Democratic Republic of Sao Tome and Principe Country ...

Report No. 10383-STP

Democratic Republic of Sao Tome and PrincipeCountry Economic Memorandumand Key Elements of an Environmental Strategy(In two volumes)Volume II Key Elements of an Environmental Strategy

June 9, 1993

Western Africa DepartmentIndustry and Energy DivisionFOR OFFICIAL USE ONLY

Doowent of the World Bank

This document has a restricted distribution and may be used by recipientson* in the performance of their official duties. Its contents may not otherwisebe disclosed without World Bank authorization.

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ABBREVIATIONS

ADB African Development BankAMI Assistencia Medica Internacional [of Portugal]BPM Best Practicable MeansCITES Convention on International Trade in Endangered SpeciesCLUSA Cooperative League of the United States of AmericaCNA Commissao Nacional de AmbienteCTG Cradle to GraveDNRE Direccao dos Recursos Naturais e EnergiaEA Environmental AssessmentEC European CommunityEEZ Exclusive Economic ZoneEIA Environmental Impact AssessmentEMAE Empresa de Agua e ElectricidadeEMPESCA Enpresa de PescaFAO Food and Agriculture Organization of the United NationsGDP Gross Domestic ProductGEF Global Environment FacilityGTZ German Technical Assistanc:ICAT International Commission for the Conservation of NatureICBP International Council for Bird PreservationIDA International Development AssociationIFC International Finance CorporationIUCN International Union for the Conservation of NatureNEAP National Envirommental Action PlanNES National Environmental StrategyNFE Non-Formal EducationNGO Non-Governmental OrganizationPCI Per Capita IncomeSPPF Special Project Preparation FacilitySTP Sao Tome and PrincipeTHS Toxic and Hazardous SubstancesUNDP United Nations Development ProgrammeUNEP United Nations Environment ProgrammeUNICEF United Nations Children's FundURRA Unidade de Reabilitacao da Rede de AguaUSD United States DollarWFP World Food ProgramWHO World Health OrganizationWTO World Tourism Organization

FOR OMCLIL USE ONLY

VOLUME II: KEY ELEMENTS OF AN ENVIRONNMNTAL STRATEGY

CONTENTS

EXECUTIVESUNIMAARY .................................. ,,,iii

CHAPTER i -INTRODUCTION .1A. Background ........................... 1B. Purpose and Outline of Study.. 2C. EconomicContext.. 4D. Environmental Issues and Opportunities ............................... 5E. Current lnstitutonal Framework in STP .. 8F. Current Donor Efforts .. 9

CHAPT'ER I[ - STATE OF ENVIRONMIENT ......................... 10A. Introduction .10B. Geographical Overview .10C. International Agreements and Protocols .10D. Key Regional Issues .11E. Local Environmental Conditions and Impacts y sector) .12F. Initial Screening of Key Environmental Problems and Priorities .16

CHAPTER mI - POTENTIAL CONSTRAEIS TOENVIRONMENTAL MANAGEMENT . .19A. Policies, Istitudons and Legislation .19B. Human Resource Constraints .20C. Infrmation Constraints .21D. Cultural Considerations .21E. Loca NGOs .. 22F. Summary .22

CHAPI`ER IV - ECONOMY-ENVIRONMENT LINKAGES . .24A. Introduction. 2B. Enviromnental Quality and Trade Policy .26C. Enviromnental Issues Associated with Land Distribution .27D. Interest Rates, Credit and Environmental Quality .28E. Privaization and Environental Quality .28F. Enviromental Screening of Public Investment Program .30G. Sectoral Fiscal Policies and Envirommental Quality .30H. Health Sector Linkages .33I. Summary .. 34

CHAPIERV-RECOMMENDATIONS . . 35A. General Strategy .35B. Priorities - Near- vs Long-Term .35C. Institutions and Legislation .36D. Economic Policies 38E. Education, Training and Awareness Building .41

BIBLIOGRAPHY .43

This document has a restricted distribudon and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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TABLES

1.1 - Illustrative Comparison of Environmental Problems and Policy Responses in SelectedIsland Nations

1.2 - Introduction of Environmental Issues in Sao Tome and Principe2.1 - Potential Threats to Environmental Quality in Sao Tome and Principe2.2 - Summary of Severity of Impacts of V^rious Environmental Problems in Sao Tome and

Principe

4.1 - Selected Ecor.omy - Environmental Linkages in Sao Tome and Principe4.2 - Sample Screening of Projects in Public Investment Program of Sao Tome and Principe

ANNEXES

A - Table A. 1 - Summary Indicators for Comparable Island NationsA.2 - Summary of Environmental Issues and Mitigative Efforts: Cape VerdeA.3 - Summary of Environmental Issues and Mitigative Efforts: JamaicaA.4 - Summary of Environmental Issues and Mitigative Efforts: MauritiusA.5 - Summary of Environmental Issues and Mitigative Efforts: Seychelles

B - Environmental Legislation and InstitutionsC - Status of International Environmental Conventions and Protocols in Sao Tome and

PrincipeD - Selected Cases of Environment -Economy LinkagesE - Table F. 1- Sa) Tome and Principe - Natural Resource Indicators

- F.2 - Sao Tome - Basic Indicators: A Comparison with other Economies withPopulation of less than 1 million

F - Map of Sao Tome and Principe

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EXECUTIVSUMMARY

(i) Background. Sao Tome and Principe consist of two islands with a total land area of964 sq. km, located in the Gulf of Guinea. The two islands are separated from other islandsin the gulf and from the west coast of Africa by seas up to 1800 m deep. The Islands havenever been connected to each other or to the continent. They are part of a volcanic lineincluding Pagalu to the southwest, Bioko to the northeast and extending up the mainlandthrough Mount Cameroon and the Cameroon highlands to Lake Chad. Rainfall on the islandsaverages between 900 mm per year in the low-lying areas and 7000 mm per year in thehigher elevations. Both islands are mountainous with several peaks reaching over 1500 m.Steep and rugged terrains render large parts of the islands inaccessible, thereby preserving, toa large extent, biological diversity unique to the islands. STP's forests have been found to behome for some of the highest levels of species endemism in the world. The InternationalCouncil for Bird Preservation (ICBP) has ranked the forests in southwest Sao Tome as thesecond most important in Africa based on the number of endemic bird species. An inventorycarried out by Interforest indicates that there is substantial primary fo' -tt and considerablymature secondary forest representing almost 60 percent of the count id area. Much ofthe land area below 800 m has been converted to plantations by the . ese, who occupiedthe islands for 500 years. Secondary forest growth has taken over some of the abandonedplantations.

(ii) The Environment. Envieonmental problems in STP are not yet that sever: orwidesp-ead. The country has resisted exporting timber from its rainforests, and agriculture hasalso historically not led to severe soil erosion. Since the country lacks industries and largeurban areas the air quality is generally very good. The recent volcanic origin of the islandshas precluded the development of mineral resources with its associated environmental impacts.Nonetheless, the country's economic development aspirations will depend upon undertakingactivities and implementing policies that risk exerting additional stresses on the environment.Programs to improve food self-sufficiency promote vegetable growing. Some of theseactivities are carried out on steep slopes posing threats to slope stability and leading toconversion of secondary forest, soil erosion and loss of species diversity. ST? currently has apopulation of 117,000 and an average population density of 118 persons per sq.km. Thepressures on natural resources will be exacerbated by a population currently growing at anannual rate of about 2.7 percent. Population increase is an indirect cause of almost everyenvironmental problem in the country and if unchecked will continue to threaten existingresources at an increasingly large scale.

(iii) Poor water quality, forest degradation, the widespread malaria, threats to primaryforest and bio-diversity, erosion on steep slopes caused by vegetable growing, fisheries loss,improper handling of toxic and hazardous substances and coastal erosion due to sandextraction are all problems which concern Government officials as well as the non-Governmental community in STP. The human health dimension of environmental degradationis universally acknowledged, and malaria eradication and safe water availability are generallyregarded as being of critical importance.

(iv) Relatve Priorities. Environmental problems in STP were prioritized based on theirenvironmental significance, economic significance and impacts on human health. Whenproblems were ranked according to their different criteria, population growth, water quality,deforestation and steep slope erosion, species loss, coastal erosion and non-toxic solid waste

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pollution were assigned high priority. A more moderate priority was assigned to marinepollution, fisheries loss, sofl contamination, pollution from toxic and hazardous substancesand wetlands losses. A low priority was assigned to issues of water availability and airquality. The prioritization process carried out in this study is essentially a preliminaryscreening, since the exact linkages between the physical effects of various environmentalproblems are not known with certairty. Further, the islands" small size Inexorably linksactIvities; any economic intervention will affect the environment, and environmentalInterventions will affect the economy. Interventions in one sector will affect other sectors,and any intervention will have not only local but also national impacts.

(v) WsstesQsmet. Spohvraiou wntironqunalt prasuremens wh dichastkes that waterountisrothein cotminacteda soureb human weatsdthes,o caarosts wasdbftes ofd tddi esticidteseanfungicids usedby thouehld (ainoun.roll.ng moqitkomes). Megadatinese andb commu.nicabl.wa ter-b ofrnei oisea als pofictigh prorultyon arP trbtdt hsroblems assoiate wihithy.~~jj ~

wtrspl.~ Only2terentions thee plcuty' prorutienhs cabes r taro asaf dsrinking wtrfortstngo 7.l~ spoin y source upyn th a e bCity of ece SaiTo e haincate the ate allofthem

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inappropriate petcdMsehakofewater Ptireatmen fclties ismaorue fthe

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(v) Water Quality. Sporadic water quality measurements indicate that water supplies areoften contaminated at source by hulman wastes, hazardous wastes and toxic pesticides andfungicides used by households (in controlling mosquitoes). Many illnesses and commumncablewater-borne diseases affecting the population are attributed to these problems associated withwater supply. Only 20 percent of the country's population has access to safe drinking water,and testing of 7 spring sources supplying the City of Sao Tome has indicated that all of themare contaminated with fecal matter, much in excess of safe drinking water standards. Surfacewaters are contaminated with organic wastes as well as toxic substances, particularly throughinappropriate pesticide use. The lack of water treatmnent hfaciities is a major cause of thedeclining health conditions of the population. Diarrhea is the third major cause of death inSTP, after malaria and respiratory disease, and 95 percent of the population is infected withintestina parasites. In addition to the health impact, the economic and environmental impactsof water pollution can be substantial, and the benefits to be derived by eliminating waterpollution may be as much as or more than $4.5 million per year.

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(vi) Population Growth. Population growth is evident as a primary indirect cause ofalmost every environmbntal problem listed. Currently the population in Sao Tome andPrincipe is estimated at 117,000 with a population density of 118 per km2. The populationgrowth rate is estimated at 2.9 percent per annum. If unchecked it will continue to threatenexisting resources, and at an increasingly large scale. Population growth places increasingstrains on natural resources. More people generate more wastes threatening local healthconditions. They place increasing demands on scarce arable land, declining forests and wateravailability. The results of uncontrolled population increase will be degraded lands, declinedand degraded forests, loss of natural habitats as well as decreased yield from crops. Alreadystrained access to infrastructure inclading safe water, sanitation, energy and housing will beoverburdened. Investments in education, particularly for females, adult literacy andeducation, awareness campaigns on contraceptive use are critical to achieve population growthreduction.

(vii) Deforestation. Although almost 60 percent of the country's land area still harborsprimary and mature secondary forest, unsustainable harvesting of fuelwood and encroachmentby smallholders for vegetable production pose major threats to these forests. The forestresources currently produce 5400 cubic meters of commercial wood annually and 170,000cubic meters of fuelwood. Under a sustainable regime, the annual supply of wood is estimatedto be 110,000 cubic meters of commercial wood and 70,000 cubic meters of fuelwood. Theimplication is that there is a disequilibrium resulting in a loss of economic value, as well as anincreased risk for environmenta; damage from non-sustainable fuelwood harvesting. Theclearing of forested land would in the near-term result in loss of species diversity and habitatand soil erosion, and over the longer-term would lead to changes in eco-systems and climate.

(viii) Steep Slope Erosion. While it is expected that the current land reform programwhere usufructuary rights to land are assigned to smallholders, will in general, improveeconomic prospects for the country, there dre a number of potentially detrimentalenvironmental externalities that need to be addressed. Such externalities arise because, undersmall plot private land holdings, the offsite environmental costs of unsound management aregenerally neglected. The off-site environmental costs are typically most significant in steepslope areas and in areas adjacent to open-access land. In steep slope areas there are incentivesfor farmers to ignore the impacts of soil erosion on neighboring plots. There are alsoincentives for farmers to encrr.-ch onto open access land, which will, in general be on slopes,and cultivate them with marginal crops or over-exploit the forest resources. Environmentaldegradation will clearly be the result of these activities, disrupting functions such as water-shed control and erosion control. Species loss will also be a direct result. Effectiveenvironmental education and extension programs as wall as targeted programs to ensureenvironmentally sound practices can help overcome this problem.

(ix) Inappropriate use of pesticides, fungicides and certatn agro-chemtcals.Inappropriate use of these chemicals could pose threats to humans as well as to bird and plantspecies. A number of chemicals currently in use in STP have been banned elsewhere in theworld for environmental reasons. Existing stocks of DDT are being used in STP primarily bysmallholders and households for pest control. These and other toxic wastes, including thosefrom industrial and construction activities such as dyes, paints and oil products, pose a threatwhich could be magnified with increased economic development. There is currently limitedawareness in the country as to the hazardous nature of these substances and no mechanismsfor guarding against their potential toxic effects.

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(x) Fisheries Loss. Recent decline in the domestic fisheries yield (1.94 tons/person L1989 to 1.15 tons/person in 1992) indicate that either fish stocks are coming under sustainablepressure or capital stock in the fishery :a in poor condition. Analysis of revenue collectedfrom commercial fishing activities and value of exports captured by foreign fishing fleetsindicates that STP As currently ,ring less than 5 percent of the gross value of its fishery.Weak monitoring and enforce capacity placus STP in a vulnerable position vis-a-visforeign fishing companies and a gniflcant opportunity for growth is being missed due to thefailure to effectively participate ih fishery resource rents. Economic instruments, such asincreased license fees can provide a significant increa'. in fishery revenue while encouragingsustainable use of marine resources. External assistance and regional cooperation should besought in order to overcome these problems and put in place an effective fisheriesmanagement strategy. A comprehensive management strategy that concurrently addresses theregional issue of the offshore fisheries and the domestic issue of improvements in artisanalfishery can have important economic and environmental benefits.

(xi) Coastal Erosion. Coastal erosion in Sao Tome, especially in the southern parts ofthe country has reached serious proportions. The infrastructure in these areas is threatened aswell as the human dwellings. The road bordering the southern coastline will need to bedeviated and a new road constructed. The wave action around Sio Tome as well as ofPrincipe needs to be studied as well as the regenerating capacity of the shoreline in order toassess the magnitude of the problem. Such a study will also indicate potential cost effectiveoptions for mitigating the erosion threat in the short term. There is also widespread concernoier threats of coastal erosion caused by sand extraction from beaches. This activityprompted the Government to ban sand extraction from all island beaches except one. Theenvironmental concern has been that sand extraction disrupts mangrove or estuarine habitatsand poses a potential threat to tourism development. Investigations carried out as a part of thisstudy indicate, however, that sand extraction can be environmentally and economicallysustainable if carried out under proper conditions and that sand can essentially be treated as arenewable resource. Any major operation of sand quarrying, however, should be subject to acomprehensive environmental impact assessment.

(xii) Non-Toxic Solid Waste Pollution. The "solid' waste stream essentially consists ofthree components: non-toxic solid wastes such as non-degradable products; organic andsanitary wastes; and, toxic and hazardous substances. Non-toxic solid wastes are increasinglybecoming a major environmental and human health problem especially in Sao Tome city, andthe practice of dumping such wastes on the beaches poses a barrier to tourism development.Major environmental and human health concerns also arise from the fact that the variouswaste streams are often not separated. Solid wastes, organic wastes, and toxic substances areoften disposed of together, posing potential threats to water supplies and to soils. There isone project in the PIP that is intended to address solid waste handling, although the $240,000allotted to this task is wholly inadequate for providing separation as well as the necessarytreatment of wastes.

(xiii) Constraints to Sound Environmental Management. There are several constraints tosound environmental management in STP. They include the lack of a clearly articulatednational policy and legislation pertaining to environmental protection; the lack of an institutionwith a specific mandate to coordinate activities relating to environmental protection in thecountry; non-availability of accurate data in key sectors such as water supply andmanagement, land and forest management, education, health and agriculture; lack of culturaltraditions pertaining to land ownership and resource management; and the lack of awareness

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and senmiti.ation of environmental concerns. Overriding all these constraints is the majorproblem of human resource constraints which the country currently faces. There are notenough trained or envirornentally sensitized persons in the country, given the types ofenvironmental problems that they may wish to deal with. Many educated and trained personshave left the country in search of better opportunities overseas. In addition, conflicts of timeand interest prevent those remaining in the country who are interested and knowledgeable ofenvironmental issues from actively participating in environmental management programs. STPhas significant corstraints in delivery in the education sector, lacking qualified teachers andbasic necessities.

(xiv) Interactions Between Economic Poldcies and Environmental Quality. The mainfocus of this repert is to highlight the potential interactions between economic policies andenvironmental quality. Where data permitted, quantitative analyses of such linkages have beencarried out to illustrate the economic value of key environmental resources and functions.These linkages also indicate where inappropriate economic policy signals and decisions canlead to a degradation in environmental quality. Most importantly these linkages illustrate howeconomic policies can be used beneficially to improve both economical-y efficient allocationas well as environmental quality.

(xv) In assesbing the role of economic policies in environmental management, a study wascarried out of key environmental problems and general policy recommendations in comparableisland nations. The study revealed that while some of the environmental problems are easilyremedied through policy interventions, other problems may be very difficult to remedy due topervasive institutional constraints. In such situations the following key lessons emerged, whichcan be considered for STP's present situation: (i) focused or targeted policies, concentratingon the highest priority or most significant issues, are effective where institutional capacity isweak or in the process of being developed; (ii) a precautionary policy approach is appropriate,where information is limited or impacts are uncertain; and (iii) the use of decentralizedresource management policies, such as price signals or other non-regulatory, instrumentswhere human resource constraints are pervasive. In (iii) it should be noted that"decentralization' refers to the idea that resource management decisions are made voluntarilyin a way that is likely to improve economic efficiency as well as environmental quality. Itdoes not necessarily imply that institudons and activities that are currently centrally controlledshould be duplicated at a localized level. In this context, decentralization applies strictly tohow and by whom various resource allocation decisions are made. Options for environmentalmanagement should avoid regulations that require a great deal of monitoring and should relyinstead on 'incentive' structures or forms of conflict management that minimize Governmentintervention.

(xvi) Recommendations. Having assessed the main environmental priorities in the countryand developed an understanding of some of the potentially important linkages betweeneconomic issues and environmental quality, the following recommendations are made formitigating or avoiding environmental problems in STP. These recommendations take intoaccount the major institutional and human resource constraints faced by the country at thepresent time. The following initiatives have both near-term and long-term requirements:

(a) National Environmental Policy. Policymakers need to take requisite steps tomake effective an integrated policy for sound management of the country'snatural resource base.

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(b) Institutignal Framework for Environmental blanamga . A carefully designedInstitutional structure needs to be established for formulating andimplementing environmental policy. This can be achieved within the existinginstitutional framework. The institution should be clearly mandated with thetasks of environmental policy and strategy formulation as well as coordinationand monitoring of all environmental activities in key sectors. The Institutionshould have capacity io provide advice on policy to line agencies, to setpriorities, formulate guidelines and standards and to monitor progress ofimplementing agencies. The institution should have an advisory/technicalcommittee comprising representatives from all sectors of Government as wellas NGOs to facilitate coordination among line ministries and agencies which iscritical for effective environmental management.

A system should be set up to collect and process environmental data. Initiallythis may be achieved by appointing an Environmental Information Officer tokeep track of available key environmental data and assess whether the datawhich is being gathered in key sectors is appropriate for environmentalpolicymaking and for carrying out Environmental Impact Assessments (EIAs).

(c) Environmental Screening of Projects and EIAs. The public investmentprogram of STP needs to be screened to identify those projects whichpotentially threaten the country's environment in areas identified as being ofhigh and moderate priority. This exercise would reveal the need for carryingout Environmental Impact Assessments of these projects. Initially the countrymay rely on foreign expertise to carry out the EiAs. Over the longer term, thecost-effective method may be to encourage the private sector to developexpertise to carry out ElAs.

(d) Education. Training and Awar'ness Building. Education, training andgenerating environmental awareness are essential elements of any nationalenvironmental strategy. Instilling in the younger generation a sense ofenviromental awareness and responsibility is a key priority. Environmentalsensitization of the overall curriculum, as well as development of modules forintroducing environmental education into the schools' curriculum should beconsidered. Non-formal environmental education programs should bedeveloped in association with NGOs and community leaders. These can bedeveloped in collaboration with agricultural extension programs and health andnutrition programs. Over the longer term, specialized training inenvironmental concerns in priority sectors and capacity to carry out ELAsshould be considered.

(e) Kex SetoralInitives. High priority sectoral initiatives include (i)formulation of policy and strong programs targeted at controlling populat.ongrowth; (ii) for-mulation of a land-use plan for the country, establishing asystem of zoning, specifying land areas to be protected, and demarcating landareas to be utilized for agriculture, industry and energy generation; (ii) thesetting up of a protected area system and well planned economic buffer zonesto ensure that land-use conflicts do not arise and to ensure that localpopulations do benefit from activities such as tourism development. Theesuaolishment of the buffer zones needs to be carried out with inputs from

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ministries Involved in agriculture, forestry, water, enerpgy and touripm; (iii) aprogram for water quality measurement and treatment, along with anassessment of water pricing to reflect the marginal costs of wator treatment;(iv) a strategy for non-toxic solid waste disposal in Sgo Tome city; (v) a studyon coastal erosion to deflne costs effective means of mitigating or avoidingfurther erosion in threatened areas; and (vi) a strategy for better managementof fisheries. The Government should seek to formulate regional alliances Inestablisning a system of monitoring and enforcement of off-shore fisheriesexploitation.

Over the longer term studies need to be undertaken to define strategies andmechanisms for capturing a greater share of flshery rents and to ensurL "^"q-term sustainable use of the country's forests through assessing forestr- uctpricing issues and licensing mechanisms. A major issue in both cases . jeweak implementing capacity in the country. In order to prevent threats ofrenewable resource degradation in the country, institutional capacity buildingand Investing in human resource development should be a priorify ofpolicymakers.

KEY ELEMENTS OF AN ENVIRONMENTAL STRATEGY

CHAPTER 1. INTRODUCTION

A. Background

1.1 Activities related to developing a National Environmental Action Plan (NEAP) have beenongoing In the Democratic Republic of Sao Tome and Principe (STP) since 1990. Severalinitiatives are being currently undertaken by the Government for the protection of theenvironment and the conservation of the country's natural resources. These include thedevelopment of a national environmental policy, the formulation of national environmentallegislation and the setting up of the Comissao Nacional de Ambiente (CNA). The Governmentis also updating several of the sectoral legislation in key sectors, including fisheries, forestry, andwater and sanitation. However, no official strategy has yet been espoused by the Government,and the lack of a strategy threatens the ability of the nation to attack its current natural resourceproblems as well as ameliorate future threats. The need for developing a NEAP is clear becauseof the strong dependence of STP on its environmental resources.

1.2 Public awareness of environmental issues is also increasing as some of the moreimmediate problems affect both the health and the economic well-being of the population. Waterquality in Sao Tome city, the nation's capital, is so poor that all households boil their water.Even then diarrheal diseases are rampant in the city. Further, it is common knowledge thatmarine pollution in the Baia de Ana Chaves-the port of Soo Tome-has depleted what was atone time a thriving artisanal fishery in the bay. In addition, the widespread nature of malaria inthe country is often regarded as the most devastating 'environmental' issue in the country; malariais the major cause of morbidity and mortality in STP. Public concern about the highly visibleactivity of excavation of sand from popular beaches resulted in a ban on sand excavation fromall but a few beaches. In spite of the growing awareness about environmental issues, however,the public and official responses have not always reflected either the economic or environmentalseriousness of any given problem. In some instances, such as sand excavation, the response wasrather extreme. In other cases, such as those dealing with the disposal of toxic and hazardoussubstances (THS), official responses have been virtually non-existent. In short, one goal of aNEAP would be to allow the Government to review all of the environmental issues and setpriorities in a rational manner.

1.3 It is important to note that, compared to many countries in Africa, the environmentalproblems in STP are not yet that severe and widespread that they are beyond any hope ofamelioration. The country has resisted exporting timber from its rainforests; cowisequendy it stillmaintains a substantial amount of primary forest and high quality, mature secondary forest.

Jriculture has also historically not led to severe soil erosion, and the air quality is generallyvery good because of the country's small population and lack of industries and large urban areas.Also, the recent volcanic origin of the islands has precluded the development of mineral resourceswith its associated environmental impacts. Nonetheless, the country's economic developmentaspirations will depend upon undertaking activities and implementing policies that risk exertingadditional stresses on the environment. Increased vegetable growing on steep slopes to improvefood self-sufficiency and enhance nutrition poses potential threats to slope stability and is alreadyleading to increased conversion of secondary forest and soil erosion. The nation's growing needsfor energy will place potential hydroelectric development under closer scrutiny as they providean opportunity for decreasing oil import needs. The pressures on natural resources will beexacerbated by a population currently growing at an annual rate of about 2.7 percent. Animportant aspect of any NEAP must be to confront the trade-offs and linkages that exist betweeneconomic development and environmental quality, while recognizing that sustained development

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will in general depend oiu rational use of the country's natural resources and prudent managementof key environmental support systems such as air, water and soils.

1.4 Because of the country's relatively small size and the fact that many of its environmentalproblems have not yet reached a crisis level, there is an opportunity to set realistic andmanageable targets for achiaving some form of environmentally sustainable development. Inaddition, lessons from other island nations illustrate that the range of management options foraddressing environmental pio'biemns in a small country are in fact quite broad. A retrospectivesurvey of the environmental problems of Cape Verde, Jamaica, Mauritius and the Seychellesshows that Sao Tome shares some of the environmental problems experienced by these countries(Table 1.1) Moreover, the policy responses that have been implemented or are currently plannedin these countries cover a full range of interventions including institutional reforms, developmentof information gathering and dissemination systems, economic policy interventions, directregulation, direct investment in sectoral projects, and improved education, training, and publicawareness (Annex A). Such policies may also be appropriate for Sao Tome, but selecting theoptimal policy responses requires an understanding of some of the key linkages that currentlyexist or are anticipated to arise as the country continues its economic development.

B. Purpose and Outline of Study

1.5 The purpose of this report is to develop recommendations relating to potential policyrtponses for mitigating or avoiding environmental problems in Sao Tome. It is based on areview of the findings of reports and studies available up to December 1992, as well as analysisof information received during a field mission in late 1992. The overall objective of the missionwas to assist the Government in initiating the environmental action planning process in thecountry, and to identify the priority areas which are the most threatened and for which urgentremedial or preventive actions need to be taken. A key purpose of the report is to assesseconomic issues and their linkages and impact on environmental concerns and to make strategicrecommendations to the Government for alleviating the impact on the environment or on thepopuace. These would include near-term ae well as long-term policy interventions as elementsof an environmental strategy and action plan for the country. These inputs are expected to betimely and of value to the Government since the country is currently engaged in developing anational environmental policy and formulating environmental legislation.

