SPE 86583
Strategic Assessment of Oil and Gas Activities: Looking Beyond EIA/SIA
Jay Paul Wagner (Rudall Blanchard Associates), Murray G. Jones (Shell International)
Copyright 2004, Society of Petroleum Engineers Inc.
This paper was prepared for presentation at The Seventh SPE International Conference on
Health, Safety, and Environment in Oil and Gas Exploration and Production held in Calgary,
Alberta, Canada, 29–31 March 2004.
This paper was selected for presentation by an SPE Program Committee following review of
information contained in a proposal submitted by the author(s). Contents of the paper, as
presented, have not been reviewed by the Society of Petroleum Engineers and are subject to
correction by the author(s). The material, as presented, does not necessarily reflect any
position of the Society of Petroleum Engineers, its officers, or members. Papers presented at
SPE meetings are subject to publication review by Editorial Committees of the Society of
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Proposal
Throughout the world energy companies face a complex
agenda requiring improved social and environmental
performance. Alongside health, safety and environmental
(HSE) issues, questions relating to human rights, revenue
sharing, biodiversity, ethics, governance, corruption and the
social and economic implications of energy activities are
rising to the fore. This requires an understanding of the wider
social, economic and political context of energy activities.
Indeed, social, economic and political factors can play a
crucial role in determining whether and at what pace
development proceeds; something that traditional ESIA does
not always capture given its focus on project-specific issues.
The objective of the paper is to outline the purpose and value
of high level, strategic impact assessments of the social,
cultural, political, economic and environmental impacts of
energy projects. The focus is on providing examples of the
practical application of these assessment techniques rather
than to dwell on theoretical models and to compare them to
other forms of “strategic” assessment.
Background
The international energy industry, alongside other sectors such
as mining, chemicals and infrastructure, is facing increasing
pressures to improve its social and environmental
performance. Environmental and social sustainability concerns
have come to play a particularly important role with regard to
large scale energy and infrastructure projects and their impacts
at national and regional level.i Although considerable progress
has been made in recent years in improving the environmental
and social track record of such projects, and the tools available
to plan and manage them in a sustainable manner, much
remains to be done. Traditionally environmental impact
assessment (EIA) and, more recently, Environmental and
Social Impact Assessment (ESIA), has been the mechanism of
choice to address these issues at the planning stage.
However, while EIA/ESIA provides a clear practical
framework for evaluating the environmental, social and health
effects of specific projects, EIA/ESIA is typically focused on a
single proposed development rather than an analysis of the
wider environmental and social impact of development
activity throughout a region. It is not designed to address
“strategic” decisions which often influence the actual
development of a country or a region or decisions related to a
project entry.
Increased attention has thus been given to new assessment
types more suited to address strategic environmental, social
and economic issues at national and regional level such as
Strategic Environmental Assessment (SEA), Sustainability
Appraisal (SA), and Strategic Impact Assessment. Although
each of these techniques deals with “strategic” decisions and
issues, they ultimately fulfil distinct purposes. Indeed, a
certain amount of confusion has arisen regarding the purpose
and application of these instruments, especially regarding SEA
and Strategic Impact Assessment, which are complementary
though distinct processes, answering to different needs and
based on separate methodologies. Likewise, SEA and SA are
often confused with each other in the literature.
The objective of this paper is to briefly describe each of these
techniques and address the relationship between them. The
aim is to differentiate these forms of assessment from each
other and to clarify their respective scope of application,
especially with regard to oil and gas and energy activities. The
focus is on Strategic Impact Assessment as a newly
emerging approach to address complex social, cultural,
2 SPE 86583
economic, environmental and political issues in the context of
large-scale projects and policies, plans and programmes (PPP).
The paper defines what Strategic Impact Assessment is,
considers which issues it is designed to address, and
references its use and position in the impact assessment
hierarchy. Further, it compares and contrasts Strategic Impact
Assessment with other tools designed to address issues and
impacts at the “strategic” level, namely SEA and SA. It also
provides a high level overview of the recent application of
these forms of assessment at international level, especially in
relation to the international E&P sector.
Strategic Impact Assessment
Defining Strategic Impact Assessment
Strategic impact assessments are independent and impartial
high level multidisciplinary appraisals of the likely direct and
indirect impacts on host countries, regions and local
communities arising from large energy and infrastructure
projects. They are a key step for major projects such as a new
country entry or a major addition to existing operations,
particularly where the scope and complexity are likely to
cause significant impact at national or regional level.
Strategic impact assessments enable early identification and
assessment of major social, environmental and health risks and
benefits to project sponsors (e.g. business, government). They
are also applicable to government plans, programmes and
policies (PPP) as well as investment decisions of major
financial institutions across a wide range of areas including
energy, infrastructure, transport, tourism, land-use, industry
etc. Such assessments are particularly important for informing
major decisions such as whether to enter a country or
undertake a major expansion. They help facilitate external
dialogue and build consensus around the respective
responsibilities for addressing key issues. They aim to assist
decision-makers and managers in identifying and assessing
material issues that individually, cumulatively or through
synergistic effects can:
represent a significant risk and/or opportunity to the
project or venture, or have have long term impacts on the
social or economic stability of the locality, region or
country;
offer significant challenges to project management and
implementation that require high level decisions at an
early stage;
and have long term persistent effects on the environment,
the social context or the quality of life of communities
and individuals.
