Amendment 1 J.7 Adaptation IEE Asia 21-022.pdf

US Agency for International Development (USAID) Sri Lanka & Maldives

Climate Change Adaptation Activity Initial Environmental Examination (IEE)

Program/Project/Activity Data

Activity/Project Name: Climate Change Adaptation Activity

Assistance Objective:

Development Objective 3 for Sri Lanka CDCS: Resilience of Resources to Shocks and Stressors Enhanced

Mission Objective 2.2 of Maldives ICS: Improved Maldives natural resource management to promote long term sustainable development and economic growth

Program Area: Climate Change Adaptation Country: Sri Lanka and Maldives Originating Office: Economic Growth Office Date: 12/14/2020 PAD Level IEE: Yes No Supplemental IEE: Yes No RCE/IEE Amendment: Yes No

DCN of Original RCE/IEE: N/A

DCN of Amendment(s): N/A

If Yes, Purpose of Amendment (AMD): New award IEE prepared by Nihani Riza, Economic Growth Office

DCN(s) of All Related EA/IEE/RCE/ER(s): COVID 19 PIEE Asia 20-042 Implementation Start/End: September 2021 - 2026 LOP: 5 years

Funding Amount: LOP Amount:

$19,000,000 AMD Amount: N/A

Contract/Award Number (if known): N/A IEE Expiration Date (if any): 2026 Reporting due dates (if any): Quarterly / Annually Recommended Environmental Determination:

X Categorical Exclusion: Positive Determination:

X Negative Determination with Conditions Deferral:

Additional Elements:

Conditions: Local Procurement:

Government to Government: Donor Co-Funded:

Sustainability Analysis (included):

Climate Change Vulnerability Analysis (included):

Adaptation/Mitigation Measures: Project technical assistance activities are of moderate per the 2021-2025 climate risk analysis. Climate risk screening is required1. COR to share

1 The current Sri Lanka Climate Risk Profile:

https://www.climatelinks.org/sites/default/files/asset/document/Sri%20Lanka_CRP_Final.pdf and the current Sri Lanka Tropical Forest and Biodiversity Analysis (2016 FAA 118/119):

https://www.usaidgems.org/Documents/FAA&Regs/FAA118119Asia/Sri%20Lanka%20FAA%20118- 119%20Analysis%20March%202016.pdf The current CDCS:

https://www.usaid.gov/sites/default/files/documents/1861/CDCS_Sri_Lanka_December_2019.pdf

Asia 21-022

12 2 strategic climate risk analysis 2021-2025 once approved with IP and ensure appropriate screening at activity level. See Annex 2 for climate risk screening format.

1. Background and Project Description

1.1. Purpose and Scope of IEE

The purpose of this document, in accordance with Title 22, Code of Federal Regulations, Part 216 (22CFR216), is to provide a preliminary review of the reasonably foreseeable effects on the environment of the USAID/Sri Lanka and Maldives Adaptation Activity described herein and recommend determinations and, as appropriate, conditions, for these activities. Upon approval, these determinations become affirmed, per 22CFR216 and specified conditions become mandatory obligations of implementation.

This IEE also documents the results of the project/activity level Climate Risk Management process in accordance with USAID policy (specifically, ADS 201mal).

This IEE is a critical element of USAID’s mandatory environmental review and compliance process meant to achieve environmentally sound activity design and implementation.

Potential environmental impacts should be addressed through formal environmental mitigation and monitoring plans (EMMPs) and/or Environmental Assessments (EAs), if needed.

1.2 Project Overview

The impacts of climate change are already slowing the Maldives’ and Sri Lanka’s economic growth by degrading natural assets and resources that are critical to the competitiveness of key sectors and livelihoods. These negative impacts are expected to increase for identified sectors and further affect other sectors and wider communities in the future, given current trends. While responding to the ongoing COVID-19 pandemic remains the paramount priority, investing in adaptation measures that build capacity to respond to climate change impact will be critical to build long term and broader resilience to future health, environmental, and economic crises in both countries.

Both Maldives and Sri Lanka are highly vulnerable to the impacts of climate change. Sea level rise, coastal storm surges, and associated flooding pose a significant threat to the Maldives, where more than 80% of the land area is less than one meter above sea level. Many inhabited islands in the archipelago have experienced increasing intensity of extreme weather events in recent years, including storm surges, strong winds, rough seas, and flooding2. These events continue to inflict damage to coastal infrastructure, cause significant beach erosion, and increase the logistical challenges of transporting essential goods and providing services across the 200 plus locally inhabited and 150 plus resort islands of Maldives. Expanding human and economic development activities exacerbate pressure on the country's fragile coral reef ecosystems and coastal zones leading to reduced fish populations, beach erosion, and saltwater intrusion into freshwater tables. The public sector responses to these events divert the Maldives’ public resources from funding other

Global Climate Risk 2019:

https://www.germanwatch.org/sites/germanwatch.org/files/Global%20Climate%20Risk%20Index%202019_2.pdf

12 3 development needs. The driving forces of the Maldives economy, tourism and fisheries, are particularly sensitive to the impacts of climate change: much of these industries’ assets and infrastructure are primarily located within 100m of the coastline2. Considering that these two sectors alone account for combined 40 percent of GDP and 27 percent of employment in the Maldives, climate change poses a significant threat to the capacity of the Maldives’ economy to drive self-reliance.

