US-AEP COUNTRY ASSESSMENT:
Democratic Socialist Republic of Sri Lanka

ACRONYMS

  1. BOI: Board of Investments of Sri Lanka
  2. BOO: Build-own-operate
  3. BOT: Build-own-transfer
  4. CEA: Central Environment Authority
  5. CIP: Core Investment Plan
  6. EIA: Environmental impact assessment
  7. GDP: Gross domestic product
  8. GOSL: Government of Sri Lanka
  9. ISO: International Organization for Standardization
  10. M/TEWA: Ministry of Transportation, Environment, and Women's Affairs
  11. M/ID: Ministry of Industrial Development
  12. NAREPP: Natural Resources and Environmental Policy Project
  13. NEAP: National Environmental Action Plan
  14. NGO: Nongovernment organization
  15. PIP: Public Investment Program
  16. RTSC: Regional industry service committee
  17. UDA: Urban Development Authority
  18. US-AEP: U.S.-Asia Environmental Partnership
  19. USAID: U.S. Agency for International Development

1. ECONOMIC PROFILE

Demographic Conditions and Trends

Population, estimated at about 18.3 million,1 has been projected to stabilize at 25 million by 2046.2 The birth rate has dropped from 5.0 per woman in 1960 to 2.7 in 1990. In spite of its low annual per capita income, Sri Lanka has achieved high adult literacy and primary education rates, high life expectancy, and a low infant mortality rate. The United Nation's Human Development Index placed Sri Lanka among the fifteen countries with the highest index ratings.3 Sri Lanka's urban population, at roughly 25 percent, has grown steadily in proportion to overall population but at a considerably slower rate than other Asian countries.4

Economic Conditions and Trends

Sri Lanka began its independence with high expectations that its Sinhala, Tamil, and Moslem populations and English-speaking heritage would forge secure political and economic structures.5 Sri Lanka's economy in the 1950s and 1960s depended largely on exports of tea, rubber, and coconut. In the 1960s the government nationalized banks, utilities, and transportation; in the 1970s it pursued import substitution; nationalization of steel, sugar, cement, petroleum, and other industries; and strong socialist land ownership and pricing policies. In late 1977, however, it launched a liberalization program that has since largely continued market-oriented policies. These have resulted in higher growth rates and, as population rates continued to decline, nearly 4 percent growth per capita, until a rapid decline in the middle to late 1980s6 largely caused by costly ethnic and civil strife.7

Despite protracted civil disturbance, Sri Lanka's GDP grew at a rate of 5.5 percent in 1994 and 1995, down from 6.9 percent in 1993, the highest since economic liberalization. Industry contributes about 26 percent to GDP; garment manufacturing and food processing predominate. Agriculture accounts for 25 percent of GDP, whereas the service sector makes the largest contribution at 50 percent.8

2. ENVIRONMENTAL PROFILE

Industrial and Environmental Development Background

Sri Lanka's economic development after independence in 1948 was characterized by a focus on tea, rubber, coconut, and agricultural promotion in the 1950s and 1960s. Nearly 80 percent of Sri Lanka's land was then and still is owned or managed by government agencies. During the 1970s, Sri Lanka began a massive hydroelectric and irrigation program on the Mahaweli River, which today provides 90 percent of Sri Lanka's electrical energy.9

Sri Lanka's industrial development has fostered industries that are small and medium sized; those averaging $40 million10 a year in gross revenue are considered "large." Approximately 15 percent of the industrial sector is government owned, although Sri Lanka has privatized steadily during the past nearly twenty years. Key industries include rubber processing, tea, desiccated coconut, wood commodities, metal finishing, leather tanning, textiles, garment assembly and washing, gems and jewelry, cement, petroleum refining, chemicals, and tobacco. Industry is heavily concentrated in Greater Colombo (Colombo and Gampaha Districts), which includes more than 40 percent of the country's private sector and more than 60 percent of public sector establishments.11 In 1994 estimated exports were $3.1 billion,12 of which $1.2 billion went to the United States. Other major export markets are Germany, United Kingdom, Japan, the Netherlands, and Belgium.13

Environmental Conditions

Water quality is among the most serious pollution issues in Sri Lanka. Although reliable water quality data are limited, a detailed study of the Kelani Ganga, the country's second largest river and the major source of potable water for Greater Colombo, indicates that major portions are seriously contaminated with oxygen-consuming pollutants and to a lesser extent with heavy metals. The greatest point source is municipal sewage, accounting for approximately three-quarters of BOD514 loadings to the river, whereas industrial effluents from the twenty or more industries that discharge to the river account for most of the remaining point source pollution. The Mahaweli, Sri Lanka's largest river, is primarily affected by urban wastewater and sediment and agricultural residues.15

Use of groundwater, the main source of drinking water for roughly half of Sri Lanka's rural population, is unregulated, resulting in saltwater intrusion due to overpumping in coastal areas and contamination in others.16

Vehicle pollution is a far more serious concern than industrial air pollution.17 A study conducted by the National Buildings Research Organization in the early 1990s indicated that Greater Colombo has "hot spots" of suspended particulate matter and lead that pose health concerns primarily attributed to motor vehicles.18

Environmental Trends

Although it is generally conceded that coastal and inland water pollution, vehicular air pollution, and solid waste conditions have worsened throughout most of Sri Lanka, neither the government nor the research and academic community are carrying out a systematic approach to identify and monitor environmental trends. A comprehensive baseline study of environmental conditions was supported by the U.S. Agency for International Development (USAID) and the Government of Sri Lanka (GOSL) in 1991,19 but that effort has not been updated. Water quality analyses are conducted on selected water bodies, but these studies have not yielded sufficient data to characterize discernible trends in water quality conditions.20 Under the World Bankfunded Metropolitan Environmental Improvement Program (see endnote 76), the GOSL is establishing a continuous monitoring program for air quality in the greater Colombo area.21

3. GOVERNMENT

Sri Lanka's current constitution established a strong president with an appointed prime minister and an elected Parliament. Ethnic problems spurred creation of nine provincial governments, which have taken on increasing responsibilities for environmental management.

Beginning in the early 1980s, Sri Lanka passed several laws designed to integrate environment into its economic development program.22 A coastal zone management program was established that addressed new tourist development as well as coastal erosion issues.23 More far-reaching was the National Environmental Act of 1981, which established (a) the Central Environmental Agency, (b) the requirement for EIAs, and (c) with amendments in 1988, a strengthened EIA process and a new environmental protection licensing system, which affected all development-oriented government agencies. The government has been assisted by strong donor interest in environmental programs and institution strengthening,24 yet efficient government management has been frustrated by a lack of rewards and incentives for action and by the large numbers of ministries, subministries, and agencies whose jurisdictions often overlap.25

