Monitoring the environmental impacts of trade policy reform in Africa: lessons from Chad

ECOLOGICAL ECONOMICS ELSEVIER

Ecological Economics 13 (1995) 155-167

Methodological

and Ideological Options

Monitoring the environmental impacts of trade policy reform in Africa: lessons from Chad J o y E . Hecht * Consultant on Ent'ironment and Information Systems, 838 South Lincoln Street, Arlington, VA 22204, USA

Received 25 April 1994; accepted 10 December 1994

Abstract USAID and other development agencies are required to protect against negative environmental effects of policy reforms such as structural adjustment, sectoral development loans or grants, and "non-project assistance". This paper considers the issues involved in monitoring and mitigating those effects, based on the author's experience designing a system to track the impacts of agricultural trade policy reform in Chad. The focus of the paper is on why, how, and whether to identify the environmental impacts of policy reforms which are already in place. Key issues which arose in Chad include whether it is realistic to try to show a causal link between specific policy reforms and observed environmental harm and how this might be done; the extent of USAID liability for environmental harm which may be shown to result from the reforms; conflicts between the priorities of USAID's Chad country strategy and the need to invest in environmental monitoring and mitigation; and possible rules of thumb for the cost of environmental monitoring and mitigation relative to the cost of the project as a whole. The paper suggests 5 different approaches to monitoring a n d / o r mitigation which might be applied in the Chad case, discussing the strengths and limitations of each approach. It then generalizes from the Chad experience to suggest the questions which USAID and other agencies will have to address in designing such monitoring and mitigation systems. Keywords: Trade and environment; Environmental monitoring; Chad; Sahel

1. F r a m e w o r k 1.1. I n t r o d u c t i o n

International development agencies have been concerned about the environmental impact of their projects for a number of years. They have instituted complex procedures to review, assess, and mitigate the impacts of infrastructure devel* Tel. (703) 979-0759; Fax (703) 979-0273; e-mail [email protected].

opment, pesticide use, building construction, and other physical interventions. Only recently, however, have they acknowledged that economic policy reforms such as structural adjustment, sectoral development loans or grants, and so-called "non-project assistance" may also have significant impacts on the natural environment. Identifying this kind of harm is much more difficult than dealing with physical projects because the effects are diffuse and indirect. Nevertheless, in the long run they will probably prove to be more significant than any of the physical projects. As in

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J.E. Hecht /Ecological Economics 13 (1995) 155 167

the West, an overall pattern of economic development, consumption, transportation and production can threaten the environment from its roots with more force than any single road or irrigation canal. This p a p e r considers some of the broad questions involved in identifying and addressing those impacts. It originated with a U S A I D policy reform program now beginning in Chad, the Agricultural Trade Policy Reform Program (ATPRP). A T P R P provides budgetary support to the Chadian Ministry of Agriculture in return for specific reforms in tariff and i m p o r t - e x p o r t policies. This type of non-project assistance (NPA) may be introduced by U S A I D missions under the terms of the Development Fund for Africa (DFA). Section 496 of the Foreign Assistance Act of 1991, the law which created the DFA, requires that "policy reforms shall also include provision to p r o t e c t . . . long-term environmental interests from possible negative consequences . . . . " This requirement raises the question of how to know whether A T P R P reforms actually have an impact on the environment. To address this question, the Chad mission brought in a team of natural and social scientists to predict the impacts of A T P R P on Chad's resource base and propose a way to monitor those impacts 1. The team spent 7 weeks in Chad meeting with government officials, visiting the geographic areas expected to be influenced by the policy reforms, talking with farmers and herders, observing the natural resource base, a n d - - p e r h a p s most import a n t l y - a r g u i n g about whether or how it is possible actually to observe the impact of a set of tariff reforms on the environment.

I The team included James Keith and Darrel Plowes, wildlife biologists; Scotty Deffendol, range management specialist; G. E d w a r d Karsh, forester; J o s e p h Tabor, agronomist/pedologist; Robert Hanchett, then USAID's Regional Environmental Officer for West and Central Africa; and this author, regional planner and team leader. This paper builds heavily on the contributions of all of the team mem~ bets. The assistance of Chemonics International, which fielded the team, and of the USAID mission in Chad, were essential in carrying out this work. However, the author takes sole responsibility for any errors or misunderstandings which may appear in this paper.

