World Bank Document

E1647

Ministry of Agriculture, Forestry and Water Management Serbian Transitional Agriculture Reform (STAR) Project Project Preparation Unit Nemanjina 22-26 Public Disclosure Authorized 9th floor, Office No 31 11 000 Belgrade, Republic of Serbia

SER-STAR-CQ-CS-06-003

Grant No. : TF 055134

Serbian Transitional Agriculture Public Disclosure Authorized Reform (STAR) Project

Preparation of the Environmental Impact Assessment Study

Public Disclosure Authorized Submitted by:

VVMZ Environmental Institute Center for Community Organizing

Public Disclosure Authorized

Serbia Transitional Agriculture Reform Project

Preparation of the Environmental Impact Assessment Study

SER-STAR-CQ-CS-06-003

Draft Report Version 3

April 27, 2007

TABLE OF CONTENTS

Chapter Subject Page

1 Introduction 4 2 Findings during the reporting period 5 3 Output 1 – Scheme for environmental evaluation and 13 selection of subprojects 3.1 Introduction 13 3.1.1 Short summary of the STAR project 13 3.1.2 Short summary of the EIA project 13 3.2 International legal framework 14 3.2.1 Overview of relevant international documents 14 3.2.2 Overview of World Bank procedures for environmental 16 evaluation 3.3 National legal framework 18 3.3.1 Environmental protection law 18 3.3.2 Environmental Impact Assessment 19 3.3.3 Strategic Environmental Assessment 20 3.3.4 Provisions regulating environmental monitoring 21 3.3.5 Soil protection and land use control 22 3.3.6 Nature protection 24 3.3.7 Short description of the standard EIA procedure as required by 24 EIA Act 3.4 Environmental Assessment Procedure for the STAR Project 27 3.4.1 Introduction 27 3.4.2 Detailed description of the procedure 28 3.5 General recommendations for environmental monitoring 41 3.6 Status of the environment 43 3.6.1 Results of the analysis of the relevant documents 43 3.6.2 List of the most important environmental issues 46 3.7 Environmental indicators and eligibility criteria 48 3.7.1 List of indicators and eligibility criteria 48

4 Output 2 – Environmental Management Plan 53 4.1 Recapitulation of procedure 53 4.2 Procedure workflow analysis 53 4.3 Identification of issues 54 4.4 Implementation Plan 55 4.5 Monitoring & Reporting 56 4.6 Institutional arrangements 56 4.7 Cost estimates and sources of funds 57

5 Output 3 - Scheme for environmental evaluation and 58 selection of subprojects for Stara Planina Nature Park 5.1 Introduction 58 5.1.1 Short summary of the output 1 58 5.2 Environmental characteristic of the Stara Planina Nature Park 58 5.2.1 Results of the analysis of the environment of the territory of the Stara 58 Planina NP 5.3 List of the most important environmental issues and problems for the 61 Nature Park 5.4 Type of the STAR projects 62 5.4.1 Overview of the projects to be implemented in the Stara Planing 62 Nature Park within the STAR project 5.4.2 Description of the main links of the projects to the environmental 63 issues and problems 5.5 Procedure 73 5.5.1 Scheme and description of the proposed procedure of 73 environmental evaluation, selection and monitoring of the subprojects to be implemented in the Nature Park 5.6 Public involvement 73 Recommendations for the public involvement to the environmental 73 evaluation, selection and monitoring of the single STAR project implemented in the Nature Park Summary of the most significant comments from the public 73 (workshop)

1. Introduction

This report presents the draft final report of the assignment titled „Preparation of the Environmental Impact Assessment Study” to the STAR Project. The report follows the structure that was suggested in the Inception Report, while adding a first chapter including findings during the reporting phase, because we believe that they give a valuable insight into the situation and the basis from which the three outputs presented later on were developed. They represent findings from interviews (partly group interviews) with over 20 people at the national and local level.

We note that the report was developed with a considerable time constraint and that it should truly be considered as a draft for further discussion and elaboration. In this respect, we have chosen not to draft some specific sections of the report, but rather to wait for feedback from stakeholders during the upcoming workshop, as to proceed most effectively. Moreover, certain information needed to fully complete Output 3 has not been obtained or processed by the date of submitting this report, in which case the text indicates “to be completed”.

2. Findings during the reporting period

Findings during the reporting period are sorted according to the level that they relate to (national level, local level) and with respect to Stara Planina also according to the measures that are intended to be realized under Component 3.

National level

1. The STAR project includes 3 components, of which the first two regard rural development and capacity building for Serbia, and the third component rural development of the Stara Planina area. The third component was supposed to be a separate project, but was included in the larger STAR project.

2. The budget of the total STAR project will amount to 30 MUSD to 60 MUSD, depending on further negotiations between WB and the GoS. The amount allocated to component 3 is now estimated at 5.4 MUSD.

3. At the moment of executing the mission, final comments to the Inception Report were not available for the Consultant. Also the final draft version of the STAR project itself was not available. Both will be made available asap. MAFWM however wants the Consultant to complete his assignment asap, i.e. according to the required time schedule totaling two months. The Consultant may consider that the final draft STAR project will be based on partial reports that were made available to the Consultant.

4. As regards capacity building, the WB considers that a Paying Agency (according to EU model) will have to be created first, before concrete grants shall be given to beneficiaries. The Consultant notes that experiences from other countries show that setting up a certified Paying Agency may take between 1 and 4 years.

5. MAFWM is running grant schemes for ARD now, but monitoring and evaluation systems seem to be weak. Capacity for managing STAR basically has to be built-up from scratch, but due to tight state budget there is a pressure on GoS to reduce the number of state employees.

6. For project selection, monitoring and evaluation, an inter-ministerial body could be created, to improve coordination especially between MSEP and MAFWM. A similar body has been established for the DREPR project and that functions properly. As regards reporting to the WB on the STAR implementation there should be produced annual evaluation reports, at least.

7. Serbian pesticide legislation has not been harmonized with the EU Acquis and offers much less environmental protection. A legislative proposal was drafted but has been withdrawn from the parliamentary procedure. A new proposal will be drafted after three ministries (Health; Science and Environment; and Agriculture, Forestry and Water Management) adjust their opinions. The time frame for drafting the new proposal is not defined.

8. SEA legislation has been designed according to EU-Directive and is in force for about two years now (since 2004). Experiences with SEA are limited, not only because it has only been applied for two years, but also because according to strict interpretation of the law, various strategic documents do not fall under the law; SEA law covers plans and programmes, incl. spatial plans, and master plans for sectors, but not strategies and policies.

9. EIA legislation has been harmonized with EU-Directive and is in force since 1992. There is more experience with EIA.

10. Major projects and projects in nature parks are subject to screening by and final approval of EIA by MSEP. Other projects are subject to screening and approval by the respective municipality (city).

11. Specifically for SEA, the competent authorities are usually not actively involved in project formulation and consultations on the assessment, but only provided with written requests for their standpoint based upon the check of the agreement with a law wording; in some cases the authorities are being invited to comment the scoping draft. Especially in the phase of final approval the competent staff considers that possibilities to comment the assessments and require changes in the proposed project are very limited. Such is especially the case when there is political pressure to approve a project. There was expressed a need to strengthen the capacities of the SEA Dept. at the MSEP and build capacities for SEA, EIA, IPPC, etc. at certain regional/provincial level (it is desired that the responsible people from the SEA Depts. are involved in the development of the SEA report)

12. In case that the competent authority formulates certain criteria or concrete mitigating measures for implementation of a project (investment), their fulfillment should be checked (by the Technical Inspection Commission before the utilization permit is issued. There seem to be very are limited, if none, possibilities to monitor real impacts during the operation of the project and upon its termination, even if the harmful effects might be envisaged and specific measures to prevent, reduce or eliminate the likely harmful effects were formulated within the EIA; the responsible authorities have limited resources and legal instruments available to enforce respecting of the requirements. Consultations with the authorities responsible or nature conservation within the EIAs are pursued on irregular base. It was also mentioned that the Law on Construction includes provision for the implementation of construction projects, incl. monitoring and evaluation; however there are no financial means to follow them.

13. There is a practice of constructing “black buildings”, meaning buildings without a construction permit or EIA. There are insufficient legal instruments to fight this practice. Apparently, half of the buildings in Stara Planina are black.

14. As regards Stara Planina, there is a proposal for a new spatial plan. Now the whole area is a nature park without any internal differentiation in levels of protection: all is level 3. The

new spatial plan will establish a zoning with protection levels 1, 2 and 3 (corresponds to the regime in national parks).

Local level – Stara Planina

15. Various stakeholders state that they have not had an opportunity to provide input to the spatial plan (for Stara Planina). Municipalities state that they commented the plan, but that they had no feedback on their inclusion or rejection. According to stakeholders at the national level, the new spatial plan is pending for approval by the new government, so to say a formality. Some local stakeholders still expect public hearings on the proposed spatial plan.

16. With the new spatial plan, the competencies of Srbijasume will be re-defined, giving it a more clear task description. Whereas Srbijasume states that it manages the whole park including the grasslands (60 % of the park), various stakeholders state that the management plan is inadequate and that Srbijasume has insufficient capacities for managing the whole area properly. Srbijasume agrees that capacities and tasks setting should be improved. It has proposed that the renewed management shall be located in Vrelo.

17. For example, at present poaching (illegal hunting) is being monitored by Srbijasume in its own forests only (meaning forests that it owns, not owned by private owners). In other areas this should be monitored by the Environmental Inspectorate, but it reportedly has no capacity whatsoever to do so.

18. No stakeholders are mentioning dissatisfaction with the intentions of Srbijasume towards Stara Planina (no excessive foresting activities). Srbijasume is cutting some 1.8 million m3 wood per year, while it has permission to cut 3 million m3 wood per year.

19. Next to the spatial plan, a Master Plan for Stara Planina is being developed. This is reportedly a 1.5 MUSD assignment by the GoS that is being executed by a Croatian consultancy firm. Especially at local level, the Master Plan is seen as a political document that is not being consulted with the public. The Master Plan seems to be a confidential document.

20. This seems to be connected to the interest of GoS to develop high-level ski-tourism in Stara Planina. Already GoS has financially supported the construction of a ski-lift on Babin Zub. Also the road to that location is being reconstructed. Of all persons that we met in Stara Planina, only one person was supportive to this project. All others question the possible success of the investment, with objections ranging from unfavorable conditions (no snow) to low income for local entrepreneurs. Apparently the project received approval on its EIA due to political considerations rather than environmental.

21. Related to that project, a hotel is being built on Jablcko raviste. It is not clear if this project obtained approval on its EIA. Peat bogs at that location are reportedly endangered.

22. Serbia is a member to various international nature conservation / biodiversity conventions and is preparing for participation in more networks, such as the EMERALD network.

23. There seem to be conflicting approaches to development of Stara Planina between local stakeholders (municipalities, NGOs, regional branches of state administration) and GoS. While GoS seems to promote high-level ski-tourism, local stakeholders support small- scale environmentally friendly tourism, next to other agricultural activities (sheep/goat farming, dairy etc.). According opinion of representatives of nature protection the current lack of zoning in the park makes gaps that are used within the planning for proposing business (some activities being realized already - building roads for skiing, cutting trees). They also say that the 4 municipalities sharing their force over the area of the park, do have different approach towards the nature protection.

24. Local stakeholders have no aggregate listing of projects that they would like to realize under the STAR project. There is no locally-developed complex strategy or program for development of Stara Planina.

25. Apparently RD grant programs are more successfully implemented in e.g. Vojvodina as the farmers in Stara Planina do not have “agriculture insurance”.

Sensitivity of the environment in Stara Planina

26. The cities in Stara Planina have appropriate sewage systems and waste collection services. Plans for improvement of waste disposal have been made, and should be implemented in 2007, if financing is available.

27. A main problem relating to air (smell), water and soil quality, is manure management of cattle holdings that are located in the villages. Cattle was in the past held on grasslands in the mountains, but the deterioration of facilities and changing habits have brought the animals into the villages12. There is no appropriate manure management, reportedly there is nitrate leaching into streams from lagunes.

28. As regards water quality, another issue is the lack of sewage systems in the villages. While canalization in the cities is sufficient, it has been “improvised” in villages, meaning that waste water is canalized into the direct environment.

29. As regards solid waste, until date there is a total lack of municipal waste services in the villages. As mentioned above, new communal waste management plans have been made to improve waste collection and disposal. This plan creates two waste collection areas: Zajecar-Zajcev and Pirot-Dimitrograd. The waste collection service of the largest cities will become responsible for collecting waste from the cities and the villages, leading to a

1 These holdings are characterized as “property with animals” (not proper farms, means registered facilities). 2 Lack of proper facilities for the shepherds up in the mountains was mentioned as one of the obstacles to the re- extension of grazing practices- but this is not understood as an environmental risk).

considerable improvement. 1 However, the communal services are serving at this moment only the terrioty of the town(s), in the villages in the park there nobody collects waste and deals with waste water. As regards the waste management outside the area of SP there was mentioned (Zajcev) a problem with the collection of hazardous waste (direct linkage to agriculture was not discussed in this relation), this is not properly managed yet and only temporary storage is disposable

30. Reportedly, vultures and bears have disappeared from Stara Planina, which apparently is related to the lack of open grasslands.

31. Reportedly, the blueberry has disappeared from large areas, apparently related to illegal picking and lack of grazing. This applies to Stara Planina, but a fortiori to the Bulgarian side of the park. There are mentions of illegal picking of mushrooms and herbs as well.

32. As regards monitoring of the environment, the Consultant received ambiguous information. Some stakeholders indicate that there is insufficient measuring of water pollution (closed hydro meteorological measuring stations on the area of SP) , and that ordering analyses is very expensive. Additional measuring stations should be created (Pirot – proposal of measuring spots was submitted to the STAR project): a project to that end has been submitted. Other stakeholders state that various national institutes monitor air and water quality, that data are available and sufficient (Zajecar). It was noted (Dimitrovgrad) that the environmental inspectors are empowered to do monitoring on an ongoing base, but in practice it happens only occasionally.

33. According to the Institute of Environmental Protection, inventories of habitats and species have been made.

Component 3 Measure 1: Grasslands

34. All stakeholders state that they expect strong positive effects from bringing back sheep and goats to the SP pastures for grazing. In the past 300,000 sheep were grazing on SP, now some 10,000 sheep are being held (see no. 27). The lack of sheep constitutes an urgent and major problem (such as burning out the grass, spreading wild species of flora).