Key Ministries for Industrial and Environmental Matters

  • Ministry of Transportation, Environment, and Women's Affairs (M/TEWA). In conjunction with the Ministry of Policy, Planning, and Implementation, M/TEWA is principally responsible for environmental policy. The ministry was established in 1990. Efforts to strengthen the environmental component of this ministry and its predecessor have been undertaken by USAID and a number of other donor agencies with steady, albeit limited, success.
  • The Central Environmental Authority (CEA), placed within M/TEWA, was established by the National Environmental Act in 1980 to be responsible for implementing environmental programs and standards. CEA's effectiveness was hampered by its lack of regulatory authority until 1988 amendments to the National Environmental Act gave it legal authority to issue and enforce the environmental protection licensing scheme as well as oversee EIAs conducted by project-approving agencies. Given its broad duties, CEA lacks sufficient staff and financial resources to meet demands for increased industrial pollution control or engage other agencies in environmental enforcement.26
  • The Ministry of Finance, Planning, Ethnic Affairs, and National Integration is the central economic planning ministry of Sri Lanka. Among its responsibilities, the ministry guides the annual Public Investment Program, which is a mandatory planning document appraising all public investments planned for the next five years.27
  • The National Planning Department is responsible for preparing the Public Investment Program and appraises the economic and financial viability of all projects submitted to the Cabinet for approval. It has established an informal environmental working group to review the environmental impacts of projects as needed. The National Water Council falls under this department and is the focus of an Asian Development Bank project to develop a strengthened legal and institutional framework for water resource management.28
  • The Urban Development Authority (UDA) has wide powers to acquire, develop, and dispose of lands and properties and to exercise stringent controls on urban development activities.29 UDA has established industrial estates in various regions of the country by acquiring land for development and selecting industries via a committee comprised of representatives from the Ministry of Industrial Development, Board of Investment, provincial councils, and the Industrial Development Board.30
  • The Board of Infrastructure Investment, which recently replaced the Secretariat for Infrastructure Development and Investment, has a leading role in infrastructure-financing policies in Sri Lanka and is the counterpart institution for USAID's Promotion of Private Infrastructure Project. In 1993 the secretariat developed guidelines for build-own-operate/build-own-transfer (BOO/BOT) projects to be used by prospective investors and state agencies promoting private financial packages from infrastructure projects.31
  • The Board of Investment (BOI) of Sri Lanka is responsible for promoting, approving, and assisting foreign investment and is empowered to grant a wide range of incentives to projects in selected sectors. Renamed and expanded in 1992, BOI's objectives are to broaden the economic base of the country and generate economic development, in addition to promoting foreign investment. BOI is also responsible for planning and overseeing industrial development in three export promotion zones and three industrial estates, including environmental oversight and EIA compliance. BOI also has environmental jurisdiction over industries it approves for location outside export promotion zones and industrial estates and has authority for issuance of environmental protection licenses to these industries.32
  • The Ministry of Industrial Development (M/ID) has major responsibility for tracking and promoting industrial development, facilitating private sector growth, providing industrial infrastructure, assisting domestic industry in financing investments, and strengthening regional industrial development strategies. M/ID has the lead responsibility for implementing Sri Lanka's new industrial estatesiting program (see section 4) for polluting industries, a key component of its national industrialization policy.33
  • The Industrial Development Board is responsible for promoting and developing small- and medium-sized industries and has established some of the nation's first industrial estates prior to creation of UDA. These estates are equipped with basic facilities such as water supply, roads, drainage, waste disposal, electricity, and telecommunications.34
  • Regional Industry Service Committees (RTSCs) serve as regional extensions of M/ID in planning and promoting industrial expansion at the local level and providing technical assistance to local industries. Efforts are being made to strengthen the committees' ability to develop industrial estates programs effectively in each region. The committees have recently formed committees that include the Industrial Development Board, UDA, and CEA in establishing regional industrial policies, particularly with respect to industrial estates.35
  • The Fiscal Incentives Committee oversees implementation of Sri Lanka's fiscal incentives policies to encourage investment in advanced technologies. These incentives apply to (a) technologies that provide new products and services and process raw materials locally that are currently imported in processed form and/or (b) utilize local resources to produce public utilities and infrastructure services. Of particular interest to the U.S. Asia-Environmental Partnership (US-AEP), the committee provides duty and turnover tax waivers for the import of advanced environmental technologies.36
  • Ministry of Housing, Construction, and Public Utilities. Within this ministry the National Water Supply and Drainage Board is the principal agency for developing urban and rural water supply and urban sewerage schemes. It is responsible for removing water from the Kelani Ganga for supplying the Colombo Metropolitan Area and has lead responsibility for monitoring and maintaining sewerage systems in the cities of Colombo and Kataragama.37

Other Key Institutions

Provincial and local governments. Under CEA's industrial classification scheme, all industries that fall in the "low-polluting" category are regulated by local authorities. This includes both licensing under the environmental protection licensing system as well as carrying out enforcement activities. The North Western Provincial Council, which has jurisdiction over Kurunegala, currently has the most autonomy on environmental matters and enacted a Provincial Environmental Act in 1993.38

The Sri Lanka Standards Institute sets product standards (most of which are not mandatory), which currently number more than 1,200, for manufactured products, agricultural commodities, industrial raw materials, and production processes. Sri Lanka has adopted the ISO (International Organization for Standardization) 9000 series standards (ISO 9000 to 9004) on quality management and assurance and ISO 10011 standards on environmental management systems; no accreditation program is in place, however, and few firms are certified. At the request of CEA, the institute developed national standards, including tolerance limits on industrial and domestic effluent, air emission norms, noise level criteria, and classification of industries. The institute could play a lead role in ISO 14000, but little interest now exists generally in Sri Lanka in establishing an accreditation/certification program.39

Research institutes. Several government research institutions gather environmental data and provide environmental monitoring services. These include the Agrarian Research and Training Institute, the Central and Regional Agricultural Institutes, and the Rubber Research Institute, among other agriculturally focused entities.40

4. POLICIES AND LAWS

Environmental Policies and Laws

A long history of jurisprudence under Dutch, British, and customary law has been enriched since independence, giving Sri Lanka a strong regard for law and its administration by the courts. Sri Lanka's Constitution declares the individual duty to "protect nature and conserve its riches"41; an array of environmental laws has established a strong framework for natural resource and environmental management. The legal framework has, however, required at the central level strong and effective administrative skills and enforcement resources, which have broken down in recent years. Disenchantment with this centralized approach has contributed to liberalization policies. Where resourceswhether water, forest, or otherwiseare under pressure, much emphasis has been placed on policy declarations, plans, and attractive incentives that may foster environmental protection.

Sri Lanka developed a National Environmental Action Plan (NEAP) in 1991, which was revised and strengthened in 1994. Of particular relevance to US-AEP is the NEAP's emphasis on combining national economic development and sound environmental management by building environmental considerations into all levels of policy planning to achieve sustainable economic development. The NEAP focuses on clean industrialization, based not only on the long-run costs of disregarding the environment but also on Sri Lanka's shortage of energy resources and the lack of international competitive advantage in polluting industries.42

Implementation of environmental policies falls to M/TEWA, a relatively weak ministry within the government. CEA's enforcement capabilities and political weight within the bureaucracy are widely recognized by government, business, and nongovernmental organization (NGO) sectors as being deficient.43 CEA relies principally on its own agency's resources to conduct monitoring, even though the agency's technical and laboratory capacity is limited. Industry does not generally monitor itself.44

The National Environmental Act does not address the problem of groundwater use, leaving CEA no power to regulate it. CEA relies on the National Water Supply and Drainage Board for technical expertise on groundwater issues, but CEA does not have the authority to regulate groundwater extraction.

Industrial Policies and Laws

Under the government's economic liberalization program, tariffs have been substantially reduced, although some effective rates of protection still exceed 100 percent (e.g., for paper and metal products). External liberalization in manufacturing has been accompanied by internal deregulation and privatization of a large number of state-owned enterprises, causing a decrease in the share of publicly owned, value-added manufacturing from 60 percent in 1981 to 15 percent in 1991. As mentioned in section 3, BOI administers a series of incentives for new and existing manufacturing companies to invest in advanced technologies.45

The government's policies of encouraging private investment and fostering an industrialization program include increased reliance on BOO/BOT arrangements to finance infrastructure projects. The Board of Infrastructure Investment is responsible for all aspects of BOO/BOT project development in coordination with the key policy and implementing ministries; however, privatization of infrastructure has progressed slowly. Most emphasis is on the power sector, although to date no private power projects exist.46

The various ministries with important roles to play in economic and environmental policies have historically communicated poorly among themselves. In an attempt to rectify this problem, in the early 1990s the GOSL established an Interministerial Environmental Council consisting of permanent ministry secretaries to coordinate environmental policies with other government policies and plans. This council no longer exists, but the GOSL has recently established a council to review major project proposals, including industrial estates and major industrial facility expansions with respect to their economic and environmental viability. The fifteen-member interministerial council includes CEA, BOI, UDA, M/ID, and the Water Supply and Drainage Board.47

In spite of attempts to improve coordination, integration of environmental concerns into industrial policy is currently limited. One promising exception is the GOSL's recent adoption of a policy for siting high-polluting industries on industrial estates (see below).