This paper reviews the issues which arose in those arguments. While this is only one case, our experiences grappling with A T P R P should be of interest to the development community at large. As donor agencies try to ensure at least that they are not degrading the environment in countries they are trying to help, or at best, that they are promoting environmentally sustainable development, they may not realize how much work their impact assessment and monitoring requirements involve. The Chad example brings to the forefront some of the real difficulties involved in doing such monitoring and suggests several different strategies for responding to them. 1.2. The context and the program

Chad is a medium-sized, land-locked country in central Africa, with a population estimated at somewhat over 5 million. About two thirds of the country is desert, and most of the population lives on and off of the remaining third of the land. With 1987 G N P per capita estimated at $150, the country is among the world's poorest ( U N D P and World Bank, p. 3). When this mission was carried out, U S A I D had a representative in Chad, rather than a full mission 2, meaning that A I D / Washington has assigned it lower priority than other countries in its Africa development strategy. The mission focused its work on health care and agricultural marketing, with the environment explicitly not a priority area for mission support. This makes Chad a good case for considering the environmental impacts of NPA. If the environment were a priority, monitoring and mitigation would not conflict with other objectives of USA I D ' s country strategy. In Chad, they may conflict, forcing into relief the trade-offs involved in protecting the environment from possible harm. A T P R P is designed to increase the efficiency of the agricultural marketing system for non-industrial crops. It calls for the reduction of tariffs on imported agricultural inputs and the elimina-

2 However, by convention the AID office is referred to as a "'mission" even though technically it is not one. That practice is followed in this paper.

J.E. Hecht /Ecological Economics 13 (1995) 155-167 tion of tariffs on interprovincial transport of agricultural produce. It also calls for simplification of the licensing procedures for international exports. The direct objective of these reforms is to improve the policy environment for formal sector businesses to participate in agricultural marketing. This is expected to lower the cost of some Chadian agricultural produce, making it more competitive on regional markets, particularly urban areas of Nigeria. The resulting increased demand is expected to stimulate production, increasing incomes in targeted provinces.

1.3. Monitoring the enuironmental impacts of A T PRP reforms: what should it accomplish? The Chad mission was expected to ensure that A T P R P tariff and regulatory reforms would have no adverse impact on the environment. 3 However, this overall purpose is inadequate to tell us precisely what monitoring should accomplish. It is also insufficient to guide us in designing a monitoring system; only if we know how monitoring data are to be used, can we design a system that actually makes that possible. The team therefore considered the objectives of monitoring at some length. One purpose could be to identify areas of negative environmental impact so that mitigative action could be taken. To pursue this strategy, we must be able to establish a causal link between the policy reforms and observed changes in the environment. Moreover, we may also want to determine how much of the change in the environment is due to these reforms. The natural environment is already degrading in response to population growth, drought, cultivator-herder conflict, and political unrest. If A T P R P causes significant additional degradation, then U S A I D

3 This is, of course, not realistic; any expansion of agriculture will affect the resource base in ways which may be considered adverse. However, this requirement is, at least in principle, embodied in the DFA legislation calling for protection of the environment against the impacts of policy reform. In practice, USAID has not yet addressed the issue of whether, or to what extent, environmental costs imposed by policy reform may be justified by the concomitant economicbenefits.

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may be responsible for mitigating its impacts. If, however, A T P R P impacts on the environment are trivial relative to the other factors, then U S A I D may legitimately decline to invest in mitigation, since it has not caused the problem. While this objective of monitoring responds closely to the mission's apparent needs, it is not clear that it is possible to establish a clear causal relationship between tariff reforms and the environment; determining what share of degradation is caused by a particular policy is even harder. A second purpose for monitoring is to learn as much as possible about the mechanisms through which economic reforms affect the environment. This may provide a basis on which to minimize environmental damage in the design of future economic reforms. This issue extends far beyond the scope of A T P R P , and has broad implications for other donor agencies as well as for USAID. A better understanding of economy-environment relations may improve the design of regulatory and tariff policies, structural adjustment programs, and other policy reform activities encouraged by donor agencies. Because this objective serves a broader constituency than the Chad mission, it raises the question of whether A T P R P should bear its full cost. A third purpose is to track the evolution of the environment and flag problems as they arise. The data which let us do this are not linked to a particular project or policy reform program, and thus might not let us establish a causal relationship between A T P R P reforms and the environment. They would provide background information for detecting a range of changes or problems in the resource base. As with the previous purpose, this one raises questions about who the beneficiaries are, and whether A T P R P is an appropriate source of funding. In principle, the team considered the first purpose the most compelling one. In practice, however, we argued at length about whether it is feasible to show a causal relationship between tariff reforms and environmental degradation. We therefore considered strategies which tried to show causality as well as ones which ruled it out as impossible, and eventually presented a set of different strategies to respond to different put-

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Agricultural expansion

Economic change,

Policy reforms go into effect

Step 3:

Step 2:

Step 1:

>>>>

especially increased

>>>>

affects natural resources

agricultural output Fig. 1. Link between policy reform and the environment.

poses. Although the team r e c o m m e n d e d one of the strategies, it presented all of them to the mission, with arguments for and against each, so that they could make the choice which best responded to their priorities. Before describing each of these strategies, however, we m a p p e d out how we expected A T P R P reforms to affect the environment. This provided a basis for considering what could be monitored in each strategy.