1.6 In developing the recommendations, the mission engaged in dialogue with key agenciesin Government as well as non-governmental agencies and the donor community. Meetings wereheld with representatives of Ministros do Economia e Financas, Equipamento Social e Ambiente,Saude, Agricultura, Comercio, Industria, Pesca e Tourismo and with officials of Empresa deAgua e Electricidade (EMAE), Unidade de Reabilitacao da Rede de Agua (URRA), the Direccaode Medicine Preventiva, the Direccao de Tourismo, the Direccao de Pesces and the Direccao deFlorestas. The mission also met with representatives of non-governmental agencies includingCLUSA, AMI and the U.S. Peace Corps, local environmental NGOs including the Instituto deEcologia and Associacao de Desenvolvimento e Ecologia and with the donor community includingthe UNDP, UNICEF, WHO anc the EC. A meeting was held with the Sociedade de Advogadosin order to discuss the draft national legislation on the environment, wh.ch has been preparedwith the assistance of the UNEP and is currently being reviewed by the Sociedade.

1.7 The mission also carried out an overview of the country in order to get an understandingof the environmental situation. Ca the island of Sao Tome, site visits were made at: (i) thevicinity near the city of Sao Tome to investigate areas where sand was being excavated and areas

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where water contaminat^in was of concern; (ii) Neves in the north to investigate forestconversion, (iii) S. Joao dos Angolares aid to the Rio Grande in the south to investigate areasthat would be subjected to drainage for malaria eradication, areas in which conflicts betweentourist development and fisheries have allegedly occurred; and (iv) inland to Monte Cafe andNova Moca to investigate the impact of vegetable farming on slope erosion and secondary forestconversion. A visit was also made to the island of Principe where the mission made a tour ofthe land area leading to the construction site of the hydroelectric power plant at the Rio Papagalo.

Table 1.1Illustrative Comparison of Environmental Problems and Policy Responses in

Selected Island Nations

Cape Verde Jamaica Mauritius Seychelles STP

Land Area (sq.km.) 4,033 10,991 2,04S 44S 964Population ('000) 370 2.460 1,080 67 117Population Density (per sq.km.) 92 224 528 1S0 118Life Expeotancy (years) 60 74 68 70 67GNP (USS per capita-1990) 890 1,500 2,2S0 4,670 400

Environmental Problem

Water Pollution *. 4'

Marine Pollution 4.44 ''4

Non-Toxic Solid Wafte Pollution 40

Air & Noise Pollution 0 0 0 0

Soil Erosion 4.0 40 '

Coastal Erosion 4' ?? 00 *4

Fishery Resource Degradation 4'

Threatened Biodiversity 44

Toxic and Hazardous Substances

Pollcy Response

Enivironmental Authority in Place 0 1a1

Regional Management Initiatives 0 X X X

Sector-Specific Investmnent Projects 101 [01] [01 [01 (0

Systemaic Data, Gathering and X X [01 0 XReporting _

Land Use Reforms X ° [0 0 X

Regulations and Guidelines 0 0 [1 [10

Economic Policy Reforms [01 [S) [01 [01

Education Programs 0O0 0 0 O1t

Key: 4' = Widespread Problcm; = Problem; 0 = Not a Major Problem;?? = Inadequate Data.[03 = Some Responses in Place; 0 = Responses Planned; X = No Response.

Source: Based on Annex A.World Development Report, 1992.

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1.8 Specifically, the report will:

(a) provide a brief economic, environmental and institutional contex for assessingSTP's environmental problems (Chapter 1);

(b) address problems in a priorty-seiing context, where the screening of prioritiesexplicitly considers direct impacts on human health and environmental quality,and potential long-term impacts on economic development (Chapter 2);

(c) highlight some of the key constraints involved in addressing these problems(Chapter 3);

(d) identify and analyze the economic linkages that exist between environmentalquality and economic well-being (Chapter 4); and,

(e) develop racommentiQns for institutional reforms, economic policyinterventions, sectoral investment initiatives, and education programs consistentwith the country's priorities (Chapter 5).

C. Economic Context

1.9 Sao Tome received its political independence in 1975, 500 years after being colonizedby Portugal. The economy was taken under state control and a policy based on central planningwas adopted. Trade ties were established with East Germany and China, major plantations andindustries were nationalized, most prices fell under Government control, subsidies were providedfor basic necessities, and the currency was maintained at over-valued levels. Over the longerterm, declines in cocoa revenues eventually undermined growth prospects, and by the mid-80sthe economy had collapsed. Budget deficits from a bloated public sector rose out of control whileoutput plummeted in all sectors. After just a decade of independence, SWP had the lowest percapita GNP of comparable island economies, relying almost entirely on foreign assistance anddeclining cocoa revenues for foreign exchange.

1.10 Economic liberalization measures initiated in 1985 have attempted to attract foreigninvestment and reverse economic decline. Plantation management has been partially turned overto foreign enterprises, many Government enterprises have been abandoned, subsidies have beenprogressively eliminated, and the currency has been devalued. However, continued low worldprices for cocoa, delays in privatization and limited institutional capacity have delayed economicrecovery. GDP has shown only modest growth of 1-2 percent, and has not kept pace withpopulation growth. Cocoa currently accounts for 30 percent of GDP and 90 percent of exports;moreover, 60 percent of all acreage under cultivation is planted in cocoa even though attemptshave been made to diversify to alternative cash and food crops. Foreign aid and dwindling cocoarevenues thus persist as the economy's mainstays.

1.11 Social sector problems associated with health, education and declining nutritionalstandards persist as a constraint to achieving accelerated short-term economic growth. Altho.ughmalaria was almost eradicated, it re-emerged in the late 1980s and is now regarded as the numberone health problem in the country. It places a substantial burden on existing treatment capacityand has led to substantial declines in worker productivity due to absenteeism or illness. Further,it is postulated that maternal malnutrition and micronutrient deficiencies are contributing

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significantly to declines in nutrition levels. Finally, although literacy rates are relatively high inthe country, there is an acute shortage of qualified and experienced personnel.

1.12 Most of the economic growth prospects for the country are premised on developing afocused policy agenda that is geared towards new sources of growth in a few specialized areaswhere STP has clear comparative advantages. The themes of this agenda include:

(a) implementing macroeconomic policies that promote financial stability;

(b) increasing the role of the private sector through phasing-down Government sectorcommercial activities and through providing appropriate incentives and necessaryinfrastructure to prowr'te efficient private development;

(c) exploring new sources of growth;

(d) investing in humsrn resource development; and,

(e) paying closer attention to the sustainable use of limited natural and environmentalresources.

1.13 Some of the key reforms currently planned or underway in the country includerestructuring of public enterprises, some enterprises have been liquidated and privatization is inprocess, reductions in the size of the civil service, financial sector reforms, and land reforms.From both an economic and environmental perspective, the land reforms are likely to have themost significant impacts. The main elements of the land reform program include the promotionof small-holder production through a program under which usufructuary rights to land are grantedand management contracts and leases are issued to promote crop diversification and reducedependence on food imports. These reforms are intended to provide concomitant benefits throughpromoting local entrepreneurship, a more diversified, increased economic stability, and improvedagricultural and environmental management capacity.

1.14 In pursuing the overall economic policy agenda, there are many opportunities forsimultaneously promoting economic and environmental objectives. The role of incentives inenvironmental management-through the assignation of land utilization rights or through the useof price signals that reflect full environmental costs-has been established in many jurisdicationsas an effective means for achieving environmental objectives while concurrently lowering thecosts of achieving compliance. Further, comparative advantages in certain environmentalcommodities or services can provide a potential economic growth center.

D. Environmental Issues and Opportunities

1.15 There are a broad range ofissues that are regarded by Government and non-governmentalofficials as important environmental problems and opportunities. Without assigning any particdularpriorities, environmental concerns include issues such as: changes In rainfall patterns; secondaryforest degradation; threats to primary forest and bio-diversity; erosion on steep slopes caused byvegetable growing; loss of fisheries and avifauna from agricultural and domestic pesticide use;coastal erosion due to sand extraction; and, water quality. Tne generally poor water quality isa dominant concern throughout the country; causes of contamination include human organicwastes as well as improper handling of toxic and hazardous substances. Some general policyissues raised include impacts of the land distribution program, pricing of energy and water,

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tourism development, off-shore fisheries management and credit access. The human healthdimension of environmental degradation was universally acknowledged; malaria eradication andsafe water availability were generally regarded to be of critical importance. In general, theseissues can be regarded as either direct physical problems, economic policy linkages, orinstitutional constraints (Table 1.2).

1.16 The direct physical problems are often regarded as the "effects" of some physicaldegradation process that is occurring in key environmental resources. Declining water qualityor availability, loss of soil productivity, or degradation of renewable resource stocks such asfishes or forests fall Into this category. The economic policy linkages or institutional constraints,by contrast, are often cited as problems because they are regarded as "causes" that migbtcontribute to the environmental degradation. Inappropriate fiscal structures or lack of regulatorycapacity, for example, can exacerbate an inherently bad e.vironmental situation. Conversely,however, such economic policy and institutional linkages can also provide an importantopportunity for sound environmental management. Interventions in trade policy, structuralreforms, or sectoral fiscal policies can be designed to have beneficial environmental impacts or,minimally, can be designed to ensure that any negative impacts can be mitigated through othertargeted environmental policies.

1.17 It is worth noting that, to date, the country's relatively undisturbed environment has beenregarded as an asset that might provide opportunities for developing some type of comparativeadvantage. It is for this reason that issues such as "tourism" and "hydroelectric" developmentare regarded as environmental opportunities that can be beneficially exploited. It should beemphasized, however, that any such development does have potentially negative impacts.Decision-makers must acknowledge the policy challenges and institutional challenges in insuringthat such development does not itself undermine the integrity of the environmental assets that arebeing developed.

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Table 1.2:Introduction of Environmental Issues in Sbo Tome and Principe

Issue Description

Physkca Problkms 0 Water availability is a potential concern given natural deoines and growingWater Availability & Quality water demand from a growing population.

* Groundwater polution from pesticides, fungioides and household wastesleads to severe health impacts.

* Marine poUution from dumping of untrated sewage.

Solid Waste Polution * Dumping of non-toxio wastes represents constraint to tourism development.* Toxic and hazardous substances are not separated from normal solid or

liquid waste stream.

Soil Degradation 0 Soil contamination.* Steep slope soil erosion ocou.s where smallholders encroach on econdary

forests.* Coastal erosion caused by indiscriminate sand quarying.

Renewable Resources * Non-sustainable forest harvesting.* Fishery degradation from marine polution.* Less than optimal participation of Sao Tom6 in offhhore fishery.

Biodiversity Loss 0 Loss of matur secondary forest and primary forest habitat fromsmallholder encroachment.

* Thre&t of loss of wetland habitats due to wetlands drainage from malariacradicaCon.

* Loss of rare bird species from habitat loss and poisoning by pestioides.

Coastal Erosion 0 Erosion of the coastal belt.* Threat to infastructure and human habitat.* Reduction of land mass.

Economic Poliy Likages * Regional fisheries policies.Trade Policy * Import substitution - energy and food self-reliance.

Structural Changes 0 Privatization.* Land distribution.* Credit availability.

Sectoral Fiscal Policy * Energy pricing and generation.* Water pricing and the provision of treatment facilities.* Sard quarrying.* Forest product pricing.* Tourism development.

Insdhdonal Consgrnia * Lack of consistent, oomprehensive and integrated environmental policiesPolicy and Legislation and legislation.

* Limited participation in inernational protocols.

Human Resources 0 Lack of requisite training.* Smal number of professionals available for training.* Environmental agenda not in formal or non-formal education.

Occupational Health and Safety * Lack of clear policy or legislation.* Lack of institutional capacity to carry out monitoring and implementation

of health and safety measures.

Information Constraints 0 No regular monitoring or reporting of nvironmental information.

Local NGO Capacity 0 Limited number of people; large number of issues.

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E. Cuirrent Institutional Framework in SUP

1.18 Although several activities have been initiated pertaining to environmental management, there iscurrently no official national environmental policy or strategy in effect. There is significant awarenessin Government of the need to develop an environmental strategy and commitment towards setting in placea legislative and institutional framework for dealing with environmental issues. An inter-ministerialcommittee was formed comprising representatives of the Ministries of Social Infrastructure andEnvironment, Agriculture and Animal Husbandry and Cooperation in Regional Development, Industry,Fisheries and Tourism, Transport, Energy and Water Resources to prepare the national report which waspresented to the United Nations Conference on Environment and Development last year. The report,dated November 1991, identifies selected environmental problems in the country and lists examples of.tions that might form part of a national environmental strategy for redressing the problems.

1.19 Enviromnental functions and responsibilities in STP are currently distributed amongst severaldifferent authorities. The Ministries of Social Infrastructure and Environment, Agriculture andCooperation and Regional Development, Commerce, Industry, Fisheries and Tourism, Health, PreventiveMedicine, the Power and Water Company and the Ministry of Foreign Affairs all carry environmentalresponsibilities. There is significant overlap between the duties and responsibilities of different entitieswithin specific Ministries as well as amongst different sectoral ministries. One example is the strongoverlap in the functions of the Directorate of Physical Planification and the Directorates of Forests andof Habitat under the same Ministry of Social Infrastructure and the Environment. Another example isthe lack of clarity of jurisdiction amongst the Ministry of Social Infrastructure and Environment and theMinistries of Agriculture, Fisheries and Tourism and Foreign Affairs. The Ministry of Foreign Affairsis empowered with the mandate for disposal of treaties and conventions. It is unclear that in the field ofenvironment, (example, a convention on the Law of the Sea) the Ministry of Foreign Affairs would actindependently or act on the advice of the Ministry of Social Infrastructure and Environment, or theMinistry of Fisheries and Tourism or both. The responsibility for water supply and maintenance of watersystems and monitoring of water quality are distributed amongst several agencies including the Authorityfor the Rehabilitation and Reconstruction of Water (URRA) and the Power and Water Company (EMAE).It is understood that there is a proposal for the setting up of a Directorate of Natural Resources withinthe Ministry of Social Infrastructure and the Environment which would henceforth be carrying theresponsibility for water supply.

1.20 In response to the Government's request, a consultant from UNEP, Professor A.A. CancadoTrindade, visited the country in April, 1992 to assist the Government in preparing draft legislation onenvironmental protection. The draft law sets the basis for formulating environmental policy and proposesto establish a National Environmental Commission comprising representatives of all authorities inGovernment currently bearing environmental responsibilities. The Commission would also includemembers from national NGOs. According to the draft law, the Commission's primary responsibilitywould be the preparation of sectoral regulations in priority areas. The draft law also contains provisionsrelating to the establishment of a national system of information on the environment, environmentalzoning for setting up protected areas and the establishment of standards of environmental quality. Anadditional piece of legislation prepared with UNEP assistance is the draft law on Civil Public Action ofResponsibility for Environmental Harm. This draft legislation is aimed at empowering Governmentagencies as well as "Organs of Local Power" to take action against persons initiating an activity whichis considered harmful to the environment. There is also proposed legislation on forestry ("Anteprojetode Lei Florestal") currently under review, which establishes a National Forestry Service, a NationalForestry Plan and a Forestry Fund. The Lawyers Association of Sao Tome and Principe (Sociedade deAdvogados) is assessing the proposed legislation and their evaluation and recommendations are expectedto be submitted to the Government shortly. [More details on existing and proposed environmentallegislation are outlined in Annex B of this report.]

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F. Current Donor Efforts

1.21 Foreign financing has been critical to the financing of the country's public investmnents during the1980's. Much of this assistance has been in the form of grants or highly concessional loans, particularlyduring the latter half of the 1980's. Foreign aid ranged from 20 percent to 40 percent of GDP duringthe 1980's and provided 60-150 percent of Government revenues.1/ It is understood that on a per capitabasis, net foreign aid was equivalent to US$200 during 1990. Apart from multilateral and bilateraldonors, firms and suppliers from Portugal were among the major players assisting STP. STP did notbecome an official borrower of IDA until 1985, when a line of credit was approved to support a seriesof institutional reforms associated with the preparation and implementation of the Government's firstadjustment program. A Structural Adjustmnent Credit (SAC) was approved in 1987 and a second SACin mid-1990. To complement the adjustment program IDA also approved a Cocoa Rehabilitation projectin 1987 to expand cocoa production and diversify into food and cash crops including forestry; a Multi-Sector Project in 1989 and a second Multi-Sector project in 19)1 to finance additional expenditures forinfrastructure development, water supply, slum upgrading and road rehabilitation. More recently IDAfinanced an Agriculture Privatization and Smallholder Development Project aimed at diversifyingagricultural production through privatization and promotion of small-holder agricultural production anda Health and Education project to address the decline in health and education and the malaria problem.

1.22 During 1989-1992, the African Development Bank, the EC, Japanese Government, and someEuropean firms, became involved in activities in STP. The Japanese Government and IFAD have beenattempting to increase the efficiency of artisanal fishermen through the supply of fishing boats and fishinggear. During the previous regime tourism development was high on the national agenda and severalconcessions were granted for resort development. Construction of several hotel facilities hadcommenced, some of which had been abandoned due to lack of financing. Both the EC and FAO arecurrently assisting the Government in the area of forestry management. The EC is involved in a projecttargeted at conservation of the primary forest. This project is expected to carry out an inventory of theflora and fauna and implement a pilot project for agro-forestry. The WHO and the Spanish Governmentare assisting the Government in developing a health program aimed at preventing the spread of AIDS,diarrheal diseases, Malaria and Tuberculosis. The WHO is also implementing a project involving thedrainage of a swampy area. The Portuguese Government is financing the development of a hydro-electricpower plant in Principe. This project is hampered by the difficulties in transporting constructionmaterials to the island. UNICEF has a project targeting communities, providing health and sanitationeducation, constructing latrines and water systems (hand pumps) with community participation. UNICEFis also providing technical assistance to the Directorate of Preventive Medicine and to the National Centerfor Health Education. UNICEF is currently active only in Sao Tomd, but is shortly expected to extendtheir assistance to Principe. The UNDP's focus has been human resources development, education andtraining. They are currently formulating their country assistance program for 1993-95, the main focusof which is poveity alleviation.

1/ During 1985-90 external grant. amounted to 35.9% of the country's GDP and 137% ofGovernment revenues. [World Bank, Country Economic Memorandum for Sao Tome,Volume I, 19921.

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CHAPTER II. STATE OF ENVIRONMENT

A. Introduction

2.1 This chapter concentrates on identifying the key physical environmental problems in STP, witha view to establishing a general idea of which of these problems are of highest priority. It Is importantto note that the prioritization procedure in this chapter is essentially a preliminary screening using criteriasuch as the impacts on human health, environmental quality, and long-term economic developmentprospects. At this stage, such a screening is useful to allow identification of the major policy andinstitutional constraints that might exist for addressing the problems. A more extensive analysis of someof these issues is taken up later for those issues that are regarded as potentially having particularly stronglinkages to the economic well-being of the country. Following a brief descriptive geographic overview,the chapter addresses some key international and selected regional environmental issues of relevance inSTP, followed by a description of the local impacts of various environmental problems in the country.

B. Geographical Overview

2.2 STP is a small island nation (964 km) off of the west coast of Africa with a population of117,000 and average population density of 118 persons per km2. It is located in the Gulf of Guineabetween latitudes 001' south and 1°43' north and longitudes 6028' and 7028' east. The two islands ofST? are separated from other islands in the gulf and from mainland Africa by seas up to 1800 metersdeep and have never been connected to each other or to the continent. The islands are part of a volcanicline including Pagalu to the southwest, Bioko to the northeast and extending up the mainland throughMount Cameroon and the Cameroon highlands to Lake Chad. Rainfall on the islands averages between900 and 7000 mm per year with a dry season from June to August; average temperatures range from25°C at sea level to 180C at the higher elevations.

2.3 Both islands have mountains rising abruptly from the sea in the south while their northern regionshave stretches of flat or gently sloping land. Several of the peaks on Sao Tome reach over 1500 meters.The steep and rugged terrain has rendered large parts of these islands virtually inaccessible. Themountain relief is deeply carved by rivers and waterfalls; most of the coastline is rocky, but sandy baysalso exist (See Annex C for a map of the islands.) Due to their inaccessibility, montane forests above800 meters on Sao Tome are largely intact and exhibit a great deal of species diversity. The area below800 meters saw most of its forests converted to plantations by the Portuguese; secondary forest growthhas, however, taken over much of the abandoned plantations. Above 1400 meters, rainfall approaches7000 mm/year with a constant mist and cool temperatures.

2.4 Principe was also once covered by forest, although its forests were less diverse than those of SaoTome. By 1906, almost all of the primary forest that had not been cleared for cultivation on Principewas destroyed in an attempt to eradicate sleeping sickness. The forests have regenerated since then, andPrincipe currently has very mature secondary forests.

C. International Agreements and Protocols

2.5 Two indicators of a country's commitment to environmental protection are: (i) the effectiveparticipation in international agreements related to these issues; and (ii) the efforts of a nation to collectand disseminate environmental information. As international cooperation for global environmentalprotection continues to grow, many countries around the world have signed and ratified internationalconventions relating to climate change, preservation of biological diversity and forestry and thetransboundary movement of toxic and hazardous wastes. Seventeen African nations participated in the

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convention held in 1091 in Bamako, Mali to limit the movement of hazardous wastes. These countrieshave signed the treaty and ratification is now in process.

2.6 A perusal of the Colectanea de Legislacao (1975-1989) which contains a list of internationaltreaties and protocols to which STP is a party indicates that the country has done very little with regardto participating in conventions and treaties relating to environmental concerns. STP has ratified theUnited Nations Convention on the Law of the Sea in 1982, and the regional OAU Bamako Conventionon Hazardous Wastes in 1991. However, the country has not yet ratified the CITES Convention, theVienna Convention on the Ozone Layer, the Montreal Protocol, the Basel Convention on HazardousWastes, the RAMSAR, CFC Control or the Marine Pollution Conventions. (A List of internationalConventions and Protocols and the status of STP with regard to each of these conventions is indicatedin Annex C). It is understood that there is a study group within the Ministry of Foreign Affairs currentlyassessing conventions and treaties which deserve ratification by STP. The study is being undertaken withassistance from UNDP (Project of Coordination of External Assistance). It is reported that theGovernment is considering the ratification of the CITES Convention and the Basel Convention onHazardous Wastes.

D. Key Regional Issues

2.7 Biodiversitv Protectign. BiodivArsity protection is a key regional issue, since STP is part of asmall number of areas that escaped major glaciation events during the Pleistocene era, together with anumber of the intact primary rainforest area on the western part of the continent in Nigeria andCameroon. The resultant refuges resulted in a high degree of species endemism in such areas, and -because they are islands - subsequent evolutionary patterns on STP have accentuated this endemism. SaoTome island contains nine different ecosystem types and Principe contains four; STP's remaining forestshave been found to have some of the highest levels of species endemism in the world. ICBP has rankedthe forests in southwest Sao Tome as the second most important in Africa based on the amount ofendemic bird species and degree of endangerment. Over one hundred species of plant are endemic to theislands, and Sao Tome, for example, has 3 endemic reptiles, 4 mammals and 14 land birds. An avifaunastudy in 1987 found that the current bird habitat conditions in both the forests and the plantations wereprobably as favourable at present as they have been for a long time. The high levels of species endemismin STP has thus received substantial attention from the international community, to the extent thatsuggestions have been made that land development on Principe should be halted so that the entire islandcould be designated as a nature reserve. A key issue in such cases is whether STP could in fact reap anyof the benefits that such a move would entail.

2.8 Regional Tourism Development. Tourism potential is closely tied to maintaining much of STP'snatural attractions in tact. However, a key issue is the extent to which STP can be developed as a soledestination. Even if local infrastructure constraints can be dealt with, and health barriers such as unsafedrinking water and malaria can be effectively overcome, STP's isolation suggests that its tourism potentialmight best be realized in an overall regional strategy. In such a strategy, STP might be developed notas a primary destination, but as a secondary or stop-over destination associated with destinations on thecontinent such as southern Africa, or Gabon or other countries on the Gulf of Guinea. There are bothenvironmental advantages and disadvantages to such a strategy. Short-stay visitors tend to contain theirvisits to a few sites that can be readily monitored; the "trampling effect' is therefore readily contained.On the other hand, short-stay visitors tend to place higher demands on local environmental resources suchas water and electricty and it is important that pricing or allocation mechanisms not favour foreignvisitors at the expense of the domestic population (WTO, 1992.)

2.9 Regional Fish_rije. The fish resources of much of the Gulf of Guinea are connected, in part, toSTP and the country is a member of the Regional Committee for the Gulf of Guinea. However, fisheries

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development is hindered by the fact that STP has a small continental shelf of 1500 km2 and relativelysmall sea area of about 128,000 km2 (by contrast, the six Pacific Island Bank member countries have atotal sea area of 7.6 million kin). As fisheries are expected to grow in economic importance, it isparamount that STP be allowed to function as an effective voice in decisions affecting the fisheryresources of the entire region. Since 1989, this ability has been substantially curtailed with thedissolution of the public fishing enterprise EMPESCA.

E. Local Environmental Conditions and Impacts

2.10 Water Availability. Water availability is a concern in many developing countries as populationincrease results in greater dema.1ds while concurrent declines in natural supply create conditions of waterdeficit. The causes for decreased water availability vary greatly: salination of ground water is sometimescommon in coastal areas when groundwater extraction by industries or domestic users causes seawaterto infiltrate freshwater aquifers. Also, natural supplies can become depleted if natural recharge areasexperience drought conditions or if watershed characteristics are modified in a way that leads to increasedsurface run off.

2.11 In STP, there is on the whole no shortage of water: the theoretically available average annualresources are estimated to be 2000 million cubic meters for Sao Tom6 and 180 million cubic meters forPrincipe. By contrast, current water demand for the entire country is only about 7 million cubic meters.Even given that this demand will likely double over the next 20 years, there is generally enough wateravailable. Water resources are, however, not evenly distributed, and many are not accessible. The mostsignificant long-term concern is that long-term changes in rainfall patterns are being modified by naturaland human-induced changes in the local micro-climate. Some parts of Sao Tome have experiencedlong-term declines in rainfall; whereas historical records indicate annual rainfall levels of 8000 mm inthe north of Sao Tome, recent rainfall has been in the range of 5000 mm annually. It is not known towhat extent this decline is attributable to natural fluctuations and to what extent it is attributable to lossof primary forest cover. Irrespective of what caused the decline, however, its long-term impacts can haveserious consequences on local environmental and economic conditions. A recent study suggests that waterscarcity may become more pronounced in this region as agricultural requirements for irrigation increase(Mott MacDonald, 1992).

2.12 The primary health impacts of these declines are that it would decrease the availability of waterfor domestic consumption needs. This problem is generally exacerbated by the poor quality of water,and declines in water availability could therefore both accelerate and increase the investments requiredto ensure that safe water is available for the entire population. The actual environmental impacts of wateravailability declines are likely minimal; the main environmental concern is for any habitat loss that mightoccur, which would in turn lead to decreased biodiversity and the economic opportunities stemming fromthat. The major longer term concerns are likely to be economic in nature. In addition to higher waterprovision costs, declines in water availability could affect the costs and availability of long-termhydroelectric potential and could marginalize some crops that require substantial irrigation. At present,however, there is no direct evidence that water availability is a problem in the country.

