State of the Environment

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- 91 - State of the Environment Attachment 5 Environmental Sustainability in Cambodia 1. Cambodia's economy depends heavily on agriculture, fisheries, and natural resources. The agricultural sector accounts for a third of GDP, but reliance on natural resources is even higher in rural areas, where they provide for much direct household consumption, and serve as a safety net when other sources fail. Almost all rural people engage in some fish harvesting, and 82 percent of national energy consumption measured in 1995 was in the form of fuel wood. The unique eco-system centered on the Tonle Sap Basin supports a fishing industry which alone provides an estimated 40-70 percent of Cambodia s protein intake and 5 percent of GDP, and upon which approximately 1.7 million people (14 percent of the total population) depend. 2. Environmental pressures have been exacerbated by the high population growth rate (2.8 percent over the last two decades), owing partly to the baby boom that followed the Khmer rouge era. These pressures have led to a higher demand for natural resources, especially land. If improperly managed, widespread land grabbing is likely with severe impacts on poor and vulnerable groups. Rapid urbanization has also put increasing pressure on the municipalities, which have to manage both solid waste and wastewater generated by residents. Furthermore, transboundary issues involving illegal logging and wildlife trade are also on the rise despite the agreement in 2001 among Cambodia, Lao PDR, and Vietnam to promote international cooperation in environmental protection. 3. Table 1 compares Cambodia s key environmental indicators with some of its neighbors. Table 1: Comparison of Environmental Indicators among Mekong Countries Environmental Indicators Cambodia Lao PDR Thailand Vietnam Population (million persons) 13.4 5.5 64.8 82.7 Average annual population growth 1980-2001 (percent) 2.8 2.5 1.3 1.9 Land area (sq. km.) 181,040 236,800 515,113.6 331,114 Forest (1,000 sq. km.) 93 126 148 98 Deforestation (average annual % change 1990-2000) Land under protection (% of total land) 0.6 0.4 0.7-0.5 18 14 18 Water use (% of total resources) 0.1 0.3 8 6 CO2 emissions (metric tons per capita) Access to an improved water source (% of pop.) Access to improved sanitation facilities (% of urban pop.) Environmental expenditure (% of total expenditure 0.1 0.1 3.2 0.6 30 35 80 56 58 29 97 86 n/a 0.6 1.2-14 0.8-1

- 92-4. The importance of natural resources and environmental management in Cambodia has been recognized in the following key national policies and legislation: (i) National Environmental Action Plan (NEAP) covering the period from 1998-2002; (ii) Second Five Year Socio-Economic Development Plan (2001-2005); (iii) Land and Forest Policies; (iv) Royal Decree on the Creation and Designation of Protected Areas, 1993; (v) Environmental Protection and Natural Resources Management Act 1996; (vi) Sub-decree on Water Pollution Control, 1999; (vii) Sub-decree on Solid Waste Management, 1999; (viii) Sub-decree on Environmental Impact Assessment, 1999; and (ix) Sub-decree on Air Pollution and Noise Disturbance Control, 2000. 5. Yet environmental management in Cambodia remains weak. The legal framework for environmental management does not yet fully meet the country's needs, and practical implementation measures including coordination and enforcement lag behind. Although many environmentally unsustainable forest concessions have been cancelled, illegal logging and land grabbing continues. Information and sector guidelines are lacking on crucial aspects such as allowable forestry cut, fish yields, and groundwater resources. The roles and responsibilities of the environmental agencies at various levels need to be clarified; as many as 14 agencies are involved in the management of the Tonle Sap Basin. Management capacities are particularly weak at local levels, forcing many environmental management decisions to be made centrally. Although 20 percent of rural cash incomes derive from common access resources, poor stakeholder participation weakens community-based management. The Government has released many private fishing concessions in the Tonle Sap to communities, but the regulatory framework and local capacity for management are insufficiently developed. Key Environmental Challenges Decreasing Forest Cover. Forestry has made a relatively small contribution to both national revenue and to GDP, not exceeding 4 percent and 8 percent respectively since 1994. Although growth in other sectors of the economy have contributed to the decline of forestry growth, the fall in logging revenues and increase in the volume of timber extracted during the 1990s are more a consequence of weak governance. The Government responded with a crack-down on illegal loggers and sawmills, and closed many commercial forest concessions, but longer-term commitments are still needed. Pressures from various factors contribute to the loss of forest cover in Cambodia: (i) many forms of land concessions; (ii) population growth and increasing demand for land; (iii) unsustainable types of agriculture; (iv) encroachment on seasonally forest, wetland, and protected areas; and (v) impact from development activities e.g., mining and quarries for construction and extraction. Waste and Wastewater Management. Urban population growth has averaged 3.5 percent per annum in the last two decades. In 2002, roughly 800 tons of solid waste were collected every day in Phnom Penh, the largest city in Cambodia with over 2 million people. It has been estimated that a little over 80 percent of all solid waste is collected and disposed of within Phnom Penh. This ratio drops signif icantly in other major cities. Sewage and wastewater treatment and disposal are unable to meet the growing population needs. In Phnom Penh, the sewerage system has not been maintained for more than three decades and 80 percent of sewers are blocked or severely damaged. Sewerage coverage is only about 10 percent, and of the 194 factories in the city assessed in 2000, only eight had on-site primary treatment and their effluents generally exceeded Cambodia s water quality standards. During the dry season, untreated sewage is directly discharged into