They provide an opportunity to quickly assess the wider
ramifications of major projects (as well as PPPs) and allow for
more in-depth coverage of key issues. Strategic impact
assessments, for example, consider the likelihood and
consequences of such events occurring and identify
appropriate means of mitigating negative impacts and
enhancing positive effects of PPPs and major projects. They
also allow for earlier consideration of key policy issues, as
well as concerns about less tangible matters (e.g. loss of
cultural identity, national and regional expectations etc).
The Rationale of Strategic Impact Assessment
While in most instances it is sufficient to proceed with an
ESIA following the initial profiling of the project by the
proponent, there are cases where it is appropriate to undertake
a higher level of analysis, a Strategic Impact Assessment first.
The findings and process of the Strategic Impact Assessment
are invaluable in identifying if a project can meet with an
organisation’s general business principles and in preparing the
ground for more effective ESIAs.
Strategic Impact Assessment thus has a unique place and
should be applied to major projects likely to have a significant
effect on societies and natural resources. It is a highly
focussed process and is not intended to replace any aspect of
ESIA. It is a social-science led, interdisciplinary undertaking
that applies to major projects as well as PPPs. It focuses in
particular on social and economic issues but also considers
wider environmental, political, cultural and other issues. The
decision to opt for a Strategic Impact Assessment will ideally
flow from the early environmental and social profiles
undertaken at project conceptualisation.
Many organisations, such as the World Bank, have in recent
years been looking for ways to “upstream” the impact
assessment (IA) process and to overcome real and perceived
shortcomings with traditional forms of IA.ii Key amongst
these has been the tendency to pay insufficient attention to
social and cultural issues (see Box 1).
SPE 86583 3

Box 1: EIA – Lessons Learned • water supply;

“Evaluation of impact studies … over the past 30 years • education and training;
reveals a consistent pattern of overstating the physical and
ecological impacts of major projects and a pattern of • environmental and biodiversity issues and sensitivities at
underestimating the local and regional social, economic, and
local and regional levels (e.g. aceess to reserves).
cultural impacts. It is these impacts, however, that have
consistently emerged as the more important, and more
environmentally damaging over the long term”.iii Figure 1: Impact Assessment Hierarchy

In response to these challenges, some entities have opted for voluntary: initial
SEA, which is normally applied to environmental issues on scoping study of key
Environmental
environmental and
PPPs. Others, such as the British government, have started to & Social social issues. Helps to
Profiles determine subsequent
carry out sustainability appraisals (SAs), hand-in-hand with
types IA -
public consultation on key issues such as air transportation and recommended
energy policy. Likewise, the World Bank has conducted many
voluntary: focus on
country, region and sector SEAs. large-scale projects –
Strategic
national & regional
Impact scope - recommended
However, SEA is not appropriate or sufficient, in the case of Assessment
very large and/or complex projects where social, cultural and
voluntary: to focus on
economic aspects play a significant role. For this reason regional planning or
SEA/SA programme
Strategic Impact Assessment is attracting increased attention
sustainability
internationally. An overview of the relationship between
strategic impact assessment and other forms of IA is set out statutory: project-
ESIA specific & permit-
below in Figure 1. related - required

The Scope of Strategic Impact Assessment

The Practice of Strategic Impact Assessment
Strategic impact assessments consider a range of issues,
Strategic Impact Assessment, as defined here, has only been
including the following:
formally applied a few times in the E&P sector to date. Recent
• governance structure including legislative & institutional
examples include the following:
framework and enforcement;
• revenue distribution, corruption and bribery; Faroe Island Impact Study: In 2000 BP-Amoco
• crime and security issues (e.g. security of employees); commissioned an independent report of the likely impacts
on the Faroe Islands arising from the development of
• capacity of local authorities to effectively regulate oil and
hydrocarbon resources within Faroese waters. The study
gas activities;
included a political risk analysis, an assessment of the
• local aspirations, cultural identities and value systems; macro- and micro-economic impacts of oil, and
• state of existing ‘traditional’ industries; accompanying assessments of the associated short,
• local enterprise and economic development initiatives medium and long-term social, cultural and environmental
impacts. The work, which was carried out by independent
(including use of local supplies and services);
specialists in association with the University of the Faroe
• improvements in local business standards and corporate Islands, included extensive stakeholder consultations and
governance; made specific recommendations for mitigation measures
• capacity/capability of indigenous labour force; and further studies. The objective was to survey the
economic, political, social and environmental context
• past, current and projected demographic shifts;
within which a future oil industry might operate, and to
• human rights, vulnerable groups; chart the political impacts that might occur on the Faroe
• labour and employment issues; Islands during the period of oil-related E&P, and beyond.
• community health – AIDS/STD; This included consideration of the human context of
future oil operations with particular reference to issues
4 SPE 86583
such as political decision-making processes, local
people’s expectations, cultural identities and value
systems, the state of traditional industries, capacity and
capabilities of the indigenous labour force, demographic
change, institutional framework and capacity, and the
regulatory environment. The study was multi-disciplinary
in nature and combined in-depth local knowledge with
specialist international knowledge. An unusual feature of
the study was the role played by a senior independent
advisory board (combining local and international
specialists) in monitoring the process of the study, and in
reviewing the content of the outputs. The project started
in advance of drilling activities and concluded with the
launch of public report which aimed to stimulate local
debate on the future of the Faroe Islands, with or without
oil.iv
Kashagan Strategic Impact Assessment: From 2001
through 2003 Agip-KCO (The ENI operating company
leading the North Caspian venture) undertook a Strategic
Impact Assessment of the Oil Fields Development. The
objectives of this study were to identify the potential
positive and negative economic, social and environmental
impacts of the project at the strategic level and to help
prepare a plan setting out the steps that would be taken to
meet sustainable development objectives, along with
suitable indicators of progress towards meeting these
goals. The study also aimed to provide the developers
with a useful strategic planning tool. Agip KCO has also
planned a two phase consultation process. The first phase,
carried out in 2001 at international and national level,
provided inputs to set the local scene and identify the
concerns of NGOs, communities, international institutions
and authorities. These concerns fed into the Strategic
Impact Assessment process. The second phase will
present solutions to stakeholders on the solutions for local
development.