As an island nation highly vulnerable to the effects of climate change and dependent on maintaining the richness of its natural resources and a sustainable energy system to drive economic growth and provide for the welfare of all of its people, improving the resilience of Sri Lanka’s resource base to shocks and stresses is critical to advancing inclusive self-reliance. Low-end estimates predict that, even with mitigation measures, Sri Lanka will experience a 1.2 percent loss of annual GDP by 2050 due to climate change. Health, human settlements, and many sectors of the economy, including power, transportation, infrastructure, industry, tourism, water resources, agriculture, food security and aquaculture, are directly impacted by rainfall variation, temperature changes, and marine and coastal degradation induced by climate change9. Floods and droughts are increasing, as is the severity of landslides, especially in the highland regions2. Sea level rise and storm surges driven by climate change threaten the heavily-populated west, southwest, and southern coastal belt areas, where much economic activity takes place2. These impacts directly threaten the capacity of Sri Lanka’s private sector to contribute to generate sustained, inclusive economic growth. The need for the Government of Sri Lanka to respond to these events, both acute and gradual, depletes the resources that it has available to invest in other development needs. Furthermore, ecosystem services not only support local communities, but also act as a long-term buffer against increasing change and mitigation and sequestration of carbon. Efforts to protect these habitats or reduce other non-climate stressors can help to maintain the resilience of ecosystems and the services they provide.

Both countries have policy frameworks in place that identify climate change risks and resultant adaptation needs, and prioritize adaptation strategies that incorporate input from community, government, and the private sector. The Maldives’ National Adaptation Program (NAP) identifies extensive erosion, impacts on critical infrastructure, tourism, fisheries, human health, water resources, agriculture and food security as the immediate sectors with significant climate change impact. The Maldives Climate Change Policy Framework (2015) identifies five policy goals to guide the implementation of the NAP - sustainable financing, low emission development and ensuring energy security, adaptation actions or opportunities and building a climate resilient infrastructure and communities, building local capacity and taking up an advocacy role at international level, and fostering sustainable development. Sri Lanka’s NAP identifies food production and food security, conservation of water resources and biodiversity, coastal resources management, and infrastructure design and development as priorities. The National Climate Change Policy of Sri Lanka provides guidance to address the adverse impacts of climate change through broad policy statements under Vulnerability, Adaptation, Mitigation, Sustainable Consumption and Production, Knowledge Management and General Statements. Both the Maldives’ and Sri Lanka NAP’s also define intended Nationally Determined Contributions (NDCs) to adapt to the impacts of climate change by addressing these priorities; however, both countries lack the resources and expertise to comprehensively implement these NDCs and coordinate activities across multiple ministries and agencies. The need for both governments to redirect resources to respond to the health and economic impacts of COVID-19, which has severely impacted tourism in both countries, has further exacerbated the challenges faced in implementing the NDCs19.

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Both governments face challenges in developing and effectively implementing other policies, rules, and regulations related to climate change and the protection of environmentally sensitive areas. On paper, Sri Lanka has national policies on the environment, wetlands, and biosafety, but enforcement is lax. Sri Lanka’s below average Environmental Policy commitment score reflects the government’s implementation and coordination challenges applying its numerous existing environmental laws, policies, and regulations. USAID’s Tropical Forest and Biodiversity Analysis supports this, noting that inconsistent or, in some cases, inadequate or even absent application of environmental laws, policies, strategies, regulations, and procedures drives a set of threats to Sri Lanka’s resource base. Similarly, the Government of Maldives has developed a relatively comprehensive set of rules and regulations regarding environmental protection and climate change adaptation but lacks capacity for implementation, especially at the local governance level19. This weak enforcement contributes to a significant trust deficit between government and firms19. Both Maldives and Sri Lanka lack comprehensive frameworks for investments in climate change adaptation approaches and lack strong private sector engagement and incentives to support these investments19.

The Maldives’ and Sri Lanka’s private sectors struggle to identify and implement investments needed to reduce vulnerability to climate change. In some cases, firms and private sectors associations lack awareness of the numerous risks that climate change poses to their short- and long-term financial viability and business sustainability. In other cases, firms tend to view climate change adaptation through a corporate-social responsibility lens19. Those firms that do acknowledge climate risks to their core business interests struggle to identify partnerships and solutions that would build their capacity to adapt to climate change and invest in these solutions. The impact of COVID-19 has exacerbated this situation by forcing firms to divert/focus their attention on sustaining essential operations.

