Lesotho Highlands Water Project

Transcription

1 Report prepared for Lesotho Highlands Development Authority Lesotho Highlands Water Project Report of the Panel of Environmental Experts Report 70 May 2015 Prepared by D Hayward, J Hennessy, M Mentis and J Seager

2 PoE Report 70 May 2015 Executive summary Page 2 of 46 Executive summary 1. The Panel of Environmental Experts (PoE) for the Lesotho Highlands Water Project (LHWP) undertook a mission from 3-13 May The purpose of the mission was to help develop and implement projects being undertaken by the Lesotho Highlands Development Authority (LHDA), and to focus on critical issues. 3. The critical issues addressed during the mission, and the way forward on each, are summarized below. Readers should consult the matrix in the body of this report for further explanations of the recommendations. Critical issues 1. Five-year compensation disbursement strategy The Bokong electrification project is on track and so long as the future compensation entitlement is determined quickly, Phase 2 of the project should proceed according to plan. Good progress is being made with the application of the FYCDS and there is generally good acceptance by affected communities. Recommendations: Make sure that the future compensation entitlement is determined and communicated to the Bokong LLE as soon as possible in order to avoid protests from other Phase 2 beneficiaries. Place emphasis on the use of comprehensive community liaison and documentation of agreements to prevent and resolve disputes. Expedite the reassessment and communication of entitlements to LLEs. Seriously look at resource requirements to deal with LLE entitlements under FYCDS. Identify ways to streamline the administration of entitlements and payments, especially for smaller amounts, and allocate dedicated staff to managing larger community projects. 2. Complaints management strategy Panel reviewed the March 2015 progress report on the compensation related complaints management in LHWP1. There is progress, albeit slow. Recommendation: Continue to implement and monitor the implementation of the strategy and identify and implement improvements. Complaint verification and resolution is constrained because vital information is not to hand, though it might be available from past Panelists and consultants. Recommendation: Task a small group of relevant LHDA staff to seek out and acquire missing information. There is a danger that complaints management is seen as one-sided, with LHDA making the final decisions. This could lead to legal appeals. Panel believes that independent arbitration will promote more transparency and confidence in the system. Recommendation: Consider the establishment of independent arbitration panels to attend to disagreements.

3 PoE Report 70 May 2015 Executive summary Page 3 of 46 Consider streamlining claims by allowing disputes over small amounts to be dealt with at customer service unit (CSU) or other intermediate management levels. Recommendation: Pursue the possibility of dealing with small claims at the CSU or intermediary levels. There is a risk that the current resolution process will become overwhelmed with spurious complaints, particularly because, currently, the onus of proof does not rest with the claimants but with the LHDA. A cut-off point, beyond which the onus of proof with respect to new claims should rest with the claimants, is an option. Panel supports this. Recommendation: Establish a cut-off point beyond which the onus of proof for any new complaints shall rest with the complainants. Panel was asked to consider whether fallow lands should be considered to be agricultural fields for compensation purposes in terms of the policy. Recommendation: Consider fallow lands to be agricultural fields for compensation purposes. 3. Wetlands management strategy PoE was asked to review a proposal for preparing a wetland strategy, and recommendations are as follows. As the first part of the wetland strategy, prepare a plan to spearhead change management to address non-sustainable land use in LHWP catchments. Consider postponing work on the wetland strategy until the change management project can inform on interventions and their priorities in improving the sustainability of land-use. 4. Katse Botanical Garden strategic plan The strategy document is the most coherent LHDA has ever produced on KBG. There are two shortcomings which need attention, as follows. Explain in the Strategy that KBG is not just a Treaty obligation but a potentially valuable CSR activity where success is not measured in immediate financial return (there might never be a direct return) but in spearheading less tangible environmental conservation, biodiversity protection and education gains (implicitly with potential PR spinoffs). Insert into the Strategy the management practice of capping the budget, prioritizing a few goodprospect activities, and making those selected projects work or dropping them for some new and better initiative. 5. Aquaculture disease testing LHDA, as administrator of regulations for aquaculture operation on LHWP dams intends to undertake its own surveillance. Some capacity for doing this might be warranted, yet the principle should be adopted that not only should operators comply, but the onus is on them to demonstrate compliance. PoE recommends as follows. Make maximum use of data from independent laboratories and suppliers currently used by HT and KFF before considering commissioning any testing program and laboratory service. Ensure that aquaculture operations comply fully with HACCP protocols for food safety. 6. Environmental policy PoE was asked to review draft 3 of policy. Big improvement has been effected especially to the body of the policy, but page 2 (the commitments) is worse (too cluttered, verbose, confusing). The following is recommended. Revise the policy on the following basis: adopt less is more, start with policy purpose, identify 5-6 of the most essential actions to meet the purpose, and explain these actions in the body of policy.

4 PoE Report 70 May 2015 Executive summary Page 4 of 46 Redo page 2: focus on the purpose of environmental management, articulate the 5-6 most essential commitments in simple English, on one uncluttered page so an employee can commit easily to memory. In revised policy define significance (or any alternative term related to impact/risk/threat severity or materiality). Reclassify the zoning consistent with the principle of risk classification on the basis of similarity of nature of risk and control. In the next draft of policy either define the geographic scope of biodiversity and ICM commitment, or commit to resolving it within a specified time frame. Ensure the policy is environment-focused, relate it to the whole of LHWP, keep the policy direct and proactive, and bear in mind that there are different stakeholder groups that can require specific treatment. Make LHDA s environmental policy distinctive. Start/practice adopting the contents of developing policy. 7. Aquaculture operations PoE reviewed internal and external audits. The reports and discussions with LHDA, and the possibility of aquaculture operations failing, raise concerns about the adequacy of contracts, for example on the possibility of LHDA being faced with unanticipated clean-up costs. Review contracts with operators, assess whether there are adequate provisions for worst case scenarios, and get expert advice on concession contracts. Have internal (and if possible external) audits focus on issues which, if the operator quits, could leave LHDA with costly clean-up and the like. Require operators to appoint independent auditors, as far as present contracts allow, and reject audits which are not independent. Be reasonable in demanding conformance with regulations, and undertake to review and revise the regulations regularly. 8. LHWP1 IFR PoE was asked to review (a) ToR for LHWP1 EFR audit, (b) proposed revisions to LHWP1 EFR release schedules, and (c) proposed revision to EFR 7 flow and write-off of accumulated deficit. Recommendations regarding the ToR for the audit are as follows. Review LHDA needs for a compliance or management audit, or both, and decide bearing in mind the cost-benefit. Require that the project manager have formal environmental auditing qualification and experience. Specify the expertise needed rather than the experts. Restyle the ToR. Put the objective up front and then explain, not the reverse. For revision of the EFR schedules the recommendations are as follows. Adopt DOD s recommended revised EFR schedules and variances. Keep dam operating infrastructure in tip-top working order, and fix malfunctions as soon as possible and as far as possible. On the deficits at EFR Site 7 PoE recommends as follows. Adopt DOD s recommendations to reduce the flow spec at EFR 7 from 22% to 13.5%, and to write off the deficit. 9. Reservoir sedimentation PoE was provided with reports on measuring reservoir sedimentation and options for treating the dam sediments. Work is being done to an improving and high standard, and should continue. Recommendation:

5 PoE Report 70 May 2015 Executive summary Page 5 of 46 Continue on the present course measure sedimentation, build capacity, explore options for treating the dam sediments, get expert advice. 10. Compensation Panel reviewed the Phase 1 annual compensation management report for 2014/15. The output indicators for global ACP and in-kind compensation are not correct. Recommendations: Apply the calculation method for determining global ACP and in-kind output indicators as advised by Panel and ensure that the calculations in tables are double checked. Results from one year are usually compared to the results from the preceding year but historic results are not always good benchmarks. Recommendation: Consider setting annual performance targets for ACP and in-kind payments at the beginning of the year and work to achieve the targets. The Report identifies problems (and lessons learned) with ACP processing and distribution. These problems are not new and are well known. Some problems are external and difficult to control. The Report recommends strengthening regular consultation and awareness/educational initiatives, which Panel supports. Many challenges are internal, which LHDA and LHWC can control. The Report recommends corrective actions but Panel believes that these require constant high level, pro-active commitment to training, resources, incentives and, especially, supervision and follow-up. Recommendation: Prepare and implement action plans for all the measures recommended in the 2014/15 annual compensation management report to address the challenges of ACP distribution. Occasional temporary absence of key staff led to delays in compensation and applications for lump sum payments were not included in the payment schedules. Recommendation: Plan and implement adequate arrangements for back-up or delegation of authority for critical positions within both LHDA and LHWC. Currently, beneficiaries are paid by bank cheque with numerous, well known challenges that impact on the efficiency and effectiveness of compensation payments. It is time to look (or relook) at electronic payment methods (eg direct bank transfers and mobile phone money transfers) as standard or optional payment methods. Recommendation: Investigate the advantages and disadvantages of offering beneficiaries the option of receiving their cash entitlements via electronic transfer and produce a position paper. In response to the implementation of the five-year compensation strategy there was an increase in the number of applications to convert to lump sum payments. However, LHWP struggled to handle all the applications. It is important that controls, already recommended or identified, be implemented to avoid compromising the success of the five-year strategy. Recommendation: Implement the recommendations contained in the 2014/15 annual compensation management report. The output indicators presented in the annual report for in-kind compensation (grains and pulses) are misleading. Recommendation:

6 PoE Report 70 May 2015 Executive summary Page 6 of 46 Check the relevance of in-kind compensation indicators and double check calculations in the tables. 11. Maloti minnow In discussion with LHDA, PoE established that construction of the proposed barrier is about to start. The initiative is well advanced and PoE endorses the proposed way forward. Proceed with construction on the basis of this modified design. Engage with the local community to the extent that at least the reason for the barrier is understood, and stay alert to possible tourism potential for this and other sites in the Highlands. Design monitoring procedures and schedules and put these in place prior to the completion of construction. 12. Corporate social responsibility (CSR) policy PoE reviewed a revised CSR policy document. The document is an improvement, but LHDA is still some way from what it needs, and the following is recommended. Reformat the policy document with the purpose and 5-6 commitments on an uncluttered page 1, written concisely in simple English and capable of being memorized easily by employees, followed by 9 pages of explaining in principle how the commitments will be met. Appoint a CSR policy steering committee representative of LHDA, and engage the committee over a period of weeks and months to meet frequently to write, review and rewrite the policy until it is superlative. CSR initiatives, like Katse Botanical Garden, must be selected and supported not on any expectation of financial return, but on achieving environmental protection, social development, education or other areas related to LHDA s business. Follow up on CSR initiatives, helping them to get up and running, finding auxiliary support, involving GoL, NGOs and business, and advancing knowledge and practice. 13. LHWP2 compensation Panel reviewed the draft agreements for permanent and temporary acquisition of land for LHWP2. These are good drafts but Panel suggests further consideration of some aspects. Recommendation: Consider the issue of a possible long time delay between signing asset registration forms and the payment of compensation on the livelihoods of beneficiaries and options for mitigating this. The draft agreements stipulate time periods after signing of agreements or payment of compensation in which affected property owners must remove salvageable materials and in which LHDA can enter property. Panel believes that further consideration needs to be given to the potential impacts on property owners of these stipulations. Recommendation: Reconsider time periods for salvaging property and occupation of a property by LHDA after agreement signing or payment of compensation. Panel was also appraised of other Phase 2 compensation issues, including the compensation policy, compensation rates for new entitlements, asset registration procedures, the consultation process, livelihood restoration and social development, the socio-economic baseline study and the Phase 2 procurement program. Panel is satisfied that these are being developed to a high standard. Recommendation: Continue developing the various components according to plan.

7 PoE Report 70 May 2015 Executive summary Page 7 of 46 Previously, Panel has raised the issue about the loss of fields within the proposed site establishment areas. In the Highlands, houses can be replaced relatively easily but fields cannot. Land capability classification should be used to assist in deciding no-go areas for construction of facilities. Recommendation: Ensure that the ESIA consultant incudes land capability analysis in his proposed method in his inception report. Lessons learned from Phase 1 highlight the need for having, and adhering to, a good dispute resolution mechanism. Recommendation: Develop an appropriate dispute resolution mechanism for Phase 2 before resettlement planning commences in the project areas. 14. LHWP2 EFR scenarios and model Panel was required to review the scenario and final reports and provide expert comments. Panel considers that the EFR project does not produce the goods that LHWP requires. The reasons for this are explained in Appendix 2 to this report. What LHWP needs now is a figure for EFR bulk release, and a conception of the EFR management system. The recommendations are as follows. Work on determining the bulk EFR release and a conception of how the EFR management system will work. Determine a bulk EFR allocation in the region of 15-20% of MAR, with flexibility to go up to 25% MAR. Adopt a release system along the lines that the instantaneous rate of release is a constant fraction of the instantaneous rate of inflow, perhaps subject to some constraints (eg time steps and slight lagging rather than real time). Develop a plan to collect adequate baseline data, and design a monitoring system along the lines of the Nepid study, so that, at a minimum, the decision rules can be applied. 15. Public health baseline survey Draft 3 (26 Jan 2015) of the Public health baseline study round one survey report shows little improvement over the previous drafts and there are still many errors and omissions. Several other databases are mentioned (eg LDHS, DHIS and census) but there are few comparisons between these and PHBS. If this had been done, it would have helped verify or refute some of the more surprising results. However, we must not rely too heavily on LDHS or census. These will provide some useful information but LDHS is only every 5 years and the census every 10, so their contribution to ongoing surveillance will be limited. Recommendation: Do not rely heavily on LDHS and census data for tracking health trends. These surveys are too infrequent and in the case of the census, not health focused. Use DHIS (the MOH data system) where possible for an overall health assessment at District level but undertake periodic surveys of key, LHWP-relevant, indicators. Spurious results should be addressed in Round 2 (in the field at the time of this review) but the fact that the consultant failed to even notice some of these spurious results is cause for serious concern. The concluding chapter specifically comments on a low tertiary education rate of 38%, while this is actually extremely high; LDHS reports 8-9% nationally. There are also unacceptably high rates reported for orphans, with 56% of upstream households having both parents deceased. Recommendation: Consultants must undertake thorough data cleaning, reject spurious data, and provide meaningful comparisons between the PHBS results and relevant, regional data and SEBS.

8 PoE Report 70 May 2015 Executive summary Page 8 of 46 The consultants failed to focus on those determinants of health that are likely to be influenced by LHWP. Several important variables, such as anxiety and depression (in the general population, as opposed to only the elderly), alcohol and other substance abuse, and violence are missing entirely. Recommendation: The proposed health impact assessment should include a comprehensive theory of change model which is properly aligned with the likely influences of LHWP. Representative control sites are essential for monitoring the impacts of LHWP. The proposed sites appear too close to intervention sites and may therefore be affected by LHWP. Recommendation: If the proposed control sites are likely to be indirectly affected by LHWP, find other control sites, similar in socio-economic and demographic terms to the project area, which we can be reasonably certain will not be affected by the project. Failing this, compare households within the project area that have lost different amounts of assets. Few statistics are shown for the comparison of proposed control and intervention sites and most comparisons offered are of little value. It is no use comparing education based on ever been to school when 92% of the sample had some schooling. Recommendation: The consultants must undertake a proper statistical comparison of the proposed control and intervention sites using relevant socio-economic and demographic indicators.

9 PoE Report 70 May 2015 Contents Page 9 of 46 Contents Executive summary... 2 Introduction Critical issues Five-year compensation disbursement strategy Complaints management strategy Wetlands management strategy Katse Botanical Garden strategy Aquaculture disease testing Environmental policy Aquaculture operations LHWP1 EFR Reservoir sedimentation Compensation Maloti minnow Corporate social responsibility LHWP2 compensation LHWP2 EFR scenarios and model LHWP2 Public health baseline survey Appendix 1 Issues for next PoE mission Appendix 2 Review of LHWP2 EFR final and scenario reports... 43

10 PoE Report 70 May 2015 Introduction Page 10 of 46 Introduction The Panel of Environmental Experts (PoE) for the Lesotho Highlands Water Project (LHWP) undertook a mission from 3-13 May The mission was attended by David Hayward, John Hennessy, Mike Mentis and John Seager. The overall objective of the mission was to provide the Lesotho Highlands Development Authority (LHDA) with an independent evaluation of its operations, identifying where things might be going wrong, how LHDA might improve its performance, and providing guidance on best practice. The specific terms of reference (ToRs) for the mission were as follows. Task # Issue/Title Action required LHWP1 issues 1 Five-year compensation disbursement strategy (FYCDS) 2 Complaints management strategy (CMS) 3 Environmental and conservation issues Review and comment on the proposal from Bokong LLE as part of implementation of FYCDS and provide expert advice. Critically review and comment on progress made on the implementation of the CMS. Review and comment on the terms of reference for the development of a wetlands management strategy aimed at rehabilitating key wetlands within the LHWP catchments. 4 Critically review and comment on updated draft Katse Botanical Garden strategic plan. 5 Review draft terms of reference for a consultant to undertake an independent testing for various diseases in fish samples and fish ova for aquaculture operations in LHWP dams. 6 Environmental policy development 7 Aquaculture operations 8 Environmental flow requirements (EFR) Critically review progress on the updated LHDA environmental policy in order to determine how the previous mission s comments have been incorporated in the draft final policy. Critically review and comment on the current progress reports and internal audit reports of the aquaculture operations at Katse. Review the terms of reference for the second external audit of the implementation of the EFR policy and procedures. Comment on proposed revised EFR releases. Comment on EFR deficits at EFR sites. Review and comment on progress. 9 Reservoir sedimentation 10 Compensation Review and comment on the 2014/15 annual compensation payments report. 11 Maloti minnow Review and comment on progress attained on the implementation of the Maloti minnow barrier project. 12 Corporate social responsibility Critically review and provide comments on the revised LHDA corporate social responsibility policy. LHWP2 issues 13 Phase 2 compensation Review and provide comments on the draft Phase 2

11 PoE Report 70 May 2015 Introduction Page 11 of 46 Task # Issue/Title Action required compensation agreement that will be signed with affected households/entities. 14 Environmental flow requirements scenarios and model 15 Public health baseline survey 6008 Critically review the revised final EFR report and flow release scenarios and provide expert opinion. Review and comment on progress on the on-going public health baseline survey within the Polihali catchment. The above issues and their terms of reference are addressed as critical issues in the matrix that follows. Possible issues for attention at PoE s next mission are shortlisted in Appendix 1. PoE thanks the Lesotho Highlands Water Commission, Lesotho Highlands Development Authority and the Project Management Unit for setting up the panel mission and for many hours of helpful discussion.