2.13 Water Ouality. Water quality and the lack of treatment facilities are critical concerns as recentmonitoring has shown that water supplies are often contaminated at source by human wastes, hazardouswastes, and toxic pesticides used by households in controlling mosquitoes. Many illnesses andcommunicable water-borne diseases affecting the population are attributed to these problems in the watersupply. Only 20 percent of the country's population has access to safe drinking water, and, testing of7 spring sources supplying the City of Sao Tome shows that all of them are contaminated with fecalcoliform counts in excess of safe drinking water standards. During the period of high DDT and pesticideuse in the 1980s, springs also showed contamination by these toxic compounds. Although concentrations

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of these chemicals at source is no longer a severe problem, there are concerns that such contaminationwill reoccur if pesticides are inappropriately used for the increased production of smallholder food cropsin the country. Also, contamination of surface waters by such chemicals does persist as many householdsuse them to try to control mosquitoes responsible for malaria; pesticides sprayed on clothing or beddingeventually enter the waste water stream during washing. As there are no water treatment facilities, thecountry's population suffers substantial declines in health. Diarrhea is the third major cause of death inSTP (after malaria and respiratory disease), and 95 percent of the population is infected with intestinalparasites. The widespread practice of doing laundry and bathing in contaminated water is a major causeof schistosomiasis.

2.14 In addition to the health impacts, the economic and environmental costs of water pollution aresubstantial (see Annex D.6). Pollution in the Bafa de Ana Chaves-the port of Sao Tome--is threateningwhat was at one time a thriving artisanal fishery in the bay. Declines in water quality have placedsubstantial investment demands on EMAE, but, coupled with its current restructuring reforms,investments for providing safe water are slow in being implemented. In the interim,it has becomeconventional practice for households to boil all of their water. Fuel requirements for this practice aresubstantial and are estimated to represent an economic cost of about $4 million annually for the 35,000inhabitants of the City of Sao Tome. In addition to such direct impacts, indirect impacts on futuredevelopment opportunities can be substantial; clean water supplies are often regarded as a prerequisitefor successful tourism development.

2.15 Solid Waste Pollution. The "solid" waste stream essentially consists of three components:non-toxic solid wastes such as non-degiadable products; organic and sanitary wastes; and, toxic andhazardous substances. Non-toxic solid wastes are increasingly becoming a major environmental andhuman health problem especially in Sao Tome city, and the practice of dumping such wastes on thebeaches poses a barrier to tourism development. Major environmental and human health concerns alsoarise from the fact that the various waste streams are often not separated. Solid wastes, organic wastes,and toxic substances are often disposed of together, posing potential threats to water supplies and to soils.There is one project in the PIP that is intended to address solid waste handling, although the $240,000allotted to this task is wholly inadequate for providing separation as well as the necessary treatment ofwastes.

2.16 Toxic and Hazardous Substances. Toxic wastes are the most dangerous component of the wastestream to both environmental and human health. In Sao Tome, potentially the most dangerouscomponents of this waste stream include hospital wastes and certain agrochemicals. Hospital wastes arecurrently disposed of with other solid wastes; an incinerator intended for waste destruction is availableto the hospitals, but it has been out of operation for a few years now. Misuse of pesticides and otherchemicals pose a threat to human and bird life; a number of chemicals in use in Sao Tome have beenbanned elsewhere in the world for enviromnental reasons (see Annex D.7). In the case of DDT, existingstocks are being used primarily by smallholders and households for pest control. In addition to suchpoisonous wastes, THS also includes a broad range of other industrial and construction wastes such asdyes, paints, and oil products. Use of such products is expected to increase as ongoing economicdevelopment occurs, but the Government currently has no mechanism for guarding against the potentiallytoxic effects of these products. Indeed, there is little awareness in STP that these substances shouldactually be regarded as hazardous.

2.17 Soil Degradation. With some exceptions, most current agricultural activities in Sao TomE arenot detrimental to the environment. There is no large scale land clearing causing soil degradation; cocoadrying consumes fuelwood, but new energy saving investments in cocoa drying will save fuelwood, andplantations are reinvesting in forestry. Also, most timber extraction is oriented to meeting domestic needsand no destructive forest-based export industries are currently in evidence. Further, the use of

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agrochemicals in plantation management is not very widespread and should decrease with crop husbandrypractices more adapted to the environment. However, the increased shift towards smallholder privatesector production of food crops raises several environmental concerns that must be addressed by theGovernment. First, increased pesticide use for horticultural production poses a threat to human healthand to rare bird species, and potentially contaminates soils. Second, vegetable farm encroachment on tosteep slopes by smallholders, while not threatening primary forests, does contribute to soil erosion assecondary forest cover is being converted to farm land. Fiaally,there is a concern that continued mono-cropping practices, in evidence for over 300 years, will eventually degrade nutrient levels in the soils andwill, over the long term, increase the need for nutrient supplements. One meair ,a prevent or mitigateany of these negative impacts is for the Government to adopt appropriate complementary environmentalpolicies to ensure rational use of agrochemicals and complementary education and extension initiativesto assist in sound resource management by smallholders.

2.18 Coastal Erosion. Coastal erosion in Sao Tome, especially in the southern parts of the countryhas reached serious proportions. The infrastructure in these areas is threatened as well as are humandwellings. The road bordering the southern coastline will need to be deviated and a new roadconstructed. The wave action around Sao Tome as well as of Principe needs to be studied as well as theregenerating capacity of the shoreline in order to assess the magnitude of the problem. Such a study willalso indicate potential cost effective options for mitigating the erosion threat in the short term. There hasalso been widespread concern over coastal erosion stemming from the practice of extracting sand fromisland beaches as a source of construction aggregates. The obvious eyesore caused by this extractionprompted the Government to ban sand extraction from all island beaches except one, where currentextraction continues by a private operator. Although there are no health impacts arising from thisactivity, the environmental concern has been that the sand extraction disrupts mangrove or estuarinehabitats and poses a potential threat to tourism development. Investigations carried out as a part of thisstudy, however, suggest that such sand extraction can be an environmentally and economically sustainableactivity under the correct set of circumstances (see Annex D.8). In essence, the sand can be treated asa renewable resource which, if gathered sustainably, provides economic benefits without harmingenvironmental integrity. Any major sand quarrying operation should, however, be subject to acomprehensive environmental impact assessment.

2.19 Fish= Mismanagm . Fishing is an important economic activity that has strong cultural rootsin Sao Tome. Although the offshore fishery (discussed above) only provides a minimal participation ineconomic rents, a key component of the national fishery is actual small-scale artisanal fishing; 90 percentof current annual production is caught through artisanal fishing. There are currently about 2500 artisanalfishing vessels, 600 of which are equipped with outboard motors. The fishing techniques are, however,inefficient because of poor vessel quality, primitive fishing techniques, and the inability of most vesselsto go further than 10 miles from the coast. The mismanagement of near-shore fisheries is a moderatehealth, environmental, and economic concern. The fishery is important as a source of domestic protein,but losses from pollution and inefficient harvesting of existing stocks is limiting the contribution thatfisheries can make to overall economic well-being. Weak implementation capacity is a major constraintfor ensuring sustainable exploitation and effective management of offshore-fishing activities. Consideringthe experiences of other island nations faced with similar constraints of monitoring and surveillance ofoffshore fisheries, STP should consider seeking external assistance and regional cooperation to overcomethese problems over the long term. Box 2.1 illustrates measures taken by the Kiribati Government toimprove the management of the country's marine resources. A comprehensive management strategy thatconcurrently addresses the regional issues relating to fishing activities offshore and the domestic issue ofimprovements in artisanal fishing can have important economic and environmental benefits (see AnnexD.4).

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2.20 Non-sustainable Forest Harvesting. An inventory of the forest estates shows that S3o Tome stillharbors substantial primary forests and mature secondary forests; these forests represent almost 60 percentof the country's land area (see Annex D.3). The major threats to the forests include encroachmeut intosecondary forests by smallholders for vegetable production, and non-sustainable harvesting of fuelwood.The forest resources currently produce 5400 cubic meters of commercial wood annually and 170,000cubic meters of fuelwood. The potential annual supply of wood under a sustained yield regime isestimated to be some 110,000 cubic meters of commercial wood and 70,000 cubic meters of fuelwood.This implies that, although the to.al sustainable wood supply is potentially sufficient, there is adisequilibrium that is currently resulting in a loss of economic value as well as an increased risk forenvironmental damage from non-sustainable fuelwood gathering.

. -. . -.. ..-.. C. 0 - ... h ... yi .. : g - -> <

: ; -: -M -I. -::-.---: : - - --:X: - - --:: .:: . - : ::-:-:.:: At :- : V W . ..::..: f -:2.-i i .~~~~~~~~~l .. :. .;.:. . . -. : .0- :i0 B..-.. -..

.. .._. .. _*.. - ..* .... ..... ..... .. ..>: .. i v ....... i> > > g < g ;

Bo*~~~~~~~~~.....: ... . .: - - .. . .

".21

impacts. Foupoher ot is somebatoh mspeading to beiverae nftb anygivem n . environentral problem

Ocnain,Ued inasighle asecto Cable 2.1e). Intr-av xsectoforeal tikaes oare clearly appare nly as a plarticlatactivity o cauesproUemst ian seveal difftereouth ai scoutors. T Ihs comilteln renvironmental situatio noelmied

ttheavl 4immdite sburrounm in areasomucst. eadesdSyec ciiy

2.22 Populatio Gmroweth. Curgrrendyfth Seaot' TomeanPrincipea has oan estimaed populmatio put 11700

auid s an p opulaio regnsial nofpe11o8 Iciriat T ohed gothe Prat isheurresnd ny esti ate an 2.9 prcen per anout.Pouatsion incrase wis tevdn g as t a*no poarv*n indiractia cau e of almsh to aedery envionmelnat~alpabemelitedIfunheled thoiot thll cotinue t threasten Paxisting resuources, and ath Nanr Treatiny large scOale.Pouationu

local thealth conditins Theya plac inreasoling dslands, onbi scarcew Iaraland,~ declininoet and twatertdavaiablty. The iroesults Thofg unotheeregonlled ce po helcount inreaeee wull bedegrded lsisancds,o declinedand tegrade .orests laossotn of natralgi.haitat astvte we.llasde .gcrepaseield from,n creo.ps. Aret.ady staell alesslto d infrastructure in dudiing safe water san t~4iita.in,eery n houing. wii be overurdeed. Awell-definedh policyanid straegpbly towntro putopulatin agrowth acsl wellt as inesmnt in educstioevnue partiual

fntrventionlwil afftierct the educaironmn, andarnyenvcapirnsonmna ionteracention will likewisealt affcthiev

2.22aio growth1contro~ilh.CurnlSbTmanPrniehsaesmadpoltonf17,0

with~~~~~~~~~~~~~~~~A a.ouaindni.o.18k2 rwhrtei urnl siae at. 2..9.ecetpe.nnmPopulation increase is evident as a primazy indirect cause of almost every environmental problem listed.W:M~If nchcke i wil cntiueto hrete exstig rsorce, ad a a inreainly arg scle Poulaiogrwhpae increasing.strains on ... natura res. _`:oure.Mr epe eeaemr ase hetnn

locl halt coditons Thy pac inreaingdemndson care .abe.lnd,decinig.fress.ad.wteavailability. The results of uncontrolled pouato in ..eas wilb.egae.ans.elie n

degrdedforsts,los ofnatual abiats s wll s dereaed iel fromops led tandacsto infrastructure... inldn safe. water, sanitation.energy.and housNg will. be. ovrudee.A.el

define polic andsrate .to. control.. pouaingot as well asivsmns.neuain,priualfor females. adult literacyI... andcto,awaens camagso otaetv s r rtclt civpopulation.. grwt coto... ...

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Table 2.1:Potential Threats to Environmental Quality in Sgo Tome and Principe

Throat Direct Cause |Indirt Cause

Water Contamination 0 Human waste. * Population increa8e and* Pesticide contamination. urbanization.* Hazardous wastes. 0 legal chemical use.

* Lack of treatmentfacilities

Deforestation * Land clearing. * Population increase.* Timber development. * Cocoa dryins.* Tree felling. * Fuelwood needs.

* Land privatization.* Livestock development.* Lack of laws and

enforcement.* Lack of energy

.. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ d__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ alternatives.Soil Degmdation * Deforestation. * Unfamiliar crop use.

* Poor agricultual 0 Lack oftechniques. education/extension.

* Annual cropping. 0 Insecure land tenure.* Overgrazing. 0 Livestock intensification.

Biodiversiqy Loss * Habitat disruption. * Introduced species.* Forest clearing. * Malaria control.* Water contamination. * Agro-chemical use.

* Hydroelectric powerdevelopment.

Fishery Loss 0 Over-fishing. * Inability to enforce limits.* Poisoning. * Water pollotion.

Coastal Erosion * Sand quarrying. * Lack of awareness.* Unsustainable use of * Lack of controls.

natural resources in the 0 Lack of Integratedcoastal areas. strategy for development

of coastal activities.

F. Initial Screening of Key Environmental Problems and Priorities

2.23 In selecting the priority problems, attention must be paid to their enviromnental significance, theireconomic significance, and their impacts on human health. The previous sections in this chapter providea basis for this prioritization and allow the problems to be ranked according to the various criteria (Table2.2). In establishing the overall priorities, equal weights are given to each of these three criteria.Different weights can be readily incorporated if, for example, one wanted to place a greater significanceon human health impacts.

2.24 Problems with the 'high' priority include population growth, water quality, deforestation/steepslope erosion, species loss, coastal erosion and non-toxic solid wastes. Water quality is of concernbecause of its substantial impacts on human health and environment resources; economic impacts fromlost productivity and foregone development opportunities (such as tourism) are also considerable. Therenewable resource impact of forest and biodiversity losses could be substantial. Species loss, while not

- 17 -

an immediate threat to human health, is ranked of high priority because of the environmental impacts andthe foregone development opportunities. Coastal erosion, especially in the southern coastal belt of SioTome is causing concern. It has become necessary to deviate the road bordering the southern coastlinedue to se,ious erosion problems. Due to its high environmental and economic significance coastal erosionhas been classified as a high priority. Contamination of ground water sources through non-toxic solidwastes has become an increasingly serious problem espocially in Sao Tome city and other urban centers.The threat to human health, associated environmental and economic impacts are considerable, which hasled to non-toxic solid wastes as being categorized high priority.

2.25 A "moderate" priority is assigned to marine pollution, soil contamination, pollution from toxicand hazardous substances, fisheries and wetlands losses. In most of these cases, human health impactsare low to moderate, although there may be some substantial economic or environmental impactsassociated with the problem. Toxic and hazardous substances are of concern primarily because of theirpotential impacts on human and environmental health, and resultant impacts on economic output. Theone area that is potentially the most contentious involves wetland losses: in this case wetland drainagemay yield human health benefits (from decreases in malaria) with resultant improvements in economicproductivity. However, environmental impacts of wetland drainage could be significant to the extent thatthey decrease habitat for rare bird species and modify existing drainage patterns; this would in turn havesome potentially negative economic consequences.

2.26 A "low" priority is assigned to the issues of air quality and water availability. It must be realizedthat these issues are regarded as having a low priority relative to the others, but some may warrant sometype of policy response to ensure that they do not become unmanageable over the very long-term. Wateravailability may, for example, be a long-term concern if population keeps growing and if naturalconditions decrease water supplies; water quality, however, is a much more pressing problem that meritsattention before the longer term issue of water availability is addressed. On the other hand, air qualityis likely to be the only issue that will not develop into a problem over the foreseeable future.

2.27 In principle, a definitive set of priorities could be established if all of the impacts of any givenproblem were known and if the particular preferences of decision-makers were also clear. In such anevent, the various costs and benefits of all of the environmental 'problems' could be evaluated andcompared. Unfortunately, a number of factors conspire against making such a comparison. First, theexact linkages between the physical effects of various environmental problems are not known withcertainty. Second, most of the "problems" are of a sufficiently large scale that evaluating their completeimpact on the economy would require a full general equilibrium model of Sao Tomd's economy thatincluded all relevant environmental linkages; such a model is not available. Third, selected institutionalproblems would impose constraints on the adjustments even if such a model were available. Finally, thedynamic and volatile political situation in Sao Tome at this time is not likelv to reveal a clear set ofpreferences. As it 's not possible to provide a definitive prioritization at this time, this prioritizationprocess should be regarded essentially as a preliminary screening. The following chapters handle in moredetail the key constraints aid economic linkages that have been identified, with a view to developingappropriate policy recommendations based on this preliminary screening and the indicated constraints andlinkages.

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Table 2.2:Summary of Severity of Inpaots of Various Environmental Problems in Sao Tomo and Principe

Problem Sificance of Direct Impacts on OversUor Source Human Heaflth Environment Economy Priorty*

Populakon Increase Moderate _ High _ High _ _ _

WaterWater Availability Low Low Moderate Low

Wator Quality High High High HighMarine Pollution Low Moderate Moderato Moderate

AirAir Quality Low Low Low Low

Solid WasJcsNon-toxic High High Moderate High

Toxio and Hazardous Moderate Moderato Moderato ModerateSalk

Soil Contamination Moderate Moderate Modorato ModeratoSteep Slope Erosion Moderate High High High

Coastal Erosion Low High High** HighRenewabe Resources

Forest Degradation Low High High HighArdsanal Fisheries Loss Low Moderate Moderate ModerateOffshore Fish Depletion Low Moderate High Modorate

Blodlverslly LossesForest Converion Low High High High

Wetland Lose Low*** Moderate Low-Moderate*** ModerateSpecies Loss Low High High High

Notes: * The actual subjective rankdng is constructed as follows: human health, environmental and economic significancecriteria arejudged as Low, Moderate, or High and assigned a significane index of 1, 2, or 3, respectively. Theoverall ranking is computed by taking the average of these three.** Sand extraction does provide an economically beneficial use of a renewable environmental resource if doneat a sustainable leveL-** In the case of wetland loss, there might be a direct positive impact on human health and an improvement inproductivity if the wedand loss leads to a lower incidence of malaria in the country.

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CHAPrER III. POTENTIAL CONSTRAINTS TO ENVIRONMENTAL MANAGEMENT

3.1 Even if Sao Tome and Principe can effectively identify the physical priorities (as in Chapter 2),there are many constraints to sound environmental management in the country. These are: (i) inadequatepolicies, institutions and legislation; (ii) limited human rnsource capacity; (iii) Information constraints inselected areas; (iv) cultural considerations that conspire against effective management; and, (v) limitedlocal NGO capacity. Each of these is taken up in detail in this chapter, before addressing key economicconstraints in Chapter 4.

A. Policies, Institutions and Legislation

3.2 Tne fragility and uniqueness of the island ecosystem, the generally poor economic health and lowstandard of living of the nation, population increases and the desire for rapid economic growth, all poserisks to the future environmental health of the nation. Further, being a country of relatively smallgeographic size, the environmental problems in the country are interlinked and a particular activity in onesector would have immediate impact in other sectors. In such a scenario, a clearly articulated nationalpolicy on the environment is critical to carry out development efforts in a cohesive and coordinatedmanner. Currently, different initiatives are being undertaken in an uncoordinated and isolated manner,which raises concerns of overutilization of precious natural resources. Further, the existence of a nationalenvironmental policy would make a valuable contribution to raising political awareness in the country ofenvironmental issues and providing a sense of responsibility towards protecting the natural resource base.

3.3 There is currently no institution mandated with the overall responsibility of coordinating activitiesrelating to environmental protection in the country. The Ministry of Social Infrastructure and theEnvironment oversees urban and infrastructure related environmental issues, including the supply andrehabilitation of water systems. The Ministry of Industry, Commerce, Fisheries and Tourism overseesindustrial development, commerce, fisheries development and exploitation and tourism. The Ministryof Agriculture, Animal Husbandry and Cooperation in Regional Development oversees agricultural andforestry initiatives. As outiined in page 8 (the institutional framework) there are many jurisdictionaloverlaps in the duties and responsibilities of these ministries and departments. There are overlaps evenamongst directorates and departments within the same ministry.

3.4 There is a need for an appropriate public sector institution, within the existing institutionalframework, which is specifically charged with the mandate for formulating environmental policy inrespective sectors and for coordinating environmental activities. Such an institution should be multi-disciplinary, with the ability to coordinate with appropriate ministries with regard to the formulation ofpolicies, programs and projects in respective sectors. The implementation of the programs and projectscould be achieved through the respective ministries and directorates.

3.5 There is currently no national legislation pertaining to environmental protection although thereare different enactments, some of them dating from colonial times and others adopted more recentlypertaining to specific sectors. These sectoral enactments contain some provisions relating toenvironmental protection, specifically conservation of natural resources. Of the more recent legislation,the Marine Resources Law of 1981 provides norms relating to the protection, exploration and use ofmarine resources, and the "Lei Fundiaria", of 1991, relating to land resources regulates the utilizationof rural areas for agricultural exploitation and sets out norms for the creation of reserves for distinctpurposes. Most of the other legislation pertaining to flora and fauna, forestry, fisheries and ports havebeen drafted in the 1950s and many of the norms set forth are totally unrealistic and inadequate in thepresent day. The absence of pertinent legislation and more importantly, regulations containing guidelines

- 20 -

and standards in key sectors also hampers effective management of natural resources. Although theGovernment may not yet have the capacity to enforce such regulatiors and standards, the need for anappropriate legislative framework cannot be overemphasized.

B. Human Resource Constraints

3.6 Human resource problems in Sao Tome can be categorized into four types: (a) lack of trainingand sensitization of environmental concerns; (b) actual number of trainable people; (c) conflicts of eithertime or interest arising from this; and, (d) delivery constraints.

(a) Lack of training and sensitization of environmental concerns. There are not enoughtrained or environmentally sensitized persons in the country, given the types ofenvironmental problems that they may wish to tackle. There is currently no staff dealingwith economic or financial issues or the budgetary process who is in any way trained orsensitized to environmental issues. Economic planners mainly seem to concentrate onhow the environment can be developed as an opportunity (e.g., hydroelectric power,sandy beaches, biodiversity), rather than recognizing some of the potential threats andways of managing those threats. The environment is treated simply as an input to theeconomic process, with little regard being given to the fact that economic processes canhave significant impacts on the environment.

(b) Number of trainable people. The country only has 117,000 people. Of this number,many of the educated and trained persons have left the country in search of betteropportunities overseas. Economic hardship and lack of opportunities in the countryexacerbate the problem of "brain drain'.

(c) Conflicts. Conflicts are of two types: (i) conflict of time; and (ii) conflict of interest.(i) Conflict of time relates to the tremendous investment in human resources that wouldbe required to get training up to par. Many of the trainable people are probably alreadyover-worked in their current positions. This is in part due to the large Governmentbureaucracy. The Government is considering significant reforms of the civil service.It is possible that some of the employees whose services are terminated can be trainedfor other activities, such as in the field of enviromental affairs. (ii) Conflict of interestrelates to the situation where even if the people are trainable, there will probably beconflicts of interest. Conflicts of interest may exist for EIA specialists. Even in GuineaBissau, which has almost 10 times the population, there are only a few people in thecountry with the ability to carry out EIAs, and they are Government officials who carryout this activity in their spare time.

(d) DeHvery constraints. There are significant constraints in delivery. Currently STP onlyhas a skeleton educational system. The country only has one high school. It does nothave a university. Primary schools often lack the basic necessities such as desks andchairs or text books. Over 85 percent of the secondary school teachers and over 50percent of the primary school teachers do not possess adequate qualifications. In thissituation the country tends to lose the best of the educated to seek better opportunitiesabroad.

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C. Information Constraints

3.7 There is a significant problem in the country relating to the availability of accurate data in keysectors such as water supply and management, land and forest management, education, health, andagriculture. There is some good economic sectoral data, important for resource management pertainingto the fishery, agricultural products, and forestry. The Department of Economics and Statistics keepsrecords of this information. However, the major problem is accuracy of the data as there are fewindependent mechanisms for verifying them. The most serious problem is likely to be the available datarelating to fisheries. STP basically has to rely on the figures that foreign fishing companies providethem. STP has no way of patrolling or otherwise monitoring the catch of foreign fishing fleets. Further,even though sectoral data are available, there has never been an attempt to compile this data and carryout disaggregation along the lines of a "State of Environment" (SOE) report.2/ The only report everprepared along these lines is the report on water supply, prepared by the Director General ofEnvironmental Quality in Portugal. No air quality measurements have ever been done. Sporadic waterquality testing has been done since the springs were connected to city water supply in 1955. Agenciesin charge of water supply do not have even the basic equipment to carry out water quality measurementand analysis. Currently this activity is contracted out to foreign firm or consultants.

3.8 The Ministry of Social Infrastructure and the Environment is the agency in charge of surveyingand mapping. They have a set of 1:25 000 maps dating from colonial times, consisting of 5 map sheetsfor Sao Tom6 and 2 map sheets for Principe. The last formal maps that had complete air photographyand ground truthing were generated in 1974. The Ministry of Tourism has produced a 1:100 000 touristmap; the single map sheet indicates elevations but not land-use. There is a complete set of planning mapsfor Sao Tome city that has current land use at a scale of 1:10 000, which are kept with the AgriculturalMinistry and mainly used for planning water supply systems and development.

D. Cultural Considerations

3.9 Many environmental issues stem from a lack of cultural tradition pertaining to land ownershipand resource management. Traditionally, employment in STP is from fishing and from 'wage' earningplantation labor. Even in recent years the traditions relate to cultivating some crop on a privatelymanaged and owned small-holding. Cultural problems are two-fold: (a) lack of a land-holding orland-managing tradition; and (b) lack of cultural institutions to pass on information and knowledgepertaining to basic issues of crop management, land ownership and other issues relating to responsibility,from one generation to the next.

(a) The lack of a land-holding tradition. This leads to "short-sighted" behavior resulting inthe degradation of land. Land is not regarded as a long-term asset that belongs to peopleto manage (or mismanage). They are therefore not likely to worry about future problemswith their own land, arising out of current mismanagement. Soil erosion is often theresultant problem. The current land distribution reforms assign usufructuary rights toland and these rights are canceled if the land is not utilized in a prescribed manner.These reforms may, over the long term ensure the utilization of land in a sustainablemanner.

21 SOEs are published by government agencies, multilateral organizations, universities andNGOs. They analyze the condition and management of a country's natural resources.

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(b) The lack of cultural institutions: One role of cultural Institutions is to ensure thatenvironmentally sound land management skills are passed on from one generation to thenext, while also ensuring that land mismanagement that might have a negative effect onneighbors is avoided. Although such institutions are currently largely lacking, this ispartially a technical problem that can be overcome with provision of sound extensionfacilities. The delivery of technical expertise relating to what should be planted, how itshould be planted, when to plant, how to spray, and so on would be relatively easy. Themore difficult part would relate to carrying out these activities in a manner that culturalinstitutions are created which would eventually make this type of interventionunnecessary.

3.10 The cultural problems (a) and (b) together contrive to create a third problem relating to"externalities" where the activities of one farmer creates an environmental problem which would affectfarmers in neighboring lands. Clearing of lands upstream affects water quality and quantity downstream.Water contamination and soil erosion would result from clearing of steep slope areas. The worst casesof externality occur: (a) where there are no cultural norms or institutions that make farmers feelresponsibility to their close or distant neighbors; and (b) where farmers are actually unaware that theiractions are causing these problems.