There are a small group of active non-governmental organizations (NGOs) in both Maldives and Sri Lanka raising awareness on climate change impact and/or implementing climate change adaptation initiatives. These NGOs have limited resources and capacity to advocate for and/or implement such adaptation initiatives. Small grant mechanisms implemented through the US State Department, the UN and regional USAID environmental initiatives continue to provide critical short-medium term funding to support work by such NGO’s. However, long term support is needed to build their capacity to network and advocate for public/private sector financing to sustain and expand their efforts on climate advocacy and adaptation. Similarly, local communities in the Maldives and Sri Lanka whose livelihoods are threatened by climate change-related stressors lack the capacity and resources to implement initiatives that would make them less vulnerable19.

The above-mentioned challenges are exacerbated by a lack of access to high-quality data, analysis and sharing of this information with relevant stakeholders to raise awareness and reduce vulnerability to climate change. In Maldives, while high quality climate vulnerability data is available to some extent, there is a need to better utilize this information for decision making centrally and locally. Sri Lanka, government institutions lack detailed sector-specific and area-specific climate risk data and information to inform decision making19. Both the Maldives and Sri Lanka struggle to coordinate data collection and sharing between government agencies, the private sector, NGOs, community organizations, and research institutions19. These issues limit the ability of these stakeholders to make informed decisions and investments to adapt to climate change.

1.3 Project Description

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The impacts of climate change are already slowing Maldives’ and Sri Lanka’s economic growth and social development by degrading natural assets and resources that are critical to its economic competitiveness, and this negative impact is likely to increase in the future, given current trends. By supporting innovative solutions to climate-related risks, strengthening governance of climate sensitive areas and sectors, and improving the quality of and access to climate information, this activity will enhance adaptive capacities of the Maldives’ and Sri Lanka’s private and public sectors and local communities to climate change impact in ways that contribute to sustained, inclusive market-based growth.

This activity will seek to achieve its purpose through three objectives: (1) identifying and scaling up innovative solutions to climate-related risks through market-driven private sector and community engagement, (2) strengthening central and/or local governance to address climate-related risks, and

(3) improving the quality of and access to information for decision-making to reduce vulnerability to climate change.

Objective 1: Identify and scale up innovative solutions to adaptively manage climate-related risks through market-driven private sector and community engagement

This activity will identify innovative solutions to adaptively manage climate-related risk through market-driven private sector and community engagement and scale up successful initiatives. It will:

(1) improve the capacity of private sector associations to identify and build awareness of shared risks in key economic sectors and establish dialog with the governments of Maldives and Sri Lanka about the risks and benefits of investing in solutions; (2) incentivize and strengthen the capacity of private sector partners to adapt to and mitigate climate-related risks in their business models and investment chains, overcome business model barriers to climate change adaptation product or service adoption, integrate climate change adaptation into core business interests, and identify financing opportunities to fund and scale up climate change adaptation pilots; and (3) build the capacity of communities to identify climate-related risks, devise solutions to adaptively manage these risks, strengthen engagement and partnerships with public and private sector to support adaptation, and access financing opportunities to implement these solutions. This activity will propose appropriate interventions to scale up climate adaptation investments in Maldives and Sri Lanka that support an enabling environment for investment, strengthen information and capacity development, and improve financial markets and mechanisms.

Objective 2: Strengthen central and/or local governance to address climate-related risks

This activity will strengthen governance capacity of central and/or local governments in Maldives and Sri Lanka to address climate-related risks. Efforts will be made to support the government to incentivize and engage the private sector in climate change adaptation governance initiatives wherever possible. It will: (1) identify and address gaps in regulatory and policy frameworks for investments in climate change adaptation approaches and incentives for these investments; (2) build government capacity, at the central and/or local level, to assess climate vulnerability, develop and implement rules, regulations, and policy commitments (e.g., NDCs) related to soft and hard adaptation measures and the management of environmentally sensitive and/or protected areas that are vulnerable to the impacts of climate change; and (3) strengthen government capacity to coordinate and integrate climate change adaptation governance measures across relevant ministries

12 6 and agencies, as well as engage the private sector in climate change adaptation-related policy development and implementation.

Objective 3: Improve availability and access to high quality information for decision-making to reduce vulnerability to climate change

This activity will: (1) improve availability and access to high quality information that the private sector, government, non-government organizations, educational organizations, and communities need to make informed decisions to reduce vulnerability to climate change; (2) improve coordination between government and non-government agencies, the private sector, and research institutions in the collection, analysis, and sharing of climate change-related information;

(3) support the development and dissemination of tools that facilitate the incorporation of information into decision-making regarding investments in climate change adaptation activities; and

(4) promote initiatives that increase public awareness of climate change-related risks and adaptation opportunities.