12 PoE Report 70 May 2015 Critical issues Page 12 of 46 Critical issues 1 Five-year compensation disbursement strategy Review and comment on the proposal from Bokong LLE as part of implementation of FYCDS and provide expert advice. Panel reviewed the project proposal/brief from the Bokong multipurpose coop and the progress report on the Bokong electrification project. Phase 1 of Bokong electrification is about 75% complete but household connections cannot be made until contracts are signed with LEC. This is dependent on funds held by the LLE in a fixed deposit account becoming available at the end of May. Phase 2 can only proceed once the future compensation entitlement has been finalised. This has been agreed in principle but still needs CPI adjustment. Panel also considered a number of other LLE issues. Good progress is being made with consultation on the proposed FYCDS in Katse and Mohale; some outlying households and those resettled in Maseru are still outstanding. Communities are generally in favour of the strategy but some issues are still to be resolved regarding the potential legal action. An out-ofcourt settlement was expected but a new issue has been raised by an NGO, namely whether the community compensation approach represents livelihood restoration or is an alternative form of compensation. Panel recognises that the protection of the rights of communities is of great importance but we must be prudent about spending time on issues raised by NGOs that may not actually be concerns of affected communities. Some dissatisfaction arose within the community after the Mohale multipurpose coop had agreed on the way forward with the FYCDS and had expected payment to be made immediately. This was not possible because some reassessment of entitlements still has to be done. The backlog Make sure that the future compensation entitlement is determined and communicated to the Bokong LLE as soon as possible in order to avoid protests from other Phase 2 beneficiaries. Place emphasis on the use of comprehensive community liaison and the documentation of agreements to prevent and resolve disputes. Expedite the reassessment and communication of entitlements to LLEs. On-going

13 PoE Report 70 May 2015 Critical issues Page 13 of 46 entitlement will be paid and resolving the future entitlement is in hand and should be completed within a few months. Panel is concerned that there will be constraints on LHDA s human resources to deal with the expected increasing number of LLEs participating in the FYCDS. Panel cautions LHDA about raising expectations from large numbers of LLEs simultaneously when resources for processing entitlements, etc are limited. Community and lump sum payments should substantially reduce the LHDA administrative burden but individual compensation payments will persist. The high costs of administering compensation when relatively little money is distributed must be minimised. Part of the solution will be to streamline administrative procedures and ensure that each LLE has a dedicated LHDA staff member to manage the process (one or two projects per officer). Seriously look at resource requirements to deal with LLE entitlements under FYCDS. Identify ways to streamline the administration of entitlements and payments, especially for smaller amounts, and allocate dedicated staff to managing larger community projects

14 PoE Report 70 May 2015 Critical issues Page 14 of 46 2 Complaints management strategy Critically review and comment on progress made on the implementation of the CMS. On-going Panel reviewed the March 2015 progress report on the compensation related complaints management in LHWP1. Panel notes that the target of resolving 60% of old complaints by the end of 2014/15 was not met 37% of cases were verified, 25% validated but only 1% resolved. The report does not say how many of the resolved cases were decided in the favour of the complainants (which would be useful). LHDA encountered a number of challenges with the roll out of the process involving Flow-centric functionality, designation of roles in Flow-centric, field staff capacity and the identification of complaints that are lodged in different locations, in different formats and in different databases. These have been resolved or are being attended to. Panel believes that the current strategy will go a long way to achieving the desired results but cautions that this will take much longer than envisaged. Given the increasing intervention of outside legal interests in Phase 1 issues, it is highly likely that some decisions will be legally challenged which may prolong closure of the process or prompt a second phase. Verification and validation of complaints is often hampered because complaints are not accurately recorded, the wrong people are consulted about a complaint or complaints are listed under the wrong village, leading to delays. A major challenge has been to find supporting records and documents to determine the validity of claims in cases where an asset may not have been affected by the project even when a claimant may offer testimonial evidence. This places LHDA in a vulnerable situation. Panel believes that some information that appears to have been misplaced, destroyed or lost may still exist. Acquisition of this information may assist in resolving some cases. Continue to implement and monitor the implementation of the Strategy and identify and implement improvements. Task a small group of relevant LHDA staff to seek out and acquire missing information. On-going

15 PoE Report 70 May 2015 Critical issues Page 15 of 46 PoE Report 69 suggested that one possible solution would be to appoint arbitrators who must be acceptable to both LHDA and the communities. Once agreed to by both parties (in writing) their decisions must be binding. The question might be: when do these arbitrators get involved? Panel believes that the most appropriate time would be during the verification and validation processes if an impasse between a claimant and LHDA arises. An arbitration panel might be tasked with deeper investigation of a complaint, including talking to local authorities, neighbours and other relevant parties. Consider the establishment of independent arbitration panels to attend to disagreements PoE Report No 69 suggested that it would be advisable to streamline claims by allowing disputes over small amounts to be finalized at customer service unit (CSU) or other intermediate management levels. Panel understands that this has been addressed but not concluded. When consulting with claimants in villages to verify and validate complaints, LHDA field staff are sometimes confronted by people with new complaints, many of which are probably, at best, opportunistic. The risk is that these will increase and compromise the finalisation of the complaints management strategy. Until now the onus has been on LHDA to disprove complaints and not on complainants to prove complaints. This allows people to sometimes make non-genuine complaints. It has been suggested that there should now be a cut-off point beyond which the onus of proof should rest with complainants for any new claims. Panel supports this approach. Panel was asked to advise if fallow lands should be considered to be agricultural fields for compensation purposes in terms of the Policy. Panel advises that fallow land s should be considered to be agricultural fields for compensation purposes. Pursue the possibility of finalizing small claims at the CSU or intermediary levels. Establish a cut-off point beyond which the onus of proof for any new complaints shall rest with the complainants. Consider fallow lands to be agricultural fields for compensation purposes. On-going On-going

16 PoE Report 70 May 2015 Critical issues Page 16 of 46 3 Wetlands management strategy Review and comment on the terms of reference for the development of a wetlands management strategy Rehabilitating wetlands is necessary but the degrading wetlands are a symptom of a bigger problem the ultimate causes for which need to be addressed. Every organization is perfectly designed for the results it gets. What is the design of Lesotho that leads to the results of nonsustainable land use? Unless the design is remedied, treating symptoms will be costly and on-going and possibly ultimately fail. PoE understands that LHDA is addressing this bigger picture. A stakeholder workshop was recently hosted by LHDA. Talk-fests are however not enough. It is necessary to undertake formal change management. LHDA can legitimately spearhead this as part of its strategy to rehabilitate key wetlands in LHWP catchments. Formal methods, not just work-shopping, must be used description and deep understanding of the current and the desired situations, a force field analysis to identify and understand the driving and restraining forces, commitment chart construction to identify the mindsets obstructing and supporting change. Inevitably the driving forces and supporting mindsets are feeble (if they were powerful there would not be a problem), and it is necessary to work on the restraining forces and the opposing mindsets. The individual constraints need to be understood, and constraint-specific interventions designed and implemented. This is the realm of change management. LHDA needs to consider how it can spearhead this. Probably change management expertise is required and a champion in the form of a prominent member of Lesotho society. PoE is concerned that the wetland strategy planning is incomplete and should be informed by the change management initiative (referred to above) that should provide perspective on interventions and their priorities. As the first part of the wetland strategy, prepare a plan to spearhead change management to address non-sustainable land use in LHWP catchments. Consider postponing work on the physical interventions of the wetland strategy until the change management project can inform on interventions and their priorities in improving the sustainability of land-use

