in delivery ofirrigation and drainage. Any new set-up should have built-in flexibility. User organizations areinsufficiently developed in Pakistan. The best option for the government is to develop user-directed,autonomous, commercially-oriented public utilities (PUs), ensuring operational transparency, and cost
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recovery of all current O&M and future investment expenditures. Establishing PUs on a canal commandbasis will allow flexibility, a basis for comparison of cost of delivery services, adaptation to the localconditions, while causing minimal disruption to the overall system. Since users would direct theoperational policy of the PUs and only pay for actual deliveries, the utilities would be highly responsive tousers' needs. Because the decentralized utilities would also have a local monopoly on canal-water delivery,there will have to be public oversight on delivery charges and other financial matters to avoid monopolyprofits. Public utilities, however, would only be an interim arrangement pending the further developmentand strengthening of user organizations. Once these organizations are up and running, they will take overmanagement of the system.
5.16 In targeted policies to address the problems of drainage (particularly waterlogging and salinity), theNCS recommended a combination of approaches, including intensive cropping and tree planting, promotionof salt-tolerant crops and cropping systems, provision of gypsum for salt-affected areas, installation oftubewells, construction of surface drains by farmers, provision of subsurface drainage for selected areas,and implementation of a National Wetlands Management Plan.
5.17 In addition, a Drainage Sector Environmental Assessment (DSEA), completed in June 1993, maderecommendations for a medium-term strategy in response to the deterioration of the drainage system in theIndus Basin. Among the key principles outlines in the DSEA's strategy were: (i) no project that mobilizessalts from deep groundwater aquifers should be undertaken unless such salts can be safely disposed of inthe sea; (ii) additional irrigation water, if available, should not be supplied to areas where this couldexacerbate the need for drainage; and (iii) the government should not provide structural drainageinterventions that can reasonably be carried out by the private sector.
5.18 Implementation of many of the DSEA's recommendations have begun and some progress has beenmade. Two key areas where progress has been made are in: (i) directing investments in main andsecondary surface drains to areas where: (a) crop damage as a result of storm runoff can be reduced,groundwater tables are rising, and sufficient irrigation supplies are available to cultivate reclaimed land,and (b) disposal drains are required for saline effluent of subsurface drainage facilities; and (ii) undertakingmajor drainage schemes in conjunction with preventive measures at source (that is, improvement ofirrigation management at main and secondary levels and reduction of water losses at watercourse and fieldlevels).
5.19 For the long-term, the government's drainage strategy, as articulated in the DSEA, emphasizesmeasures to: (i) reduce the drainable surplus, such as improved water management, reducing or interceptingseepage at source, and biological drainage; and (ii) exploit residual potential of adversely affectedresources, such as saline agriculture. Through the DSEA, the government has formulated a 25-yearNational Drainage Program (NDP) (1993 to 2018), ending in the Twelfth Five-Year Plan (2013 to 2018),with an estimated cost of Rs. 90 billion (in 1993 prices) for 77 projects, of which Rs. 18 billion had beenspent by 1993.
5.20 The Bank is assisting the government to implement the first phase of the NDP through the NationalDrainage Program Project. This project is designed to restore environmentally sustainable irrigatedagriculture minimizing the saline drainable surplus and facilitating the eventual evacuation of salinedrainable surplus from the Indus Basin to the Arabian Sea. To that end, the project will assist inintroducing associated policy and institutional reforms, in strengthening the irrigation and drainage researchand sector planning capabilities, and in financing investments.
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B. Institutional Changes for Stimulating Economic Growth and Protecting the Environment4
Assigning Property Rights to Land and Water
5.21 The absence of property rights and institutions to manage common property resources (such ascomnnon lands and water) has been associated with many of Pakistan's the green environmental problems(particularlv in Balochistan and NWFP). Without clear rights over common property, the resource is likelyto become degraded or used in ways that are unsustainable. In the water sector, for exarnple, localproperty rights over irrigation water are recognized only in some communities in the Northern Areas, whereirrigation systems have been managed locally for decades. The establishment of property rights for waterenables markets for water to be established leading to great efficiency in its use, as evidenced by recent -developments in Latin America (box 5.4). Development of nmarkets and rights for water will take time, andthe transition from the current system to a svstem based on individual ownership rights will be difficult,however
5.22 The lack of propertv rights on open-access grazing land in Balochistan has led to unsustainablestocking rates, causing serious degradation of the rangelands (see chapter 3). In some sectors, such as theforest sector, property rights for natural resources have been reassigned from the state to communities andindividuals This process can be facilitated by appropriate legislation that recognizes the role of localcommunities. Communities will also need to develop their own governance structures and managementskills to assume these property rights. However, for communities to manage the resources responsibly,they must be enabled teclmically, financially and organizationally.
Box 5.4. Irrigation System Management and Water Markets in Latin America
To alloBx water users to secure water on a permanent basis and to facilitate water leasing, some LatinAmerican countries have begun to pass legislation to permit tradable property rights to water. Under Chile's 1981water law, the State grants existing wvater users (farmers, industrial firms, water and power utilities) property rightsto water without charge. and auctions new wvater rights. Subject to certain regulations, these rights can then besold to anyone for aiiy purpose at freely negotiated prices. The rights can also be used as loan collateral. Mexicohas also established propertv rights to water, albeit with restrictions on intersectoral trading of water rights. Peru's1993 constitution grants equal status to land and water resources, thus permitting tradable property rights to water.A draft water law proposes that these rights can be traded, leased, or used as collateral. Property titles would beissued free of charge to those who already hold water rights, either implicitly by custom or explicitly throughlicenses and permits. Rights for unused water would be auctioned subject to protections that ensure that theavailability of wvater to others is not reduced, that there is enough water to maintain a minimum ecological flow,and that residents of neighboring towns tetain their accustomed access.
