IFC’s Draft Cumulative Impact Assessment Guidance out for Comments

IFC Draft Good Practice Note on CIACIA can be a vulnerable spot in bankable ESIAs for large scale project developments. This draft IFC Good Practice Note on Cumulative Impact Assessment and Management  is an interesting (required?) reading for bankable ESIA practitioners. Does it open up any cumulative cans of worms?

Shortlink: http://wp.me/p27qSt-uK


Update: the published "Good Practice Handbook Cumulative Impact Assessment and Management: Guidance for the Private Sector in Emerging Market" can be accessed here.


The preamble of the draft Note developed for the Private Sector in Emerging Markets highlights both the importance and challenge of Cumulative Impact Assessments:

“Cumulative impacts are contextual and encompass a broad spectrum of impacts at different spatial and temporal scales. In some cases, cumulative impacts will occur because a series of projects of the same type are being developed, for example when a series of hydroelectric projects are constructed or planned on the same river or within the same watershed, when multiple oil and gas projects or mines are being developed in close proximity or when a series of wind farms are constructed or planned within the same flyway or region. In other cases cumulative impacts will occur from combined effects over a given resource of a mix of different types of projects, for example the development of a mine site, access roads, transmission lines, and adjacent land uses.”

Importantly, the IFC Note highlights that the responsibility for the prevention of potential cumulative impacts is usually beyond the capability of any one party (read: project proponent conducting the ESIA/CIA). Not sure how this will play out in practice when commercial and multilateral organizations have to make a judgment call which may look like this:

There is a good project, ready (or nearly so) for financing. A chapter (my preference) or stand-alone Cumulative Impact Assessment has also been prepared. This identified potentially significant cumulative impacts. Solving these will involve a diverse group of known, unknown and cross-sectoral stakeholders. Each will feature very different levels of capacity, motivation, commitment, finance or credibility. I wonder how many of these actors really care about the permitting and financing challenges of the project developer…

How can the outcome of an CIA be managed reasonably (and fairly?) in terms of investment agreements, covenants, project completion tests, and definition of what action (or lack of it) would be a default? Will an IFC Board (or similar) be very keen to accept ‘Reasonable/Best Effort’ wording relating to a prospective 'high risk' extractive  investment to deal with cumulative impacts which involves collaboration risks associated with a philharmonic orchestra-sized group of stakeholders (while advocacy NGOs zoom in on cumulative risks)?

Will this draft IFC Note result in other ‘cumulative issues’, if I may borrow this term? Consider if, through this Note, IFC is advocating further ‘outsourcing’ to private sector project developers the kinds of activities that might seem primarily a public sector responsibility: promoting/discouraging/accepting broader spacial and temporal policies/developments and sustainability trade-off/impact scenarios and uncertainties?

Given the challenge of determining what constitutes “significant” in the context of cumulative impact assessments and how these might be managed, is thisdraft NOte cueing up a series of future complaints landing in front of the door of Independent Accountability Mechanisms of multilateral financial institutions or OECD National Focal Points? The IFC CAO case Celulosas de M'Bopicua (CMB) & Orion, which was – fundamentally - about potential cumulative impacts with a transboundary waterway twist comes to mind. IFC even commissioned its own Cumulative Impact Assessment (see media release here). And Argentina and Uruguay nearly got into a fist fight and proceedings were brought before the International Court of Justice (see here)!

The draft IFC Note also suggests that the inclusion of mitigation measures in relation to identified cumulative impacts in ESIA/CIA can be considered a proxy to determine that these potential impacts are actually “significant”. However, practitioners will know of cases were mitigation measures are not always the product of presence, anticipated or significant impacts. Instead, opting for such mitigation can serve other purposes: dealing with entrenched perceptions, appeasing/co-opting certain stakeholders and accelerating approval/permitting processes. Also, I wonder how this Guide will play out in pending and future international arbitration cases, some of which feature a variety of ESIA/CIA-related arguments used to justify expropriation?

Ultimately, I like the concept of Cumulative Impact Assessment and its linkage to system thinking, a phrase which is surprisingly absent in the draft Guide. Any good ESIA should have a chapter devoted to CIA. Dealing with cumulative impacts at the project finance stage may well serve the need to develop a suitable response and covenanting - or even PR - strategy (however effective that may be). But would a Strategic Impact Assessment further ‘upstream’ not be a more powerful approach to help with broader and more transparent sustainability trade-offs and decision making which precede project-level decision making processes?

What is your take on IFC’s draft Note on Cumulative Impact Assessment and its practical application? What have you learned from completing CIAs on your projects?