China West to East Project (W2E): The project, which
involved a high level assessment (HLA) of the W2E
pipeline project, was commissioned in 2002 by Shell
China. The objective of the HLA was to to provide
assurance that major risks and issues were effectively
identified and necessary mitigation measures and social
and environmental development opportunities associated
with the project had been identified. It involved a high
level strategic overview of impacts including
environmental, social and socio-political and policy issues
arising from the W2E project. It focused on high level
strategic issues and drew on Chinese and international
experts and stakeholders, as well as on internal Shell
resources and expertise. Unlike in the case of the Faroe
Island Impact Study or the FIG study, the W2E HLA was
conducted once the project had already started.
The Legal Status of Strategic Impact Assessment
Strategic Impact Assessment is not currently a regulatory
requirement. It is a voluntary initiative that applies only to
large-scale projects and particularly complex PPPs. It is not
clear whether it is either feasible or even desireable to regulate
for such studies.
Carrying Out Strategic Impact Assessments
Ideally Strategic Impact Assessment is conducted well in
advance of project start-up, during the planning stages of
major projects and PPPs, although it can also be applied once
a project is under way. It should be carried out independently
from the agent sponsoring them and will typically be
conducted by independent specialists from a range of
institutions (consultancy, university, research institution,
government institution, NGO) working in collaboration with
local and international experts.
The work will typically be coordinated by a lead consultant.
For especially sensitive projects, where a decision to proceed
with a highly public and interactive form of strategic impact
assessment has been made, the appointment of an independent
advisory board consisting of recognised national and
international experts should be considered. The board will be
consulted at agreed intervals in the life-cycle of the assessment
to advise on the process and the output.
Any organization contemplating a Strategic Impact
Assessment should form the project team early on to allow for
timely issue identification. If a decision is made to go ahead
with a Strategic Impact Assessment, it is vital that the process
maintain the early momentum, in advance of detailed planning
and/or project initiation. It is also critical to secure senior
management commitment to the process and get an internal
champion.
It is also vital that a broad cross-section of the company or
organization be involved and that the approach taken is in line
with any joint venture agreements. The approach needs to be
bespoke and sensitive to local and project circumstances. The
next step is to establish the scope of the assessment. It is
SPE 86583
important to be cautious in defining the Terms of Reference
(TOR) so as to avoid unrealistic expectations by local,
national and international stakeholders. It is also important to
decide the level of participation that is going to be possible
(i.e. broad-based, participative public process versus a less
public form of assessment).
Other key steps involved are as follows:
Baseline Data: Collection, collation and evaluation of
existing sources of high-level baseline data sets. Although
in many cases such data sets are not available, they are
essential for carrying out systematic assessments as well
as to monitor changes (e.g. on issues such as demographic
shifts, employment structures, training etc).
Consultation: Carrying out a process of one-on-one
consultation, with an initial focus on institutions,
government agencies and issue experts. This can also
form the basis for subsequent, more detailed
consultations.
Integration: Integration of the findings within the
assessment team to rank and prioritise them for further
action and research for government, industry and
stakeholders.
Project Decision-making: Integration of the key findings
into project decision-making to ensure potential “show-
stoppers” are understood and managed where they cannot
be avoided. The summary of the main findings should be
disseminated to key stakeholders.
Review: At the end of the assessment, it is valuable to
carry out an internal review of the process with the
assessment team to learn lessons and ensure
implementation of the recommendations provided.
Implementation of the findings needs to be monitored and
documented.
Key Benefits of Strategic Impact Assessment
The decision for Strategic Impact Assessment needs to be
made very early in country entry or project-expansion
decision-making. Experience suggests a range of business
advantages that can result from such assessments. These
include:
improved downstream management of social and
environmental issues;
improved basis for informed and timely decisions on
5
project go-ahead at a very early stage, thereby influencing
project design and improving the quality of decision-
making;
acceptance at local, regional and national level of a
licence to operate and grow, in part by providing an
important initial framework for consultation and for
building consensus which helps in securing local “buy-in”
and development of trust by stakeholders;
achievement of practical benefits such as avoiding project
delays, reduced costs, avoidance of regulatory or legal
intervention, and sound assessment and management of
risks;
better understanding of social and related risks that could
be potential “showstoppers”. Other secondary benefits
can accrue such as ESIA optimisation, fast-tracking of
permits and identification of locally focussed research;
facilitation of funding from international institutions or
banks (often required in joing venture (JV) situations by
by JV partners);
a competitive advantage in bidding for new projects,
particularly where an opportunity has a significant social
and/or environmental dimension;
provision of the basis for subsequent decisions on social
investment, thus avoiding non-productive social
investments;
demonstration of leadership, positioning of corporate
policy, providing competitive advantage and building
reputation, which can increase the chance of future
project capture;
paving the way for successful partnerships through
dialogue with stakeholders allowing for longer-term
associations to emerge out of the engagement process;
addressing the “attribution factor” - sponsors should
expect to be criticised by some stakeholders, whatever the
findings of the study. Where major social and economic
change is already having a major impact, there may be a
temptation to associate the company or project with any
and all negative changes, even where the causes lie
elsewhere. Strategic impact assessments can assist in
6 SPE 86583
understanding wider patterns of social and economic
change and help to separate these from project-specific
issues.
