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ABBREVIATIONS AND ACRONYMS



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ABBREVIATIONS AND ACRONYMS





ACUA

Azerbaijan Credit Union Association

ADCP-3

Agricultural Development and Credit Project-III

APL

Adaptable Program Loan

AzRIP

Azerbaijan Rural Investment Project

BOD

Biological Oxygen Demand (liquid effluent)

CAS

Country Assistance Strategy

COD

Chemical Oxygen Demand (liquid effluent)

dB

Decibels (noise level)

DoSEE

Department of State Ecological Expertise

EA

Environmental Assessment

EIA

Environmental Impact Assessment

EIAR

Environmental Impact Assessment Report

EMP

Environmental Management Plan

ER

Environmental Review

GOA

Government of Azerbaijan

IAC

Information and Advisory Center

IBRD

International Bank for Reconstruction and Development

IEC

Important Environmental Components

IPM

Integrated Pest Management

LEA

Limited Environmental Assessment

MENR

Ministry of Ecology and Natural Resources

MOA

Ministry of Agriculture

NGO

Non-Government Organization

PFI

Participating Financial Institutions

PID

Project Information Document

pH

Measure of Acidy/Alkalinity : pH 7.0 is neutral

PMU

Project Implementation Unit

RAC

Regional Advisory Center

SAAC

State Agency for Agricultural Credits

SEE

State Ecological Expertise

SPRD

State Program for Regional Development

SS or SP

Suspended solids in air: Suspended Particulates (dust) in air

SVS

State Veterinary Service

TS

Total Solids in a liquid effluent (dissolved and suspended)

VFU

Veterinary Field Unit

WB

World Bank



1. SUMMARY AND BACKGROUND

  • Environmental assessment – purpose

The objective of the Environmental Management Plan (EMP) for the Agricultural Development and Credit Project-III (ADCP-3) is to help ensure that the project proposed for World Bank financing is environmentally sound and sustainable and that the project interventions are in compliance with the requirements of the legislation of the Republic of Azerbaijan.

The project is classified as FI (Financial Intermediary) because Component C (provision of agricultural credits through designated banks) is the largest component.

It is a requirement of the Bank and Azerbaijan legislation that for a FI category project, all microprojects should be verified that they are in compliance with the Azerbaijan environmental laws and regulations and are consistent with World Bank policy (OP 4.01) and procedures on environmental assessment. As in the case of economic, financial, institutional and engineering analysis, environmental assessment is part of project preparation. The Environmental Management Plan provides the framework to address environmental considerations of activities to be financed under the ADCP-3.

  • The Project

The proposed project is being prepared as a third phase of APL and builds on the substantial progress made to date under the ADCP II. The Project Development Objective (PDO) of the project is to contribute to strengthening competitiveness of the Azerbaijan agri-food sector. The proposed project will build upon the lessons learned during implementation of the current phase of ADCP and would further promote agribusiness/food processing; further strengthen agricultural support services; upgrade and modernize the plant protection service and veterinary services; facilitate development of selected high-value chains by targeting key constraints in functioning of agricultural commodity marketing chains; and finally, would contribute to improving a regulatory and institutional basis for food quality and safety system.

The project proposes to develop new national standards in areas of production safety conforming to the international standards in collaboration with various donors; upgrade veterinary and quarantine services to qualify for international accreditations; introduction of international ISO standards; rehabilitate, and in necessary cases building new (e.g. bio-control agents rearing line for enhancing integrated pest management) and refurbishing; procurement of new laboratory equipment to improve the quality or research. Additionally, laboratory staff training which is necessary for efficient use of resources made available under the project, and creation of additional opportunities to liquidate toxic laboratory wastes (e.g. appropriate incinerator setup) will ensure reduction in agro-chemical use and mitigate the environmental risks related to the handling of chemically and biologically hazardous substances significantly. Finally, the project will contribute to improving regulatory and institutional basis for enhanced food quality and safety system, both for domestic consumption and export markets.

