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1 A Cost Effectiveness Approach to Routing of Linear Infrastructure in Environmentally Sensitive Areas: A Case of a Crude Oil Pipeline In the Albertine Rift in Uganda DISCUSSION PAPER N o 7 February 2015

2 DISCUSSION PAPER February 2015 N o 7 Conservation Strategy Fund A Cost Effectiveness Approach to Routing of Linear Infrastructure in Environmentally Sensitive Areas: A Case of Crude Oil Pipeline in the Albertine Rift in Uganda Geoffrey Mwedde 1, Grace Nangendo 1, Dan Segan 1, Irene Burgués Arrea 2, Rhona Barr 2, Andrew J. Plumptre 1 1 Wildlife Conservation Society (WCS) 2 Conservation Strategy Fund (CSF) Photo: Oleg Znamenskiy Please note: This document was made possible by the support of the American People through the United States Agency for International Development and its program on Biodiversity Understanding in Infrastructure and Landscape Development (BUILD). The views expressed herein are of the author (s) and do not necessarily reflect views of USAID of the United States Government. We thank John Fay and Hedley Grantham for their technical support. We also thank Joseph Bull and Aaron Bruner for their thoughtful review. This paper can be downloaded without charge from

3 Table&of&Contents& Introduction&...&4& Approach&...&4& Results&...&5& Conclusion&and&recommendations&...&8&

4 1.&&Introduction& ThegovernmentofUgandahasplanstoconstructapipelinetodelivercrudeoilfromitscentral processing facilities in Buliisa District, to a refinery to be located in Kabale parish in Hoima District.Theproposedroute,whichpassesthroughthebiologicallyrichAlbertineRift,posesa significant risk of destroying, fragmenting, and altering vital habitats for important and endangered species, thereby damaging valuable ecosystem services which may negatively impact people and wildlife. These sorts of external costs are typically not paid for by developers,andarethereforefrequentlyunderestimatedorignoredinprojectdecisions.this study demonstrates a methodology to evaluate potential alternative routes for the pipeline, seekingtobalanceconservationimpactconsiderationswithfinancialcosts. 2.&&Approach& Thestudyincludedthreemajorsteps.First,weidentifiedareasofconservationprioritybased on41importantconservationfeaturessuchas:elephants,lions,wetlands,andgrasslands.we alsosetconservationtargetsrangingfrom13%to100%oftheremainingdistributionofeach feature. 1 A conservationoplanning tool called Marxan was then used to identify areas that achieved conservation targets at minimum sociooeconomic costs. SocioOeconomic costs were basedonproximitytosettlements,roads,andtowns,andpresenceoabsenceofprotectedareas. Theoutputofthisprocess(figure1)providedabasisforidentifyingavoidanceareas(areaswith highenvironmentalcost)andassessingpotentialimpactsofpipelineoptions. ThesecondstepwastoidentifypotentialroutesforthepipelineusingaLeastCostPath(LCP) analysis.asthenamesuggests,thistypeofanalysisfindsthelcpbetweentwopoints,where costismeasuredbasedonasetoffactorscombinedintoamapof pathresistance. Thehigher thecost,thehighertheresistancevalueforeachcellonthemap.wegeneratedandcompared LCPsundertwoscenarios.Thefirstscenariowasbasedonlyonfinancialfactors,thereforecalled thefinanciallcp.thisscenarioincludescostsrelatedtothelengthofthepipeline,crossingof major barriers in the landscape, and passing through populated areas such as settlements, urbancentres,andtheexistingroadnetwork.thesecondscenarioaddedtheconservationarea prioritiesfromsteponetothepathresistancemap.thisscenarioiscalledthefinanciallcpwith Environmental Considerations. The resistance layers and optimal pipeline routes under each scenarioareshowninfigure2. Thethirdstepwastoidentifythedirectimpactsofeachpipelinerouteonspecificconservation featuresandinreducingoptionsforachievingconservationtargets.impactsofthetwopipelines on suitable habitats for species were quantified both within the direct path (Right Of Way ROW)ofthepipelineandwithinthreebuffersofvaryingwidtharoundtheROW.Impactswere estimatedbasedontheunderstandingthatpipelineconstructionwillreducethequalityandsize of species habitat through removal of vegetation directly under the pipeline ROW, create species migration barriers [edge effects] and disturbance of vegetation composition and structurethatwouldaffectthequalityofhabitatinadjacentareas. 1 Conservationtargetsfortheanalysiswerebasedonexpertopinionforminimumviablepopulationforthreatenedandendangered speciesandecosystemsandfeedbackofparticipantsinascenarioplanningworkshop 4