Public Information Policies and Laws

At present, the only public disclosure requirements in place are for EIAs, which must be made public and available for comment before a project decision pursuant to the National Environmental Act. NGOs have worked effectively with government to ensure that this unusual and highly effective window on government is carefully maintained. Under the new environmental statute pending before the Sri Lanka legislature (see below), public disclosure of environmental information would become a mandatory requirement for government agencies.

Legal and Policy Developments of Particular Relevance to Industrial and Urban Environmental Management

Industrial siting policy. In 1994 the Cabinet adopted a policy requiring that all new industries that are classified as high polluting (as defined by CEA) be located on industrial estates. In addition, all new industries classified by CEA as "high polluting" must be located on industrial estates if they generate large quantities of solid and liquid wastes. M/ID is implementing this policy and recently initiated a program to foster development of industrial estates throughout the country. With the assistance of the USAID mission's Natural Resources and Environmental Policy Project (NAREPP) (see endnote 75), M/ID has assessed a number of candidate sites and is developing industrial estate siting and development policies and practices.48

Industrial pretreatment plans. Under World Bank funding (see section 9), Sri Lanka plans to construct common wastewater treatment facilities under BOO/BOT arrangements for two industrial zones near the metropolitan Colombo areaEkala-Jaela and Moratuwa/Ratmalana. To minimize the uncertainties for private investors, CEA is requiring existing industries in these zones to declare by early 1997 whether they will comply with the agency's effluent standards by installing their own pollution controls or by committing to a pretreatment program and paying for treatment of their effluents by the central facilities.49

Amendments to the National Environmental Act. The Cabinet is currently reviewing a draft bill that would essentially replace the National Environmental Act with sweeping new legislation that would fundamentally change the framework of the Sri Lankan environmental policy regime. Although the prospects for enactment by the legislature are uncertain at this time, the law, if passed, would have major implications for Sri Lanka's approach to environmental management.50

5. URBAN ENVIRONMENT AND INFRASTRUCTURE

Although Sri Lanka's urban areas are not growing as rapidly as in most other countries in the region, cities and municipalities are facing severe environmental problems. Sri Lanka has no effective zoning process; residential areas have tended to develop around industrial sites. In recent years, this development has resulted in a proliferation of public nuisance suits.51 Urban environmental problems are further exacerbated by a critical shortage of environmental infrastructure.

Following is an overview of some of the country's most pressing environmental infrastructure needs:

Water Supply

According to the National Water Supply and Drainage Board, about 53 percent of Sri Lanka's population is served by "safe" drinking water facilities (which includes protected dug wells, tube wells, and treated piped water systems). For urban areas, the figure is 87 percent. In spite of the classification of its water supply as "safe," the Greater Colombo Water Supply System is plagued by the occurrence of bacterial contamination due to inadequate chlorination and inflow of polluted water from the Kalani River.52

Wastewater

Only two cities in Sri LankaColombo and Kalaragamahave sewer systems. The Colombo system serves only about 482,000 people, whereas other residents rely on on-site disposal. It is estimated that about 15 percent of the total population of the Colombo urban area have no sanitation facilities at all.53

Sri Lanka has no municipal wastewater treatment facilities. The only wastewater treatment facilities currently being contemplated are for the town of Kotte, which, in conjunction with UDA, the National Water Supply and Drainage Board, and CEA, is seriously examining development of a municipal wastewater treatment system under a BOO or BOT arrangement.54

Solid Waste

Currently, regular solid waste collection systems exist only in Greater Colombo, that is, in DehiwalaMt. Lavinia, Moratuwa, and Kotte. In the Colombo Metropolitan Area, about 70 percent of the total municipal solid waste is systematically collected; solid wastes are typically dumped at a large number of unprotected sites. Under the World Bank's Colombo Environmental Improvement Project, this situation should be dramatically improved with construction of a sanitary landfill in Welisara to service the Colombo Metropolitan Area.55

Hazardous Waste

The GOSL does not currently have an enforceable framework for classifying solid waste as hazardous or for regulating hazardous waste management; hence, no infrastructure exists for managing hazardous waste.

6. PRIVATE SECTOR AND ACADEMIA

Industry

With the high cost of capital (currently in the mid-20 percent range), Sri Lankan industries are having a difficult time obtaining financing for new investment. This issue, combined with the fact that investment in environmental equipment is generally viewed as nonproductive, has resulted in a low level of environmental expenditures. In general, industries in Sri Lanka view environmental concerns as imposed by CEA; the notion that good environmental management is important to competitiveness has not been widely accepted.56 Environmental considerations are usually made in a reactive mode, for example, in response to an enforcement action, and typically involve adding end-of-pipe "quick fixes" that do not consider the potential for clean production.57

Given this situation, industry has little interest in ISO 14000; a recent survey found that less than 15 percent of the industries surveyed had even heard of ISO 14000.58 The two largest business organizations in Sri Lanka, however, described below, have recently become seriously engaged in environmental matters.

  • Federation of Chambers of Commerce and Industry of Sri Lanka. The federation and (see below) Ceylon Chamber of Commerce have the greatest breadth of contact with Sri Lankan industries. Since 1995 the federation has worked closely with CEA and M/ID to heighten industry awareness of environmental concerns and of industries' obligations under Sri Lanka's laws and standards, including workshops and training programs.59
  • Ceylon Chamber of Commerce. With the assistance of USAID's NAREPP project, the chamber has established an environmental unit that will act as an information clearinghouse on environmental issues for the private sector. Events during its first year of operation have included a workshop for local environmental consultants, an industry survey of environmental concerns, and formation of an environmental task force (including industry, NGOs, and CEA). The chamber's environmental activities are focused on representing private sector interests in national environmental policy and on providing guidance to industry on environmental regulations, environmental business opportunities, and clean technologies.60

Other private sector environmental initiatives in Sri Lanka include the following:

  • ITMIN is a new private sector venture, launched in December 1994 to serve as an information broker on innovative technologies. Startup funds have been provided by the United Nations Development Programme but with the express objective of leveraging these funds to establish a self-supporting venture. ITMIN currently has a mix of government and private shareholders, including the Ceylon Institute of Scientific and Industrial Research. ITMIN manages CleaNet, an initiative funded by the World Bank to provide an online clearinghouse of specialized information on environmental technologies, including assistance available locally and internationally. It has recently become operational and provides information on environmental technologies developed and used in Asia.61
  • Environmental engineering and consulting. The number of environmental firms serving industrial needs is small. CEA maintains a list of environmental companies but does not evaluate these firms on the basis of performance. These firms are typically small and not aligned with major, internationally recognized environmental engineering firms. The only in-country presence of the large firms is through project offices under donor assistance programs.62

Academic and Research Institutions

Given the limited capacity of environmental companies, academic and research institutions do much of the environmental monitoring and pollution control technology evaluation for Sri Lankan industry.

The Ceylon Institute of Scientific and Industrial Research is a quasi-governmental research organization, partially financed by government funding and revenues generated from consulting. The institute's board of directors is appointed by the minister of science and technology. The institute plays a leading role in the United Nations Industrial Development Organisation's industrial waste minimization program and is accredited to certify laboratories under ISO standards.

Many university departments target environmental research on specific issues and offer master of science courses in environmental subjects, including the University of Colombo (environmental sciences), PGIA/University of Peradeniya (environmental economics and natural resource management programs), University of Kelaniya (environmental chemistry and resource management), University of Sri Jayawardenepura (forestry), and University of Moratuwa (environmental engineering, environmental planning, and town and country planning).

