Proposed measures to manage potential social and environmental impacts which might arise from project activities are described in the section that follows. The section below should be read in conjunction with the Environmental and Social Action Plan which summarizes action items arising from IFC’s review and which should be considered part of the review summary.
Environmental and Social Assessment:
No formal environmental or social impact assessment was carried out for Xiloa where the plant and corporate offices are located. However, the environmental and social impacts of this plant are minimal and easily managed due in part to the following:
- the plant does not utilize or produce process water,
- the plant is not immediately adjacent to any communities nor do there appear to be any other major community or social issues.
Because of the emergency situation created by Hurricane Felix, the government does not require an Environmental Assessment for this project, and thus the RAAN logging property only has an “Environmental Authorization.” The PAF (in Spanish the Plan Aprovechamiento Forestal, the Forest Harvest Plan) does include provisions for controlling forest fires, pest outbreaks, reforestation, and monitoring (including permanent plots). It also requires MAPIINICSA to employ low impact logging techniques and control damage to standing trees that are regenerating naturally.
A rapid social assessment of the logging project to include land tenure issues will be undertaken, to better understand key project stakeholders and the socioeconomic context in which the project operates, including a characterization of potential risks. Following this assessment, a timescale to implement additional social management measures shown necessary by the assessment will be agreed between IFC and SMG.
Forests in this part of the RAAN typically receive 3 meters of rain per year concentrated over a period of six months or so. Logging is not usually done in the rainy season because of the increased likelihood of erosion and the increased logistical complexity in general. SMG will undertake an analysis of the technical and environmental feasibility of year-round logging.
Environmental and Social Management System (SEMS):
MAPIINICSA and Simplemente Madera have heretofore relied on the purchase of certified wood to ensure that the most significant environmental and social impacts, those of their wood supply chain, are correctly managed.
Some elements of an SEMS are present throughout the various companies owned by SMG’s sponsors, but they are diffuse, informal and not systematized. They include, for example, certification audits that assess potential impacts, informal and ad hoc public consultations, policies on use of agrochemicals, and contingency plans for forest fires. These elements provide a useful foundation, as well as practical experience, but they will be strengthened, formalized and expanded into a comprehensive management system that allows the SMG to assess its environmental and social impacts and mitigate and monitor these impacts, as well as continuously improve its performance through time.
- Labor and Working Conditions:
HR Policy and Management. Neither MAPIINICSA nor SMG has a human resources policy or manual covering issues such as recruitment, employee grievances, collective bargaining, or rights of association. For the most part, both companies make use of oral rather than written employment contracts, a practice which is recognized under Nicaraguan labor law.
While these arrangements have proven satisfactory in the early stages of the companies’ development, existing informal systems do not allow demonstration of compliance with IFC’s requirements. SMG will develop a formal Human Resources management structure and implement policies and procedures covering written documentation of the working relationship, working conditions, freedom of association and expression, non discrimination, and employee grievance mechanisms. Such systems will support the SMG’s growth from around 160 employees today to more than 300 anticipated on project completion.
SMG’s companies pay more than 2.5 times the minimum wage as well as well as all the benefits required by the law, including severance pay (after 1 year), vacation (4 days/month), a “thirteen month bonus” (equivalent to one month’s wages) and social security contributions (6.25%).Overtime is defined as anything more than 8 hours per day or 40 hours per week according to local law. MAPIINICSA and Simplemente Madera pay overtime as double the base wage as stipulated by the law. Work on Saturdays and Sundays is paid as overtime.
- Occupational Health and Safety (OHS).
The main H&S risks come from working with saws and sharp tools, as well as maneuvering large logs and other pieces of sawn lumber. Most workers do not appear to use PPE, such as hardhats, eyeglasses, masks and noise protection, though they are provided at no cost to workers. Workshops also lack sufficient ventilation to remove wood dust created from sawing. The quantity of fire extinguishers and other firefighting equipment is inadequate given the amount of stored lumber. Signage also needs to be improved. Employees are provided with some training related to safety and other topics but it is not documented or systematic.
