Mexico - Second Solid Waste Management Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 12848-WE STAFF APPRAISAL REPORT NVXICO SECOND SOLID WASTE MANA'M4ENT PROJECT MAY 16, 1994 MICROGRAPHICS Report No: 12848 MX Type: SAR Country Department II Infrastructure and Energy Operations Division Latin America and the Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the perfonnance of their offical duties. Its contents may not otherwise be disclosed without World Bank aoan  CURRENCY EQUIVALENTS Currency Unit = Peso (Mex$) US$1.00 = 3.3 Pesos (as of May 1, 1994) FISCAL YEAR January 1 - December 31 UNITS OF WEIGHTS AND MEASURES Meric US Equivalent 1 meter (im) = 3.28 feet (ft) 1 kilometer (kIn) = 0.62 mile (mi) 1 kilogram (kg) = 2.20 pounds (b) 1 metric ton (m ton) = 2,205 pounds (lb) 1 liter (1) 0.26 gallons (gal) 1 cubic meter (i3) 1,000 liters (1)  FOR OFFICIAL USE ONLY ABBREVIATIONS AND ACRONYMS BANOBRAS Banco Nacional de Obras y Servicios Pdblicos National Bank of Public Works and Servimes CAS Country Assistance Strategy CCNN Comite Consultivo Nacional de Normalizad6n (National Consultative Committee for Standards) CETES Certificado de la Tesorerfa de la Federaci6n (Mexican Government Treasury Bill) CNA Comisi6n Nacional de Aguas (National Water Commission) CONAPO Consejo Nacional de Poblaci6n (National Population Council) CONALEP Consejo Nacional de Educacid6n Profesional T6c=ca (National Council of Vocational Education) COPLADES Comit6 de Planeacion y Desarrollo Estatal (Committee for Planning and Development) CPP Costo Porcentual de Captacidn Bancaria (Average Cost of Funds Index) DGIE Department of Infrastructure and Equipment Direcci6n General de Infraestructura y Equipamiento DPRS Direcci6n de Proyectos de Residuos S61idos y Preservaci6n del Medio Ambiente (Office of Solid Waste Projects and Preservation of the Environment) GDP Gross Domestic Product GOM Govenment of Mexico ICB nternattional Competitive Bidding INE Instituto Nacional de Ecologfa (National Ecological Institute) INEA Instituto Nacional de Educaci6n de Adultos (National Institutte for Adult Education) ISWMP Integrated Solid Waste Management Plan IVA Impuesto al Valor Agregado (Value Added Tax) LCB Lcal Competitive Bidding NAFIN Nacional Financiera (Government-owned National Development Agency) NTP National Training Program Pi Poverty Index (Indice de Mrginalidad) POA Annual Operating Plan PCR Project Completion Report PFPA Procuradurfa Federal de Protecci6n al Ambiente (Office of the Attorney General for the Protection of the Environment) PRONASOL Progmma Nacional de Solidaridad (National Solidarity Program) SECOGEF Secretarfa de la Controlarfa General de la Federaid6n (Government Comptroller Office) TWs document has a resicted distnrbution and may be used by recipients onb in the era oheir 1 official duties. Its content may not otherwise be disclosed vwithout Wod Bank auth  SEDUE Secrcfa de Desarrollo Urbano y Ecologfa (Mnstry of Urban Development and Ecology) SEDESOL Secretarfa de Desarrollo Social (Ministry of Social Development) SHCP Secretarfa de Hacienda y Cr6dito Pbblico (Ministry of Finance and Public Credit) SIMEPRODE Sisenma Metropolitano de Procesamiento de Desechos S61idos (Metropolitan System for the Processing of Solid Waste) SOE Statement of Expenses TA Technical Assistance  MEXICO SECOND SOIMD SASTE MANAGEMNT PROJECT STAFF APPRAISAL REIPORT "Table of Contents Page No. LOAN AND PROJECT SUMMARY ..................................... i-vi I. THE SOLID WASTE SECTOR ..................1................... A. Socio-Economic Setthig ..... ........ .......................... I B. Legal Framework and Sector Institutions ................................ 1 C. Secto.al Issues ................................... 2 Institutions ................................... 2 Service Levels and Efficiency ................................... 4 Cost Recovery ............. ...................... 6 Regultory Framework and the Environment .......... ............... 8 Scavenging ................................... 9 Recycling ................................... 10 D. Government Strategy for the Sector ................................. . 12 E. Lessons Leaned from Past Projects .................................. .12 II. THE PROJEC .................................................14 A. Origin ................................ 14 B. Project Objectives ................................ 14 C. Rationale for Bank Involvement .................................. 15 D. Project Description ................................ 15 Institutional Strenening Component ........ ..................... 16 Investment Support for Implementation of Integrated Solid Waste Management Plans . 17 Social Component for Scavengers ................................. 17 E. Eligibility Criteria and Subloan Conditonality ............................ 17 F. Project Cost .......................... ...................... 18 0. Project Financing ............ ........... ..................... 19 H. Project Implementadon ............................. 22 Implementation Responsibilities . ............................. 