The ultimate aim of the project would be to contribute to improving the earning potential of producers and processors through value addition and create additional and higher earning employment potential in rural space. The proposed objectives are in line with the Government's food security program and regional development strategies.

The major focus of the project would be to support the development of commercial activities in the rural areas by enhancing the value chains and improving access to financial resources, product quality, competitiveness and capacity of Azerbaijan rural entrepreneurs and producers. The project would support the development of market-driven agri-food value chains; continue the process of expanding financial services for rural enterprises through commercial banks; and scaling up the privatization of veterinary services while continue to upgrade and modernize the State Veterinary Service to support public health functions. The project would also address the increased demand for food safety standards.

While there is little likelihood of harm to environment under this project or its interventions, the Project will strive to do good by ensuring best practice adoption and by addressing the residual impacts of general decline in environmental management of post-Soviet decades. As a matter of fact, significant positive effects on the environment are expected with the use of resource management approaches. Social and economic conditions in rural area as well as information marketing infrastructure will be improved. Increased food safety, including improved monitoring of pesticide residues, and enhanced and streamlined regulatory environment will contribute to significant reduction of negative impacts as well as better enforcement of existing environmental legislation. Thus social and environmental risks during the project implementation are expected to be minimal, and adequate capacity for their monitoring (environmental and social safeguards) already exists in the PMU.

  • ADCP-3 Project components

The proposed project largely builds on the design of the on-going ADCP II, and it’s institutional and implementation mechanisms, which have been successful in terms of results, achieved on the ground, and achievement of overall development objectives. Additionally ADCP-3 will pursue innovation in food safety and value chain development. The project shall comprise the following components: (i) Support for Sanitary and Phytosanitary Services; (ii) Agribusiness Value Chain Development; (iii) Access to Credit; and (iv) Project Management.Component A: The National Food Safety Strategy has been developed with assistance from the FAO and submitted to the Government. Similarly, the national veterinary reform strategy for the State Veterinary Service (SVS) has been developed together with the World Organization for Animal Health (OIE) and the national phytosanitary strategic framework was created with technical assistance from the International Plant Protection Convention (IPPC). These three strategic plans would provide the guidance and specific activities and interventions to be supported under the project. The component would be structured into three subcomponents: (i) National Food Safety Strategy and Capacity Building; (ii) Upgrading Plant Health and Phytosanitary System (iii) Animal Health and Veterinary Services.


Component A: Support for sanitary and phytosanitary services

This component would support strengthening the efficiency and effectiveness of sanitary and phytosanitary services in order to reduce existing obstacles to agricultutal and food trade. The component investments would support approximation with the requirements for regional or international trade and to create market opportunities for iport substitution in the agri-food sector. Activities under Component A will be grouped into three subcomponents: (i) National Food Safety Strategy and Capacity Building; (ii) Upgrading Plant Health and Phytosanitary System (iii) Animal Health and Veterinary Services.



Component B: Agribusiness Value Chain Development

This component would finance activities aimed at improving productivity and market integration of selected supply chains and promote linkages amongst value chain participants. The component will help agro enterprises, farmers and others to actively engage in the development of commodity value chains by partially financing demand-driven investment proposals. The component would also support activities for improving seed varieties and quality of seeds entering the market. The activities will be structured into two sub-components: (i) Investment and advisory support for agribusiness value chain development, and (ii) Seed sector development. Investments under this Component are expected to result in the development of selected supply chains and widespread dissemination of lessons learned to other farms and businesses.



Component C: Access to Credit

The objective of the component is to enhance access to financial services for agribusinesses operating in Azerbaijan’s agrifood sector, in particular towards enhanced competitiveness of the sector, improved quality and food safety standards, and establishment of market linkages. The project will build on the experience gained during ADCP-II which has achieved sizeable results with provision of financial services to medium agribusiness. Under ADCP II, some 119 agribusinesses covering a broad range of sub-sectors have been financed for a total of US$ 18 million. ADCP II also supported capacity building to participating banks to improve their skills in appraising agriculture-related investment loans.