17 PoE Report 70 May 2015 Critical issues Page 17 of 46 Turning to the plan for developing the wetland strategy, the ToR might be extended beyond just rehabilitation to include various interventions to protect wetlands. In addition to rehabilitation, identification of further protective measures (reserves, exclusions, etc) should be part of the scope of services. Put on hold The study includes the design of an outreach program for wetlands users. Reference is made to various documents to be included in the literature review. The scope mentions rehabilitation plans for severely degraded wetlands. It may not be cost effective to rehabilitate severely impacted wetlands and chances of success may be low. Task 5 requires a plan for monitoring all wetlands in the project area. This may not be feasible or necessary. Mention should be made to include a strategy to educate the local population, particularly wetland users on the importance of, rehabilitation, conservation and sustained use of wetlands. Reference the Drakensburg/Maluti study, which mapped the wetlands of Lesotho using remote sensing. Rephrase to require a plan for selected wetlands where rehabilitation has a high likelihood of success. Rephrase to say that all wetlands should be monitored annually using remote sensing data and selected wetlands should be monitored on the ground as well. Put on hold Put on hold Put on hold Put on hold

18 PoE Report 70 May 2015 Critical issues Page 18 of 46 4 Katse Botanical Garden strategy Critically review and comment on updated draft Katse Botanical Garden strategic plan. The strategy is the most coherent document on KBG ever produced by LHDA. Well done! The kinds of activities in which KBG should be engaged are identified and explained. There are however some weaknesses that warrant remedy. KBG is pre-eminently a CSR initiative. While environmental conservation including biodiversity protection is at least an implicit requirement of the Treaty, and thereby legitimizes KBG activities, the strategy does not help to bound the activities. How much environmental conservation, biodiversity protection, education, etc is required, or is enough? There is no upper limit to how much money and effort can be expended on the kinds of activity listed. So Management must define a way of capping the budget, and ensuring available funds are expended efficiently to deliver CSR benefits. Without clarity on these issues, explicit in the strategy, there are liable to be interminable wrangles within LHDA, for example spending on activities which do not bring financial return. Regarding bounding KBG activities, the emphasis is not on doing everything, or even doing most things. How is LHDA to do KBG to avoid random, unfocused or frenetic activity, and pursue one or a few focused initiatives? The strategy does not say, but it should. It is necessary to engage in one or a very few chosen initiatives, ones with good prospects of working. If they are not working they have to be either fixed or dropped. The imperative is to make a few things successful, and unless and until success is attained, there is no point in fund-raising to support yet more failures. To illustrate the kind of approach required, suppose the following. 10 school groups go through KBG per month. What is the outcome? Groups/scholars regard the outing as a welcome break from the tedium of the classroom? Or they go home and tell Mum & Dad: Wow. We went to Explain in the strategy that KBG is not just a Treaty obligation but a potentially valuable CSR activity where success is not measured in immediate financial return (there might never be a direct return) but in spearheading less tangible environmental conservation, biodiversity protection and education gains (implicitly with potential PR spinoffs). Insert into the strategy the management practice of capping the budget, prioritizing a few goodprospect activities (focused, specific measurable targets or goals), and making those selected projects work or dropping them for some new and better initiative

19 PoE Report 70 May 2015 Critical issues Page 19 of 46 KBG today. We learnt that we must preserve the soil, plants and animals so people can live in the Highlands forever. What message is KBG trying to communicate? Is the message being received? What checks is KBG doing to see which messages are being effectively communicated to which groups? Drop the messages and the groups for which communication is poor. Every KBG activity must be amenable to such specification and measurement. If it isn t measured it can t be managed and improved. 5 Aquaculture disease testing Review draft terms of reference for independent testing for various diseases in fish samples and fish ova for aquaculture operations in LHWP dams. South African legislation presumably includes quality control of material exported from its fish farms (including ova, fry and fingerlings imported into Lesotho). Likewise, fish food undergoes stringent quality control in the countries of origin. While not completely fool proof, it will be more efficient to use suppliers own quality control and certification systems than for LHDA to try to set up its own. Importers and regulators can and should request evidence of quality control from suppliers, but it is not feasible for LHDA to do its own testing. Both HT and KFF are HACCP (Hazard Analysis and Critical Control Points) certified which provides an independent, internationally recognised, verification of quality control standards. HACCP certification is designed to help prevent contamination of foodstuffs intended for human consumption and covers issues such as chemical contamination and antibiotic residues. If the frequency of testing is too low, enforcement of the regulations should be attempted before considering setting up a parallel testing protocol. Some local spot checks may be necessary but we should not duplicate what is already being done by others. Make maximum use of data from independent laboratories and suppliers currently used by HT and KFF before considering commissioning any testing program and laboratory service. Ensure that aquaculture operations comply fully with HACCP protocols for food safety. On-going Ongoing

20 PoE Report 70 May 2015 Critical issues Page 20 of 46 6 Environmental policy Review draft environmental policy and incorporation of previous comments. Draft 3 of the policy is a distinct improvement. The body of the policy now explains well in principle why and how. However, page 2 (the commitments themselves) is worse. Further improvement is warranted, as explained below. Previous comments were that page 2 of the policy should be condensed. But now the previous 5 commitments have been increased to 10 that are verbose, repetitive and garbled. A main issue is that policy is attempting to be comprehensive whereas PoE is urging cogency. It is not possible in this world of ever-increasing complexity to cover everything. To avoid saying everything and thereby saying nothing, focus on the most essential. This is most critical for page 2. Environmental management should control only significant or material risks. Previously PoE said that significant had many meanings and needed to be defined. Present policy contains no definition. The issue is avoided. Page 9 section 4.2 says mitigation measures required shall be agreed by the Parties based on baseline studies Yet how are the Parties to agree? If the basis is whim or political expediency then why have a policy? If agreement is to be informed by ESIA, then impact assessors need policy guidance otherwise they also adopt whim or expediency. Significance or materiality should rest on the law (LHDA must of course always comply with the law) and be guided by stakeholder expectations (norms, standards, best practice). Previously PoE proposed that zones should be recognised in LHDA s area of responsibility since there are different types and degrees of risk that warrant different types and degree of control. Present policy recognizes Zone 1 as reservoir catchment, Zone 2 downstream and Zone 3 the Revise the policy, on the following basis: adopt less is more, start with policy purpose, identify 5-6 of the most essential actions to meet the purpose, and explain these actions in the body of policy. Redo page 2: focus on the purpose of environmental management, articulate the 5-6 most essential commitments in simple English, on one uncluttered page so an employee can commit easily to memory. In revised policy define significance (or any alternative term related to impact/risk/threat severity or materiality). Reclassify the zoning consistent with the principle of risk classification on the basis of similarity of nature of risk and control.

21 PoE Report 70 May 2015 Critical issues Page 21 of 46 wider area outside LHWP catchments. This does not accord with what PoE proposed: Zone dam basin that will be inundated, Zone 2 downstream and Zone 3 catchment upstream of inundated basins and beyond. PoE s zoning rests on the ideal that risk identification, classification and delineation should be based on similarity of risks (preventable, strategy, external) and their control. In PoE s Zone 1 some resources are unavoidably lost. In Zone 2 the concern is strongly possible undesirable effect of the Project. In Zone 3 there are environmental threats to the Project, and threats by the Project on the environment are low (Maloti minnow maybe an exception). Previous comments included concern about the geographic scope of ICM and biodiversity management. This is particularly in relation to Zone 3. The present draft policy has not clarified, or postponed clarifying with a commitment to resolve. For Maloti minnow the environmental policy might refer to the Maloti minnow policy which should define the spatial extent of LHDA s minnow conservation efforts. But this still leaves unbounded the conservation commitments on spiral aloe, bearded vulture, other red data species, biodiversity generally and ICM. Regarding the previous draft Policy it was criticised that there was uncertainty about scope and overlap between environmental and social policy, that the environmental policy must cover all LHWP not just LHWP2, policy should be proactive, periodic review and revision must be provided for explicitly, and stakeholder types must be distinguished (insider stakeholders working on LHWP and outside stakeholders). These issues have been addressed at least to a degree. They must not be lost sight of in refining policy further. Under proactive was previously included mention of the need to control not just risks of the Project for the environment, but of risks that the environment poses for the Project. Either define the geographic scope of biodiversity and ICM commitment in the next draft of policy, or commit to resolving it within a specified time frame. Ensure the policy is environment-focused, relate it to the whole of LHWP, keep the policy direct and proactive, and bear in mind that there are different stakeholder groups that can require specific treatment.