22 Subproject Preparaion and Pipeline ............................. 23 I. Project Supervision and Reporting . ............................. 23 Project Supervision .............................. 23 Reporting .............................. 23 Annua Reviews ............................. 24 Mid Term Review .............................. 24 Auditing ............................. 24 J. Procurement .............................. 25 K. Disbursements ............................. 27 L. Project Benefits ............................... 29 M. Environmental Impact ............................. 29 N. Project Risks .............................. 31 m. AGREEMENIS REACHED AND RECOMMENDATIONS ..................... 32  TABLES Table 1.1 SolidWasteGenerationbyZone ................................. 5 Table 1.2 Regulatory Framework for Solid Waste and Environment in Mexico. 9 Table 1.3 Percentage Composition of Municipal Solid Waste by Region in Mexico .11 Table 1.4 Examples of Subproduct Prices Paid to Scavengers by City .12 Table 2.1 Projtct Cost Summary .19 Table 2.2 Mix of Credit, Grants and Municipal Contribuion ...................... 20 Table 2.3 Project Financing Plan .21 Table 2.4 Procurement Method .27 Table 2.5 Allocation of Loan Amount and Percentage to be Financed .28 Table 2.6 Disbursemnt Schedule .29 FIGURES Figure 1.1 Managemet of Solid Waste in Mexico .. 6 ANNEXES A SEDESOL Strengthening Program .. 35 B BANOBRAS Stengtheing Program .. 40 C National Traning Program .. 45 D Cost Recovery Requirements and Mechisms .. 54 E Strengthening Program for Environmental Management of s'olid Waste ............... 58 F Social Component for Scavengers .............. ......................... 62 G Recycling Studies and Public Education Campaign ............................ 74 H SubprojectSummaries .............................................. 82 I Content of Integrated Plan for Solid Waste Management ........................ 95 J Poverty Index and Mix of Resources ..................................... 99 K Specific Project Functions of Federal and Local stitutions ...... ............... 106 L Subproject Economic Evaluation Methodology ......................... .... 108 M ImplementationPlan ..........................................,1Ill N Enviromental Assessment Summary . ................................... 129 0 Selected Documents in the Project File .................................. 136 MAP IBRD No. 25666 IThis report has been prepared jointly by the Mexican Government and the World Bank, and is based on the findings of a World Bank mission which visited Mexico from Jamnary 24 to February 10, 1994. The mission was composed of Messrs./Mmes. John H. Stein CTask Manager, LA21E), Manuel Mariflo (IVUWS), Geoffrey Kirkman (LA2IE), Gisu Mohadjer (LA2CO), Juan Quintero (LATEN), Tova Solo (ENVSP), Menajem Besallel, Adolfo Pdrez, Edgardo Derbes, and Rene larqufn (Consultants). Messrs. Carl Bartone (WURD) and Antonio Estache (SASVP) provided the Peer Review. Mr. Mardn Staab is the Managing Division Chief, and Mr. Edilberto Segura is the Department Director.  MEXICO SECOND SOLI[D WASTE MANAGEMENT ]PROJECT LOAN AND PROJECT SU[MMARY Borrower: Banco Nacional de Obras y Servicios PNblicos (BANOBRAS) Guarantor: United Mexican States Execuig Agency & Beneficiarie: BANOBRAS, Secretarfa de Desarrollo Social (SEDESOL), and states and municipalities. Loan Amount: US$200 million equivalent. Terms: Repayment in 15 years, including five years of grace, with interest at the Bank's standard variable rate. Relending Terms: BANoBRAS would onlend loan proceeds to participatng municipalities and states in Mexican Pesos at the Mexican Goverament Treasury Bill (CEIES) rate or the banking system's average cost of funds (CPP), whichevet is higher, plus two percentage points, with maturities of up to 15 years, including grace periods of up to the years. Project ObJectives: The main objectives of the proposed project would be to: (a) improve solid waste services and extend their coverage in participating medium size cities; (b% strengthen the capacity of BANOBRAS and SEDESOL to appraise and supervise solid waste projects and provide technical assistance to municipalities; (c) increase technical, administrative and regulatory capicAty at the state and local levels to improve sector management and operations; (d) improve the legal and regulatory framework and cost recovery mechanisms of the sector to encourage greater private sector involvement and safeguard the environment; (e) correct environmental problems and reduce health hazards caused by inadequate collection and disposal systems; and (f) mitigate the social impact on scavengers of the establishment of modern waste collection and disposal systems. Project Description: The prcoect would have three main components: (i) strengthening of federal institutions, local governments and operating agencies which play a key role in development of the sector, (ii) supporting the investment needs of participating cities through implementation of comprehensive and integmted solid waste management plans; and (iii) providing support for scavengers and informal workers impacted Sy the project through a social component.  