Results

The activity is expected to achieve the following illustrative results:

1. Innovative and improved climate change adaptation approaches developed that increase private sector and community resilience to climate-related risks

2. Increased number of public and private enterprises implementing climate change adaptation approaches

3. Increased decision-making using climate-risk information by public and private sectors

4. Increased number of laws, policies, regulations, or standards addressing climate change adaptation formally proposed, adopted, or implemented

5. Improved government capacity to coordinate and integrate climate change adaptation across the public sector portfolio

6. Increased public awareness of climate change risks and adaptation opportunities

7. Increased capacity of non-governmental organizations to support or advocate for adaptation initiatives

8. Private and public resources mobilized for climate change adaptation

2. Baseline Environmental, Climate and Socio-economic Information

2.1. Locations Affected and Environmental Context

The mission’s Tropical Forest and Biodiversity analysis, and the Climate Resilience analysis for 2021-2025 performed at the CDCS and sector level informs this activity on environment and climate impact for Sri Lanka. Activities in both countries will have a nation-wide coverage, and majority of planned activities (70% of budget) will have no environmental impact. These activities will mainly focus on technical assistance to strengthen policies, systems and procedures of the public and private sectors in both countries to strengthen climate change adaptation. It is anticipated that about 30% of the budget maybe invested to support specific measures to adapt to the impacts of climate change in selected climate vulnerable regions and areas in both countries.

2.2. Description of Applicable USG and Host Country Environmental and Natural Resource

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Legal Requirements Policies, Laws, and Regulations A Tropical Forest and Biodiversity Analysis (FA 118/119) was prepared for Sri Lanka in March 2016, as part of the Mission’s CDCS programming for 2017-2019. This analysis outlines the environmental and natural resource legal requirements, policies, laws and regulations of the country. As the Mission is currently developing its next CDCS for 2021-2025, this information has been revised for the next CDCS period and is anticipated to be finalized and made public prior to commencement of this activity. This updated analysis will briefly analyze the capacity of the country’s public institutions tasked with conservation and environmental management.

For Maldives, a summary of the environmental and natural resource legal requirements, policies, laws and regulations is provided under section 3.

2.3. Country/Ministry/Municipality Environmental Capacity Analysis Four dedicated government agencies have been set up for environment and natural resources management in Sri Lanka. This includes the: Forest Department, Central Environmental Authority, Department of Coast Conservation and Coastal Resources, and Marine Environment Protection Agency. There are several other government agencies and over 70 legal instruments regulating environmental, water, biodiversity, forestry, etc. natural resources, but lack of proper coordination and enforcement weakens the effective and efficient implementation. For Maldives, a summary of institutional capacity is provided under section 3.

2.4 Climate Change Vulnerability Analysis + Eco-systems services Climate risk is moderate in accordance CRM for the 2021-2025 CDCS and the IP will require screening at the activity level, following the format provided in Annex 2. The IP shall review locations where adaptation activities will be implemented to ensure that facilities are adequate and they are not in areas/zones which may be affected by floods, extreme weather conditions, sea level rise, etc. The activity level climate risk analysis will be performed once the geographic areas for implementation in both countries are determined and adaptation/mitigation measures will be included in the screening matrix and EMMP as appropriate.

3. Regulatory and Organizational Framework

Sri Lanka Sri Lankan Environmental Management Policy originates from the Constitution. There are two major provisions in the Sri Lankan Constitution related to the environment: Article 27 which makes it the duty of the State to nature and conserve its riches. The Constitution also enshrines the general right to information.

In Sri Lanka EIA was first introduced by the Coast Conservation (Amendment) Act No. 57 of 1981.

This applies to projects that come within the "Coastal Zone"2. The "Coastal Zone" includes the area lying within a limit of 300 meters land ward of the mean highwater line and a limit of 2 kilometers seawards of the mean low water line. Under the Act, identification of projects that require EIA is left to the discretion of the Director, Coast Conservation Department.

2 http://www.cea.lk/web/en/acts-regulations & https://www.ecolex.org/result/?q=Sri+Lanka&type=legislation&xdate_min=&xdate_max=

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The National Environmental (Amendment) Act No. 56 of 1988 introduced EIA, as a part of the strategy to achieve sustainable development for the entire country and the Central Environmental Authority was assigned regulatory functions. The Central Environmental Authority (CEA) was established on 12th August 1981, under the provision of the National Environmental Act No:47 of 1980. The Ministry of Environment which was established in December 2001 has the overall responsibility in the affairs of the CEA with the objective of integrating environmental considerations into the development process of the country. The CEA was given wider regulatory powers under the National Environment (Amendment) Acts No:56 of 1988 and No:53 of 2000.

Part IV C of the amendment act mandated that all "prescribed" development projects are required to be subjected to Environmental Impact Assessment. Only large-scale development projects that are likely to have significant impacts on environment are listed as prescribed projects. In addition, "prescribed projects" if located in "environmental sensitive areas" are required to undergo EIA irrespective of their magnitude.

The prescribed projects are listed in the gazette No 772/22 of 24th June 1993, 859/14 of 23rd February 1995, 1104/22 of 5th November 1999 and 1108/1 of 29th November 1999.

