Part I: Why are safeguards important for sustainable growth?

The Inter-American Development Bank (IDB) defines the term “Safeguards” as a “set of policies to ensure protection against environmental and social harm, improve development value for stakeholders, and enable countries and clients to meet best international practices.” In relation to sustainability, the purpose of implementing safeguards is to develop projects that maximize positive environmental and social outcomes while minimizing risks and negative impacts on people and natural capital.

In an attempt to identify how and in what way safeguard policies contribute to sustainable infrastructure projects, a comparative analysis was conducted between the IDB safeguards policies and the Envision Rating System for Sustainable Infrastructure. Furthermore, a detailed case analysis of nine IDB-funded projects revealed how the application of safeguards impacted sustainability performance in practice, as well as the role of specialists in utilizing the safeguards framework to facilitate sustainability improvements.

The Envision Rating System was developed by the Zofnass Program at Harvard University and the Institute for Sustainable Infrastructure. It is a comprehensive framework of 60 sustainability indicators, or credits, which encompass the full social, environmental, and economic impacts of a project.[1]  Credits are grouped into five categories that correspond to principal areas of impact applicable to all infrastructure types:

• Quality of Life;
• Leadership;
• Resource Allocation;
• Natural World; and
• Climate and Risk.

Our analysis demonstrates that IDB safeguard policies provide a comprehensive coverage of sustainability dimensions. Safeguards address 99% of Envision points within all five Envision categories, whereas they substantially exceed Envision on issues of gender diversity and indigenous peoples. Overall, safeguards provide a comprehensive framework through which sponsors can anticipate, account for, and mitigate environmental and social risks in a timely manner.

The analysis of the nine IDB-funded projects demonstrated that the application of safeguards was instrumental in achieving a high Envision sustainability rating in all projects. In most cases safeguards doubled the overall Envision sustainability performance of the projects, while in those projects where IDB was involved earlier in the project cycle, the Envision sustainability performance was tripled. Moreover, in many cases, most commonly in the Climate and Risk category, projects would have achieved a zero or very close to zero Envision rating without the application of safeguard policies, and project sustainability performance in specific Envision categories was increased by up to 26 times.

Safeguards in practice – The case of Haiti

The Caracol Industrial Park (PIC) in northern Haiti is a clear example on how IDB’s safeguards promote sustainability in practice. In 2008, the Government of Haiti, the United States Government and the IDB agreed to support the establishment of PIC at Haiti’s Northern region. The site, designated by the Government, was a 250 hectare greenfield site in the rural community of Caracol. Through a series of grants, IDB provided basic infrastructure, industrial facilities, management support and complementary resources required for the construction, operation and expansion of PIC.

The Haitian Government’s limited capacity and the tight timeline to plan and implement such a complex project introduced considerable challenges. In addition, the lack of mechanisms and procedures needed to ensure the region’s sustainable development implied impacts on local livelihoods, community displacement, increased gender inequality, and environmental risks.

PIC would have achieved the lowest Envision score from all nine projects evaluated in our research without the implementation of safeguard policies. Safeguards more than doubled the project’s Envision performance. Particularly significant was the contribution in the Leadership, Resource Allocation, and Climate and Risk Envision categories, where the project would have achieved a very close to zero score without safeguards.

PIC’s main positive impact is the generation of new employment, which improves the quality of life of communities and promotes long-term economic development. The IDB:

• Contributed to creating and improving institutional capacities by supporting PIC’s management agency;
• Ensured that right compensation was provided for resettled families;
• Played a major role in relation to the protection of the environment by creating the Three Bays National Park, which was declared a protected area in order to help mitigate PCI’s direct, indirect, and cumulative impacts; and
• Supported baseline studies and a social and environmental impact management plan that considered both short and long-term hazards.

Overall, all projects undoubtedly facilitated long-term economic development and promoted social welfare. Safeguard policies provide the foundation through which necessary interventions to improve quality of life and stimulate opportunities for sustainable growth are introduced in IDB-funded projects.

 

[1] Plus 3 new credits of the Vulnerable Groups subcategory, added by the Harvard Zofnass Program in collaboration with the IDB for application in Latin American projects. At the time of writing this blog post, the next version of Envision was under development, which includes most of these aspects.

 

Top photo credit: Pogonici/Shutterstock