35. No stakeholder foresees negative impacts from Measure 1, only one stakeholder mentions that attention should be given to manure management. It should also be noted that under the present legislation, grazing is not allowed in zone A protected areas.

36. It is not clear what time-path is foreseen for this activity.

1 It was mentioned (Pirot) that there was developed a manure management strategy for SP, developed for the WB, funded by the GoS by represent. of municipalities in region that includes measures for communal waste treatment and building facilities for temporary storage of waste in 44 locations (4 out of it in tourist centers, 40 in villages, 10 out of it in the area of the park) and 1 (permanent) storage point for animal waste and household waste and a plan for the manure management –plan for composting and plan for training for farmers.

Component 3 Measure 2: Rehabilitation dairy processing facilities

37. All stakeholders stress the importance of reviving the production of traditional sheep and goat cheese.

38. Rehabilitation of dairy processing facilities would be welcomed, but all local stakeholders stress that much milk is also processed by individual farmers, and that at present the amount of milk produced in the region is totally insufficient for running a serious dairy operation. Apparently a Supply chain analysis is being made by another consultant to the STAR project.

39. The Consultant did not obtain information on the present environmental status of the facilities, in particular infrastructure (sewage) and solid waste management.

40. The time-path for realization of this activity is unclear, while its dependence on Measure 1 should be considered as well for planning its realization.

Component 3 Measure 3: Rehabilitation of roads and increase of traffic

41. All stakeholders agree that road infrastructure needs to be improved, but there are different views how this should be implemented.

42. Beside the rehabilitation of existing hard-surface roads, also soft-surface tracks and paths may be upgraded. Most stakeholders state that this should only be done in case that the use of those roads is connected to other than purely agricultural purposes (moving equipment) they would also like to build a tourist infrastructure (paths, rest areas, bridges, etc.), i.e. use for tourism (travel by ordinary cars to tourism destinations – attractions) or possibly agricultural products.

43. Srbijasume has requested to be equipped with motorbikes. This intention should be checked against negative impacts in particular due to high noise-levels of motorbikes, which negatively affect nature but also tourism. Beside that, the use of motorbikes by rangers may set a wrong example for other users of the park.

44. Apparently a road infrastructure analysis is being prepared by another consultant to the STAR-project.

Component 3 Measure 4: Visitor centers, tourism trails, and beautification of villages

45. The idea among stakeholders is that visitor centers will be combined in multi-functional buildings, for example Srbijasume management seat (Vrelo), monitoring stations, other tourism facilities. Visitor centers should as much as possible be created in rehabilitated existing buildings.

46. In Vrelo there should be sufficient infrastructure (sewage), in other locations this is unknown but cannot be expected.

47. As regards beautification of buildings, we note that this element seems to be underestimated, while the protection of cultural heritage is a global priority that is considered to be directly related to environmental impact as well. The SP area holds many typical Serbian style houses and barns in a deplorable state, actually such that it might repel tourists. The reconstruction of those houses and barns should be an important and urgent issue. Reportedly a list of buildings with typical architecture exists with the Institute for Cultural Heritage.

Component 3 Measure 5. Potential increase of number of visitors …

48. Local stakeholders do not think there will be negative environmental impacts from increased numbers of visitors. As they state, the number of visitors is so low now, that any increase could be absorbed with problems.

49. The Consultant notes that is seems to be very difficult for local stakeholders to estimate impacts of increased tourism, because the level of tourism is so low now, and hardly any experience exists to this respect. Only in one location (Zajecar) there was discussed a need somehow to manage the tourism in the park as this might be connected to the increasing demand for other services (waste collection, water supply, etc.)

Preliminary Conclusions from the above findings

50. Although SEA and EIA legislation exists, its application does not yet seem to reach the level that is desired by WB and EU standards. This regards in particular inadequate spatial plans; limited influence by local stakeholders; little influence by the competent authority (MSEP or municipality) in the process of drafting SEA/EIA (influence only for comments and final approval); approval of SEA/EIA due to political pressure; and possibilities to circumvent SEA completely by giving strategic documents a different name than those specified in the Serbian SEA law.

51. There is a lack of insight in the phasing of implementation of the STAR Project. Such phasing should be drafted and agreed with stakeholders. Insufficient planning of implementation may have a strong negative effect of properly handling environmental procedures; we note that it might negatively affect the project as a whole.

52. The EMP needs to consider the above and the fact that present capacities for monitoring and evaluation are very weak.

Preliminary Recommendations from the above findings

53. The procedure to be designed for assessing projects needs to take into account, that SEA/EIA in Serbia is not yet completely compliant with international standards.

54. The procedure and the Environmental Management Plan should identify preparatory action and implementation action. Preparatory action should start asap.

55. Likewise, phasing of implementation should clarify when implementation of Component 3 should start. Both the background of that component as well as urgent and important environmental and cultural issues justify the urgent start-up of implementation of component 3.

56. If the STAR project should be implemented according to EU structural policy principles, and based on findings in SP, a programming document for development of SP and implementation of Component 3 should be drafted with involvement of all stakeholders.

3. Output 1 - Scheme for environmental evaluation and selection of the subprojects prepared and submitted within the STAR project.

3.1 Introduction 3.1.1 Short summary of the STAR project The World Bank study “Supporting Serbia’s Agricultural Strategy” (2006) identifies improved producer access to high quality inputs and technologies, greater commercialization of farms, land consolidation, improved output quality and strengthened farmer association as important constraints in the sector. Key actions recommended by the study include: (i) increased financing of research and extension systems more closely aligned with farmers’ needs; (ii) development of the institutions and capacity to benefit from EU pre-accession funds (iii) compliance with international food safety and standards requirements; (iv) continued shifting of public resources from market support into structural support programs; and (v) increased public expenditures facilitating land consolidation and farmer retirement programs. The STAR project would directly support recommendations (i) – (iv), and indirectly support recommendation (v) through improved capacity for public expenditure management, monitoring and evaluation. The project complements other World Bank support to Serbia for regional integration. This includes the Danube River Pollution Project (GEF, FY05) which seeks to reduce nutrient pollution from livestock production and slaughterhouses, in keeping with the EU environmental acquis (nitrates directive). The Bank also participates, together with the European Commission, in the Infrastructure Steering Group for South East Europe, which promotes a regional strategic approach to infrastructure development. The STAR project will help to strengthen cooperation between the World Bank and other donors, including the EC, which is a key partner in promoting reforms linked with the SAA. The focus of this project is on supporting rural development, both structurally and substantively, in ways that echo Pillar 2 of the CAP.

3.1.2 Short summary of the EIA project The objective of the EIA project is to prepare Environment Impact Assessment (EIA) study together with Environmental Management Plan (EMP) for the STAR Project. The assignment includes two tasks: Task 1: Environment Impact Assessment for the STAR Project Task 2: Specific Environment Impact Assessment for Component 3 of the STAR Project- Sustainable Land Use and Ecological Management of the Stara Planina Nature Park

The aim of the output 1 (within the task 1) is to propose a scheme for environmental evaluation and selection of the subprojects prepared and submitted within the STAR project. This scheme is considered as one of the most important tools for minimizing of the likely adverse environmental effects of the STAR Project implementation. The application of the scheme should ensure that the projects with negative environmental impacts will not be supported, and that the support is preferentially directed at those projects that can contribute to improving the environment in Serbia. The scheme will include 3 main parts: 1. procedure for project’s environmental evaluation and selection 2. set of environmental indicators and criteria 3. overall system of environmental monitoring for the STAR project implementation Monitoring of the environmental impact of the implementation of the STAR project can be realized through the aggregation of the evaluation of the impacts of the individual projects that will be funded under the project. Such approach is based on the assumption that the single projects submitted to the STAR project are the tools for the STAR project implementation. The system to be proposed will be considering the fact that in practice it is not always possible to differentiate between the STAR environmental impacts and the impacts of other activities or interventions (i.e. project financed from sources other than the STAR). In order to monitor the STAR implementation’s environmental impacts (through the monitoring and evaluation of single projects), there will be proposed a set of environmental indicators. The indicators as well as the criteria for selection of the project will be proposed in relation to a set of environmental objectives based on the analysis of the situation of the quality of environment, trends and environmental priorities.

3.2 International legal framework 3.2.1 Overview of relevant international documents Among the international legal norms relevant in the context of the assessment and optimization of the STAR project’s environmental impact are both the EU EIA Directive and the EU SEA Directive as well as the related international treaties, namely the Espoo Convention on Environmental Impact Assessment in a Trans-boundary Context (1991)1 and the Aarhus Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters (1998) and its SEA Protocol (2003) Considering that the main environmental impact of the STAR project will occur through the implementation of its concrete subprojects realized by the individual developers participating in the STAR financial mechanism, the EIA procedure required under the terms of Directive 97/11/EC amending Directive 85/337/EEC on assessment of the effects of certain public and private projects on the environment, which has been fully transposed into the Serbian legislation, will be one of the key measures securing the environmental soundness of the activities taking place within the Project at a local level. The Directive sets out the guidelines for decision as to what types of projects require the EIA to be carried out. With respect to the subject matter of the STAR Project, namely the following types of projects are relevant:

1 Serbia is not yet a member of the Convention on Environmental Impact Assessment in a Trans-boundary Context (Espoo, 1991) although a draft law on ratification has been prepared.

Relevant examples from the ANNEX I of the Directive (i.e. projects always subject of the EIA):

• Installations for the intensive rearing of poultry or pigs with more than: (a) 85 000 places for broilers, 60 000 places for hens; (b) 3 000 places for production pigs (over 30 kg); or (c) 900 places for sows. Relevant examples from the ANNEX II of the Directive (i.e. projects subject to case-by-case examination):

• Agriculture, silviculture and aquaculture (a) Projects for the restructuring of rural land holdings; (b) Projects for the use of uncultivated land or semi-natural areas for intensive agricultural purposes; (c) Water management projects for agriculture, including irrigation and land drainage projects; (d) Initial afforestation and deforestation for the purposes of conversion to another type of land use; (e) Intensive livestock installations (projects not included in Annex I);

• Food industry (a) Manufacture of vegetable and animal oils and fats; (b) Packing and canning of animal and vegetable products; (c) Manufacture of dairy products; (d) Brewing and malting; (e) Confectionery and syrup manufacture; (f) Installations for the slaughter of animals; (g) Industrial starch manufacturing installations;

• Infrastructure projects • Tourism and leisure (a) Ski-runs, ski-lifts and cable-cars and associated developments; (c) Holiday villages and hotel complexes outside urban areas and associated developments; (d) Permanent camp sites and caravan sites;

The EIA Directive also provides in its ANNEX III the relevant selection criteria shall be taken into account in a case the project is a subject of a case-by-case examination, which shall provide the information for decision whether an EIA shall be applied for the particular project: information to be specified by an EIA in case the project is a subject of the assessment: 1. Characteristics of projects The characteristics of projects must be considered having regard, in particular, to: - the size of the project, - the cumulation with other projects, - the use of natural resources, - the production of waste, - pollution and nuisances,

- the risk of accidents, having regard in particular to substances or technologies used.

2. Location of projects The environmental sensitivity of geographical areas likely to be affected by projects must be considered, having regard, in particular, to: - the existing land use, - the relative abundance, quality and regenerative capacity of natural resources in the area, - the absorption capacity of the natural environment, paying particular attention to the following areas: wetlands; mountain and forest areas; nature reserves and parks; landscapes of historical, cultural or archaeological significance.

3. Characteristics of the potential impact The potential significant effects of projects must be considered in relation to criteria set out under 1 and 2 above, and having regard in particular to: - the extent of the impact (geographical area and size of the affected population), - the transfrontier nature of the impact, - the magnitude and complexity of the impact, - the probability of the impact, - the duration, frequency and reversibility of the impact.

3.2.2 Overview of World Bank procedures for environmental evaluation The following World Bank/ IFC policies and guidelines were considered when preparing this report:

• Pollution Prevention and Abatement Handbook, 1998. o General Environmental Guidelines; • Operational Procedures/ Directives/ Policy Notes: o Environmental Assessment (OP 4.01), January 1999; o Natural Habitats (OP 4.04), January 2001; o Forestry (OP4.36), January 2002;

General As stated in the Bank Operational Manual OP/BP 4.01 (lastly updated in March 2007), the Bank requires environmental assessment (EA) of projects proposed for Bank financing to help ensure that they are environmentally sound and sustainable, and thus to improve decision making. Under

the Bank’s regulations the borrower is responsible for carrying out the EA in compliance with both the country’s legislation and the Bank’s regulations. An EA is a process whose breadth, depth, and type of analysis depend on the nature, scale, and potential environmental impact of the proposed project. An EA evaluates a project’s potential environmental risks and impacts in its area of influence; it examines project alternatives; identifies ways of improving project selection, siting, planning, design, and implementation by preventing, minimizing, mitigating, or compensating for adverse environmental impacts and enhancing positive impacts; and includes the process of mitigating and managing adverse environmental impacts throughout project implementation. The World Bank favours preventive measures over mitigation or compensatory measures, whenever feasible. EA takes into account the natural environment (air, water, and land); human health and safety; social aspects; and transboundary and global environmental aspects. EA considers natural and social aspects in an integrated way. It also takes into account the variations in project and country conditions; the findings of country environmental studies; national environmental action plans; the country’s overall policy framework, national legislation, and institutional capabilities related to the environment and social aspects; and obligations of the country, pertaining to project activities, under relevant international environmental treaties and agreements.

EA Instruments Depending on the project, a range of instruments can be used to satisfy the World Bank’s EA requirement: environmental impact assessment (EIA), regional or sectoral EA, environmental audit, hazard or risk assessment, and environmental management plan (EMP). EA applies one or more of these instruments, or elements of them, as appropriate. When the project is likely to have sectoral or regional impacts, sectoral or regional EA is required.