22 PoE Report 70 May 2015 Critical issues Page 22 of 46 Non-sustainable land-use and wetland degradation are prime cases of environmental threat to the Project. Panel has suggested previously that the policy should be distinctive LHDA written all over it. The present page 2 could apply to almost any organization. Ideally a corporate policy should be part of the organization s branding, positioning it distinctively and differently to any and every other organization. This is easier said than done. The challenge is to portray the specific case. But try compiling a list of potentially differentiating words and phrases, and play with them to construct the unique positioning: the Lesotho Highlands, The Roof of Africa, Africa s biggest water transfer scheme, protecting the environment to sustain the water transfer and land-use in the Lesotho Highlands, etc. Don t try to resolve this at one sitting of the environmental policy steering committee, but rather get committee members to work on it over a period of weeks. Previously Panel urged that LHDA start adopting the environmental policy even though it has yet to be finalized and approved. For example, present policy uses EFR not IFR. Yet IFR is still in day-today use (eg ToRs for present PoE mission). But it goes deeper than just being consistent with the jargon. LHDA must embrace the notion that environmental management involves controlling not only the risks to the environment imposed by the Project, but risks to the Project caused by the environment. The draft wetland strategy does not articulate this broader notion. There are good underlying reasons: practice makes perfect, application will quickly show up weaknesses, get into good habits of using policy to guide. Make LHDA s environmental policy distinctive. Start/practice adopting the contents of developing policy

23 PoE Report 70 May 2015 Critical issues Page 23 of 46 7 Aquaculture operations Critically review and comment on the current progress reports and internal audit reports of the aquaculture operations at Katse. Several strategic issues are arising from the audit reports and from discussions with LHDA. It is possible that an aquaculture (or other) venture within LHWP dams/areas might fail. Panel is not informed on contractual provision for such eventualities, and what safeguards exist to protect LHDA, eg What happens to the fixed assets? How are environmental liabilities (undisposed waste, contamination, etc) to be addressed? If an existing and already contracted operator fails, and there is insufficient contractual provision, then LHDA could be exposed to unanticipated expenses. There might be little that can be done about this now, except for auditing and inspections to persevere with containing liabilities by making operators comply with regulations and good practice. However, LHDA should review the contractual provisions, check their adequacy for worst case eventualities, probably take expert advice, and improve future contractual conditions if this is warranted. PoE did previously advise, when reservoir zoning was being considered, that expert advice should be sought eg Sanparks took such advice when it set up concessions in its parks 15 years ago. It is unclear to PoE how applications from potential aquaculture operators are handled. Is there a level playing-field? Are the criteria made known? What contract review or renewal is provided for? How is it all set up to make it fair but competitive? Is it all transparent? LHDA does not have to learn about concession contracting the hard way or through bitter experience. A further strategic issue is who does the auditing? Superficially it might seem appropriate that the regulator (in this case LHDA) does the Review contracts with operators, assess whether there are adequate provisions for worst case scenarios, and get expert advice on concession contracts. Have internal (and if possible external) audits focus on issues which, if the operator quits, could leave LHDA with costly clean-up and the like. Require operators to appoint independent auditors, as far as present contracts allow,

24 PoE Report 70 May 2015 Critical issues Page 24 of 46 checking/auditing. The regulator is always going to have some kind of surveillance system. However, in terms of good practice (ISO14001) the onus is on the operator no just to comply with law, but to demonstrate that. If the onus is not put on the operator then he adopts tax avoidance/evasion tactics. It is more effective (and less costly to the regulator) to require the operator to be independently audited. Similar to the polluter pays principle, costs of compliance should be internalized. Any regulator with a small and competent surveillance system (environmental managers on the ground and PoE for audit review) is quickly going to pick up overlooked non-compliance and lack of auditor independence. PoE is not sure on the requirement in the contracts with the operators for independent audit. and reject audits which are not independent. There seems to be a problem with getting a real association between the operators. HT seems particularly reluctant to pursue an association yet the audit report states that it is fully compliant with this issue. Possibly the present regulations are unduly onerous. To require the members of the association to meet monthly when there is nothing to meet about is petty bureaucracy, and it is preferable for the operators to expend resources on production and managing externalities. It should be sufficient for the members to check in writing (copied to LHDA) on the first day of every month whether a meeting is necessary. In general, while the regulations are in operation, there must be conformance, but there needs to be reasonableness and a preparedness to regularly review and revise the regulations. Be reasonable in demanding conformance with regulations, and undertake to review and revise the regulations regularly.

25 PoE Report 70 May 2015 Critical issues Page 25 of 46 8 LHWP1 EFR Review draft ToR for LHWP1 EFR audit. Is the audit a compliance or a management audit? A compliance audit asks Are we doing this right? whereas a management audit asks Are we doing the right thing? The ToR are not explicit, but imply a compliance audit. For what reason does LHDA need a compliance audit? If there is an obligation to do a compliance audit then the ToR should specify this. A management audit should be useful to LHDA. Compliance and management auditing involve contrasting mindsets (bean-counting and forensics versus lateral thinking) usually not found in one auditor. LHDA s options are to go for either a compliance audit or a management audit or both. The RFP might ask for both. An implication is that the bidder would probably need to have two auditing experts/teams. Once the bids have been submitted, LHDA can decide how to contract just the one type of audit, or (in a bigger and more expensive project) both types of audit. ToR do not specify that the audit project manager is a qualified lead auditor, or even has any auditing experience. If a compliance audit is conducted it is hypocrisy not to have a qualified lead auditor (someone who has formal environmental audit training and auditing experience). Experts do not necessarily come along in neat packages as envisioned in ToR description of resource requirements, eg a geomorphologist might also be an expert hydrologist. ToR are in the standard LHDA document format. The objective of the exercise is not up front. Consequently the outside reader does not know the relevance of issues on the first page and a half the reader does not know what is being explained and motivated. The body language is that LHDA is not purpose driven. In the words of the famous motivationist Stephen Covey: Begin [proceed and finish] with the end in mind. Review LHDA needs for a compliance or management audit, or both, and decide bearing in mind the costbenefit. Require that the project manager have formal environmental auditing qualification and experience. Specify the expertise needed rather than the experts. Restyle ToR. Put the objective up front and then explain, not the reverse. Comment on proposed revised EFR The proposed revision arises because of Adopt DOD s recommended

26 PoE Report 70 May 2015 Critical issues Page 26 of 46 malfunctioning release facilities. The main problems are that at Katse mini-hydro1 is not available, and mini-hydro2 can be used for emergency only. Hence low flow variability is constrained. At Mohale the low level outlet can be opened only partially, and this means that only smaller than required EFR floods can be released. DOD has proposed revision to the EFR schedules, as well as a 5% variance to flow requirements. This means targets are more realistic in relation to release capacity, and acceptance of small deviations (5%) from targets. revised EFR schedules and variances. EFR deficits The circumstance of dam operating infrastructure not being in tip-top working order is not good or even acceptable practice. There are obvious safety implications. Also, failure to be able to deliver the EFR flows, because of difficult and expensive repairs to release facilities, must be juxtaposed to contingent liabilities for claims for downstream resource losses running to M10 millions. An accumulating EFR deficit has arisen at site EFR 7 because contribution by an intermediate catchment was overestimated at the outset of EFR planning. DOD recommends adjustment of required flow at EFR 7 from 22% to 13.5% MAR, and write-off of the deficit. Panel supports this. Intelligent management is to use better information when it becomes available. DOD points out that trying to meet the previous flow spec and trying to make up the deficit endanger the assurance of water transfer delivery. Also, it makes ecological sense to specify EFRs that are realistic and (in bulk amount) consistent. Keep dam operating infrastructure in tip-top working order, and fix malfunctions as soon as possible and as far as possible. Adopt DOD s recommendations to reduce the flow spec at EFR 7 from 22% to 13.5%, and to write off the deficit. On-going

27 PoE Report 70 May 2015 Critical issues Page 27 of 46 9 Reservoir sedimentation On-going Review and comment on progress. 10 Compensation Review and comment on the 2014/15 annual compensation payments report. Panel was provided with several documents: Muela sediment survey report 2014 (revision of previously reviewed report), Muela sediment survey measurements precision study, an external review on summary of conclusions and way forward, and a Board paper to seek approval on proposed action plans. DOD has addressed criticisms, taken outside expert advice, made good progress, and improved the standard of workmanship. Well done! It makes sense to capacity-build within LHDA (techniques, data analysis, interpretation, writeup) and get outside specialist advice for expertise that PoE does not have (treating sediment once in the reservoir). Panel reviewed the Phase 1 annual compensation management report for 2014/15. Panel has provided comments in an electronic copy of the report which will be submitted to LHDA. The output indicators have now been standardised as per Panel s recommendation in PoE Report No 69. Accuracy of ACP and in-kind output indicators: Global ACP and in-kind output indicators (eg distribution percentages for all of Phase 1) are still incorrectly calculated for cash and grains/pulses, individually, as well as for total compensation (ie cash and grains/pluses combined) Tables (i) and (iv) and the Executive Summary. Using the average of the individual distribution percentages for each FOB introduces bias it does not consider weightings. PoE Report 69 recommended using the total number of eligible (planned) and served (actual) households for all of Phase 1 to calculate the global Phase 1 distribution percentage. In Table (i) there are arithmetic errors in the Muela calculations or are these typos? Continue on the present course measure sedimentation, build capacity, explore options for treating the dam sediments, get expert advice. Apply the correct calculation method for determining global ACP and in-kind output indicators and ensure that the calculations in tables are double checked. On-going

