1. Regional Environment Office (REO) for South Asia,
based at Embassy Kathmandu, would like to propose several
projects for FY 02 and FY 03 funding via South Asia Bureau
regional Economic Support Funds (ESF). While all of the
proposals have an environmental dimension, they are cross-
cutting, multi-purpose concepts that will contribute to
regional stability, confidence-building, and support other
important U.S. objectives in the region. REO would like
to withdraw the FY 02 and 03 requests for USD 1 million
per year for an integrated river basin management and
flood forecasting proposal and substitute three new
proposals. The total request for REO projects has been
revised downward slightly for FY02, to USD 1.2 million,
and sharply, to 1.3 million, for FY 03.



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SUMMARY


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2. Projects have been listed in priority order, with
approximate amounts required for effective execution in
each of the fiscal years 2002 and 2003. Projects with an
asterisk are new proposals; others are ongoing initiatives
requiring continued funding already submitted through the
MPP and BPP processes.

Project FY02 FY03

(1) USGS Bengal Basin 250,000 350,000
Groundwater Arsenic Research

(2) Forests, People, Conflict 250,000 150,000
and Insurgency*

(3) SA Transboundary Water 150,000 -
Quality Monitoring Project

(4) Environmental Crime* 250,000 250,000
Anti-Trafficking Enforcement

(5) Asian Water Quality 100,000 250,000
Coalition*

(6) Regional Environmental 200,000 300,000
Governance Initiative

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TOTAL: 1,200,000 1,300,000




3. Thumbnail descriptions of the initiatives follow
(complete project proposals to be furnished if needed):



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-
USGS Bengal Basin Groundwater Arsenic Research


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-

REO requests USD 250,000 in FY02 and 350,000 in FY03 to
fund continued research by the U.S. Geological Survey into
the causes of groundwater arsenic contamination in the
Bengal Basin. This would complement, not/not duplicate or
replace the separate request for bilateral ESF by Embassy
Dhaka and our USAID mission to Bangladesh. (Note: The
World Bank has USD 37 million left in a USD 40 million
fund for arsenic research and mitigation in Bangladesh,
but the results of this research are needed to be able to
use the funds effectively.) Regional funds would be used
to cover the cost of USGS participation in a multi-donor
effort to research the extent of the problem in Nepal's
Terai and investigate the mobilization pathways by which
the arsenic makes its way into the groundwater. In
addition, it would fund travel to India, especially West
Bengal, for USGS consultations and collaborative research
with responsible Indian officials and groundwater experts.
(Coordination of research efforts between India and
Bangladesh to date has been poor.)

Justification: Arsenic-contaminated groundwater has been
called - accurately, in our view - the greatest natural
disaster ever to strike mankind, affecting tens of
millions of people in the Bengal basin, including Nepal's
Terai. The problem is not limited to South Asia, as
extensive contamination has been discovered in the
countries of the Mekong region, as well as in the U.S.
USGS has great credibility with all partners involved in
the arsenic question and, by common consensus, has the
greatest scientific capacity to address hydrogeological
and geochemical issues that need to be resolved. Nepal
offers several comparative advantages for extending
research already underway:

-- The contaminated aquifers are much closer to the
Himalayan source of the arsenic. The simpler hydrogeology
(compared to the complicated stratography of the Gangetic
Delta) is more likely to yield early answers as to how the
arsenic gets into groundwater.

-- The relatively recent and less extensive development of
groundwater resources in Nepal offers an opportunity to
study aquifers less influenced by human activities.

-- The concentrations of arsenic in Nepal are roughly
equal to those found in parts of the U.S. The Terai, with
its relatively stable population, is favorable to a study
of the long-term effects of consumption of moderately
contaminated water -- of great interest to U.S. health
authorities studying cancer risk.



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Forests, People, Conflict, and Insurgency


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REO requests USD 250,000 in FY02 and USD 150,000 in FY03
for an initiative to counter the spread of regional
insurgencies through a sustained effort to promote
community-based natural resource management policies in
forest areas of South Asia. The purpose is to identify
specific socio-economic measures and policy changes that
will prevent disadvantaged, disenfranchised and
dispossessed societies and communities from becoming the
perfect breeding ground for extremist ideologies and
violent movements. Goals of the project are:

-- Reduce tensions and conflicts between people and the
government agencies through participatory, socially
acceptable and sustainable forestry/natural resources
policies and regulations.