Universities also play major roles in private sector consulting, particularly in monitoring, assessment of treatment technologies, and provision of turnkey packages, in partnership with private engineering companies for wastewater treatment facilities.63 Moratuwa, for example, conducts extensive consulting services to private companies, particularly in designing wastewater treatment facilities and conducting effluent and ambient water quality monitoring.64

Center for Environmental Studies. Founded in 1992 at Peradeniya University, the center promotes programs in environmental education, research, and consultancy. The center also conducts regular training workshops on EIAs for state, private sector, and NGO officials and has just announced a year-long postgraduate course on EIA beginning August 1996. The course will cover concepts and definitions, evolution of environmental policy, EIA process in Sri Lanka, ecological foundations, socioeconomic dimensions, techniques in environmental assessment, project planning, and case studies.65

The National Building Research Organization, part of UDA, is a research and development entity concerned with the built (housing and construction) environment. The Environmental Division carries out industrial pollution surveys and monitoring as well as monitoring the quality of air and surface and drinking water. Industrial estate sitings and solid waste disposal surveys and planning recommendations are also provided by the division.66

Financial and Insurance Institutions

Commercial banks. Sri Lanka's banking sector suffers from a lack of competition and financial innovation. Although more than twenty commercial banks exist, competitive forces are weakened by the two state-owned commercial banks, which control about 60 percent of the sector's assets. In addition, the foreign banking sector has declined in importance since its years of rapid expansion in 197982.67

Development finance institutes. The two private development finance institutes are the National Development Bank and the Development Finance Company of Ceylon. The latter has an environmental unit with two environmental engineers, who are responsible for reviewing the environmental impacts of every project applying for loans. Although environmental aspects of proposed projects is a major concern, the Development Finance Company of Ceylon does not actively promote clean technologies or "innovative technologies," opting instead for conventional technologies, which are viewed as having lower risks.68

The Pollution Control and Abatement Fund provides assistance to industries to encourage investment in pollution technologies. Funds are available through the National Development Bank, Development Finance Company of Ceylon, Sampath Bank, Hatton National Bank, and Commercial Bank for matching grants for pollution prevention audits and investment loans for implementation of audit findings. The loan program has not been used extensively by industry, primarily because it is not very concessional.69

7. ENVIRONMENTAL AWARENESS AND PUBLIC INVOLVEMENT

General Public Awareness of Environmental Issues

The general public is keenly aware of environmental issues. In 1993 Survey Research Lanka conducted an environmental awareness survey for USAID's NAREPP project. It showed that, nationwide, environmental problems ranked fifth among economic and social problems, but first among local community problems for both urban and rural adults.70

Citizen groups have been active in recent years in taking industries to court. In fact, more companies have been shut down by citizen suits than by CEA enforcement actions.71

Nongovernmental Organizations

Sri Lanka has a large number of NGOs that are active in the environment on the national and local levels. The following represent some of the key, nationally focused NGOs:

  • EMACE Foundation. This environmental NGO uses a community-based approach in its work with industry, schools, Colombo slums, and village groups. EMACE provides waste treatment training, consultancy contacts, and information on cost-saving waste/pollution minimization techniques.
  • The Environment Foundation's primary focus areas are environmental law, legal advocacy, natural resource rights, research, and an environmental law education program for magistrates and others. Foundation lawyers and scientists have worked on environmental cases in areas such as EIAs for proposed development, public trust, river gem mining, highway expansion through wetlands, and stone quarry blast damage.72
  • The March for Conservation promotes nature conservation education and public awareness, prepares environmental education materials, conducts research and teacher training, and is staffed mainly by scientists.73
  • The Sri Lanka Environmental Journalists Forum specializes in communications aspects of environmental issues and provides environmental awareness through the mass media.74
  • The Asia Foundation. Although not an indigenous organization, since 1991, the foundation has worked under a cooperative agreement with USAID's NAREPP program to assist NGOs in raising public awareness of environmental issues. The foundation has assisted dozens of environmental NGOs through grants designed to strengthen the overall programs of NGOs or target specific projects.75

8. U.S. GOVERNMENT ACTIVITIES

U.S. assistance has totaled over $1.3 billion since Sri Lanka's independence in 1948. In 1994 the United States delivered about $55 million in aid, including $25 million for free wheat, $18 million in low-interest loans for additional wheat, and about $12 million in other direct assistance activities. The United States is the second largest bilateral donor behind Japan and the fifth largest donor overall.76

USAID projects of particular relevance to US-AEP include NAREPP, the Shared Control of Resources Project, Agro-Enterprise Project, Technology Initiative for the Private Sector, and Promotion of Private Infrastructure.77

US-AEP Activities in Sri Lanka

US-AEP has supported 61 environmental exchanges, has processed 31 trade leads, and has sponsored 2 technology grants through the National Association of State Development Agencies. With the U.S. Environmental Protection Agency, US-AEP has supported one environmental action team.

9. OTHER BILATERAL AND MULTILATERAL ORGANIZATION ACTIVITIES

Sri Lanka depends greatly on foreign assistance and has received approximately $500 million per year from donors since 1990. The Asian Development Bank and World Bank are the largest major sources of project lending. In addition, the U.N. Industrial Development Organisation (UNIDO) supports an industrial pollution reduction program. Information on relevant projects of these three organizations is provided in the endnotes.83

The following are major multilateral-supported projects of particular relevance to industrial and urban environmental management:

World Bank

Environmental Action 1 Plan 19962001 (EA1P). This represents the 199598 implementation phase of the NEAP. Priorities of the project are to (a) strengthen the institutional framework, (b) address policy reform needs, (c) support operations of an urgent nature (investment subprojects), and (d) support studies that are potentially relevant for understanding the implications of economic policy for resource management. Under the EA1P program, M/TEWA plans to strengthen its environmental protection licensing scheme and rationalize the current set of effluent standards by making them more industry-specific, more directly relevant to Sri Lankan industry, and based on loadings rather than the current concentration-based standards. Greater use of contracting services (e.g., for conducting facility inspections) is also under consideration (information collected during US-AEP country visit by John W. Butler and John J. Mapes [June 1721, 1996]; Sri Lanka [1994c])84.

Metropolitan Environmental Improvement Programme (MEIP). Supported in conjunction with the U.N. Development Programme, the project began in 1990. MEIP in Colombo was designed with the primary objective of first creating the strategic (policy and institutional) framework that could then be followed by investment actions for physical remedial measures for environmental cleanup of the greater Colombo area.85 One of the major products of the program is completion of a comprehensive inventory of hazardous wastes generated by industries along the western corridor of the country, including an assessment of hazardous and biohazardous wastes and waste oils for nearly 90 percent of Sri Lankan industries. With the MEIP project for Colombo nearly completed and with startup of CEIP (see below), the World Bank is negotiating with the GOSL for urban environmental assistance in the cities of Galle and Kandy. These projects are envisioned to address municipal wastewater and solid waste as well as community-based environmental management (information collected during US-AEP country visit by John W. Butler and John J. Mapes [June 1721, 1996]; Norconsult and Engineering Consultants [1994]).

Colombo Environmental Improvement Project (CEIP). Based on work completed under MEIP, CEIP will include the following components: clean settlements, construction of a 1,000-ton-per-day sanitary landfill to service the Greater Metro Colombo region; hospital waste management, including a treatment/disposal facility; strengthening the institutional capacity of solid waste authorities in and around Colombo; central wastewater treatment facilities for two existing industrial zones (Ekala-Jaela and Ratmalana); financing under BOO/BOT arrangements; and implementation of the Beira Lake cleanup program, including sewer connections for sources now discharging into the lake (information collected during US-AEP country visit by John W. Butler and John J. Mapes, June 1721, 1996).