Stakeholders can benefit from Strategic Impact Assessment in
numerous ways as well, if trust and good relationships are
established quickly. Stakeholders engaged in this exercise
typically include national, regional and local government,
public institutions and major NGOs. The most significant
advantages include:
Early input from significant external stakeholders to the
decision making process.
Early focus on the most important stakeholder concerns.
Anticipating employment issues and improving the
possibility for local people to obtain meaningful jobs and
or other secondary benefits.
Identification of opportunities for local engagement that
will facilitate operations such as educational needs,
capacity requirements, local planning constraints etc.
Identification of conflicts between local, regional and
national priorities.
Contribution to options for local and regional planning.
Facilitation of transfer of best practice in traditional
industries (e.g. fisheries or forestry management).
Minimisation of negative impacts and maximization of
positive effects to create overall “net benefit”.
Earlier consideration of key policy issues, consolidation
of existing knowledge and highlighting concerns about
less tangible matters (e.g. loss of cultural identity,
national and regional expectations etc).
It is important, however, to be realistic about what strategic
impact assessments can and cannot achieve. Many host
countries are undergoing development characterised by social
tensions, economic challenges and political contradictions.
Carrying out more participative assessments can be difficult in
such conditions, especially in areas with serious governance
problems. In such cases, less inter-active forms of strategic
assessment may be the best option.
Ultimately, the measure of success is the relationships that
grow out of the process. Indeed, the actual process can often
be more beneficial than the technical output of the Strategic
Impact Assessment. However, for the process to be a success,
it is vital that the company is fully committed to the process
and the conclusions reached.
Alongside Strategic Impact Assessment, other, complementary
forms of strategic assessment tools include SEA and SA.
Because they are at times confused with Strategic Impact
Assessment, these assessment types are briefly discussed
below.
Strategic Environmental Assessment
SEA dates back to the early 1970s and is based on, and in
many ways developed from, EIA. SEA aims to ensure that
environmental issues are addressed at an early stage in the
process of formulating plans, programmes and policies (PPP),
and incorporated throughout this process. Unlike project-
specific EIA, which is not designed to address and influence
wider, regional or national environmental issues that have
been decided at an earlier stage, and at more strategic levels,
SEA deals primarily with decisions which influence the
development of a country or region more than a single project.
Defining SEA
To date there is no internationally accepted definition of SEA.
The most widely quoted definition to date is provided by
Sadler and Verheem who refer to SEA as:
“… a systematic process for evaluating the environmental
consequences of proposed policy, planning or programme
initiatives in order to ensure they are fully included and
appropriately addressed at the earliest appropriate stage of
decision-making on a par with social and economic
considerations.”.v
Others have a broader view and consider SEA as a tool
supporting integrated development planning, including the
social dimension of development policies and programmes,
over and above its function as an impact assessment tool. vi
The International Association for Impact Assessment
(IAIA), for its part, defines SEA as:
“a pro-active instrument for integrating environmental
considerations into spatial and sectoral policy, plan and
programme formulation for sustainable development” [which]
“supports more systematic, participative and sustainable
decision-making” [and] “which considers direct, indirect and
cumulative synergistic and induced impacts of proposed
actions in terms of previously identified sustainability
objectives and targets.”vii
SEA, then, is primarily an assessment tool aimed at
establishing the suitability or scale of undertaking a particular
PPP.viii It involves a holistic approach that considers the
projected environmental impacts over time of multiple actions
SPE 86583
within a region or ecosystem. Although natural science-based,
ix
it is less technical and detailed and more qualitative than
project level assessment.x
The Rationale of SEA
The underlying rationale of SEA is to capture the longer-term
environmental impacts of PPPs, alternative developments and
mitigation measures. It also aims to address cumulative and
synergistic impacts, and to integrate these into proposed laws
and PPPs. It aims to integrate environmental considerations
into the earliest phase of PPP development (although in
practice this does not always happen). It is intended to act in
anticipation of future problems, needs, or challenges and
creates and examines alternatives leading to the preferred
option. xi xii
A further rationale of SEA is to help pinpoint conflicting
national and local goals and reconcile these. It aims to provide
decision-makers with information, strategies and actual and
projected information on environmental effects on a large
scale (plans) and enables policy-makers to anticipate effects
on species, habitats and ecological processes that site-specific
studies do not capture.xiii
SEAs are set in the context of a broader vision, goal or set of
objectives, where the assessment of a wider range of
alternatives at a higher level of decision-making is the key.xiv
The strategic component is the set of principles and objectives
that shape the visions and development intentions which are
incorporated in a PPP. The focus, unlike in ESIA, is on wider
areas, regions or sectors of development rather than on a
particular project.xv
SEA is thus primarily a form of environmental analysis of
impacts caused by PPPs or legislation and should be seen as
an instrument of environmental planning.xvi Its overall
purpose is to improve strategic decisions in such a way that
the relevant environmental concerns are considered adequately
in each case, and influence the result accordingly.xvii
Its objective is to increase the weight, or promote the role of
environmental concerns in the PPP process. Some see it as an
extension of environmental assessment into the strategic
arena, where the focus is on evaluating the potential
environmental consequences of already proposed PPPs.