-- Give local people greater access and greater
entitlement to forests and other natural resources,
enabling them to raise their standard of living and
discouraging them from extremist ideologies and
activities.

-- Identify corruption in forestry management and find
effective solutions to curb abuses.

Justification: Forests in Nepal, India Bangladesh, Bhutan
and Sri Lanka and parts of Pakistan have turned into
battlegrounds between government forces and insurgents.
Ultra-left-wing "Naxalites" reportedly control an area two
and half times the size of North Carolina in the dense
forests of eastern India. During a recent meeting, Indian
Naxalites and Nepalese Maoist groups agreed to form a
South Asian Maoist Coalition in a forest corridor from
western Nepal to the hinterlands of Andhra Pradesh in
Southern India to facilitate their movements and
operations. There is no one specific cause for the rise
of such insurgencies in these areas. However, there is
now a general understanding that such insurgencies have
been fueled by the dispossession of people of their
traditional rights and access to natural resources, arcane
and socially unpopular forest policies, severe poverty,
and the alienation of forest people from the political
mainstream. People who traditionally depend on forests
for their livelihood have joined the insurgents or are
sympathetic to their cause. They often find it easier to
deal with insurgent groups than with corrupt government
officials. In many forest areas, insurgent groups are
running parallel governments and issuing populist decrees,
such as raising the price of forest products sold by local
communities. Forests also function as the resource base
of insurgent groups, which resort to lucrative trafficking
in wildlife products, illegal timber felling and other
illegal activities to finance their activities.



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South Asia Transboundary Water Quality Monitoring Network


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REO requests USD 150,000 for FY 2002 to complete Phase
II of this initiative, which seeks to establish a
regional network for collecting and sharing water
quality data of transboundary rivers South Asia. The
main U.S. partner for execution is DOE's Sandia
National Laboratories Cooperative Monitoring Center.
In the current phase of the project, the focus is on
using technology to complement ongoing and existing
projects and activities of the partners in the network
and supporting institutions to foster a common
understanding of critical water issues and improve
communication and data sharing within the region. The
second phase of this project aims to:

-- Broaden the partnership - include more strategic
institutions in monitoring water quality in the region.

-- Increase the number of parameters monitored and the
geographic extent by enlarging the area of coverage
(i.e., number of mutually agreed test sites).

-- Strengthen the partnership by providing additional
training and technological know-how.

-- Institutionalize the partnership by creating a
permanent framework for cooperation and data sharing.

-- Move to the policy sphere. As the extent and
severity of regional water quality problems emerge from
these studies, we hope that the partners will be
motivated to seek support from their governments for
regional approaches to pollution mitigation.

Justification: South Asia is one of the most water-
stressed areas of the world. Many sub-regions, including
southern Pakistan, western and southern parts of India,
and nearly all of Afghanistan, are already facing moderate
to acute shortages of water scarcity, increasing the
danger of social conflict and fragmentation within these
societies. Compounding the problem is the fouling of
existing supplies. Water quality in South Asia is
degrading at a fast - and accelerating -- pace. Pollution
of surface and ground water is caused by poorly planned
and uncontrolled growth of industries, human settlements
and agricultural runoff. Lack of adequate water data is
hampering the ability of scientists in the region to
understand the true extent of the problem and find
effective solutions. Regional cooperation in this area
can support sustainable development and, consequently,
social, economic, and political stability - thereby
contributing to the relaxation of regional tensions and
reducing the risk of conflict. There is considerable
potential for embedding this project in a larger regional
approach to water quality issues funded by multilateral
lenders and other major bilateral donors -- please see the
section entitled "Asian Water Quality Coalition."



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Environmental Crime Anti-Trafficking Enforcement Project


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REO requests USD 250,000 in each of FYs 02 and 03 to
support South Asian governments in strengthening their
capacity to enforce Multilateral Environmental Agreements
(MEAs). South Asia is in immediate need of assistance in
implementing and enforcing MEAs, especially at the
operational levels, i.e. intelligence-gathering, inter-
agency coordination, detection of contraband and smuggling
operations, prosecution of traffickers, and
institutionalization of enforcement training. Expected
outcomes of the project include:

-- Increased knowledge about the status of MEA enforcement
in South Asia and diagnosis of deficiencies, particularly
in intelligence and investigative techniques.