28 PoE Report 70 May 2015 Critical issues Page 28 of 46 Around 93% of households received ACP entitlements (cheques, grains/pulses combined). The year before it was 93.6%. The tendency is to compare with the results from previous years. But are historical results good benchmarks? Setting realistic annual targets to objectively measure actual outputs against planned outputs and to reflect on any variations has advantages. It facilitates the allocation of resources and fosters commitment and motivation within an organisation to achieve the targets. Otherwise, it is business-as-usual. Targets must be realistic and attainable. 100% is a dream. Consider setting annual performance targets for ACP and in-kind payments at the beginning of the year and work to achieve the targets ACP challenges and corrective measures: What is the objective of the compensation exercise in any one financial year? To deliver entitlements to as many beneficiaries as possible with the least possible delay? It is prudent not to forget the impact on the 7% of eligible households that did not receive their entitlements in 2014/15. The 2014/15 annual compensation management report describes several problems encountered during ACP distribution in the year that challenge the objective. The problems are known - they are hardly different to those encountered in previous years. Some will not disappear in the future. So, what are the constraints to resolving the problems? For some, the constraint is external human nature/behaviour over which the LHWP has little control, although it may have some influence. Beneficiaries die, don t turn up to collect cheques, don t cash their cheques on time, have different names on their identity documents, cheat, complain, etc. For other problems, the constraint is essentially the efficient and effective operation of the internal LHWP compensation processes, over which the LHDA (and LHWC) does have more control. Prepare and implement action plans for all the measures recommended in the 2014/15 annual compensation management report to address the challenges of ACP distribution

29 PoE Report 70 May 2015 Critical issues Page 29 of 46 Delays in completing critical tasks, Flow-centric issues, capacity issues, consequential delays, etc all have significant impacts on the ability to achieve the overall objective as stated above. Panel does note that there have been some positive attempts to address these issues. The 2014/15 annual compensation management report, through lessons learned, recommends corrective actions to overcome both the internal and external constraints. Panel broadly supports these recommendations but offers possible additional measures for consideration. The question is: how to operationalise these remedial measures so that they actually happen? Panel believes that constant high level, pro-active commitment to implementing the measures is crucial, including commitment to training, resources, incentives and, especially, supervision and follow-up, particularly in respect of the internal processes. Commitment must also be made to ensuring that regular liaison and interaction with beneficiaries, and awareness and educational campaigns with local authorities and CALCs, are realised in a properly planned manner and not done on an ad hoc basis. This requires a commitment to the preparation and accountable implementation of appropriate action plans which are supported by realistic implementation schedules and the necessary human and financial resources and are continuously monitored and revised. The final schedule for the 2014/15 ACP was approved by LHWC more than one month behind schedule. Panel understands that this was due to the temporary, unavoidable absence of a key staff member in the approval process. For similar reasons, it appears that the processing of some applications for lump sum payments could not be completed in time. In any organisation, reliance on only one person for critical functions can seriously compromise other processes and even the integrity and Plan and implement adequate arrangements for back-up or delegation of authority for critical positions within both LHDA and LHWC

30 PoE Report 70 May 2015 Critical issues Page 30 of 46 liability of the organisation. One aspect of the compensation process that LHWP has some control over is the method of cash payments to beneficiaries. Currently, beneficiaries are paid by bank cheque. The use of cheques has problems: beneficiaries die after final schedules are approved; the names of beneficiaries on cheques are different to those on identity documents; beneficiaries do not collect their cheques; or beneficiaries do not cash their cheques before they become stale. All these lead to considerable delays in paying beneficiaries (or heirs) and add to the administrative burden of LHDA. Panel believes that LHDA should consider (or reconsider) the use of electronic transfers of entitlements to beneficiaries, such as direct transfers into beneficiary bank accounts or payment via the mobile phone money transfer mechanism (eg mpesa). Panel does not understand why electronic payments cannot be used. There appears to be some resistance to this idea within LHDA but Panel has not been given a clear explanation. The World (and the LHWP areas) are changing. Most families have mobile phones and banking services are increasingly becoming more accessible to people. More and more people have identity documents to enable them to open bank accounts. Some possible advantages: electronic transfers can be made almost immediately after the final schedules have been approved; once a transfer is effected LHDA is absolved of further liability for a specific payment; once banking details are registered with LHDA the onus is on the beneficiary to present correct identification to the bank; there is no longer a problem with uncollected or stale cheques; and deposits can still be made into the account of a deceased Investigate the advantages and disadvantages of offering beneficiaries the option of receiving their cash entitlements via electronic transfer and produce a position paper.

31 PoE Report 70 May 2015 Critical issues Page 31 of 46 beneficiary (if he/she dies before or after the approval process) Panel understands that there is a process whereby District Administrators can assist heirs to access the funds of deceased persons. Electronic transfers may not be suitable on all occasions, and it may be that electronic transfers should not be obligatory but optional. Arable land lump sum compensation: The community meetings held to explain the Five-year compensation strategy have resulted in an increased number of applications for lump sum payments. The ability of LHDA to handle the increased numbers of applications has been tested and there have been a number of problems and lessons learned. LHDA has instituted a number of corrective measures (eg additional field staff) and other measures are proposed. All applications must be completed for submission to LHWC before close of business in December It is important that, having encouraged beneficiaries to opt for lump sum payments, the system does not let them down. The risk is that this could undermine the success of the five-year compensation strategy. Panel would like to believe that, with the experience gained and the proposed corrective action, the processing and payment of the expected increased number of lump sum applications will improve. In-kind compensation: Many of the issues related to in-kind compensation (eg grain and pulses) are the same as those for annual cash compensation payments. Table (iv) gives figures for the remaining quantities of grains and pulses in FOB stores after distribution. No indication is given of the quantities of grains and pulses collected from the FOB stores after general distribution and before Implement the recommendations contained in the 2014/15 annual compensation management report. Check the relevance of inkind compensation indicators and double check calculations in the tables On-going

32 PoE Report 70 May 2015 Critical issues Page 32 of 46 the stocks were auctioned after the end of October Presumably, this also relates to the number of households collecting grain and pulses. Thus the output indicators presented (ie distribution percentages) are lower than what they should be. Analysis of the figures given in Tables (iii) and (iv) gives a negative result for the quantity of beans collected from FOB stores after general distribution. 11 Maloti minnow Review and comment on progress attained on the implementation of the Maloti Minnow barrier project. The Maloti minnow barrier is now out to tender and construction will soon begin. The Panel recommendation that had suggested modification of the design to include the addition of gabions on each side of the weir to concentrate overflow in the centre of the river and to prevent fish from skirting the weir at the shallower and slower flowing sides has been accepted. In the ideal the minnow barrier project should be in partnership with the local community, and there might well be some tourism potential. It is never too late to engage and involve communities, but this project is so far advanced now that the local community is liable to regard it as LHDA s project, and claim no ownership over it. Perhaps in the future the minnow barrier might be on a Highlands tourist itinerary, but for the moment there is little chance of income for locals from tourism. In short, LHDA might now ensure that the local community understands the reason for the barrier, and LHDA might stay alert to the tourism potential for this and other sites in the Highlands. Monitoring will be required, both on the engineering and environmental side the engineering aspect will monitor needs for maintenance or repair while the environmental side will monitor whether or not the barrier is breached by trout or other predatory species. Proceed with, and complete, construction on the basis of this modified design. Engage with the local community to the extent at least that the reason for the barrier is understood, and stay alert to possible tourism potential for this and other sites in the Highlands. Design monitoring procedures and schedules and have in place prior to the completion of construction On-going

33 PoE Report 70 May 2015 Critical issues Page 33 of Corporate social responsibility Review progress on updated CSR policy and how comments of previous mission are incorporated Previously Panel commented that the draft CSR policy should refocus. The PR slant was not appropriate because it was liable to be interpreted as cover-up to atone for environmental and social sins committed. The approach that PoE favoured was to focus on environmental protection, social development and creating shared value. There is refocus in the recommended direction in the present draft, but there is still too much PR. For example, the draft policy says Enhance LHDA s reputation as a corporate citizen. LHDA does indeed want to bolster its reputation, but explicit mention of this in the policy may be interpreted by LHDA detractors as the CSR is white-wash. The policy statement format previously proposed has not been followed. Panel proposes the format recommended for the environmental policy. The present policy content is not so much wrong as insufficiently clear. There is a confusion of guiding principles, objectives, etc. The policy is not LHDA-distinctive, viz every organization should be a good corporate citizen (accountable, transparent, ethical, law abiding, caring of stakeholders, observant of international norms, etc). To prepare the CSR policy that LHDA needs is a challenging task requiring time and effort not by one or two PR individuals but by a CSR steering committee representative of the whole organization. LHDA knows the role of involvement in securing ownership. As yet there is insufficient appreciation that the purpose of CSR is not direct or immediate financial benefit. The benefits sought are environmental protection and social development outside LHDA, and if those are done well then there should also be an intangible benefit to LHDA in reputation. The revised CSR document should focus on things related to LHDA s business (eg sport is not close to LHDA s core activities, whereas environmental protection and social development are). Katse Botanical Garden Reformat the policy document with purpose and 5-6 commitments on an uncluttered page 1, written concisely in simple English and capable of being memorized easily by employees, followed by 9 pages of explaining in principle how the commitments will be met. Appoint a CSR policy steering committee representative of LHDA, and engage the committee over a period of weeks and months to meet frequently to write, review and rewrite the Policy until it is superlative. CSR initiatives, like Katse Botanical Garden, must be selected and supported not on any expectation of financial return, but on achieving environmental protection, social development, education or other areas related to LHDA s business