Safety audits will be undertaken at the forestry and manufacturing operations, and following these audits Action Plans to improve OHS will be agreed with IFC and implemented over an agreed timescale. Initial observations suggest that action items are likely to be related to training, enforcement of correct use of personal protective equipment, dust control and fire prevention precautions in the processing buildings. These Action Plans will form the basis of the OHS management systems.
- Supply Chain:
The main contractors within MAPIINICSA’s and Simplemente Madera’s supply chain include ten independent truckers who haul lumber from the RAAN to Xiloa, a logging contractor currently working in the RAAN (though no logging contractors will be used in the future), and about ten independent woodworking and furniture shops who produce furniture for Simplemente Madera’s operations. The most actively managed of these are the independent workshops but primarily from the standpoint of product quality. There is no evidence of any violation of core labor standards among any of these contractors but there is room to improve and monitor the H&S performance of these contractors, particularly among the trucking contractors who probably represent the greatest risk.
- Pollution Prevention and Abatement:
- Forestry Operations
The most significant impacts from forestry operations generally arise from felling operations and/or road building. The forests were heavily damaged by Hurricane Felix, though there is a surprising amount of re-growth only eight months later, even on standing trees. Because of this large-scale destruction of the stand from Hurricane Felix, residual damage from improper felling techniques and poor maneuvering of skidders and other equipment is much less relevant. Nonetheless, every effort should be made to disturb existing vegetation and standing trees as little as possible, particularly given the fact many commercially important tree species have sprouted and begun growing again in the herb layer. Efforts in the logging operation will focus on common sense mitigation measures such as adequate design, construction, and maintenance of roads and log yards, minimizing erosion by avoiding stream crossings and long skid trails, minimizing soil compaction by using skidders and avoiding overloading of trucks, reforestation along streams and in other sensitive areas, construction of proper site drainage at the camp, and decommissioning of primary roads and temporary stream crossings. These measures will be formalized in the Master Forest Plan and Annual Operating Plan and Road Management Plan.
- RAAN Logging Operation:
The logging operation is more of a camp than an industrial facility, though this will change as the company’s operation expands. Key environmental impacts (apart from the logging and road building impacts discussed above) include stormwater management and erosion, fuel storage and fire risks. Other impacts include domestic sewage produced at the camp and air emissions from mobile sources such as saws, generators, and other woodworking equipment. Systems will be put in place to treat sanitary waste water to IFC standards, and to capture and treat storm water, particularly that arising from the log yard.
A formal fuel storage and dispensing area will be established, to include an impermeable base, and containment walls.
Processing Facilities:
MAPIINICSA and Simplemente Madera’s industrial and manufacturing operations are relatively simple: their electricity comes from the grid and they have no boilers, they do not use water nor do they use significant quantities of hazardous or toxic materials or generate such wastes.
Key environmental impacts of the Xiloa facility include: generation of large quantities of sawdust which accumulate in an unlined, open-air pile, stormwater management and particulate emissions from wood drying kilns.
A waste management plan will be developed to address the sawmill waste. This is most likely to consider possible use of this waste as a renewable energy source for electricity generation. Plans will also be developed for collection and treatment of storm water arising from the wood waste pile.
Air emissions from the combustion facilities will be measured, and if excessive pollution abatement plans will be developed, possibly integrated with the wood waste management plan.
Management of electricity use will be included within the environmental management system at Xiloa.
Pesticide Use:
MAPIINICSA and Simplemente Madera do not use any pesticides or herbicides in their nursery, for weed control or as wood preservatives. Pest control is achieved through proper cultivation techniques.
Emergency Preparedness:
Formal emergency preparedness plans will be developed for both the RAAN logging operation and Xiloa.
- Community Health, Safety & Security:
There are no communities or settlements immediately adjacent to either the Xiloa or the RAAN properties, though the latter do include some individual houses within a kilometer or two of the property line. Community risks are relatively minor and would appear to consist primarily of transport-associated risks (along the entire transportation route to Xiloa) and fires. Transportation guidelines, to minimize risk to neighboring communities will be developed.
The relatively small scale of the project makes it very unlikely that it would serve as a magnet attracting an influx of people looking for work or other licit or illicit economic opportunities. The project is also unlikely to result in an increase in vector-borne or other infectious diseases.