The National Environmental Act stipulates that approval for all prescribed projects must be granted by a Project Approving Agency (PAA). At present, 23 Government Agencies have been designated as PAAs. A single Project Approving Agency is established as responsible for administrating the EIA process for a project. When there is more than one PAA is involved the appropriate PAA is decided by the CEA. It is important to note that a state agency which is a project proponent cannot function as a PAA for that project. Project Approving Agencies are listed in the Gazette Extra Ordinary No. 859/14 of 23rd February 1995 and Gazette Extra Ordinary ,No. 1373/6 of 29th December 2004.

The National Environmental Act has identified two levels in the EIA process. If the environmental impacts of the project are not very significant then the project proponent may be asked to do an Initial Environmental Examination (IEE), which is a relatively short and simple study. However, if the potential impacts appear to be more significant, the project proponent may be asked to do an Environmental Impact Assessment (EIA) which is a more detailed and comprehensive study of environmental impacts.

EIA reports must be kept open for public comments for 30 working days. IEE reports have been exempted from this requirement. However, an Initial Environmental Examination report shall be deemed to be a public document for the purposes of sections 74 and 76 of the Evidence Ordinance (Chapter 21) and shall be open for inspection by the public.

EIA provisions are also included in the Fauna and Flora (Amended) Act No. 49 of 1993. According to this Act, any development activity of any description what so ever proposed to be established within one mile from the boundary of any National Reserve, is required to be subject to EIA, and written approval should be obtained from the Director General, Department of Wild Life Conservation prior to implementation of such projects.

Sri Lanka is a signatory to a myriad of multilateral international agreements related to the environment, some thirty-one are cited in the relevant chapter, e.g. The Convention on International Trade in Endangered Species of Fauna and Flora; RAMSAR Convention, Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal; Montreal Protocol

12 9 on Substances that Deplete the Ozone Layer; Biodiversity Convention and the Framework Convention on Climate Change.

Sri Lanka’s regulations and policies related to climate change can be accessed on https://www.climate-laws.org/legislation_and_policies?from_geography_page=Sri+Lanka&geography%5B%5D=169&ty pe%5B%5D=executive.

Maldives

The 2008 Constitution of Maldives stipulates the following:

Article 22 - Protection of the environment: The State has a fundamental duty to protect and preserve the natural environment, biodiversity, resources and beauty of the country for the benefit of present and future generations. The State shall undertake and promote desirable economic and social goals through ecologically balanced sustainable development and shall take measures necessary to foster conservation, prevent pollution, the extinction of any species and ecological degradation from any such goals.

Article 23 - Economic and social rights: Every citizen the following rights pursuant to this Constitution, and the State undertakes to achieve the progressive realization of these rights by reasonable measures within its ability and resources: (a) adequate and nutritious food and clean water; (b) clothing and housing; (c) good standards of health care, physical and mental; (d) a healthy and ecologically balanced environment; (e) equal access to means of communication, the State media, transportation facilities, and the natural resources of the country; (f) the establishment of a sewage system of a reasonably adequate standard on every inhabited island;

(g) the establishment of an electricity system of a reasonably adequate standard on every inhabited island that is commensurate to that island.

Article 67 – Responsibilities and duties: The exercise and enjoyment of fundamental rights and freedoms is inseparable from the performance of responsibilities and duties, and it is the responsibility of every citizen (a) to respect and protect the rights and freedoms of others; (b) to preserve and protect the State religion of Islam, culture, language and heritage of the country; (c) to preserve and protect the natural environment, biodiversity, resources and beauty of the country and to abstain from all forms of pollution and ecological degradation; (d) Every person in the Maldives must also respect these duties.

Article 248 - Land, sea and naturally occurring valuable resources: (a) The land, sea, and seabed, including all fish within the territory of the Maldives, and all naturally occurring resources, including metallic ores, petroleum and gas, shall vest in the State. (b) All living, non-living and naturally occurring resources of value within the Exclusive Economic Zone of the Maldives and the seabed shall vest in the State.

The main legislative instrument for the protection of the environment in the Maldives is the Law on the Protection and Preservation of the Environment (EPPA, Law No. 4/93).3 Law No. 4/93 established a framework upon which regulations and policies can be developed to protect and

3 http://en.epa.gov.mv/regulations

12 10 preserve the natural environment and resources for the benefit of future generations.

Additionally, Environmental Impact Assessment (EIA) has been made mandatory for large scale projects in the Maldives through the Environmental Protection and Preservation Act (4/93). The legislation provides the basic framework for the EIA process in the country and the EIA procedures are laid out in the form of guidelines.

