© 2005 Asian Development Bank All rights reserved. Published 2005. Printed in the Philippines. Publication Stock No. 050905 Asian Development Bank This publication describes and evaluates environmental issues in Azerbaijan. The views expressed in this book are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank or its Board of Governors or the governments they represent. The Asian Development Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. Use of the term “country” does not imply any judgment by the author or the Asian Development Bank as to the legal or other status of any territorial entity. FOREWORD This report describes and evaluates urban environmental issues in Azerbaijan. It was developed from the end of 2003 to 2004 from various sources of data, and the findings were discussed with the Ministry of Environment and Natural Resources, regional environmental nongovernment organizations, and bilateral assistance agencies active in urban environmental issues during the contact mission held on 19–26 January 2004. The mission confirmed the preliminary findings, discussed government priorities, and collected remaining data. While there is consensus on the scope and extent of urban environmental pollution in Azerbaijan, various sources surveyed provided often contradictory statistics. This report has aggregated some data and new data have been developed during its preparation, such as on access to urban water and sanitation services. The information provided should be treated only as indicative for the purpose of comparison. An analysis was made of major ongoing developments and initiatives related to urban environment. The conclusions and findings of the report are recommended for the consideration of the Azerbaijan Country Team and the ongoing country strategy and program and its update process. ABBREVIATIONS ADB – Asian Development Bank ARWC – Apsheron Regional Water Company CO – carbon monoxide CO2 – carbon dioxide EIA – environmental impact assessment ERBD – European Bank for Reconstruction and Development EU – European Union FSU – former Soviet Union GDP – gross domestic product GEF – Global Environment Facility GOST – Gosudarstveniy Standart (surface water quality standard) HMS – hydrometeorological station IDP – internally displaced person IMF – International Monetary Fund MENR – Ministry for Ecology and Natural Resources MOED – Ministry of Economic Development MOH – Ministry of Health MPC – maximum permissible concentration NPESSED – National Program for Environmentally Sustainable Socio-Economic Development NEAP – National Environment Action Plan NEHAP – National Environmental Health Action Plan NGO – nongovernment organization NOx – nitrogen oxides SCE – State Committee of Ecology and Control of Natural Resource Utilization SO2 – sulfur dioxide SPPRED – State Program on Poverty Reduction and Economic Development TACIS – Technical Assistance for the Commonwealth of Independent States UNDP – United Nations Development Programme US – United States USAID – United States Agency for International Development WHO – World Health Organization WEIGHTS AND MEASURES g/kg – gram per kilogram km – kilometer km2 – square kilometer l – liter m – meter mg – milligram mg/l – milligram per liter mm – millimeter µg/m3 – microgram per cubic meter NOTE In this report, “$” refers to US dollars CONTENTS FOREWORD EXECUTIVE SUMMARY vii I. COUNTRY DESCRIPTION 1 A. Geography and Topography 1 B. Climate 1 C. Vegetation 1 D. Fauna 1 E. Population 2 F. Social Conditions 2 G. Economy and Industrial Development 3 H. Environmental Conditions 3 II. KEY ENVIRONMENTAL MANAGEMENT ISSUES 3 A. Water Resources and Urban Water Supply 3 B. Municipal Water Supply 6 C. Wastewater Management 9 D. Policy Measures in Water Resources and Pollution Control 10 E. Air Pollution 15 F. Energy, Heating, and Gas 25 G. Solid Waste 25 H. Natural Disasters Management 33 I. Human Health and Environmental Conditions 34 J. Policy, Legal, and Institutional Framework 38 K. Policies, Programs, and Government Priorities 40 L. International Programs and Agreements 44 M. Environmental Institutions 44 N. Environmental Monitoring and Enforcement 47 O. External Assistance 49 P. Issues Restraining Environment-Friendly Development 51 REFERENCES 53 APPENDIXES 1 Basic Country Statistics 56 2 Key Environmental Problems and Actions Priorities Identified by the National 58 Environmental Action Plan 3 Water, Wastewater, and Sanitation 61 4 Laws on the Environment and Water Management 69 5 Changes and Additions to the Environmental Laws 70 6 Action Plan on Development of Economic Regions of Azerbaijan, 2004-2008 72 7 Decree of the President of Azerbaijan on Measures to Accelerate Social and 78 Economic