2. Impacts of ATPRP reforms A T P R P reforms will affect the environment through a complex web of interactions, first between regulations and economic (primarily agricultural) activity, and then between agriculture and the environment. The most important effects can be represented as a three-step chain of causality (Fig. 1). Using this structure, each team m e m b e r thought through his or her expectations of the impacts of A T P R P based on our own individual expertise and the analyses of U S A I D teams who designed the program. We then used field work to develop a sense of which impacts are actually of most concern, and so to determine where monitoring may be needed. We assumed that the first step, the implementation of the policy reforms, would in fact occur, and focused our attention on the second and third steps. Based on this work, the team identified several mechanisms through which A T P R P reforms would have significant impacts on the environment, and dropped a number of others which we considered insignificant. A key issue was the extent to which agricultural expansion occurred

through extensification versus intensification of agriculture, since their impacts on the environment are quite different. 4 In most cases, we expected increased output to come through extensification, because land is only occasionally in short supply, the private market for agrochemicals is very weak, and credit is not available for their purchase outside of donor projects. However, intensification through use of pesticides and fertilizer could be cost-effective in certain limited areas, particularly riverbank irrigation and recessional agriculture in the flood plains. Particular crops most likely to show increased output include wadi-based tomatoes, garlic, and onions and recessional rice, sorghum, and maize. Of these, rice was considered most likely to generate a risk of pollution, both from agrochemical use and from increased runoff and sedimentation. Consequently, the monitoring strategies which we proposed had to address several impacts: • Expanded agriculture will directly reduce natural vegetation and habitat. The vegetation which remains will be subject to greater stress from humans, livestock, and wildlife. This should be observable through changes in land use, plant species composition, wildlife numbers and wildlife species diversity. E x p a n d e d cultivation on marginal lands will also increase erosion, leading to sedimentation of rivers and lakes. This will be observable in impacts on aquatic plant life and

4Extensification m e a n s increasing agricultural output by expanding the land area under cultivation. Intensification means increasing output without more land, by introducing pesticides and fertilizers, shortening fallow cycles, irrigating, or otherwise changing technology.

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wildlife dependent on those plants, including migratory birds which summer in Europe and winter in the Sahel (and which have a strong constituency among European birders). • Increased pesticide use can lead to water pollution, which kills plants and small animals. This may eliminate food supply and habitat for species higher in the food chain. Increased fertilizer use can lead to excessive algae growth, choking off other plants and thus reducing food and habitat for animals higher in the food chain. Both of these impacts will affect migratory birds as well as endangered species like the manatee, which survives in Lake L6r6 in south western Chad. Several possible impacts of A T P R P reforms on the environment were considered unlikely to be significant. A m o n g these were: • Reduced tariffs on imported trucks will reduce the cost of gathering fuelwood around urban areas. After much discussion, the team decided that demand for fuelwood is probably price-inelastic, so this will not lead to increased consumption or greater forest destruction. • Increased incomes from expanded agriculture may be invested in livestock, which will place increased pressure on natural vegetation. While we did expect to identify increased pressure on remaining vegetation after expansion of agriculture, we did not expect to be able to link this to farmers investing increased earnings in additional cattle because so many other factors are at work in farmers' investment decisions. • Increased incomes from expanded agriculture will lead to increased consumption of medical services, and thus lower mortality rates. The resulting increased population will place increased pressure on all natural resources. While we felt that this kind of impact may, in fact, be more important in the long run than all of the others, we did not think it would be feasible to observe a link between A T P R P - g e n e r a t e d income and population growth. A n o t h e r type of impact, which was not considered by the team because it was not relevant in Chad, could result from changes in existing environmental policies or regulations as a result of the trade policy reform. Chad's existing environmental policy and regulatory framework is weak,

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and is quite unaffected by A T P R P policy reforms. Similarly, the Chadian government, confronted with a host of more immediate economic, political, and military problems, is quite unlikely to make any policy or regulatory reforms on its own to address possible environmental impacts of A T P R P reforms. Therefore the team focused only on the environmental impacts of trade-related economic changes, and did not address possible impacts on Chadian environmental policy.

3. Strategies for addressing monitoring and mitigation The team considered several approaches to environmental monitoring, each of which offers advantages and disadvantages, and any of which involves some compromise. This section discusses the options we considered and our choice among them. 3.1. Option 1: Com,entional ecological monitoring "Conventional" ecological monitoring is a response to the third purpose of monitoring, to flag changes or environmental problems as they arise. Conventional monitoring systems include time series data on the evolution of features such as water quality, water flows, rainfall, land u s e / l a n d cover, natural vegetation and species composition, and wildlife population. These data reveal changes over time and establish a baseline for " n o r m a l " environmental conditions. In the A T P R P context, conventional monitoring might focus on features expected to be affected by A T P R P reforms, such as: • Land u s e / l a n d couer. A system which monitored changes in human use of land through agricultural expansion, deforestation, or urban growth, and the resulting impacts on vegetation and soil erosion, would pick up one major consequence of A T P R P , habitat loss due to agricultural extensification. • Water quality. The development of a broad water quality monitoring network would make it possible to determine what pollutants are entering the watersheds, where, and how this affects

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downstream water quality at different times of the year. • Wildlife populations. A system to monitor wildlife populations and wildlife kills would help detect A T P R P impacts on sensitive populations like migratory birds and manatees. While conventional monitoring systems are invaluable for flagging the existence of environmental problems, they usually do not provide much insight into the causes of the problems observed. For example, if land use data showed agricultural expansion, we would not know whether to attribute it to A T P R P reforms or to other causes of growth. Moreover, the cost of such monitoring is very high. In the A T P R P context, it is hard to justify the investment without knowing how the resulting data will tell the mission whether it is responsible for environmental degradation. For these reasons the team rejected conventional ecological monitoring for ATPRP.