EPPA Article 2 states that the concerned government authorities shall provide the necessary guidelines and advise on environmental protection in accordance with the prevailing conditions and needs of the country. All concerned parties shall take due considerations of the guidelines provided by the government authorities. Article 4 states that the Ministry of Environment shall be responsible for identifying protected areas and natural reserves and for drawing up the necessary rules and regulations for their protections and preservation. According to Article 5 (a) of the Act, an Environmental Impact Assessment study shall be submitted to the Ministry of Environment before implementing any development project that may have a potential impact on the environment. As per Article 5 (b), The Ministry of Environment shall formulate the guidelines for EIA and shall determine the projects that need such assessment as mentioned in paragraph (a) of this clause. As per Article 6, the Ministry of Environment has the authority to terminate any project that has any undesirable impact on the environment. A project so terminated shall not receive any compensation. Article 7 states that any type of waste, oil, poisonous gases or any substances that may have harmful effects on the environment shall not be disposed within the territory of the Maldives. In cases where the disposal of the substances becomes absolutely necessary, they shall be disposed only within the areas designated for the purpose by the government. If such waste is to be incinerated, appropriate precautions should be taken to avoid any harm to the health of the population. Article 8 states that Hazardous/Toxic or Nuclear Wastes that is harmful to human health and the environment shall not be disposed anywhere within the territory of the country.

Environmental Impact Assessment Regulations were issued by the Ministry of Environment and Energy (MEE) on 8 May 2012. The first step in environmental assessment process involves screening of the project to be classified as one that requires an Environmental Impact Assessment (EIA) or not. Based on this decision, the Ministry, EPA and other stakeholders decides the scope of the EIA which is discussed with the proponent and the EIA consultants in a “scoping meeting”. The consultants then undertake the EIA starting with baseline studies, impact prediction and finally reporting the findings with impact mitigation and monitoring program.

This report follows the principles and procedures for EIA outlined in the EIA regulations. The EIA report is reviewed by EPA following which an EIA Decision Note is given to the proponent who should implement the Decision Note accordingly. As a condition of approval, appropriate environmental monitoring may be required and the proponent shall have to report monitoring data at required intervals to the EPA. The project proponent is committed to implement all impact mitigation measures that are specified in this EIA report. Furthermore, the proponent is committed to environmental monitoring and shall fulfil environmental monitoring requirements that may be specified in the EIA decision note as a condition for project approval. The processes specified in this ESMF for the EIA or EMP preparation is based on the EIA regulations of 2012.

Any requirement to carry out civil engineering works, such as construction of channels or harbors would need to comply with the requirements of the Environmental Impact Assessment Regulations, 2007. The requirement for and the regulations relating to the preparation of Environmental Impact Assessments are set out in the Environment Impact Regulations, 2007 which are enforced under Environment Protection and Preservation Act (Law No. 4/93).

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Under this Law: (a) The “environment” means all the living and non-living things that surround and affects the lives of human beings; and (b) A “project” is any activity that is carried out with the purpose of achieving a certain social or economic objective. This regulation has undergone a number of amendments in 2013, 2015 and 2016. These amendments included revision of EIA review period and associated costs, qualification required for monitoring the Environmental Management Plan, revision to the list of projects that requires EIAs, projects that can be undertaken by simply applying mitigation measures defined by EPA such as for dredging of harbors, clearance of vegetation within allocated plots for households and for roads, transferring EIA decision making to Minister of Tourism for tourism related activities; categorization of EIA consultants, point system for consultants to assess performance and license suspension, a code of conduct for consultants, and increment to the fine for non-compliance of regulations and violations.

The Regulation on Environmental Liabilities (Regulation No. 2011/R-9) The objective of this regulation is to prevent actions violating the Environmental Protection and Preservation Act 4/93 and to ensure compensations for all the damages that are caused by activities that are detrimental to the environment. This includes all the activities that area mentioned in clause 7 of EPA Act as well as those activities that take place outside the projects that are identified here as environmentally damaging. The regulation sets mechanisms and standards for different types of environmental liabilities and equal standards that shall be followed by the implementing agency while implementing the regulation. According to this regulation the Government of Maldives reserves the right to claim compensation for all the activities which have breached the Environmental Protection and Preservation Act 4/93.

Environmentally Sensitive Areas (ESA) List, 2014. Environmentally Sensitive Areas (ESA) are islands with unique features, reef systems, mangroves, wetlands, seagrass beds or places that are vital to the long-term maintenance of biological diversity, beach sediments, soil, water and other natural resources and features, especially as they relate to human health, safety, and welfare, both on the island and in an atoll context. These features are highly valued, both for their scenic beauty and for the habitats they provide for the flora and fauna. The compilation of the list was initiated in 2009 with the assistance of the local Island Offices and other stakeholders. The list has been produced to identify environmentally and economically significant areas to offer protection, safeguard and enhance the conservation of the biological diversity of the country.

Commencing from 1st January 2011, under the Environmental Protection and Preservation Act:

4/93, the sites listed had been identified as Environmentally Sensitive Areas (ESAs). This ESA list helps in safeguarding, minimizing and mitigating the environmental impacts from different development projects, by monitoring the development in the area with the involvement of all stakeholders. The areas identified in the ESA are not protected areas. A site/habitat being identified as an ESA does not indicate that sustainable development cannot take place. It encourages development to take place, taking into consideration the conservation of the sensitive area, there 35 by mitigating the negative impacts. It has been noted that ESA cannot be used as a reason for refusing sustainable development applications.