Environmental Screening The World Bank undertakes environmental screening of each proposed project to determine the appropriate extent and type of EA. The World Bank classifies the proposed project into one of three categories, depending on the nature and magnitude of the proposed project’s potential environmental and social impacts.1 A proposed project is classified as Category B if it’s potential adverse environmental impacts on human populations or environmentally important areas— including wetlands, forests, grasslands, and other natural habitats—are less adverse than those of Category A projects. These impacts are site-specific; few if any of them are irreversible; and in most cases mitigation measures can be designed more readily than for Category A projects. The scope of an EA for a Category B project may vary from project to project. The EA examines the project's potential negative and positive environmental impacts and recommends any measures needed to prevent, minimize, mitigate, or compensate for adverse impacts and improve environmental performance. The findings and results of Category B EA are described in the project documentation (Project Appraisal Document and Project Information Document).

Public Consultation

1 The current STAR project has been classified by the World Bank a Category B project.

For Category B, during the EA process, the borrower consults project-affected groups and local non-governmental organisations (NGOs) about the project’s environmental aspects and takes their views into account. The borrower initiates such consultations as early as possible.

Disclosure For meaningful consultations between the borrower and project-affected groups and local NGOs on all Category B projects, the borrower provides relevant material in a timely manner prior to consultation and in a form and language that are understandable and accessible to the groups being consulted. Any separate Category B report for a project is made available to project- affected groups and local NGOs. Public availability in the borrowing country and official receipt by the World Bank of Category B EA report for projects proposed for IDA funding, are prerequisites to World Bank appraisal of these projects.

Implementation During project implementation, the borrower reports on (a) compliance with measures agreed with the World Bank on the basis of the findings and results of the EA, including implementation of any Environmental Management Plan (EMP), as set out in the project documents; (b) the status of mitigatory measures; and (c) the findings of monitoring programs. The World Bank bases supervision of the project’s environmental aspects on the findings and recommendations of the EA, including measures set out in the legal agreements, any EMP, and other project documents.

3.3 National legal framework The field of environmental protection in Serbia is regulated by a considerable number of legal and sub-legal acts at the national level as well as by international treaties ratified by Serbia. The national norms have been gradually harmonized with respective international standards, primarily those of the European Union. Many new legal acts and regulations have been developed and adopted recently and more are still under preparation. The environmental policy objectives as well as the conditions for their implementation are set out by the National Environmental Strategy prepared during 2005. A number of sectoral strategies (e.g. water, waste, energy, agriculture) have also been developed as well as Local Environmental Action Plans (LEAPs). This section provides an overview of the current legal framework for the environmental management with a particular relevance to the Environmental Assessment and Monitoring of the activities proposed under the STAR project, including the following areas: • Environmental Framework Law; • Environmental Assessment • Monitoring; • Soil protection and land use control; • Nature protection

3.3.1 Environmental Protection Law The basic legal act which regulates environmental issues in the Republic of Serbia is the Environmental Protection Law (EPL) adopted in 2004 (Off. Jour. of RS, No. 135/2004, p. 29-43). The EPL regulates "the integral system of environmental protection which shall ensure the

human right to live and develop in healthy environment as well as balanced economy growth and protection of the environment in the Republic" (Article 1). Provisions of the Law are divided in ten chapters and set out an environmental management framework in line with European environmental directives. Important changes, as compared to the previous legal arrangement, include the introduction of development of strategies, the establishment of the Environmental Protection Agency, EMAS, the Environmental Protection Fund, economic instruments, decentralization, improved environmental impact assessment and strategic environmental assessment, Integrated Pollution Prevention and Control, ecolabelling, etc. The EPL is a framework law and many issues need further regulation through bylaws and amendment of already existing bylaws. Since this is a new law, not all requirements have been regulated yet and where this is the case, the regulations of the previous law with the same name (“Official Gazette RoS” No. 66/91 and 53/95), are still in force. Local governments cannot independently adopt their own laws or regulations, as environmental protection is under the mandate of the Republic. Further, the municipalities largely lack adequate institutional capacity, sufficient knowledge base and equipment to enforce environmental legislation. However, communities can regulate some local issues, such as local programs for environmental protection, but always in accordance with legislation of the RoS.

3.3.2 Environmental Impact Assessment The Law on Environmental Impact Assessment (EIA) was adopted in 2004. (Off. Jour. of RS", No. 135/ 2004, p. 14-18). The Law contains 47 articles divided in to five chapters: basic provisions, impact assessment procedure, supervision, penalty provisions, transitional and final provisions. The Law regulates the impact assessment procedure for projects that may have significant effects on the environment, the contents of the Environmental Impact Assessment (EIA) Study, the participation of authorities and organizations concerned, the public participation, transboundary exchange of information for projects that may have significant impact on the environment of another state, supervision and other issues of relevance to impact assessment. The provisions of this Law do not apply to projects designated for national defence purposes" (Article 1). According to the Article 3 “The subjects of the impact assessment are planned projects and projects being implemented, changes in technology, reconstruction, the extension of capacity, the termination of operations, and the removal of projects that may have significant impact on the environment.” Projects currently in operation but without a license for operation from the MSEP, also need to processed an EIA. Impact assessments shall be elaborated for projects in the fields of industry, mining, energy production, transport, tourism, agriculture, forestry, water management, waste management and utility services, as well as for all the projects that are planned in areas with protected natural resources of special value and within the protected zones of cultural resources. Article 4 of the Law on Environmental Impact Assessments regulates the list of projects requiring an EIA. The list of projects for which an EIA is required was adopted by the Government in October 4 2005 as a Regulation on the List of projects for which EIA is obligatory and the List of projects for which EIA may be required. (Off. Jour. of RS", No. 84/2005, pp. 7-21).

The law introduces screening, scoping and public participation procedures in line with the EU Directive on EIA. The annexes defining which projects need EIA have also been harmonised. Further elaboration of basic intentions contained in this Law has been done by adoption of certain number of bylaws. These are: • On the basis of Article 4, par 1 and 3 of the Law on environmental impact assessment the Government adopted on October 4 2005 Regulation on the List of projects for which EIA is obligatory and the List of projects for which EIA may be required. (Off. Jour. of RS", No. 84/2005, pp. 7-21; • On the basis of Article 20 par.5 of the Law, the minister decreed on August 9 2005 Rules on the procedures of the public access, presentation and public debate on study of the environmental impact assessment (Off. Jour. of RS", No. 69/2005, pp. 3-4); • On the basis of Article 23 par.5 of the Law, the minister decreed on August 9 2005 Rules on work of technical commission for assessment of the study of the environmental impact assessment. (Off. Jour. of RS", No. 69/2005, p. 4-5); • On the basis of Article 17 par.4 of the Law, the minister decreed on August 9 2005 Rules on contents of the study on environmental impact assessment (Off. Jour. of RS", No. 69/2005, p. 5-6); • On the basis of Article 34 of the Law, the minister decreed on August 9 2005 Rules on contents, forms and method of keeping of public book on executed procedures and adopted decisions regarding environmental impact assessment (Off. Jour. of RS", No. 69/2005, p. 8-10); • On the basis of Article 8 par.3 and Article 12 par. 3. Of the Law, the minister decreed on August 9 2005 Rules on contents of the application on needs for the impact assessment and contents of application for determination of size and contents of the study of the environmental impact assessment (Off. Jour. of RS", No. 69/2005, p. 10-19).

3.3.3 Strategic Environmental Assessment (Strategic EIA) The Law on Strategic Environmental Assessment (SEA) (Off. Jour. of the Republic of Serbia", No. 135/2004, p. 18-23) contains 27 articles divided into four chapters: basic provisions (art. 1- 4), strategic assessment procedure (art. 5-24), penalty provisions (art. 25), transitional and final provisions (art. 26-27). This law follows the EU SEA Directive. The UN/ ECE protocol on Strategic Environmental Assessment has been signed by Serbia and Montenegro. The Law on Strategic EIA, describes, evaluates and assesses potential significant impacts, which may be caused by the implementation of the plan or programme and it deals with mitigation measures. The subject of strategic assessment, according to the provisions of Article 5 of the Law, are plans, programmes, grounds in the field of spatial and urban planning or land use, agriculture, forestry, fishing, hunting, energy, industry, transport, waste management, water management, telecommunication, tourism, protection of natural habitats and wild flora and fauna, by which the framework for obtaining a permit for future developmental projects is prescribed by regulations regarding environmental impact assessment According to this law the body mandated to prepare the plan or programme should decide whether or not it must prepare a Strategic EIA, having previously obtained the opinion of the mandated body for environmental protection and other interested parties.

The Law stipulates that the public must be included in the decision making process. Annex I of the Law prescribes criteria for determining potential significant impact to environment. The report on a Strategic EIA must contain: • Baseline studies of the strategic assessment; • General and special objectives and the selection of indicators; • Possible environmental impacts with mitigation measures and analysis of alternatives; • Instructions for strategic and/or regular EIA to be undertaken under the mandate of lower levels of government; • A monitoring programme; • An overview of the methodology used and difficulties encountered during preparation of the study; • An overview of the decision-making process, description of the most important reasons for the selection of the plan or programme from the alternatives considered and an overview of the methods for inclusion of environmental protection issues into the plan or programme; • Conclusions • If a project, plan or programme may have a significant transboundary impact, the mandated ministry must inform the potentially impacted country for both regular and strategic EIAs on the following issues: o The project, plan or programme together with all gathered data; o The nature of the decision which it is expected to make; o The deadline for the country concerned to announce its intention to participate in the procedure of the EIA; and request official opinion.

3.3.4 Provisions regulating environmental monitoring A regular environmental monitoring is required according to the Serbian laws. Basic provisions are contained in the EPL in its chapter 4 (art. 69 - 77). Article 69 provides that "The Republic, autonomous province, and local self-governance unit, within their respective competencies under the law, shall provide for continual control and monitoring of the state of the environment in compliance with this and special laws. Monitoring shall be an integral part of the uniform information system on the environment. The Government shall develop the programme of monitoring for a two year period. Autonomous provinces, namely local self-governance unites shall develop monitoring programmes on its own territory that must be in compliance with the programme (made by Government). The Republic, autonomous province and local self- governance unit shall provide for financial means for monitoring." Article 70 of the Law states that "State monitoring shall be carried out by systematic measurement, examination and rating of indicators of the status and pollution of environment, including the monitoring of natural factors, namely changes of status and characteristic of the environment, including transboundary monitoring of: air, water, land, forest, biodiversity, flora and fauna, elements of climate, ozone layer, ionizing and non-ionizing radiation, noise, waste and

early warning of accidents with monitoring and assessment of the development of environmental pollution, as well as obligations from international agreements. The Government shall determine criteria for the number and lay-out of measurement points, measurement point's network, scope and frequency of measurement, classification of phenomena monitored, methodology and indicators about the pollution of the environment and their monitoring, deadlines and manner of data submission." Monitoring can be carried out by authorized organizations if it meets the conditions prescribed by Law (requirements in relation to human resources, equipment and space, accreditation for the measurement of the given parameter and JUS ISO standards in the domain of sampling, measurement, analysis and reliability of data). Obligations of polluters are prescribed by the Article 72 of the Law: "legal and private entity who is the owner, namely operator of a plant that is the source of emission and pollution of the environment, is obliged to: 1) perform emission monitoring; 2) provide for meteorological measurements for big industry complexes or facilities of special interest for the Republic, autonomous province or local self-governance unit; 3) participate in expenditures of measurement of immissions in the impact zone, when necessary; 4) monitor other impacts of their activity towards the environment. Submission of data is also regulated by Law. It is prescribed that the subjects who carry out monitoring (State authorities, organizations, authorities of autonomous province and local self- governance unit, authorized organizations and polluters) are obliged to send data (articles 70 and 72) to the Agency for Environmental Protection. The establishment of the integral polluter cadastre is regulated by Article 75. Reporting on the state of environment and its contents are regulated by Article 76 and 77. Several other provisions of the Law on environmental protection are referring to monitoring as well: art.14 - control over utilization and protection, article 23 – water protection, article 24 - air protection, etc. The following bylaws are also relevant to the monitoring: • Regulations on establishing networks and work programs of meteorological stations of interest for the whole country (Off. Jour. of SFRY, No. 50/90) • Regulations on limit values, imission measuring methods, selection of sample spots criteria and data collecting (Off. Jour. of RS, No. 54/92, 30/99) • Regulations on emission limit values, methods and timeframe for measuring and data noting (Off. Jour. of RS, No. 30/97, 35/97) • Regulation on detailed conditions which must be fulfilled by professional organisations which perform emissions and imissions measurement (Off. Jour. of RS no. 5/2002) • Decree on the Establishment of the Air Quality Control Programme in 2004 and 2005 (Off. Jour. of RS no. 48/2004)

3.3.5 Soil Protection and Land Use Control Several regulations concerning soil protection, zoning and land-use planning are contained in the EPL. According to the Article 22 "protection, utilization and arrangement of land, agricultural and forest soil and goods of general interest shall comprise preservation of productivity, structure, layers, rocks and mineral formation, as well as their natural and transitive shapes and processes. The activities that shall not pollute or damage the soil may be carried out on the ground surface

or under it. Throughout project realization as well as before its execution (constructing, mineral raw material exploiting and so on), the protection of land and soil shall be ensured." Article 34 of the EPL prescribes that the conditions for measures (for environmental protection in spatial and urban plans) "shall be issued by the Ministry, autonomous province body or self- governance units at request of the authority in charge of plan preparation and its passing in, and on the basis of conditions and measures of competent authorities." The Law on Agricultural Land (Off. Jour. of RS, Nos. 49/92, 53/93, 67/93, 48/94, 46/95, 54/96 and 14/00) regulates in detail the exploitation of minerals, building fish ponds, examination of the levels of pollution of agricultural land etc. The following legal acts are also relevant for soil protection in Serbia: • Law on geological investigations (Off. Jour. of RS, No. 44/9) regulates conditions under which geological research and the use of its results must be done, programming of geological research, its financing and inspection. Among other matters, environmental protection is mentioned in Article 2 and in Artides 21-34; • Law on mining (Off. Jour. of RS, No. 44/95) regulates conditions under which the mining activity can be done, on ground, underground, on river or lake bed or under it. It does not apply to exploitation of sand, stone or gravel from river beds and / or from natural or man made accumulations; • Law on determining and classification of mineral raw materials and presenting results of geological investigations (Off. Jour. of FRY, No. 12/98, 13/98); • Regulations on permitted amounts of hazardous and harmful substances in soil and water for irrigation and methods of their testing (Off. Jour. of RS, No. 23/94); • Regulations on maximum amounts of harmful substances in the fodder (Off. Jour. of SFRY, No. 2/90,27/90); • Law on protection of plants from illness and damaging species (Off. Jour. of SRS 14/84, • 6/89 and Off. Jour. of RS 53/93, 67/93, 48/94); • Law on organic agriculture (Off. Jour. of FRY 28/2000); • Bylaw on method of destroying plants for which measures of destroying are ordered (Off. Jour. of FRY 67/2001); • Bylaw on types of packaging for pesticides and fertilizers and on destroying pesticides and fertilizers (Off. Jour. of FRY 35/99, 63/2001); • Bylaw on trade, import and sampling of fertilizers (Off. Jour. of FRY 59/2001); • Bylaw on trade, import and sampling of pesticides (Off. Jour. of FRY 59/ 2001); • Bylaw on methods of organic plant production and on collecting forest fruits and curative plants as products of organic agriculture (Off. Jour. of FRY 51/2001); • Bylaw on methods of organic livestock production (Off. Jour. of FRY 51/2002); • Bylaw on conditions which must be fulfilled by legal persons performing examination of methods of organic production process (Off. Jour. of FRY 67/2002).