34 PoE Report 70 May 2015 Critical issues Page 34 of 46 is the most obvious example of CSR in LHDA. Success in CSR is not measured by financial return, but in cost-effectively facilitating and promoting environmental, social, educational or other projects. Thus what counts is not the funds voted nor the number of projects launched, but the success of the few selected launches. The CSR budget is never going to be astronomical, and it is critical to pick just a few projects on the basis that they are achievable, and success with them will have impact/benefit. CSR policy must provide for its selected initiatives to be followed up. For the most part, CSR must empower others to do, not do it all itself. Hence, in the context that CSR by LHDA should be facilitating, promoting and spearheading, LHDA should signal : get GoL, NGOs and business to support and supplement its CSR initiatives. In the launch of CSR initiatives, LHDA should hold the hand of the project leader, help to kick-start and resolve teething problems, and not subsidize failed concerns which need to be dropped. Advancing knowledge and practice is another CSR role lessons learnt, how to, who offers what training (or other service), etc. Follow up on CSR initiatives, helping them to get up and running, finding auxiliary support, involving GoL, NGOs and business, and advancing knowledge and practice

35 PoE Report 70 May 2015 Critical issues Page 35 of LHWP2 compensation Review and provide comments on the draft Phase 2 compensation agreement that will be signed with affected households/entities Draft compensation agreements: Panel reviewed the draft agreements for permanent and temporary acquisition of land for LHWP2. Some comments have been made on an electronic copy of the form that will be submitted to LHDA. Panel considers these to be very good drafts but that some aspects may need further consideration. Asset owners are expected to sign asset registration forms confirming the assets that will be impacted and for which compensation will be paid. It is implicit that after the asset registration process any new assets, or improvements to assets, will not be compensated for. How does this affect the owners? If agreements are only signed and compensation is only paid a considerable time (eg one year) after asset registration, how will this impact on the livelihoods of the owners? This is particularly important for the cultivation of crops after signing the asset registration form because households need to feed themselves while the resettlement and compensation process takes its course. In recognition of this problem some countries (eg Tanzania) have laws that requires a project proponent to pay compensation within a specified period (eg six months) after asset registration. Failure to do so compels the proponent to pay interest on the assessed value of the assets for the disturbance or inconvenience caused. There are other options. In the case of fields one option is to allow owners to continue to grow crops until advised by the proponent to stop (with reasonable notice) after which a quick assessment of standing crops can be carried out immediately prior to signing agreements in order to determine the actual crop losses that are eligible for compensation. The draft agreement states that a property owner shall be entitled to remove any and all movable assets from a property within 30 days of signing an agreement. Consider the implications of a possible long time delay between signing asset registration forms and the payment for compensation on the livelihoods of beneficiaries and options for mitigating this. Reconsider time periods for salvaging property and occupation of a property by the LHDA after agreement

36 PoE Report 70 May 2015 Critical issues Page 36 of 46 It also states that LHDA can enter, occupy and remove or destroy items 30 days after signing the agreement or paying compensation. Panel believes that an affected property only transfers to LHDA once compensation has been paid, not 10 or 30 days after signing an agreement. Consideration also needs to be given to the impacts on households that have signed agreements that include relocation but where the households might have to wait some months before they are actually relocated. signing or payment of compensation. Other Phase 2 issues: Panel was also appraised of other Phase 2 compensation issues, including the compensation policy, compensation rates for new entitlements, asset registration procedures, the consultation process, livelihood restoration and social development, the socioeconomic baseline study and the Phase 2 procurement program. Panel is satisfied that the Phase 2 compensation and resettlement preparations are of a very high international standard. The Phase 2 compensation Policy is close to being the benchmark for other projects to follow. PoE Report 68 noted concern about the impacts of acquisition of agricultural land in the proposed site establishment areas. While houses can be relocated, fields are a scarce commodity in the Highlands and, once lost, are irreplaceable and impair hard-to-recreate livelihoods. A valuable aid in deciding among alternative locations for construction facilities (or no-go areas) is a land capability analysis of the relevant areas. Lessons learned from Phase 1 highlight the consequences of not having and implementing a robust dispute resolution mechanism that includes comprehensive procedures. Such an instrument is not only considered to be best practice but is a requirement of the World Bank safeguard policies. Continue developing the various components according to plan. Ensure that the ESIA consultant incudes land capability analysis in his proposed method in his inception report. Develop an appropriate dispute resolution mechanism for Phase 2 before resettlement planning commences in the project areas. On-going

37 PoE Report 70 May 2015 Critical issues Page 37 of 46 Panel has been made aware that a dispute resolution mechanism will be completed but believes that this should be done before the various resettlement planning consultants commence work among the communities. A onepage summary of the mechanism should be prepared for dissemination to the communities in the project area. 14 LHWP2 EFR scenarios and model Review of final and flow scenarios reports, and expert opinion Panel considers that the EFR project does not produce the goods that LHWP requires. The reasons for this are explained in Appendix 2 to this report. What LHWP needs now is a figure for EFR bulk release, and a conception of the EFR management system. In meeting the two needs mentioned above, assumptions of how the river works are required, something like as follows. The river is an out-of-equilibrium event-driven system. Only gross predictions are reliable (eg with reduced flows the river is liable to get smaller). There is limited scope for large scale variability in bulk releases, for design, contractual and political reasons. The EFR bulk release is going to have to be decided on pragmatic (rather than theoretical modelling) grounds, along the following lines. Low bulk EFR (eg 5%) is too little. An EFR bulk release 25% will face economic and political opposition (viz an unquestionable motivation would be required). A bulk EFR of 15-20% MAR has the precedent of Katse and Mohale. The EFR bulk allocation might stretch to 25% MAR to afford flexibility for the unknown future. Regarding the approach to the release regime, the present diversity of the river is not despite the perturbations (events) but because of them. The events result in different portions of the river being in different non-equilibrated states thereby providing a wide variety of habitats for a diversity Work on determining the bulk EFR release and a conception of how the EFR management system will work. Determine a bulk EFR allocation in the region of 15-20% of MAR, with flexibility to go up to 25% MAR. Adopt a release system along the lines that the instantaneous rate of release is a constant fraction of the instantaneous rate of inflow, perhaps subject to

38 PoE Report 70 May 2015 Critical issues Page 38 of 46 of species. The river management must perpetuate the events mimic the natural flow variations, albeit with a lesser quantity of water. The process of EFR management is at least as important as any targeted river condition, and care must be taken to avoid playing God with the river predefining its required condition as if we really know what the ideal state of a river is. some constraints (eg time steps and slight lagging rather than real time). Inevitably dam management should be informed by measuring inflows, transfers and outflows, and estimating evaporative loss. In the absence of a model predictive of downstream effects, good baseline data on resources (water quality, fish, riparian vegetation, sand) are required, and a competent monitoring system that can track resource changes with known confidence. Panel does not believe that the baseline and the proposed monitoring system are adequate to inform on compensation. The best working models are the decision rules and the Nepid study. LHDA needs to apply these models to LHWP2, and design the appropriate monitoring system. Develop a plan to collect adequate baseline data, and design a monitoring system along the lines of the Nepid study, so that, at a minimum, the decision rules can be applied.