Private Finance Development Project. The $4 million Pollution Control Abatement Fund was created through this project to provide low-interest loans to existing industries to finance investments in waste minimization and end-of-pipe treatment. The project is also responsible for the development of CleaNet via its Pollution Control Abatement Fund component (Patchamuthu and Walton N.d.)86.

Private Sector Infrastructure Development Project. The main objective of the project is to create the Private Sector Infrastructure Development Company to facilitate private sector implementation of commercially viable, high-priority infrastructure projects by improving access to a source of long-term financing. The company would be public with the GOSL as the major shareholder (World Bank 1996).87

Asian Development Bank

Sri Lankan Urban Development Project. This project's objectives are to implement infrastructure development programs in several medium- to small-sized urban areas; strengthen urban sector policies, including those related to creation of urban growth centers; and provide on-the-job training to counterpart staff (UDA/MPPI) and community-based organization representatives. The infrastructure component is related mainly to environmental improvements such as water supply, sanitation, drainage, and solid waste management (Norconsult and Engineering Consultants 1994).88

10. OPPORTUNITIES TO SUPPORT A CLEAN REVOLUTION

Policy Framework

Environmental law. The major amendments to the National Environmental Act currently under consideration by the GOSL will, if enacted, provide CEA with significant new authority as well as substantial demands. If the amendments are passed, CEA as well as other agencies will need assistance in implementing a wide range of policy mandates in the act as well as developing air and water quality implementation plans at the national and provincial levels.

Public information. Although public reporting of environmental information is currently limited, the government has gained a fair amount of experience in dealing with the public through the EIA process. Enactment of the amendments mentioned above would dramatically expand the government's responsibilities to conduct public disclosure programs and provides an opportunity for donor assistance in improving the quality and management of information on environmental conditions and industrial environmental performance.

Incentives for investment in clean technologies. BOI criteria for providing financial incentives for technology investments do not currently address environmental considerations; however, the board is currently considering a policy revision that would require investors to report on the amount of their proposed investment dedicated to pollution abatement equipment. In addition, BOI staff have expressed an interest in learning more about additional incentives that could be provided for investments in clean technology.

Professional society. An environmental professional association, providing a forum for public, private sector, and NGO professionals to exchange their experiences and technical information, is both critically needed and in strong demand in Sri Lanka. Support by U.S. environmental professional societies and associations in establishing counterpart organizations in Sri Lanka would make a substantial contribution to strengthening the country's environmental regime.

Industrial Environmental Management

Industry outreach. The environmental initiatives of the Ceylon Chamber of Commerce and the Federation of Chambers of Commerce and Industry of Sri Lanka provide important forums for reaching a large segment of Sri Lankan industry and engaging industry leaders in an expanded dialogue on environmental issues, such as the importance of ISO 14000 and environmental concerns in the global marketplace. This could include, for example, exchanges between staff in environmental units in the Sri Lankan chambers and in U.S. counterpart organizations.

Technology transfer. The environmental information data bases and clearinghouses managed by ITMIN, including CleaNet, may be important vehicles in providing information to Sri Lankan industries on environmental technologies and clean production processes.

Environmental Infrastructure

Privatization. Privatization of environmental infrastructure is at a rudimentary stage in Sri Lanka and to date has been largely limited to a handful of projects, such as wastewater treatment facilities for the two industrial estates discussed above. Provision of a significant amount of privately financed infrastructure to meet Sri Lanka's pressing urban environmental needs is not likely to occur in the near future. The central and provincial governments and municipalities have a major need for training and technical assistance in implementing successful privatization projects.

Industrial estates. Sri Lanka's policy of requiring high-polluting industries to locate in industrial estates managed by M/ID provides a potentially important venue for donors to work with M/ID in the areas of policy and technology transfer. Policy issues include industrial wastewater pretreatment policies, solid and hazardous waste management policies, and charge schemes that incorporate the "polluter pays" principle.

REFERENCES

The Asia Foundation. 1994. 1994 Asia Foundation Annual Report. San Francisco, Calif.

Baldwin, Malcolm, ed. 1991. Natural Resources of Sri Lanka: Conditions and Trends. Colombo: Sri Lanka; Natural Resources, Energy, and Science Authority.

Ceylon Chamber of Commerce. 1996. Environmental Survey. Colombo.

Environmental Business International. 1996. Sri Lanka: Environmental Market Summary. Report prepared for US-AEP (March).

International Institute for Environment and Development (IIED). 1992. Environmental Synopsis of Sri Lanka. Prepared for the British Overseas Development Administration.

Norconsult and Engineering Consultants, Ltd. 1994. Sri Lanka Environmental Action 1 Project. Revised draft of project preparation document. Prepared for the Government of Sri Lanka and World Bank.

Patchamuthu, Illangovan and Thomas E. Walton. N.d. Preparing and Implementing an Urban Environmental Management Strategy and Action Plan for Colombo, Sri Lanka. Washington, D.C.: World Bank.

Premadasa, Hema. 1992. "Women, Environment, and Development: The Sri Lankan Experience." Presented at the Earth Summit, Rio De Janeiro, Brazil, June 314, 1992.

Review Publishing Ltd. 1995. Asia 1995 Yearbook. Hong Kong.

de Silva, Lalanath. 1993. Economic Development Projects: An Analysis of Legal Processes and Institutional Responses. Colombo: U.S. Agency for International Development, NAREPP (April).

Sri Lanka. 1980. National Environmental Act. No. 47.

. 1988. National Environmental Act. No. 56.

. 1991. National Environmental Action Plan 19921996. Ministry of Environment and Parliamentary Affairs. Colombo.

. 1993. Public-Private Partnership in Infrastructure Development: Guidelines for BOO/BOT Projects. Ministry of Policy Planning and Implementation, Secretariat for Infrastructure Development and Investment. Colombo.

. 1994a. Environmental Management Strategy for Colombo Urban Area. Urban Development Authority. Colombo.

. 1994b. "Resource Document." Environmental Management Strategy for Colombo Urban Area, Volume III. Urban Development Authority. Colombo.

. 1994c. National Environmental Action Plan 199598. Revised draft. Ministry of Environment and Parliamentary Affairs. Colombo.

. 1995. Policy Reform Agenda for Environmentally Sound Development: Time-Bound Action Plan of Initial Policy Steps. Institute of Policy Studies for Ministry of Environment, Transportation, and Women's Affairs. Colombo.

. 1996. "Board of Investment of Sri Lanka." Embassy of Sri Lanka Online (Internet: http://wheat.symgrp.com/symgrp/srilanka/boilogo.html).

. N.d. National Environmental Protection Act. Draft provided to US-AEP country assessment team by the Ministry of Transportation, Environment, and Women's Affairs on June 17, 1996.

Survey Research Lanka, Ltd. 1993. Environmental Awareness Survey. Prepared for U.S. Agency for International Development, NAREPP. Colombo.

U.S. Agency for International Development (USAID). 1995a. Draft Sri Lanka Industrial Estates Siting Study. Vol. I. Main Report. Natural Resources and Environmental Policy Project. Colombo.

. 1995b. USAID/Sri Lanka Budget Planning Document FY 1997. Colombo.

. 1995c. USAID/Sri Lanka Country Program Strategy FY 1996FY 2000. Colombo.

. N.d. Making Environmental Compliance Easy: Financial and Technical Assistance Available to the Private Sector. Factsheets 1, 2, & 3. Colombo: Natural Resources and Environmental Policy Project, Ceylon Chamber of Commerce, and Central Environment Authority, Ministry of Environment.

U.S. Department of State. 1995a. "Sri Lanka Background Note." Background Note Series (Internet: gopher://dosfan.lib.uic.edu:70/OF-1%3A22656%3ASri%20Lanka%202/95).