The main legal act on spatial planning in Serbia is the Law on Planning and Construction (Off. Jour. of RS, No. 47/2003). This Law regulates conditions and method of planning and arrangement of space and arrangement and use of building land and building; establishment of

the Republic Agency for Spatial Planning; supervision over implementation of this Law and other relevant issues. Law on the Spatial Plan of the Republic of Serbia (Off. Jour. of RS, No. 13/96) has been intended to serve as a strategic development guideline for the period 1996-2010. The document contains basic rules concerning long term spatial organization and spatial use in Serbia. According to this document, the territory of the Republic has been divided into ten regions. For each of these regions special environmental measures were planned, based upon the characteristics and the state of the environment. Specially protected zones with natural values and protection of cultural heritage sites have also been established at the national level by this Law.

3.3.6 Nature Protection The field of nature protection is currently regulated by numerous legal and sub-legal acts. As the most important can be regarded: • The Old Law on Environmental Protection (Off. Jour. of RS, No. 66/91, 83/92, 53/93, 67/93, 48/94, 53/95); • Law on Environmental Protection (Off. Jour. of RS, No. 135/04); • Law on National Parks (Off. Jour. of RS, No. 39/93, 44/93, 53/93, 67/93, 48/94); • Regulation on Protection of Natural Rarities (Off. Jour. of RS, No. 50/63, 93/93); • Regulation on the control of use and marketing of wild flora and fauna (Off. Jour. of RS, No. 31/05, 45/05); • Decision on protecting animal species as natural rarities (Off. Jour. of RS, No. 11/90, 49/91); • Regulation of categorization of natural goods (Off. Jour. of RS, No.30/92); • Regulation on methods of marking protected natural goods (Off. Jour. of RS, No.30/92, 24/94,17/96); • Regulation on the registry of protected areas (Off. Jour. of RS, No.30/92); • Regulations on the form for national park supervisor off. ID (Off. Jour. of RS, No. 70/94); • Statute of the Institute for the protection of nature of Republic of Serbia (Off. Jour. of RS, No. 59/93, 22/95) (1). As relevant can be, in a wider sense, regarded regulations related to water, forestry, fishing, hunting, mining, spatial planning, traffic, tourism, etc. The regime of environmental protection of specific areas is regulated also on individual basis by the specific regulations issued for individual locations.

3.3.7 Short description of the standard EIA procedure as required by EIA Act According to the Law on Environmental Impact Assessment, a project cannot be initiated without approval of an EIA given by the mandated administrative body being any one of the following: • The ministry in charge of environmental protection (currently the MSEP); • The administrative body of an autonomous region in charge of environmental protection; • The administrative body of the municipalities in charge of environmental protection.

Picture 1: Scheme of the standard EIA procedure in Serbia

Project Competent Public developer authority

Application Decision on the Comments need for EIA

EIA not EIA required required

Application Decision on the Comments scope and content of EIA

EIA study (authorized person, at the expenses of the Developer)

Application Decision on the Public EIA study consultation approval

EIA approval Project includes conditions and Implement measures that should be ation undertaken during the project implementation

Checking the fulfillment of conditions contained in the EIA Study approval

The Procedure for EIA consists of following steps (see Picture 1): 1. Decision-making if it is necessary to perform an EIA regarding the list, given by the government, prescribing projects for which EIA is compulsory and projects for which EIA can be required; 2. Decision-making about the scope and content of EIA study; 3. Decision-making about giving approval for EIA. The procedure begins after the receipt of a request from a project implementing organisation. The Law has also prescribed documentation necessary to submit a request. An EIA study must contain: 1. Data about the implementing organisation; 2. Description of the project locations; 3. Description of the project; 4. Summary of main alternatives, which have been considered; 5. Overview of environment condition at the locations and in the neighbouring areas (micro and macro locations); 6. Description of possible significant impact of the project to environment; 7. Estimation of environmental impact in case of accident; 8. Description of measures predicted to prevent or decrease, or where possible remove any significant harmful influence to environment; 9. Program for monitoring of environmental impact; 10. Non-technical summary of information given in previous 8 steps; 11. Data about technical shortages or non-existence of suitable expert’s knowledge or impossibilities to collect all necessary data. The study should also list the persons who participated in the preparation, the person in charge, the date of preparation, signature of the person in charge and the stamp of the organisation, which prepared the study. The administrative body in charge is obliged to organize public consultation, presentation and discussion about the EIA and to inform all interested parties about the place and time of public insight and discussion. The study shall be reviewed by a technical commission with representation of the viewpoints of all stakeholders and the public in general, which may require changes being made to the document. The mandated administrative body approves the EIA study, considering the conducted procedure and the opinion of technical commission. The body is obliged to inform the public about the decision through at least one local journal in every of official languages in the project area. It must also inform all stakeholders, administrative bodies and organisations in writing form on: • The content of decision; • The main reasons on which the decision was based; • The most important measures, which the implementing organisation must conduct in order to prevent, reduce or compensate harmful impacts on the environment.

The Law on EIA specifies a number of punitive actions in case of non-compliance with the law: The present fines range from 5,000 to 3,000,000SD, while in some cases, the implementing organisation and/or a responsible person may be forbidden to perform any activity in the field it/he/she operated without a legal permission for a period of up to 5 years.

3.4 Environmental Assessment Procedure for the STAR project 3.4.1 Introduction The main purpose of the system proposed it to identify the likely environmental impacts of the projects submitted for the support from the STAR project, and to specify appropriate mitigation measures. The effectively implemented system will also maximize the positive environmental impacts of the entire implementation of the STAR project. The system shall be understood as an opportunity for enhancing the overall quality of projects and not as an administrative barrier. The proposed system covers two levels: 1. Programme level i.e. monitoring of the environmental impacts of the entire STAR project implementation. 2. Project level i.e. evaluation of the single projects submitted within the STAR project from the environmental eligibility point of view.

The realization of the specific activities (see below) within these two levels will create the overall system for environmental monitoring of the STAR project. In terms of the environment, the projects submitted and implemented in the framework of the STAR project represent the final phase of implementation. These projects can have direct environmental impact (positive and negative). Because of that, it is necessary, in order to ensure efficiency of the STAR project to the environment (i.e. to ensure the minimum negative and maximum positive environmental impacts of the STAR project), to include also environmental criteria into the system of evaluating and selecting the projects (together with e.g. financial feasibility etc.). The whole environmental monitoring system (on the programme and project levels) includes the following activities:

• Evaluation of the projects submitted using environmental eligibility criteria • Monitoring of the specific project’s impacts on the relevant environmental issues • Monitoring of the overall environmental impacts of the STAR project • Initiation of respective steps in case the STAR project negative environmental impacts were found • Publishing of the results of monitoring • Communication with the respective environmental authorities and nature conservancy bodies • Providing consultation in the field of environment to the staff working in the STAR project implementing structure, i.e. especially to the members of evaluation and selection commissions • Providing advisory services in the field of environment to the entities submitting projects

• Providing information on environmental issues related to the STAR project to all parties interested (e.g. NGOs, general public etc.) The proposed monitoring system is based on the relevant environmental issues as identified by the analysis of the environment in Serbia (see below). These issues represent the environmental areas and topics that can be substantially influenced by the STAR project implementation, i.e. the environmental impacts of the STAR project implementation will be monitored through the extent to which these issues would be influenced. The proposal of environmental evaluation of project applications outlined below offers a general system for identifying projects with possible adverse environmental impacts and so it shall enable to support projects which will be the least harmful to the environment or those which will have the highest environmental benefits. The aim of this system is to ensure that the STAR project will support projects without significant negative environmental impacts. The system of environmental evaluation of project applications does not substitute other tools of environmental protection under the respective legal regulations (especially EIA). The environmental monitoring should be carried out during the whole time of the STAR project implementation and the results should be published regularly, ideally in electronic form (Internet). The results from the monitoring shall be also included in the reports to be submitted to the IBRD. It is presumed the effective realization of the proposal is connected with ensuring sufficient personnel and professional capacities in the field of the environmental protection within the implementation structure of the STAR project.

3.4.2 Detailed description of the procedure The scheme outlined below illustrates the proposed procedure for the environmental monitoring system for the entire STAR project – as mentioned above its possible to identify two main levels of the whole system – programme and project levels. The following chapter then describes in detail two key stages of the system – the stage of the evaluation of the project proposals and the monitoring of the real environmental impacts (i.e. Sub-step 2C and Step 3). These two steps should be carried out to ensure the projects with negative environmental impacts will not be supported from the STAR project. The programme level means the monitoring of the environmental impacts of the entire STAR project. The environmental impacts of the STAR project implementation will be monitoring though the set of environmental indicators proposed in this report and linked to the relevant environmental issues. In order to differentiate the STAR environmental impacts from the impacts of other activities or interventions (i.e. project financed from sources other than the STAR) the qualitative aspects of the STAR project implementation shall be monitored as well. It means the basic question is “how many projects implemented within the STAR influenced the environment”. This question will be answered for the particular environmental issues and based on data from the project level i.e. from the environmental eligibility evaluation of the specific projects submitted within the STAR project (for preliminary estimation of the possible STAR project impacts to the environment) and from the monitoring of the specific projects during their implementation and operation (for determination of the real environmental impacts of the STAR project.).

The project level includes the evaluation of the specific projects submitted within the STAR project, and monitoring of the real environmental effects during the project implementation. The procedure for the environmental monitoring of the STAR project is possible to divide to following 4 steps (see Picture 2): Step 1: Determination of the relevant environmental issues for the STAR project (programme level) Within this step the framework for the environmental monitoring is established. The relevant environmental issues for the STAR project are specified in this report and environmental indicators to be used are proposed. The relevant environmental issues were determined based on the analysis of the relevant documents and field research and represent the most important environmental issues and problems in Serbia related to the sector of agriculture. The environmental impacts of the entire STAR project will be monitored through the extent to which these environmental issues will be influenced.

Step 2: Evaluation and selection of the specific projects (project level) Environmental evaluation of the project applications should be carried out as an integral part of decision-making about granting support to a concrete project within the STAR project, i.e. evaluation as for environmental criteria should be a part of the summarizing evaluation of the eligibility of the project submitted. Activities included in the project with the potential negative environmental impacts will be determined within this step and based on the environmental eligibility criteria the mitigation measures will be proposed. For the evaluation the environmental indicators proposed within the Step 1 shall be used as criteria i.e. the likely impacts of the specific projects to this indicators will be the subject of the evaluation. Environmental evaluation of the project applications includes in fact 3 stages (sub-steps) – informal pre-project evaluation, modification of the projects as a result of the informal evaluation, and the formal evaluation and selection. The first two sub-steps don’t in fact directly serve to the evaluation of the project environmental eligibility, but they are important parts of the overall system proposed and (if implemented effectively) will make easier the formal project evaluation, so it’s recommended to integrate them in the overall system. Sub-step 2A: Informal pre-project evaluation It is very important for the project applicant (submitting entity) is informed about the environmental issues relevant to the specific projects and to have an opportunity to undertake environmental evaluation during elaboration of their project application. This should enable the applicant to modify the project if necessary and so avoid the possible identification of the likely adverse environmental impacts of the project within the formal evaluation of the project eligibility. Pre-project evaluation can be carried out by the applicant using the generic forms outlined in the table below (see Table 1). It is not always necessary to use the full list of the environmental issues, but based on the type of the project to select only relevant ones. The information about the environmental consequences of the project (as resulted from the informal evaluation) should be submitted by the project applicant as an integral part of their project application.

Picture 2: Procedure for environmental monitoring of the STAR project

Step 1: Determination of the relevant environmental issues

Step 2: Evaluation and selection of the projects

Sub-step 2A: Preliminary evaluation during the project preparation

Sub-step 2B: Projects modification as a result of Step 2A

The estimation of the likely Sub-step 2C: environmental impacts of the Formal project evaluation and STAR project selection

Real environmental impacts of Step 3: the specific projects Monitoring of the specific project

Overall environmental impacts Step 4: of the entire STAR project to Monitoring of the STAR the environmental indicators project

Step 5: Reporting

Sub-step 2B: Modification of the projects The results of the informal pre-project evaluation will enable to the project developers to further modify their project in order to minimize potential adverse environmental impacts and so improve the environmental performance of their projects. Sub-step 2C: Formal evaluation and selection The formal environmental evaluation of project applications is the key step within the whole procedure – the likely adverse environmental impacts of the projects submitted should be identified within this step and the relevant mitigation measures shall be proposed accordingly. The evaluation should be carried out as an integral part of the selection procedures concerning granting of support within the STAR project. The project proposals submitted by the project applicant will be reviewed - in the framework of the overall evaluation of the project – also from the environmental point of view using the environmental eligibility criteria specified in this report. This review will analyse the environmental aspects of the projects and based on this the mitigation measures are to be proposed (i.e. changes in the project and/or conditions for the project implementation or other recommendations). Based on this review, the selection committee will determine, inter alia, obligatory conditions for granting funds from the STAR project, which shall be stipulated in the contract between the granting authority and the applicant. The summary of the environmental evaluation of the projects selected for the support from the STAR project shall also serve as a base of the estimation of the likely environmental impacts of the entire STAR project.

The formal evaluation is triggered by the proposed STAR Environmental Compliance Application Checklist, that is filled out and submitted by the applicant. The proposed screening checklist has been drafted in line with the analysis of environmental impacts that are likely to occur (see “Environmental indicators and criteria”), however we suggest maintaining the general questions of the standard EU screening checklist to ensure completeness.