3.2. Option 2: Mitigation Given the difficulty in establishing the importance of A T P R P as a source of environmental harm, the team considered simply assuming that A T P R P will harm the environment and putting the available resources into mitigation without any monitoring. Since the terms of the D F A require protection rather than monitoring of the environment, this could be considered to satisfy the regulations. Moreover, some team members felt that the only effective way actually to mitigate A T P R P - g e n e r a t e d environmental damage would be to prevent the harm from occurring before policy reforms go into effect, rather than compensating for the harm done after the resources had been destroyed. To follow this approach we have to know what we hope to accomplish by mitigation, just as we have to understand the purpose of monitoring. Mitigation can be designed to correct specific environmental harms created by the project. This is the logic behind the " n o net loss" standard for evaluating the destruction of wetlands in the United States, according to which developers may destroy existing wetlands if they replace them with comparable ones elsewhere. Following this

principle, team members suggested projects in areas such as agroforestry, soil conservation, and restoration of endangered plant or animal species. However, without monitoring, we would not know what problems actually needed correcting. More importantly, some environmental impacts of ATP R P will be trivial relative to the overall environmental problems of the country. If so, correcting them might not be a cost-effective way to improve the environment. For example, while trucks imported under A T P R P ' s relaxed import duties will cause some air pollution, mitigating it would be a misuse of resources in the overall context of Chadian environmental problems. Moreover, the environmental impacts of A T P R P reforms may be too diffuse to permit such precise mitigation. Where a project destroys a specific resource or wildlife habitat, it is possible to think in terms of replacing it; but where a set of policy reforms leads to a marginal increase in overall habitat encroachment across a large region, it is not obvious how to replace a specific resource. A second approach, which addresses some of these difficulties, would be to prioritize the country's overall environmental problems and allocate mitigation resources accordingly. Since A I D has explicitly chosen not to focus on the environment in its Chad strategy, it should not presume to propose government priorities for environmental improvement. However, there already is an environmental plan, prepared by a technical committee based in the Ministry of Forestry with United Nations support (R6publique du Tchad, 1989). It establishes the G o v e r n m e n t of Chad's priorities for environmental improvement activities, and lists activities fox which donor support is to be sought. U S A I D could therefore put its A T P R P mitigation resources into priority areas identified in this plan. A third strategy was suggested in light of the relatively limited A T P R P funds available for this purpose. Those resources could easily be used up simply designing a program, without ever carrying it out. Instead, therefore, it was suggested that U S A I D review ongoing environmental projects funded by other donors. If one of them addresses problems like those created by A T P R P and is effective and well-managed, the available re-

J.E. Hecht /Ecological Economics 13 (1995) 155-167

sources could simply be contributed to extend or expand it. Thus none of the resources would have to go to project design, and mission m a n a g e m e n t time might be kept to a minimum. This would, however, require some negotiation with the other donor involved. Moreover, while it might help the environment in general, it would not necessarily benefit the specific populations harmed by ATP R P activities, if they can be identified. A fourth approach is to design project or program interventions which prevent environmental harm from occurring in the first place rather than correcting damage after it occurs. This could involve introduction of village land m a n a g e m e n t strategies to encourage more sustainable use of agricultural and forest land, or education on integrated pest m a n a g e m e n t to promote less harmful ways of controlling parasites. This approach could also involve environmental policy reforms which would complement the tariff reductions, such as changes in land tenure or forest ownership policies. This strategy would involve fundamental redesign of A T P R P , which could make it costly to introduce now that the program has already been planned. Several general objections were raised to the mitigation-only approach. One was that, even if it were only possible to establish a rough relationship between A T P R P and environmental degradation, this could justify the monitoring effort. Although the Chadian environment might be better off in the short- or medium-term with mitigation than with monitoring, the benefits of actually showing (or disproving) a link between economic reform and the environment could be felt elsewhere in the Sahel, by helping to design better policy reforms in the future. A second objection is that most mitigation activities would force the Chad mission to take on an environmental project of some sort, even though this is explicitly outside the scope of its country strategy. This would divert staff energies away from the mission's primary goals in Chad.