. 1995b. Sri Lanka Country Commercial Guide. Washington, D.C.: Office of the Coordinator for Business Affairs (gopher://dosfan.lib.uic.edu:70/OF-1%3A8210%3ASri%20Lanka%20Country).

World Bank. 1995a. Sri Lanka Private Sector Review. No. 12514-CE. Washington, D.C.

. 1995b. Staff Appraisal Report, Sri Lanka, Colombo Environmental Improvement Project. No. 12878-CE. Infrastructure and Operations Division. Washington, D.C. (June 2).

. 1996. Private Sector Infrastructure Development Project. Project identification document. Washington, D.C.

World Trade Organization (WTO). 1995. "Sri Lanka Continues Reforms, But Needs Support From Its Main Trading Partners," Trade Policy Reviews (November 3) (Internet: http://www.unicc.org/ wto/Trade_Reviews/sri1.html).

ENDNOTES

1. Civil unrest has prevented any census since 1981.

2. These projections are based on assumptions constructed in 1988 and based on assumptions concerning fertility, mortality, and migration. See Baldwin (1991, 24).

3. Premadasa (1992).

4. Baldwin (1991, 29).

5. Sri Lanka's population is roughly 75 percent Sinhala, largely Buddhist; 12 percent Tamil, Hindu, and Christian; and the remainder descended from the Moors, being Moslem. Approximately 5 percent of the population is Christian. In 1956 the government declared that Sinhala was the official language.

6. Baldwin (1991, 56).

7. Military expenditures by the government and effects of civil disturbances on tourism and new investment have been a continuing drain on the economy. The insurrection led by the Tamil Tigers in the north and east of Sri Lanka, which began in 1983, has continued, although the city of Jaffna was taken by government forces in 1996. The insurrection in the south in 1988 by an extremist element of the Sinhala population opposed to the government-invited Indian army occupation of the north ended by 1990.

8. Environmental Business International (1996).

9. Baldwin (1991, 7475). Electricity provides 40 percent of commercial energy in Sri Lanka, but because Sri Lanka lacks any fossil fuel resources, biomass provides 70 percent of the country's total household and commercial energy supply.

10 Unless otherwise indicated, all dollar amounts are U.S. dollars.

11. From information collected during US-AEP country visit by John W. Butler and John J. Mapes (June 1721, 1996); IIED (1992).

12. Leading industrial exports in 1993 were:

Textiles and garments $1.41 billion

Tea $413 million

Petroleum products $79 million

Gems $76 million

Rubber $64 million

Coconuts $58 million

(Review Publishing 1995).

13. U.S. Department of State (1995a).

14 The amount of dissolved oxygen needed or consumed in five days by biological processes that break down the organic matter in an effluent.

15. Baldwin (1991, 16667).

16. Groundwater studies performed in the northern and northwestern coastal areas have found nitrate and bacterial contamination (Baldwin 1991, 169).

17. Problems are highly local, such as areas near cement plants. See IIED (1992, 89).

18. Sulfur oxides in the Colombo area are also attributed to motor vehicles, due to the presence of sulfur in diesel fuels (information collected during US-AEP country visit by John W. Butler and John J. Mapes [June 1721, 1996]).

19. See Baldwin (1991). This document, to which more than a dozen Sri Lankan experts contributed, was Sri Lanka's first comprehensive natural resource conditions and trends report.

20. Examples are the ongoing water quality study by the University of Moratuwa under the sponsorship of the Central Environment Authority and water quality monitoring along the reach of the Mahaweli River basin under the jurisdiction of the Mahaweli Water Authority (information collected during US-AEP country visit by John W. Butler and John J. Mapes [June 1721, 1996]).

21. Under this program, called "Clean Air 2000," a network to monitor suspended particulate matter, SOx, NOx, and lead will be established (information collected during US-AEP country visit by John W. Butler and John J. Mapes [June 1721, 1996]).

22. The Coast Conservation Act of 1981, the National Aquatic Resources Act of 1981, the National Heritage and Wilderness Act of 1987, and the National Environmental Act of 1980, as amended in 1988 (Baldwin 1991, 7).

23. Baldwin (1991, 238).

24. Donor support for government, including but not limited to environmental assistance, has been substantial in Sri Lanka, growing to nearly half of its gross domestic investment by 1990 (Baldwin 1991, 61).

25. Baldwin (1991, 8).

26. IIED (1992); Sri Lanka (1980 and 1994c).

27. The GOSL's economic and fiscal policies and investments in the public sector are documented in the annual Public Investment Program (PIP). Public resources are allocated by providing an estimate of total public investment over a five-year period beginning with the year of publication. The first year generally reflects actual budgetary allocations approved by Parliament or the Core Investment Plan (CIP). New projects are included in the PIP after review by the National Planning Department, but even priority projects may be dropped in subsequent years if the funds are not available. The PIP attempts to take into account existing environmental concerns. Some attention is given to sectoral environmental concerns, but this is restricted to general references to the National Environmental Action Plan (NEAP) and pollution concerns.

The 1995 PIP shows that 10 percent of the investment addresses NEAP concerns, whereas the 1996 PIP has a 12 percent level. The CIP provides for rates of investment of 12 percent and 15 percent respectively. The urban and industrial sector of the NEAP has the largest amount of the PIP/CIP's NEAP investment with the 1995 CIP allocation of 8.1 percent and the 1996 level of 11.4 percent. The PIP levels of investment for the same years are 5.7 percent and 8.5 percent respectively. It should be noted that approximately 85 percent of these investments address urban infrastructure deficiencies, such as water supply and sanitation and canal rehabilitation for Greater Colombo (information in text and this endnote is abstracted from Sri Lanka [1994c] and Norconsult Engineering Consultants [1994]).

28. The National Planning Department acts as the secretariat to the GOSL's Committee of Secretaries, which is an administrative arrangement that unites the secretaries of all the ministries on a regular basis to determine which government projects are ready to present to the Cabinet for approval and to coordinate government proposals and functions. The National Planning Department provides economic and conformity analyses of financial feasibility and government policy and strategy for projects that the committee discusses (information in text and this endnote abstracted during US-AEP country visit by John W. Butler and John J. Mapes [June 1721, 1996] and from de Silva [1993, 19]).

29. UDA has jurisdiction over 11 municipal councils, 35 urban councils, 46 local authorities, the Tricomalee district in Eastern Sri Lanka, and local authorities within a 1-kilometer-wide belt along the coast.

30. The functions of UDA include (a) carrying out integrated planning and physical development within and among the designated development areas, (b) formulating and implementing an urban land use policy, (c) developing environmental standards and preparing schemes for environmental improvements in the development areas, (d) formulating and executing housing schemes, and (e) clearing slum and shanty areas and undertaking the development of such areas (information in text and this endnote abstracted from World Bank 1995b).

31. USAID (1995c); Sri Lanka (1993).

32. Raw materials and essential plant, machinery, and equipment can be imported into export promotion zones duty free, provided that the resulting products are exported. BOI controls all infrastructural and environmental aspects within these areas. BOI's duties include management and operation of pollution control systems and control of the regulations imposed on industries regarding disposal of their wastes. Individual industries that locate in BOI export promotion zones do not have to conduct an EIA for the proposed activity, provided it is consistent with development assumptions used in developing the EIA prepared for the zone. BOI also plays a role in planning and managing industrial development in the entire country and in siting new industries.

BOI law dictates incentives that vary according to sector categories but may include profit/dividend tax exemptions; exemption from import duty, turnover tax, and excise duty; tax holidays and exemption from capital gains taxes resulting from a transfer of shares; exemption from the exchange control act; and so on. BOI categorizes investments as follows:

  • Manufacturing projects using higher technology
  • Service projects using higher technology
  • Investments in large-scale development projects, including infrastructure
  • Small-scale infrastructure projects
  • Tourism, recreation, and leisure projects
  • Agricultural sector products
  • Dairy and livestock development projects
  • Institutions providing training facilities
  • Projects not satisfying export orientation and/or investment criteria using higher technology (these are referred to M/ID's Fiscal Incentive Committee to obtain applicable incentives).