E. Local NGOs

3.11 There are several international NGOs active in the country, the main ones being CLUSA, AMIand the US Peace Corps. The existing local NGOs such as the Instituto de Ecologia and the Associacaode Desenvolvimento e Ecologia are very small with limited resources and impact to influence Governmentpolicy. Survival and growth of local NGOs depends largely on public policy and legislation whichgoverns the formulation and operation of grassroots organizations. In most countries, Governments arewary of the growth and popularity of grassroots organizations and their ability to mobilize people. Thisis especially so when the Governments are weak and defensive.

3.12 In STP, there are probably not enough activities to engage the attention of purely environmentalNGOs. The small geographic size of the country and the interlinked nature of the problems require theservices of NGOs who address in an integrated manner, the issues of poverty reduction, advancement anddevelopment of human resources and the management of natural resources in a sustainable fashion. Asin the case of human resource constraints with regard to interest, conflicts of time could arise due to thelarge number of problems to be dealt with (both environmental and non-environmental). Conflicts ofinterest may arise because in all probability the most qualified and trained individuals would be holdingpositions in Goverrment service. Local NGOs should collaborate with international NGOs andinternational NGOs should seek the participation of local NGOs in developing targeted programs forbetter management of natural resources.

F. Summary

3.13 In summary, the lack of clear and well-defined policy and legislation with regard to environmentalaffairs, the absence of an institution with the clear mandate for environmental management and the humanresource and information constraints all pose obstacles to the management of environmental matters andnatural resources in a sustainable manner. The country needs a sound constituency which advocateseffective environmental management. There is a need for environmental sensitization to be generated atthe highest levels of decision making in the country, which should then permeate to all levels of society.

- 23 -

3.14 The implications of the constraints are that unless long-term strategic interventions are made toremedy the situation, the country's natural resources as well as human resources would be gravely andirretrievably threatened. Legislative, Institutional and programming reforms would need to beimplemented in order to redress the current situation and prevent potential environmental problems, thussetting the stage for sound environmental management.

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CHAPTER IV. ECONOMY-ENVIRONMENT LINKAGES

A. Introduction

4.1 Because of its relatively small size, STP provides a unique opportunity for studying potentialinteractions between economic policies and environmental quality. The previous chapters indicated someof the key environmental concerns in the country, and investigated the constraints to addressing theseissues. The purpose of this chapter is to identify potential key environment-economy linkages in STP;where data permitted, selected quantitative analyses of such linkages are also documented (Annex D).Such linkages are important for a number of reasons. First, they illustrate the economic value of keyenvironmental resources and functions. Second, they show where inappropriate economic policy signals,or inappropriate economic development decisions, can lead to a degradation in environmental quality.Finally, and perhaps most importantly from a policy planning perspective, these linkages illustrate howeconomic policies can at times be used beneficially to improve both economically efficient allocation aswell as environmental quality.

4.2 The role of economic policies as a positive element in environmental management is receivingincreased attention in international development projects (WDR, 1992); many island nations have foundthat such policies are at times appropriate for addressing local environmental concerns (see Annex A.)A characteristic of many of these countries is that, while some of their environmental problems are easilyremedied through policy interventions, other problems may be very difficult to remedy because ofpervasive institutional constraints. In all such cases, however, there are three key lessons that can beapplied to Sao Tome's present situation:

(a) focused or tageted policies, concentrating on the highest priority or most significantissues, are effective, where institutional capacity is weak or in the process of beingdeveloped;

(b) a precautionary policy approach is appropriate, where information is limited or impactsare uncertain; and,

(c) use of decentralized resource management policies, such as price signals or othernon-regulatory instruments, where human resource constraints are pervasive.

4.3 A policy approach which ignores these lessons particularly (a) and (b) risks failure in a countrysuch as STP. First, policies that are untargeted and attempt to cover a broad range of problems in onesingle initiative are often difficult to implement; Chapter 2 demonstrated that it is possible to identify highpriority areas and policies that are more specifically targeted to such areas are less likely to placeuntenable burdens on existing or emerging institutions. Second, policies that do not reflect theuncertainties involved in environmental mismanagement risk sacrificing key resources in an economy withlimited economic development options; where the economic costs of an incorrect decision could besubstantial, a prudent and precautionary approach to decision-making is called for. Third, policies thatrely on a centralized approach with a strong regulatory focus have significant demands on human,institutional and information resources; these requirements are expensive and implementation of suchpolicies could lead to economic inefficiencies that the country can ill afford.

4.4 What is needed, therefore, is a general strategy of developing 'targeted, precautionary anddecentralized policies' (See Box 4.1). It is important to note that 'decentralization' does not necessarily

- 25 -

imply that institutions and activities that are currently centrally controlled should be duplicated at alocalized level in the various provinces and towns. In this context, decentralization applies strictly to howand by whom various resource allocation decisions are made. Chapter 3 demonstrated that there is asignificant potential in STP for conflicts of interest, in addition to the general human and institutionalcapacity constraints to implement and monitor policies. This suggests that environmental managementalternatives should attempt to avoid regulations that require a great deal of monitoring and should relyinstead on 'incentive' structures or forms of conflict management that minimize Government intervention.Decentralization, in this context, refers to the idea that resource management decisions can be madevoluntarily in a way that is likely to improve economic efficiency as well as environmental quality.Examples of this elsewhere have to include full-cost pricing of environmental goods and services, orassigni1; property rights in a way that will improve environmental management.

4.5 The specific analyses of potential economy-environment linkages in this chapter draw oneconomic policy initiatives or economic conditions associated with each of the following areas: tradepolicy, structural policy, monetary policy, sectoral policy, and budgetary expenditure policy (Table 4.1).

Table 4.1.-000-Selctoed iy-EvronlDeST4and Wrl*wl:-

96onomic Policy Li -:age

Trade P l cImport Subs:tiuion Vegetabto Farm Encroah4*o Scoond*t. P:d.a-Export Development In.prov- Fishey Ma .n .a :n -lXot.-

' -i : . ' ! l L -' ; .............. .-' .' .. .: , -;: ,: .: -, .. ., , A; -L,,.,! t,, ,.,-,.,"P.1,.., . . . . . . . .. ..

St6drucjtiMicLand D bution. So QuMity Im p..-Commeialition of Public Sector Environmenti a t ow Power an Wa.er.Fri.....Stru.turePrivatization o5n atof d.ion'.:et 'i. :-.--OW.oiitl p,pr'-'..

Sectra JFIcaI Poicy.i-her .C I..e- . .n. t-......-F ic -- - 0 R ent ~~~~~~~~~~~~~~~~~ .ty. . . ,,-.... . ,i:.E :.:. : :. . -.v.iv-.::: .u:.i-- .

-hbi..X. f h .:: -- - -. -. -:-~~~~~~~~~~~~~~~ . ....... . . .. .. ... ....s o - ? - Env>Xm~~~~Pbw f

- f - ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. .:. tB f < ..- ..:-..-ForeiWastry Rment CaEtur. .. . .......... ..s

Simiery Powe Priin "itesetoa Sikgshteitbt elecvaiouso envromntal/Hyroelemtr , enmaIny inkgealsoeris Watwer ths aiu cnmcpolicies. Mnianciy of thecatsest ianvestigaedhrfrdrs

Public Inv tnt Pror Ehvrm types of pieeening of wioiedtS

Healcth Pofy (Wiatei stalt enenrmis aw pacs to medto ealpl fareTouationd. Protcted suhas p r tittion loa isiutSidac e Mslanaduemeantd Managloest coqce aHrom inap i a

Similar to the 'intersectoral linkages" that exist between various environmental problems, many linkagesalso exist between these various economic policies. Many of the cases investigated therefore addressmore than one of these types of policies. The pricing of water, for example, is linked to STP's structuralpolicy of privatizing state enterprises, as well as to sectoral policy for improving efficient waterallocation. Policies such as import substitution, land distribution, and credit provision all have potentialimpacts on land-use and potential environmental consequences from inappropriate land-use decisions.

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The following discussions, therefore, have a goal of identifying the key policy issues in Sao Tome,presenting findings of specific analyses, and summarizing the implications for economic policy. Inaddressing the implications, the discussion will concentrate on how the 'targeted, precautionary anddecentralized policy' approach discussed above can be applied. Box 4.1 illustrates how island nationsof similar size have proceeded to develop environmental strategies using the type of approach above-mentioned.

B. Environmental Quality and Trade PolicyBox 4.1

4.6 Issues. Sao Tome's growth prospects Pally Lessons from Other Wland Nationsdepend to a large degree on improving its external -=atrade position. Historical deterioration of cocoa q .t hd aM thi'n. .i. 'at' TheY ot`emarkets has required that it look both to new ve bUindi human, adistiional mouroos bsources of exports and to decreasing its reliance of-tei eUi:s*. :Th'y.i. nt el their.on imports in favor of domestically available a'ironment are oen tgtl.' Mthey:: .:goods. In terms of the relation that such trade -n Yb X mallnue of..yta but tHnaW(einkenejan betpolicies can have to environmental quality, two bia us.ogeneral issues arise. First, Import substitution . e t i.. 5.can place increased pressures on domestic -Ue ,o%MI-t a"emaIum b ke so .....nsenvironmental resources, especially for oil and t.t: hat ae .fe........food imports. Second, export development ..... .-...opportunities can be linked to improved environmental management, especially in the d . . ....offshore fisheries. 7 .n- on ef nei;o. iam*....

movin towdi a system of deenreir pU -o4.7 Findings. To date, the linkages of import . t- a T substitution to environmental quality have not - yyoccurred to a large degree, but the Government's X blstp cffuture plans suggest that its desire to reduce oil i v i - givenand food imports will cause escalated pressures on e ,g pity B .

the environment. Decreasing oil imports would pln t Infis at eharge tf reucbe accomplished by stepping up development of as wt*t .the country's hydro-electric potential (Annex euai tprme rosrvin.doD.5); decreasing food imports is beingaccomplished through encouraging farming of 'r vyi t oovegetable products, which poses a threat to soil strategie m a n serosion in steep slope areas (Annex D.2). In both umm ai o epoof these cases the locations of the initialenvironmental impacts would be relatively =well-defined, as they correspond to steep slope .........areas at the margins of existing agricultural land,and to a small number of selected hydroelectric sites. The long-term impacts from mismanagement are,however, less well-defined. Watershed degradation from improper hydroelectric development, ordeforestation or soil loss from environmentally unsound farming practices, would have potentiallyimportant impacts throughout the economy. By contrast, the current situation with offshore fisheries hasshown that a significant opportunity for growth is being missed because of the failure to effectivelyparticipate in resource rents (Annex D.4). The lack of effective monitoring, coupled with a pricingregime that implicitly undervalues the fishery, leads to potentially substantial economic and environmentaldegradation of this important resource base.

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4.8 Implications. Many of the potentially detrimental impacts of the import substitution policies canbe readily addressed through measures that are targeted directly at the sites where the impacts are mostlikely to occur. Given the potentially significant economic benefits arising from such trade policies, itis not normally warranted to completely reorient the trade policy. Setting aside critical habitats coupledwith the proper use of economic and environmental feasibility analysis of hydroelectric projects willensure that desires to reduce oil imports do not indiscriminately translate into unmanageable watershedmanagement problems. Also, opportunities exist, for example, to decrease the risk of soil erosion insteep slope areas through encouraging the use of appropriate soil conservation practices. As discussedin the following section, these can be coupled with explicit adjustments to the way in which landdistribution is being conducted. Finally, the most significant area in which some decentralized policyinstruments are appropriate is through the use of sectoral fiscal policies for improved offshorefisheries management.

C. Environmental Issues Associated with Land Distribution

4.9 Issues. The Government is currently undergoing a substantial program of land distribution tosmallholders in an effort to increase agriculture sector output and encourage self-reliance in foodproduction. The redistribution program will, over the next five years, see a total of 30,000 ha of landplaced under control of individual farmers. While it is expected that this distribution will in generalimprove economic prospects for the country, there are a number of potentially detrimental environmentalissues which arise from it (see Annex D.2). All of these occur because of some form of environmentalexternalities occurring with private ownership that did not, for various reasons, arise when the land wascollectively managed or under public care. First, the granting of short, albeit renewable, leasehold termscould lead to environmentally unsound practices. Second, in steep slope areas and in areas adjacent tounallocated public lands, ownership structures are such that impacts of soil erosion or impacts ofencroachment into public lands could lead to soil degradation or unsustainable harvesting. Third, asdiscussed in Chapter 3, there is little cultural tradition for private ownership and there are, consequently,no cultural institutions or norms to mitigate the effects of these externalities.

4.10 Findings. Because the land distribution program and the policies around it are relatively new,there is little historical experience in Sao Tome on which one can draw for analyzingenvironment-economy linkages associated with ownership patterns. However, it is relevant to note thatthe current distribution falls on the heels of a previous distribution that, for various reasons, fell far shortof expectations. Of 10,000 ha previously distributed as a result of a 1987 decree, almost one-half (4500ha) will in fact be redistributed because of failure of the previous program. This points to the need for,minimally, some acceptance of the risks involved in such programs. The distribution of 30,000 ha in factamounts to almost one-third of the total country and, as such, mismanagement of these lands could leadto substantial environmental disruption.

4.11 Implications. Even given the risks and uncertainties associated with land distribution, theenvironmental impacts could be minimized with carefully targeted policies that address the potentialproblems before they become uncontrollable. First, to overcome some of the cultural constraints,extension and non-formal education services are important complementary initiatives to the land reformprocess. In the area of economic policy, however, it may be necessary to target specific managementprograms in areas which are particularly environmentally vulnerable such as steep slopes and distributedlands close to 'open access' public lands. In such areas, it may be beneficial to reintroduce some formof collectivized management to minimize the potential externalities. Also, giving the public lands adjacentto such areas a protected status, and enforcing that status through penalties, would provide a disincentiveto encroachment.

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D. Interest Rates, Credit and Environmental Quality

4.12 Issues. Although monetary policy has traditionally not played a significant role in the country'seconomic management, the availability of rural credit could become a constraint to the adoption ofenvirommentally sound technologies by smallholders. The issue is potentially important when farmersor landowners have inadequate capital, or inadequate access to credit, to invest in appropriate soilconservation practices. Also, if credit or capital is not available during those parts of the year when thereis no income from the farm, there may be an incentive to go into open access public lands to supplementthe income needs. As such, the credit issue potentially could exacerbate any of the problems associatedwith the externalities of the land distribution program discussed above (see also Annex D.2).

4.13 Findings. There exists a substantial risk that, unless credit acces3 is improved, the lack of creditavailability could indeed lead to environmental degradation. There are a number of features of thecurrent system that point to this conclusion. First, an analysis of the credit requirements of currentsmallholders shows that small amounts of credit are required to finance their operations. Typical loansizes are of the order of 100,000 Dobra (US$400), and these are isually paid within two years. Second,current sources of credit actually lend to associations which then on-lend to individual members of thatassociation; the collective assets of the association, including the land, are partially used as collateral andmembers are often jointly liable for the debt. In environmentally sensitive areas, such practices arebeneficial because externalities are reduced when individual smallholders have an implicit interest in theproductive capabilities of their neighbors. However, under the current land distribution system,associations will have limited rights for utilizing land, and individual families will be limited tousufructuary rights to 10 ha each. Given existing credit delivery systems, there is thus a risk that thereis an implicit bias against single farmers. In environmentally sensitive areas, the lack of credit could thuslead to degradation.

4.14 Implications. The lack of credit need not develop into an environmental problem if it isacknowledged at the outset that credit availability may be requirement for sustainable management ofsmallholdings. Ax-ain, with properly targeted incentives, credit availability could potentially be used asa positive agent cf improved economic efficiency and improved environmental management. What isrequired is that; vit ain the context of the land distribution program, areas of environmental vulnerat ilitybe identified and then explicitly targeted through encouraging the formation of associations or other smallcollective management units that can administer and on-lend credit for specific enviroi.rnentally soundmanagement practices. When coupled with an effective extension service, this could also assist inovercoming some of the current cultural constraints discussed earlier.

E. Privatization and Environmental Quality

4.15 Issues. One of the key components of structural adjustment in STP has involved privatizationand restructuring of public enterprises. The potential environmental problems associated with privatedistribution of land have already been addressed. By contrast, many of the environmental implicationsof privatizing or commercializing public firms are likely to be positive. Two issues that demonstrate thepotential environmental benefits of privatization are: efficiency in the use of toxic or hazardous materials;and, the general environmental benefits associated with full cost pricing of services provided by utilities.

4.16 Findings. The beneficial trends of commercialization are notable in many sectors. First, in theagricultural sector, past environmental concerns have at times focused on the misuse of pesticides or othertoxic compounds. In addition to contaminating soils, they have been linked to the disappearance ofendemic bird species. Although such chemicals are still being used, they are currently being sold withoutany subsidy to private firms; although in the past the public enterprises implicitly absorbed any losses

- 29 -

associated with overuse of these compounds, the prices currently being charged are likely to discouragemisapplication. Second, there was, and continues to be, a practice of plantation workers taking homepesticides from company stocks without paying for them. This "cross-subsidy" is poit ially of growingconcern as smallholder development expands. However, private companies that must remain competitiveare less likely to tolerate such activities than were their public predecessors. Third, in the provision ofwater and energy, recent "commercialization" of EMAE requires that the ftrm set its water and powerrates at a level that is capable of recovering its costs. This is causing water and power prices to go up(Annexes D.5 and D.6), providing an incentive for efficient use and also providing EMAE with thefinancial resources for strengthening their capacity. Rates will need to go higher still, however, if theyare to cover incremental capacity additions both for power generation and environmentally critical watertreatment capacity.

4.17 Implications. A key implication is that it is possible to use the economic price signals andprofitability controls within the private sector as an effective way of decentralizing allocation decisionsand improving management. This is of particular relevance in the water and energy sectors, where pastallocation decisions were driven by bureaucratic expediency and opportunism in the face of nonexistentfinancial checks and balances. Using price mechanisms for these two sectors alone can result insubstantial economic and environmental improvements. It is important, however, not to regardprivatization as a panacea for all potential environmental problems. Although privatization will usuallyincrease economic efficiency and the concomitant use of environmental resources, opportunities forconflict also exist. There was, for example, an unfounded fear in Sao Tome that urxegulated touristdevelopment by private companies would lead to substantial clashes with local fishermen; developmentrestrictions on such private operators in fact ensured that such clashes were minimized and thatenvironmental impacts were contained (see Box 4.2).

-followed However,- exeiehs no Ieostae tat ;-ic a bv-illag people are -nole *n tE E lnigadcntutino h ai

ha fnshd,ad tisaniipte ha hepnael ond= n opeate hote will mieceve its -

>~~~~~~~~~~~~~~~~~~~. .. .. . '. .. sa

-s .;freelanceguideoisngtrists ....................... -5I. . -. .. .. ..

er .is . . s. ., -. <. : -. -7..:. .'d- .-- S. ..... .z ............... .. -. -.- .... ......... .. . s. -..- .D. -. -.--......................... -...

X f f ; f;- -N, - s.. .... .. -..

In other areas, however, open unregulated access to beaches by private firms resulted in a significantamount of uncontrolled sand quarrying; fear of coastal erosion brought this to a halt quickly and firmsare now restricted to conducting such practices only in a select number of locations (see Annex D.8).

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F. Environmental Screening of Public Investment Program

4.18 Role of Screening. Key linkages between economic development and environmental quality areoften identified by "screening" projects and policies through relatively simple environmental assessmentprocedures. The general role of this screening is to determine whether a more detailed environmentalimpact assessment should, in fact, be done. Screening guidelines are available that can be applied eitherto projects or policies; these procedures do not necessarily provide tl}e nornative information of whethera project or policy should be adopted, but they do provide critical information about what the nature ofthe environmental impacts of a project or policy might be. It will then still be incumbent ondecision-makers to decide whether the impacts are socially acceptable, whether some mitigative actionsshould be taken (such as changing the project or policy or introducing other targeted policies), or whetherimplementation be delayed until a thorough EIA is conducted.

4.19 Example of Screening of PIP. An effective time to conduct such a screening occurs during theactual process of designing the Public Investment Program (PIP). One example of a screening mechanismis that used by the World Bank, which classifies projects according to their potential environmentalimpacts. 'Category A' or 'Category A+" projects, for example, would require a thoroughenvironmental impact assessment before proceeding, either because they have major environmentalimpacts or because a complete review of the available environmental technologies is necessary to establishan appropriate environmental component. Although it was beyond the scope of this study to conduct afull environmental screening of all projects within STP's PIP, a screening of 10 of these projects wasundertaken to illustrate how the screening procedure operates (Table 4.2).

4.20 An important aspect of this screening is to ensure that projects with potential negativeenvironmental impacts are identified. Any such project should, normally, be subjected to some form ofEIA and should fall under a Category A or B classification. Even projects that are specifically targetedto tackle one environmental problem could have negative environmental impacts in other sectors.Examples of this in the current PIP of STP are evident for water supply projects; these projects mighton the surface appear to be "Category C" projects because they are explicitly targeted to improving waterquality. In the attached list, however, these projects are conditionally classified as "Category B" becausethe infrastructure that must be constructed to realize such projects (including wells, pipelines, and civilworks) could itself disrupt environmental resources.

G. Sectoral Fiscal Polcies and Environmental Quallty

4.21 The strongest economy-environment lhikages often occur direcdy at the level of sectoral fiscalpolicy; described simply, these occur when prices of goods are "incorrect." Much of environmentaleconomics is concerned with "getting the prices right", which generally means that prices should, to aslarge a degree as possible within existing institutional frameworks, reflect the marginal opportunity costsof a good or service. The marginal opportunity costs must include not only the usual economic costs oflabour and materials, but also the environmental costs associated with consuming or producing a givengood or service. Sectoral fiscal policies, and pricing within a given sector, are also of key policyrelevance because any distortions that exist are typically more easily remedied than distortions arisingfrom the economy-wide interventions, such as monetary or trade policy, that were discussed earlier.Distortions from sectoral policies can often be remedied by introducing some form of price intervention.In Sao Tome and Principe, a review of sectoral policies shows that a number of significant distortionsexist where products are, in effect, under-priced.

4.22 Hazardous Chenical Use, Although, as noted above, the current trends to privatization will tendto provide economic incentives for more careful use of hazardous substances, a number of concerns still

-31 -

Bdncatiot, MeterWiSub{ i'r*t ..... ..*X. , . .'alo~ of te~ttbo.. ..;.. ..

(US$1 mi~lo*,) . ... n.....la_s410 'ppaI~ee2t O

... ................................. . s. -. ... ai m .... ...... .. . . .......

:,-,lQ ,,,., ..P.:: .-' :., -1~d :o l*euw f : e

- ~ ~~~~ W _M

... ,.Jb X..06.t.~~~~~~~~~~.. .;. ...-.'. .'.''"B" :"

. S X - a - ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~......

cross-sbsiyo hmclrmaricultura firmsProc .t o woks slkely toprita on ssm tt

controlle e~alnterories til exst or as logaaim unabideet uhpatcs eond,atough

th wategrsupy, inict P wtha - evermn4 at world priesn-thren wpexits a iOmplici envidronmna ubiyo

suchgood.OA roelativl simple means t~owremedy thius is tro itro ducv bet aptax or esurhreoteueo

damages,~ but, jecasofth unpertai~ nvtyi.n the damages, Uait4 iA ap~propiate t omnewt 'rcautionry' tax trohat reflets somevpro sumentd d1amages pomalyusnso efactryfrucrany.Drn 95

190exitthrat sggettantsoamoned o3.ecn of the moehzrousnchmicas are under37periced.Frt the iovplicit

seuchcemiSchal curretlhtadge at cnithen 'worlda price',pman thazardos substagncresastinl arcptne inisetromol

tewtolsppy,inicate thatmic w vna oldpie here existiny s an impliciteaur f h environmental subacs;idy ncale

suc goods.. Onereatiel sipl men.oreey.is...itrdc txo.uchreo teueosuch hemials. n prncipl, ths surharg shold bein poporton t the resued enironenta

damags, bt, bcauseof te unertaity i thedamags, i is pprpit. ocomnewt 'precutioary' ax tat relect somepresmed dmage plu s me atrfrucrait.Drn 951990 externa grants amouted to 35.9 ercent.of.th cuntry's GDPand17pecno oermnrevenues. Such a surharge is consistentwith a principle tha is gaining increasng acceptance.withi

ecological sgeooist whersoeo uncertit mor haanrdortan fheatures ofrte unenvrironenta Fimpats; ith implcalle

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the 'precautionary polluter pays principle (PPPP)' as a natural extension of the widely accepted 'polluterpays principle (PPP)'. Because any such tax is intended as a safeguard or insurance against damages,it is appropriate to earmark some portion of it for improving the management of toxic substances.Indeed, through a refund/deposit system, firms could readily be encouraged to return unused hazardouschemicals to a central facility for storage and monitoring in return for a partial rebate of the tax paid onthe product.

4.23 Forestry Product Pridng. The major price distortion in the current forestry regime is that thestate obtains no substantial rent through stumpage fees or license fees on forest products. As a result,standing timber has little value, and there is no incentive for firms to manage it sustainably. Whencoupled with the Government's reluctance to export wood, this has resulted in a tremendousover-harvesting of fuelwood, but essentially no commercial timber development, even though STP's forestcould support some sustainable level of timber harvesting. Given this massive distortion, any pricechange in the right direction is likely to improve management prospects for the country's forests.Establishing a system of licensing, although problematic in the short-term due to insufficientimplementation capacity, should be considered over the long-term as a mechanism for improving rentcapture by the Government, and for providing private entrepreneurs with incentives to manage the forests(Annex D.3).

4.24 Fishery Polides. The offshore fishery sector is in a similar situation as the forestry sector,although in this case there has been an explicit promotion of exports to the possible detriment of fishstocks (Annex D.4). Although offshore fishing has not been open access, the low level of rent capturethrough the existing system of licensing has provided little incentive to offshore fleets to control theirfishing activity sustainably. Moreover, after the demise of STP's own small offshore fishing fleet, the'window on the industry' disappeared and there are currently no effective mechanisms in place either tomonitor the state of the fishery or the veracity of reports filed by foreign fishing vessels. In thisparticular case, some form of economic instrument can provide a significant increase in rents while alsoencouraging more sustainable exploitation of the fishery. Increases in fish license fees and competitivebidding for licenses are two means for improving management, while also increasing returns to the sector.It may also be beneficial to encourage joint-venture arrangements between Sao Toman and foreign fishingvessels. These mechanisms may not be feasible for STP in the short term due to lack of monitoring andenforcement capacity. Over the longer term, the country should seek external assistance and regionalcooperation in establishing a system of surveillance and monitoring of fishing activities offshore. Otherisland nations, particularly nations in the Central Pacific Ocean, such as Kiribati and the Solomon Islands,have been successful in establishing a system of effective enforcement of offshore fisheries, with theassistance and support of regional alliances. Both nations have significantly increased their foreignexchange earnings in the fisheries sector, by effectively enforcing a system of licensing and levying feesfrom foreign fishing vessels. In an attempt to maximize revenue from commercial fishing, Kiribati alsoentered into joint venture partnerships with the UK and Japan. (see Box 2.1).