The project will further expand the access to the investments financing through additional lending resources for use by banks and leasing companies for on-lending agribusiness. The project will also support introduction of new financial products better tailored for satisfying the specific needs of the businesses operating in the agrifood sector. Finally, the project would support introduction of agricultural insurance risk management mechanisms for improved risk mitigation in the agricultural sector and implement capacity building program for the participating financial institutions.
Component D – Project Management and Results Monitoring

This component will finance the administrative and operational project implementation and management costs (FM, procurement, safeguards compliance, M&E), including overheads of Project Management Unit (PMU) professional staff as well as support staff. ADCP 3 will continue the current practice of regular and rigorous project monitoring and using mixed quantitative and qualitative methods.



  • Project Stakeholders

The main project stakeholders are farmers, agri-businesses, Ministry of Agriculture, as well as the Ministry of Finance and Ministry of Economic Development.
  • Project Area

The project coverage is country-wide. The activities under Component A would cover the Stet Phytosanitary Control Services (SPCS) and the network of animal health and veterinary laboratories. The activities to be supported under Components B and C will be implemented in all rural areas of Azerbaijan, depending on demand for agricultural grants and credits.

  • Project Environmental Aspects

Overall, the project is not expected to have significant environmental implications, and anticipated positive effects are associated with the increased food safety and animal health, adoption of best practices by plant and animal health laboratories and agri-businesses, and improving capacity of agricultural and banking organizations and farmers in terms of environmental management. The environmental concerns relate to inadequate environmental practice in the laboratories to be equipped under Component A and B, indirect impact of increased pesticide use that might be caused by the TA to be delivered under Component A and B, and environmental impacts associated with the implementation of sub-projects under Component B (grant program), such as construction of small-scale farm infrastructure, and under Component C (credit line), such as animal husbandry, agro-processing, fruit and vegetable farming, small scale construction of agricultural facilities etc.

Depending on demand, the project might include raions in the northern region of Azerbaijan where there are national parks, forests and natural reserves that may be impacted by project interventions. Investments that negatively affect national parks, forest or habitats will not be allowed for funding under the project.

This EMP has been prepared to identify potential impacts, mitigation measures and mechanisms for implementation and monitoring. In addition, the Recommendations for the Development of the National Integrated Pest Management Program (IPM) and Pest Management Plan (PMP)have been prepared to address issues related to possible increased use of pesticides and consider introduction of the IPM principles country-wide.

It will be ensured that the IPM aspects are duly covered by the extension services.


  • Agriculture related Environmental Issues

Azerbaijan has a number of environmental issues, many directly or indirectly related with agriculture, making them relevant to this project that should therefore be addressed. Avoiding harm, the Project will promote activities that might enhance environmental compliance that may mitigate some of the past harm. .

The operation of agricultural and rural enterprises can also cause negative environmental effects. The issues are listed below, with causes, but in no particular order of importance:

• Groundwater pollution – chemicals including agricultural

• Surface water pollution – chemicals including agricultural

• Water losses – irrigation systems

• Soil salinization and alkalination – irrigation systems

• Water logging – irrigation systems (drainage)

• Fisheries destruction – over fishing, pollution, and loss of breeding habitat

• Biodiversity losses (including pressure on relatives of domestic crops, fruit trees and medicinal plants) – grazing and deforestation

• Soil erosion – overgrazing and deforestation

• Soil fertility losses – cultivation practices

• Land contamination – industrial wastes

• Environmental health and hazards – food contamination and exposure to pollutants
In addition to these issues, there are others related to agro-processing and other agribusiness enterprises, major concerns relate to effluent discharge and their impact on water quality, water use, disturbance of significant sites for biodiversity and cultural protection, and general health and safety issues. The State Phytosanitary Control Service had prepared a list of pests and disease species that pose a threat to Azerbaijani agriculture.