3.3. Option 3: Targeted monitoring T h r e e related strategies considered by the team focus observation more directly on the actual

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impacts of A T P R P reforms on the environment. The first of these, referred to as "targeted monitoring", tracks the activities of farmers expected to be most affected by A T P R P reforms, in order to determine whether they are noticeably harming the environment. It involves detailed case studies of individual farmers expected to benefit from A T P R P reforms, to determine through interviews whether their economic behavior has changed because of the policy reforms. If they have in fact changed their agricultural practices because of the policy reforms, then environmental monitoring would begin on those fields (or downstream from them) to see what the impact is on the environment. Monitoring would involve visual observation of the environment through field data collection and aerial videos, to determine the impact of increased agrochemical use, shortened fallows, or extensification into new areas on vegetation and water quality. Complementing the visual observation would be in-depth interviews with farmers, providing information with which to interpret the field data. In order to find farmers whose practices change because of ATPRP reforms, this approach ties environmental monitoring closely to A T P R P project activities. A T P R P staff are expected to identify and work with specific traders and farmers who are best placed to take advantage of the A T P R P reforms. The environmental monitoring effort would target the same individuals, who should fall into three groups: • those expected to be affected who did not increase production; • those who increased production but attributed it to input factors other than A T P R P ; • those who indicated that A T P R P reforms did in fact make it possible for them to increase output. The farms of the third group would be monitored for evidence of environmental harm, while those of the first group would be monitored to serve as a control for comparison purposes. This approach has two problems. First, while it may show specific examples of environmental harm due to A T P R P reforms, it tells us nothing about the overall magnitude of A T P R P environmental effects or their importance relative to

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other sources of degradation. Second, specific instances of A T P R P - c a u s e d environmental harm are not likely to show up during the life of the project, which is also the time frame for monitoring. A T P R P policy reforms are expected to go into effect in 1995 at the earliest. It will be several years before their impact on agricultural output is felt. It will then be several more years before expanded agricultural activity is likely to begin harming the environment. The A T P R P project component is scheduled to end in 1998; this will be well before we could reasonably expect to observe A T P R P - c a u s e d environmental harm in the field.

3.4. Option 4: Multi-step monitoring To deal with the problems of targeted monitoring, a related but considerably more complex approach, termed "multi-step monitoring", was designed. It combines village-level data collection, like that described above, with a statistical survey of farmers, in a several-step strategy designed to establish how much environmental degradation may actually be attributed to ATP R P policy reforms. Each step in the monitoring system corresponds to one causal link between tariff policy and the environment (see Fig. 2): 1. Policy reforms lead to increased agricultural production either through increased use of agro-

Step 1: Policy reforms go into effect

chemical inputs or through expanded cultivation and shortened fallows. 2. Increased use of inputs leads to decreased water quality and degradation of aquatic habitat. Expanded cultivation and shortened fallows lead to degradation of existing vegetation and terrestrial habitat. 3. Decreased water quality leads to wildlife deaths from pesticides. Habitat degradation (aquatic or terrestrial) decreases carrying capacity of the environment, leading to decreased wildlife populations. Each of these three causal links is investigated through a separate monitoring effort, and the

three efforts need not be directly linked to each other. The first step is the only one which is particularly related to A T P R P reforms. It involves a broad statistical survey of farmers in the provinces most likely to be affected by A T P R P reforms, asking about changes in their agricultural practices and the causes of those changes. The survey is designed to determine the extent to which agrochemical use increases or land use intensifies or expands, and to attribute those changes to a variety of possible causes, of which A T P R P reforms are only one. This will be a one-time survey of several hundred farmers, carried out 3 years after A T P R P reforms go into effect.

Step 3: Agricultural expansion affects natural resources

Step 2: Economic change, especially increased agricultural output

via: [[increasedinputs

via:

11-*--*

decreased water quality

direct wildlife deaths

aquatic habitat degradation OR

expanded

decreased wildlife populations terrestrial habitat degradation

cultivation &

shortened fallows

Fig. 2. Link between policy reform and the environment.

J.E. Hecht / Ecological Economics 13 (1995) 155-167

The second step is similar to the targeted monitoring discussed above, but it need not be carried out in villages actually affected by ATP R P reforms. The impact of agricultural expansion on the environment should be the same irrespective of what caused that expansion. Thus this part of the monitoring can begin immediately, in any village where agriculture is expanding, and need not wait until A T P R P effects on agriculture are felt. In contrast, in the targeted monitoring discussed above the villages would have to be affected by A T P R P before they were chosen, since there would be no statistical survey to establish the first causal link. Thus this approach makes it possible to stay within the time constraint imposed by the A T P R P project cycle. The third step also involves field observation, so for m a n a g e m e n t purposes it can be linked to the second step. It involves collecting data on wildlife populations which can be correlated with trends in water pollution and habitat degradation, in support of a causal link between environmental damage and loss of wildlife. The advantage of this approach is that it should make it possible actually to establish a causal link between A T P R P policy reforms and environmental degradation. It has several disadvantages. First, the reliability of that link depends entirely on the reliability of the statistical s u r v e y - - h o w well it is designed and how much faith one can put in farmers' assessments of the reasons for changes in their agricultural practices. Both of these are open to serious question. Second, there will be no way independently to verify the survey results; one can only look at the questionnaire and make a value judgement as to its suitability to obtain the desired information. Third, because field data collection begins before the statistical survey, the mission must invest significant resources in field data collection to establish the second causal link without knowing whether the first one has occurred. If the survey should show that A T P R P reforms had no impact on agricultural production, then the expenditure on field data collection will have been unnecessary. While the data obtained might be quite interesting for other purposes, this probably will not justify the investment for the mission.