4.25 Water Provision, Treatment and Pridng. Although there have been substantial increases inthe price of water after the commercialization of EMAE, the current prices are still likely to beinadequate to cover the costs of installing treatment facilities (Annex D.6). In addition, given thatpolluted water imposes substantial enviromnental costs on Sbo Tome, it is clear that the current systemof water pricing still embodies a hidden subsidy. One means of removing this subsidy is to increasewater prices to the extent that they do cover all of these costs. Although there might be some resistanceto such a scheme on political grounds, it must be understood that costs currently being incurred by manycity-dwellers include some cost of boiling or treating water in any event. Given that energy costs areanticipated to increase as well, the costs incurred by end-users for treating their own water supplies arelikely to escalate even further. Some of the higher water charges will thus be offset by a decrease in

- 33 -

these costs, and the higher charges will provide incremental funding for needed investment in treatmentand delivery systems. In addition, there may be opportunities for some cross-subsidies based ondifferentiating between industrial and domestic users; such cross-subsidies are justified to the extent thatthese two groups will have different pollution impacts and different water quality requirements.

4.26 Electricity Generation and Priding. A substantial debate exists in Sao Tome over whether torely more on hydroelectric capacity for power provision, or to revert to thermally generated power(Annex D.5). Recent developments have swung the balance in favor of hydroelectric power, but this isprimarily because of a distortion in capital marketr which sees aid flows given preferentially for capital.A correct economic approach should be to develop hydroelectric power or thermal power, whichever isleast costly, taking into account all of the environmental externalities and taking into account both thecapital and operating costs. The problem is that with current distorted 'pricing' structure, capital forpower projects is often given freely (such as the recent gift of a dam by the Portuguese to Principe).Under such a distorted pricing regime, the current comparison becomes one of hydroelectric operatingcosts vs thermal operating costs. In such a case, hydroelectric power invariably shows a lower costbecause there is no fuel import requirement. If this capital bias is removed, thermal power would insome instances turn out to be the least-cost method for generating power. If one includes theenvironmental costs, the balance swings even further in favor of thermal generation; in Sao Tome,hydroelectric power in most cases has significantly higher environmental costs than thermal power, asair pollution is not a problem but watershed modification is a potential threat. To date, any suchenvironmental costs are not reflected in any of the pricing structures, either through ensuring that projectsmeet a high environmental standard or through charging end-users power prices that reflect theenvironmental subsidy implicit in the prices. As with water prices, power prices have been increasingbut not yet to the extent necessary to cover full marginal social costs of power generation. To rectifythis to a situation where the hydroelectric vs thermal power choice is made rationally will require: (i)removal of the capital-oriented bias of grants; and, (ii) consideration of the differential environmentalcosts. Such a situation can only be achieved if a transparent project assessment, in the form of ageneration plan that includes environmental costs, is conducted for the sector as a whole to determine theleast cost generation alternatives. Such a plan can help in selecting opportunities for reducing fuelimports by exploiting hydroelectric potential where the environmental and economic costs of suchpotential are demonstrably less than those of thermal generation.

H. Health Sector Linkages

4.27 Malaria. Linkages between the economy and the environment are perhaps strongest in the healthsector. While the economic benefits of malaria control can be substantial, through decreasing health carecosts, improving productivity, and improving general well-being, there are at times sacrifices that mustbe made. In the case of Sao Tome, one key feature of the malaria eradication program is that it involvesnot just a drug treatment program, but also a complete line of 'vector' control designed to limit thepropagation of the malaria-carrying mosquito. Part of this program involves draining wetlands in the areaof the populated centers; malathion pesticide will also be used to kill mosquitoes. Such wetland drainageand pesticide use have potentially negative impacts on both biodiversity and watershed management.From both an economic and environmental perspective, however, it is valid to ask whether the sacrificesassociated with such a program are out of line compared to the indicated benefits (Annex D.9).Environmentally, most of the wetlands proposed for drainage are in fact close to the City of Sao Tom6and thus comprise a relatively small proportion of the country. Also, when its use is well-controlled,malathion is biodegradable and poses few significant risks. In addition, a comparison of malaria controlcosts in other countries where malaria incidence has fallen dramatically, to those projected for Sao Tomd,shows that the proposed malaria control program in STP is cost-effective when compared to costsincurred elsewhere. In summary, although a trade-off between environmental quality and human health

- 34 -

and economic well-being is .m*_necessary, in this case the evidence .. : 4Xsuggests that well-controlled a wtjiii&flon..: eAts o M;l.........wedand drainage and spraying formalaria control Is indeed a desirable ..a. ... a... .nd r I l ru iroption (Box 4.3). . ... ..tI both drug ..:n 'vm t

4.28 Educadon and Children's bta C ii pg e aHealth. A final key economic vepproahr7miflionoer-afly . I;:itlinkage involves the health impacts ':::.:- s In reducing malia, howee, it is estimated thatof environmental degradation on v nt from incresed ptoducity an : : -easechildren. Although the lost X e wfll exced is b a fproductivity associated with -o hhe average cs rpollution-related adult absenteeism is TOnE a .mess readily quantified, the economic w studief oter countries suggest isnor;aLimpacts of pollution on childrenusually receive less attention. ; tCst tCo p abecause such impacts do not o R r ($).translate directy into lost outputHowever, both the health care costs Sri k 1-6.0 . -and the costs associated with lost n n a. .3;education because of absenteeism . ..i.. ....40-.can be substantial for children. s 4 . ' . .. -i g

While there is no basis for a 3 ' 900estimating the final long-term health i . ' 3 .S 4impacts of effective pollution pl e . 4 ; -control, it is worth noting that, ina acountry hamnpered by cufrent human I {or: Annex P.9resource constraints, any investment .. ...in education and children's healththrough mitigating the adverse impacts of environmental pollution is likely to provide a substantialpayback.

I. Summary

4.29 This chapter has demonstrated that there are potentially substantial linkages between theenvironment and the economy in STP. Much economic planning has traditionally focused on the linkageof how environmental resources act as an Input to the development process; little regard has been givento the fact that economic processes can have significant impacts on the environment. However, thelinkages in fact can operate in both directions: maintaining intact the country's key environmentalresources is an important prerequisite for long-termn sustainable economic development, but economicdevelopment activity and economic policies can also have an impact on environmental quality. A keylesson is that many of these linkages can be managed, by using appropriate sectoral economic policies,to achieve "win-win" solutions that result in both efficiency gains as well as enhancements inenvironmental quality. Using such positive policy linkages is a critical component of any enviromentalmanagement strategy, especially given the numerous institutional and human resource constraints thatpersist in the country.

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CHAPTER V. RECOMMENDATIONS

A. General Strategy

5.1 The purpose of this report is to develop recommendations relating to potential policy responsesfor mitigating or avoiding environmental problems in Sao TomE. The recommendations are based on anassessment of the key environmental priorities in the country, an evaluation of the principle institutionaland human resource constraints persistent in STP, and an understanding of some of the potentiallyimportant linkages between economic policies and environmental quality. It Is recommended that, withinthe development of a National Environmental Action Plan, STP adopt a strategy that has the followingthree key components:

(a) Institutional and legislative reforms, to address the current institutional constraints andfuture institutional requirements for effective implementation;

(b) economic policy initiatives and sectoral programs based on a strategy of 'targeted,precautionary and decentralized' policies, to improve environmental management efforts;and

(c) education, sensitization and awareness-building, to address existing human resourceconstraints and future human resource requirements.

Each of these initiatives will have both near- and long-term requirements in high priority areas.

B. Priorities - Near- vs Long-Term

5.2 The need for targeting policies at various key environmental issues is important in Sao Tome,where financial resources are limited and institutional capacity is still weak. Highest priority needs tobe placed on those issues which have a critical environmental, economic, and human health componentsand which, moreover, can be addressed by available policy interventions. As shown in Box 5.1, the highpriority issues include water quality, population growth, deforestation, steep slope erosion, species loss,coastal erosion and non-toxic solid wastes; all of these areas merit some near-term policy responsessupported by long-term strategies. Problems with a moderate priority involve primarily those associatedwith renewable resource management, such as soils, fisheries and wetlands and the management of toxicand hazardous substances; the condition in these areas is not regarded as being in a crisis situation, buteffective interventions will be necessary over the long-term to ensure that these resources are utilizedsustainably. In some instances, some near-term policy measures are also in order for these moderatepriority problems where such measures are relatively cost-effective. Finally, the analysis indicates thatwater availability and air quality are generally regarded as low priority problems; they should, however,be the subject of modest monitoring efforts to ensure that any changes to this situation do not gounnoticed.

5.3 In terms of policy responses, it is recommended that the near term efforts must focus on thefollowing types of interventions: (i) development of a national envirommental policy; and, (ii) thecomplementary tasks of screening the public investment program and encouraging EIAs to be carried outon projects having considerable impacts in high priority sectors. In addition, a longer term need for thecountry is to focus on: (i) developing institutional capacity consistent with the national policy, includingcapacity to monitor and act on environmental information; (ii) implementing legislation consistent withthe national policy; (iii) implementing sectoral economic policy and investment initiatives in priority

- 36 -

areas; and, (iv) developing a long-term strategy for removing human resource constraints through greatereducation, sensitization, or specialized training. Even in these long-term strategies, however, it is clearthat some short term responses are appropriate to ensure that programs are heading in the right direction.These are discussed in further detail in the following sections.

Summary of Relative Priorities

An assessunent of the various environmental problems, whih also -takes Into -accounttheir impacts on human health and the economic costs and benefits of addressing these

.-problems, suggests that various types of environmental'degradation can be categorizedIn terms of their overall policy priority. Problems* i4th-a higoh polcy priority generallyhave some cost-effective meansof dealing with them; those of lo policy prloritj are-ether not intrinsicalIleronm entallysignifcnt problems, or have few available-cost-effective inteventions. -These p-olicy -priorities can-be Iregadedas ea "screeing for-sl ectingwere policy intervioc bebthe a ite-resourcs andIns titutioa aci available i-a Sa Tome an Pcp

High Priori ty LOW PriOrity.r-WaterQalty M a- :e olluo Wt A-vaibt

iopulat on (ro -:-Soll C ntami ation - Quality-:Defrestation/Steep Siope Artisan Fisheries Lbos

-:-Erosion- - --- -Fl- ------------i - -- Dep -tioSpcies Loss - - Weand Loss-:;

:TXxic &*{azadou-s ustace--= -- :--- -- : --- :-:-------Non-toxic S-olid Wastes::

C. Institutions and Legislation

5.4 National Environmental Action Plan. Several initiatives have commenced in STP to put inplace the institutional framework for environmental management. An interministerial committee wasmobilized to prepare a national environmental report for the United Nations Conference on Environmentand Development; steps were taken to formulate a national environmental action plan and nationallegislation for environmental protection. The momentum generated must be maintained and policymakersshould concentrate on taking the requisite steps to make effective integrated policy for sound managementof the country's natural resource base. The costs of formulating sound environmental policy are relativelysmall when compared to the potential gains to be derived from improved efficiency and higher growththat will result.

5.5 Establishing Environmental Institutions. Well designed institutional structures for formulatingand implementing environmental policy and the establishment of a carefully designed constituency arecritical elements of a national environmental strategy. Different countries have adopted different modelsfor establishing the institutional framework for environmental management. Based on different countryexperiences, the following are key issues to be considered for the establishment of an environmentalinstitution in STP: (i) the institution should have the ability to provide advice on policy to line agencies;(ii) it should have the capacity to monitor implementation of appropriate environmental policies; (iii)environmental units in line agencies should provide the environmental institution with technical expertise

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and information; (iv) sectoral agencies and provincial units should implement policies and programs andprovide feed back to the environmental institution; (v) the environmental institution should involve theparticipation of local communities, women's groups and grassroots organization in monitoring theimplementation of programs and policies. The institution should have an advisory/technical committeecomprising representatives from all sectors of Government including agriculture, water, industry, energy,forestry, fisheries, health and tourism. This arrangement would aid in facilitating the coordinatingmechanisms which are pre-requisites for effective environmental management. Coordination betweenagencies in key sectors is essential to ensure consistency, cost-effectiveiess as well as to prevent negativeimpacts on the environment. The institution should develop capacity to set priorities, formulate policiesand strategies in key sectors and monitor progress of implementing agencies. Implementing agenciesshould be held accountable for their actions and for any environmental impact due to their activities.

5.6 Environmental Legislation. STP has initiated the process of laying out the legal framework forenvironmental management. A national law for protection of the environment is being formulated, andsectoral laws are being reviewed to assess the need for repeal, modification, and formulation ofregulations in key areas. The draft Environmental Protection Law for STP prepared with UNEPassistance sets the base for formulating environmental policies in sectoral areas and for the developmentof a national environmental strategy.

5.7 A review of the sectoral legislation containing relevant provisions for protection of theenvironment revealed that they are of differing quality and depth. Some of the provisions have beendrafted during the colonial era and have no relevance in the present day; some of the penal provisions,norms and standards would not thwart potential offenders. These provisions require amendment or insome cases repeal. Other provisions in legislation and regulations which have been drafted more recently,are too general and, in the absence of specific criteria or standards, ineffective and unenforceable. Inthese instances detailed regulations need to be developed under specific legislation specifying standardsand guidelines for effective enforcement to be possible. In order for meaningful regulations to bedeveloped in key sectors, legislators should work in close collaboration with sectoral implementingagencies. Because of capacity constraints and because there are economic mechanisms available in manycases that work better than a direct regulatory approach, legislation should be put into place, but specificregulations and standards should not be worked on until they can be coordinated with potentially moreefficient market-based mechanisms in specific sectors.

5.8 Currently there is no legislation setting up protected areas or reserves. In order to preserve thecountry's remaining primary and mature secondary forest and to conserve the unique biodiversity in STP,it is important that legislation be formulated for the establishment of protected areas. Forest reserves andbuffer zones should be set up to limit threats of deforestation and losses of biodiversity. A draft law onforestry, the Anteprojeto de lei florestal, is currently under review by the Ministry of Agriculture andForestry. The draft law proposes the setting up of a National Forestry Service, the formulation of anational forestry plan and the, establishment of a forestry fund. The legislation should stipulate clearcriteria for the issuance of licenses, guidelines for exploitation of forest and the management and controlof reserves. [An analysis of the existing and proposed legislation in key sectors is provided in AnnexB of this report.]

5.9 Participation in International Protocols. While most environmental problems need to beaddressed at the local and national levels, there are a number of areas where international commitmentis required to effect changes in the status quo. These areas are set out in Agenda 21, the agendaproposed for the 21st century, at the United Nations Conference on Environment and Development lastyear. There are a number of international agreements and protocols, the participation of which signalsa Government's commitment to the resolution of environmental problems both at the national and global

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levels. Sao Tome is not yet a participant in most of these agreements. [Annex E contains a list ofagreements and protocols and the status of participation of STPJ. It is understood that the Governmentis currently considering the ratification of the CITES Convention (Convention on International Trade inEndamgered Species of Wild Fauna and Flora) and the Basel Convention on Hazardous Wastes. It isimportant for STP to participate in these conventions, which deal with issues relating to the protectionof endangered species and the transboundary movement of hazardous wastes and their disposal. Inaddition, while ST? has ratified the Law of the Sea Convention, which establishes rules and standardsto prevent and control marine pollution, the country is not a participant in the MARPOL Protocol, theProtocol of 1978 relating to the International Convention for the Prevention of Pollution from Ships. Itis recommended that the Government considers the participation in all three of the conventions above-mentioned, as a priority.

5.10 Information Systems. The development of sound policies in key sectoral areas such as land andforest resource management, water supply and water quality, health and sanitation, require the availabilityof accurate information. Environmental and natural resource information is currently scattered amongthe key sectoral agencies. The Department of Statistics keeps records of this data. There is a concernhowever as to the accuracy and mechanisms for verification of the data. There is a need to develop thecapacity whether in the Department of Statistics or within the main environmental institutions, the abilityto carry out verification, disaggregation and analysis of the data pertaining to environmental and naturalresource information. The draft Environmental Protection Law contains provisions relating to theestablishment of a national system of information on the environment and environmental zoning. As afirst step, an Environmental Information Officer may be appointed or a senior officer in the StatisticalOffice may be designated as such, to carry out record keeping and processing of environmental data. Hecould keep track of key environmental data and assess whether the data which is being gathered isappropriate for environmental purposes, such as carrying out EIAs.

D. Economic Policies

5.11 Screening of Projects. A near-term policy priority should be to screen the complete publicinvestment program of STP with a view to identifying those projects which potentially threaten STP'senvironment in high and moderate priority areas. In addition, this screening should in principle beextended to all investments funded by bilateral or multilateral aid. Such a screening will, it is recognized,also signal the need for environmental impact assessment to be conducted on select projects in highpriority sectors. Although developing some long-term indigenous capacity for conducting EIAs will benecessary, it is likely that the more immediate EIA requirements will need to be met with foreigntechnical assistance. As noted below, some of the required EIA studies can be used as 'on-the-job'training schemes to develop such a capacity. It is therefore recommended that STP: (a) commencescreening of all investment projects; and, (b) prepare an interim strategy for conducting ELAs of projectswhere necessary.-/

5.12 Review of Economic Polides. A long-term policy priority will also be to screen the potentialenvironmental impacts of economic policy initiatives. SIP will at times be required to put into placemitigative environmental policies to offset any potentially negative impacts of other policy initiatives.However, a premise behind the use of any mitigative policy measure is that the potential environmentalimpacts of any broad policy initiative - trade policy, monetary policy, or sectoral policy - are in factassessed. Where negative impacts are unavoidable, appropriate mitigative policy instruments areidentified and put into place. An example of this in Sao Tome is the land distribution policy, which could

I/ See further, special training needs (p.41).

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have some negative environmental impacts if appropriate credit is not made available or if incentives ortraining are not provided to reduce the risks of steep slope soil erosion. The monitoring and evaluationof the effectiveness of economic measures are crucial follow-up activities to ensure that environmentalproblems are being contained. A key institutional issue, in this regard, is how these follow-up tasks willbe conducted in a way that - if STP's economic policies lead to unanticipated and unacceptableenvironmental impacts - policies can be corrected in mid-course. One means of achieving this is toconduct an environmental assessment (EA) of policy and to allow the results of such assessments to enterdecision-making structures. Such a process would function somewhat differently than project screening,as policies typically undergo a different type of scrutiny than investment projects. The policy screeningand assessment process must be capable of identifying potential environmental distortions of such policiesso that modifications can be considered or - where appropriate - separate mitigative policies can beintroduced. It is therefore recommended that STP establishes a mechanism within its NEAP that will:(a) develop 'policy' screening/evaluation guidelines; and, (b) incorporate the guidelines within the policyformulation process.

5.13 Role of Private Sector. The private sector can be a powerful ally in achieving environmentallysustainable development, especially where the environmental regulatory capacity of the Government isunderdeveloped. In Sao Tome, however, there is currently no significant private sector. In the longer-term as the sector emerges, potential private sector alliances should be encouraged through activities suchas: (i) joint venture developments of forest products design to capitalize on their biodiversity values aspharmaceuticals or food products; and, (ii) providing incentives for transferring environmentally soundtechnologies to Sao Tome in the high priority area of water quality and sanitation.

5.14 Speciflc Sectoral Initiatives. A number of pricing or regulatory interventions are appropriatefor key sectors, as follows:

(a) Protected Areas. Species loss and biodiversity protection are high priority concerns inSTP and, as such, there is ample reason to introduce a protected area system. Tominimize potential conflicts, however, a number of key sites should be established asprotected areas along with well-planned economic buffer zones to ensure that land-useconflicts do not arise and to ensure that local populations do benefit from activities suchas tourism development. It is recommended that any such buffer zones be establishedwith input from ministries involved in agriculture, forestry, water, energy and tourism.

(b) Agricultural Land-use. The greatest risk of environmental degradation arises with thepotential impacts of the land distribution program in steep slope areas and adjacent topublic lands with continued open access (defined as 'environmentally vulnerable lands.")To contain these impacts, it is recommended that two steps be integrated into the overallland distribution system as the process occurs: (i) inventory of environmentallyvulnerable lands; and, (ii) design and adoption of mitigative programs targeted tovulnerable lands. It is recommended that the mitigative program consider interventionsin the following areas: (i) implementation of specialized extension programs to minimizeenvironmental disruption; (ii) encouraging collective management schemes; (iii) providingtargeted credit for environmentally sound technologies to associations of smallholders insuch areas; (iv) monitoring environmental conditions; and, (v) making leasehold renewalconditional on the adoption of environmentally sound practices that do not impact on thevulnerable lands. In addition to the above, a comprehensive land-use plan should bedeveloped for the country which includes the establishment of protected areas and bufferzones. A study for developing such a plan is currently underway with the assistance ofGTZ.

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(c) Population Control. Strong programs target I at reducing population growth have beensuccessful in countries such as Singapore, Thailand, Sri Lanka and Indonesia, wheresignificant progress has been achieved. Increased access to contraception, targetedprograms to sensitize the public, both men and women, investments in family planningand health programs are all measures to be adopted in the near-term in STP. InNicaragua, Sri Lanka and Botswana, Government efforts to encourage participatory,community-based family planning, health and nutrition programs have proved to besuccessful. Programs in family planning, sanitation and nutrition should be developedin collaboration with NGOs and community leaders.

(d) Forestry. To improve the long-term sustainable use of the country's forests, it isrecommended that forest product prices be effectively increased to allow the Governmentto capture a greater share of forestry rents. In view of current constraints in STP withregard to monitoring and implementation, a study should be undertaken to definedifferent policy mechanisms for establishing a system for collecting forestry revenue.

(e) Offshore Fishery. Economic instruments can provide a significant increase in fisheryrents while also encouraging more sustainable use of the country's offshore fishery. Itis therefore recommended that over the longer term, the Government should take stepsto develop a strategy for better management of off-shore fisheries. External assistanceshould be sought in developing mechanisms that allow the Giovernment to capture agreater share of fishery rents through increasing license fees and strengthening countrycapacity for monitoring and control of foreign fishing activities.

(t) Water Treatment. The provision of water treatment is hampered by a lack of fundingand the distribution of water is currently enjoying an environmental subsidy. Over thelonger term, the Government may consider increasing the price of water to reflect themarginal costs of water treatment, and that such funds be earmarked for improvingcommunity water quality.

(g) Energy Generation. The efficient allocation of power is currently hampered by a biastowards inexpensive capital and implicit neglect of the environmental costs associatedwith different generation alternatives. The Government may consider the formulation ofa generation plan, which includes environmental costs, to be conducted for the sector asa whole to determine the least cost generation alternatives. Such a plan can help inselecting opportunities for reducing fuel imports by exploiting hydroelectric potentialwhere the environmental and economic costs of such potential are demonstrably less thanthose of thermal generation.

(h) Malaria Control. It is acknowledged that the malaria control program is a high priorityfor STP. However, it poses some environmental risk if swamp drainage and theapplication of malathion are not condLcted under well-controlled conditions. To ensurethat these conditions are met, it is recommended that: (i) appropriate "best practices"guidelines be established for wetland drainage and pesticide application; (ii) contractorsengaged in such activities be required to post a performance bond large enough toencourage compliance and cover mitigative costs if best practices are not followed.

(i) Solid Waste Management. Non-toxic solid waste is considered a high priority, THS isconsidered a moderate priority. This will require that a concerted and comprehensivesolid waste management strategy be adopted for Sao Tome over the long term. It is

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recommended that, in the near term, the following actions be considered: (i) developinga solid waste managernent strategy for Sao Tome city; (ii) developing a "Best PracticableMeans" strategy for THS to encourage improved waste handling through sensitizing usersabout the need for separating THS from the regular waste stream; (iii) applying aprecautionary tax on critical substances with known hazards to human and ecosystemhealth; and (iv) applying a portion of the proceeds of such a tax to developing a longterm "Cradle to Grave" management scheme for handling THS.

(J) Coastal Erosion. In the near term, it is recommended that a study be undertaken toassess the magnitude of the threat of coastal erosion, the direct and indirect causes andto define cost effective measures for redress of the problem. Over the longer term anintegrated coastal zone management strategy needs to be developed to provide aframework for the sustainable development of the resources of the nation's coastal zone.As development activities take place in various sectors including fishing, aquacuiture,tourism and other coastal activities, such a strategy would be needed. The carefullyplanned use of the coastal environment is also an integral part of a successful tourismdevelopment strategy.

E. Education, Training and Awareness Building

5.15 Investing in human resources is a key element of any development strategy. Education, trainingand generating environmental awareness are essential components of a national environmental strategy.Formal environmental education, non-formal enviromrental education and specialized training inenvironmental concerns in priority sectors are all areas to be focussed on in developing a national strategyfor environmental management.

5.16 Formal Environmental Education. Instilling in the younger generation a sense of environmentalawareness and responsibility is a key priority. By introducing basic environmental principles into thegeneral curriculum in primary schools, the country would be achieving a major objective of influencingthe future direction of the younger generation. Since the children would also influence their families thiswould achieve a dual purpose of influencing the whole community. Given the current poor level ofeducation services in the country, including the low educational levels of teachers, non-availability ofteaching materials, desks and chairs as well as text books, the available optior, in the near-term wouldbe an overall environmental sensitization of the entire curriculum. Over the longer-term, the developmentof modules for the introduction of environmental education into the schools curriculum can be considered.

5.17 Non-formal Environmental Education. Environmental awareness can be generated outside ofthe formal educational system. Social marketing programs, agricultural extension programs, health andsanitation programs which may be developed with the collaboration of local and international NGOs maybe considered as potential non-formal educational (NFE) initiatives to generate environmental awarenessin communities. Some countries set aside an "Environmental Improvement Day" every month, wherepeople are encouraged to participate in a clean-up activity. Such programs may be developed with theassistance of the local NGOs and community leaders. Clean-up days may be initiated in Sao Tome citywhere there is a significant absence of awareness of proper methods of garbage disposal andsanitation/health issues. In the rural areas programs should be developed in collaboration withagricultural extension programs, particularly where clearing of steep slopes is currently being carried outconsequent to the Government's land distribution program. These programs should be developed withthe collaboration and participation of village elders, women's groups and local NGOs.

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5.18 Spedalized Training Needs. Since environmental impact assessments (EIAs) will be arequirement for many projects, including those funded by the Bank, there is a need for developingcountry capacity to carry out ElAs. In the near-term, STP will need to rely on foreign technical expertiseto carry out ElAs for projects. However, over the longer-term, the following options can be considered:(i) develop EIA capacity within an existing Government agency such as the Ministry of Planning; (ii)develop EIA capacity within the proposed CNA or the proposed Directorate of Natural Resources; (iii)develop EIA capacity within individual ministries; and (iv) encourage the private sector to develop EIAcapacity, retaining powers of review within a Government agency such as the proposed CNA. Given thesmall size of the country and the fact that there may not be a large number of EIAs which would needto be carried out, the fourth option may be the most cost-effective method. Over the longer-term, otheroptions may be considered depending on the evolution of the country's institutional framework withregard to environmental management.

5.19 There is also a need to develop capacity in the country in areas of environmental technologies,toxic and hazardous waste management and environmental and natural resource economics. Options tobe considered are (i) short training courses overseas for officials in key sectoral ministries and those ofthe proposed CNA and Directorate of Natural Resources; (ii) hiring of foreign experts for short periodsduring which time local seminars and workshops may be arranged to disseminate information and providetraining, especially on-the-job type of training.

5.20 Awareness building. Environmental management, to be effective, must involve the participationof the people. Governments at all levels can play a significant role in mobilizing local committees,women's groups, and grassroots organizations to become active participants in environmental planningand programming. Government should encourage grassroots organizations and work in closecollaboration with international NGOs, currently active in STP in sensitizing the people and getting themto participate in integrated programs aimed at poverty alleviation and protecting and conserving naturalresources.

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BIBLIOGRAPHY

Asian Development Bank, Environent and Development: A Paciflc Island Perspective, AsianDevelopment Bank, Manila, Philippines.

