Peep Mardiste

Highway through Forests? 20.09.2000

CAS and Transport Sector

Estonia became a member of the World Bank Group in June 1992. The first, and the only Country Assistance Strategy (CAS) for Estonia dates to September 21, 1994. The Bank's attitude and priorities were shown by suggestions to develop a foreign trade-driven infrastructure. The Bank declared that ”it will assist the Estonian government to meet the demand for the substantial public investment that will be required...to reorient transport and other infrastructure to meet the demands of the production for and trade with the West as well as the East. The Bank’s antipathy against subsidies is expressed also in the CAS: “Increased subsidies for public transport...would jeopardize the proposed transport sector project.”

Previous Transport Loans

The first World Bank's public sector loan was a rehabilitation loan of USD 28 million approved in October 1992. A part of the rehabilitation loan (approximately USD three million) was used for buying spare parts for public transport vehicles and overhauling diesel locomotives. The loan was co-financed by Japanese Export-Import Bank (JexIm) with USD 7.5 million.

So far, only one transport loan has been completed in Estonia the highway maintenance loan of USD 12 million that was approved by the Board in May 12, 1994. The main objective of the loan was to finance routine maintenance of the roads in 1995 and 1996. A total, 3000 km of surface dressings and 200 km of surface overlays were completed, and three asphalt mixing plants were rehabilitated. The project also included a sub-section for training officials and staff who were working in private companies or as technical assistance. The Finnish Government granted an additional grant of USD two million came from Western donors, out of which 1.1 million. The project was completed in 1996 and ranked as a “highly satisfactory” in the World Bank's Implementation Completion Report.

Background - Tallinn-Tartu Highway Project

Tallinn and Tartu are the two largest Estonian cities with a distance of approximately 180 kilometers. Because of the trade between the cities, well-functioning transport infrastructure is important. The Tallinn-Tartu road is the busiest one in Estonia with average daily traffic of more than 6000 vehicles per day. In sections close to Tallinn traffic volume is up to 15000 vpd.

In the early 1980s, the Government started to upgrade the Tallinn-Tartu road, planning to expand it from two lanes to four lanes. In road sections the end of the 1980s-upgraded closer to Tallinn less than 20 kilometers of road. During the period between the fall of communism and the first years of the 1990s there was no money to continue the project.

In the late 1990s construction went slowly ahead and ten kilometers of two-lane road were built. In 1997 it was decided to speed up the project and finish the remaining construction of 150 kilometers on the Tallinn-Tartu road. The aim was to build a so-called First-class Road with two lanes in both directions. A specific Tallinn-Tartu highway lobby group was formed with strong support from the Estonian National Road Administration (ENRA). By mid-1998, a number of studies such as preliminary environmental impact assessment were conducted, but with insufficient public involvement. In February 1999 the Government decided to upgrade half of the 180-kilometre road (starting from Tallinn) from two- to four lanes and on the second half of the road (from Mäo to Tartu) to cover it with a new surface. In addition, a new bridge and bypass would be built.

Proposed World Bank Loan

The World Bank was mentioned as a possible founder of the project in December 1997, when the second Estonian transport project firstly appeared in the World Bank's Monthly Operational Summary (MOS). According to the Estonian transport ministry officials, it was not their proposal and there was no reason to list the project in MOS. However, the intensive project preparations started in 1998. The first Public Information Document (PID) about the project was released in December 1998. Since then, three steps were undertaken to proceed with the project. Firstly, the project Task Manager was replaced by the Bank in early 1999 (Cesar Queiroz replaced Anders Bonde). Secondly, Banks' Board approved the projected on March 16, 2000. Finally, preliminary negotiations about another transport loan from the World Bank began and are still going on. The new project that should start in 2003 would complete the remaining parts of the highway between Tallinn and Tartu with major realignment and environmental impact assessments (EIAs) as well.

Project Description

According to the World Bank the overall objective of the project is to improve the availability and reduce the cost of trade supporting services in order to increase the level of trading activities and the transit of goods through Estonia. According to the PID of the World Bank, the project includes the following components:

• Rehabilitation and Upgrading of Portions of the Tallinn-Tartu-Luhamaa Road. This component will include the rehabilitation of priority sections of the road and the widening of the Tartu Ring Road and construction of an Interchange.
• Improvement in Road Safety. This component would include, among other sub-components, the construction of civil works to eliminate accident black spots, installation of long life road markings for new asphalt pavements, road side delineators, changeable traffic signs, automatic speed control cameras, and the creation of campaign materials for a road safety educational campaign.
• Institutional Strengthening, Training, Office and Laboratory Equipment. This component will provide continued assistance to the Estonian National Road Administration (ENRA) for strengthening its operational capacity, including assistance for continuing the work on routine maintenance by contract, improvement of the Pavement Management System, assistance in improving financial management, and additional support for the ENRA personnel in road design and supervision for improvements in the main road network.
• Trade Facilitation. This component will include carrying out part of the action plan prepared during project preparation, including the specific actions aimed at developing an environment with:
• laws and regulations to ensure the development of trade supporting services and infrastructure on an equal and fair basis, taking into account the EU accession process;
• support for creation of an efficient public and private partnership based on combined resources, close and objective, and the perception of a common goal;
• access to capital for the Estonian economy on equal terms and conditions as competitors;
• provision of quality education, training, and research on trade supporting services; and
• easy Estonian accesses to global markets and foreign access to the Estonian market. It will also include the hardware and software required implementing a pilot electronic system for providing one-stop border clearances in Estonia by the year 2003. The total cost of the project is USD 49.5 million, including 22.65 million from the Estonian Government, 25 million as the World Bank's loan, 1.65 million from the EU, and 0.2 million from the Finnish government.