-- A strategic plan devised by South Asian governments to
build their intelligence-gathering regarding various types
of illegal trafficking, bolster MEA enforcement capacity
and develop measures to control this illegal commerce.

-- Enhanced regional capacity to detect illegal commerce
under several MEAs and apprehend/prosecute traffickers,
consistent with international obligations.
-- Greater domestic and international coordination and
cooperation among the various law enforcement agencies in
South Asian countries charged with enforcing MEAs.
-- Creation of an indigenous South Asian capacity to
provide field-based MEA training modules to law
enforcement officials.

Justification: Terrorism is a threat to democracy and
civil society everywhere, and cutting off the sources of
finance and support for terrorism is one of the highest
priorities for the U.S. Typically, when South Asian
insurgencies falter in their popular support, they link up
with existing criminal networks to finance revolutionary
activities through such varied illegal pursuits as drug
running, trafficking in women and children, smuggling of
arms and ammunition, as well as illegal commerce in
products covered under the convention on endangered
species (CITES). More recently, the development of
illicit markets for chemicals prohibited or regulated
under the Montreal Protocol on ozone-depleting substances
(ODS) have opened up another extraordinarily lucrative
line of business for criminal smuggling syndicates.
Reports indicate that profits from this criminal activity
may be second only to the narcotics trade.



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Asian Water Quality Coalition


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REO requests USD 100,000 in FY02 and USD 250,000 in FY03
to support participation by USG scientific agencies, such
as USGS and EPA, in a broad-based, multi-donor initiative
to address water quality issues in South Asia. The funds
would be used to pay for TDY travel for consultations and
joint research by USG scientists in the region. We would
welcome support from REO for Southeast Asia/Pacific
(Bangkok) in soliciting additional support from EAP and/or
OES for this proposal.

Justification: See the comments on the South Asia Water
Quality Monitoring for background. The World Bank and
other multilateral lenders, as well as international
organizations such as UNICEF and WHO, have recognized the
inefficiencies involved in designing country-specific
programs for each of the many contaminants of concern
(i.e., arsenic, fluoride, cadmium, other metals,
fertilizers, organics such as pesticides, microbiological
organisms, etc.) As a result, a coalition of donors and
international agencies is now considering a broad
initiative on water quality for the South and Southeast
Asian regions. These entities frequently seek world-class
expertise and consulting services from top-ranked USG
scientific agencies, but are prevented by their charters
or other technical reasons from funding USG activities.
The purpose of this request is to ensure that the premier
U.S. scientific capabilities can be employed effectively
to support an international initiative to address critical
South Asian water quality issues.



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Regional Environmental Governance Initiative


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REO requests USD 200,000 in fiscal year 2002 and USD
300,000 in FY 2003 to promote environmental good
governance in South Asia. Small grants (not to exceed USD
25,000) will be provided, on a competitive basis, to local
and national non-governmental organizations. The grants
will help implement projects to:

-- Enhance civil society's environmental knowledge base,

-- Build local governments' capacity to integrate
environmental considerations into development planning,

-- Promote effective enforcement of environmental
regulations at the local level,

-- Strengthen local communities' ability to manage natural
resources in an environmentally sound manner,

-- Encourage local environmental advocacy and stewardship
using democratic means.

Justification: One of the major causes for rapid
environmental degradation in South Asia is the poor
implementation of environmental rules and regulations and
the insufficient ability of local governments to integrate
environmental considerations into their development
planning. The low level of environmental awareness of the
rural population and the lack of effective civil society
organizations to advocate and promote environmental
conservation further aggravates this problem. There is an
immediate need to strengthen environmental governance at
the local level. While there is a growing effort by
central governments to devolve more power and resources to
the local level, there has been a lack of complementary
efforts to assist local communities and governments to
manage their natural resources in a sustainable manner. As
a result, the natural resource base, the source of
livelihood and sustenance of the mostly rural people of
South Asia, is increasingly threatened.



4. The Regional Environment Office for South Asia hopes
the above will be useful to the South Asia Bureau in
setting priorities and planning for FY 02 and 03 regional
Economic Support Funds.

MALINOWSKI