Collar, N.J. and S.N. Stuart. 1988. Key forests for threatened birds in Africa. ICBP monographno. 3, ICBP, Cambridge.

Demeocq, Marielle and Jacky Mathonnat. 1991. Pauvrete et ajustement I Sao Tome et Principe:;lements d'analyse. Centre d'Etudes et de Recherches sur le Developpement International/UNDP. June.

Government of Seychelles. 1990. Environmental management plan of the Seychelles, 1990-2000. 2vols.

Hammer, Jeffrey S. 1993. The economics of malaria control. Ihe World Bank Research Observer,vol. 8, no. 1 (January), pp. 1-22.

International Development Research Center, Renewable Resources in the Pacific, Proceedings of the12th Pacific Trade and Development Conference, Vancouver, Canada, September 1981.

Jones, P.J., J.P. Burlison, and A. Tye. 1991. ConservaqIo dos ecossistemas florestais na Repdblicademocratica de Sao Tome e Principe. IUCN, Gland.

Mott MacDonald International (Cambridge). 1992. Sub-Sharan Africa hydrological assessment, WestAfrica countries: Country report Sio Tome and Principe. World Bank/UNDP/AfDB.August.

RDSTP [Repiblica de Sao Tome e Principe). 1992. Energia: Caracterizagbo e politicas dedesenvolvimento. Ministerio da Cooperagbo. [February].

RDSTP. 1988. Esquema directivo da pesca artesenal: contexto, objectivos, prioridades e plano dedesenvolvimento. Vol 2. Ministdrio da agricultura e pescas, Sao Tome.

RDSTP. 1988. Evaluation des problemes d'alimentation en eau e electricite de la ville de Sao Tome.Ministbre de la cooperation.

RDSTP. 1990. Estado do ambiente na repdblica democratica de Sao Tome e Principe.Direcao-Geral de Planificagbo Fisica, Sao Tome. May.

RDSTP. 1991. Conferencia das Nasoes Unidas sobre ambiente e desevolvimento (CNUAD) Brasil92: Relat6rio da RD;;TP. November.

RDSTP. 1992. Dadoss estatfsticos de captura de atum. Department of Fisheries, Sio Tome.RDSTP. 1992. Estrutura de custos de combustiveis para 1991. Minister of finance, Sao Tome.

Mimeo.RDSTP. 1992. 11 recenseamento geral da populagbo e da habita&5o 4 de Agosto de 1991:

Resultados gerais, distritos, aglomeraoes e localidades. Ministerio de economica e financas,direcgio de economica e estatistica, Sao Tome.

RDSTP. 1992. Indicadors economicas. Various. Ministerio de economica e finangas, direccao deeconomica e estatistica, Sao Tome. June.

RDSTP. 1992. Informacao sobre as perspectivas futuras no ambito florestal em Sao Tome Principe.Ministerio da agricultura, direc&bo florestal, Sao Tome. Mimeo.

RDSTP. 1992. Pesticide data 1989-1991. Various. Ministerio da agricultura, Sao Tome.RDSTP. 1992. Realizagbo do estudo do piano director electriticagio de Sao Tome. Ministerio do

equipamento social e ambiente. [November].RDSTP. 1992. Water quality data 1955-1991. Various. URRA, Sao Tome.Reste, Jorge. 1991. AMI: De Portugal para o mundo. Medice, August.Ruitenbeek, H.J. 1992. The rainforest supply price: a tool for evaluating rainforest conservation

expenditures. Ecological Economics, 6:57-78.

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Societe Generale pour l'Industrie. 1992. Reabilitagao de Riboque e Lucumi. Repdblica de SaoTome e Principe Fundo Social e de Infraestrutura.

Traore, Por Sitapha. 1992. Relat6rio revisto do estudo sectorial sobre o abastecimento de dguapotavel e o saneamento. Ministerio dos assuntos econ6micos e financeiros/OPS/PNUD.

UNDP. 1991. Etude 'Lutte cntre la pauvret6" I Sao Tome et Principe: rapport sue le seuil depauvretd de I'annee 1987 a 1990. UNDP, Sao Tome.

UNICEF. 1991. Sao Tome and Principe: Progress, against all odds. UNICEF.World Bank, Solomon Islands: Review of Agricultural Programs, Washington, D.C., December

1986.World Bank, Kiribati: Economic Developments, Issues and Prospects, Washintgon, D.C., May 1988.World Bank. 1990. Sao Tome and Principe: Country strategy paper. World Bank, Washington.World Bank. 1992. Democratic Republic of Sao Tome and Principe: Country economic

memorandum. World Bank, Washington. [September 1992 Green Cover].World Bank. 1992. Jamaica environmental issues paper. World Bank, Washington, D.C. [26

October 1992 Green Cover].World Bank. 1992. Mauritius environmental monitoring and development project: Staff appraisal

report. World Bank, Washington. [16 November 19921.World Bank. 1992. Republic of Cape Verde: Elements for an environmental strategy. World

Bank, Washington. [30 June 1992 White Cover].World Bank. 1992. World development report 1992: development and the environment. World

Bank, Washington, D.C.'W'orld Tourism Organization. 1992. Indicators of sustainable tourism. WTO, Madrid. Draft.

Table A.1 - Summary Indicators for Comparabif Island Nations

Country Existing Institutions for Environmental Key Environmental& Basic Information Management, Concerns

General Policy Recommendations & Intentions

Republic of Cape Verde * a NEAP is now being developed but (June 1992) no * water availability10 volcanic islands & 5 islets 650 km off W. Africa coast central government agency to oversee its implementation * water ponutionLand Arca: 4,033 km' Population: P.37 mil (1990) General Policy Recommendations 0 soil erosionPop Density: 92/km2 Capital: Praia, pop 57,000 * develop a national environmental policy 0 coastal erosionLiteracy: 37% Life Expectancy: 60 years cstablish appropriate public sector institutions * EEZ polutionEconomy: fish processing, salt distilling, clothing. * provide legislation, monitoring & enforcement of laws &Exponls: seafood, coffee, bananas. PCI: UST) 890 (1990) regulations

0 re-appraise respective roles of markets & state

Jamaica 0 National Resources Conservation Authority, established 0 soil erosionLand Area: 10,991 kin2 Population: 2,460,000 (1990) 1991, is part of the Ministry of Tourism and Environment a water pollutionPop Density: 224/1kmr Capital: Kingston, pop 525,000 0 the Commission has ultimate responsibility forLiteracy: 96% Life Expectancy: 74 years environmental quality - developing regulations, advisingEconomy: bauxite, aluminum, food processing, textilcs, its Ministry; monitoring & enforcement; managingmachinery, manufacturing, tourism. Exports: sugar, bananas, national parkscoffee. PCI: USD 1,500 (1990) General Policy Recommendations

* review national policy on land usz to clarify ownership* review property tax structur

Maurilius ministerial level National Environmental Commission * water poUutiongroup of islands in Indian Ocean, Mauritius is largest island E Environmental Protection Department within Ministry of 0 fishey exploitationLand Area: 2,045 km'Population: 1,080,000 (1990) Environment and Land Use * marine degradationPop Density: 528/kmkCapital: Pt Louis, pop 136,000 Under Environmental Investment Program * threatened flora & faunaLiteracy: 83%Life Expectancy: 68 years 0 establish institutional capability through modirication ofEconomy: textiles, wool products, food processing, existing legal & institutional systemchemicals, tourism, electronics, jewelry. Exports: sugar, tea, 0 develop a National Physical Development Plan to guidemolass. PCI: USD 2,250 (1990) land use on the islands

Seycheles 0 Environmental Protection Act (1988) established the 0 water pollutionI 15 islands in Indian Ocean, 41 Granitic & 74 Coralline Department of Environment (DOE) to coordinate * coastal erosionLand Area: 445 kim' Population: 66,627 (1990) environmental responsibilities of other departments 0 soil erosionPop Density: 150/km2 Capital: Victoria, pop 23,000 0 DOE initiated a review of environmental legislation (1989) * fishery exploitationLiteracy: 58% Life Expectancy: 70 years to strengthen & extend environmental laws * cora reef damageEconomy: tourism, food processing, boat building Intended Generl Policy Action as per Seycheles' NEAP * air & noise polutionExports: coconuts, cinnamon, seafood * regular state of environment reporting 0 threatened for & buna " xPCI: USD 3,180 (1992) * legislation & procedures for environmental asessment 0 :>

* annual susainable development audits of public agencies. , . vo~~~~~~~~~~~~~~~~~~~~~~~~~~.

Table A.2 - Summary of Environmental Issues and Mitigative Efforts: Cape Verde

Environmental & Economic Impacts of Causes of Mitigative Efforts -Environmental Problems Environmental Problems Government & Bank RecommendedIValerAvailabilty * water prices below cost of supplies Government Efforts• ground water & sea water desalinization are * water lost in the supply & distribution network * plans to improve water & sanitation systemsmain sources of supply l lack of municipal financial resources to in Praia & Mindelo are underway* ground water supplies falling on island of Sao maintain water distribution network * in Mindelo treated waste water is used forTiago * agricultural irrigation water is subsidized, its agriculture* on average in rural areas 65% of population use accounts for 84% of total water use Bank Recomnmendations

has access to drinking water, on Sao Tiago, it * water conservation measures are not * price water according to. its long run marginalis 50% undertaken (exception in Mindelo, island of supply cost to achieve efficient allocation* water in Praia (national capital located on Sao Sao Vicente) * enforce charge collectionTiago) is rationed * salt water is infiltrating ground water * in urban areas, reexamine willingness to pay* increased human health & costs for water* constrained agricultural production * undertake water conservation measures as* constrained industrial development alternative to supply increasesWater Pollution -Surface, Ground & Marine * in Praia 3% of households are served by a Goternment Efforts* local po!lution of the sea worst near Praia sewer system; 20-30% of households have no * plan to improve water & sanitation systems in* threatens water availability & increases access to waste disposal Praia & Mindelo is underwayinfrastructure costs * collected sewage is dumped untreated into sea Bank Recommiendations* increased human health & costs * local dumping of solid wastes on beaches * in urban areas, reexamine willingness to pay* loss of potential touism development * no municipal financial resources because for sanitation services

(except for Mindelo) no charges are levied for * increase charges for sewerage & wastesewage & solid waste disposal collection services, in order to cover costs

* industrial pollution: brewery emissions * enforce charge collection* fisheries pollutiorr residue dumping by * establish guidelines on industrial pollution

fishing vessels * establish guidelines on the disposal of* agnculttural pollution: livestockl maintained in hazardous waste

urban areas * undertake public educationSoil Erosion * Sahelian drouglt; average annual reduction in Government Efforts* erosion estimated at 30 tlha/yr in the arid zone rainfall of 54% during the drought periods . reforestation programs covering 15% of landto more than 100 tlha/yr in the sub-humid * unsustainable fanning techniques area since 1975zone * inadequate extension services Bank Recommendtoions* loss of land suitable for cultivation or pasture * lack of incentives for fanners to undertake soil * improve extension services to farmers* loss of land productivity conservation * undertake public education

*0rh

Coastal Erosion * large scale sand removal for construction Bank Reconunendations* two beaches on Sao Tiago irreversible * no regulations on industry or residential * provide alternative building materialsdestroyed by sand removal sectors * enforce a policy to prohibit sand removal* destruction of sea turtle habitat * open access to beaches, no charge for sand* saline infiltration of grnd water removal* increased infrastructure costs* loss of tourism potentialExclusive Economic Zone Pollution * no fnancial resources for surveillance & Bank Recommendations* unproved but suspected dumping of hazardous policing * organize an international effort to survey &wastes by foreign vessels monitor EEZ* destruction of sea life habitats & sea life* contamination of food chain* decreased marine productivity .* increased human health costs

-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-

Li :JQ j

0{D >

Table A.3 - Sumnuary of Environmental Issues and Mitigative Efforts: Jamaica

Environmeatal & Economic Impacts of Causes of Mitigative Efforts -Environmental Problems Environmental Problems Government & Bank RecommendedSoil Erosion * land is very susceptible to erosion, 80% of GovernmentEfforts* of the 33 watersheds, 19 are badly eroded land surface is hilly or mountainous; more * setting of leases & stumpage fees on public* in the past century more than 60 rivers ceased than 50% has slopes of greater ffita 20 lands to commercial ratesto flow year round degnes * land tiling projects* flooding is becoming more frequent & more * inadequate agricultural extension services * Blue Mountain Coffee projectsevere * deforestation for agricture * National Parks projects* increased siltation of dams * deforestation for charcoal production. * forestiy & hydrology projects.* blocked water courses * open access to public lands. Bank Reconmendations* damaged marine habitats * unsustainable farning tecliques * land tenure reform, property taxes, pollution* increased pollution of ground water * government support for annual crops & taxes, & maintenance of commercial rates for* increased human health costs livestock - both ill-suited for hillside public land leases & stumpage fees* increased infrastuctur costs agriculture * improve education & extension services* decreased agricultmal productivity * pooiy planned infrastructure & * increase capacity of key ministries* decreased marine productivity housing/commercial development * invest in major watershed protection &management efforts; & in forestry.______________________________ _ .conservation & management projectWater Pollution - Surface, Ground & Marine * sewage: 24% of pop. has muncipal sewerage Government Efforts* ground, surface & marine water resources connection; over 50% (70% in rural areas) use * Kingston Harbor clean-up studyincreasingly poDuted pit latrines; the rest use indoor water closets * North Coast Development project (water* high nitrate concentrations recorded near not linked to public system supply & sewerage investment)Kingston & in Kingston harbor * untreated or primary treated sewage is * planned solid waste management project* aquifers contaminated by sodium from dumped into the sea Bank Recommendationsdisposed aluminum tailings * appropriate landfils for solid waste do not * issue water policy* typhoid outbreaks in the Roaring River area exist, nor does specific facilities for disposal * differentiate rates for water services* potential for cholera outbreak of hazardous wastes * charge efficient prices for water, sewage &* important natural habitats - coasta wetlands * industnal pollution: agro-industry, minerals garbage services& coral reefs - threatened industry, marine pollution from near-shore & * set & monitor standards for effluent quality* fertilizer & pesticide pollution linked to off-shore sources - water pollution taxes; input & output taxesfalling productivity in mafine fisheries * agricultural pollution nm-off & leaching of * provide techrical support & information to* increased infrastructure costs agricultural inputs private sector* potential loss of tourism revenue * over-pumping of irrigation water has led to * require solid waste contracts to include the* agriculture productivity loses- sugar estates saline intusion into coastal aquifers cleaning of drainage gullies in Kingston YQabandoned due to loss of irrigated water * invest in waste water treatment in Kingston; & Xsome further sewerage development 4

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Table A4 - Summary of Environmental Issues and Mitigative Efforts: Mauritius

Environmental & Economic Impacts or Causes of Mitigative Efforts -Environmental Problems Environmental Problems Government* & Bank RecommendedWater Pollution - Surface, Groniad & Marbae * inadequate sewage treatment & disposal from Bank Recommendations* loss of water supply through degradation of houses, hotels, businesses & industries * strengthen legislation & reguatoDy frameworklagoons & coniamination of ground water * inefficient & incomplete solid waste collection to deal with sewage seepage, waste dumping,* human health problems -100 deaths annually * unmanaged solid waste disposal sites effluent disposal, & pollution from marinedue to enteritis & other dianiheal diseases; * inappropriate locations of industries soarces (yachts, boats, etc.)31,000 cases of these diseases treated * industrial pollution: emissions from textile * public educationannually in hospitals & dispensaries dye houses Envsronmental Investment Program* fish have become extinct from some streams * no suitable disposal sites for toxic wastes * prepare National Sewage Master Plan* destruction of lagoons & coral reefs * agro-industrial pollution: loading of organic * prepare National Solid Waste Management* decreased fisheries productivity wastes in rivers by the sugar processing sector Plan* potential loss of tourism revenue * agricultural pollution - run-off of herbicides, * upgrade laboratory facilitiesfertilizers, insecticides, &fungicides * implement urgent works: rehabilitate existing

landfill sites; prepare new saritaly landfill site* create industrial paks* conduct sbudies: impact of specific pollutants

on environment; incenfives or controlmechanisms for industry; establishment of ahazardous waste control board

* improve fertilizer pesticide use. & regulation* research use of integrated pest management_ __ _ ____________________ _ fertilizer studies & researchFisleries * illegal fishing methods, poor fishing practice GoveramieniEfforts* artisanal fish catches have declined over past & over fishing * regulations on some fishing practices - net10 years * poor enforcement of existing fishing sizes, spear fishing, fishing reserves, choral &regulations shell harvesting

* reduction mangrove forests Bank Recommendaions* insufficient data on fish stocks * improve enforcement of regliations by

increasing resources to responsible bodies* mobilize community support* educate public on need to protect marine areas| develop marine expertise

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Maoine Degradation - * insufficient data to determine relative Environmental Investnmnl PrograntBeaches, Lagoons & Coael Reefs contributions of each suspected cause of * prepare marine environment management plan* insufficient data to gauge the extent of degradation * establish manne parksdegradation * no marine management * establish conservation center* beach erosion suspected * reduction in mangrove forests * imwestigate marine pollution* coral reef ecosystem damagc supected * removal of beach sand * monitor marine ecosystem* potential less of land * removal of coral, shells & fish * collect oceanogaphic data* potential loss of toWim revenue * water pollution* potential loss of marine productivityThtreatened Flora & Fauna * introduction of foreign species of animals; GovernmentEffors* extinction of many plants & animals has example, rabbits & goats * ecological restoration & 10-year managementalready occuared * absence of environmental management plans plan for Round Island*loss of genetic stock * deforestation EnvironmentalinvestinensProgram* loss of potential tourism revenue * establish Black River Gorges National Park

* manage nature reserves* manage offshore islets* reforestationl In the casc of Mauntius. mitigative efforls of thc government include those which are part of the Bank-financed Mauritius Environmenta Monitoring andDevelopment ProjecL This project compnses core elements of the Mauritius EnWironmental Investment ProgramL

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Table A.!' - Summary of EnviroRmental Issues and Mitigalive Efforts: SeychellesEnvironmental & Economic Impacts of Causes of Mitigative Elforts -Environmental Problems Environmentat Problems Govemment of SeychellesWaler Pollution - Surface, Ground & Marine * in heavily populated urban area of Northern Intended Action as per NEAP* surface water is main source on granitic Mahe island, only 19% of total discharge is * set & monitor of surface water qualityislands; oxier coralline islands source mainly collected & treated before discharge at sea standards; similar action to be undertaken forgrousid water aquifers * most sanitation systems are deficient & ground water before 1995* fecal contamination in many rivers of Mah6 inapproptiate individual systems - septic tanks * supplement institutional capacity with more* contamination by pig manure (Beau Vallon & pit latrines resourcesBay area). * uncontrolled pig & poultiy rearing * strengthen legal framework.* deterioration of coral reef & ground water * uncontrolled use of fertilizers & pesticides * sewerage system projects for Greater Victoria,(Beau Vallon Bay area) * industrial discharges Beau Vallon Bay, Anse Volbert, Roche* saline infiltration of ground water aquifers * fisheries pollution: discharge from Caiman, & Anse aux Pinsfeared on coralline islands commercial & artisanal fising fleets * implement International Conventions for the* increased human health costs (garbage, fish wastes, oil, & brine) Prevention of Pollution from Ships* increased infrastructure costs * risk of oil spillage from commercial tankers * develop contingency plan for oil spills; &* potential loss of tourism revenue due to heavy traffic aroud the islands control program for off-shore drillingCoastalErosion * shoreline protection structures are often * shoreline erosion studies undertaken* many beach fronts on Mahe have beach inappropriate, based on poor understanding of * sand removal from beaches & river mouthsprotection structures coastal process banned* some shoreline areas on Praslin have receded * sand removal from beaches, coastal plains & * pnce of sand increased to encourage use ofmore than 50 m in the past 25 years river mouths substitute - fine granite crusher* loss of land for development Intended Action as per NEAP* removal of sand from beaches aggravates * underke baseline research & set-p aflooding of low lands during rainy season monitoring system* increased infrastructure costs * develop tecbhical expetise* potential loss to tourism sector due to beach * review curent land use plans for coastal zoneserosion * environmental guidelines for granite & sand

* sngthem monitoring & pealties for illegalsand removal

* identify & promote alternative constructionmaterials

* identify alternative sand supply sources

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SoilErosion * most of the granitic inner islands (comprising * land use planrning started in 1988 for Mahe,* severe soil erosion cn Pasin & Cwuieuse 54% of total land area) consist of steep slopes Praslin, & La Digue (tree main inner islands)* loss of agicultbial productivity & narow coastal plains; these areas are * establishment of conservation areasheavily populated * afforestation projects

.soil types on both the ganitic & coralline hit ended Adion asper NEAPislands naturally have low organic contents * apply national land use plans & set & enforce

* deforestation (especiafly on Praslin & guidelines for land useCurieuse) * monitor, protect & restore soil fertiity

(thwrgh education & efficient use of inputs)* revision of foresby legislation* laboration of forest management plansFishtries * introduction of pwse seine in pelagic (tuna) intended Action as per NEAP -* marine biologist believe that pelagic catches fishezy * strengthen existing programs of stockof recent years am close to sustainable levels * open access inshore fishery assent & monitoring for pelagic fishery,

e in the in-shore areas around the main islands & demersal fisheay in catain in-shore areasthere is evidence of over-exploitation of * develop management & consevation plansdemersal & semi-pelagic fish stocks* potential loss of fisheries productivityCoral Reef Dwmange * biochemical pollution * establishment of manne parks* evidence that reefs are deteriorating * siltation caused by dredging & reclamation Intended Action asper NEAP* potential loss to totrism sector * anchor drops & damage by divers * undetke baseline research & establish a

* coral removal monitonng system* insufficient resources for marine park officials * strengthen protection of coral reefsAir & Noise Pollution * major source: motor vehicles (5,000 IntendedAction asper NEAP* increased health problems registered) * set & enforce by 1995 appropnate air* potential loss of touism revenue * limited number of industrial sources, largest is emission standards for industry & vehicles, as

tuna canning factory which is equipped with well as noise pollution standards for industiy.fume treatment facilities appliances & products

* monitor vehicle emissions

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Threatened Fauna - Sea Tlurtls OGreen tures exploited by residents of outer * export of raw shell banned for* Green turtle vrtally etinct in the Islands for heal cosumption Hawksblll turtegrautic Islands, popubtio *Hawbbl rtle ebloted for la craft * FCbeies Legislation (I587)concentrtes in Adabr Indust srels prohibits filling of famales; killingestimaed ot ee turtle female eprotective liltion dilffcult to enforce of mles permt* eluoo - 3500 to SOOD *insufrient resources for marine park & other * ect to re 'cfemale d#eSi Hawksb environmenta law enforcement offiai proj ptretfae pafo 1200 to 1800 the Aldabm e asse

* potentlapo less of genetic s ttce Adiuo atper NRAP* l1sk of potentilouism reve n ueearm to ebom ga , do

.~~~~~~ea stdo _wmet & preununsge punt pluor Green and

Hxwsffl turde

World Bank. 1992. Republic of Cape Verdt: Ekments pr an Envrmetl SrateV, Africa Region, Technical Deparment, Draft Repor, June 30, 1992,Confidential.

Wodd Bank. 1992. Janaka Evironmental Lses Paper. World Bank, Washington, D.C. [26 Odober 1992 Gr.en Cover].

World Bauk 1990. Markr Elroumsenal Monioring and Depmen Project, Staff Appraisl Report No. 8996-MAS, Infasucur Opeais Dnivon,astern Afria Depamt, Novanber 16, 1990, Resticted Distbation.

Govanment of Seyche. 1990. Enwvomeal Maname Plan qfhe Sycheles 1990 - 2000, Revised Vesion, October 1990. (Prepard with advice andasstane of the United Naton Enionmna Progrm (UNEP), Unted Nations D bont Program (UNDP), and the World Bank.)

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-54- ANNEX BPage 1 of 3

ENVIRONMENTAL LEGISLATION AND INSTITUTIONS

1. Background. There is currently no national environmental legislation in STP. There Ishowever, numerous pieces of legislation, some dating back to colonial times and others which havebeen enacted in more recent times, pertaining to different sectors, which have environmental content.Pursuant to the growing awareness of environmental concerns and the need for a holistic frameworkwithin which to formulate national policy on the environment, the Government, requested assistancefrom the United Nations Environmental Program (UNEP) to provide technical assistance indeveloping an appropriately integrated legal and institutional framework for the management of theenvironment and natural resources in the country. A consultant from UNEP visited the country inApril, 1992 to assist the Government in this respect. Consequent to many interviews and paneldiscussions with key agencies in Government, donors and members of the private sector, a draft lawhas been prepared, which is currently being reviewed by a committee of lawyers in the country, theSociedade de Advogados. Their recommendations are soon to be provided to the Government.

2. Existing Legislation in Key Sectors. A review of the sectoral legislation containing relevantprovisions for protection of the enviromnent revealed that they are differing quality and depth. Someof the provisions have been drafted during the colonial era and have no relevance in the present day;some of the penal provisions, norms and standards would not thwart potential offenders. Theseprovisions indeed require amendment or in some cases repeal. Other provisions in legislation andregulations which have been drafted more recently, are too general and in the absence of specificcriteria and or standards are ineffective and unenforceable. In these instances detailed regulationsneed to be developed under specific legislation specifying standards and guidelines for effectiveenforcement to be possible. In order for meaningful regulations to be developed in key sectors,legislators should work in close collaboration with sectoral implementing agencies. The followingparagraphs provide a brief analysis of specific pieces of legislation with regard to their coverage ofenvironmental aspects.

3. Fisheries. The Fisheries (Marine Resources) Law, December 1991 contains provisionsregarding the exploitation of marine resources in the country. The law has provisions declaringunlawful the contamination of waters of the exclusive economic zone of STP through the activities offoreign vessels. There are no provisions however, stipulating standards and guidelines for the controlof fishing activities within the territorial waters of STP. Bearing in mind the current situation wherefishing activities are carried out by foreign fishing companies without any controls or monitoring byauthorities, it is critical to put in place an appropriate regulatory framework. Modifications should bemade to the existing law or separate regulations need to be enacted under the law, specifyingguidelines for the safe and sustainable exploitation of marine resources.

4. Forestry Laws and the setting up of Reserves and Protected Areas. In the forestry sector,the applicable legislation is outdated and does not provide for sustainable exploitation for woodresources. As the pressures on the forest resources increase with growth of populations and increaseddemands on woodfuel as well as increased logging and exports, new legislation specifying detailedcriteria for issuance of licenses for logging, for the use and exploitation of wood and non-woodproducts needs to be developed.

S. Currently there is no legislation setting up protected areas or reserves. In order to preservethe country's remaining primary and mature secondary forest and to conserve the unique biodiversity

-55-ANNEX BPage 2 of 3

in STP, it is important that legislation be formulated for the establishment of protected areas. Forestreserves and buffer zones should be set up to limit threats of deforestation and losses of biodiversity.

6. A draft law on forestry, the Anteprojeto de lei florestal, is currently under review by theMinistry of Agriculture and Forestry. The draft law proposes the setting up of a National ForestryService, the formulation of a national forestry plan and to establish a forestry fund. The legislationshould stipulate clear criteria for the issuance of licenses, guidelines for exploitation of forest and themanagement and control of reserves.

