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Policy Framework

  • National Environmental Action Plan (NEAP)

The NEAP identifies Armenia’s environmental goals, objectives and priority activities for the prevention of further degradation of the country’s natural resources. Key areas of action include policy and program development, legal and regulatory reforms, institutional strengthening and capacity building, environmental awareness and education, ensuring effective implementation of the Action Program and financing and co-operation with other organizations.

The NEAP indicates specific issues relating to agriculture. Since privatization of the country’s agricultural lands, there has been no immediate positive impact on agricultural production and the environmental sustainability of agricultural land use has been reduced. Agriculture, both present and in the past, have resulted in land degradation through soil erosion, soil compaction, fertility decline, salinization, alkalization and water logging.

  • Lake Sevan Action Program

The Lake Sevan Action Program identifies four phases to implement a sustainable management of the lake to provide opportunities for development for tourism and recreation, to protect and enhance biodiversity, to improve fisheries in a sustainable manner, to control and minimize pollution discharges, to improve institutional arrangements to more effectively integrate all user groups within the watershed and to restore the strategic value of Lake Sevan. This is particularly relevant to RESCAD since the lake’s watershed includes one sixth of the country’s total area. Thus, agricultural activities that promote runoff (siltation from soil erosion, chemical inputs) can adversely affect the lake’s ecosystem.

  • Biodiversity Strategy and Action Program

Armenia's strategy for biodiversity conservation, as identified in the NEAP and Biodiversity Strategy and Action Plan (BSAP), focuses on sustainable development of landscapes, building human capital and increasing financial investments to achieve improvements in four key areas: (i) institutional and community know-how in sustainable development and its enabling legal framework; (ii) public awareness and participation; (iii) protected area network planning and management; and (iv) safeguard flora and fauna by mainstreaming biodiversity conservation into agriculture, forestry and other economic sectors.

  • Sustainable Agricultural Development Policy

The GoA has taken actions to liberalize the country’s agriculture and to arrest the deterioration of agricultural infrastructure. Specific objectives of the strategy are to: (i) provide food security in the country; (ii) improve social conditions in the country and to reduce poverty; (iii) establish an agricultural system smoothly functioning under market economy conditions and principles; (iv) support the development of production and marketing of Armenian agricultural production, which will ensure the entrance into the international market and competitiveness; and (v) increase profits and improve livelihood of rural the population. The strategy focuses on agricultural policy and macroeconomics, crop production, livestock breeding, processing and marketing of agricultural products, agricultural finance, and, rural infrastructure and management.

2.4 Institutional Setting

2.4.1 National Level

At the National level the Ministry of Nature Protection has the mandate for environmental protection, the sustainable use and regeneration of natural resources and the improvement of the environment. It carries out this function through the following:

  • The State Environmental Inspectorate and its 11 Regional Environmental Inspectorates who perform the enforcement of laws and regulations pertaining to air and water pollution, land use, biodiversity conservation and forest protection;

  • State Environmental Expertise which is the body responsible for EIA;

  • Environmental Monitoring Center which is responsible for air and surface water quality monitoring;

  • Hydromet which is responsible for monitoring of water flow, water balance and water level fluctuations, organization of research in the field of environmental pollution and weather forecasting

The State Environmental Expertise will be responsible for ensuring that those Project interventions in terms of sub-projects to be financed through the PFIs and directly from the Project itself (PMU) meet the country’s environmental laws.

The Ministry of Agriculture (MoA) is responsible for implementation of agricultural policy and realization of agricultural production objectives, management of state agricultural lands and development of land use schemes, overseeing agro-processing procurement and food policy and supporting farmers of privatized land. In addition, the MoA oversees management of agro-biodiversity, seed-production, fish breeding farms, veterinary and plant protection services.

The State Committee on Water Management manages irrigation, drinking, mineral water resources and the sewage system, registries all artesian sources and owns all available water infrastructures. It develops the water use fee policy, usage quotas for all main water users and implements investment projects in all subordinated agencies. It is divided in a Water Supply Agency and a Drainage, Irrigation and Management Agency who are both established as state closed joint stock companies.