- 93 - rivers, and during the wet season a mixture of sewage and storm water backs up into houses in low-lying areas, posing significant health risks. Inland Fisheries and Coastal Resources Degradation. Cambodia has the fourth largest freshwater fishery in the world, after China, India and Bangladesh. This is remarkable given Cambodia s population relative to these countries, and is possible largely due to the productivity of the Tonle Sap Basin. Official figures record an increase in freshwater fish catches since 1980, but true trends are difficult to determine given that much small-scale freshwater fishing does not appear in national statistics. Population growth, especially in the Tonle Sap basin where around 40 percent of households are directly dependent on fishing, suggests that the rise in fishing efforts may have outstripped the growth in catches over recent years. The marine fish catch has declined from a high of 40 to 36 billion tons between 1990 and 2000. The illegal use of destructive fishing tools and methods has undermined the long-term sustainability of fish and marine resources. This will have adverse implications on the livelihoods of people whose daily consumption and cash income depend on these resources. Poor Protection of Biodiversity and Protected Areas. Cambodia has one of the highest protected area coverages in the region (18.3 percent), but insufficient resources have been allocated to the responsible agencies at the national and local levels to carry out their duties. There are many settlements within and around protected areas, and overexploitation of forest resources is common. Protected areas are normally surrounded by forest and other land concessions, making it very difficult to ensure protection. Few protected areas are patrolled on any consistent basis, and ongoing surveys and trade research reveal that wildlife populations are being poached at an alarming rate. Recently, the Government established a protected forest system for conservation of wildlife and forest covering 1.03 million ha. These protected forests are under the jurisdiction of the Ministry of Agriculture Forestry and Fisheries, whereas other protected areas are under the responsibility of the Ministry of Environment. It remains to be seen how the two agencies will coordinate and work together to strengthen their protection efforts. Weak Environmental Institutions and Instruments. The Government has put in place many forward-looking environment legislations and policies, but inadequate resources, including human, financial, and physical resources have been allocated to implementation and enforcement. In 2001, MOE received a budget of only US$ 1.25 million or about 0.3 percent of total government expenditure. It is critical that innovative sustainable financing of environmental protection be identified. Payment for ecological services might provide a viable option for the Government to consider. In addition to resources, better environmental governance needs to be provided in terms of clearer mandates and guidelines for implementation of new legislation, and coordination between management agencies. The existence of numerous agencies involved in the management of the Tonle Sap Basin and the division of protected area management between two separate ministries are examples of overlapping jurisdictions. Clarification of responsibilities and transparency in management transactions will ensure proper accountability and reduce the incidence of abuses. Appropriate regulatory frameworks at the local level are also needed to address national-level policies and priorities, including provision of secure land and resource tenure to provide for community or local management.

- 94 - Environmental Linkages to CAS Objectives 6. Cambodia has a considerable natural resource base that has the potential to provide sustainable benefits to the poor. Since the Cambodian economy depends heavily on natural resources, economic growth and poverty reduction can be significantly undermined by their overexploitation and degradation. The CAS clearly recognizes the importance of NRM and the key linkages between natural assets and poverty reduction. Objective 2 of the first CAS Pillar specifically supports the improvement of transparency and accountability in the governance of natural resources, ensuring security of access to land for smallholders and supporting improvements in state land management. The expected outcomes and the proposed instruments supporting the CAS objectives are listed in Table 2. Table 2: Environmental Outcomes and Bank Instruments Outcomes A. Improved provincial land use management 1. Provincial land classification & allocation maps completed with local participation 2. Public access to state land registry B. Accelerated land distribution & increased number of secure land titles 1. Increasing proportion of plots < 5ha. registered 2. Increasing proportion of state land allocated to social concessions C. Transparency regarding generation of public & commercial benefits from forests Government adopts strategy for prioritizing & monitoring forest resource management & benefits obtained, & for resolving disputes over forest use D. Expansion of community forestry Annual increase in forest area under local benefitsharing E. Improved policies & institutions for protected areas management 1. Protected areas law submitted to National Assembly 2. System -wide plan for protected areas management adopted 3. Five protected areas complete management plans & boundary demarcation through participatory processes Instruments Lending 1. Land Management and Administration Project I (ongoing) 2. Forest Concession Management and Control Pilot Project (ongoing) 3. Biodiversity and Protected Area Management Project (ongoing) 4. Land Management for Social and Economic Development (FY06) 5. Land Management and Administration Project (LMAP) II (FY08) AAA 1. Poverty-Environment Nexus (FY05). This TA will improve the environmental and natural resources management coverage of poverty reduction efforts 2. Rural Sector Strategy (FY05) 3. Agrarian Structure in the context of Trade Liberalization (FY06) 4. Cambodia Environment Monitor (FY06) will focus on environmental education and awareness raising 5. Support to Forestry Policy and Strategy through TWG (FY06/FY07) 6. Land Policy and Strategy (FY06) 7. Support to Agricultural Policy and Strategy through TWG (FY06/FY07) 8. Strategic Environment Assessment (FY07) will provide a strategic environmental assessment of selected priority sectors such as water, land and forests 9. IDF Strengthening Environmental Management Capacity at Local Levels (FY06-08) 7. To enhance coordination with development partners, the Government signed the Declaration on Harmonization and Alignment on December 2, 2004 in which all parties have