Filling out the Checklist will be complicated for applicants with no experience in this area. It is therefore recommended: • To assess the possibility to set a minimal project size (budget) as a threshold above which the Checklist has to be submitted, once that measures and financial allocations are defined with the STAR project • to provide sufficient assistance to applicants with respect to filling out the Checklist (communication strategy).

STAR - ENVIRONMENTAL COMPLIANCE APPLICATION CHECKLIST

1. Applicant

Full legal name (business name): Legal status Official address

Postal address

Contact person

Telephone number

Fax number

E-mail

Internet site

We declare that the information in this Environmental Compliance Application Checklist is true, complete and accurate to our best knowledge.

Date, place

Name, Signature of legal representative

2. Project Information

General Project Description (name, location, actions, planned results)

Project budget

Does the project require an Environmental Impact Assessment or a Strategic Environmental Assessment according to Serbian law?

If yes, what is the status of the EIA / SEA?

If EIA or SEA has been completed, please provide copies of EIA/SEA and statements from relevant authorities to it.

Does the project require any particular permits according to Serbian law (construction permits, other)?

If yes, what is the status of obtaining those permits?

If a permit has been obtained, please provide a copy.

Are there any particular plans related to the environment for implementation of the project?

If yes, please provide a copy.

Specific environmental information

Section A

1. Will the project involve actions which will cause the use of pesticides? 2. Will the project involve actions which will cause the use of fertilizers? 3. Will the Project involve actions that lead to the production, treatment or disposal of manure or other animal by-products? 4. Will the project lead to increased water use for consumption or for other purposes? 5. Will the project involve actions that will cause deforestation or other actions that could cause soil erosion or degradation of soil? 6. Will the project involve actions which affect wild flora or fauna or habitats? 7. Will the project involve actions that lead to a particular increase of human presence or traffic / transport? 8. Will the project involve actions that will cause deforestation or other actions that could cause soil erosion or degradation of soil? 9. Will the project involve actions which affect wild flora or fauna or habitats? 10. Will the project involve actions that lead to a particular increase of human presence or traffic / transport? 11. Does the project comply with standards of Good Agricultural Practice?

Section B

3. Will the Project involve use, storage, transport, handling or production of substances or materials which could be harmful to human health or the environment or raise concerns about actual or perceived risks to human health? 4. Will the Project produce solid wastes during construction or operation or decommissioning?

5. Will the Project release pollutants or any hazardous, toxic or noxious substances to air?

6. Will the Project cause noise and vibration or release of light, heat energy or electromagnetic radiation?

7. Will the Project lead to risks of contamination of land or water from releases of pollutants onto the ground or into surface waters, groundwater, coastal wasters or the sea?

8. Will there be any risk of accidents during construction or operation of the Project which could affect human health or the environment?

10. Are there any other factors which should be considered such as consequential development which could lead to environmental effects or the potential for cumulative impacts with other existing or planned activities in the locality? 11. Are there any areas on or around the location which are protected under international or national or local legislation for their ecological, landscape, cultural or other value, which could be affected by the project? 12. Are there any other areas on or around the location which are important or sensitive for reasons of their ecology e.g. wetlands, watercourses or other waterbodies, the coastal zone, mountains, forests or woodlands, which could be affected by the project? 13. Are there any areas on or around the location which are used by protected, important or sensitive species of fauna or flora e.g. for breeding, nesting, foraging, resting, overwintering, migration, which could be affected by the project? 14. Are there any inland, coastal, marine or underground waters on or around the location which could be affected by the project?

15. Are there any areas or features of high landscape or scenic value on or around the location which could be affected by the project?

16. Are there any routes or facilities on or around the location which are used by the public for access to recreation or other facilities, which could be affected by the project?

18. Is the project in a location where it is likely to be highly visible to many people?

19. Are there any areas or features of historic or cultural importance on or around the location which could be affected by the project?

20. Is the project located in a previously undeveloped area where there will be loss of greenfield land?

21. Are there existing land uses on or around the location e.g. homes, gardens, other private property, industry, commerce, recreation, public open space, community facilities, agriculture, forestry, tourism, mining or quarrying which could be affected by the project? 22. Are there any plans for future land uses on or around the location which could be affected by the project?

23. Are there any areas on or around the location which are densely populated or built-up, which could be affected by the project?

24. Are there any areas on or around the location which are occupied by sensitive land uses e.g. hospitals, schools, places of worship, community facilities, which could be affected by the project?

Questions to be Considered Yes / No / ? . Briefly describe Is this likely to What mitigation What is the effect For administrative result in a measures do you of the mitigation use only significant effect? propose in the measures? Yes/No/? – Why? project? 25. Are there any areas on or around the location which contain important, high quality or scarce resources e.g. groundwater, surface waters, forestry, agriculture, fisheries, tourism, minerals, which could be affected by the project? 26. Are there any areas on or around the location which are already subject to pollution or environmental damage e.g. where existing legal environmental standards are exceeded, which could be affected by the project? 27. Is the project location susceptible to earthquakes, subsidence, landslides, erosion, flooding or extreme or adverse climatic conditions e.g. temperature inversions, fogs, severe winds, which could cause the project to present environmental problems?

Submitted Checklists are handled according to the Administrative Checklist presented below:

Administrative Checklist

Question Answer action Remark 1. Does the project require Yes go to 2 EIA or SEA? No go to 4 2. Is EIA or SEA included in Yes go to 3 No = (temporary) rejection the application and No request from applicant approved by relevant authorities? 3. Is EIA or SEA executed in Yes approve No = (temporary) rejection line with EU standards? No address issue with applicant and authorities 4. Is the checklist properly Yes go to 5 No = (temporary) rejection filled out, does it No request from applicant sufficiently and clearly address the questions, are required permits included? 5. Do the answers correspond Yes go to 6 No = (temporary) rejection to reality? No request from applicant 6. Does the checklist identify Yes go to 7 significant effects? No approve 7. Are proposed mitigation Yes go to 8 No = (temporary) rejection measures adequate with a No address issue with view to EU standards? applicant and authorities 8. Is a plan (EMP) required Yes go to 9 Grant contract to include for proper implementation No approve obligation for implementing of mitigation measures? mitigation measures, payment only after their implementation 9. Is a plan for implementation Yes go to 10 No = (temporary) rejection (EMP) included in the No request from applicant application? 10. Is the EMP adequate with a Yes approve Grant contract to include view to EU standards? No address issue with obligation for implementing applicant and authorities mitigation measures according to EMP, payment only after their implementation

Step 3: Monitoring of the environmental impacts of the specific projects (project level) The projects supported from the STAR project will be monitored during its implementation and operation. The activities proposed for the monitoring of the environmental impacts shall be

carried out within the overall monitoring system i.e. when the implementation of the projects in accordance with the conditions given by the grant contract is reviewed. For this monitoring at project level, it is recommended that Environmental Baseline Assessments and Environmental Monitoring Measurements shall be made for projects that may have significant impacts.

Step 4: Monitoring of the overall environmental impacts of the entire STAR project (programme level) The overall environmental impacts of the entire STAR project will be determined through the aggregation of the result from the monitoring of the specific projects. As mentioned above, the monitoring will be focused mainly on the qualitative aspects of the environmental effects – it means the expected result from the system proposed will provide the answer to question “how many projects implemented within the STAR influenced the environment – positively / negatively”. The data from the monitoring of the real impacts of the specific project (Step 3) shall be used for the estimation of the overall environmental impacts of the STAR project.

Step 5: Reporting (programme level) The results from the environmental monitoring (both ongoing and final) should be published regularly, ideally in electronic form (e.g. on the web page created for this purpose under the web page of the MAFWM). The results from the monitoring shall be also included in the reports to be submitted to the IBRD – ongoing results shall be published in the semi-annual progress reports submitted by the MAFWM Fiduciary Center for World Bank Projects to the IBRD, in an internal mid-term review (which will be conducted jointly by the MAFWM and the IBRD at the end of the second year of project implementation). The overview and the final results of the environmental monitoring i.e. summary of the overall environmental impacts of the STAR project should be integrated in the project Implementation Completion Report (to be provided by the MAFWM no later than 6 months after the credit closing date to the IBRD).

3.5 General recommendations for environmental monitoring A quality and effective system of monitoring and evaluating of the environmental impacts of the STAR project implementation will contribute not only to preventing the programme´s possible negative environmental impacts, but it will also help to enhance its positive effects, not only in terms of the environment, but also in terms of a higher quality of the projects submitted. In order to ensure environmental monitoring, it is necessary:

• To ensure sufficient personnel and professional capacities in the field of environment within the STAR project implementing structures; • To ensure that the applicants are informed sufficiently about environmental issues and about possible links of the draft projects to the environment The practical experience shows that, for a quality and effective system to monitor environmental effects of the programmes and project implementation, several aspects are of key importance. These include exact focus, selection, review and possible modification of relevant environmental criteria for projects selection and evaluation and of related environmental indicators on the basis of the focus and the contents of the specific projects. Ensuring these activities requires sufficient personnel and professional capacities for the area of environment, in the framework of the whole evaluation and selection system (i.e. implementing structure) of the STAR project. One of the options is to create the position of “environmental manager” within the implementing structure1 of the STAR project. This person shall be responsible for: - evaluation of the project’s eligibility from the environmental point of view - monitoring of the environmental impacts within the overall monitoring of the projects implementation - providing information on the environmental issues to the projects applicants (especially inform them about the environmental criteria to be used) - communication with an EIA competent authority - ensuring the links between an EIA and the projects i.e. to support the proper implementation of the conditions given by an EIA within the project realization As mentioned in the relevant background documents, it is still possible to identify some problems regarding the STAR project implementation e.g. - Incomplete programme management structure (i.e. Programme Managing Authority, Programme Monitoring Committee) and implementation structures (e.g. Paying Agency, local offices, etc.) - Insufficient coordination and capacity building of national and local authorities and bodies to be involved in implementation of RD schemes

1 The position of “environmental manager” shall be open within the Project Implementation Support Unit as the key element of the implementing structure.

- Lack of comprehensive and user friendly guidelines on conditions and rules governing project preparation directed to various target groups (e.g. various beneficiaries, authorities and public bodies involved, potential project advisors, etc.) So, its recommend to allocate the appropriate funds to the training of staff of the implementing structures especially the members of the evaluation committees / programme monitoring committees. Vice versa, the information about the STAR project and related activities should be distributed among the relevant authorities responsible for the environment and nature protection in order to be able to provide support and recommendation in this field to the project developers. It is also recommended to provide the opportunity for the project developers to get the information about the environmental problematic related to the STAR project, especially about: - the system of the environmental monitoring - specific environmental indicators and criteria to be used - ways of integrating the relevant environmental issues in the project in order the increase the environmental performance of the projects. This can be organized by the series of the workshops and training seminars, or by the establishment of the permanent information centre providing information and advices in the field of the environment and its protection.

3.6 Status of the environment

3.6.1 Results of the analysis of relevant documents Air quality The main sources of air pollution in Serbia include: the energy sector (thermo power plants), district heating plants, oil refineries, chemical industry, fuel combustion in households, industry, individual heating boiler plants, traffic, construction industry, inadequate storage of raw materials, waste dumpsites. The major air pollution results from combustion of low quality lignite (thermo power plants in Obranovac, Lazarevac and Kostolac), and engine fuel. Also, low prices of energy, irrational and inefficient energy consumption, inefficient combustion technologies, inadequate maintenance of industrial plants and the obsolete vehicle fleet increase the emission despite the reduced industrial and economic outputs. The old vehicle fleet, much of which was recently imported, still uses leaded fuel and low-quality motor fuels (diesel fuel with high sulfur content). There are no plans in place to introduce systems of vehicle control in traffic to improve their maintenance or discharge of leaded fuel. Pollution resulting from traffic is increasing, including soot concentrations, especially in major towns. Considering the seriousness of the problems with the air quality (and probable growing intensity of the car traffic) the only slow improvement of the current situation might be expected. In relation agriculture activities the main problems of air quality arise in respect to transport and improper management of bio-degradable waste in dumpsites – disposal sites often do not meet technical requirements and there many illegal dumpsites in rural areas – with a consequences for the quality of air, soil and water. At present there are no sanitary landfills in Serbia which comply with the EU standards. Only the newly constructed sanitary landfill in Vranje partly meets the EU standards. There are 180 officially registered municipal waste disposal sites in Serbia. In rural areas waste is dumped in illegal dumpsites or burnt causing environmental pollution. Disposal sites generally do not meet the prescribed requirements according to national legislation with respect to waste disposal. Numerous sites are located along riverbanks, and often in zones where the possibility of groundwater contamination is high. Environmental impacts of the improper waste management at the dumpsite include uncontrolled burning producing harmful emissions and emissions of landfill gas (risks of explosions, emissions of CO2 and methane). There are also other current problems related to the agriculture and air quality – it is namely the problem of degradation of nature and biodiversity due to fires and natural disasters (draughts, floods). These issues might be positively influenced by activities supported from the STAR project.