Emergency Preparedness. The Forest Harvest Plan (PAF) contains a Forest Fire Prevention plan—in cooperation with FondoNatura, a local environmental group—that includes establishment of community fire brigades, training and awareness raising regarding the risk of forest fires.
- Land Acquisition and Involuntary Resettlement:
All land transactions that have taken place to date have been of a “willing buyer-willing seller” nature and MAPINIICSA has no rights of expropriation as a special government project. Sellers included some indigenous persons but they held individual titles to these lands, and their lands were not traditional or communal lands. Only one of the property owners was living on the land, and he decided to move after receiving MAPIINICSA’s offer to buy his land. All the other sellers were absentee landowners, and these lands were idle or devoted to agriculture and some cattle. Former owners were allowed to return to their lands to harvest crops. MAPINIICSA paid between $428-$471 per hectare for the property. There were no squatters on any of these lands, therefore no involuntary resettlement arose from the land acquisition. The property is surrounded on all sides by other private land owners.
Before future land acquisition, the Group will develop a Land Acquisition Plan that would include socioeconomic profiles of landowners, squatters, settlers, neighboring communities, and any other users of the land, a description of existing and previous land-uses, a grievance procedure, the procedure used for determining the value of the land, a description of any competing claims or disputes.
- Biodiversity Conservation and Sustainable Natural Resources Management:
Both the Xiloa and RAAN logging facilities are currently in the process of seeking FSC-certification for Chain of Custody and Controlled Wood, respectively. MAPIINICSA’s other wood sources (the family’s plantations and Layasiksa) are already FSC-certified. Any other forestry or wood processing facilities which may be acquired by SMG will be similarly certified.
Hurricane Felix created an unusual circumstance in which the Government of Nicaragua is authorizing salvage logging efforts without first requiring an environmental assessment. Thus, the project has not included an assessment of the potential impacts of logging operations on biodiversity, though the impacts are likely to be similar to conventional selective logging operations (with some important differences). Key differences between salvage logging and normal selective logging include:
- large fallen trees and stumps make maneuvering heavy equipment difficult and often require the use of a bulldozer to push the debris aside and gain access to the desired trees;
- this means that more logs and trunks are being raked over the soil and dragged longer distances
- on the other hand, there is a more exuberant herb layer than one would normally find because most of the forest canopy is simply gone and this has allowed for growth of shrubs, small trees, vines and non-woody plants;
- in this operation at least, standing trees are being passed over initially for future harvest.
A land-use change from natural forests to plantations clearly reduces botanical diversity. However, this situation is unusual inasmuch as Hurricane Felix has already had a dramatic impact on at least the largest and most visible animal species. In addition, the properties that make up the RAAN losing site were already devoted to agriculture to one degree or another. No exotic species will be planted as part of post-logging reforestation efforts, and neither the RAAN property nor the potential acquisition target area is located within the boundary of any protected area.
One of the tree species targeted for extraction, Honduran or “big-leaf” mahogany (Swietenia macrophylla) is listed under CITES Appendix II, meaning its trade is controlled and regulated, with specific requirements for certification and export which will be met by the Group.
- Indigenous Peoples:
All land for the project has been acquired from individuals on a “willing seller-willing buyer” basis and none of the land surrounding the acquired property belongs to indigenous groups. However, PS7 is applicable to the project because the RAAN is an autonomous region with an overwhelmingly indigenous population and almost by definition, any project or activity taking place there involves indigenous peoples.
MAPINIICSA has already demonstrated its interest in working with indigenous communities through its work with the Layasiksa forestry venture from whom they purchase about 600 m3 of logs per year. They also have a three-way Memorandum of Understanding (MOU) with Layasiksa, Rainforest Alliance and FUNDENIC-FONDONATURA that commits them to, among other things, set aside 300 manzanas (210 ha) for research; set aside the whole area for pilot projects in carbon sequestration; adopt both Controlled Wood and Chain of Custody certifications; and purchase Layasiksa’s lumber according to a preferential pricing scheme.
This existing engagement with indigenous stakeholder will be expanded to include indigenous and other communities in the vicinity of SMG’s properties.
