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3.3 Project Benefits

Project activities are expected to lead to increased incomes of farmers, rural entrepreneurs, and other rural residents. This increase in farmers’ income would result from the direct incremental benefits of the competitive funding sub-projects implemented, as well as the spread-over effects in terms of: (i) improved benefit/cost indicators, (ii) lowered production and processing losses and quantities of rejected products, (iii) improved quality of products (including recognized quality of produced commodities that has been ignored due to the absence of laboratory test confirmations), that fetches higher prices on internal and external markets, (iv) improved access to market (infrastructure and information) and related up- and down-stream linkages, that reduces transaction costs and sales and marketing margins, and (v) employment generation, either as hired labor or as increased household labor requirements for both on-farm and off-farm activities.

At the national level, the improved competitiveness of agricultural and food production would increase the value and volume of rural domestic and export trade and it would contribute to an improved trade balance.

Other potential benefits include: (i) gradual increase of marketable products and export opportunities and linkages; (ii) medium- and long-term effects of sub-projects’ positive experience leading to innovations that are beyond the scope and implementation period of the project; (iii) improved food safety; and (iv) improved consumers’ confidence in the food system.



The key social development outcome expected from the project is improved access to markets and knowledge for farmers and rural entrepreneurs. The main stakeholders which will benefit from positive social impacts of the project are: (i) owners of small private farms as well as managers/owners of large farms and agricultural enterprises, (ii) farm workers; (iii) managers/owners of small and medium rural non-farm enterprises, (iv) managers of agricultural processing companies; and (v) key village informants.

Table 3.2: Project Benefits



Broad Category


Benefits

Laboratory/Testing stations

  • Improved food safety;

  • Improved enforcement of environmental legislation

  • Improved consumers’ confidence in the food system;

  • Strengthened control over plant and animal health;

  • Improved access of Azerbaijan agricultural products to external market

Marketing infrastructure

  • New jobs and potentially improved incomes;

  • Improved rural economy. May result in an export market;

  • Provision of arrangements for large and small farmers to market goods as well as the marketing of manufacturing goods;

  • Production quality improvement

Agriculture production and processing technologies

  • Provision of jobs, incomes, and meeting demand for agricultural related products;

  • Improved rural socioeconomic conditions;

  • Development of sustainable agricultural practices;

  • Creates potential export products resulting in improved balance of payments and increased foreign exchange reserves;

  • Provides value added to agricultural production.

Table 3.3 Socioeconomic Benefits




Input

Benefits

Laboratory Testing

Contribution towards national security; Azerbaijan agricultural competitiveness on both internal and external markets

Veterinary services

Healthy livestock, improved production and farm incomes

Seed testing

Increased production; increased farm income; contribution towards national food security

Fertilizer

Increased production; increased farm income; rural economy improved; contribution towards national food security

Pest management/ Pesticides

Increased production; increased farm income; rural economy improved; contribution towards national food security

Plant production technologies

Increased production; improved farm income; rural economy improved; contribution towards national food

Livestock production technologies

Improved farm income; rural economy improved; contribution towards national food

Slaughter houses

Improved quality of meat product for marketplace; improved farm income

Primary Processing

Value added stays in rural areas leading to improved local economy through provision of jobs; improved farm income; reduction in transportation costs and fossil fuel consumption

Storage facilities

Reduce wastage and spoilage of crops and grains leading to improved economic efficiency and higher farm incomes


3.4. Potential Impacts

Project’s potential impacts and/or risks are as well as proposed mitigation measures are summarized in Tables A7-1 to A7-10 of Annex 7. The level of significance of those impacts is presented in Table 3.4.