2.4.2 Marz and Local Level3

Armenia has 10 counties or provinces, known as Marzas, which are subdivided into communities, Hamainks. The city of Yerevan constitutes an additional political entity in itself. General marz administration functions include supervising the constitutionality and legality of decisions taken by local self-governing bodies, assuring the implementation of decrees, implementing regional economic and social development programs, coordinating the activities of state agencies, overall planning, organizing and providing infrastructure services, and securing protection of state property, natural resources, and cultural heritage.

In the field of the environment the marz:

  • participates in the development of national environmental programs and make provisions for their implementation in the marz areas

  • is responsible for enforcement of legislation in the marz,

  • supports specially protected areas, natural resource utilization, and executing measures against illegal hunting, fishing and logging,

  • co-operates with environmental NGOs.

Agricultural Support Centers have been established in all marzas under the World Bank ARS Project. These Centers work in close co-operation with the MoA and provide extension services to farmers, manage information data bases on agricultural issues, develop nurseries, distribute seeds and promote public awareness.

The Hamainks are in charge of managing the property in their district and resolving problems of local significance. They have significant authorities in land management and water management. It is their responsibility for instance to maintain the irrigation systems and assist in the prevention of crop and livestock diseases.

    1. Institutional Framework for Environmental Regulation4

The Department of Ecological Expertise is responsible for environmental assessment and Figure 2.1 summarizes the procedure to be followed when a proponent wishes to proceed with a particular activity.

Figure 2.1: Schematic Indicating Process of Development Proponent Receiving Environmental Approval

The proponent is responsible for ensuring that an environmental assessment is prepared for his proposal. This is conducted by the Department of Environmental Expertise which has a staff of ten scientific specialists. The proponent pays for this service based on a scale of costs for EA preparation for various types and sizes of projects. Specialists travel to the proposed site and conduct the necessary examination. This is often done in collaboration with the local Marz government representatives. Each project submitted will receive a response (yes or no) from the DEE within 120 days. In accordance to the legislation the general public is informed of the proposed project and has an opportunity to comment on the project, particularly regarding environmental effects. The DEE takes public input into account before preparing its final report.

Once the environmental certificate signed by the Minister has been issued the proponent is allowed to proceed with the development. The DEE will conduct periodic inspections (monitoring) of the project to ensure that all standards agreed to are maintained.

For air and water monitoring the Environmental Monitoring Centre performs partial regular monitoring. The Centre monitors the air basin of six cities and the water quality in 30 rivers and a number of lakes.

    1. Institutional Capacity for Environmental Management5

2.6.1 Ministry of Nature Protection

Having stated the responsibility and procedure of the DEE above, The Law on Environmental Expertise is not properly implemented and does not reflect the actual procedure which is followed. Contribution of independent experts and NGOs is minimal and public hearings are never held. Apart from lack of implementation, the Expertise law is also incomplete. Assessment criteria, requirements for preliminary environmental studies and the procedures for public hearings still need to be developed.6

According to the Director of the Environmental Inspectorate, the staff comprising the ecological expertise are well qualified and sufficient in number to address the cases for which they are responsible. However, in the case of environmental monitoring “the existing system (for air and water quality monitoring) is equipped with outdated technical equipment which produce results within a 25-30% error margin. There is also a lack of mobile laboratories. In order to address environmental concerns, a complete, trustworthy, and accessible qualitative and quantitative environmental assessment data is needed. The activities of the central monitoring unit are not a full-programmed capacity due to the lack of technical resources and insufficiency of funding”7

Two major issues identified by farmers during the field visit (Annex E) were the legal and illegal removal of trees and the consequence that this has on the environment; and the over use of pastures and resulting loss of forage cover, soil compaction and soil erosion. These two issues are reflected in the inadequacies of the Forest Code and the Law on various land types, respectively. These are described in the following:

The Forest Code states that all forests have a protecting, sanitary and health role, therefore forest cannot be used for production. The forest may be cut only for sanitary and care purposes. The code neglects the actual situation and the productive role of forests in the country. Amendments to the Forest Code are badly needed. It is necessary to have implementing legislation on forest use adopted under the Forest Code which grants the use of forests for leasing, grazing, etc. Furthermore, the present Forest Code does not provide for private forest land ownership or community management (providing opportunities for cash flowing back to e.g. forest user associations). Procedures for forest preservation services and monitoring are lacking as well. With regard to implementation of the forestry component activities forest regulations supporting SFM activities such as correct felling techniques, road construction, sustainable planning etc. have to be developed before any logging activities take place.