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3.5. Option 5: Long-term monitoring The last monitoring strategy relaxes the time constraints posed by the A T P R P project to address the last of these problems, though it does not resolve the first two. It envisions a 10-15-year monitoring effort, long enough actually to observe the environmental impacts of A T P R P reforms. With this longer time frame, it would be possible to monitor the different causal links in the order in which they occur. This would reduce the amount of field data collection required before it is clear that A T P R P reforms have, in fact, had an impact on agricultural production. If it turned out that A T P R P reforms had not had any impact on production, then there would be no need to continue monitoring, since there would be no environmental impact. Extending the schedule for monitoring would also make it possible to address a variety of substantive questions not likely to be feasible within the shorter time schedule of the other targeted approaches. With a 10-15-year program it should be possible to establish baseline data and observe at least some changes in the environment over time. This would not be feasible with a shorter program, because annual variation from unrelated causes is likely to be greater than ATPRP-related changes or other long-term trends. In particular, with a longer monitoring program, one can gather data on indigenous soil classifications and how farmers approach their management, to understand the impact of policy reforms on resource m a n a g e m e n t in different parts of the country. With a longer monitoring schedule it would also be worthwhile routinely to census populations of selected bird and mammal species on the lakes and in specified parks and reserves, since the time series would be long enough to expect meaningful results. Long-term monitoring has several disadvantages. It would require severing the link between environmental monitoring and the rest of the A T P R P project, increasing the overall management burden on U S A I D Chad. It would also saddle the mission with a requirement to monitor A T P R P reforms well into the next decade, beyond the tenure of any current mission staff and

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beyond the duration of both A T P R P and the current country strategy. This might turn out to be a significant constraint, limiting the ability of future mission staff to design their own activities. More immediately, it would not be possible to link long-term environmental monitoring to ATPRP project activities, requiring some duplication of effort and thus higher costs. It would also be more difficult to retain the same personnel throughout the environmental monitoring process, which would decrease the reliability of the results. Even if long-term monitoring covered the same data as multi-step monitoring, it is likely to be more expensive, if only because of the longer management period and inflation. 3.6. The team's recommendations

On the basis of merit alone, the team felt that U S A I D Chad should implement a 10-15-year program to monitor the impacts of A T P R P policy reforms on the environment. However, this seems unrealistic because it involves changing two basic parameters of the environmental monitoring as described in the A T P R P planning d o c u m e n t s - - i t s schedule and its link to the A T P R P project. For this reason, the team settled on multi-step monitoring as a second best approach. All 5 options were presented to the Chad mission during our stay, with the arguments for and against each, and with our recommendation. Mission staff were skeptical about multi-step monitoring, particularly about the reliability and cost-effectiveness of the statistical survey. When we left the country they had not yet selected a course of action. However, to our surprise, they seemed to be leaning towards direct mitigation. This showed an unexpected willingness to face environmental issues head-on even though the environment is not part of their country strategy. However, it would still leave open the question of how tariff reforms actually affect the environment, which is a loss in terms of building a better understanding of the problem. 5 s After completion of this work, USAID decided, for entirely unrelated reasons, to withdraw from CHAD. ATRP activities will be sharply cut back and no environmental monitoring or mitigation is anticipated.

4. Implications for USAID and other donor agencies 4.1. The problem

This paper has considered how to monitor the environmental impacts of tariff reforms in Chad. It does not come to a simple solution; there is no one right strategy which is both cost-effective and allows the mission to define its own priorities. However, by bringing out the general issues, this case may serve as a catalyst for the Africa Bureau, the Agency as a whole, and other donor agencies to address them more abstractly, to understand and perhaps resolve them in general terms rather than only in the context of specific projects. The Bureau is now facing similar issues in a number of other African countries; this analysis may suggest useful ways to frame their questions and so arrive at more informed solutions, 4.2. Project t,ersus general monitoring

Funds have been allocated to the environment through A T P R P to allow the Chad mission to address the specific problems caused by this program. However, in Chad, as in many developing countries, the base data needed fully to track program impacts on the environment are virtually non-existent. The development of these base data is very costly, far exceeding the limited resources available through A T P R P or through any individual program or project. For this reason, our team's strategy was to identify the m i n i m u m information needed solely to determine whether A T P R P reforms are having an impact. We did not think in terms of building databases which could be used for other purposes in the future or of launching a continuous data collection system, since this would have added to the cost of our monitoring program. This is a rational solution to the problem of a sectoral bilateral project not specifically focused on the environment, and it has been followed widely by projects throughout Africa. Although data about the evolution of the environment would be useful to everyone, no one project will benefit enough from them to justify the expendi-