5.23 Even with well-functioning property rights, however, issues of sustainable resource management,such as downstream effects of water pollution and soil erosion remain. Conservation of critical watershedsand maintenance of biodiversitv will also require State intervention, sometimes at the expense ofindividuals. An example where new institutional structures are required to support market-based reforms isin the water sector. Fanner organizations as the major water users, will be vital to any new market-oriented irrigation system. Their immediate tasks would include organizing farmers to carry out someO&M, ensuring water is distributed in accordance with property rights, monitoring groundwater use,organizing on-farm drainage development, and collecting delivery and drainage charges. Such organizationwould also counterbalance the public utility monopoly and facilitate water trading within (and eventuallyoutside) their areas. At present, trading takes place informally on 70 percent of Pakistan's watercourses.
4 The recommendation s of this section are consistent with and in part draw on the Environmental Protection and Resource ConservationProject Mid-tenn Rcview.
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Farmer organizations would enhance this through facilitation and supervision of trading locally, as well asexpanding local markets (particularly to distributaries). Experiences in countries like Mexico, Argentina,Indonesia and the Philippines show that farmer organizations can successfully manage irrigation.
5.24 Land tenure arrangements on land for which ownership rights are established are another cause ofenvironmental problems. To improve farmers' responsiveness to economic conditions, and create betterincentives for making long-term investments and for practicing more sustainable farm management,security of tenure should be granted to more farmers, particularly tenants-at-will. Property rights can alsobe reinforced by improving and streamlining land registration and establishing a system of permanent titledeeds.
Clarifying Roles of Environmental Institutions and Establishing Jurisdiction over Brown and GreenIssues
5.25 Effective environmental management requires strong institutions. Because various institutions-including specialized policymaking bodies, line departments, semiautonomous governmental "watch dogs",community-based organizations, NGOs, or the private sector-may be responsible or accountable forparticular environmental management functions, coordination is difficult. As a result, implementation andenforcement of environmental regulations is weak. To strengthen its environmental program, Pakistanmust clarify which institutions are responsible for which functions.
5.26 Responsibility for the environment should be divided between the federal and provincialgovernments, based on the comparative advantage of each level of government. Appropriate rates for eachof the major environmental institutions in Pakistan are described briefly here, based on experience ofsystems from other countries.
5.27 The primary functions of PEPA could be to prevent pollution (within federal jurisdiction); conductEIA of projects (within federal jurisdiction); promote awareness of specific environmental and conservationissues; coordinate provincial environmental programs, the exchange of information, and training programnsfor provincial EPA personnel; establish uniform procedures, monitoring methods, and environmentalstandards; and publish national state of the environment reports. A strong case can be made for keepingthe agency semiautonomous in order to ensure its independence and objectivity. Autonomy would alsoallow the institution to set salaries and working conditions that would allow it to attract a first-rate cadre ofstaff.
5.28 The role of MEUFW could be to assist the PEPC in the promotion of environmental considerationsin natural resource management and sustainable development in national policies and plans; coordinateimplementation of the NCS; prepare and implement broad environmental policies in accordance withprinciples established by PEPC; develop environmental legislation; sponsor research on policy,administration, and other issues affecting environmental protection and sustainable development; and,promote general public awareness of environmental and conservation issues.
5.29 The role of the provincial EPAs could be to prevent pollution in accordance with national policy,environmental standards, and procedures; conduct EIAs of provincial proposals in accordance withnational policy, environmental standards, and procedures; promote conservation of biodiversity andsustainable natural resource management through EIAs, implementation of policies, and the publication ofenvironmental information; publish provincial state of the environment reports; and promote communityand government agency awareness of provincial environmental and conservation issues. 'The provincialEPAs should be given the freedom to develop their own environmental standards and policies as long asthey are at least as stringent as national standards and policies.
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5.30 Provincial P&D departments have a key role to play in coordinating, privatizing, approving, andfunding provincial departments that involve government expenditure. These departments currently performan important function in referring proposals to provincial EPAs to obtain advice on environmentalimplications. This advice may form the basis for environmental conditions of approval. The role of theseagencies should remain unchanged. P&D departments may also assist in the formulation of environmentalpolicy through coordination of affected agencies and the enforcement of environmental conditions ofapproval for projects involving green or resource management issues.
5.31 Institutional jurisdiction over brown issues is well established (table 5.1). Control over industrial,urban, and domestic pollution and waste is covered by the PEPO and the NEQS, enforcement of which isthe responsibility of PEPA, which delegates implementation to the provincial EPAs. In contrast,jurisdiction over green issues is poorly defined, and requires clarification.