The Law on Rental and Regulations on Utilization of Natural Pastures, Hay Meadows and Other Land Types has a number of problems. The leasing terms provided are too short for sustainable pasture management, possibilities for privatization of pastures and most of the hay meadows are not provided and there is no pasture use control. The law should provide for an obligation for improvement of land and its protection. Rent fees should be used for pasture rehabilitation and improvement.

The Project will have provision for community development opportunities. However, legal constraints for community level developments include lack of or inadequate regulations for land tenure, pasture renting, taxation of non-profit and agricultural organizations, status of farms and rehabilitation of irrigation and other water facilities. A law on agricultural co-operatives is lacking.

Some of the specific weaknesses in Government, as relate to the environment and which effect the RESCAD Project are discussed in the following:8

  • Human capacity and financial constraints limit the environmental authority’s ability to fulfill its role, especially at the local level. The functions as well as the prevailing attitudes of the management are based on one-way administration and implementation from central to local level. There is a considerable need for further training and improved management skills at all levels. Budget limitations and general lack of financing is a continuous constraint to build adequate technical and management capacity. Capacity in key areas such as environmental planning, management and law drafting within the MoNP are weak.

  • Co-operation amongst relevant sectoral agencies is weak, with several agencies sharing overlapping responsibilities of resource use. Institutional co-ordination and collaboration for sustainable natural resources management needs to be improved and the enabling framework should be provided through legislation and institutional set up.

  • The monitoring capacity of the relevant agencies is inadequate. Monitoring equipment is obsolete and sampling is conducted according to guidelines from the Soviet era. Monitoring for forestry and biodiversity is performed in an ad hoc manner and is very weak. Scientific studies within protected areas are not well integrated into park management decisions. There is no proper monitoring of the utilization of non-wood forest resources. Reference data is needed to support the environmental authorities’ technical functions. Management planning and zoning can not be carried out without proper information. There are no basic rules for information management and the existing monitoring agencies or academic institutions lack co-operation. An information network is needed to ensure the regular exchange of information between the management authorities and the users of the natural resources

  • Generally the public awareness on the importance of biodiversity and natural resources conservation is weak. Mistrust of government agencies, combined with often conflicting regulations and unclear property rights have further weakened the ability of local communities to manage their resource base on a sustainable basis.

  • The Structure of MoNP is outdated and unclear. This is being addressed through the NRMPR Project.

  • Low salaries and non-payment of salaries have occurred in the past. This has probably been responsible in the past for corruption and illegal logging in the forestry sector. The problem of illegal logging is currently being addressed within the ongoing PRSC program. Corruption has to be addressed through stricter law enforcement, adoption of an efficient monitoring system which allows public involvement, transparent and accountable administration, clear allocation of responsibilities and access to information.

      1. Commercial Banks

The banks have no environmental expertise nor do they currently require it. Under the ARSP the PFIs are only obligated to ensure that the proposed borrower has obtained the relevant certificates and clearance approvals from the various agencies, including the MoNP which is responsible for environmental protection.


3.1 General

The RESCAD Project has not been finalized at the stage of environmental assessment although significant changes to the concept and the current description of components are not anticipated. The challenge in conducting an EA for the Project is that there are no location specifics for the Project (the intent is that the Project and the credit available through the Project will be available country wide, in all marzes). The other challenge is to attempt to determine as best as possible the various activities that individual farmers, agribusiness (including agro-processors), and communities will wish to pursue in terms of loan proposals. As described in the following sections, a list of activities has been prepared based on previous similar studies and on discussions with stakeholders. It should be noted, however, that this list may not be comprehensive since it is difficult to predict all activities that may be proposed for financial support. At the same time the list may well contain activities that will not be pursued by potential borrowers.

3.2 Legal Instrumentation and Management Capacity

The comprehensive review of legal instrumentation for the EIA for the NRMPR Project has been updated. This has been supplemented with further discussions with the relevant government officials and review of additional documentation. An analysis of the country’s capacity for environmental management was carried out on the basis of discussions with government officials and, again, on the documentation prepared by the EIA team for the NRMPR Project.