Another school of thought argues that SEA should provide a
sustainability focus and cover social and economic aspects as
well as environmental ones.xviii
7
A number of countries actually include socio-economic
aspects in the scope of SEA. By that, however, there is a
danger that the scope of SEA is broadened to a point where it
would be more appropriate to call the tool “sustainability
assessment”, which plays a different role.xix Although SEA
considers social and economic issues, and does so in greater
detail than project-level EIA, the main focus of SEA is on
environmental issues.
The Scope of SEA
The main output of SEA is a plan that provides the basis for an
integrated (as far as circumstances allow) and environmentally
and socially sustainable activity. SEA is applicable to a
number of areas such as: international treaties, privatisation,
trans-national corporations, structural adjustment operations,
national budgets, legislative proposals, area-wide or land-use
planning, major infrastructure projects, and trans-boundary or
global issues.
It is a forward-looking planning tool, which is applied at
various levels of the policy-making cycle. It is complementary
to EIA and, if effectively carried out, can strengthen
subsequent project EIA. It examines all kinds of
environmental impacts including issues such as biodiversity,
population, human health, flora, fauna, soil, water, air,
climatic factors, material assets, cultural heritage, including
architectural and archaeological heritage, landscape, and the
interrelationship between these factors.
The Practice of SEA
The application of SEA internationally varies considerably.
Some approaches are formal, others more informal, some are
comprehensive others less so, some are closely linked to
policy or planning instruments whereas others are unrelated.
Most SEAs to date have been carried out by European and
other OECD countries but developing countries are becoming
interested and promising experiences are emerging (e.g.
Brazil, South Africa).
The World Bank, along with other multilateral financial
institutions and bilateral donor agencies, has also been
involved in a number of SEAs, mostly in the form of sectoral
and regional environmental assessments. In addition a number
of major donor institutions have started to use SEA in relation
to their activities, although SEA has yet to gain more far-
reaching significance within the work of bilateral and
multilateral institutions.xx
8 SPE 86583
Each country and institution practising SEA has developed its
own system. In some states, SEA is restricted to specific plans
and programmes, in others it is applied to policies as well, and
in the case of Denmark, the Netherlands and Norway in some
cases even to draft legislation. In general, however, the
application of SEA to higher level policies (particularly at
national level) has been very limited.xxi The EU’s SEA
Directive, for example, is restricted to specific plans and
programmes, largely due to the reluctance of some Member
States to subject policies to SEA procedures. Moreover, not
all SEAs carried out to date are strictly speaking strategic in
nature.xxii The variation in approach reflects the disagreement
over the exact scope of SEA. Recently, there has been
growing recognition of the importance of integrating
environmental assessments with other policy and planning
instruments.xxiii
In relation to E&P activities, SEA allows proponents a look at
potential areas and activities of concern before investments are
made in projects and facilitates consideration of alternatives
which are more difficult to do in project-specific EIA. In this
sense SEA is mainly a decision-aiding rather than a decision-
making process. Canada, Norway and the UK, for example,
carry out such SEAs in relation to E&P licensing areas. In
addition, some companies have applied SEA to major
projects.xxiv
Although SEA is primarily intended to be applied by public
authorities at the PPP level (e.g. in advance of an oil and gas
licensing round), in practice this does not always happen. In
fact, the application of SEA by public authorities has been
patchy, both in the OECD and elsewhere. Consequently, SEAs
are often championed by the private sector, often with the
support of the competent authorities and frequently carried out
by independent consultants on behalf of the “client”. El Paso
Energy (and partners), for example, sponsored a SEA in
relation to an integrated gas exploration, production and power
generation project in the south of the state of Bahia in Brazil
in 2002/2003. Although industry-led, the project was carried
out in collaboration with the public authorities at local, state
and federal level.
The Legal Status of SEA
The legal status of SEA varies considerably. Some countries
mandate SEA through legislation (e.g. US, the Netherlands),
others do so through administrative orders or Cabinet
Directives (e.g. Canada, Denmark), or via advisory guidelines
(South Africa, UK). In addition, a growing body of guidance
on SEA is available but much of it is specific to national
systems and not generic. Guidelines on SEA, for example,
have been issued by the Canadian and South African
authorities.xxv Attempts to regulate SEA have also been made
at regional level, for example, the EU’s, SEA Directive
(Directive 2001/42/EC)xxvi and the new UNECE Protocol on
Strategic Environmental Assessment, which was adopted on
21 May 2003.
Key Benefits of SEA
Whether SEA is worthwhile depends on the relationship
between its costs and its benefits. Although SEA has been
around for close to two decades, it has until recently not been
widely applied. As a result, the costs and benefits of SEA have
yet to be studied in sufficient detail. If properly applied it can
provide significant benefits in terms of clearer, more robust
and more sustainable strategic actions. Its effectiveness
depends on: who carries it out; at what stage it is carried out;
what resources are available; and how it is documented.
Key benefits include the following:
integrating environmental issues in strategic decision-
making and facilitation of the design of environmentally
sustainable PPPs;
improving transparency of decision-making process and
provision of a systematic mechanism for public
engagement at a strategic level;
wide use and dissemination of baseline and assessment
information;
avoiding wrong decisions and related costs and time
expenses at an early stage through strengthening of
project EIA and achieving a clearer understanding of the
potential environmental effects of PPPs;
ability to address cumulative, indirect, induced and large-
scale effects and global change that cannot be dealt with
at project level;
consideration of a larger range of alternatives than in
project EIA;
less reactive approach than EIA allowing for
consideration of longer time horizons.
SPE 86583
Sustainability Appraisal
Sustainability appraisal (SA) is latest of a series of techniques
aimed at integrating sustainable development issues into
decision-making.xxvii They should aim to facilitate consultation
and the weighing up of the pros and cons of a proposal during
the decision-making process, the main aim being to stimulate
thinking and encourage action, not just the production of
another report.