Table 5.1 Roles and Jurisdiction over Environmental InstitutionsIssue 1 Policymaking | Enforcement of 1 EIA compliance and | Mass awareness
I l laws J monitoring lBrown l
Public sector PEPC, MEUFW, EPAs P&D departments, MEUFW, ProvincialPEPA Provincial EPAs EPAs, NGOs
Private sector PEPC, MEUFW, EPAs Provincial EPAs MEUFW, ProvincialPEPA EPAs, NGOs
Green PEPC, MEUFW Forest Department P&D departments, MEUFW, ProvincialPublic sector (forests, provincial EPAs EPAs, NGOs
rangeland)Soil Survey ofPakistan (soils)Inspector GeneralWater (water) ll
Private sector PEPC, MEUFW NCS Unit (other MEUFW, provincialareas, such as land EPAs, NGOsuse and pesticides)
5.32 Where possible management of natural resources should be decentralized, with primaryresponsibility put in the hands of local governments, community organizations, and individuals so thatsolutions to local environmental problems can be addressed with tailored policy and regulatoryinterventions. Effective management will also require close coordination among departments whosemandates affect that resource.
5.33 Differences in the way policymaking, monitoring, policy implementation, and accountability arehandled for different resources suggest different institutional solutions. Some natural resources, such asforestry and rangelands, can be handled effectively through the provincial forestry departments, withoversight through the Inspector General of Forests at the federal level. Responsibility over soils can betaken over by the Soil Survey of Pakistan, in conjunction with federal and provincial departments ofagriculture and irrigation departments. Various agencies, including WAPDA, the Indus WatersCommission, and the Water Award Comnmission, share responsibility for water in Pakistan. To providecoordination among such institutions, it may be useful to establish a new institution (possibly namedInspector General of Water) to ensure the long-term sustainability of water bodies and fisheries. Otherareas, such as land and pesticide use, could be covered by the NCS Unit within MEUFW.
so
5.34 The role of provincial EPAs in green issues is currently limited, and should remain so. The EPAsshould not be involved in natural resource policy or research-functions better suited to line ministries andother agencies. Instead, they should continue to play a role in promoting mass awareness of and publicparticipation in conservation issues. In the short-term, EPAs need not be involved in the EIA for the publicsector, although it may be beneficial to create such a capability within the EPAs in the long-run.
5.35 Although green issues should remain largely a provincial concern, the federal government doeshave an important role to play where conservation of natural resources has national implications or wherescale econonies can be achieved by the federal government (the use of satellite imagery to monitor forestcover, for example, should clearly be handled at the federal level). Some degree of consistency also needsto be applied to laws across the provinces (banning pesticides in one province but not in others makes itimpossible for farmers throughout the country to compete with each other on an even basis, for example).For these reasons, the federal government, through MEUFW, must oversee coordination of provincialgovernments and have ultimate oversight over all natural resource issues, including green issues. TheNGOs also have an important role to play as a watchdog on green issues, ensuring that environmentalstandards are maintained by monitoring the enforcement of standards and policies by the line agencies.
Strengthening Enforcement and Monitoring Capability of Environmental Institutions
5.36 The environmental enforcement and monitoring capability must be strengthened in Pakistan. Inthis regard, support of the EPAs, the main environmental watchdogs of the country, is crucial. SeveralBank projects have provided technical assistance and equipment to the provincial EPAs in an effort to helpthem monitor industrial pollution more effectively. Efforts to improve monitoring and enforcement throughthe establishment of an environmental cell in the Punjab P&D departments were also supported through aWorld Bank project. Despite these and other institutions, enforcement remains weak, however.
5.37 Although the key to better enforcement lies in strengthening the EPAs, responsibility could beshared with other institutions such as NGOs. NGOs have had considerable success in increasing farmerawareness of environmental issues, have played an important role in shaping environmental policy, andhave recorded some notable victories in the civil courts.
5.38 Making law and regulation more visible might also increase compliance. Extraregulatory controlscould be used to encourage pollution abatement. Mandatory public disclosure of point-source pollutiondata can lead to direct negotiation between polluters and communities, consumer boycotts, and litigation.Disclosure is relatively inexpensive, requires relatively little direct government involvement, and relies onthe power of the market to enforce environmental regulation. It is therefore very important that PEPA andthe provincial EPAs be allowed full freedom and independence to publish and disseminate environmentalinformation, including the public disclosure of highly polluting industries and firms. The threat of publicdisclosure has been effective in Singapore, where firms have complied with environmental standards inorder to avoid negative publicity (box 5.5). "Environmental labeling," whereby products that are harmlessto the environment are promoted with environmental labels, also encourages regulatory compliance. Theeffectiveness of this approach in Pakistan will have to be explored.
5.39 In terms of environmental monitoring, better information is essential both to improve decision-making about natural resources and to create awareness of the urgency of environmental problems.Regular monitoring of major resources does not take place in Pakistan and there is no central repository toconsolidate the information that has been collected. The Soil Survey of Pakistan, for example, maintainsthe most comprehensive data base on land resources, but its data are based on one-time surveys, some ofwhich are almost thirty years old. Updating that does take place employs outdated technologies forrecording and mapping information. The best information on water resources is available from WAPDA,which uses better technologies to collect and analyze data. Coverage is incomplete, however, and
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information is based largely on one-time surveys. Data on forests are inadequate, and information onrangeland is particularly poor.
Box 5 5. Enforcement of Environmental Standards in Singapore
Enforcement of environmental law and regulation is highly visible in Singapore. The government,through the Ministry of the Environment, monitors industrial pollution closely, and unannounced inspections arecarried out regularly to ensure that pollution control facilities are operated and maintained properly and efficiently.When there is clear violation of regulations or complaints from the public, the government applies the consensusapproach rather than the legalistic and adversarial approach to pollution control. In general, financial penaltiesimposed are light and would not effectively deter firms from polluting. Most firms are anxious to preserve theirgood name and public image, however, and will comply with standards rather than face public disclosure of theirviolations.