5 3.&&Results& Priorityconservationareaswereidentified.Figure1shows,inred,themostcostOeffectiveareas to achieve conservation objectives and/or areas where few other remaining options for achievingconservationobjectivesexist. Figure1.Mapofconservationpriorities. The LCP routes were identified using the Financial Resistance Layer and the Financial with Environmental Considerations Resistance Layer. The optimal route identified in the Financial withenvironmentalconsiderationscenarioresultedina54%increaseinrelativefinancialcosts comparedtothepipelineroutewhichonlyconsideredfinancialcosts.thisisthecase,despitea shorteroveralllengthofthepipeline(117kmcomparedto137kmforthefinanciallcp).thisis partlyduetothefinanciallcppredominantlyfollowingtheexistingroadnetwork(plate2)asit would be financially cheaper to construct a pipeline adjacent to an existing road. The EnvironmentalConsiderationsLCP,ontheotherhand,deviatedfromtheroadtoavoidareasof veryhighenvironmentalandbiologicalsignificance(plate4). 5

6 Plate&1:&Resistance&Layer&Financial&LCP&& Plate&2:&Financial&LCP&& & Plate&3:&Resistance&Layer&Financial&LCP&with&Environmental& Considerations Plate&4:&Financial&LCP&with&Environmental&Considerations Figure2:Scenario1and2ResistanceLayers(plate1and3)andLeastCostPathroutes(plates2and4) thatwereidentifiedusingaleastcostpathanalysis. 6

7 In terms of direct environmental impact, the Financial LCP resulted in larger habitat loss for mammalandbirdspeciesofconservationconcern.therelativeimpactofeitherpipelineroute onindividualecosystemtypesishighlydependentonhowfarimpactsareexpectedtospread aroundthepipelineasaresultofattractingpeopletothearea,improvingaccesstoresources, andinfrastructuredevelopmentoinducedriskstowildlifethroughnoise,vibrationandpollution resultinginroadkills,alteredspaceouse,andhomerangepatterns(table2).duetothesizeof thelandscape,evenrelativelysmallpercentagedifferencesrepresentfairlylargeareas. AreasofparticularnotabledifferenceamongscenariosarehighlightedinTable2.Amongthe mostpreoccupyingimpactsofthefinanciallcp,consideringanimpactareaof10kmaroundthe pipeline,are:lossofnearly1/3 rd ofmangabeyhabitat,100%ofhyenahabitat,and60%ofthe landscape sgrasslands. Table2:Impacts:proportionoffeatureinpipelineRightofWay(ROW)andbuffersaroundtheROW,asa percentageofexistingtotalareaoffeatureinthelandscape Conservation& &Impact&(%&area)&within& Impact&(%&area)&in&<1km& Impact&(%&area)&in&<10km& Feature& ROW& of&row& of&row& Scenario&1&& Fin.&LCP& Scenario&2&& Fin.&w/env.& LCP& Scenario&1& Fin.&LCP& Scenario&2&& Fin.&w/env.& LCP& Scenario&1& Fin.&LCP& Scenario&2& Fin.&w/env.& LCP&& Hippopotamus Giraffe Elephant Crowned Crane Mangabey Nahan's Francolin WhiteBacked Vulture Lion Leopard Shoebill Chimpanzee Hyena Grasslands Woodlands TropicalHigh Forest Bushlands Wetlands TropicalHigh Forest (Degraded) Withregardtotheabilitytoachieveconservationtargets,theFinancialLCPwas predictedto significantly limit the spatial distribution of future conservation areas. As such, there was an increase in area of places identified as the most suitable choices for meeting conservation 7