- 95 - committed to change the way they do business in Cambodia by implementing the Harmonization Action Plan (see Attachments 6 and 7). These processes were actively supported by the World Bank in its role as co-chair of the CG meeting and the Bank will continue to play an active role in assisting the Government to improve donor coordination. Support is provided in environmental protection, capacity building, forest management, biodiversity conservation, and land management through activities aimed at strengthening institutions and enhancing environmental governance at the national and provincial levels, and financing infrastructure and services. Among the main international partners supporting the government s program are the Agence Française de Développement (AFD), Asian Development Bank (ADB), Swedish International Development Agency (Sida), United Kingdom Department of International Development (DFID), United Nation Development Program (UNDP), and the World Bank. Table 3: Key Environmental and Natural Resources Indicators Environmental strategy / action plan prepared in 1999 Group Data Country Data East Asia & Pacific Low Income Population (millions) 13.4 1,838.50 2,494.60 Urban population (% of total) 18.6 38.2 30.6 GDP ($ billions) 4.1 1,833 1,124 GNI per capita, Atlas method ($) 300 960 430 Agriculture Land area (1,000 sq km) 177 15,885 32,424 Agricultural land (% of land area) 30 50 43 Irrigated land (% of crop land) 7.1 34.7 26.3 Fertilizer consumption (100 grams/ha arable land) 0 2,077 710 Food production index (1989-91 = 100) 159 171 136 Population density, rural (people/sq km arable land) 274 568 510 Forests Forest area (1,000 sq km) 93 4,238 9,031 Forest area (% of total land area) 52.9 27.2 27.1 Annual deforestation (% change, 1990-2000) 0.6 0.2 0.8 Biodiversity Mammal species, total known 123.... Mammal species, threatened 24.... Bird species, total breeding 183.... Bird species, threatened 19.... Nationally protected area (% of land area) 18.5 9.2 8.4 Energy GDP per unit of energy use (PPP$/kg oil equiv).... 3.6 Energy use per capita (kg oil equiv).. 854 518 Energy imports net (% energy use).. -3-8 Electric power consumption per capita (kwh)... 816 317 Share of electricity generated by coal (%).. 65.1 49.2

- 96 - Table 3: Key Environmental and Natural Resources Indicators (cont d) Environmental strategy / action plan prepared in 1999 Group Data Country Data East Asia & Pacific Low Income Emissions and pollution CO2 emissions per unit of GDP (kg/ppp$ GDP) 0.0 0.6 0.5 CO2 emissions per capita (mt) 0.0 2.1 0.9 Consumption of CFCs (ODP metric tons) 94 42,259 14,561 Particulate matter (pop weighted average µg/m3) 69 69 64 Passenger cars (per 1,000 people) 312 10 6 Water and sanitation Freshwater resources per capita (m3) 38,136 6,020 6,416 - total (% total water resources) 0.1 7.2 6.5 - agriculture (% total freshwater withdrawal) 94 81 92 Access to an improved water source (% total pop) 30 76 76 - rural (% rural pop) 29 67 70 - urban (% urban pop) 70 93 90 Access to sanitation (% total pop) 17 47 43 - rural (% rural pop) 10 36 31 - urban (% urban pop) 56 72 71 Under-5 mortality rate (per 1,000 live births) 118 42 121 National accounting aggregates - 2002 Gross national savings (% GNI) 18.5 38.8 21.5 Consumption of fixed capital (% GNI) 7.3 9.2 8.4 Education expenditure (% GNI) 1.8 2.2 2.6 Energy depletion (% GNI) 0.0 3.4 5.9 Mineral depletion (% GNI) 0.0 0.3 0.4 Net forest depletion (% GNI) 0.9 0.1 0.8 CO2 damage (% GNI) 0.1 1.8 1.3 Particulate emission damage (% GNI) 0.1 0.8 0.6 Adjusted net savings (% GNI) 11.9 25.5 6.7 Source: The Little Green Data book (2004)