3.3 Public Involvement

Public input to the environmental review was solicited in the process of preparing the environmental review:

  • discussions with farmers, both small and medium sized commercial farms (Annex E), and with commercial banks (Annex E) to inform them of the environmental review of the Project, and more importantly, to identify likely activities for which loans through the Project would be requested. As well, farmers were asked for opinions on important environmental issues in their communities.

  • discussions with Ministry of Agriculture officials to determine the categories of likely farm and non-farm rural enterprises for which loans would be requested.

  • a half day NGO forum was held to solicit ideas on likely farm and non-farm rural activities to be funded and the probable environmental impacts that could be expected from these activities (attendees of NGO forum listed in Table 3.1). A summary of discussions at this round table is provided in Annex E.

  • the draft final environmental assessment was forwarded electronically to the NGOs that attended the NGO roundtable, as well as to relevant government departments, for further comment.

  • newspaper advertisements were placed in Yerevan newspapers and local newspapers in the marzes to invite the general public to examine the environmental review draft final document and to make further input to the review (open houses for discussion of the draft final report have been arranged for each of the marzes as well as in Yerevan).

  • The final version of the environmental review will be placed in the World Bank InfoShop in Washington DC.

Table 3.1: NGOs Represented at NGO Roundtable Discussion



Sona Ayvazyan

Center for Regional Development/Transparency International, Armenia

Karen Afrikyan

Armenian Forests, NGO

Gevorg Arakelyan

Association for Sustainable Human Development/ UNEP COM

Karine Danielyan

Association for Sustainable Human Development/ UNEP COM

Zhanna Galyan

Ecotourism Association

Edward Yavruyan

Armenian Nature Protectors’ Union, NGO

Arthur Yavruyan

Armenian Nature Protectors’ Union, NGO

Lilik Simonyan

Armenian Women for Health and Healthy Environment, NGO

Elena Manvelyan

Armenian Women for Health and Healthy Environment, NGO

Susanna Hakobyan

Environmental Survival, NGO

Armen Kharatyan

Union of Nature Protection

Satenik Ter-Minasyan

Ecological Monitoring, NGO

Levon Aghamyan


Artavazd Hakobyan

World Bank, ECSSD

Michael Rayner

RESCAD International Team Leader

John Ambrose

RESCAD International Consultant, EA

3.4 Determination of Potential Impacts

World Bank experience with this type of project in transition economies has been used here for identifying the potential impacts for a wide range of rural activities has been used as a basis for the EA. This has been supplemented with input from the NGOs and farmers in the field. The list of agricultural activities likely to be subject for loans in these other countries was used as a base for discussion for the Armenia project. This list was then adapted to best fit the agricultural conditions and farmer / rural development needs in Armenia.

The environmental assessment focuses on four groups of activities:

. small and medium sized farms

. rural enterprises (agriculture and non-agriculture)

. community development needs

. extension services

  • 7 categories of rural activities

Matrices (Annex B) were developed for each of the seven rural enterprise categories presented in Table 3.1. The matrices addressed each group in general terms and identified the broad potential direct and indirect environmental impacts for each group. In addition, consequences of each impact have been identified as well as the possible mitigative measures to be taken. Each group is given an impact level of significance prior to mitigation and a residual level of significance following mitigation. The likelihood of an impact occurring is indicated.

Table 3.2: Description of Rural Enterprises by Broad Categories

Broad Categories



includes agro-processing for oils, fruits, wines and sugar refining; also includes grain milling, dairy activities and meat processing

Other agribusiness

includes agricultural related businesses such as farm supply, farm insurance, farm services (machinery repair, irrigation provision, etc.)


includes other agricultural related and non-agricultural manufacturing activities


companies in the building trade to provide residential and business construction as well as roads and other public and private construction; includes maintenance

Trade (wholesale and retail)

all wholesale and retail trade in the rural areas

Hotels and restaurants

self explanatory


all forms of transport including public and specialized (transporting farm production to market or to processing centers)

  • Small and medium scale farms (less than 30 ha)

To effectively develop small and medium scale farms, a number of inputs will be required. The exact input requirements are difficult to predict but based on previous similar studies, general knowledge, and input from farmers, banks and agricultural specialists in Armenia a basic set of inputs has been determined. Table 3.3 lists 19 possible inputs. Matrices (Annex C), similar to those for the rural enterprises, were prepared.

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