8 targets(withnootheroption asshownintable3).thisisattributedtochangeinmagnitude and intensity of sociooeconomic factors or the fact that conservation targets could not be achievedinanyotherarea.someconservationtargets,however,couldnotbeachievedunder eitherscenarioofpipelineconstructionroutes.forinstance,stakeholderssuggestedthat100% ofthewetlandsshouldbeconservedinthelandscape.whiletheenvironmentallcpreduced impactonwetlandsbyuptothreetimesthatofthefinanciallcp,importantimpactsstillexist (0.5O1.0%ascompared to 0.5O3.0%). Table3showstheareaundereachconservation priority category (as prioritised by Marxan planning tool) needed to achieve targets across scenarios assumingthatpipelinesonlyhaveanimpactwithintherow. Table3:LandareainsquarekilometresperconservationprioritycategoryafterrunningMarxananalysis; (a)withnopipeline(baseline),(b)whenscenario1pipelineroutewasseparatelyconsideredand(c)when scenario2pipelineroutewasseparatelyconsideredintheanalysis Conservation&priority& categories&as& determined&using& Marxan& Area&selected&for&conservation&(Km 2 )& (a)&baseline&(no& project&scenario)&& (b)&scenario&1&& Fin.&LCP& (c)&scenario&2&& Fin.&w/Env.&LCP& Veryhighwithno otheroptions 2, , ,131.4 Veryhighwithfew options High Medium Low Verylow Notselected 1, , ,395.1 Finally, the relative cost of achieving conservation targets (based on a multioattribute cost metriccomposedofproximitytosettlements,roads,towns,andpresenceoabsenceofprotected areas) was highest under Scenario 1: Financial LCP. In relative terms, using the no project scenario as baseline, achieving conservation targets was 0.8% more expensive under the Financial LCP; whereas, achieving the same under the Financial LCP with environmental considerationswouldonlycost0.5%more. Given the limitations of the information used, it is not possible at this stage to compare in monetary terms the financial costs of building the pipelines against the costs of achieving conservationtargetsunderthedifferentscenarios. 4.&&Conclusion&and&recommendations& Contemporary environment and development policies require all projects likely to have significantimpactsonbiodiversitytoapplythemitigationhierarchytotheirdevelopment.this comprises of a sequential application of a set actions by project proponents to; first, avoid impacts(e.g.modifyroute),second,minimizeormitigateimpacts(e.g.burypipelineatanimal crossingpoints),third,restoredegraded/damagedsites(e.g.afterbuildingpipeline),andfourth, offsetresidualimpacts(bbop,2012). 8

9 Theanalysesdescribedherefocusedonpresentingclearmethodologiestoreduceimpactina costeffectivemannerandthereforeapplythefirststepinthemitigationhierarchy avoidance. Findings suggest that there is indeed significant scope for reducing environmental impact of linear infrastructure, including pipelines, by systematically including information on conservation values when analysing potential routes. The environmental pipeline route has higherfinancialcostsofconstructionbuthaslikelylowercostsofimplementingthemitigation hierarchy. Given information gaps, these costs were not estimated in comparable units; therefore we cannot conclude which route minimizes total costs, assuming the mitigation hierarchyisfollowed. In order to select the economically optimal pipeline route, the next step would be to systematically include important sociooeconomic variables and fineotune financial and environmentalcostsofpipelineconstructionacrossthelandscape.afterthis,ameasurementof restoration might be applied and offsets considered for any remaining residual impacts, and achievethegoalofnonetloss/netpositivegain. Werecommendseveralspecificrefinementsforfollowupanalysis.Theseinclude: O Usehigherresolutionanalysis;here,weused90meterresolution,whichweseeassubO optimal;neverthelessitisworthmentioningthatwedonotknowhowfeasibleitwould betobuildafinerresolutiondataset,andonlythroughrunningtheanalysiswiththis finer resolution data would it be possible to know how sensitive results are to using finerresolution. O Carry out more detailed micro'routing that allows for detailed examination of environmental impacts to select the path of least impact. MicroOrouting can be done evenaftercommencementofconstructiontoavoiddisturbingcommunitysettlements orareasofhighbiologicalorculturalvalue(johnstonandkozloff,2005); O Add consideration of subterranean features such as seismic activity, as well as more detailedconsiderationofhydrologicalfeaturessuchasrivercrossings.whereasburying thepipelinereducesvisualdisturbance,movementbarriersandrisksofsabotage,doing so at river crossings could increase ecological risk during construction and can complicatedetectionandrepairofpossibleleaks(johnstonandkozloff,2005); O O O Addconsiderationsofspecieshabitatfragmentationeffects; Move towards a full monetary valuation of alternatives, including construction and opportunity costs. We used relative values as proxies based on expert knowledge. Whereassuchproxiessimplifytheanalysis,monetarydatashouldalwaysbeusedwhere possible(naidooetal.,2006). FineOtune environmental costs by determining how far around the pipeline route impactsareexpectedtospread. 9

10 References( NaidooR.,BalmfordA.,FerraroP.J.,PolaskyS.,RickettsT.H.,andRougetM.2006.Integrating economiccostsintoconservationplanning.trends'in'ecology'and'evolutionvol.21no.12. ElsevierLtd. Johnston,L.andKozloff,KinGoodland(2005). EnvironmentalReviewofMDBHydrocarbon Projects:LessonsLearnedfromU.S.GovernmentExperience,Oil'and'gas'pipelines'social'and' environmental'impact'assessment:'state'of'the'art,iaia2005conference,usa BusinessandBiodiversityOffsetsProgramme(BBOP).2012.Biodiversity'Offset'Design'' HandbookAUpdated.BBOP,Washington,D.C.Availablefrom: trends.org/guidelines/updated_odh.pdf.isbn(pdf)978^1^932928^50^1 10