(Information in text and this endnote abstracted during US-AEP country visit by John W. Butler and John J. Mapes [June 1721, 1996]; USAID 1995b; Sri Lanka 1996.)

33. From information collected during US-AEP country visit by John W. Butler and John J. Mapes (June 1721, 1996); USAID 1995a.

34. USAID (1995a).

35. From information collected during US-AEP country visit by John W. Butler and John J. Mapes (June 1721, 1996); USAID (1995a).

36. Concessions include five-year tax holidays, exemptions of dividends paid out of tax-exempt profits, and import duty and turnover tax waivers depending on eligibility. Advanced environmental technology is defined as that which introduces a new design, formula, or process in the manufacture of an article or in provision of a service resulting in one or more of the following: higher productivity resulting from lower cost production, quality improvement, efficient utilization of raw materials, upgraded technical skills, and environmental pollution/waste minimization (text and this endnote abstracted from USAID [N.d.]).

37. It administers 216 water supply systems nationwide, serving about 4.8 million people. Operational management is decentralized to five regional offices, which monitor district offices. Although the board does not regulate groundwater use, it does provide technical advice to CEA on groundwater issues (information collected during US-AEP country visit by John W. Butler and John J. Mapes [June 1721, 1996]; World Bank 1995b).

38. From information collected during US-AEP country visit by John W. Butler and John J. Mapes, June 1721, 1996.

39. U.S. Department of State (1995b).

40. Sri Lanka (1994c).

41. Article 28 of the Constitution (Baldwin 1991, 7).

42. The 199296 National Environmental Action Plan (NEAP) was Sri Lanka's first comprehensive, time-phased environmental planning document and one of the first of its kind in the world. The 199296 NEAP included both corrective and preventive measures for the following sectors: land, water, mineral, and coastal resources; forestry; biodiversity and wildlife; urban pollution; industrial pollution; energy; environmental education; culture; and institutional capacity. Principal environmental issues were identified for each sector, followed by tables describing the background, recommended actions, implementing priorities, cost, and implementing agencies for each sector issue (Sri Lanka 1991).

The 199598 NEAP further distilled the original sectors into program areas: land and water resources; forests and biodiversity; urban and industrial pollution; coastal and marine resources; energy and mineral resources; economic-environmental linkages; and policy, institutions, education, and culture. Recognizing that everything cannot be accomplished within this four-year period, the 199598 NEAP confines itself to focusing on environmental policy and institutions development, sustainable agriculture, improved water management, and pollution prevention and control for new industries. With respect to industrial and urban pollution and wastewater management, the NEAP addresses several issues and actions to be taken during the 199598 period (Sri Lanka 1994b):

  • Inefficient solid waste management in the Colombo Metropolitan Area. Introduce self-employment schemes and cooperatives for primary collection. Introduce private sector operation of sanitary landfills, fostering BOO/BOT. Introduce private sector operations for clinical waste and composting. Formulate a long-term solid waste management strategy for the metropolitan area.
  • Lack of wastewater management in the two major urban areas (Ratmalana/Moratuwa and Ekala/Jaela). Adopt a "polluter pays" policy. Provide education on chemical recovery recycling, environmentally friendly processes and inputs, and good housekeeping to reduce quantity of water needing treatment, which will reduce the cost of production. Specify in-house pretreatment standards for facilities at the factory level. Construct a wastewater network. Set up central treatment plants through BOO/BOT. Enforce specified discharge standards. Provide a domestic sewage disposal system in each area.
  • Lack of pollution control in the Beira Lake catchment area. Adopt policy that beneficiaries of services "must pay." Stop discharge of sewage and effluents into Beira Lake. Intercept illegal sewer connections and link them to the Colombo sewer network. Mobilize private sector investment for Beira Lake resource development. Strengthen the enforcement capacity of CEA. Regulate manufacturing and other activities on the shoreline.
  • Improvements needed in the physical, social, and economic conditions of nearly 18,000 families, involving 185,000 people in settlements in Colombo Metropolitan Area. Integrate social, economic, and physical components for community mobilization and capacity building. Provide infrastructure services and organize community-based organizations and user groups to manage and maintain infrastructure and community facilities. Offer land title to qualified applicants. Provide facilities, loans, and so on for self-employment, small businesses, and income generation. Provide logistical support to implementing agencies.
  • Industries discharging sewage and other noxious substances to the environment, in particular, water bodies. Establish additional industrial estates with self-contained waste processing and disposal facilities. Provide incentive to investors to locate their manufacturing industries on these estates. Monitor and control all industrial activities that result in the disposal of waste substances.

Note: 85 percent of these activities are being addressed via the World Bank's Colombo Environmental Improvement Project and Metropolitan Environmental Improvement Project. (Sri Lanka 1995).

43. The National Environmental Act mandated the development of standards, studies, and educational programs and local-level environmental programs through the appointment of district environmental agencies by CEA. District-level administration has been discarded since then, however, in favor of provincial governments; this potentially effective local tool has not been replaced. CEA's effluent standards were also largely drawn from World Health Organization guidelines and not tailored to Sri Lankan industries.

With the 1988 amendments, the environmental protection licensing and EIA systems are CEA's principal mechanisms for monitoring and enforcing compliance with environmental standards. The 1988 amendment introduced new air, water, and land pollution standards. The Sri Lanka Standards Institute is charged with setting pollution standards. Industries, both public and private, must obtain an environmental protection license from CEA indicating conformity to pollution standards.

The 1988 amendment also nominated fifteen project-approving agencies, a combination of ministries and agencies with environmental units that must obtain EIAs from any developer (public and private). EIAs must be made available to the public for review and comment.

With respect to the two major implementation tools at CEA's disposal:

  • Environmental protection licensing. Introduced in 1990, environmental protection licensing is required for existing industries and includes conditions requiring that industries control their effluent to an agreed level within a specified period. Industries are essentially granted permits to discharge any type of liquid, solid, or gaseous waste into the environment according to standards established by CEA for each industry. Industries are also classified as low, medium, and high polluting, taking into consideration the manufacturing process, raw materials used, and pollution characteristics. CEA delegated to local authorities the issuance of environmental protection licensing to low-polluting industries in January 1994 to relieve some of the regulatory burden. The banking system is also allowed to provide a preliminary pollution classification for all potential investors (Sri Lanka 1991 and 1994c).
  • Environmental impact assessments. In 1993 EIAs became a statutory requirement for all proposed, potentially polluting industrial ventures and is enforced by CEA. Under the regulation, an initial environmental examination or EIA report will have to be submitted to one or more of the fifteen appropriate project-approving agencies as a condition of project clearance. All industrial estates exceeding 10 hectares are required to undergo an EIA (Sri Lanka 1991).

44. From information collected during country visit by John W. Butler and John J. Mapes, June 1721, 1996.

45. Sri Lanka (1996); WTO (1995).

46. From information collected during US-AEP country visit by John W. Butler and John J. Mapes, June 1721, 1996.

47. From information collected during US-AEP country visit by John W. Butler and John J. Mapes, June 1721, 1996.

48. From information collected during country visit by John W. Butler and John J. Mapes [June 1721, 1996]).

49. From information collected during US-AEP country visit by John W. Butler and John J. Mapes, June 1721, 1996.

50. Among other things, the draft bill (Sri Lanka N.d.):

  • Charges M/TEWA with assessing environmental trends and preparing annual state of the environment reports
  • Establishes an interministerial National Coordinating Committee on Sustainable Development
  • Requires CEA to establish national ambient air quality standards and a national action plan to achieve the standards and requires provincial councils to prepare implementation plans
  • Requires CEA to prepare a national action plan for maintenance of water quality and requires provincial councils to prepare implementation plans
  • Requires CEA to establish ambient noise standards
  • Requires CEA to establish a hazardous waste regulatory program
  • Strengthens the Environmental Protection License and Environmental Impact Assessment systems, providing CEA with stronger enforcement authority
  • Establishes a public right to access to environmental information.