The major potential impacts are associated with the implementation of sub-projects under Components B and C and may include water and soil contamination, air quality deterioration, loss of biodiversity and impacts on biophysical resources, including soil erosion. Agriculture production and processing technologies present most of the concern and should be carefully mitigated. The production and processing sectors generally produce a wide range of wastes that are disposed of in the form of effluents that flow into surface watercourses, seepage into groundwater, emission gases that are released into the atmosphere and solid wastes that are disposed of in municipal and unorganized dumps. Such wastes pose a threat to groundwater supplies, air quality, aquatic ecosystems, and ultimately to human health.
Livestock rearing in large numbers and in closed conditions, results in a concentration of animal waste that can contaminate both groundwater and surface waters. In the case of the former, public health is at risk, in the case of the latter, aquatic ecosystems and, possibly public health, are both at risk. Livestock expansion, particular for farms in the hills and near the mountains, can lead to pressure on common public lands including forests. Loss of biodiversity and soil erosion can occur if livestock and pastureland is not managed effectively and if livestock numbers are not controlled.
Another set of environmental issues might be related to the improper environmental practices in the laboratories which are to be upgraded under Components A and B, as well as to the implementation of minor civil works. A special attention will be required on the issues of toxic substances application for veterinary and quarantine laboratories activities as well as when implementing the subprojects where pesticides and fertilizers use is necessary. Insufficient infrastructure for storage and disposal of the toxic wastes represents a high risk for the environment.
Although pesticides will not be purchased under the project, the increased use of pesticides can be triggered by the TA to be provided under Components A and B, and due to the implementation of some sub-projects under Components B and C. This can lead to pesticide residue built up in the soil. Pesticides and fertilizers can migrate to both surface waters and groundwater resulting in contamination of these two sources and leading to damaged aquatic ecosystems and threatened health to downstream users.
In assisting borrowers to manage pests that affect agriculture, the Bank supports a strategy that promotes the use of biological or environmental control methods and reduces reliance on synthetic chemical pesticides.
As mentioned above, the use of pesticides may be triggered by Components B and C of the project that will provide grants and credits to small and medium size agribusinesses. The use of pesticides in Azerbaijan is regulated by the list of pesticides of Class I a and I b of the World Health Organization (WHO) Classification of Pesticides by Hazard and Guidelines to Classification (Geneva: WHO, 2009); materials listed in the UN Consolidated List of Products Whose Consumption and/or Sale have been Banned, Withdrawn, Severely Restricted, or not Approved by Governments (New York: UN, 1994); and pesticides included into the pesticide registration list is appended below at Annex 8.

Table 3.4: Summary of Potential Major Environmental Impacts – broad project categories




Broad category

Potential negative Impacts

Level of Significance

Laboratory/Testing stations

  • Air pollution

  • Water pollution

  • Land pollution

Low

Moderate


Moderate-High

Seed

  • Water and soil contamination through chemical inputs

Low-moderate

Marketing infrastructure

  • Water pollution

  • Land pollution

Moderate

Low


Agriculture production and processing technologies

  • Water pollution

  • Land degradation

  • Air pollution

  • Biodiversity loss

  • Aquatic ecology altered

  • GHG emission

Moderate-High

Low-Moderate

Low-Moderate Low-Moderate

Moderate


Low-Moderate

Although Table 3.5 indicates a large number of Low-Moderate potential impacts, through mitigation and adoption of best practices most of these can be reduced to low, as indicated in the tables in Annex 7.

Typical impacts for those potential subprojects which have high likelihood to be applied for are presented in Tables 7A-1 to 7A-10 in Annex 7. The tables also consider consequences of the impacts, including residual risks, provide for impact rating and indicate relevant mitigation measures. A summary of the potential impacts and their level of significance is given in Table 3.5.

Table 3.5. Summary of Potential Major Environmental Impacts – likely subprojects




Project Input

Potential Negative Impacts

Level of Significance

Laboratory Testing

Water pollution through chemical inputs; Air pollution. Land contamination through hazardous wastes disposal

Moderate- High

Veterinary services

Chemical inputs; Hormones and chemicals in meat and animal products

Moderate

Seed testing

Water pollution

Low-Moderate

Fertilizer

Water pollution

Moderate

Pest management/ Pesticides

Ground and surface water pollution; Soil contamination

Moderate- High

Plant production technologies

Soil erosion; Water pollution and Soil contamination; Water extraction and salinisation

Moderate-High

Livestock production technologies

Overgrazing; Loss of biodiversity; GHG emission

Moderate

Slaughter houses

Water and soil pollution

Moderate

Primary Processing

Surface water contamination

Moderate

Storage facilities (collection and cooling)

Reduction in productive land; high energy use

Low

The major potential negative impacts associated with likely potential sub-project types mainly relate to water and soil quality, soil erosion and contamination.

More intensive laboratory research activities to be facilitated due to the project supported laboratory upgrade may lead to increase of hazardous wastes and waste water formation. Hazardous waste disposal might lead to leakage to the ground water sources and drinking water pollution/contamination.

Increasing pesticide applications can lead to pesticide residue built up in the soil. Pesticides and fertilizers can migrate to both surface waters and groundwater resulting in contamination of these two sources and leading to damaged aquatic ecosystems and threatened health to downstream users. Land preparation can promote erosion, particularly if tractors are too heavy and cause soil compaction, and if fields are ploughed (with or without the contour) and left a longtime before the sowing period. Risks of erosion may increase, particularly on steep sites.

Livestock rearing in closed conditions, both on the small farm holding and the large commercial farm, results in a concentration of animal waste that can contaminate both groundwater and surface waters. In the case of the former, public health is at risk, in the case of the latter, aquatic ecosystems and, possibly public health, are both at risk. Livestock expansion, particular for farms in the hills and near the mountains, can lead to pressure on common public lands including forests. Loss of biodiversity and soil erosion can occur if livestock and pastureland is not managed effectively and if livestock numbers are not controlled.

A system of ex-ante environmental screening of subprojects has been developed and will be implemented to decide if and which mitigation measure is required.





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