Danish Environmental Support Fund for Eastern Europe

3. Project Evaluation Criteria

Two models are applied in connection with environmental projects supported by the DESF facility, i.e.:

Application

The application model, which was the predominant way of obtaining support at the start of the DESF. Typically, this model is used by a partnership between a Danish applicant and a partner in the recipient country who identify and describe a project according to guidelines provided by DEPA. Subsequently, the Danish consultant applies for DESF support by using this model.

Tender

The tender model, which has been gradually introduced and is gaining importance especially after the approval of the country programmes. Typically, the Danish Environmental Protection Agency identifies the projects in close co-operation with the recipient country. The identified projects will subsequently be tendered according to official tender procedures.

The DEPA describes a number of standard project evaluation criteria in the publication Project Proposals for Environmental Activities in Central and Eastern Europe. These criteria are used in the review of project applications and as a base for evaluation of tendered projects and pipeline development. The publication is mainly in Danish, but procedures for preparing project descriptions are described in English.

Needs and wishes of the recipient

A crucial factor in the formulation of a project is the needs and wishes of the recipient. It is essential to the success of a project to determine which services and products are of interest to the recipient. The term recipient is broadly defined and may include public as well as private enterprises, government authorities, NGOs, etc.

Approval by recipient

Before a project can be approved for DESF support, it must be approved in writing by the national environmental authorities in the recipient country.

Co-ordination with other donors

Funding is largely co-ordinated with other donors and funding sources, in order to promote synergy between projects and to avoid duplication of efforts.

Extent of pollution reduction

Projects will be evaluated with regard to the pollution reduction anticipated measured in terms of quantity and toxicity.

Equal emphasis is given to minimizing transboundary pollution (global as well as regional) and local pollution problems.

Implementation projects which imply a significant quantitative and/or qualitative improvement of the environment are given high priority.

TA projects may be given just as high priority as an implementation project if the projects are essential to the solution of environmental problems.

The environmental consequences of a project should, to the extent possible, be specified in the project proposal, typically quantified e.g. in tons/year. This includes the anticipated pollution reduction resulting from the project, assuming that the project is implemented as specified in the project proposal. The secondary environmental effects should to the extent possible be specified, too.

Transfer of Danish know-how and/ or technology

DESF support is primarily granted to projects which entail the transfer of Danish know-how and/or technology. As a general rule, only projects involving proven technologies will be approved. Projects involving the development of new technology may, however, be considered in exceptional cases.

Pollution prevention, purification or clean-up

Environmental problems are closely tied to the volume and structure of production and consumption. Interventions should thus seek to attain savings in consumption of resources, energy and water. In this connection, focus should be on pollution prevention, conservation, cleaner technology and recycling rather than on clean-up of old pollution.

Pollution and economic development

When considering pollution prevention, the interrelation between pollution and economic development is important. The CEEC are in a difficult process of economic transition. Benefits to both the environment and the economy can be attained to the extent that environmental interventions can be integrated into the on-going restructuring process. An example is the reconstruction of energy systems.

Project finalization

Projects, which can be fully completed are likely to be given higher priority than projects for which follow-up or related projects will obviously be needed.

Dissemination effect

Priority will be given to projects which in the course of implementation or project reporting enable:

• dissemination of Danish environmental know-how or technology, or
• demonstration of financially and technologically appropriate solutions for environmental protection.

Projects of general interest and utility, possessing the potential of being replicated, will be given preference over projects of specific interest, which may be for a limited number of potential implementors.

All projects must include activities, contributing to the dissemination of project results, either in the form of workshops, articles in journals, or similar activities.

Technical and geographic coherence

Priority is given to projects which are consistent with the country’s environmental strategy and environmental project/programme portfolio.

Moreover, priority is given to projects in geographic areas with serious environmental problems as well as areas of ecological value.

Project viability

Project viability is tied to a number of factors, such as:

• political support for the project,
• appropriate choice of technology,
• institutional and managerial capacity of the recipient,
• economic and financial considerations.

Project viability can be assessed in terms of the project’s ability to continue operations and environmental impact even after withdrawal of DESF and other donor support.

Co-financing

DESF financial assistance is perceived as a means of promoting self-support. As such, projects involving the recipient’s own capital, whether the recipient is an enterprise or a government agency, will be given higher priority than projects which rely solely on DESF support.

Projects, where subsequent phases are likely to be financed by other sources - the recipient’s own capital or funding from other donors - will also be given high priority.

Three typical funding patterns are applied:

• projects financed solely by the DESF, usually TA projects, small IN projects or pilot projects,
• projects in the range of USD 3-7 million, where co-financing is likely to come from the recipient or from national financial institutions and funds,
• large-scale projects, expected to be funded by international financial institutions, which can be kick-started by Danish inputs through e.g. feasibility studies or financing studies.

DESF support averaged about USD 400,000 per project for projects approved during the period 1991-95, with DESF support to the individual projects ranging from USD 42,000 to USD 2.5 million. Total project costs ranged from USD 42,000 to USD 25 million. The typical financial gearing factor was 4.0. In other words, every DKK 1 (Danish kroner) spent by the Danish state on e.g. air quality improvement in the CEEC generated an additional DKK 4 from other sources, i.a. donors and recipients.

Type of projects

Environmental assistance may take the form of investment projects (IN) or technical assistance projects (TA). Most projects combine both components. The following classifications are used by the DEPA:

Technical assistance includes:

• pre-appraisal (including environmental studies, planning and analyses),
• monitoring,
• feasibility study and appraisal (including review),
• supervision (training and education).

Investment includes:

• project design,
• construction and maintenance,
• supply of equipment.