Proponents of SA argue that it is a new and evolving process
through which plans, proposals and strategies are assessed in
sustainability terms. This is achieved by looking at a cross-
section of environmental, social and economic development
issues and integrating environmental, social and economic
development issues.xxviii
It is a development of environmental appraisal, involving
systematic evaluation of the economic, environmental and
social impacts of proposals and options. It aims to ensure
improved environmental decisions and focuses to a greater
extent than SEA on socio-economic issues.xxix The principal
objective of SA is to integrate environmental and
sustainability considerations into development plans and
improve plan-making.
Defining SA
SA is a challenging concept to define, much less to implement
and apply. According to the Netherlands EIA Commission,
SA is:
“a structuring of the decision making process so that
administrators can develop projects and plans from a
sustainability perspective (the ‘internal’ aspect) and justify
them on the grounds of their contribution to sustainable
development (the ‘external’ aspect). The outcome should be
plans and activities that make an optimal contribution to
sustainable development.xxx
The UK Department of Transport, Environment and the
Regions (DETR), in contrast, refers to SA as:
“… a method of policy appraisal which aims to ensure that
consideration of sustainable development objectives is
ingrained into the strategy making process, influencing all
stages of the policy process.”xxxi
SA, in other words, is a process which is intended to test the
performance of a plan and thereby to provide the basis for its
improvement. The appraisal exposes the conflicts within, and
likely impacts of, a plan or strategy in order to inform the plan
or strategy making process. The final output from the process
9
sets out the nature of the choices that have to be (or have been)
made.
There is an overlap between SA and other forms of strategic
assessment. In the planning context the strongest link is with
SEA, as both techniques seek to help inform decision-making
by providing information on the potential implications of
PPPs. The European Union’s (EU) Directive on Strategic
Environmental Assessment (SEA Directive) in particular
demonstrates this link given its focus on plans and policies.xxxii
Socio-economic Focus
SA has a wide scope, covering social, economic and
environmental topics, unlike SEA which primarily
concentrates on environmental issues (which are dealt with in
greater depth). In contrast to SEA, SA is almost wholly of a
qualitative nature. In the event, this can lead to a lack of
objectivity if the process is not appropriately managed. The
Royal Commission on Environmental Pollution (RCEP), for
example, has identified the lack of quantification in SA in the
UK and the “poor science” involved in their environmental
analyses as being an issue of concern. The RCEP has also
criticised SA on the grounds that:
it is often not used as a decision-making tool;
it is undertaken after a plan or strategy has been largely
written, rather than ex ante, meaning less chance to
influence the decision and improve sustainability
performance,
it is not always undertaken by a team independent of the
plan development process.
The RCEP has also criticised SA on the basis that it often fails
to address cumulative, secondary impacts.xxxiii Moreover, SA
is still at a relatively early stage of evolution and its
relationship to other forms of IA, in particular SEA, is in need
of further definition.
The Practice of SA
SA is applied in a variety of contexts including regional and
local planning, trade policy, development policy, road
building, housing schemes, and biodiversity and forestry
development. In the UK, SA has become increasingly
common in the planning process and is applied by public
authorities to appraise regional strategies, development plans
and other policy documents, as well as a growing number of
10
major development projects (e.g. road building and housing
schemes, major defence projects).
SA is also applied in Denmark, Finland and the Netherlands.
Likewise, a number of actors including the Chilean, Canadian
and US governments, NGOs such as WWF, and several
academic institutions have started to assess trade agreements
on sustainability grounds.
Legal Status of SA
SA is not a formal legal requirement although some systems
are beginning to mandate it for certain types of activities. In
the UK, for example, SA is a formal requirement in the
preparation of regional planning guidance. It is anticipated that
SA will become more widespread as a result of the
implementation of the EU SEA Directive.
Key Benefits of SA
To date, SA is applied primarily by government authorities to
help achieve integration between social, environmental and
economic objectives, and to assist planners in ensuring that
plans and strategies are sustainable. While SA is not always
used effectively (e.g. it is not always applied ex-ante), it can
help to improve plans and policies, and deliver more
environmentally sustainable forms of development.
It can also help to: avoid wrong decisions and related costs
and time expenses at an early stage; advance sustainability
through promotion of integrated environment/development
decision-making; consider a larger range of alternatives than is
normally the case in project EIA and assessment of the
impacts of alternative options rather than option alternatives;
and to provide a detailed log of decisions and provide
transparency for decision-making. As in the case of SEA, its
effectiveness depends to a large extent on who carries it out,
with what resources available and crucially on timing.
Comparing Techniques
Although SEA/SA and Strategic Impact Assessment have
different objectives, they are complementary. All three are a
response to real or perceived shortcomings of project-level
EIA. Like SEA/SA, Strategic Impact Assessment can
facilitate subsequent ESIAs through the evaluation against
baseline data as well as more abstract objectives. It is
therefore important to define the boundaries between SEA/SA
and Strategic Impact Assessment, particularly where socio-
economic impacts are concerned and to ensure that there is no
misplaced rivalry between them. As SA evolves, and its
SPE 86583
relationship to SEA matures, this will help to define the
relationship with Strategic Impact Assessment as well.
Unlike SEA/SA, there are no official guidelines available for
Strategic Impact Assessment. However, all three forms of
assessment are evolving concepts and no single “best”
approach has yet emerged. Decision-makers and developers
will have to carefully evaluate the sensitivities of a particular
project or PPP and decide, in light of the relevant factors
(risks, opportunities etc) whether a Strategic Impact
Assessment or SEA/SA is warranted.