5.40 The federal and provincial governments need to agree on a strategy for monitoring naturalresources by identifying environmental indicators that need to be regularly monitored and by assigningresponsibility for information collection to particular agencies. A central repository of information onenvironmental quality also needs to be established that would share this information with other institutionsand publicize it. Establishment of a central agency to provide regular and up-to-date information on thestate of natural resources in all sectors would also give a greater sense of urgency to environmental issues.Introduction of "green accounting" methods, which use environmental information to estimate economiclosses, adjust national account figures, and create awareness of the problems of environmental degradation,is also important. Given the weakness of the environmental data in Pakistan, introduction of greenaccounting may not be feasible, however, at least in the short-term.
Evaluating Environmental Impacts ofAll Investment and Policy Decisions
5.41 Environmental issues should be considered at all levels of economic planning and policy.Insufficient "mainstreaming" of the environment has taken place in Pakistan, which remains behind otherAsian countries in this regard (box 5.6).
5.42 In terms of institutional development, the PEPC, which met rarely during the first ten yearsfollowing its authorization, now meets regularly. The council is becoming increasingly influential andactive in environmental policy, and its initiatives are widely reported and disseminated in the mass media.Within the government structure, the environment is now handled by its own ministry, thus enhancing theenvironrnent's profile among policymakers and politicians. An environmental section of the PlanningCormmission is taking on greater importance in environmental screening of federal (and some provincial)projects, and environmental cells have been established in the provincial P&D Departments. The PEPAand provincial EPAs are also being strengthened, although they remain weak and ineffective.
5.43 Environmental issues could be further mainstrearned into the broader economic policymakingbodies by broadening the mandate of the Economic Coordination Council (ECC), the highest leveleconomic policy body of the federal government, to include environmental policy. Because the ECC nowtends to focus only on short-term issues, it has not been an appropriate forum for consideration ofenvironmental policy, which by nature is long-term. But the ECC's mandate could be broadened to includelong-term issues, such as the environment. Under this scenario, the ECC would ensure that environmentalimplications of public projects were identified and addressed, and PEPC would continue to function as thechief policymaking body with respect to both private and public sector projects.
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Box 5.6. Environmental Protection and National Economic Development Plans in China
In China, local govermnents and authorities are required to include environmental projections as part oftheir plans and to incorporate environmental considerations into their overall planning. Objectives, plans, targets,and measures for environmental protection are incorporated into all national, regional, and departmental medium-and long-term plans, and comprehensive planning of projects, funds, and technology must include environmentalconsiderations. Environmental protection is thus an integral part of national economic and social development.
Regional and urban planning must incorporate all relevant requirements for environmental protection.China is adopting scientific methods to design zoning for the construction of residential areas, commercial areas,industrial zones, transportation facilities, forests, farmland, and green areas. Before a project is constructed, anenvironmental impact assessment is required. In old enterprises, measures are being taken to promote cleanproduction and install facilities for the use of waste products.
5.44 While it appears that the stature of environmental institutions within the government structure isgrowing, three important concerns remain. First, better coordination among institutions, especially betweenthe environmental cells in the P&D departments, line ministries, and EPAs, must be achieved (box 5.7).Second, professional expertise needs to be strengthened and equipment purchased so that institutionsresponsible for the environment can fulfill their mandates. This need is particularly great within theprovincial EPAs. Investment in training is crucial for better mainstreaming the environment in investmentand policy decisions. Third, the capability for policy analysis and analysis of environmental issues must bestrengthened and made less diffuse. For example, no government agency or unit is mandated to handleforestry policy; most policy analysis, including development of the Forest Sector Master Plan and thereview of forest policy in NWFP, is done by foreign aid teams commissioned by the federal and provincialgovernment. Valuable as this information is, consultants are no substitute for in-house staff, and a forestpolicy unit should be established at both the federal and provincial level.
5.45 Mainstreaming environmental issues must also be achieved by improving implementation andenforcement of the EIA requirements. The requirement to conduct ElAs is frequently ignored, and althoughEIA requirements feature prominently in the Draft Act, future implementation and effectiveness is doubtfulwithout the introduction of a transparent system in which the regulations are clearly defined. Proceduresconcerning setting EIA guidelines, reviewing and evaluating projects, and monitoring compliance must bedeveloped, understood, and enforced.
Box 5.7. Coordination of Environmental Initiatives in Singapore
Although responsibility for environmental issues is scattered among many government ministries andstatutory boards, coordination and effectiveness in carrying out environmental policies and regulations are high inSingapore. Ministries and departments work together to coordinate environmental works in promotingindustrialization and preventing pollution. The effectiveness of these key agencies on environmental managementhas been strengthened by adequate financial resources and well-trained environmental personnel.
5.46 The PEPO and Draft Act provide for the EIA of proposals by PEPA and provincial EPAs (bydelegation). PEPO specifies that only those project proposals that are prescribed may be subject to EIA,whereas the only qualification for an EIA under the Draft Act is that a proposal is likely to have an adverseenvironmental impact. EIA procedures and project types requiring ELAs (such as harbors and ports,petrochemical complexes, oil refineries, mines metal smelting works) should be identified in the legislation,although remain highly flexible. Proposals requiring EIAs may be prescribed on the basis of theirenvironmental significance or proximity to an environmentally sensitive area. EPAs should not be
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overambitious and should designate only a small number of activities for which EIAs are required. Thelegislation should allow the EPAs to require ElAs on all projects, not just those prescribed.