Water Water quality in watercourses in Serbia is generally low and it is further deteriorating. Examples of very clean water - Class I and I/II - are very rare, and are found in mountainous regions, the most polluted watercourses include the Stari and Plovni Begej, Vrbas-Bečej Canal, Toplica, Veliki Lug, Lugomir, Crni Timok and the Borska River. The water quality suffers especially from eutrophization caused by nutrients and organic pollutants (due to discharge of untreated sewage and agricultural run-off) and along large cities. The deterioration of water quality is

partially attributed to transboundary pollution of the waters entering Serbia. The transboundary rivers are contaminated with nutrients, petroleum/oil, heavy metals, and organic components. Despite large pollution load, the quality of the Danube remains in class II-III mainly due to large dilution capacity. Household surveys show that, overall, around 84 percent of the people in Serbia and Montenegro are served by piped drinking water supplies delivered to their homes. Urban and rural differences in coverage are notable, however (97 versus 68%). These figures are in contrary with the fact that residents, particularly in rural areas, increasingly receive inadequately treated drinking water supplies due to the absence of a functioning municipal system. Most water supply networks have difficulty assuring a regular supply, and there are widespread water quality problems. The percentage of drinking water samples that do not meet the required standards is at 50% in Serbia. According to official statistics, access to sanitation services (a sewage system or septic tank) in Serbia and Montenegro over the past decade has increased from 66 to 88% (the rest use pit latrines.) Construction of sewage systems has lagged behind water supply development, and there are distinct regional differences in sanitation coverage. It is estimated that only 15% of treatment plants operate satisfactorily, resulting in significant groundwater and surface water pollution. Bacteriological pollution has been found in small rivers and channels from municipal and industrial wastewater discharge. Wastewater treatment plants are heavily overburdened and must often discharge untreated sewage. In small towns and rural settlements, sewage systems are nonexistent, with around 28% of the population using septic tanks and absorbing wells, the contents of which are not always disposed of properly. Municipal water and sanitation utilities are in serious financial trouble, preventing the initiation of rehabilitation works that are urgently need to prevent the collapse of services. The following main problems regarding the water can be identified in Serbia:

• Considerable contamination of watercourses by point and non-point pollution sources • Increased concentration of nitrates in areas sensitive to nitrate pollution caused by non-point agricultural pollution • Frequent floods causing high damages • Contamination of groundwater aquifers • Pressure on the environment and natural resources in areas of the hydropower reservoir impact including: deposition of bed load and suspended solid, change of water regime in the riparian zone, impact on biodiversity etc. • Inadequate monitoring of water There are also specific problems within the water management related to the sector of agriculture especially

• Water pollution due to agricultural run-offs o uncontrolled use of pesticides; impact of eutrophization on water quality = non- point agricultural production leads to increased concentration of nitrates in areas sensitive to nitrate pollution (mainly surface waters and watercourses endangered) o uncontrolled use of fertilizers; eutrophization due to uncontrolled effluents from livestock farms

The consumption of fertilizers in Serbia declined from 115 kg/ha in 1991 to 36 kg/ha in 2002. Consequently, the contribution of land cultivation to eutrophization of water bodies has been significantly reduced. Currently, the soil contamination and eutrophization problems in Serbia are connected mostly with uncontrolled effluents from livestock farms. There is little promulgation of good environmental management practices in large livestock farms. There are no facilities for hazardous waste treatment and disposal, leading to a continuous build- up of improperly stored hazardous waste within industrial sites. Few enterprises have temporary storage sites equipped to prevent the spreading of toxic components or their diffusion into soil and groundwater. The animal waste management does not comply with the EU standards.

• Water consumption o Agriculture sector belongs to production industry with a high demand for water. Increase intensification of agriculture activities can lead, if not properly managed to over- exploitation of water sources for agriculture production which can have negative impact on groundwater sources • Water pollution due to improper wastewater treatment o Inadequate, insufficient maintenance and investment during the past years resulted in considerable deterioration of majority of the sewerage infrastructure. The especially critical (vulnerable) places are the main collector pipes and pumping stations. Frequent defects and disruption of operation are evident, while discharge of untreated wastewater presents human health hazard. In the rural areas there is still prevailing the usage of permeable septic tanks for sanitation purposes.

Soil The occurrence and progress of erosion processes is one of the major causes of soil degradation and its deteriorated quality. It is estimated that the erosion processes (of various degrees) affect up to 80% of agricultural soil in Serbia. While in central regions and the hilly-mountainous regions the predominant type is water erosion, the predominant type in Vojvodina is eolic erosion (erosion processes caused by wind). Soil is also affected by exploitation of mineral resources, especially by open cast mining, causing loss of soil. Soil quality is also affected by uncontrolled and inadequate dumping of waste. Large land areas in the vicinity of industrial complexes (Bor, Pančevo, Novi Sad, Smederevo, Belgrade and Kragujevac) are contaminated with various pollutants discharged from industrial facilities. Along roads, especially highways, the quality of soil is endangered by traffic related emissions i.e. pollutants from the exhaust gasses (lead and PAH). Quality of soil is affected by inadequate agricultural practices including uncontrolled and inadequate use of fertilizers and pesticides, uncontrolled effluents from livestock farms, and lack of control of quality of water used for irrigation (this water is usually considerably polluted). The widespread use of leaded petrol causes soil contamination by lead along the main roads. Poor management of waste and chemicals also causes soil degradation (loss of space, infiltration of pollution into the soil profiles). The occurrence and progress of erosion processes is one of the major causes of soil degradation and its deteriorated quality. It is estimated that the erosion processes affect up to 80% of agricultural soil in Serbia.

Biodiversity and nature protection The great scope of biological diversity in Serbia is caused by the biogeographical position, the openness of the territory to other surrounding regions and the past processes of flora and fauna genesis. The territory of Serbia includes three biomes: sub-Mediterranean (as part of the Mediterranean), Middle-European and Pontian-Southsiberian; and thanks to the high zoning of eco-systems in the mountains, there are elements of boreal, middle-European mountainous (including Arctic-Alpine) and southern-European mountainous biomes. The Balkan endemites make up 8.06% of the flora in Serbia, and local endemites make up 1.5% (59 species). The number and diversity of fauna is also very high. The total number of mammals, nesting birds, reptiles and amphibians living in Serbia is 43.3% of these animals living in Europe. The total area of protected areas is about 6.5% of the total land area in Serbia. Apart from national parks (5), nature reserves (98), landscape protected areas (16), nature monuments (296) and nature parks (24), there are also 215 plant species and 426 fauna species which fall under the category of protected natural rarities. International status of nature protected areas according to the Ramsar Convention criteria is assigned to Laduško Lake, Obedska Bara, Stari Begej – Carska Bara, and Slano Kopovo. According to the Convention on Natural and Cultural Heritage, the Golija- Studenica is declared biosphere reserve. Pressure on biodiversity in Serbia is most strongly reflected by the status of forest eco-systems and sensitive eco-systems (aquatic eco-systems, humid and wetlands, steppe and forest-steppe, sand eco-systems, continental marshes, high mountain habitats, etc.) and they cause loss of biodiversity. The impacts of uncontrolled tourism, illegal construction activities, transport and forest management on nature protected areas is of particular concern. Also agricultural activities cause problems related to the biodiversity. The following problems can be specified in relation of the activities to be implemented within the STAR project:

• Degradation of forests due to use of pesticides • Risks of degradation of nature and loss of biodiversity due to intensive exploitation of forests, hunting and fishing fauna. • Use of inappropriate methods and chemicals for pest control (pesticides). • Collection of wild flora, fauna and fungi for commercial purposes (without ensuring adequate protection measures) • Pressures on nature and biodiversity due to intensive tourism in areas of sensitive ecosystems and protected natural areas (waste water and communal solid waste)

Waste management Waste volume in the Republic of Serbia is hard to estimate. The main reason is a lack of information on waste qualitative and quantitative analysis, i.e. filing system of quantities, characteristics, especially content, and classification of waste. Data on waste origin and methods of disposal are incomplete. According to the data provided by the professional association KOMDEL, total waste collected by the 90% communal companies in Serbia is estimated at 2.200.000 t/year. The above number includes household, commercial and non-hazardous industrial waste, but not waste form hospital and other health institutions, as well as buildings

where health preserving activities preserved, clinic waste, and also construction waste. Communal waste is deposited to sites without any previous treatment. In spite of an option of composting (large percent of organic waste), it is not done. There is no single waste-incinerating device in Serbia, nor is it used as an alternative fuel in cement-factories or iron-factories. Despite the fact that primary recycling (waste separation at the source) is regulated by law in the Republic of Serbia, anticipating deposition of paper, glass and metal containers into specially marked trashcans, the system is not practically used. Communal waste recycling is not organized either. There is only industrial waste recycling, mostly privately initiated.

3.6.2 List of the most important environmental issues Generally the following environmental issues have been identified as critical in Serbia, based on the negative impact of the current environmental conditions on human health, the economy, and natural ecosystems:

• Deteriorating trends in water, sanitation, and waste management. • Air pollution hot spots. • Energy inefficiency. • Excessive industrial pollution. • Insufficient environmental management system, institutionally and legally. • Inefficient application of economic instruments • Difficulties with the quality and quantity of water resources. • Transboundary water and global environmental issues. • Lack of sustainable forest management. Main environmental issues that are considered in relation to agriculture development in Serbia are related to water, soil, air and biodiversity and nature. Generally, the following cross-section causes of problems can be linked to activities and production in agriculture sector, forestry, rural development and tourism:

• Insufficient enforcement of environmental and nature protection legislation (adopted to address negative impacts of agriculture and rural development activities) • Lack of environmental awareness of decision-makers as well as producers, • Insufficient public participation in planning and decision-making in agriculture and rural development • Insufficient development of sewerage network • Inadequate protection of water sources (groundwater, surface water, reservoirs and water courses • Low level of treatment of municipal and industrial wastewater • Improper and uncontrolled use of pesticides • Inadequate management of soil fertility and application of fertilisers • Uncontrolled use of fertilizers • Inadequate environmental management in large livestock farms • Over-exploitation of groundwater resources

• Intensive exploitation of forests, hunting and fishing fauna • Lack of strategic planning documents regarding forest management • Collection of wild flora, fauna and fungi for commercial purposes (without ensuring adequate protection measures) • Use of inappropriate methods and chemicals for pest control • Agricultural and forestry practices encouraging soil erosion • Use of old vehicles fleets, leaded fuel and low-quality motor fuels with high content of sulfur in vehicles • Lack of an organized system of collection, transport, treatment and disposal of waste in rural areas

3.7 Environmental indicators and eligibility criteria

3.7.1 List of indicators and eligibility criteria Considering the results of the analysis of the status of the environmental in Serbia i.e. the most important environmental issues related to the sector of the agriculture and tourism, the following environmental issues and relevant environmental eligibility criteria for the project evaluation have been proposed to be used within the system of the environmental monitoring for the STAR project (see the detailed description of the procedure above):

Activities with Mitigation measures Indicators / Monitoring Environmental issues potentially negative Eligibility criteria action environmental impacts Pollution from the Application of pesticides Compliance with a safety and sanitary legal Training in Pesticides agriculture sources and/or fertilizers requirements. agrochemicals consumption application. Soil contamination, surface The pesticide/fertilizer management plan Surface and and groundwater included in the project. groundwater quality contamination The use of agrochemicals is justified and measurements cannot be (in given circumstances) Compliance with the reasonably substituted by eco-agriculture management plan techniques

Livestock facilities Detailed plan of liquid effluents treatment Good housekeeping Nutrients content in Soil contamination, surface Proper manure and other animal by-products practices (e.g. separate water surface and and groundwater management plan included in the project waste collection and groundwater contamination design (including the environmentally sound storage, ventilation). Compliance with the Waste treatment and final disposal method) Individual water technological disposal treatment facility or standards and Ambient air quality and connection to sewage management plan visual impact problems system of appropriate Appropriate relation capacity. between nutrients Facility design content in soil and the adjustments (e.g. quantity of the manure insulated waste storage used for fertilization vessels instead of permeable septic tanks, separate rainwater collection and discharge system).

Food and other agro- Detailed waste management plan with Good housekeeping Nutrients content in production prominent focus on liquid effluents treatment practices (e.g. separate surface water and Soil contamination, surface and separate waste collection and disposal waste collection and groundwater and groundwater storage, ventilation). Water quality contamination Individual water measurements Waste treatment and treatment facility or Compliance with the disposal connection to sewage technological system of appropriate standards and capacity. management plan Facility design Compliance with health adjustments (e.g. and sanitary standards insulated waste storage vessels instead of required by legislation permeable septic tanks, closed cycle of water use within technological process). Over-exploitation of Water consumption Water supply is secured in a sustainable Water efficiency Water consumption the water sources manner (e.g. takes into account the future water measures Available water needs of local community and other foreseeable reserves developments)

Soil degradation Changes in land-use No significant deforestation is allowed Introducing small scale Area damaged by triggering soil erosion terrain modifications erosion due to agriculture and influencing runoff Effectiveness of other developments regime. mitigation measures (e.g. deforestation of Trees planting in hillsides and other areas erosion susceptible vulnerable to erosion caused by water, building areas large paved surfaces, extending the arable areas)

Grazing and other Project takes into account the maximum Flexible adjusting the Areas endangered by extensive forms of environmental carrying capacity of the grazing size of heard overgrazing animal husbandry area Introducing a scheme of Specific impacts on (surface soil erosion due temporary excluded local ecosystems to overgrazing and areas enabling natural animal trampling) recovery of grasslands Nature and Hunting and fishing. Detailed environmental management plan Seasonally or locally Compliance with biodiversity Collection of wild flora, embodied in the project design. applied restrictions concerned fauna and fungi for Secured capacities (both within the project and enabling natural environmental commercial purposes those of official authorities) for monitoring recovery legislation and project and mitigations enforcement level environmental management plan Concerned species abundance Specific environmental impacts

Tourism Tourist facilities design and capacity consulted Seasonally or locally Waste production and Habitats destruction, with the environmental protection authority. applied restrictions on treatment wildlife disturbance, Waste management plan and its execution access of tourists to Effluent discharge impact on landscape face. costs included in the project economic vulnerable localities volumes and quality Associated transport and feasibility calculation Wastewater treatment (Nutrients content, transport infrastructure Effluent treatment and discharge meets all unit harmful substances) impacts (air quality, Number of tourists noise, habitat standards required by the legislation Tourists and visitors fragmentation) Related transport is addressed in the project education programs Traffic intensity (e.g. available parking, access through the public transportation, mitigation of negative impacts from induced transport)

Forestry, logging Forestry management plan applies sustainable Avoiding clear cutting Total forest area Habitats destruction, forestry principles Forest area managed in wildlife disturbance, compliance with Soil erosion, sustainable forestry Runoff regime alteration principles Compliance with the management plans of environmentally protected areas (where applicable)

Transport related Transportation related Project achieves its transportation needs in a Transport volumes environmental to agriculture, forestry, costs-effective way, avoiding excessive issues tourism operations and transportation. Significant increase in activities transportation is justified and mitigation Increase in transport measures put forth volumes, air pollution, noise, accidental full spills, safety risks, etc. Transport infrastructure Compliance with spatial/land-use plans Minimization of Length of roads construction While assessing alternatives, upgrading of conflicts with nature constructed or upgraded Habitats destruction and/or already existing infrastructure should be given protection at the level fragmentation, wildlife preference over new constructions unless the of spatial planning disturbance, impact on new development is clearly superior in terms of landscape face environmental impact

4. Output 2 – Environmental Management Plan

4.1 Recapitulation of procedure

The proposed procedure consists of 5 steps:

1. Selection of environmental indicators 2. Evaluation and selection of the projects 3. Monitoring of specific projects 4. Monitoring of STAR Project 5. Reporting

4.2 Procedure workflow analysis

The procedure workflow can be analyzed in two separate groups of activities:

Group A: Selection of environmental indicators, monitoring of specific projects and STAR project

Group B: Evaluation and selection of projects, reporting

Group A

Group A requires the execution of the following activities (numbering refers to numbering of steps):

1. Selection of environmental indicators - analysis of environmental issues in Serbia - draft set-up of monitoring system - draft selection of environmental indicators - consultation with stakeholders and experts - final selection of environmental indicators

3. Monitoring of specific projects - establishment of baseline indicators - establishment of target indicators (taking into account specific conditions for granting – mitigating measures) - collection and processing of data - interpreting of data (taking into account dynamic effects) - project monitoring report.