As demands for more systematic consideration of
environmental and social impacts of policy-making and
strategic planning intensify, decision-makers are increasingly
coming to see SEA/SA and Strategic Impact Assessment as
tools to compensate for the limitations inherent in ESIA.xxxiv
However, there is a need for further guidance and practice in
order to gain experience and delineate the boundaries between
these forms of assessment more clearly.
Strategic Impact Assessment, like SEA/SA, represents an
attempt to address strategic issues in relation to PPPs and
major projects. Like SEA, it targets key
policy/programme/project decisions and significantly benefits
from formal involvement of the decision-makers, with
appropriate timing and time-scales. Like SEA, data needs and
analysis are targeted at critical issues (including induced and
cumulative impacts) rather than being comprehensive. Both
approaches rely on extensive consultations rather than
consultation on specific documents. Moreover, they both
include feedback and review/monitoring mechanisms and rely
on stakeholder involvement and transparency through
consultation and dissemination. They also depend on adequate
scoping.
However, while SEA examines proposed developments and
ancillary/secondary activities on an ecosystem basis,
considering not only natural processes, habitats and wildlife in
a region, but also the interests of local communities and
stakeholders, SEA is not necessarily appropriate or indeed
sufficient, especially in the case of very large and/or complex
projects where social and cultural aspects play a significant
role. Strategic Impact Assessment, in contrast, addresses
higher level, socio-economic issues and offers a variety of
benefits that other forms of IA are not designed to deliver.
SPE 86583 11

Strategic Impact Assessment is also quite distinct from here has a potential value in this regard but the decision on
SEA/SA in a number of other ways, including the following: which assessment form to apply needs to be made on a case-
by-case basis in light of the relevant circumstances.
It focuses on a wider set of larger scale issues including
social, economic, political, cultural and environmental
On the basis of current experience, Strategic Impact
factors and aims to achieve a high degree of integration of
Assessment can, if properly carried out, have the following
different disciplines and perspectives compared to other
advantages:
forms of IA ;
create a better balance between environmental, social and
It is primarily social-science based, unlike SEA which is
economic factors while also accelerating the process of
generally natural science led;
decision-making;
It considers higher level, long term issues and questions
integrate environmental, social, economic, cultural and
the merits of an undertaking to a greater extent than other
political issues early into strategic decision-making;
forms of IA do;
lead to improved planning and an early focus on the most
It provides more detailed coverage of social, economic
important stakeholder concerns;
and cultural issues than SEA/SA;
lead to better stakeholder relations through developing
It is less formalised than SEA/SA and is primarily an
early links with important external stakeholders such as
issues-based approach that is tailor-made for the
NGOs and governments and allowing for early input from
particular project or PPP;
these groups;
It emphasises the local context while firmly placing the
support mitigation plans to minimise potential negative
assessment into a wider global and regional perspective;
financial consequences such as project and licensing
It is not triggered through legislative fiat; delays and negative stakeholder reaction;
It considers longer time horizons than SEA/SA and is less help avoid non-productive social investment by providing
focused on baseline environmental data than SEA; an improved basis for decisions on these issues;
It is carried out on a more independent and impartial basis assist in identifying constraints and opportunities within
and should not be directly undertaken by government local communities and help to anticipate employment
and/or the project proponent. issues;
Although superficially there is significant overlap between identify potential conflicts between local, regional and
these three approaches, largely on account of their similar national priorities;
origin (in particular between SEA and SA) - all three
help to demonstrate leadership and competitive
approaches are a response to real or perceived shortcomings
advantage;
with regard to project-level EIA - there are subtle but
important differences between them. assist in the selection of partners through allowing longer-
term associations to emerge out of the associated
Conclusions engagement process;
This is a fast moving and evolving field in which SEA, SA facilitate the transfer of best practice in areas such as
and Strategic Impact Assessment represent the most strategic revenue management and local and national economic
forms of assessment, alongside a swathe of other subsidiary development.
techniques. However, while it is recognised that there is a
On the other hand, there are situations where SEA/SA may be
need to go beyond project-level ESIA to address the
more appropriate prior to progressing to the ESIA stage. The
increasingly important socio-economic dimension of large
decision on which tool to opt for, if any, needs to be made on
scale projects, there is no international consensus on the
a case-by-case basis in light of all relevant circumstances.
precise scope and application of the respective techniques as
yet. Consequently there is a measure of confusion regarding
the use of these techniques. Each of the techniques reviewed
12 SPE 86583

Endnotes xxiv
The DTI has embarked upon a process of Strategic Environmental
i Assessment (SEA) for the UK continental shelf. The purpose of this
Thomas Bunge, Strategic Environmental Assessment: Aims, types, and
exercise is to enable licensing of regional offshore oil and gas exploration
processes at national and international level, in Bundesministerium für
and development in an environmentally sensitive manner. To achieve this
Umwelt, Naturschutz and Reaktorsicherheit, Workshop on Strategic
the DTI wishes to conduct the widest possible consultation in order to
Environmental Assessment in the cooperation with developing and transition
identify areas of the UKCS that may require special protection or
countries, Berlin, 26-27 November 2001, p.8.
ii consideration. In 1999/2000 the DTI conducted their first SEA of an
Olav Kjörven and Henrik Lindhjem, Strategic Environmental Assessment in
area to the Northwest of Shetland (formerly referred to as the "White
World Bank Operations – Experience to Date – Future Potential,
Zone"). DTI has since commissioning a series of further SEAs with the
Environmental Strategy Papers No.4, World Bank, 2002; World Bank, The
ultimate objective of assessing the remaining unlicensed areas of the
Impact of Impact Assessment: A Review of World Bank Experience, World
UKCS. For further information, see http://www.offshore-
Bank Technical Paper No 363, 1997.
iii sea.org.uk/sea/dev/html_file/announce.php.