5.47 Procedures for conducting cost-effective ETAs must be devised. One approach, which has beensuccessful in other countries, would be to refer prescribed proposals to the EPA (PEPA for federalprojects, EPAs for provincial projects), which establishes guidelines, determines a timetable for carryingout the EIA, and establishes a period for public review.
5.48 Since the EPAs are overextended and lack expertise on green issues, they should continue to focuson brown issues (pertaining to both public and private sector). Oversight of ElAs for projects in greenareas should be done by federal planning departments (for federal projects) and P&D Departments (forprovincial projects). The EPAs and project proponent may consult on the process, but the EPA should bethe final arbiter on the scope and form of the EIA guidelines (generic guidelines may be established byregulation but should not be overly prescriptive). The EIA would then be prepared by the projectproponent, usually through private sector consultants (a registry of qualified consultants could be availablefrom either the environmental cell of the P&D Department or the EPA), which would then submit it to theEPA to determine if it is acceptable for release to the public. Acceptable ELAs would be released to thepublic for a period specified earlier by the EPA. The proponent would then address the issues raised by thepublic and government agencies, and provide a response to the EPA, which would then conduct itsassessment and prepare conditions of approval. Final approval of projects subject to EIA could rest withthe Minister of the Environment on the advice of the EPA in consultation with ministerial colleagues(thereby better mainstreaming the environment). Conditions of approval could require submission ofmonitoring reports and environmental management plans on a regular basis to determine the environmentalperformance of the proposal and to verify predictions made in the EIA.
5.49 Enforcement and auditing of compliance could be achieved using approval systems of otheragencies (such as provincial P&D, agriculture, and mines departments) and private firms could becontracted to monitor implementation of corrective procedures. This delegation of responsibilities to lineministries could encourage them to build up environmental expertise, thus ensunrng that environmentalissues are taken into account in project planning and proposals. Enforcement by line ministries should besubject to auditing by EPAs to ensure satisfactory enforcement and assessment.
Establishing Meaningful Priorities andAchievable Objectives
5.50 Priorities need to be established so that programs with the greatest effect on the most urgentenvironmental problems are implemented earliest. Once priorities have been set, realistic and measurableobjectives or targets should be set for each priority area (see box 5.8). Setting realistic goals increases thelikelihood that the goals will be met, which is important not only in terms of protecting the environment, butalso in terms of increasing the credibility of environmental institutions with the public. Setting measurabletargets means that progress can be monitored.
5.51 In Pakistan, further work is needed to identify priorities and set clearly stated, specific, andmeasurable goals. The environmental goals set out in the NCS and the Plan of Action have not been usefulin setting an agenda, because the goals are impractical given Pakistan's technical, economic andinstitutional constraints. The NCS contains fourteen core areas that could be considered priority areas. Tothe extent that allocated expenditure is a guide to priorities within these fourteen areas, maintaining soils incropland is the country's number one priority, followed by pollution abatement, increasing energyefficiency, and increasing irrigation efficiency. Based on expenditure allocations in the Plan of Action, thenumber one priority is supporting institutions for common resources, followed by managing urban wastesand pollution abatement. Using a method of priority setting developed by SWECO (using criteria based onrelevance to the NCS, project ripeness, and constraints affecting implementation of the projects), protection
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of watershed, pollution abatement, and conserving biodiversity are the top three priorities in the immediateterm. Brandon's (1995) rough estimates of the mnagnitude of the economic costs of environmental problems inPakistan indicated that health costs significantly outweigh economic losses and that water sector issues have thegreatest effect on health. These priorities are consistent with the AERC study indicating serious problems waterand air pollution over the next 40 years.
Box 5.8. Setting Policy Priorities in the Philippines
In collaboration with the World Bank, the govemrnent of the Philippines developed a set of prioritiesbased on the economic benefits and costs of addressing various pollution problems. Rather than select policyinterventions, the government ranked its pollution problems in terms of the severity of the problem and the cost ofameliorating it. Serious pollution problems that could be mitigated through relatively inexpensive interventionswere given high priority. Low policy priority was given to problems that were not significant in terms of thebenefits and that could not be dealt with through cost-effective interventions. The approach was to identifypriorities based on sound economic analysis, and develop a set of objectives that were clearly stated, highlyspecific, and measurable.
Through this procedure, the government identified reduction of SPM and lead emissions as its highestpriority. High priority was also assigned to domestic waste reduction and to selected industrial sources ofbiochemical oxygen demand and suspended solids (major industrial contributors include food processing, piggeriesand slaughterhouses, pulp and paper mills, beverage production and textiles). The lowest priorities were assignedto reducing included stationary sources of sulfur dioxide, mobile sources of hydrocarbons and carbon dioxide andall sources of nitrogen dioxide. This was especially significant because many of the current regulations in thePhilippines are explicitly targeted toward controlling some of these pollutants.
5.52 In addition to considering the economic costs and benefits of solutions to environment problems,policymakers must also consider the potential irreversibility of the problem. Much of the rangelanddegradation, for example, is likely to result in desertification, and therefore requires immediate action. Byway of contrast, some of the problems of soil productivity losses resulting from nutrient depletion mighteasily be reversed through appropriate soil fertility management strategies.
