Indonesia - Additional Financing for Third National Program for Community Empowerment in Rural Areas Project : environmental management framework

 E2853 Safeguard Policy INDONESIA: Third National Program for Community Empowerment in Rural Areas Environmental Management Framework Introduction: PNPM Rural III is the most recent in a series of projects that began with the Kecamatan Development Project (KDP) and have been cited as a model for the development of projects of this nature. Project methodology benefits from a continual refinement to incorporate lessons of experience and best practice and reflects a pool of direct experience extending back over more than a decade in the Indonesian context with PNPM Rural projects I and II, and grant-funded activities that use the PNPM Rural planning and implementation processes, in particular PNPM Generasi Sehat dan Cerdas (PNPM – A Bright and Healthy Generation) and PNPM Green. The Bank has assessed this project as category B. The objective of the Project is that villagers in PNPM rural locations benefit from improved socio- economic and local governance conditions. Negative impacts may include: (1) air pollution from vehicles, (2) flooding if bridges are improperly sited, (3) an increase in air-borne dust, (4) noise pollution, (5) increased erosion, and (6) diverting the flow of rainwater. In overview five specific mitigation methods are routinely applied; (1) selecting an alignment that reduces environmental disturbances; (2) utilizing civil works and vegetation treatments to limit negative impact; (3) ensuring maintenance and repairs are made in a timely fashion; (4) using vegetation to stabilize slopes and prevent erosion; and (5) using special treatments, such as drains, to overcome problems with ground water. This Annex outlines the procedures put in place to ensure that all project activities are assessed and that potential environmental issues are identified and addressed before an activity with the potential to negatively impact on the environment is commenced. Where it is assessed that the merits of activity indicate an activity should proceed, even though a negative impact may result, this framework outlines the standard operating procedures that have been incorporated in PNPM Rural III to minimize and offset those negative impacts. The three basic principles guiding project design and this environmental framework are: 1. Proposals should avoid or minimize negative environmental impacts, and in each case viable alternatives with no or minimal negative impact will have been explored. 2. Before any activity where a potential negative environmental impact has been identified can proceed past the planning stage it must be accompanied by a plan to mitigate the negative impact. 3. Any proposed activities should fit into the General Spatial Plan and avoid areas designated by the Ministry of Environment. PNPM Rural III follows official Indonesian government policy in regard to environmental management and protection. The Indonesian Environmental Law No. 32 of 2009 governs environmental management in general and covers all sectors. Government Regulation 27 of 1999 established the required methodologies for environmental impact analyses (or AMDAL in Indonesian), and Ministry of Environment Regulation No. 8 of 2006, further provides guidance on the AMDAL process. On the basis PNPM Rural – Environmental Framework 1 of 11 of these Regulations planned development activities are divided into three classes. The first class covers those activities that clearly have a large and significant adverse impact that are sensitive, diverse or unprecedented, and as a consequence require a formal environmental impact analysis. The second class covers those activities with less adverse impact and these impacts are site specific and in most cases mitigatory measures can be designed more readily that the first category, and for these an environmental management plan is required. Lastly, the third class covers those activities with relatively minor or no adverse environmental impacts and for these an explicit impact analysis is not required. A review of the scale and nature of activities proposed under PNPM III identifies that in line with the Decree of the Minister for the Environment No. 11 of 2006 for Activities Obligated to be Supported by Environmental Impact Analysis, the type and size of activities undertaken by PNPM Rural III mainly fall into the third class where due to the very small scale of investments and construction activities supported they do not require a formal impact analysis and can follow standard operating procedures issued by sectors as available. PNPM Rural III Environmental Impact Analysis: The first step in the PNPM review was to conduct a thorough review of experience under the Kecamatan Development Project (KDP). A total of 14,175 small-scale infrastructure projects were financed in just the third year of the first KDP project. Since there were no technical changes to the design manuals in later years, these are considered to be representative of investments in all years. The infrastructure investments have been classified into one of ten infrastructure development types and the investment costs tabulated. The summary data are shown in the Table 1 below which the following conclusions can be drawn: • of the ten categories of development, only five are of a type which would raise any potential concern from an environmental point of view, namely; roads, irrigation, bridges, water supply and wharves; and • the average scale of construction was extremely small. For example, the average road investment financed development of only 1.2 kilometers of new road at a cost of about 36.6 million rupiah (US$ 4,100) per kilometer. Most of the irrigation development involved rehabilitation of small schemes although there