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ture. However, the resources which these projects devote to meeting their individual needs might be more productive if they were pooled to support development of the base data which everyone needs. In many countries, donors are interested in funding the development of databases and the h u m a n and technical infrastructure needed to manage and use them. If individual projects like A T P R P could team up with these efforts to obtain their own information, rather than creating new systems from scratch, their funds would do double d u t y - - m e e t i n g individual project needs and reinforcing a multi-user system for maintaining ongoing data on the environment and the society. Creating such shared systems is not simple. It is not just contrariness which leads projects and donor agencies to work independently of each other. Both technical and organizational constraints make cooperation expensive, especially at the beginning. However, a n u m b e r of donor agencies are seeking ways to encourage this kind of collaborative venture through environmental planning processes, direct support for data development, and as an adjunct to other projects and programs. 6 F r o m the project side, it is important to identify, work with, and support these efforts if they exist, instead of designing separate environmental monitoring systems to meet individual needs.

4.3. Responsibility for mitigation and the relative significance of project impacts A second question raised by the A T P R P case is how far donors must go to determine whether policy reforms have had negative e~nvironmental consequences. The A T P R P team argued that the Chad mission should determine three things. First, how do its actions harm the environment (if at all)? Second, what is the magnitude of that impact? And third, how significant is that harm in the context of other causes of environmental degradation? The third of these questions is the most diffi-

6 See Hassan and Hutchinson (1992) for further discussion.

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cult. It is important following a rather legalistic justification for environmental activity. If A I D policy reforms are responsible for only a trivial share of observed degradation, then A I D might make a case that it is not liable for mitigation. If, on the other hand, the A I D program appears to be the major cause of environmental harm, then the Agency would be hard pressed to say it was not responsible for mitigation. This focus provides A I D with a way to cover itself if charged with violating the terms of the DFA; thus it is an approach focused on protecting the Agency as well as the environment. One could argue instead that responsibility for mitigation should be related to the absolute rather than relative magnitude of the harm done. This view might satisfy both those environmentalists who feel that no one should be permitted to harm the environment at all, and economists who are concerned with internalizing the environmental externalities imposed by development projects. However, from the perspective of ensuring the most cost-effective use of a fixed supply of resources for environmental improvement, it falls short, since there is no a priori reason why the harms caused by a given project should be the most inexpensive to correct. It is also useful to distinguish between strategies advocated by those who consider environmental protection to be of primary importance, and strategies supported by those concerned less about the environment, but nevertheless concerned about compliance with D F A regulations. The concern with demonstrating the relative importance of A T P R P impact characterizes the latter group. If everyone were equally convinced of the importance of the environment, this strategy would not emerge, and in fact there would be no need for the regulations. As long as there is legitimate disagreement over the importance of environmental protection, however, this view will emerge, especially among the lawyers who must defend the Agency against charges of non-compliance. While addressing this issue directly will not eliminate the disagreement, it is nevertheless helpful to understand it better, so that efforts can go into solving the problems rather than arguing about them.

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4.4. Mitigation--to what end, and at what cost? The mitigation of environmental damage once it has been identified also raises questions about costs, management requirements, and feasibility. Can w e - - o r should w e - - d e v e l o p rules of thumb about the relationship between the cost of the project and the resources devoted to identifying and correcting its environmental impacts? The A T P R P N P A and project components jointly will cost about $18 million, of which somewhat over 5% has tentatively been allocated to the environment. Is this a useful rule of thumb? Should small PVO projects be held to the same standards as larger efforts? For example, would a PVO project that costs $50 000 be expected to spend the same share of its budget ($2500), the same amount of money ($1000000), or something in between? While it may not be possible to come to clear answers to these questions, they must still be discussed. Mitigation can force missions like Chad to launch environmental projects which are not part of their country strategies, for which they have neither project budgets nor management resources. This may be appropriate, in the sense that U S A I D should cover the full social cost of its activities. However, it will make N P A a less attractive strategy by adding an element of unpredictability to the expenditure and management requirements which it could impose. This flies in the face of one argument for NPA: that it will reduce management costs and permit A I D missions to operate with lower overhead. It is also not clear what is meant by mitigation or "protect(ing)...long-term environmental interests". It can be taken to mean that it is acceptable to destroy some environmental assets if they are replaced with others, as in the "no net loss" guideline for wetlands in the United States. This may be a feasible criterion for evaluating projects, but it will be less useful in evaluating longterm economic reforms. In a context of population increase, dependence on subsistence agriculture, and environmental degradation due to climatic change, it is hard to see how "no net loss" of wildlife habitat can be consistent with any significant increase in income and standard of

living. Thus, while it may be possible to uphold this principle in the context of an individual project, in the aggregate this is less apparent. The A T P R P case also raises a question about how closely mitigation should be related to the harm caused. Should it attempt to correct the specific harms caused by an individual project or policy reform? To address similar problems, but not necessarily in the same context? To address whichever environmental problems are of highest priority to the country, even if those are not the ones caused by the project? Or, at the other extreme, should the resources go to preventing environmental harm rather than mitigating it after the fact, by modifying the design of projects or policy reforms? Although there probably is not one "right" mitigation strategy, it may be useful to discuss this issue in the abstract and see what general principles can be developed, rather than simply leaving it to be resolved anew as each case arises.