5.53 Based on rough estimates of the magnitude of the economic costs (health effects and productivity losses)of enviromnental problems, this report recommends improvement of water management and control of waterpollution, the establishment of new regulations and policy reforms to control air pollution, stricter regulation ofindustrial pollution, and management of rangelands as the top priorities in Pakistan. It is important that inPakistan further work is done to fine tune these priorities and objectives.
5.54 Pakistan must develop, however, its own approach to setting priorities and objectives based onsound economic analysis of the losses in economic activity and health associated with all forms of pollutionand natural resource degradation. The absence of reliable baseline data may make this exercise impossible.An alternative approach would be to set specific goals and targets and to distinguish between actions thatshould be taken in the short-term and actions that should be taken in the longer-tenn. This approach wouldobviate the need to make tradeoffs between different critical environmental objectives, and would take intoaccount the feasibility of implementation.
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C. Supportive Measures for Improving Policy and Institutional Effectiveness
Investing in Training, Research, and Technology
5.55 The quality of environmental agency staff will be a critical factor in determining the success ofthese institutions. Training of EPA staff is crucial to implementing environmental policies, and eachagency should immediately undertake a training needs assessment and develop appropriate training plans.Selection of personnel for training must be made carefully given the high turnover of high-level staff inthese institutions. Training should cause as little disruption as possible to the operation of the EPAs, andshould emphasize short study tours of operational overseas agencies to provide experience of operationaland administrative procedures and policy developments. Twinning arrangements with overseas EPAsshould also be used for a small number of staff. In-house training should be done for staff by consultantswith extensive experience in pollution prevention, EIA techniques, enforcement, and environmentalmanagement approaches. The objectives of in-house training should include the training of trainers, andtraining should be coordinated and arranged by PEPA to ensure cost effectiveness and consistency acrossprovinces.
5.56 Agricultural extension also needs to be improved and better focused. Farmers should be instructedon the use of integrated pest management (IPM), a widely advocated means of reducing pesticide use anddeveloping more sustainable production systems. Pakistan has been a latecomer to IPM, and the campaignto reach farmers will be initiated only next season, with a modest target of only 4,000 hectares. Promotionof IPM throughout the country is critical if pesticide use is to be reduced.
5.57 The role of research and technology in developing solutions to environmental problems has beengrossly neglected in Pakistan. No research agency has a mandate to undertake environmental research, andresearch on natural resource issues has not been a priority within the line ministries until recently. Oneway of sponsoring research on the environment would be to establish a competitive research grant programthat would be open to all research agencies in the country. The competitive grants scheme could also beused to fund pilot schemes to field test and demonstrate sustainable agricultural practices. Research is alsocritical to the successful implementation of environmental policy. In irrigated agriculture, for example, themove to more input-efficient and environment-friendly practices will require considerable location-specificresearch in integrated pest and nutrient management. In forestry, there is an urgent need to analyzealternative participatory community-based research on management and utilization that are consistent withcommunity resources and objectives.
5.58 The removal of fertilizer subsidies will demand a greatly expanded program to promote organicsources of nutrients through farmyard manures and green manures, diversified rotations that includelegumes, and other practices, such as conservation tillage. PARC has only recently initiated a bio-organicapproach to agriculture that emphasizes organic sources of nutrients, including green manures, farmyardmanure, composting, and microbiological approaches. More research, especially participatory researchwith farmers, is needed on these technologies, particularly on fine tuning them for use by small farmers,and on developing appropriate methods for integrated nutrient management.
5.59 In spite of inadequacies noted above, certain aspects of the research agenda in agriculture that aresupportive of the environment. For instance, while work on integrated pest management programsthroughout Pakistan is limited, it has reduced the use of pesticides and pesticide contamination of food andpollution of water resources. The soil science program has concentrated on research to increase theefficiency of irrigation water use, reduce waterlogging, help reclaim saline soils, improve the design ofdrainage systems, and enhance techniques for water harvesting and storage in rainfed areas. Livestockprograms have looked at regenerating rangelands and other grazing areas, and introduced livestockproduction systems which allow the sustainable use of these areas.
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Increasing Public Awareness and Participation
5.60 The challenge of integrating environmental management into the overall management of theeconomy will remain unmet until environmental issues are more widely recognized by the public at large.Experience from other countries, such as China, has shown that public awareness is a powerful tool inenvironmental protection (box 5.9). Although public awareness of environmental issues has grown in someareas, especially urban centers, awareness of alternatives to environmental degradation remains low, andthe short- and long-term costs and benefits of dealing with environmental problems are not appreciated.
5.61 Lack of popular appreciation of environmental concepts and their relationship to people's dailylives limits the ability of the government to introduce appropriate incentives for environmentally sustainableeconomic activity. Because many environmental problems are local problems that directly affect people'shealth, building public awareness should enable the government to generate support for environmentalpolicies.
5.62 The need to strengthen mass awareness-through seminars, radio and television programs,newspapers and magazine articles, announcements on billboards and posters, and other means-is urgent.Local organizations and experts need to be recruited to produce the required materials and to publicizethem through appropriate local media. Both federal and provincial governments and NGOs and localcommunity groups should be supported in continuing their work in improving the understanding ofenvironmental issues at the local level.