was some new construction as well. To provide some perspective, for new construction, the average investment of around 25.3 million rupiah (US$2,850) would finance only five or six hectares of new, low technology irrigation command. The other forms of development were similar: bridges include small scale steel girder bridges with wooden decks, concrete bridges, wooden bridges, and suspension bridges; water supplies come from a variety of sources, but mostly come from springs and dug wells. Most distribution systems are gravity fed, but some utilize electrical or diesel pumps. Table I: Sample Cases of Environmental Impact in KDP Location Activity Environmental Impact Comment Kecamatan Irrigation project Aek Caused downstream areas Incorporate standard Sosopan, South Bustak to suffer drought from guideline requiring design Tapanuli, North lack of flow engineer to check effects of Sumatra incremental water demand on downstream users. Lancap Jae, Use of heavy equipment Disturbed wildlife in the Largely unavoidable and only Kecamatan in constructing a new surrounding forest of short term effect. No PNPM Rural – Environmental Framework 2 of 11  Arse road surrounding forest special safeguards recommended Riau province Construction of a road Became a link in the Potentially significant but leading to protected transportation of illegal difficult problem to deal with. forests logging One option might be to include a prohibition of such investments in the negative list. Tana Toraja, Culverts in general built In relatively flat areas Failure to follow good design South without protective the uncontrolled principles. Need to find out Sulawesi structures including discharge damaged field why communities or their wing walls, drop or orchards. engineering advisers were not structures, and lined applying standard design In mountainous areas led discharge channels. safeguards. to landslides on the side slopes of the road. Cilacap, Construction of a Reduction in flow area Failure to follow good design Central Java bridge with a caused the stream to principles. Need to find out reduction in the overflow, causing why communities or their wetted perimeter of damage to productive engineering advisers were not the channel rice fields. applying standard design safeguards. The review of KDP environmental impact and safeguards illustrated three key facts: • the basic environmental impact potential of investments supported through the project is low so the general strategy followed under KDP remains relevant; • nevertheless, the desk and field reviews suggested that a small number of environmental issues were encountered. Furthermore, with block grants doubling in size there is some potential for increased impacts should more villages cooperate on large investments (even though subproject maximum sizes will remain unchanged from KDP). • most of the issues had their origin in apparent failures to follow best civil engineering practice and it is likely that these can be addressed through continued training and supervision of engineering staff providing technical advice to participating kabupatens; the small number of environmental complaints made to the KDP complaints unit may be a reflection of the very low adverse impact potentials of investments supported under the project but it also could be a reflection of lack of interest in environmental issues on the part of beneficiaries or a reluctance to report problems upwards. These three items have been addressed in the design of PNPM Rural. It has been made clear that the national government, the donor, and the national consultants place high importance on attention to the environment. It is the responsibility of the kecamatan facilitators to explain the basis for this to the villages and to monitor implementation. Sanctions are imposed where breaches are identified, for example causing environmental damage is sufficient cause to cancel an activity. Not paying attention to the environment is sufficient cause to have the facilitator replaced. This attention to the environment is equally important at the kabupaten level, where the kabupaten consultants and especially the kabupaten engineering consultant must enforce environmental standards. In addition, the project's negative list (refer to Annex 1) is extensively announced and explained and reflected in the project's legal documents. PNPM Rural – Environmental Framework 3 of 11 Reluctance to report problems is widespread in most projects. Problems will be reported faithfully only if several conditions are met: • There are no negative effects from reporting problems • There are positive results from reporting problems, i.e. help is given • There are negative effects from not reporting problems The design of PNPM Rural attempts to address all three of these conditions. Reporting of problems is a major point in the performance evaluation system. Problems that are reported are discussed and handled at monthly meetings, and doing this is a major point in the performance evaluation of kabupaten consultants. The first item is connected with the attitude of senior consultants, government officials, and donor representatives when confronted with reported problems. They should perceive these reports as evidence that the system is working and as opportunities to improve performance in the field. Success in the field depends upon the discipline of project actors meeting these three conditions, which is a task for senior management. A review of the effectiveness of these measures will be included in the first-year evaluation and measures for correction will be agreed with the Bank prior to the approval of the second year program. Supported by donor-grants, PNPM Rural will also be piloting new approaches for community based environment work in the fragile upland areas of Sumatra and Sulawesi. These “green