51. From information collected during US-AEP country visit by John W. Butler and John J. Mapes, June 1721, 1996.

52. Information supplied by National Water Supply and Drainage Board during US-AEP country visit. Also, see Sri Lanka (1994a, 2).

53. Sri Lanka (1994a, 21).

54. From information collected during US-AEP country visit by John W. Butler and John J. Mapes, June 1721, 1996.

55. Sri Lanka (1994a, 1819).

56. One industry association director expressed his view to the US-AEP assessment team that because the government is making industry install pollution control, the government should pay for it (information from US AEP country visit by John W. Butler and John J. Mapes, June 1721, 1996.)

57. From information collected during US-AEP country visit by John W. Butler and John J. Mapes, June 1721, 1996.

58. From information collected during US-AEP country visit by John W. Butler and John J. Mapes, June 1721, 1996.

59. From information collected during US-AEP country visit by John W. Butler and John J. Mapes, June 1721, 1996.

60. From information collected during US-AEP country visit by John W. Butler and John J. Mapes [June 1721, 1996] and from USAID [1995b]. Highlights of preliminary results of the Ceylon Chamber of Commerce's (1996) industry survey are provided below:

  • The majority of respondents were not aware of or had difficulty understanding laws and regulations with which they must comply.
  • Most respondents who understand laws and regulations find it difficult to comply and to obtain assistance from relevant agencies to do so.
  • Access to appropriate technology and funds to resolve environmental problems were cited as major barriers.
  • Slightly more than half of the respondents are familiar or have personal experience with EIAs, environmental protection licensing, CEA, waste treatment technologies, and waste minimization, whereas a minority were familiar with the Draft Environmental Protection Act and ISO 14000.

61. The purpose of CleaNet is to provide a full-service center for assistance to private sector industrial units. Assistance to clients will include identifying the most cost-effective option for meeting environmental regulations and improving production efficiency through the following services: clearinghouse and information brokering, networking and training, facilitating pollution prevention through audits, and eventually promoting waste exchange among industrial units (information in text and this endnote abstracted from information collected during US-AEP country visit by John W. Butler and John J. Mapes [June 1721, 1996] and USAID [N.d.]).

62. A recent publication prepared by the GOSL and Ceylon Chamber of Commerce lists twenty-six Sri Lankan firms that offer expertise in areas such as wastewater treatment, biotechnology for wastewater, waste treatment plant design, waste audits, solid waste management, EIA preparation, environmental engineering, and design of effluent treatment systems (information in text and this endnote abstracted from information collected during US-AEP country visit by John W. Butler and John J. Mapes [June 1721, 1996] and from USAID [N.d.]).

63. From information collected during US-AEP country visit by John W. Butler and John J. Mapes, June 1721, 1996.

64. From information collected during US-AEP country visit by John W. Butler and John J. Mapes, June 1721, 1996.

65. USAID (N.d.).

66. Sri Lanka (1994b).

67. World Bank (1995a).

68. From information collected during US-AEP country visit by John W. Butler and John J. Mapes (June 1721, 1996); World Bank (1995a).

69. From information collected during US-AEP country visit by John W. Butler and John J. Mapes (June 1721, 1996; USAID (N.d.).

70. Statements such as "the average person has more important problems with which to cope than those affecting his/her environment" and "most people do not appreciate the benefits of a clean environment" were greeted affirmatively for 87 percent and 56 percent respectively of the population surveyed. Sixty percent of the sample population is aware of environmental deterioration; more than 80 percent identified water pollution, solid waste/garbage, deforestation, and heath-related environmental problems as those currently facing Sri Lanka. Of the problems cited by the population, 90 percent ranked health-related environmental problems as the most critical, followed by water. About 60 percent of the population is familiar with CEA, whereas a mere 33 percent have heard of the National Environmental Act. In general, the population does not believe that individuals can effect environmental improvement and believe that public institutions are better equipped to do so. Press, television, and radio were the major sources of environmental information for both the urban and rural populations (Survey Research Lanka 1993).

71. From information collected during US-AEP country visit by John W. Butler and John J. Mapes, June 1721, 1996.

72. IIED (1992).

73. IIED (1992).

74. The Asia Foundation (1994).

75. The Asia Foundation (1994).

76. U.S. Department of State (1995a).

77. Natural Resources and Environmental Policy Project (NAREPP) is a cooperative effort with the M/TEWA that seeks to improve environmental policy development. NAREPP serves as the umbrella project for USAID's environmental assistance in Sri Lanka. NAREPP's main project component is environmental policy and institution development. Its scope also includes biodiversity, urban and industrial environmental management, coastal resource management, and public participation in environmental management.

78 Shared Control of Resources is a subproject and the first effort ever to focus attention on the watershed as the basic unit of planning and implementation for the local use of resources. Through this subproject, USAID is empowering local people to increase their control over natural resources in selected watersheds. This activity will provide for field testing and development of the sustainable use of natural resources.

79 Technology Initiative for the Private Sector helps companies choose, acquire, and master new technologies to improve their international competitiveness. It provides cost-sharing grants on a 50/50 basis for investment in clean technologies and pollution control equipment, purchase of pollution control equipment, participation in trade fairs and meeting technology suppliers, and hiring environmental consultants. Information on new technologies and suppliers of U.S. pollution control equipment is also provided.

80 Agro-Enterprise Project provides technical/financial assistance to agricultural enterprises. Cost-sharing grants (up to 50 percent of expenses) are available for investments in pilot treatment systems and clean technologies, participation in environmental technology trade fairs or technology evaluation missions, and hiring environmental consultants. Information on U.S. technologies is also available through its Business Center.

81 Promotion of Private Infrastructure has played a major role in Sri Lanka's infrastructure privatization policies, including establishing an institutional structure within the Secretariat for Infrastructure Development Investment, now known as the Board of Infrastructure Investment, and developing regulations and procedures for soliciting, receiving, and negotiating private sector infrastructure projects under BOO/BOT arrangements.

82 Institution Strengthening for Comprehensive Water Resource Management. The scope of the grant includes a core program to implement the Action Plan for Comprehensive Water Resource Management, which encompasses relevant agencies, water users, and other stakeholders under the National Water Council. The council will install an improved and legally enacted institutional framework for water sector operations during a three-year period. The National Planning Department is the executing agency.

83 Private Sector Infrastructure Development Project. Estimated at $50 million, the project, which has not yet been approved, would provide long-term debt financing to infrastructure projects to be sponsored by private investors. It is designed to develop a modern and efficient system of infrastructure in Sri Lanka for promoting significant private sector participation in the investment, operation, ownership, maintenance, and management of infrastructure facilities. The Private Sector Infrastructure Development Committee, under the Ministry of Finance, would be the executing agency.

U.N. Industrial Development Organisation

Industrial Pollution Reduction Program. Based at CEA, the program provides low-cost technical assistance for waste minimization audits and loans to install recommended equipment to minimize waste. Past assistance has been provided to the textile, metal-finishing and distillery industries. To date, the program has assisted eleven facilities in Sri Lanka. Although the program provides generous benefits for industry (e.g., it pays all costs of pollution control equipment except shipping and installation), it has not been embraced wholeheartedly by Sri Lankan industry, due to its close ties to CEA (information collected during country visit by John W. Butler and John J. Mapes [June 1721, 1996]; USAID [N.d.]).

 

 

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