4.5. Timing The A T P R P case also suggests that U S A I D ' s standard 5-year project cycle will pose problems for both monitoring and mitigation. Change in the natural environment is gradual, and it takes many years to understand its causes. If monitoring is integrated into the project causing the harm, the time frame is likely to be too short to show any meaningful results. Worse, it might lead to a conclusion that there is no impact, whereas in fact the impact simply has not shown up yet. It may, therefore, be more appropriate for monitoring efforts to be designed on a longer time schedule than the projects or policy reforms whose impacts they are designed to identify. The same principle will apply to mitigation. If it is not clear what or how significant the environmental impacts will be, as in the case of ATPRP, it may not be possible to design mitigation efforts until well after the life of the project. To implement such mitigations, A I D would need to adjust its management systems to allow longer time schedules for designing and implementing projects. This will limit the ability of mission staffs to develop new 5-year country strategies, since they

J.E. Hecht / Ecological Economics 13 (1995) 155-167 will b e c o n s t r a i n e d b y l o n g - t e r m e n v i r o n m e n t a l activities launched by their predecessors.

4.6. Conclusion The ATPRP case does not provide answers to these questions. However, by raising them explicitly t h r o u g h a c a s e s t u d y , w e c a n s h e d m o r e l i g h t o n t h e m t h a n h a s b e e n d o n e u p till n o w . W e h a v e attempted to sort out the different issues involved in e n v i r o n m e n t a l m o n i t o r i n g a n d t o e l u c i d a t e t h e considerations which should factor into decisions a b o u t e a c h i s s u e . I n d o i n g so, t h e a i m h a s b e e n both to help USAID Chad address the particular problems posed by ATPRP policy reforms, and to e n c o u r a g e t h e A g e n c y as a w h o l e a n d o t h e r donors to face these questions throughout their project and policy reform activities.

References Collelo, T. (Editor), 1990. Chad: A Country Study. Federal Research Division, U.S. Library of Congress, Washington, DC (Copyright, U.S. Government, Secretary of the Army). Hassan, H. and Hutchinson, C. (Editors), 1992. Natural Resource and Environmental Information for Decisionmaking. Environment Department, The World Bank, Washington, DC, 164 pp. Hecht, J., 1993. Elaboration d'un programme national de connaissance et suivi des ressources naturelles. Report prepared for the Cellule Technique d'Appui au Plan Di-

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recteur de Lutte Contre la D~sertification, Chad, with support from the UN Sudano-Sahelian Office, New York (unpubl.), 47 pp. Hecht, J., Christophersen, K. and Ganguli, S., 1991. Environmental assessment in Africa. Report prepared for the Bureau Environmental Officer, Africa Bureau, USAID, by International Resources Group, Washington, DC (unpubl.), 57 pp. Hecht, J., Karch, G.E., Deffendol, S., Tabor, J., Keith, J., Hanchett, R. and Plowes, D., 1993, Agricultural trade policy reform program: design of an environmental monitoring system. Report prepared for USAID/Chad by Chemonics, International, Washington, DC (unpubl.), 205 PP. R6publique du Tchad, 1989. Plan Directeur de Lutte Contre la D~sertification, 145 pp. UNDP (United Nations Development Program) and World Bank, 1990. Donn~es 6conomiques et financibres sur I'Afrique. The World Bank, Washington, DC, 210 pp. United Nations Sudano-Sahelian Office, 1991. Information systems for environmental management. New York (unpubl.), 35 pp. USAID Chad, 1992. Program Assistance Approval Document: Agricultural Trade Policy Reform Program. Report and annexes. N'Djam~na, Chad (unpubl.), 360 pp. USAID Office of Analysis, Research and Technical Support, Bureau for Africa, 1992. Plan for supporting natural resources management in Sub-Saharan Africa: regional environmental strategy for the Africa Bureau. USAID, Washington, DC, 45 pp. USAID Regional Economic Development Support Office/ West and Central Africa. Initial environmental examination or categorical exclusion for the Chad Agricultural Trade Policy Reform Program PAAD (677-0068) and the ATPRP Project (677-0069). Prepared by USAID Regional Economic Development Support Office/West and Central Africa, July 1992 (unpubl.), 13 pp.