NGOs Arguments Against the Project

The World Bank second transport loan to Estonia has several sub-projects. The largest and the most controversial part of the project is the Tallinn-Tartu highway upgrade.

First of all, the project will cause environmental damage. The proposed wide highway (the total width of trace will be up to 400 meters) will virtually cut Estonia into two parts. It will cross the most valuable forested areas in Estonia that are key corridors for animal and bird migration. These forests will likely become a part of the EU network of valuable natural areas (Natura 2000). The new highway will be too wide for some species to cross, and therefore it will limit their ability to migrate. In addition, the project could endanger their ability to survive in these areas. The new highway is located right next to an important freshwater reservoir that is an important water source for the capital city of Tallinn which has 450 000 inhabitants.

Secondly, the project is not cost effective. The Government is arguing that this project is a major investment decision in a field of regional development at the end of 20th century. It would enable easier access to Tallinn from the southern and southeastern parts of Estonia creating also new jobs. However, regional development and cohesion between the Southern Estonia and the capital could be accomplished with other means and with less money.

Thirdly, there are alternatives. The current project is an example of trying to solve problems by dealing with results instead of causes. Estonian authorities argue that the current road is too narrow for increasing traffic while the proposed new infrastructure would, in itself generate more traffic. Government should seriously try to decrease people’s need for mobility between Tallinn and Tartu. A need to travel from Tartu to the capital could be decreased with better telecommunications such as Internet, which enables videoconferencing instead of face-to-face meetings. It would be much cheaper to maintain the current Tallinn-Tartu two-lane road and to improve road safety. There is also a parallel road that is not used because of its bad condition, but it would be cheaper to improve the parallel road than to build a highway. According to the Estonian NGOs, no possible alternatives have been considered.

Fourthly, the Tallinn-Tartu highway is not a priority transport project in Estonia. A very good railway system is collapsing because of the lack of investments. For example, the Government recently decided to cut subsidies for passenger rail services by 50 percent in 2001. Rail is losing passengers because there is no money to keep the service quality. Rail tracks are in bad shape and trains are, therefore, rather slow. Thus it takes about 3.5 hours to get from Tallinn to Tartu by train while it takes 2.5 hours by bus. Public transport in cities is facing the same problems as rail sector- the lack of money and quality of service. There are very few bicycle paths in cities although people bicycle use is increasing. In Estonian cities, bicycles could be a very good substitute for private cars.

Finally, the argument contra the proposed project is a very poor public consultation. There has been a little meaningful consultation with the wider public throughout the project development process. The Bank correctly states in the Project Appraisal Document (dated February 23, 2000) that “massive collaboration” in project preparation was done between private and public stakeholders lead by the Ministry of Transport and Communications, namely with: “the Ministry of Finance, the Ministry of Foreign Affairs, the Ministry of Economy, the Ministry of Environment, the freight forwarders association, the Chamber of Commerce, transport companies, the Customs Administrations, and manufacturing companies.” Business associations related to the beneficiaries, including agricultural associations and other industry-related groups, are also named as key stakeholders. No surprise that NGOs had no opportunity to give theirs opinion about the project, since they were not mentioned as a part of the consultation process.

The Ministry of Transport and Communications and the Bank said that there have been enough articles about the Tallinn-Tartu highway project in the newspapers so the public should be well informed. It has happened only once that the ministry called a meeting with a few NGOs in the late stage of project preparation to “introduce the project”, obviously hoping to avoid future complains. In the Project Launch Workshop (April 28, 2000) a representative of the Ministry of Transport and Communications proudly announced that Friends of the Earth Estonia (FoE) was a part of the environmental working group of the highway project. FoE-Estonia has never heard of such working group and it had never received documents about the environmental aspects of the project.

While the Government of Estonia was still considering seven alternative routes for a new highway environmental impact assessments were carried out in mid-1979 for all possible routes. As it was stated in the study, the aim was just to give suggestions for further and more detailed environmental studies. However, the Government decided on a route that was actually a combination of several alternatives. It is almost impossible to use different EIAs that were done for several alternatives. Another EIA was done, but not surprisingly, the NGOs became aware of it only when it was completed and uploaded to the website of the institute that did the study (www.geo.ut.ee/maantee). There is indeed no link to the study from the website of the Ministry of Transport and Communications (www.tsm.ee/tsm) or Estonian National Road Agency (www.mnt.ee).

What Could the Future Bring?

It is too late to stop the project at its current stage, but the NGOs will put a pressure on both the government and the WB to minimise the environmental risks of the highway construction. At the same time, it seems that the next Tallinn-Tartu highway loan is under preparation, which could cause even greater damage to the environment.

To conclude, the Estonian transport loan has shown that the WB and the Government were not willing to include the NGOs in the project preparation process. The damage of the existing route improvements on the environment will be severe, but the new loan, which would approve major realignment through natural areas, would cause even greater damage. The Estonian NGOs will take a leading role in the consultation process of the upcoming World Bank project. The Friends of the Earth-Estonia are against further construction of the Tallinn-Tartu highway and will strongly oppose planned realignments. The aim is to stop the project.