4. Monitoring of STAR Project

- establishment of baseline indicators - establishment of target indicators - aggregating project reports - interpreting aggregated information - STAR project monitoring report

Group B

Group B requires execution of the following activities:

Evaluation and selection of projects: - Set-up management structure for environmental management of STAR Project - Preparation of an internal manual for environmental evaluation of projects - Preparation of information for potential proponents (environmental criteria for project selection/rejection) - Providing information to potential proponents - informal evaluation of projects - modification of projects - formal evaluation of projects and selection/rejection - supervision of EIA and SEA - communication with proponents.

Reporting (Project/Programme level) - processing of data and information from step 1 – 4 - interpreting data - reporting including conclusions and recommendations on the system of monitoring and project evaluation and selection.

4.3 Identification of issues

There are two main issues regarding safeguarding of environmental principles of Wbin the STAR Project.

The first issue regards the practice of EIA and SEA in Serbia. Although SEA and EIA legislation exists, its application does not yet seem to reach the level that is desired by WB and EU standards. This regards in particular the lack of well-elaborated complex (multi-sectoral) planning documents (development strategies and spatial plans) to check against; limited influence by local stakeholders; little influence by the competent authority (MSEP or municipality) in the process of drafting SEA/EIA (influence only for comments and final approval); approval of SEA/EIA due to political pressure; and possibilities to circumvent SEA completely by giving strategic documents a different name than those specified in the Serbian SEA law.

The second issue regards the capacities in MAFWM and other relevant public bodies to manage and monitor implementation of the STAR Project as proposed in this report (see in particular Output 1).

As regards monitoring, the type of monitoring that is required from an environmental point of view requires collection and processing of agricultural and environmental data. This will require coordination with other public bodies. With a view of EU-accession of Serbia, there is a need for MAFWM to create a system for agro-environmental monitoring; it would therefore be highly recommendable to transform existing capacities for this purpose. We note that monitoring of other types of data (GDP, employment etc.) may also be required for the STAR Project, but this falls outside of our scope.

As regards management (group B), a number of tasks need to be executed for which no clear separate capacity exists within MAFWM. Capacity will be needed for providing environmental information to potential proponents and for informal evaluation of projects, i.e. project consultations. For this purpose the STAR Project officers can be trained, and/or a special dedicated officer can be recruited and trained. The latter person could then also be responsible for coordination with other public bodies on this topic, in particular with other Ministries and municipalities.

Next to that, capacity is needed to formally assess projects, and especially to judge whether EIA and SEA are executed properly. This activity may be very sensitive and subject to political pressure. The STAR Project would therefore benefit from a set-up that guarantees independence and objectivity of the person executing this activity.

4.4 Implementation Plan

Implementation of the environmental procedure could be executed in two phases (numbering refers to numbering of steps):

A. Preparatory phase

2. Evaluation and selection of projects - Draft management structure for environmental management of STAR Project - Preparation of an internal manual for environmental evaluation of projects - Preparation of information for potential proponents (environmental criteria for project selection/rejection)

3. Monitoring of specific projects - establishment of baseline indicators - establishment of target indicators (taking into account specific conditions for granting – mitigating measures)

4. Monitoring of STAR Project - establishment of baseline indicators - establishment of target indicators

The present assignment is already delivering input for the activities under number 1 and for the first activity under number 3. Activities under 2 and 3 could be realized before or during the start- up phase of the STAR Project.

B. Implementation Phase

2. Evaluation and selection of projects - Establish management structure including recruiting and training of officers - Providing information to potential proponents - informal evaluation of projects - modification of projects - formal evaluation of projects and selection/rejection - supervision of EIA and SEA - communication with proponents.

5. Reporting (Project/Programme level) - processing of data and information from step 1 – 4 - interpreting data - reporting including conclusions and recommendations on the system of monitoring and project evaluation and selection.

4.5 Monitoring & Reporting

Monitoring shall be executed as inidcated in Step 3 and Step 4 of the procedure described in section 3.4.2. Reporting shall take place on a semi-annual basis.

4.6 Institutional arrangements

The following institutional arrangements are proposed:

Monitoring. There is a need to create capacity for coordinating data-mining, data-collection and processing for agri-environmental monitoring within MAFWM. Logically this could be

embedded in the Sector for Analytics and Rural Policy - Department for Analytics and Statistics. The department will coordinate these activities with other public bodies (especially MESP) and ngo’s.

STAR Project management. There is a need to create capacity within MAFWM to manage the environmental aspects of the STAR Project as defined in this report. Given the financial volume of the STAR Project, it will most likely be necessary to recruit at least one dedicated officer for managing environmental aspects of the STAR Project. Further, one external and independent evaluator should be assigned to judge whether EIA and SEA submitted to MAFWM correspond to international standards, and to assess the objectivity of monitoring and reporting in practice.

Environmental management will require coordination with MESP, the Institute for Nature Conservation, and other public bodies. This coordination should especially occur with respect to the informal evaluation of projects, and the evaluation and selection of projects. For the latter, an advisory board with representatives from various stakeholders could be created (MAFWM, MESP, INC, MoT,

4.7 Cost estimates and sources of funds

Regarding costs for implementing environmental management and mitigation measures, only very rough cost estimations can be made at this moment:

- costs for training of staff of MAFWM USD 100,000 - costs for external assessment of EIA/SEA USD 200,000 - costs for monitoring and evaluation USD 300,000 - costs for implementation of mitigation measures up to 10 % of the project budget.

We note that under Component 2 and 3, it should be possible to request funding for capacity building for environmental monitoring. The budget allocation for such “green” projects is not included in the above overview.

5. Output 3 - Scheme for environmental evaluation and selection of the subprojects prepared and submitted within the STAR project for Stara Planina Nature Park.

5.1 Introduction 5.1.1 Short summary of Output 1 The objective of the entire EIA project is to prepare Environment Impact Assessment (EIA) study together with Environmental Management Plan (EMP) for the STAR Project. The assignment includes two tasks: Task 1: Environment Impact Assessment for the STAR Project Task 2: Specific Environment Impact Assessment for Component 3 of the STAR Project- Sustainable Land Use and Ecological Management of the Stara Planina Nature Park The aim of the output 1 (prepared within the task 1) is to propose a scheme for environmental evaluation and selection of the subprojects prepared and submitted within the STAR project. This scheme is considered as one of the most important tools for minimizing of the likely adverse environmental effects of the STAR Project implementation. The application of the scheme should ensure that the projects with negative environmental impacts will not be supported, and that the support is preferentially directed at those projects that can contribute to improving the environment in Serbia. The scheme includes 3 main parts: 1. procedure for project’s environmental evaluation and selection 2. set of environmental indicators and criteria 3. overall system of environmental monitoring for the STAR project implementation Based on this the system for the environmental monitoring for the Stara Planina NP will be developed i.e. system proposed of the entire STAR project will be modified considering the specific character of the Nature Park territory and existing environmental problems and issues.

5.2 Environmental characteristic of the Stara Planina Nature Park 5.2.1 Results of the analysis of the environment of the territory of the Stara Planina NP The area of Stara Planina1 protects is known for its rich biological and geological diversity. A memorandum for the establishment of a trans-boundary Peace Park was signed in 1996 between Bulgaria and Yugoslavia; as a result, a Nature Park was set aside in Serbia in 1997 with a surface of 142.221 ha. Stara Planina Mountain region is important for its natural beech forests, indeed one of the few surviving forests in the world, and for its 1,500 biological species, of which one hundred are

1 The Stara Planina Mountains are situated on the border between Bulgaria and Serbia, and cover approximately 3,500 sq. km in both countries.

considered endemic in higher altitudes of the mountain ridge. The area was designated as important bird areas by the Birdlife international alliance. Both human and livestock numbers in the Nature Park area have declined dramatically over the past 50 years, yet the high unemployment rate in the region is creating significant interest among urban dwellers in returning to village areas if there were viable economic opportunities. This is particularly true of young adults who were born in the villages and have family connections to land and other assets there. Agriculture is seen as a key element of rural livelihoods, but not the only source of necessary products and income. Increasing extensive livestock production has been identified as a key tool for reversing biodiversity loss and ecological degradation in mountain meadows in the Stara Planina Nature Park. Ensuring economic viability is in turn essential for increasing and maintaining these livestock. Rural tourism could also make an important contribution to the economic viability of rural households, and provide an economic incentive for protecting natural landscapes and biodiversity.

The assessment of the Stara Planina Mountains biodiversity carried out by different biological groups has shown that over 1,500 species, some 210 species are threatened and needed urgent conservation measures (Wilderness Fund). Shooting, poaching, shrinking of the trophic base, construction, destruction, change of habitats, and agricultural practices among others have been identified as causes of the depletion of animal species. As a result, reptiles, mammals, birds and mosses are endangered. Reportedly, vultures and bears have disappeared from Stara Planina, which apparently is related to the lack of open grasslands. Also, in relation to nature and biodiversity issues, it was reported that the blueberry has disappeared from large areas, apparently related to illegal picking and lack of grazing. This applies to Stara Planina, but a fortiori to the Bulgarian side of the park. There are mentions of illegal picking of mushrooms and herbs as well. A main problem relating to air (smell), water and soil quality, is manure management of cattle holdings that are located in the villages. Cattle was in the past held on grasslands in the mountains, but the deterioration of facilities and changing habits have brought the animals into the villages. There is no appropriate manure management, reportedly there is nitrate leaching into streams from lagunes. As regards water quality, pressures are made due to the lack of sewage systems in the villages. While canalization in the cities is sufficient, it has been “improvised” in villages, meaning that waste water is canalized into the direct environment. As regards solid waste, until date there is a total lack of municipal waste services in the villages. As mentioned above, new communal waste management plans have been made to improve waste collection and disposal. This plan creates two waste collection areas: Zajecar-Knjazevac and Pirot-Dimitrovgrad. The waste collection service of the largest cities will become responsible for collecting waste from the cities and the villages, leading to a considerable improvement. However, the communal services are serving at this moment only the territory of the town(s), in the villages in the park there nobody collects waste and deals with waste water. As regards the waste management outside the area of SP there was observed a problem with the collection of hazardous waste; this is not properly managed yet and only temporary storage is disposable.

Agriculture sector The agriculture sector is an important sector for the Serbian economy. Creating linkages between the agriculture and the tourism sector may provide opportunities for additional sources of revenues for the inhabitants of Dimitrovgrad, Zajecar, Knjazevac and Pirot. List of Agricultural Products in Serbia products cultivated in Stara Planina Organic Fruits (Apple, Pear, Plum) (There is no certified organic production in the area of Stara Planina Mt, except production of spice plants in Mali Izvor, Zajechar Municipality, on a farm which under process of conversion) Milk and dairy products such as white and yellow cheese, yogurt and curds Livestock breeding Mushrooms (annual production on Stara Planina is about 582,000 kg.) Honey – low productivity (6kg/bee keeper) but conditions to develop this activity Medicine herbs

Socio-economic development There is no significant industry in the region and a high percentage of the population is on social aid, which puts pressure on the natural resources of the mountain. The area is characterized as a “less favoured area.” There is a significant threat of abandonment, and the landscape is in need of maintenance. The population of West Stara Planina has been dropping and ageing for decades. There is strong interest in the development of ecotourism and significant potential for it. Currently, visitors are transitory and are mostly attracted by: natural areas and landscapes; cultural monuments and religious sites (monasteries, churches, traditional architecture); and crafts (carpentry, icons, knitting), products (kashkaval, urda, belmuz, maslo), and traditional lifestyles. The main characteristics of the region are a relatively aged population, progressive depopulation (due to the few opportunities for young people), jobs inadequate to qualifications, low incomes relative to the averages in the countries, and the still low but increasing use of natural resources for commercial purposes. Management To date, there is no formal management plan (MP) for the park. The Institute for Nature Conservation (INC) has recommended establishing three zones of differing levels of protection for the 116,313 hectares (ha) area proposed for the park. 70.3% of the total land would be set aside for recreational/agricultural/general mixed use. Detailed scientific background study required for management planning, has recommended 3 zones of differing levels of protection for the 116,313 hectares (ha) area proposed for the park: Zone 1, with strict protection and limited/no human disturbances (6.7% of the total area); Zone 2, allowing some human activity, but with important limitations (23% of the area); and Zone 3, set aside for recreational/agricultural/general mixed use (70.3% of the total). The INC study is fully supportive of a strategy for increased grazing in the park territory (For Zone 2 and Zone 3, and its expected Zone 1 to be used for limiting pasturing, what is going to be described in the new Law on

Nature Conservation which is under preparation); in fact, this activity is desirable in terms of its ability to improve the biodiversity and slow the degradation in the pasture habitats.

5.3 List of the most important environmental issues and problems for the Stara Planina NP Based on the preliminary analysis of the status of the environment in the territory of the Stara Planina Nature Park, including the observations obtained on a mission there can be identified the following main sensitive environmental aspects specific for rural development and agriculture (including forestry and tourism) in territory of the Stara Planina Nature Park which create or might create significant negative pressures on the environment:.