7. Land Use. The new land law, lei fundiaria of 1991, regulates the exploitation of rural areasfor agricultural purposes. It provides for the setting up of reserves for different and distinct purposes.There is a need for monitoring mechanisms and guidelines for land use, especially if land is to beused for specific purposes, in the "reservas". Regulations need to be developed to specify guidelinesfor land use so that some mechanisms are available for ensuring that land Is exploited for the purposesstipulated. ITis would also eliminate room for abuse of power. It is anticipated that a similar lawwould be formulated governing the use of urban areas. Similar provisions would need to be includedIn this proposed law.

8. Water and Sanitation. There is no legislation currently in effect which controls thedistribution and regulation of water. There are no regulations controlling effluent disposal and nopenalties for pollution of water sources whether through industrial or biological wastes. The STPSanitation Code of 1980 contains some provisions for the rights to safe water. It is understood that aFrench firm has developed a draft Code of Waters, followed by a Draft Regulation of Distributionand Drainage of Waters in 1991. This draft law has not yet been formalized. UNICEF hasdeveloped a water supply and sanitation program in collaboration with the WHO, which contains acomponent for monitoring or the water sources. Although STP's economy is basically agricultural,with only a few industries which are of very small scale, a regulatory framework is required forcontrolling effluents and for the conservation of water sources. Given the prevalence of diseases Inthe country, many of them water borne, the issue of sanitation and safe water supply is of realsignificance.

9. Proposed National Environmental Legislation. In response to the Government's request, aconsultant from UNEP, visited the country in April, 1992 to assist the Government in preparing draftlegislation on environmental protection. The draft Environmental Protection Bill for Sio Tome andPrincipe prepared with UNEP assistance sets the base for formulating environmental policies insectoral areas and for the formulation of a national environmental strategy. The draft law establishesa National Environmental Committee comprising representatives of all authorities in Governmentcurrently bearing environmental responsibilities. In addition the Committee would include membersfrom national NGOs. According to the draft law, the Committee's primary responsibility would bethe preparation of sectoral legislation and regulations in priority areas. The draft law also containsprovisions relating to the establishment of a national system of information on the environment,environmental zoning for setting up protected areas and the establishment of standards ofenvironmental quality.

10. Draft Law on Civil Public Action of Responsibility for Environmental Harn. TheGovernment is currendy reviewing a draft law providing for action to be taken against offenderscausing environmental harm. This law has also been formulated with the assistance of UNEP. Ihelaw provides for quick disposal (sumaria) of civil actions brought against potential offenders. TheMinisterio Publico as well as "Organs of the Local Power" are mandated with the power to sue

-56-ANNEX BPage 3 of 3

potential offenders. It is unclear whether the enactment Is intended to set up local tribunals to carryout this type of litigation. The Act should set up clear criteria as to what constitutes an environmentaloffence, the circumstances under which an action can be brought and by whom.

11. Existing Institutional Framework. Currently there are several different authorities whichcarry environmental responsibilities. Environmental functions and responsibilities in the country aredistributed amongst the Ministries of Social Equipment and Environment, Agriculture andCooperation and Regional Development, Commerce, Industry, Fisheries and Tourism, Health,Preventive Medicine, the Power and Water Company and the Ministry of Foreign Affairs. There issignificant overlap between the duties and responsibilities of different entities within specificMinistries as well as amongst different sectoral ministries. One example is the strong overlap in thefunctions of the Directorate of Physical Planification and the Directorates of Forests and of Habitatunder the same Ministry of Social Equipment and the Environment. Another example is the lack ofclarity of jurisdiction amongst the Ministry of Social Equipment and Environment and the Ministriesof Agriculture, Fisheries and Tourism and Foreign Affairs. The Ministry of Foreign Affairs isempowered with the treatment of treaties and conventions. It is unclear that in the field ofenvironment, (example, a convention on the Law of the Sea) the Ministry of Foreign Affairs wouldact independently or act on the advice of the Ministry of Social Equipment and Environment, or theMinistry of Fisheries and Tourism or both. The responsibility for water supply and maintenance ofwater systems and monitoring of water quality are distributed amongst several agencies including theAuthority for the Rehabilitation and Reconstruction of Water (URRA) and the Power and WaterCompany (EMAE). It is understood that there is a proposal for the setting up of a Directorate ofNatural Resources within the Ministry of Social Equipment and the Environment which wouldhenceforth be carrying the responsibility for water supply.

-57- ANNEX C

STATUS OF INTERNATIONAL ENVIRONMENTAL CONVENTIONS ANDPROTOCOLS IN SAO TOME AND PRINCIPE

Status International Convention or Protocol Legislation Title/Responsible Institution within STP

NP Nuclear Test Ban 1963 Ministry of ForeignAffairs

NP Wetlands Protection (RAMSAR)1971 Ministry of Agriculture

NP Biological and Toxin Weapons 1972 Ministry of Commerce,Trade & Industries

NP World Heritage Convention 1972 Ministry of ForeignAffairs

NP Ocean Dumping Conventien 1972 Ministry of ForeignAffairs

NP Endangered Species (CITES)1973 Ministry of Agriculture &Forestry

[under consideration]

NP Ship Pollution (MARPOL)1978 Ministry of ForeignAffairs

CP Law of the Sea 1982 Ministry of ForeignAffairs

NP Ozone Layer 1985 Ministry of ForeignAffairs

NP CFC Control 1987 Ministry of Trade &Industry

Ministry of ForeignAffairs

CP Hazardous Wastes Movement 1989 Ministry of ForeignAffairs

[under consideration)

CP Biodiversity Convention 1992 Ministry of Agriculture &Forestry

CP Climate Change Convention 1992 Ministry of ForeignAffairs

* NP: Non-participant; CP: Contracting Party; S(U): Unratified Signatory; S(R): Ratfied Signatory.

-5e- Annex D

ANNEX D - SELECThD CASES OF E.VIRONMENT.ECONO 0y LINK-_ _ES

1. Introduction

Because of its relatively small size, Sao Tome and Principe (STP) provides a unique opportunityfor studying potential interactions between economic policies and environmental quality. Inparticular, this annex investigates the following cases:

I - Land Distribution, Credit and Environmental DegradationII - Forestry Sector PolicyIII - Fishery Sector Policy and ActivitiesIV - Hydroelectric vs Thermal Power GenerationV - WaterVI - Toxic and Hazardous Substances (THS)VII - Quarrying BeachesVIII - Assessing the Economic Trade-offs of Mlalaria ControlIS - Environmental Issues on Principe

The major constraints to conducting studies of such interactions, however, are that data are oftenlimited and the types of economic policy reforms being studied are just in the process of beingimplemented. Many of these reforms represent substantial departures from historical economicpolicies and, as such, there is considerable uncertainty in the impacts of such reforms. In thisrespect, following the precautionary principle of environmental management is of key importance(Box DI).

An examination of the potential linkages does demonstrate a number of important principles forfuture management of Sao Tome's environmental resources. First, some of the case studiesillustrate that there are substantial economic benefits available if the country's environmentalresources are managed well; this is particularly clear in the case of fisheries (Case III), water (CaseV), coastal erosion (Case VII). Second, they show where inappropriate economic policy signalsor development decisions could lead to a degradation in environmental quality; especially inagricultural policies (Case I) and energy development (Case IV). Third, the linkages illustrate how

Box DlTwo Principles of Environmental Management: PPP and PPPP

Over the past two decades, two principles of environmental management have received increasing prominence inapplied economic policy design. The first of these, the Polluter Pays Principle (PPP) relates to the idea that the fullcost of environmental damages must be absorbed by a polluter. rhe second of these, the Precautionary Polluter PaysPrinciple (PPPP or '4P') relates to the idea that, if the costs of suct. damage are uncertain because of uncertainty in

ecosystem or economic linkages, the polluter should pay some premium to reflect this uncertainty. The premiumwould be reduced if the uncertainty of the impacts could be controlled either through improved monitoring of theimpacts or through undertaking investments that are specifically intended to reduce the uncertainty.

Ivlost of the applications of the polluter pays principle have resulted in regulations or taxes that effectively burdenpolluters with the costs of environmental damages. Pollution charges are such an example, as is liability legislationdesigned to give legal recourse to those suffering the impacts of environmental damage.

There are only a few clear applications of the precautionary pninciple, as it normally requires explicit recognition thatthe costs imposed on polluters may exceed the expected damages. However, performance bonds for minc

reclamation, as well as setting aside large areas for biodiversity protection are examples of the precautionary principlebeing applied. An example at the intemational level is the decision in late 1992, by signatories to the MontrealPtctocol, to accelerate phase-out of ozone depleting substances to a 100% reduction by the mid-1990s (as opposed toa 50% reduction by 2000 under the original ageement.)

H.J. Ruitenbeek. Draft, 231213.

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economic policies can at times be used beneficially to improve bothallocation as well as environmental quality; this arises especially in potential Ireforms (Case II), fisheries (Case III), the handling of THS (Case VI), ancbiodiversity (Case IX). The studies also demonstrate, however; that difficumust at times be made between human health and economic well-being, and e4is most apparent in the instance of proposed malaria control programs in Sao

2. Case I - Land Distribution, Credit and Environmen'

The Government is currently undergoing a substantial program of land distribiin an effort to increase agriculture sector output and encourage self-relianceIncluding some land which has already been distributed under a preredistribution program will, over the next five years, see a total of 30,000 ha (

control of individual farmers. The redistribution program was originally st;drought which made it clear that local food production should receive high p.was to achieve hi-her nutritional security. Moreover, at that time, there werein the country in dire need of reorganization because of poor economic conditi4land distribution program, some 10,000 ha were distributed with virtually rattached, and about 80% of these lands were never cultivated. The newredistribution of 45% of the previous allocation (4500 ha) plus an additiona75% must go to plantation workers, former public servants, young farmers, aand there is a ceiling of 10 ha per family. The remaining 25% could be 1individuals or to business groups or associations. Although the previous lancgenerally gave titles for periods as short as two years, the current programup to 20 years in length. The leases are renewable, can be sublet, and ha%attached to them. However, a lease contract exists for each package which crevocable within the lease life if the lease holder is in breach of the contract.

The exact nature of all of the redistributed lands is not yet completely certaincapability is part of the original stages of the program. Approximately 1°planted with poor quality (non-rehabilitated) cocoa, and 8,000 ha are plantecrops (coconut, oil palm and coffee). Steep slope areas will not be paralthough it is clear that many of the allocated plots will be adjacent to thesMany of these steeper slopes are currently planted with low yield cocoa (50 kinot likely that these areas will see improved management. They will, in fact,

While it is expected that the distribution will in general improve economcountry, there are a number of potentially detrimental environmental externaddressed. Such externalities arise because, under small plot p:vate landenvironmental costs of unsound management are generally neglected. It is resite costs will also be neglected under communal or large-scale plots but,actually larger in such a case, many of the 'off-site externalities' that occmanagement are actually internalized 'on-site' costs under communal manaenvironmental costs are typically most significant in steep slope areas andpublicly ownAd or open-access land. In steep slope areas, there is an incenignore the impacts that soil erosion might have on neighbouring plots. In area,lands, or lands that are largely neglected, there is an incentive for farmerslands and cultivate them with marginal crops or, where there are some existingitrees or secondary forest, to overexploit these as an open-access resource.program, it is clear that there is a potential for environmental damage becconditions exist: the undistributed open-access neglected land will in general beslope areas that are not suitable for cultivation, but which may have impolfunctions such as watershed control, erosion control or bird habitat. Althc

-60- Azme-x rEag"

surveys of such degradation have been completed, site visits of steep slope areas during a fieldmission in December 1992 showed that inappropriate farming techniques were prevalent; trees hadbeen cut down in marginal areas, vegetable crops had been planted, and soil erosion was evident inmost areas visited. There are a number of factors that might offset these potential impactsalthough, in Sao Tome, most of these factors would require some explicit policy intervention tomake them more effective.

First, it has been shown in other cultures that implicit cultural institutions will tend to offset theimpacts of off-site externalities. In effect, there is in such cases adequate social pressure to ensurethat any given small holder will manage his or her plot in a manner that does not harm theirneighbor. In Sao Tome, however, two factors prevent such mechanisms from operating. First,there are no cultural traditions of land management that would entrench such attitudes; SaoTomeans have historically suffered a history of (at worst) slavery and (at best) indentured wagelabor. This need not be regarded as a complete barrier, because there is a cultural tradition ofsustainable communal management of artisanal fisheries, and a sociological survey conducted priorto the distribution program did indicate that 70% of the population was in support of such aprogram. However, even if social pressures can be used to removed such externalities, the secondproblem is that for such pressures to work there must be a general awareness that externalities -such as soil erosion or water contamination from pesticide misuse - even exist. The lack of asmallholder agtrarian history exacerbates this problem, and it can only be overcome by effectiveextension and education programs.

Second, such externalities can be partially overcome if clear title is given to smallholders. Partialor conditional leases, such as those in the current program, tend to shorten the time horizon ofdecision-making and, in effect, increase discount rates. Higher discount rates will cause a greaterdegree of neglect of future costs (from soil erosion), and will result in less than optimalinvestments in soil conservation practices. Again, however, such linkages only apply if farmersare indeed aware that unsound techniques will yield to future soil loss. In this case, theconditionality of lease renewal may in fact be used to advantage if one of the use conditions in thecontract is that farmers engage in environmentally sound practices. Another means of encouragingsound practice is to provide an explicit ongoing economic incentive. For example, farmners inenvironmentally vulnerable areas may be provided with a partial rebate of some of the annualleasehold fees; these fees are normally anticipated to be about 15% of the value of the estimatedproduction, but this might be lowered in steep slope areas if farmers adopt prescribedenvironmentally sound management practices.

Third, extemalities can be limited if credit is directly targeted to smallholders for implementingenvironmentally sound conservation practices. If credit or capital is not available during those

Box D2A Successful Smaliholder Credit Program In Sio Tom6

The Cooperative League of the United States (CLUSA) implements a cooperative agreement with USAID toerncourage the formation of small farmer's associations in Sao Tome and Principe. In early 1990, the programstarted with 6 such groups and by late 1992 there were 18 cooperative farmer groups; plans were also in place toexpand the program into fishing and housing cooperatives.

The cooperatives to date have been successful at securing loans from the bank at commercial rates. They theneffectively on-lend to individual farmers by buying necessary farm inputs, giving the inputs to the farmers, andobtaining repayment when farmers obtain payment for their harvests. By the end of 1992, there were some 1000households in tis program, of which some 36% had outstanding agricultural loans via the cooperative and 44% hadoutstanding commercial loans. The typical loan size is 100,000 Dobra and is paid witWn two years; the maximumloan is 400,000 Dobra. The program has enjoyed a very good repayment record: achieving approximately 85-90%repayment.

Annex n-Vi1-

parts of the year when there is no income from the farn, there may be an incentive to go into openaccess public lands to supplement the. income needs. As such, the credit issue potentially wouldexacerbate any of the problems associated with the externalities of the land distribution. In SaoTome, credit has historically been available primarily to groups or associations, as individuals didnot have the required collateral. The most successful program have involved lending toorganizations or associations (Box D2); it is therefore expected that there will be a continued biasnot to lend to individuals . As the current land distribution policy will distribute mainly toindividual landowners, credit constraints could create an unintended externality. A number ofinterventions to address this are possible including: (i) providing targeted credit to smallholdersadjacent to environmentally vulnerable areas; or, (ii) during the land distibution process, distributethe environmentally vulnerable areas preferentially to groups or associacions.

3. Case I - Forestry Sector Policy

An inventory of the forest estates shows thatSao Tome still has substantial primary forests Forest Cover In SU TomE and Principeand mature secondary forests; these forestsrepresent almost 60% of the country's land A 1990 inventory of forest cover in Sao Tome andarea (box D3.) The economic potential of Principe showed substantial forest cover still exists:this forest is substantial. The currentcontribution of the sector to national output is Primary Forest 28 400 haestimated to be relatively small: less than $1 Secondary Forest 30 .100million annually based on a commercial Shadetreesonplantations 32 300(traded) output of about 5,000 cubic meters Unvegetatedland 8 1t0and fuelwood harvesting of about 170,00 I w 700cubic meters. The sustainable yield is Total 99 -@ haestimated to be about 110,000 cubic metersannually of commercial wood and 70,000 Source: intelforest (1990).cubic meters of fuelwood. Although nodetailed inventory has been conducted, the value of this commercia1 harvest is of the order of $10-$20 million annually.

Currently, however, there is no system in place that allows the government to extract any of theavailable rents from the resource. There are no stumpage fees or license fees that generate anysubstantial revenues, and firms and individuals are basically cutting wood in an unrestrictedfashion. One significant constraint to forestry sector expansion has been that the government hasnot, to date, authorized major timber export concessions. This has ensured that the forestry estatehas not been overexploited, but there are obviously significant opportunities for improving theextraction of some rent from this resource. A stumpage fee of, for example, $20 per cubic meterwould substantially limit fuelwood use and could generate almost $4- million annually forgovernment coffers on a sustainable basis. An alternative to such a system would be to establish asystem of competitive bidding for designated tree farm licenses; this would likely increase thepotential rent extracted by governments even further, and would provide incentives toentrepreneurs to manage the forests sustainably.

4. Case III - Fishery Sector Policy and Activities

Fishing is an important economic activity that has strong cultural roots in Sao Tom6. It has,however, has recently suffered significant setbacks because of mismanagement. A key componentof the domestic fishery is from small-scale artisanal fishing (Box D.4). Its importance has beeneven clearer as the domestic industrial fishing industry ceased operation in 1988, but recentdeclines in yields suggest that either fish stocks are coming under unsustainable pressure or capital

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stock in the fishery is in very poor condition. Although it is noted that yield has dropped recentlybecause of the lack of fuel availability for motor-powered boats (its price increased from 32 Db/literin 1986 to 320 Db/liter in 1992), the number of traditional craft available has remained relativelyconstant and the availability of such craft to local fishernen has remained similarly high; the ratioof non-motorized boats to fishermen has remained relatively constant at approximately 0,89:1.Improved management of the fishery would increase the likelihood of its sustainable use.

Box D4Fishing Activity In Sbo TomE

Fishing activity in SLo Tome. suggests that there has been significant mismanagement of the industry. Although nodata are available for fishing stocks, the recent declining yield to effort ratios shown in the following calculationssignal potential problems with both the fishing equipment and fish stocks.

1985 1986 1987 1988 1989 1990 1991 1992

DOMESTIC PRODUCTION (tons)Artisanal 2137 2238 2807 2873 3490 3572 2221 2000Industrial 1525 395 175 0 0 0 0 0Total 3662 2633 2982 2873 3490 3572 2221 2000

NUMBER OF FISHERMENTotal n/a n/a n/a 1770 1800 1714 1700 1743

YIELD/EFFORT (tons/person)Y:E n/a n1a n/a 1.62 1.94 2Q8 1.31 115

Source: Based on data provided by Ministry of Economics and Finance.

Box DSEstimates of Value of Offshore Fishery

Sao Tom6 and Principe captures value through giving licenses to various foreign fishing fleets for fishing in STPwaters. A major agreement has been in place with the EEC that extends from June 1990 to May 1993. The 3 yearrental is for 1.6 million ECU in direct payments plus approximately 125,000 ECU per year in payments made onbehalf of STP to various regional fishing authorities such as the Regional Committee for the Gulf of Guinea and theInternational Commission for Atlantic Tuna (ICAT). The EEC also provides approximately 50,000 ECU inpayments in kind for research efforts to improve offshore fishery management. In addition to these payments, STPhas granted 5 one-year permits to Russia at $17,000 eacht although these have fixed quotas attached there is nomechanism by which the quota can be controlled. An experimental license is also being granted to Japan, but it hasno significant economic value to STP.

The captured value thraugh the above licenses amounts to an average of approximately USS935,000.

By contrast, the value o.f the exports captured by the foreign fishing fleets is significant. The total official catch oftuna over the period 1988-1992 is shown below. At current tuna wholesale prices, this represents a gross exportvalue of approximately USS20 million annually. Given that the actual catch likely exceeds this, STP is currentlycapturing less than 5% of the gross value of its fishery.

1988 1989 1990 1991 1992 (est)OFFSHORE TUNA CATCH (metric tons)

EEC 2992 1511 1919 2647 >3000Russia 1684 408 666 1278 >1000

Total 4676 1919 2585 3925 >4000

i Source: Based on infonnation provided bv Ministrv of Fisheries, December 1992.

6? ~~~~~~~Annex D

The second problem with the fishery relates to its offshore component. It is dominated exclusivelyby foreign vessels, which pay modest licenses to Sao Tome and Principe in return for the right tofish in their waters. To date these licenses have been exclusively for tuna, although there is adesire to expand it to other species. The major current problemh, however, is that'the licensingsystem captures only a small portion of the available value of the resource (Box DS). Further,given that STP has no means for monitoring the official catches, it is possible (and indeed likely)that the official catches are under-reported and that the rent capture is smaller still than the totalvalue of production from STP waters.

A significant opportunity for growth is being missed because of the failure to effectively participatein fishery resource rents; A comprehensive management strategy that concurrently addresses theregional issues of the offshore fishery and the domestic issue of improvements in artisanal fishingcan have iinportant economic and environmental benefits. The lack of effective monitoring,coupled with a pricing regime that implicitly undervalues the fishery, leads to potentially substantialeconomic and environmental degradation of this important resource base. Economic instruments -such as increased license fees or the introduction of competitive bidding - can provide a significantincrease in fishery rents while also encouraging more sustainable use of the country's offshorefishery.

5 . Case IV - Hydroelectric vs Thermal Power Generation

A substantial debate exists in Sbo Tome over whether to rely more on hydroelectric capacity forpower provision, or to use thermally generated power based on imported fuel. There has been, inmany instances, an implied preference to move to hydroelectric power, both on economic andenvironmental grounds. The economic argument has been that it is cheaper to rely on hydroelectricpower because it does not create a foreign exchange drain for oil. The environmental argument hasrelied on the relatively common assumption that hydroelectric power is cleaner than thermallygenerated power. Both of these presumptions are, however, suspect in Sao Tome and theadvantage of hydroelectric power over thermal power is less than clear. The economic aspect oa'the problem is somewhat complicated by a bias for aid agencies to donate funding for capitalstructures and to let Sao Tome then cover the operating costs. For example, the Portuguesegovernment recently donated a hydroelectricinstallation to Principe; the facility is to belocated on the Rio Papagaio. In addition, the Box D6recent commercialization of the state-operated Electricity Tariffs in STPpower and water company, Empresa de Aguae Electricidade (EMAE), has dictated that Power rates are anticipated to see substantial increases justprices charged by the utility reflect the cost of to meet current costs of delivery. The current anddelivering services. Substantial price projected rates for selected power users in the country are:increases are in fact planned to ensure that l dUser Dmand 1992 1993costs are recovered (Box D6). Some of these a of Total) (Db/kWh)(Db/kWh)prices will need to go higher still if new ogeneration capacity is put into place. Small Household 9% 14 14

A correct economic approach to generation Other Household 30% 31 46planning would be to develop hydroelectricpower or thermal power, whichever is least |LargeCommercial 11% 42 61cost, takinsg into account all of theenvironmental externalities and taking into Industriai 3% 42 61account both the capital and operating costs.Under the currently distorted capital pricing Public Administration 20% 55 165regime, hydroelectric power invariablyshows a lower cost because there is no fuel Source: Based on information from EMA E, 12192.

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Box D7Marginal Costs of Power Generation

What gets included and excluded in calculating power generation costs is an important factor in ariving at ageneration plan that is both economically optimal and environmentally sensible. The-table below shows generationcosts for selected new capacity additions, based on typical capital and operating costs for new facilities.

The thermal facility costs are based on capital costs for a proposed French financed facility of 5000 kW, having aninstalled capital cost of approximately $4.72 million and a load factor of 65%. The hydroelectric generationestimates are based on preliminary cost estimates for the proposed Abade River 3 hydroelectric facility, which willprovide 1856 kW capacity at.a capital cost of $10.65 million. The hydroelectric project will operate at a lower loadfactor of 52% to reflect seasonal storage capabil-ties.

A number of conclusions are apparent. First, if capital costs are 'gifted' by donors, there will be a bias to invest inhydroelectric capacity. Second, if the capital charges were fully serviced by STP, the foreign exchange drair fromdebtservicing a hydroelecticfacility coud be more than the foreign exchange drain for importing fuels for tlermalpower. Third, any new capacity should lead to higher power rates as the marginat cost for both thermal andhydroelectric power exceeds the current tariff for the marginal user, which is predominanty the small howehoidsector as electrification is extended to more households to meet growing poputation demands.

1992 Power Tariffs Additional Thermal Power Costs14-55 Db/kWh Capital Costs = 7 Db/kWh

42 Db/kWh(weightedaverage) Operating Costs = 19 Db/kWhTotal Costs = 26 Db/kWh

1993 ProJected Power Tariff Additional Hydroelectric Power Costs14-165 Db/kWh Capital Costs = 55 Db/kWh

82 Db/kWh(weighted average) Cperating Costs = 14 Db/kWhTotal Costs = 69 Db/kWh

Source: Generation costs based on World Bank staff estimates. Power Rates based on EMAE.

import requirement If this capital bias is removed, thermal power would in some instances turnout to be the least-cost method for generating power (Box D7). If one includes the currentlyunquantifiable environmental costs, the balance swings even further in favour of thermalgeneration; in Sao Tome, hydroelectric power in most cases has significantly higher environmentalcosts than thermal power, as air pollution is not a problem but watershed modification is a potentialthreat.

In summary, the efficient allocation of power is currently hampered by a bias towards inexpensivecapital and implicit neglect of the environmental costs associated with different generationalternatives. A generation plan, which includes environmental costs, can help in selectingopportunities for reducing fuel imports by exploiting hydroelectric potential where theenvironmental and economic costs of such potential are demonstrably less than those of thermalgeneration.

6. Case V- Water

Water in Sao Tome is a key environmental concern because of the high incidence of water bornediseases in the country. Although there is generally no lack of water, water quality is a majorconcern as there is no water treatment capacity available anywhere. Increased growth in waterdemand is placing pressures on the recently commercialized EMAE to provide both added deliverycapacity and new treatment capacity; from 1991 to 1992 demand growth in water exceeded 40%

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(Box D8). To a large extent, this may be Box DSattributed to the fact that water has essentially Water Tariffs and Consumption In STPbeen a free good; water tariffs are in place butthe lack of metering has haiupered EMLAE's Power rates are anticipated to see substantial increases justability to recover costs through the tariff to meet current costs of- delivery. The current andsystem. A current project involving the projected rates for selected power users in the country are:installation of metering is expected to l limprove this situation, as users will then have DEnd-ser cTaiiff a financial incentive to use water more Sma (Dbcubic meter)sparingly. OtherHouschold 6.0

Water quality measuremrents have only been Small Commercial 6.0..done sporadically, but the general picture is OtherACommercial 7.5 6that many of the water supplies are Public Admistration 6.0contaminated at source. The city of Sao Total Water Consumption (cubic meters)Tome is serviced by a system of springs that 1991 2.9 millionwere connected by the Portuguese in 1955. 1992 <ft.) 4.1 millionAt that time, the springs were clear, odorless,and had no trace of contaminants. Tests of Source: EMAE, 12/92.the supply system at 31 stations in 1988 __

showed that 17 (55%) of the stations werecontaminated with unacceptably high fecalcoliform counts. A thorough bacteriological analysis of 9 of the actual supply sources in late 1991showed that none of them could be regarded as potable; some disinfection or sterilization would berequired in all cases before the water was fit for consumption . Three of these sources hadcoliform or fecal streptococcal counts so high that they exceeded the upper limit of the analyticalequipment used to measure the contaminants.