5.63 Already the MEUFW has embarked on a mass awareness campaign that is being supported by aWorld Bank project. This campaign is in its initial stages of development and is focusing on the problemsassociated with contaminated drinking water. The first step is to understand how well the populationunderstands the relationships between contaminated water and human health. This information will then beused to construct the appropriate media messages. The campaign intends to involve the NGO sector and toengage the private sector by illustrating the economic benefits of a cleaner environment.
Box 5.9. Public Awareness of Environmental Issues and Participation in China
To increase public awareness of environmental issues and engage the entire nation in the effort to preventand control environmental pollution and improve the ecological environment, China disseminates various kinds ofenvironmental information. The EIA of construction projects requires the solicitation of opinions from the publicand the social organization affected by the project. Mass media have also been used to expose organizations orindividuals that violate environmental laws and regulations, or cause serious pollution.
Some educational institutions have experimented with introducing environmental education intokindergartens, primary schools and secondary schools. Following lessons on the environment, many studentsexpressed interest in controlling environmental pollution when they grew up. Others took action closer to home: insome rural areas students tried to dissuade their parents from catching snakes or frogs.
5.64 An informed public also puts more pressure on politicians to support environmentally soundpolicies. Experience from other countries, such as China and India, has shown that consciousness about theenvironment is often raised only by a major environmental disaster, after which politicians are persuadedactively to pursue environmental goals. Mass awareness can be used to create this consciousness in theabsence of an environmental catastrophe. The campaign of the MEUFW should be continued andstrengthened, and replicated where possible in the provinces.
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5.65 In order to achieve greater public participation in natural resource management, some type ofdecentralization of decisionmaking to the local level is needed-a step that has been found useful in othercountries, such as Malaysia (box 5.10). Resource management strategies must be developed at the locallevel, whether through managerial, participatory, or representative approaches (NCS). Managerial andrepresentative approaches require strengthening of local governmental organizations, including theirdemocratization; participatory approaches are usually implemented through some form of formal orinformal community-based organization, often with NGO involvement. This process mav be difficult inPakistan, where local governments have never been actively encouraged. The recent devolution of activitiesto the provinces may mean that provincial governments will in turn devolve some of their activities evenfurther down the line.
Box 5.10. Public Participation in Municipal Waste Management in Malaysia
In the late 1980s Malaysia embarked on an ambitious national policy to manage its municipal solid waste.Under the plan, implementation roles were assigned to different levels of government, including the federalgovernment, state governments, local governments, and the private sector. The policy acknowledged the key roleof public participation and cooperation in successfully implementing the plan, and encouraged the public tocooperate with local authorities by correctly using household and communal containers, bv disposing of storageand disposal of sold waste according to the instructions of the National Environmental Sanitation Program, bycontributing financially through the payment of assessments and/or user charges, bv reducing the generation ofsolid waste by avoiding overwrapped or difficult-to-treat consumer goods, and by carrying otut source separation ofrecyclable materials, such as newspapers and bottles.
5.66 Participation of local communities and other stakeholders in managing common property resourcesis crucial, especially in management of forests and rangelands. Svstems of community participation areespecially important in Pakistan given that the allocative systems implemented by the tribal system havediminished in recent years. Community participation through community-based organzation and NGOs isespecially strong in the northern mountain areas of Pakistan, wvhere organizations are involved in local landuse planning. The sustainability of these organizations depends on continued participatory management,the development of their own capital funds, and access to specialized skills from outside the community.While community participation in common property management remains under developed for many ofPakistan's common property resources, other South Asian countries have been successful in this regard,especially in managing their forests (box 5.1 1).
Box 5.11. Community Participation in Managing Common Property Resources. Evidence from South Asia.
Nepal. The Bank-financed Nepal forestry project allowed user committees to take over forestmanagement. Forest users received certificates ensuring long-term rights to the forests. The only control theNepal state forestry agency retained over forests was through approval of village forest management plans. Theproject, however, had to reconcile the multiple and often conflicting rights to forests by local villagers before long-term tenure could be recognized.
India. In the Bank-financed second West Bengal Forestry Project, written agreements between the stateand villages established ownership and user rights to forest protection committees. To maintain rights over forests,however, each commuittee had to provide evidence of sustainable forest use.
5.67 Future efforts to decentralize natural resource management will require stronger links between thefederal and provincial governments and local governments and organizations. Supply-led programs-often
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financed by donor support channeled through the federal and provincial governments-must be replacedwith demand-led approaches, with local governments, NGOs, and community organizations demanding andpurchasing needed services from higher levels of government or the private sector. Demand for this kind ofchange can be encouraged by increasing public awareness of environmental issues so that localorganizations recognize their stake in natural resource conservation.
5.68 Demand-led initiatives are probably best promoted by placing funds in the hands of local bodiesthat can then purchase services from government departments or the private sector. Initially these fundsmight be provided from central revenues or donors, but institutional sustainability and local ownershiprequires that an increasing share of such funds must be generated locally. Various competitive fundingmechanisms can serve a similar purpose. Already the federal government has established a fund to providesmall grants to NGOs for environmental activities, and the NWFP is considering a similar proposal for asustainable development fund that would be open to all, including the private sector.
5.69 The private sector can also play a larger role in environmental activities. Some types of naturalresource management activities, such as the reclamation of waterlogged land and the utilization of unusedlands for certain types of forestry activities, are amenable to private sector initiatives and could beencouraged through tax incentives.