Regulation on Sand and Aggregate and Coral Mining This regulation addresses sand mining from islands and sand banks. Sand and aggregate mining from beaches of any island whether inhabited or uninhabited is banned for protection of the islands. Permissions for sand and

12 12 aggregate mining from other areas shall be obtained from the relevant authorities. There is another similar regulation named “Regulation on Coral Mining (1990), which is only applicable to coral mining from the ‘house reef’ of islands and the atoll rim reefs.

Dewatering Regulation (213/R-1697) This regulation is constituted for the purpose of ensuring that the drainage of water in the islands of the Maldives in the process of dewatering and subsequent dumping of discharge water into the soil or to the sea, is conducted with minimal impact to the environment. Given water is the source of life and one of the essential elements forming the environment, the purpose of this regulation is to avoid contamination of the groundwater table, to mitigate the damage caused to the water table; and to protect the habitat, the environment, the public and all living organisms from the impact of dewatering. This regulation is enacted from the rights vested on the Ministry of Environment from Article 3 of Act 4/93 (Maldives Environment Protection and Preservation Act). This regulation is enforced by the Environment Protection Agency on behalf of the Ministry. In addition to the institutions of the state, it is the responsibility of every individual to protect the groundwater table of the islands of the Maldives and to manage it in a sustainable manner. The process of dewatering for any industrial purpose shall be conducted on any island pursuant to the guidelines prescribed in this regulation and after having obtained permission in writing from the implementing agency or from their delegate.

Waste Management Regulation (WMR) was published in August 2013 and is effective from February 2014. It has been implemented by the Environmental Protection Agency (EPA). The aim of WMR is to implement the national waste policy which contains specific provisions to: (a) Implement measures to minimize impacts on human health, (b) Formulate and implement waste management standards, (c) Implement an integrated framework for sustainable waste management, (d) Encourage waste minimization, reuse and recycling (e) Implement Polluter- Pays Principle ( f) Introduce Extended Producer Responsibility.

WMR contains four main sections: (i) Waste management standards: Defines standards for waste collection, transfer, treatment, storage, waste site management, landfills and managing hazardous waste. (ii) Waste Management Permits: Defines approval procedures for waste sites, (iii) Waste transfer: Standards and permits required for waste transport on land and sea, including transboundary movements, (iv) Reporting requirements: Defines reporting and monitoring requirements and procedures, (v) Enforcement: Defines procedures to implement WMR and penalties for non-compliance. If any hazardous waste including electronic waste is to be disposed in the Maldives, it should be handled by waste sites specifically approved to manage hazardous and Special Category waste. Transportation and handling shall also conform to the standards specified in WMR.

If the waste is to be exported for reuse or disposal in another country, an application needs to be submitted to EPA 3 months prior to the shipping date. EPA will issue an approval based on compliance with WMR clauses and international conventions. Thus, all the subprojects will need to comply with the WMR in disposing construction and decommissioning related wastes as applicable.

The Maldives Tourism Act (Law No. 2/99) provides for the determination of zones and islands for the development of tourism in the Maldives: the leasing of islands for development as tourist resorts, the leasing of land for development as tourist hotels and tourist guesthouses, the leasing

12 13 of places for development as marinas, the management of all such facilities; and the operation of tourist vessels, diving centers and travel agencies, and the regulation of persons providing such services. The Act has undergone several amendments to take in the sectors development goals.

The Government of the Maldives has developed and adopted planning procedures and processes that consider biodiversity conservation.

Maldivian Land Act, 2002 The Act governs the allocation of Maldivian land for different purposes and uses and other issues regarding the issuing of land, issuing of state dwellings for residential purposes, conduct regarding state dwellings or private dwellings constructed for residential purposes and the sale, transfer and lease of Maldivian Land. All transactions concerning the issuing, receiving, owning, selling, lease, utilizing and using Maldivian land shall be conducted in compliance with this Act. In accordance with section 3 of this Act, land shall be allocated for the following purposes and uses. (a) For the construction of households and buildings for residential purposes. (b) For commercial use. (c) For social use. (d) For environmental protection. (e) For government use.

Maldives is a party to the following international environmental conventions4:

UNFCCC

Convention on Biodiversity United Nation Convention to Combat Desertification United Nations Convention on the Law of the Sea International Convention for the Prevention of Pollution of the Sea by Oil Vienna Convention for the Protection of the Ozone Layer Montreal Protocol on Substances that Deplete the Ozone Layer Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal Stockholm POPs Convention Washington Declaration on the Protection of the Marine Environment from Land-Based Activities.