ChevronTexaco Workshop on Lessons Learned from International EIA,
xxv
San Ramon, California, May 2002. Department of Foreign Affairs and International Trade, Guidelines for
iv
The public report on the project is entitled Study on the Impact of the Conducting Strategic Environmental Assessment of Policy, Plan and
Development of Hydrocarbon Resources in the Faroe Islands. It was issued in Program Proposals, Ottawa, February 2002; Department of
2001 can be downloaded at www.foib.fo. Environmental Affairs and Tourism, Strategic Environmental Assessment
in South Africa, Guideline Document, February 2000.
v
B. Sadler & R. Verheem, Strategic Environmental Assessment: Status, xxvi
Challenges and Future Directions, Report 53, The Netherlands Ministry Directive 2001/42/EC of the European Parliament and of the Council
of Housing, Spatial Planning and the Environment, 1996. This definition of 27 June 2001 on the assessment of the effects of certain plans and
is interesting as it appears to elevate social and economic issues to the programmes on the environment, OJ L Nr.197 of 21 July 2001.
same level as environmental issues. This contrasts with most other xxvii
definitions which agree that SEA is mainly environmental in focus. For an overview of these other tools, see ICON, SEA and Integration
of the Environment into Strategic Decision-Making, Final Report, May
vi
Thérivel & Partidario define SEA as “the formalised, systematic and 2001, CEC Contract No B4-3040/99/136634/MAR/B4. Despite some
comprehensive process of evaluating the environmental effects of a differences, the two concepts are closely related to each other and are
policy, plan or programme and its alternatives, including the preparation therefore jointly discussed in this document under the heading of
of a written report on the findings of that evaluation, and using the Sustainability Appraisal (SA).
xxviii
findings in publicly accountable decision-making.” See R. Thérivel & M. To be effective, SA should be guided by a clear vision or strategy of
Partidario, The Practice of Strategic Environmental Assessment, what sustainable development means for the local community. This is a
Earthscan, London, 1996, p.4. challenging area which is in need of further methodological development. See
vii EIA Newsletter 18, EIA Centre, Sustainability and EIA/SEA, University of
IAIA, The Linkages between Impact Assessment and the Sustainable Manchester, 1999.
Development Agenda, and Recommendations for Actions, August 2002, xxix
Therivel & Minas, op.cit., p.83.
p.4.
viii xxx
Although SEA can also be applied at a policy level, current experience Rob Verheem, Recommendations for Sustainability Assessment in the
relates primarily to SEA at the planning and programme level. This is largely Netherlands, Netherlands EIA Commission, June 2002.
due to the reluctance of political decision-makers to subject policies to SEA.
xxxi
ix
DETR, Good Practice Guide on Sustainability Appraisal of Regional
The research has indicated that SEA, although primarily natural science Planning Guidance, 2000.
based, also involves other disciplines such as the policy sciences. Some
xxxii
argue that SEA is a hybrid between the natural and social sciences. The situation is set to change with the implementation of the EU’s
x SEA Directive. In the UK, for example, the SEA process is to be merged
Bram Noble, Strategic Environmental Assessment: what is it? & what makes
it strategic?, Journal of Environmental Assessment and Management, Vol.2, with the existing process of SA, thus potentially blurring the distinction
No.2, June 2000, pp.203-224. of SEA and SA and the environmental focus of SEA, Office of the
Deputy Prime Minister, op.cit. The implementation of the SEA Directive
xi
Ibid., p.215. is potentially contentious, especially in Member States such as the
xii Netherlands, which consider their existing SA and SEA arrangements to
Riki Thérivel & Phillip Minas, Ensuring effective sustainability appraisal,
Impact Assessment and Project Appraisal, Vol. 29, June 2002, pp.81-92, p.82 be more stringent than the provisions of the SEA Directive.
xiii xxxiii
Bunge, op. cit., p.9. Royal Commission on Environmental Pollution, Environmental
xiv
Strategy is derived from the Greek word strategos or the “art of the Planning. CM 5459. Twenty-third Report of the Royal Commission on
general”, that which has to do with determining the basic objectives and Environmental Pollution. The Stationary Office, London, 2002. Para 7.46.
allocating resources to their accomplishment. In military terms, strategic
generally refers to “the employment of the battle as the means to gain the end xxxiv
Because EIAs take place once the main strategic decisions have
of war”. already been made, they often address only a limited range of alternatives
xv
Once the means are determined, for example of a particular policy, the and mitigation measures. The use of SEA and other strategic tools can
assessment of that means to determine its likely impacts is no longer strategic potentially have significant benefits in supplementing and to some extent
as the goal is largely predetermined. reducing the necessary scope of costs of EA work downstream.
xvi
Ibid.
xvii
Strategic in this context refers to approaches aimed at determining
basic long-term objectives and the adoption of courses of action and
allocation of resources necessary to achieve these goals. See Noble,
op.cit.
xviii
Olav Kjörven and Henrik Lindhjem, op.cit., p.7.
xix
Bunge, op.cit.
xx
Kjörven & Lindhjem, op.cit., p.9.
xxi
Kjorven & Lindhjem, p.26.
xxii
Noble, op.cit., p.204.
xxiii
Ibid.