While small and medium agricultural enterprise is not potential polluter, except for minor liquid and solid waste generation, some particulates and gaseous discharge, and transport and machinery noise especially in inhabited areas, therefore, every investment in these through the grant program and credit lines from commercial banks will be carefully screened for any negative impacts and appropriate mitigations built into their specific EMPs. These would need to be mitigated to National Standards and EMP guidelines by incorporating the necessary controls and treatment systems in the design and, during procurement, by specifying equipment and processes that meet these standards. Processors would also need to incorporate National safety measures for personnel in the vicinity of operating machinery.

The project is not expected to produce major environmental impacts. However, some investment from the grant program and loan proceeds may involve environmental issues related to, for example, the use and storage of agricultural chemicals, laboratory/testing stations, waste management at farms, agro-enterprises, and location or site preparation for facilities or agricultural techniques.

The major potential impacts associated with the sub-project categories including atmosphere water and soil contamination, air quality deterioration, loss of biodiversity and impacts on biophysical resources, including soil erosion. Of the categories, laboratory testing, agriculture production and processing technologies will contribute to the most significant impacts if mitigation measures are not taken into consideration. The production and processing sectors’ activities are usually associated with the generation of various types of wastes: effluents which pose a risk of the contamination of surface water course and underground waters; gas emissions polluting the atmosphere; and solid wastes.

Special attention will be given to potentially toxic substances application for veterinary and quarantine laboratories activities as well as when implementing the subprojects contemplating to apply pesticides and fertilizers, to ensure proper mitigatory measures are built in their respective EMPs.


  • Responsibility

During implementation of some of the sub-projects, some impacts to the soil, flora and fauna, soil structure and social environment through discharge of solid and liquid type wastes to environment, emissions of harmful gases to atmosphere and other potential impacts would be mitigated on the basis of good practice as described in the EMP, consistent with existing standards of Azerbaijan. This process besides common requirements also includes additional ecological requirements for projects to be formulated before decision is taken on allocation of funds on the basis of relevant standards, control of purchase of some equipment, and selection of appropriate technologies.

The package containing the list of requirements for grant and loan applications should also include requirement for environmental assessment (EA) applied to project. Depending on initial environmental screening, this may require no EA (e.g. trade, rural advisory services), the Environmental Review (ER), Limited Environmental Assessment (LEA) or Environmental Impact Assessment (EIA), and necessary document would be added to the application package

Sub-projects financed through project grant program and credit lines must be in compliance with the environmental laws and regulations of Azerbaijan and with World Bank safeguard policies. Buildings, equipment and processes; production, storage and marketing technologies; production and processing materials; construction sites and factories, and working environments must all comply with the relevant environmental laws.
Environmental risk management of grants and sub-loans should become a part of grants, sub-loan and micro-loan appraisal by the project’s participating financial institutions. Grant administrators ans Loan officers should be able to verify that grant, sub-loan and micro-loan applications are in compliance with Azerbaijan laws and regulations and will not cause enduring harm to the Azerbaijan natural environment; and comply with the Bank’s environmental guidelines, which require financial intermediaries to undertake environmental screening of the sub-project:


  1. To check for potential environmental problems against a checklist, and to categorize and quantify the risk against pre-determined charts;

  2. To call for an ER, LEA or environmental impact assessment for any proposal that indicates more than minimal levels of risk.

It is envisaged that the grant administrators, loan officer (or an environmental specialist) will make decisions on environmental and safeguard compliance, provided that there are no complex environmental issues involved in the proposal.

In the case of complex environmental issues that are beyond the experience of the grant adminsitartor or loan officer, the Value Chain Development Secretariat (VCDS) or PFI will request assistance from the PMU to advise the VCDS or PFIs on the scope of an environmental mitigation plan for the application to the PFI. In case of any doubt, the PFI would consult with the PMU.


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