Important institutions dealing with environmental issues are5:

Ministry of Planning Ministry of Environment6

National Environment Council Ministry of Atolls Administration Maldives Water and Sanitation Authority Ministry of Fisheries and Agriculture Marine Research Section http://www.bluepeacemaldives.org/pdfs1/Environment%20Treaties%20to%20Which%20the%20Maldives%20is%20Par ty[1].pdf and https://en.wikipedia.org/wiki/Category:Treaties_of_the_Maldives 5 http://www.sacep.org/pdf/Reports-Technical/2001-UNEP-SACEP-Law-Handbook%20-Maldives.pdf https://presidency.gov.mv/ https://www.preventionweb.net/english/countries/asia/mdv/ 6 http://www.environment.gov.mv/v2/en/

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Selected Islands Development Unit

Maldives’ regulations and policies related to climate change can be accessed on https://www.climate-laws.org/legislation_and_policies?from_geography_page=Sri+Lanka&geography%5B%5D=169&ty pe%5B%5D=executive.

4. Analysis of Potential Environmental and Social Impacts

Illustrative Activities Potential Impacts

Objective 1: Identify and scale up innovative solutions to adaptively manage climate-related risks through market-driven private sector and community engagement

Technical assistance provided to private sector identify and build awareness of shared climate risks in key economic sectors and establish dialog with the governments of Maldives and Sri Lanka about the risks and benefits of investing in solutions Technical assistance provided to private sector partners to adapt to and mitigate climate-related risks in their business models and investment chains, overcome business model barriers to climate change adaptation product or service adoption, integrate climate change adaptation into core business interests, and identify financing opportunities to fund and scale up climate change adaptation pilots;

Technical assistance provided to communities to identify climate-related risks, devise solutions to adaptively manage these risks, strengthen engagement and partnerships with public and private sector to support adaptation, and access financing

Some of these activities, depending on the approach followed, may impact the natural or physical environment and can be considered for a Negative Determination with Conditions. The conditions to be followed are stipulated in Section 4.3.

12 15 opportunities to implement these solutions.

Identify opportunities to scale up climate adaptation investments in Maldives and Sri Lanka that support an enabling environment for investment, strengthen information and capacity development, and improve financial markets and mechanisms.

Objective 2: Strengthen central and/or local governance to address climate-related risks Provide training/technical assistance to strengthen governance capacity of central and/or local governments in Maldives and Sri Lanka to address climate-related risks.

Identify opportunities to support government to incentivize and engage the private sector in climate change adaptation governance initiatives wherever possible.

Identify and address gaps in regulatory and policy frameworks for investments in climate change adaptation approaches and incentives for private sector investments Provide training/technical assistance at the central and/or local level, to assess climate vulnerability, develop and implement rules, regulations, and policy commitments (e.g, NDCs) related to soft and hard adaptation measures and the management of environmentally sensitive and/or protected areas that are vulnerable to the impacts of climate change;

and Facilitate strengthening government capacity to coordinate and integrate climate change adaptation governance measures across relevant ministries and

Some of these activities, depending on the approach followed, may impact the natural or physical environment and can be considered for a Negative Determination with Conditions. The conditions to be followed are stipulated in Section 4.3.

12 16 agencies, as well as engage the private sector in climate change adaptation-related policy development and implementation.

Objective 3: Improve availability and access to high quality information for decision-making to reduce vulnerability to climate change

Provide technical assistance to improve availability and access to high quality information that the private sector, government, non-government organizations, educational organizations, and communities need to make informed decisions to reduce vulnerability to climate change;

Provide technical support to facilitate coordination between government and non-government agencies, the private sector, and research institutions in the collection, analysis, and sharing of climate change-related information;

Develop and disseminate tools that facilitate the incorporation of information into decision-making regarding investments in climate change adaptation activities.

increase public awareness of climate change-related risks and adaptation opportunities through campaigns, awareness events etc.

These activities will not have an effect on the natural or physical environment and can be considered for a Categorical Exclusion Determination under §216.2(c)(2)(i) Education, technical assistance, or training programs.

4.2 Recommended Environmental Determinations: Categorical Exclusion and Negative Determination with Conditions

Categorical Exclusions (70 % of total funding):

A Categorical Exclusion is recommended for all activities under Objective 3 and some activities under Objectives 1 and 2 under §216.2(c)(2)(i,)(ii,)(v) and (xiv.) except to the extent such programs include activities directly affecting the environment.

Recommended Environmental Action MEO/CIL review, advises and concur together COR on the workplan.

Some activities may have adverse impacts due to COVID-19 which effects are expected to continue through 2022. In these circumstances the recommended environmental actions and conditions approved in Asia COVID 19 PIEE Asia 20-042 shall be distilled and applied.

Negative Determination with Conditions (30 % of total funding):

A Negative Determination with Conditions is recommended for some activities under Objectives 1 and

2. Specific terms and conditions for these activities are presented below in Section 4.3.

4.3 Terms and Conditions

The IP shall:

In the offeror’s proposal and budget, establish the processes, required technical and financial resources…