The treatment of this water is of critical concern, as it currently causes human health problems aswell as higher direct costs as individuals attempt to treat the water themselves through boiling. Thecosts of boiling, plus the productivity lost because of waterborne illnesses, can be regarded as alower bound estimate of the economic benefits of supplying treating water. The benefits thatwould accrue to households from avoiding the need to boil water is estimated to be approximately$3.9 million annually; this is based on average annual water usage of 15 cubic meters per personand applies only to the 35,0000 residents of the city of Sao Tome. In addition, the benefits ofeliminating productivity losses from water-related diseases such as diarrhea, intestinal parasites,dysentery and amebiasis, and the benefits from decreased burdens on the medical system, areestimated to be $0.6 million per year. This is based on an incidence rate of 1200 cases per 10,000of population, and lost time of approximately one week per case. In summary, the direct economicbenefits of eliminating water pollution are currently at least $4.5 million per year. These can beexpected to increase rapidly for a number of reasons: population is growing; energy costs areincreasing; and the opportunity cost of foregone output is rising as STP improves its economicdevelopment prospects.

By contrast, the cost of improving water quality through some form of improved treatmentsuggests that the economic benefits far outweigh the costs. Recent estimates by EMAE forsubstantial additions in potable water supply and treatment capacity indicate that the totalinvestment required for the major urban areas on the island of Sao Tome is of the order of $18.8mnillion. Given the minimum level of benefits calculated above, this implies that such aninvestment would have an economic rate of return of at least 24%.

Such an investment, if passed on through the water rates, would have a substantial impact on watertariffs. Even if water demand were to double to 8 million cubic meters annually, the marginal costof this investment is approximately 80 Db per cubic meter. This is more than ten times the currentwater tariff; it is clear that the current system of water pricing still embodies a substantial hidden

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subsidy. One meaas of removing this subsidy is to increase water prices to the extent that they docover all of these costs. Although there might be some resistance to such a scheme on politicalgrounds, some of the higher water charges will be offset by a decrease in costs currently incurredby city dwellers in boiling water or lost work. In addition, there may be opportunities for somecross-subsidies based on differentiating between industrial and domestic users; such cross-subsidies are justified to the extent that these two groups will have different pollution impacts anddifferent water quality requirements.

7. Case VI - Toxic and Hazardous Substances (THS)

Toxic and hazardous wastes are the most dangerous component of the waste stream to bothenvironmental and human health. Currently the country has no legislation or programs to deal withTHS, and there is generally a poor level of awareness regarding its potential consequences. Whilesmall lubricant and oil spills do occur, potentially the most dangerous components of this wastestream include hospital wastes and certain agrochemicals used as pesticides. Hospital wastes arecurrently disposed of with other solid wastes; an incinerator intended for waste destruction isavailable to the hospitals, but it has been out of operation for a few years now. Misuse ofpesticides also poses a threat to human and bird life; a number of chemicals in use in Sao Tom6have been banned elsewhere in the world for environmental reasons. Part of the THS managementproblem is that there is no inventory or control of potentially dangerous goods available; stocks ofDDT imported in the 1980s to control mosquitoes are reportedly stored with no specialprecautions. Workers readily have access to pesticides on plantations, and they often use these ontheir own farm plots. Significantly, pesticide use has been increasing substantially over the pastfew years (Box D9); much of this increase can be ascribed to more extensive use of insecticides inhorticulture.

The environmental impacts of inappropriate disposal of THS can be substantial. Unintendedpoisoning of bird species is regarded as one of the root causes of species loss (IUCN, 1991).Also, soil contamination and threats-to human health can occur if products are misapplied. Thepotential damages from this problem require that some management solution be pursued. Twodiverse approaches to THS management can be considered. A 'cradle-to-grave' (CTG) approachrequires a complete integrated system for THS handling from all sources that includes separation,monitoring, storage, transport, and eventual destruction and disposal. Such an alternative isgenerally regarded as untractable and too expensive for Sao Tome for the short-term, although itwill be a long-term requirement if the economy expands. For many substances, a 'best practicablemeans' (BPM) approach that improves handling through reduction, separation, or recycling isapplicable. The BPM approach also has the advantage that it acts as a pre-cursor for planning alonger-term CTG strategy.

Given the anticipated increased use of pesticides as smallholder food production in the countryexpands, a cost-efficient mechanism for containing any negative environmental impacts is required.THS is one area where pricing interventions are appropriate; such interventions can be moreefficient than direct regulation when there are very many users that would be too dispersed tomonitor effectively. Deposit/refund systems, or refundable taxes based on the polluter paysprinciple, can both be effective means for providing direct economic inceatives to those creatingTHS. Incentives can be designed to improve practices of applying toxic chemicals, and also forencouraging recycling or separation. Also, given the uncertainty associated with the impacts ofTHS, it is appropriate to consider levying a 'precautionary' surcharge in the form of aprecautionary tax on critical substances with known hlvards to human and ecosystem health. Tominimize future threats, a portion of this tax could be applied to developing a long term CrGmanagement scheme for handling THS.

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Box D9Pesticide use In SEo Tome and Principe

(kg)

1989 1990 1991 GrowthFUNGICIDESManebe 2.000 292.285Zinebe 59.350Captol 86.300 16.550 19.780Bernlate 16.476 52.760 6.460Mancozeb 85.200Cuprasam 82.245 176.900Diffiame 19.065Acaecida 10.055Subtotal 2153.126 2160.620 2581.680 9.S%/year

INSECTICIDESDecis Liquido 0.200 22.410 137.900Decis Empo 0.100 3.150Cypermetrine 79.395 55.605 1.200Malathion 4.500Phosdrin 4.600 31.900Lindane 2.265 7.065Carbaril 0.500Thiodam 19.650Bactospine 2.528Orthene-S0 15.560 22.377 3.705Nexion 2.300Subtotal 98.020 141.657 177.233 34.4%/year

OTHER PESTICIDESAtrazm 2.120Gvesaprine 5.100Amex - 820 36.000Gramoxone-2000 26.000Roundup 5.000Sancoral 1.000Phimafit-el 5.000Ratak 19.600Defenacoun 79.000 . 1.623Ratox 496.950Mesurol 4.0C0 62.200Agro-limace 403.950 224.070Metarex 44.750Sevin-Appats 33.850 72.390 15.850Dursban 29.800 48.075 91.340Tenax-Sithk 18.420Subtotal 570.200 344.53S 811.353 19.3%/year

Total 2821.346 2646.812 .3570.266 12.S%lyear

Source: Department of AAricu1ture.

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. ~~~~~pagssll

8. Case VII - Quarrying Beaches

In some areas of the country, open unregulated access to beaches by private firms resulted in asignificant amrount of uncontrolled sand quanying. When conducted in an environmentallyunsound manner, this can lead to the disruption of mangrove and estuarine systems, whichperform important ecological functions as fishery grounds and as natural barriers to coastalerosion. Fear of coastal erosion - coupled with a desire to maintain tourism assets intact - broughtthis practice to a halt quickly and the government banned sand extraction from all island beachesexcept one, where current extraction continues by a private operator. Investig&aions carried out asa part of this study, however, suggest that such sand extraction can be an environmentally andeconomically sustainable activity under the correct set of circumstances (Box D1O.)

Box DIOSand as a Renewable Resource

Although there have been concerns over the unsustainable use of sand from the beaches of Sao Tome, sand is, inprinciple, a sustainably exploitable resource if it is extracted at rates that allow beaches to recover through normalsediment transport from wave and current action. In SAo Tome, some of the most significant currents occur iight atthe northem and southern tips of the island, where a 'rip current' essentially forms corresponding to large watermovements in the Atlantic Ocean. Sand recovery potential at these places is probably the greatest of any other placein the island.

To contain the impacts of potential non-sustainable quarrying, the govemment has restricted sand quarrying toselected beach areas. The designated area is Praia dos Tamarindos, on the northem tip of the island but convenientlylocated within 10 kilometers of major construction sites in the city of Sao Tome. Although the location has a highsand recharge potential, is the current level of quarrying sustainable and, if so, it is economically sigidficant?

To answer this question, estimates were made through measurement of both a recovered and an active sand pit whilequarrying was occurring in December 1992. Interviews with workers provided information regarding tfhe timing ofsand removal, and provided insights into typical recovery periods for the resource.

The actual operation involves 6 trucks and 2 front loaders, operating year-round every day, employing a total workteam of 9 people. The amount of sand removed is just over 50,000 cubic meters per year, and has a gross salesvalue of about $500,000 annually. Estimates of fuel use, labour charges, and capital recovery costs on theequipment suggest that more than 90% of this gross value can be regarded as a 'rent' accruing to the sand resource:

Gross Revenue 131.40 million Dobra/yr (100.0%)Labor Costs 3.48 million Dobra/yr (2.6%)Fuel Costs 1.04 million Dobra/yr (0.8%)Capital Recovery 6.33 million Dobralyr (4.8%)'Economic Rent' from Sand 120.55 million Dobra/yr (91.7%)

Examination of the bonrow sites showed that, although the area had been quarried for about 7 years, the apparentphysical disruption was equivalent to only 13 days of quanying operations (2000 cubic meters). Examination ofrecovery on a recently abandoned site showed that it had recovered about 80% of its sand over an estimated 6 weekperiod. Based on these observations, it was estimated that the available sand recharge for the area is well in excess o1 million cubic meters per year. Current levels of extraction are thus only about 5% of this amount-

In short, the current level of activity is environmentally sustainable and economically important. However, what issustainable at a small scale may become unsustainable at larger scales even if it appears that c urrent extraction levelsare within the capacity of natural systems to regenerate. Any massive plans for stepped up extraction should,therefore, be subject to more detailed environmental impact assessment

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9, Case VIII - Assessing the Economic Tradeoffs of Malaria Control

Controlling malaria in Sao Tome and Principe is a high priority if the country is to realise itseconomic aspirations. Although malaria was at one time regarded as eradicated, outbreaks in themid-1980s caused a resurgence and it is currently the leading cause of death, medicalconsultations, and worker absenteeism in the country. Many donor programs are aimed at eitherpreventing or treating malaria, and the World Bank has initiated a project intended to reduce thedebilitating disease. The most effective methods of malaria eradication involve fighting the diseasethrough all of its stages. The final stages often receive the greatest effort as they generally involvetreating the disease with medication; intermediate stages might include minimizing risk of infectionthrough physical barriers (such as mosquito nets) or the use of personal mosquito sprays. Theearliest stages of control, however, commence with controlling all of the 'vectors' theough whichmalaria is carried.

Vector control in STP involves controlling the anopheles mosquito in all stages of its life cycle,from its breeding grounds in wetlands to the homes of villagers and city-dwellers. Many of thevector control methods available to eradicate malaria, however, do pose some moderateenvironmental risk. Draining of wetlands and swamps to control the early stages of the anopheles'life-cycle could alter watersheds and eliminate important habitat for birds and other fauna.Improper use of insecticides can contaminate water supplies and degrade ecosystem health. This isespecially an issue in many of the coastal villages where it is common for people to spray theirclothing with pesticides - sometimes with surplus DDT from earlier control programs - and thenlaunder their clothes in streams that run into the sea; this potentially threatens near-shore fisheriesof key importance to artisanal fishing.

Given the environmental risks and potential economic benefits, it is valid to ask which methods aremost cost-effective in controlling malaria. It is clear that some methods, such as blanket sprayingof all of islands, might be technically effective but environmentally unacceptable and financiaUyprohibitive. Conversely, allowing malaria to run rampant for the sake of one small wetland is alsolikely to be unacceptable. In between these extremes, however, some of the trade-offs maybecome more difficult, particularly if expensive control programs are being proposed or ifenvironmental disruption occurs at a large scale.. To illustrate some of the economic trade-offsimplicit in Sao Tome's proposed program, an analysis of a number of the identifiable costs andbenefits was undertaken, including a comparison of the cost effectiveness of the program withthose used in other countries where malaria has been eradicated (Box Dl 1).

The costs of vector control in STP might on the surface appear high when compared to thoseelsewhere. Primarily this is because Sao Tome has a relatively smaller population, and cost-effectiveness measures such as 'cost per case prevented' or 'cost per death avoided' tend to behigher in such circumstances. Even with this built-in bias, however, the overall conclusion of thecomparison is that the economic benefits substantially outweighed the program costs. Theeconomic costs included adequate mitigative costs to ensure that the potential for environmentaldisruption was minimized through using well-controlled procedures for wetland drainage andapplication of pesticides.

To ensure that appropriate mitigative methods are followed, however, it should be noted that somespecial economic incentives might be applicable. First, given that the exact wetlands to be drainedand the exact timing of pesticide application have not yet been defined, it would be appropriate aspart of the project planning to establish "best practices' guidelines for wetland drainage andpesticide application. Second, to ensure that these guidelines are followed, contractors engaged insuch activities could be required to post a performance bond large enough to encourage complianceand cover mitigative costs if best practices are not followed; non-compliance would result inforfeiture of the bond.

_70-- ~~~~~~Annex DEagcLi;

Box DilCosts and Benefits of Malarla Control

A World Bank project to eradicate malaria in Sao Tom6 and Principe will reqjuire a substantial expenditure both ondrugs and on 'vector' control to ensure that the incidence of malania is reduced substantially. The total costs of sucha program are estimated to be $7.16 million over a five year period. These costs include fixed equipment, technicalassistance, fejlowships, research studies, and recurrent costs for the program; the key components, however, include$251,000 for drugs and insecticides, and some $4.4 million for civil works involved with swamp drainage. Theswamp drainage and use of insecticides is not anticipated to start until the second year of the program. How do thesecosts compare to potential environmental costs, and to the economic benefits that accrue to the program as a whole?

Most of the environmental costs are already embodied in the project budget structure as ample allowance is providedfor undertaking environmentally sound practices. Malathion, to be used as an insecticide, is biodegradable and,|unless dumped into streams, will not cause ecological harm if applied in a well-controlled manner. Also, areas to bedrained are purportedly only close to large centers (especially to Sao Tom6) and thus represent a small proportion ofthe island's total wetlands. Any displacement of bird species would likely be temporary. Because the precise areasto be drained have not yet been established, this assumption would require confirmation during the planning stage.

Estimating the economic benefits from malaria eradication is somewhat more complex. In princsple, the correcteconomic valuation is based on an assessment of how much compensation Sao Tomeans would be willing-to-acceptfor putting up with high malaria levels. Measuring this is problematic, and the best that rigourous economicmethods can often provide is a measure of 'willingness-to-pay' for reduced malaria; this is typicatly somewhat lessthan the 'willingness-to-accept' measure. But substantial research is required to estimate the willingness-to-pay, anda lower bound of this measure is often estimated based on the direct impacts on productivity and health care.Essentially, the benefit of reducedmalaria is the sum of increasedproductivity and lower directhealth care costs, plussome premium (consumer surplus) that people are willing to pay for improved enjoyment of life. Although thelatter is not readily measured, the first two can txe easily estimated.

A calculation of the benefits of malaria control assumed that the progrm would, over a five year period in step-wisefashion, achieve the following goals: (a) reduce the number of cases from cuitent levels of 410 per 1,000 to200/1,000; (b) reduce child mortality from 65/10,000 to 13/10,000; and, (c) reduce general mortality from 20/10,000to 3/10,000. Health care cost savings were based on observations that cui:ent annual costs are approximately $20per capita, and that about 50% of all consultations are related to malaria Productivity losses were based on one-week of lost time per case, valued at an average product of labor of $10 per week. Discounting was conducted at areal rate of 10% over a 60 year time horizon; STP population was assumed to grow at 2.7% annually.

The net present value of benefits from the program on this basis were estimated to be $17.6 million, compared to anet present value of costs of $5.5 million. The benefits are, in fact, a lower estimate because: (a) they exclude apremium component people are willing to pay for lower malaria incidence; and, (b) no productive economic valuewas attached to deaths averted, although subsequent cost-effectivenss calculations do address this. The proposedmalaria control program in STP is generally cost-effective, when compared to costs incurred elsewhere, based onstandard cost-effectiveness measures. To some extent, the lower benefit-cost ratio in Sao Tome can be explained bythe lower poputation levels, and also partially because programs involving wetland civil works are more expensivethan those based on drugs and sprays (which were used, for example, in India and Sri Lanka). In short, however, thebenefits far outweigh the costs and the program can be regarded as economically beneficial.

Country* Benefit-Cost Ratio Cost per Case Prevented Cost per Death AvertedSri Lanka 146.0 - 117

India - 3Thailand 6.5 40-110Pakistan 4.9Paraguay 3.6 90

Sio Tom & Prinicipe 3.17 18 953Philippines 2.4 - -

Developing Countries - 1485

* Costs in $1992. Excluding Sio Tomd and Piincipe, these are based on a literature survey by Hammer (1993).

-71- AnnexDEa"~A

10. Case IX - Envirommental Issues on Principe

The island of Principe is inhabited by 5000 people and Las a small land area of about 109 sq kmn;the shoreline is approximately 79 km long Similar to SA.b Tom6, it is of volcanic ori gin and soilscomprise basalts and phonolites over 3 mnillion years old. With more than 7000 mm of annualrainfall, the island is covered by lush vegetation; the rainy season extends to more than 9 months ofthe year. There is a mountainous range in the center of the island; the highest peak, Pico dePrincipe, is 948 m above sea level. There are several rivers and streams on the island, the longestbeing the Rio Papagaio. Much of the rainforest on the island was destroyed around 1906, butsome parts of it have regenerated and, consequently, Prncipe is covered with mature secondaryforest. Island ecosystems consist mainly of tropical lowland forest, streams and some plantations.

Because of the island's geographical isolation, and the small number of inhabitants, there are no'major etnvironmental problemLs at this time on Principe. In fact, the island's generally pristine state,substanial biodiversity, and large number of endemnic species have prompted some to suggest thatit should be turned into a dedicated nature reserve (Box D12.) There are, however, a number offactors that pose threats for potential future environmental degradation:

i) increased demand for health and sanitation services as populatio.- increases;ii) increased agricultural activity and fuelwood demand;iii) increased donor activity, especially for hydroelectric development;iv) loss of marine biodiversity through mismanagement;v) lack of infrastructure for promoting sustainable tourism; and,vi) lack of protected areas for biodiversity protection.

Health and Ranitation. Currently the main problems on Principe are rampant malaria and the lack'of sanitation facilities. Malara is the predominant cause of morbidity and mortality on Plrincipe;much of the population is suffering from repeated attacks, which reduces drastically theirproductivity. Safe water availability, and sanitation, health and nutrition facilities, are absent onPrincipe. There are, however, a few donor initiatives including, a proposed project of UNICEF tosupply latrines and health care. The World Bank assisted Social Infrastructure project would assistin establishing a health center and developing malaria eradication programs.

nfoQrestat!Qn. The main plantation crops on the is, 'id are cocoa and copra; villagers growbananas, pepper and some coffee. There is some. increased agricultural activity, but these activitiespose no current threat to the ecosystems. There is some intrusion into the secondary forest forfuelwood, and there are currently no enforcement measures available to prevent deforestation.Although not currently a threat, increased intrusions due to population growth could lead to a lossof vegetative cover, higher erosion, and siltation of streams. Further, the habitat loss wouldthreaten biodiversity and lead to further species extinction.

Hydroelectricity Development. A hydroelectric power project on the Rio Papagaio, funded by thePortuguese Go-vemnment, may have environmental impacts. The Rio Papagaio is the largest riveron the island and the impact of the damming and diversion of water on communities livingdownstream needs to be assessed. An EIA also needs to be carried out assessing the impact on theecosystem, on water supply, and on biodiversity loss. Although the area to be flooded isunoccupied forest, secondary forest growth has been cleared and construction of the dam andpower plant commenced in 1990; progress has been hampered by the difficulties in transportingconstruction material to the island.

Marine Riodiversity The near-shore fishing, activities on Principe are mainly artisanal and nea-shore fish resources are currently being exploited well within sustainable levels. However, thelack of capacity for the government to monitor and control foreign offshore fishery exploitationcreates serious cc cemns that offshore fisheries are being over-exploited. In addition, there is someharvesting of sea turtles in the country. Reports suggest that some of the turtle shell crafts sold in

-72- Anex

Sao Tome's local markets in fact originate from Principe. Currently this trade is tolerated becauseSTP is not a signatory to the Convention on Intemational Trade in Endangered Species of WildFlora and Fauna (CITES). CITES regards all species of sea turtles as endangered and trade inthese species, or in products made from them, would be prohibited if STP became a signatory.

Sustainable Tourism There are a number of proposals to develop tourism on the island ofPrincipe, and at least one operator has established a self-contained resort targeted to a specializedclientele. In addition to environmental problems such as poor sanitation facilities, malaria, and aprolonged rainy season, the general problems of developing a long-range tourism plan arehampered by difficult access and a lack of basic infrastructure. There are some donor efforts toameliorate this lack of kifrastructure, but these efforts are themselves frustrated by poor access toPrincipe. First, there is a proposed road in the World Bank assisted Social In.iastructure project.Second, the French Government has initiated an education project which involves schoolrehabilitation and the construction of a culturai center. They have also assisted STP byconstructing residential and official facilities for the Minister Delegate for Principe. All donorinitiatives are coordinated by the office of the Minister Delegate, but funding, expeitise andmaterials all need to come from Sao Tome. Finally, even if a long-range tourism plan could bedeveloped, there is a danger that increased development activities that would accompany any suchplan would permanently affect the fragile island ecosystem.

ProtectedA s. Species loss and biodiversity protection are high priority concerns in STP and, assuch, there is ample reason to introduce a protected area system in the country. To minimizepotential conflicts, however, a number of key sites could be established as protected areas alongwith well-planned economic buffer zones to ensure that land-use conflicts do not arise and toensure that local populations do benefit from activities such as tourism development. Apreliminary analysis of some of the costs and benefits suggests that selecting Principe as one ofthese sites could have economic merit if low impact, small-scale nature-based tourism could bedeveloped (Box D12). Pursuing such a course of action would, however, require dedicated effortsfrom both the international community and local representatives as it would fundamentally changethe nature of economic activity on the island.

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Box D12Some Economic Consideratlons of Converting Principe Into a Nature Reserve

One option for developing Prirncipe is for the cntire island to be demarcated a nature reserve. Tourism developmentwould encourage a different type of tourist: 'ecotourists' and nature enthusiasts that would generate revenues for themaintenance of the reserve. The rationale for such a proposal is that Principe has many unique species of flora andfauna, and the island is reported to have some of the highest levels of species endemism in the world. According to astudy by IUCN (Jones et al., 1991), there are 314 plant species on Principe, 35 of them endemic. Because of itsphysical isolation, current habitat conditions for bird species are very favorable. There are 35 bird species; 6 of theseare endemic a-id 3 species are endangered.

The economic costs and benefits of such a venture are, from Sgo Tome's perspective, dubious. Developing thenecessary basis for mass tourism requires significant investments and the World Tourism Organization repeatedlynotes that the economic leakages from mass tourism often far outweigh the benefits retained locally (WTO, 199?).There is, however, some potential for low-impact tourism.

To demonstrate some of the economic costs and benefits of turning Principe into a reserve, two scenarios amconsidered. In either case, some park infrastructure and running costs would be required. These were estimated basedon typical park capital and operating costs in West Africa. Scenario A involves a strict protected area with noactivity other than 'low-impact' tourism and scientific research. Under this scenario, no agricultural or forestryactivity would be allowed, and it might be expected that the island could - over time - be entirely depopulated withthe exception of park personnel. The costs of these foregone opportunities are estimated below. Under this scenario,it is expected that the area could also attract international donor support for strict conservation. The amountsattracted are assumed to be approximately $ 101halyr: this is less than what other west African projects have attractedbecause there is little primary forest cover on Principe. Scenario B assumes that the protected area status of Principewould still allow sustainable agriculture and forestry in buffer zone areas around tlie island.

It is concluded that, unless some incremental revenue were forthcoming from tourism receipts, neither alternativewould be economically viable. The required net receipts from tourism for Scenario B - using some sort of bufferzone approach- are, however, considerably less. Just to covet he running costs of the park-, for example, wouldrequire some 1700 tourist-daysper year assuming that visitors would be willing to pay a $50 royalty for the visit(this amount is consistent with royalties paid in some other African parks). Under Scenario A - a strict reserve - thesame calculations would result in a required number of visitor-days of 120,000 a year. This higher level of touismactivity would clearly not be sustainable.

Benefit or Cost* Scenario A Scenario B(Strict Park) (With Buffer Zones)

Park Capital and Operating Costs -702 -702Foregone Agricultural Output -25 817 0Foregone Forestry Rents -24700 0Intemational ConservationTransfers +1 082 0

Net Economic Benefit -50 137 -702

Break-even Net Annual Tourism Receipts US$6.1 million USS86,000

* Figures expressed as net present values in thousands of $1992. All discounting conducted at real rate of 10%. Park capitaland operating costs include basic infrastructure only, and are based on comparable values in West African parks; direct

conservation transfers are based on a willingness to pay of $10/ha/yr (Ruitenbeek, 1992). Break-even net annual tourismreceipts show amount of net economic benefit that would be needed to be derived from tourism for these revenues to offset

the negative net economic benefits of the activity without tourism recipts.

74 ANNEX E

Page 1 of 2

Table F.1: SAO TOME AND PRINCIPE - NATURAL RESOURCE INDICATORS

LANDTotal land area 100,000 ha (of which 86% is on Sao Tome and

14% on PrincipeArable land 50,000 ha

FORESTForested land area Approximately 90,000 ha (of which approx. 28%

primary; 30% secondary shade trees on cocoaplantations 32%)

Annual logging for commercial 5,400 cubic meterspurposes Estimated at 170,000 cubic metersClearing for fuelwood

Es-imated annual supply of wood Commercial logging 110,000 cubic meters (p.a.) andunder a sustainable regime fuelwood 70,000 cubic meters (p.a.)

FTSHERIESCatch by artisanal fishermen Approximately 2,700 ton p.a. (2,000 in 1992)

Per capita consumption 25 kg p.a.

WATERTotal water consumption 2.9 million cubic meters (1991)

Estimated at 4.1 million cubic meters (1992)

BIO DIVERSITYSao Tome Plants 601 (of which 108 are endemic)

Bird species 49 (of which 14 are endemic and 8 are endangered)Reptiles 19 (of which 3 are endemic)Mammals 6 (of which 4 are endemic)

Principe Plant species 314 (of which 35 are endemic)Bird species 35 (of which 6 are endemic and 3 are endangered)Reptiles 13 (of which 2 are endemic)Mammals 3

Protected areas 0

Source: Sao Tome: Agricultural Strategy Paper, 1991.IUCN Report (Jones et al, 1991)Interforest (1990)

Table F:2: SAO TOME - BASIC INDICATORS: A COMPARISON WITH OTHERECONOMIES WITH POPULATIONS OF LESS THAN I MILLION

Sao Tome &Principe The Gambia Equatorial Guinea Guinea-Bissau Cape Verde Seychelles

Population (thousands) mid- 117 875 417 980 371 681990 _ _ _____

Area (thousands of 2) 1 11 28 36 4 (esstha

GNP per capita (dollars- 400 260 330 180 890 4,6701990) __

____ _

Life expectncy at birth 67 44 47 39 66 71(years) 1990 .

Adult illiteracy (percent) 33 73 50 64 -

Prevalence of i 17.0 20 _ 23.4 14.7malnutrition (under 5)(percentage of age group) . _ _

Source: World Development Report, 1992.

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