Development BOXES 1 Water-Use Balance 4 2 Public Transport in Baku 17 3 Permitting System: Ecological Passports 22 4 Municipal Waste Collection and Disposal in Baku 29 5 Sumgayit, an Environmental Hotspot 31 6 Article 7 of the Law of the Republic of Azerbaijan on Environment Protection 39 7 Impact Assessment Instruments 45 8 Nature Protection Reserves and Conservation Areas 47 9 Mercury Cleanup Demonstration Project 51 10 Azerbaijan’s Environmental Information Center 52 TABLES 1 Urban Water Supply and Wastewater Systems in the Secondary Cities 8 2 Number of Motor Vehicles, 1990–2001 16 3 Emissions of Selected Air Pollutants from Stationary Sources 18 4 Generation, Treatment, and Disposal of Hazardous Wastes 26 5 Treatment of Toxic Waste in Baku and Sumgayit 26 6 Municipal Waste Generated in Major Cities in 2002 28 7 Estimated Annual Health Impact of Particulate Air Pollution (PM 10) in Azerbaijan 36 FIGURE 1 Air Emissions, 1990–2002 19 vii EXECUTIVE SUMMARY 1. The Azerbaijan Republic occupies a territory of 86,000 square kilometers on the western side of the Caspian Sea. In 2001, the country’s population was 8.1 million, of which 51–57%, depending on the source, formed the urban population. The latest poverty indicators show that 68% of the population are considered poor. Urban poverty rates are reported to be as high or higher than rural poverty rates. 2. Azerbaijan has the reputation of being an environmental disaster zone. Many scientists consider the Apsheron Peninsula, where 50% of Azerbaijanis live, to be the most ecologically devastated area in the world because of severe air, water, and soil pollution. High economic and social costs are imposed on the urban poor by severe environmental pollution and the bad condition of social and environmental infrastructure. The country’s urban areas face numerous environmental problems related to polluted water, air, and soil. The main causes are unchecked industrial and municipal polluting activities; lack of adequate water, wastewater, clean air, and waste management; historic dependency of the economy on oil exploitation, often carried out in an environmentally unsustainable way; and the varying level of the Caspian Sea. Inadequate management of social and environmental infrastructure in urban centers causes shortages of drinking water in major cities, including Baku; pollution of water basins and the Caspian Sea by untreated or inadequately treated discharges of wastewater; pollution of air by toxic wastes; and inadequate collection, storage, and disposal of solid municipal, industrial, hazardous, and toxic waste. A. Economic Development and the State of the Environment 3. Fueled by exploitation of rich oil and gas resources, economic development is concentrated mainly in the coastal areas. Prior to the collapse of the former Soviet Union (FSU), the economy was based on heavy industry, and oil and gas development, mainly in the Apsheron Peninsula. The cities of Baku (the capital) and Sumgayit, located in the peninsula, have large petrochemical, chemical, and metallurgical industrial sites. Industrial development and mobile sources of fuel combustion have released high concentrations of heavy metals and other toxic and hazardous elements into air, land, and water. Decades of environmentally unsustainable oil production have left behind vast wastelands with standing oil ponds and severely contaminated soil. Scant consideration to the environment was given during urban development. Urban areas, such as Baku and Sumgayit, became classic examples of environmental hot spots. The Caspian Sea is highly polluted and there is danger that, with rising sea level, further pollution will result from inundating oil-polluted lands. Serious pollution of the urban environment is responsible for human health concerns and is a threat to the quality of life. 4. Overall, the transition period has been a mixed blessing for the environment. Since the collapse of the FSU, economic output has declined dramatically, particularly due to the demise of the inter-republican market, the war with Armenia, disruption of transport links to the north, and a slow economic reform process. Heavy industry was especially hard hit. Although the economy began to grow again in 1996, most large industrial sites are still shut down or operate at a fraction of capacity. The decline in industrial and agricultural output has significantly reduced air pollution, industrial water discharges, and pollution from agrochemicals. The country achieved significant progress in updating its environmental legislation, but environmental management and enforcement capacities have significantly deteriorated. The present accumulation of toxic industrial waste,