39 PoE Report 70 May 2015 Critical issues Page 39 of LHWP2 Public health baseline survey Review and comment on progress on the on-going public health baseline survey within the Polihali catchment. On-going Panel reviewed Draft 3 (26 Jan 2015) of the Public health baseline study round one survey report. There is some improvement over the previous draft but there are still many errors and omissions. The survey is supposed to compare and contrast the resultant baseline PH indicator data with routine data that is [sic] generated by the country s main social and health management information systems and other data sources. Despite several references to using DHIS, LDHS and census data, few comparisons are made and there is no evidence of attempts to interface PHBS data with other data systems. Nor is there any evidence of using the socio-economic baseline survey data which cover the same households. If this had been done it would have helped verify or refute some of the more surprising results. However, we must not rely too heavily on LDHS or census. LDHS was conducted in 2014 (preliminary results are already available) and the census is due in These will provide some useful information but LDHS is only every 5 years and the census every 10, so their contribution to ongoing surveillance will be limited. Spurious results, such as 100% of the elderly being at risk of malnutrition according to one measure (MNA) while 50% were obese according to another (BMI), and very high tertiary education rates, may be addressed in Round 2 but the fact that the consultant failed to even notice some of these spurious results is cause for serious concern. The concluding chapter (p121) refers to a low tertiary education rate of 38%, which is actually extremely high (LDHS 2014, female = 8.8%, male = 8% nationally). What definition of tertiary education was used? There are also unacceptably high rates reported for orphans where it appears that adults may have been included in the denominator; Table 7, p21, shows 56% of upstream households having both parents deceased. The rate of double orphanhood in Do not rely too heavily on LDHS and census data for tracking health trends. These surveys are too infrequent and in the case of the census not health focused. Use DHIS (the MOH data system) where possible for an overall health assessment at district level but undertake periodic surveys of key, LHWPrelevant, indicators. Consultants must undertake thorough data cleaning, reject spurious data, and provide meaningful comparisons between the PHBS results and relevant, regional data and SEBS

40 PoE Report 70 May 2015 Critical issues Page 40 of 46 children 0-18 years in South Africa was 3.2% in 2012, while in the most seriously AIDS- affected province, orphanhood of any kind (maternal, paternal or both parents deceased) only reaches 23%. The consultants provided a conceptual framework of the social determinants of health but did not prioritise those determinants likely to be influenced by LHWP. Some of the variables in the conceptual framework, eg sexual and genderbased violence (SGBV), were not measured at all in the initial round, although this has been addressed in the follow up. Other very important variables, such as anxiety and depression (in the general population, as opposed to the elderly), alcohol and other substance abuse are missing entirely. What is really needed is a theory of change model which would help the consultants unpack the likely health and wellbeing consequences of LHWP and highlight which variables are most important. The proposed health impact assessment must do this properly in order to allow a targeted PH action plan to be developed. While it is unlikely that identical communities can be found for use as control sites they are vitally important for tracking the impacts of LHWP. According to the maps, the proposed control sites appear to be adjacent to intervention sites which could mean that contamination is almost inevitable, ie the control sites will also be affected, to some extent, by LHWP. It does not matter if the sites eventually selected have different mean values for indicators, so long as the values are broadly similar. We are interested in establishing a counterfactual and can use the difference in differences method to compare values at control and intervention sites measured before, during and after the intervention (relocation, road and dam building, etc). Without effective control sites, it will be much harder to attribute changes in health status (either positive The proposed health impact assessment should include a comprehensive theory of change model which is properly aligned with the likely influences of LHWP. If the proposed control sites are likely to be indirectly affected by LHWP, find other control sites, similar in socioeconomic and demographic terms to the project area, which we can be reasonably certain will not be affected by the project. Failing this, compare households within the project area that have lost different amounts of assets.

41 PoE Report 70 May 2015 Critical issues Page 41 of 46 or negative) to LHWP. Few statistics are shown for the comparison of control and intervention sites. A more systematic comparison of key variables is needed it is little use to compare education based on ever been to school when 92% of the sample had some schooling. Variables being compared must have some potential for variation. This lack of rigorous comparison of intervention and control sites is a serious issue and must be addressed, moreover, statistical comparisons must show confidence limits. The consultants must undertake a proper statistical comparison of the proposed control and intervention sites using relevant socio-economic and demographic indicators

42 PoE Report 70 May 2015 Issues for next PoE mission Page 42 of 46 Appendix 1 Issues for next PoE mission LHWP2 EFR bulk release LHWP2 EFR management system Adequacy of LHWP2 EFR baseline data LHWP2 EFR monitoring system Plan for protection of fields at Polihali construction site ESIA and any other inception reports Health impact assessment and public health action plan Bokong Cooperative and FYCDS Downstream Malibamatso and Senqunyane EFR site visits Maloti minnow barrier site visit Sedimentation in Muela, Katse and Matsoku site visits Stakeholder involvement on land use, wetland strategy, etc Site visit to talk with KBG Visit to aquaculture sites (discussions)

43 PoE Report 70 May 2015 EFR final and scenario reports Page 43 of 46 Appendix 2 Review of LHWP2 EFR final and scenario reports The main conclusion of the LHWP2 EFR project is that a release of 36% of MAR would be required to maintain the downstream river similar to the present condition. Panel is uncomfortable with this finding, and this appendix is intended to explain why. Accordingly, this appendix addresses three questions. How was the conclusion determined? Is it credible? In what situation does this put LHWP? The consultant s method was to develop a model of the biophysical and social consequences of river flow variation. The constructed model, called PROBFLO, was probabilistic for a multiple-cause multiple-effect situation. The consultant undertook what is conventionally called a what-if analysis in which the flow releases were varied and the biophysical and social consequences predicted by modelling. The research question posed (scenarios report page 42 1 ) contained many objective functions: optimize flow standards, maximize environmental services, and protect environmental flows. It is improbable to maximize (minimize, optimize) two or more objective functions simultaneously. Any trade-offs or compromises that might have been used in arriving at the consultant s conclusion are not clear to the reader. A model is only as good as its assumptions. There are often both implicit and explicit assumptions. One implicit assumption in PROBFLO seems to be adoption of system linearity, something like the continuum model of ecosystem structure and function (Exhibit 1). A species distribution along an environmental gradient is in the form of a bell-shaped curve. Species distribution curves occur scattered along environmental gradients. Movement along an environmental gradient causes numbers of individuals of some species to increase and others to decrease. The change in individuals and species abundance is proportional to the environmental change distance moved along the gradient. The proportionality is the essence of linearity. Probably many ecosystems behave linearly over short distances of change along gradients, or at least under some circumstances. But with big movements drastic change in streamflow in a river ecosystem there are liable to be discontinuities, ie the system no longer behaves linearly. Ball-in-the-cup is a commonly used analogy. Visualize an ecosystem state to be represented by a ball in a cup. Shaking the cup (ecosystem disturbance) moves the ball away from the centre-bottom of the cup (ecosystem equilibrium). The agitated ball tends to return to the centre-bottom of the cup (the ecosystem moves toward equilibrium). This is comparable to linear, or at least consistent, ecosystem behaviour. But suppose the cup is shaken vigorously (the ecosystem is struck by a big event). The ball is shaken out of the cup. It is no longer attracted to centre-bottom of the cup. In effect the 1 Page numbers referred to in this appendix are the electronic numbers appearing on the computer when the consultant s documents are read.

44 PoE Report 70 May 2015 EFR final and scenario reports Page 44 of 46 system takes on a new or different mode of behaviour. This is a discontinuity or nonlinearity. Exhibit 1 Ecologist s continuum model of ecosystem structure and function In the present EFR project downriver was studied in the static state, ie the river was not subject to any experimental reduced flow, but simply the river was watched under the present circumstances. The PROBFLO predictions on the consequences of flow reduction are therefore extrapolations beyond the observational data. Some explicit assumptions were made in PROBFLO. One case is the assumption about sedimentation. In the scenarios report (pages 128-9) reduced sedimentation downstream of a dam is assumed, because the dam traps incoming sediment, and low turbidity water is released. But if the Malibamatso downstream of Katse is examined, this assumption is misleading. Indeed, the native river channel has remained from Katse down to the confluence with Kholontso, the first tributary. Downstream of the Kholontso the river channel has narrowed. Exhibit 2 shows a pool about a kilometre downstream of the Kholontso. For 15 years this big pool remained pretty well in its native state. Then there was an event. There was a huge deposition in the pool. The sediment did not come out of the dam. It came down the mountain. The channel infilling or narrowing has continued despite occasional big floods (Exhibit 3) which have not been sufficient to wash away deposited and consolidated sediments. River geomorphology tells us that the streamflow determines the channel dimensions. In a sense this is fortuitous. If the native channel remained after impoundment then a large release would be required, but if the channel shrinks then a lesser amount of water is required for the same degree of channel fill. Hence arises the notion of the smaller healthy river.

45 PoE Report 70 May 2015 EFR final and scenario reports Page 45 of 46 Exhibit 2 Sedimentation in the Malibamatso river Exhibit 3 Acknowledgements to Ntate Paul Lerotole Malibamatso flood November 2006 (~20-year event) Another explicit assumption of PROBFLO concerns riverine vegetation determinants. The model assumes that vegetation is determined by moisture or water level (scenarios report pages 59-60). This may be so for some plants some of the time. But it does not explain the bush growth in downstream rivers of LHWP (see report Mentis MT & Ledger JA 2005 The effects of reduced river flows on woody vegetation. LHDA). An important determinant is the scouring effect of floods, and with flood reduction riparian bush proliferates. Again, PROBFLO is at odds with observable reality. What resources would be required to run PROBFLO as an operations model an EFR management system? Panel has not seen whatever submissions the Consultant has made on this. But Panel considers PROBFLO big, complex, of questionable predictive value, costly to operate, and short on pragmatism. Is a predictive model essential?