• Air pollution due to transport increase (emissions from the transport) – tourism development and increase of agricultural activities • Air pollution due to uncontrolled burning producing harmful emissions from improper management of bio-degradable waste in dumpsites • Noise exposition from increased traffic • Eutrophication of water and soil contamination caused by inadequate management in livestock farms (uncontrolled effluents) • Water pollution due to improper wastewater treatment (mainly due to usage of permeable septic tanks for sanitation purposes, insufficient sewerage system) • Water pollution due to agricultural run-offs (uncontrolled use of pesticides and fertilizers • Soil erosion • Soil and water contamination and air pollution due to illegal dumpsites • Forests degradation due to use of pesticides • Nature degradation and loss of biodiversity due to intensive exploitation of forests, hunting and fishing fauna • Nature degradation and loss of biodiversity due to use of inappropriate methods and chemicals for pest control (pesticides) • Nature degradation and loss of biodiversity due to collection of wild flora, fauna and fungi for commercial purposes (without ensuring adequate protection measures) • Land fragmentation and consumption, nature and forests degradation, increase of noise and air emissions from traffic, due to intensive tourism and high-tourism activities (down-hill skiing: ski-centers, ski lifts, large hotel complexes, etc.) and building accompanying infrastructure, mainly in areas of sensitive ecosystems and protected natural areas. Over-exploitation of the water sources and increase of waste and waste water production due to increased tourism

There is also need of support of the issues related to the overall management of the Stara Planina Nature Park:

• proper enforcement of environmental legislation, including EIA • control over illegal dumpsites • control over illegal hunting, fishing, collection of wild flora, fauna and fungi for commercial purposes • proper waste and waste water management; building and efficient operation of sufficient sewage systems and system of collection and treatment of the solid waste • implementation of monitoring of impacts of big livestock farming estates and processing plants; • implementation of monitoring of the use of hazardous chemicals in agriculture; • expand monitoring of nitrates and nutrients in the nitrate sensitive zones • raising environmental and health issues awareness of agricultural producers, tourists and hoteliers • control over illegal constructions • public participation in spatial planning • protection of cultural heritage and improved treatment of neglected and abandoned houses and buildings • introduction of the biodiversity protection measures

5.4 Type of STAR projects 5.4.1 Overview of the projects to be implemented in the Stara Planina NP within the STAR project The activities to be implemented in the Stara Planina NP within the STAR project are included in the Component 3 of the STAR project “Sustainable Land Use and Ecological Management of the Stara Planina Nature Park”. The budget proposed for this component is 2.4 million USD. Within the Component 3 the following topics and issues will be supported: - Specific aspects of improved management of the Stara Planina NP, including capacity building and operational support for the management authority (Srbijasume), which currently is mainly focused on developing cutting plans for the state-owned and private forests within the park. - Public awareness raising and consensus building and strengthening of cooperation between the park management and local authorities and residents, including introduction of a participatory approach for the preparation and implementation of management plans. - Implementation of those aspects of the management plan that would not be addressed through Components 1 and 2 of the STAR project, such as ecological restoration work in areas where providing incentives for sustainable private use is not an appropriate approach. - Improved forest management (particularly in the fragmented, privately-owned patches of natural forest) and control of illegal hunting.

- Supplement in various ways the direct technical and financial support that will be provided to farmers under Components 1 and 2 to encourage adoption of sustainable land use and biodiversity conservation activities e.g. the development and implementation of certification systems and product branding to add value to environmentally friendly products that are based on, and help maintain the biological resources and ecological and cultural values of the Stara Planina NP. - Strengthening of MAFWM capacity in areas such as agro-environmental production, sustainable land use and rural tourism. This improved capacity will have particularly important benefits in the Stara Planina region and other similar parts of the country, which are generally not well suited to conventional intensive agriculture but have comparative advantage in relation to tourism, niche products and provision of environmental services such as nature conservation and watershed protection. - Strengthening the trans-boundary cooperation, ecological restoration of priority sites (particularly degraded high elevation meadows), certification of “SPNP-branded” local products, small scale infrastructure to support rural/eco-tourism, and establishing an ecological monitoring system. - Preparation of local rural development strategies and plans to enable communities to access community-level grants under the GoS rural development support program. - The GoS “Strategy for the Conservation of Locally Adapted Breeds,” supplementing ongoing GoS and local NGO initiatives to maintain the genetic heritage of autochthonous breeds of cattle, sheep, goats, horses, donkeys and pigs.

As stated in the TOR, human activities especially regard: 1. Planned re-introduction of grazing practices inside six pilot priority grasslands (situated in the Second and the Third Zone of the Nature Park) and potential increase in farm animals and agricultural production inside the Park; 2. Re-habilitation of the existing food processing facilities/dairies located inside the proposed boundaries of the Nature Park (for example Senokos Dairy, Dojkinci Dairy); 3. Rehabilitation of certain roads near the pilot grasslands and increase of traffic using 4WD vehicles and motorbikes; 4. Establishment/construction of a visitor Center (one of the proposals is to be located in Vrelo village), trails and tourism interpretation facilities, beautification programs for certain number of villages; 5. Potential increase of number of visitors of the Nature Park and Public access to agricultural land of environmental interest.

5.4.2 Description of the main links of the projects to the environmental issues and problems

In light of the observed situation the following potential positive and negative impact can be preliminary assessed in the selected environmental areas of higher concern (nation wide environmental issues related to agriculture and rural development:

1. Grasslands, cattle breeding, agriculture production

Environmental issues Impacts Eligibility criteria Mitigation measures / Recommendation (Water and air) pollution Risk of improper manure Detailed plan of liquid effluents Recommendation for the from the agriculture sources management treatment government intervention: Proper manure and other animal by- - Monitoring the impact of products management plan included big livestock farming in the project design (including the estates needs to be

environmentally sound final disposal established/improved method) (effectively operated) - Expand monitoring of Risk of surface and groundwater Compliance with a safety and nitrates and nutrients in the contamination from application of sanitary legal requirements. nitrate sensitive zones pesticides and/or fertilizers due to The pesticide/fertilizer management - Training in agrochemicals increased agriculture production plan included in the project. application,

- Sharing examples of good environmentally friendly The use of agrochemicals is justified farming practices Risk of increased waste and cannot be (in given production which s not properly circumstances) reasonably treated (with impacts on surface substituted by eco-agriculture Recommended mitigation and groundwater), due to techniques measures: increased food and other agro-

production - Individual water Detailed waste management plan treatment facility or

with prominent focus on liquid connection to sewage Ambient air quality and visual effluents treatment and separate system of appropriate impact problems waste collection and disposal capacity. - Facility design adjustments (e.g. insulated waste storage vessels instead of permeable septic tanks, closed cycle of water use within technological process).

Over-exploitation of the Increase intensification of Water supply is secured in a sustainable Mitigation measures: water water sources agriculture activities can lead, if manner (e.g. takes into account the future efficiency measures not properly managed, to over- water needs of local community and other exploitation of water sources for foreseeable developments) agriculture production which can have negative impact on groundwater sources Soil degradation Risk of soil contamination due to Detailed plan of liquid effluents Recommended mitigation uncontrolled effluents from treatment included in the project measures: livestock farms and improper Proper manure and other animal by- - Good housekeeping disposal of other waste products management plan included practices (e.g. separate Risk of soil contamination from in the project design (including the waste collection and application of pesticides and/or environmentally sound final disposal storage, ventilation). fertilizers due to increased method) - Individual water agriculture production treatment facility or connection to sewage Risk of change in land-use Carrying capacity of the grazing areas is system of appropriate triggering soil erosion due to taken in account agriculture (re)development (e.g. capacity.

deforestation of hillsides and - Facility design adjustments other areas vulnerable to erosion (e.g. insulated waste storage caused) vessels instead of permeable septic tanks, closed cycle of Risk of surface soil erosion due to water use within technological overgrazing and animal trampling process). Recommendations for government interventions: - introducing small scale terrain modifications influencing runoff regime - trees planting in erosion susceptible areas :

Nature and biodiversity Potential positive effect on reversing biodiversity loss and

ecological degradation in mountain meadows

Transport related No significant impacts expected environmental issues General recommendations for the implementation: ¨ - Preferably support to organic farming activities - To support favorably the renovation and reconstruction of existing infrastructure an buildings (brownfields) than construction on greenfields

2. Re-habilitation dairy processing facilities

Environmental issues Impacts Eligibility criteria Comments

(Water and air) pollution Risk of effluents to water due to Waste water management plan included Recommendation for the from the agriculture sources improper waste water in the project government intervention: management - Monitoring the impact of processing plants needs to be established/improved (effectively operated) - Sewerage system

Recommended mitigation measures: - Individual water treatment facility or connection to sewage system of appropriate capacity. - Facility design adjustments (e.g. insulated waste storage vessels instead of permeable septic tanks, closed cycle of water use within technological process).

Over-exploitation of the No significant impacts expected water sources Soil degradation Risk of effluents to soil due to Waste management plan included in the Recommended mitigation improper (solid) waste project measures: management - Good housekeeping

practices (e.g. separate waste collection and storage, ventilation). - Individual water treatment facility or connection to sewage system of appropriate capacity. - Facility design adjustments (e.g. insulated waste storage vessels instead of permeable septic tanks, closed cycle of water use within technological process).

Nature and biodiversity No significant impacts expected Transport related No significant impacts expected environmental issues General recommendations for the implementation: to prefer renovation and reconstruction of existing infrastructure (brownfields) than construction on greenfields

3. Rehabilitation of roads and increase of traffic

Transport related environmental Risk of the higher emissions from Alternatives for the use of To support favorably the issues the traffic, mainly in connection to more environmentally environmentally friendly means of the intention to use motorbikes by friendly means of transport transport rangers are assessed Protected areas and quiet zones are respected

4. Visitor’s centers, tourism trails and beautification of villages

Environmental issues Impacts Eligibility criteria Comments (Water and air) pollution from the Not applicable agriculture sources Over-exploitation of the water No significant impacts expected sources Soil degradation No significant impacts expected Impacts can not be determined at this level (types of projects are not specified) Nature and biodiversity Impacts can not be determined at this level (types of projects are not specified) Transport related environmental Risk of increase of noise and air Alternatives for the use of To support favorably the issues emissions from traffic more environmentally environmentally friendly means of friendly means of transport transport are assessed Protected areas and quiet zones are respected General recommendations for the implementation: protected areas and quiet zones are respected in developing specific tourist development “products”

5. Potential increase of number of visitors

Environmental issues Impacts Eligibility criteria Comments (Water and air) pollution from the Not applicable agriculture / tourism sources Over-exploitation of the water Risk of over-exploitation of the Water supply is secured in a sources water sources due to increased sustainable manner tourism (also due to activities like production of artificial snowing, etc.) Soil degradation Risk of increase of waste and Waste and waste water Considered prevention and waste water production due to management plan included in mitigation measures: increased tourism the project - Building of (or connecting to) Construction of tourism waste water treatment infrastructure (provided it is Tourist facilities consulted facilities; implement waste minimization measures considered for support) can with the environmental mean appropriation of land, can protection authority Conditions for implementation: lead to soil degradation - Tourist infrastructure must not be build on quality agriculture soil - Tourist trails (and cycle ways, etc.) should be constructed to avoid soil erosion

Nature and biodiversity Risks of degradation of nature and Detailed environmental Considered mitigation measures: loss of biodiversity due to management plan embodied - Seasonally or locally applied intensive exploitation of hunting in the project design. restrictions on access of and fishing fauna Secured capacities (both tourists to vulnerable Risks of degradation of nature and within the project and those localities enabling natural loss of biodiversity due to use of of official authorities) for recovery inappropriate methods of monitoring and mitigations

collection of wild flora, fauna and enforcement Recommendation for the fungi for commercial purposes implementation: support must be consistently conditioned with Pressures on nature and Tourist facilities design and setting environmental carrying biodiversity (incl. land capacity consulted with the capacity limits of the sensitive and fragmentation) due to intensive environmental protection nature valued areas/localities tourism in areas of sensitive authority. ecosystems and protected natural

areas (waste water and communal Recommendation for government solid waste) interventions: - Wastewater treatment unit - Tourists and visitors environmental awareness and education programs

Transport related environmental Risk of increase of noise and air Alternatives for the use of To support favorably the issues emissions from traffic more environmentally environmentally friendly means of friendly means of transport transport are assessed Protected areas and quiet zones are respected Comment: Impacts can not be determined at this point as there are no clear types of projects to be connected with this activity General recommendations for the implementation: support should be given preferably to “soft“ (environmentally friendly ) forms of tourism

Regarding the outputs of the preliminary assessment there were identified the following main areas of risks of potential negative impacts in the environmental areas of concern as defined in the output 1.

Regarding the outputs of the preliminary assessment the following environmental issues seem to be most relevant (significant) for the projects proposed for Stara Planina region; these should be given special attention to within the evaluation of project application:

- Surface and groundwater pollution, mainly due to improper wastewater treatment generating from agriculture production, livestock farming, and tourism development - Soil degradation, mainly due to agriculture production, improper waste water management and animal breeding management - Nature degradation and loss of biodiversity, mainly due to use of inappropriate methods and chemicals for pest control (pesticides), traffic increase and construction of transport infrastructure and broader tourism development

However, more precise assessment can be undertaken after the types of projects/activities to be supported within the STAR project are more precisely defined

5.5 Procedure 5.5.1 Scheme and description of the proposed procedure of environmental evaluation, selection and monitoring of the subprojects to be implemented in the Stara Planina NP The whole procedure for the environmental monitoring of the STAR project is described in the output 1 of this report. There are no major differences for the application of this procedure for the projects to be implemented in the Stara Planina NP – in fact the projects in the Stara Planina NP represent the sub-group of the projects within the STAR project.

5.6 Public involvement 5.6.1 Recommendations for the public involvement to the environmental evaluation, selection and monitoring of projects implemented in the Stara Planina NP It is recommended that project selection is executed by a selection committee that includes various stakeholders. Further the reporting on the STAR Project shall be publicly available and properly communicated to public.

5.6.2 Summary of the most significant comments from the public (workshop)

Question / Remark Inclusion in document It is important to establish baselines and to Included in Step 3 of the procedure (monitoring monitor environmental media (air, water etc.) at project level) Environmental Compliance Application Included in explanation to Step 2c of the

Checklist may be too complicated for e.g. procedure: if possible set threshold, provide farmers information and support to applicants Code of Good Agricultural Practice is being The Environmental Compliance Application developed for MAFWM Checklist includes compliance with the Code of GAP as a key question The decision process should be transparent and In “Institutional arrangements” for have a broad basis implementation of step 2c of the procedure, it is proposed that a Committee consisting of various stakeholders will approve projects.