D. Next Steps
5.70 This chapter has outlined a series of policy reforms and institutional changes that would lead toimprovements in natural resource use and less pollution in Pakistan. More work needs to be done to workout the details and specifics of the suggested policy and actions-a task that is an essential follow-up ofthis study. What are then the next steps and what specific actions to be taken in the immediate- and short-run?
5.71 This document will serve as the basis for further discussions with the government and otherstakeholders in developing a detailed agenda for further work and action. This will be done through aseries of workshops, seminars and consultations with Pakistanis. The discussions will fall into three policyand institutional changes recommended by the report-policies for stimulating economic growth andprotecting the environment, institutional changes for stimulating economic growth and protecting theenvironment, and supportive measures for improving policy and institutional effectiveness.
Next Steps on Policiesfor Stimulating Economic Growth and Protecting the Environment
5.72 Discussion and the design of an action program will have to be done in the following areas byvarious levels of government, NGOs and stakeholders:
* Removal of price distortions on agricultural outputs and inputs. While manyagricultural subsidies have been removed, some farm products and inputs remain protectedadversely affecting the environment. Discussions and an action plan for the removal ofthese distortions are needed, such as the export ban on livestock, sugarcane and wheatsubsidies, and remaining fertilizer subsidies. Many of these issues will be addressed in thediscussion for preparation of the Agricultural Sector Investment Project (ASIP) which hasnow begun.
* Development of water markets and institutions. Consultations to improve theirrigation and drainage system should involve all stakeholders, including WAPDA, theprovincial irrigation departments, farmer groups and NGOs. The discussion should centeron developing enabling legislation on water rights, markets and institutions, and on how to
59
organize and develop Provincial Water Authorities, and how to strengthen federal wateragencies to implement their roles in irrigation and drainage.
* Removal of subsidies on electricity to residential and agricultural users, andnatural gas to residential users and the fertilizer industrv. In line with its objective toprivatize the power sector, the government has recognized the need to revise the pricingregime to make the power sector more efficient and attractive to private investors. Whilesome progress has been made, supported by Bank projects, further reductions need to bemade. An action plan to the phasing out of subsidies needs to be developed withparticipation from all stakeholders, including WAPDA, PEPA, NGOs, and energy userrepresentatives.
* Implementation of pollution tax to encourage compliance with NEQS. Alreadyconsiderable steps have been taken in implementing a system of pollution charges onindustries in Pakistan. This effort has been led by SDPI which has consulted federal andprovincial government officials, representatives of industry, environmental NGOs, andacademic researchers. There still remain a number of issues to be resolved before the plancan be implemented, and a specific timetable for implementation needs to be worked out.
* Development of policies to ensure the sustainable exploitation of fishing resources.tonsultations with representatives of the government and fishing interests should begin to
find efficient ways of allocation. One area for discussion is the introduction of tradeablefishing permits that have been used successfully in other countries.
Next Steps on Institutional Changes for Stimulating Economic Growth and Protecting theEnvironment
- Establish priorities and set realistic goals. Next steps on setting environmentalobjectives are being supported by the Environmental Protection and ResourceConservation Project (EPRCP). This project is helping MEUFW, and EPAs of the Sindhand NWFP to prioritize its objectives, strategies and work programs in terms of theeconomic costs and benefits of actions to improve environmental protection and naturalresource management. To assist in this work, MEUFW will hire local consultants toexamine linkages between Pakistan's economic policies and its environmental objectives.
* Clarify jurisdiction between provincial and federal environmental institutions, andover brown and green issues. Further study and consultation is needed on jurisdiction overenvironmental problems and the roles of the various organizations. However, still morework is needed to develop precisely the mandates and responsibilities of the variousenvironmental organizations. This further work also requires consideration of the ways tostrengthen implementation and enforcement the EIA requirements.
* Increase technical expertise of provincial EPAs. Human resource development isvital for further institutional development and for moving work programs ahead. The nextsteps are for a training needs assessment to be made, followed up immediately with a planfor training of technical and management personnel.
* Improve system of land registration. A plan for removing distortions in landmarkets which will mitigate against many of the green environmental problems is urgentlyneeded. One approach that has started as a pilot is the computerization of land records.
60
This process needs to be widened, and likely to be included under the expendituresfinanced by the ASIP.
Explore extraregulatofy approaches to enforcement. Workshops need to beestablished to review the kinds of extraregulatory approaches to enforcement that areavailable and their potential applicability to Pakistan.
Next Steps on Supportive Measures for Improving Policy and Institutional Effectiveness
* Establish competitive research grant program. Consultations should begin on howto establish a competitive research grant program that would be open to all researchagencies in the country.
* Reorient agricultural research and extension to farming systems approaches.Government-funded research and extension needs to be reoriented to supportenvironmental sound practices. A plan of action needs to be developed by the governmentin conjunction with the agricultural research community to support this change in focus.
* Extend mass awareness campaign of MEUFW to provinces. A plan of actionaimed at extending mass awareness of environmental problems needs to be developed inconjunction with the MEUFW. This will involve discussions with the PEPA andprovincial EPAs in developing appropriate messages based on the most pressingenvironmental problems.
* Engage NGO and private sector in creating environmental awareness andparticipation in environmental enforcement and monitoring. The NGO community andrepresentatives of the private sector will be consulted to determine how they might have agreater role, and to develop a plan of specific actions.
61
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