ii Institutional Strengthening Component. This component (US$24.7 million) would finance technical assistance to the federal agencies involved in the development and control of sector policies and regulations. This component will also finance assistance to states to regulate solid waste services and to municipalities to strengthen their management and r_gulatory capacity and also to fulfill eligibility criteria for investments subloans. It consists of the following subcomponents: The SEDESOL subcompo9gl (US$14.2 million) would finance consultants and other services and eqwpment to: (a) strengthen SEDESOL's capacity to promote, evaluate and supervise subprojects and assist municipalities and states in system design and operation and preparation of social plans; (b) implement a strengthening program for environmental management of solid waste to: i) develop federal standards for solid waste; ii) introduce state and municipal regulations for solid waste through preparation of model regulations, and technical assistance to three states on a pilot basis; iii) develop manuals for state and municipal environmental assessment and control of solid waste disposal systems; and iv) strengthen federal environmental enforcement capacity; and (c) carry out studies to: i) develop a national recycling strategy through analysis of markets prices and incentives for recycling, the downstream environmental impact of recycling and a public awareness campaign: and ii) prepare additional integrated solid waste management plans; T.e BANBRAS subeomoonent (US$0.9 million) would finance consultants, training and purclase of equipment to strengthen the capacity of the Solid Waste Subdivision to review the financial and economic viability of subprojects, assist municipalities in financial management and monitor subproject execution. The local government subcompnept (US$9.6 million) would finance: (a) technical assistance (TA) to municipalities or states to improve their solid waste planning and management capacity and prepare final engineering designs and environmental impact assessments; and (b) development and implementation of a National Training Program to increase state and local government technical, environmental, regulatory and administrative capacity. Investment Support for IEmplementation of Integrated Solid Waste Management Plans. This component (US$384.7 million) would finance a line of credit through BANOBRAS for onlending to municipalities or states that comply with subproject eligibility criteria for implementation of integrated solid waste management plans which would comprise: (a) civil works, such as the closing of open dumps, construction of transfer stations, landfills, incineration plants, containment cells for hospital wastes, recycling  ii and composting plants, and access roads; (b) purchase of equipment, vehicles and spare parts for collection, transport and final disposal of solid waste, including hospital waste handled by the municipality; and (c) the construction and equipping of recycling stations to provide a sanitary, safe and efficient environment for the scavengers to continue their work near the sanitary landfills. Social Component for Scavengers. This component (US$6.1 million) would finance: (a) training in basic skdlls, in specaLization in recycling and in other vocational areas, and in basic health, nutrition and child care; (b) provision of basic infrastructure and building materials for self-help construction for families currently living in dumps which will be closed or transformed into sanitary landfills under the project; and (c) city-specific market studies for recycling. Project Beuefits: The project will improve solid waste services for an estimated 11 million people in the 23 cities which are expected to participate on a first-come first- served basis. The main benefits of the project will th better collection practices, improving urban environmental quality, and the rcplacement of open dumps with controlled sanitary landfills which will eliminate leachate contamination of surface and ground water resources, reduce possible public health effects and control disposal of dangerous commercial and industriad wastes in municipaL sanitary landfills. Improved management of hospital wastes will lower public health consequences from uncontrolled disosal of infectious and pathological wastes. The project will also strenz,then the overall framework for solid waste management in the municipalities, establish norms and develop a regulatory and enforcement capacity in SEDESOL and promote full cost recovery, resulting ir. the sustainability of the investments. Private sector paricipation, which is expected to help to improve the efficiency of solid waste service, would be encouraged and supported through an improved regulatory framework, increased municipal au.hority over tariffs and concession agreements and the prepwaotmn and use of model bidding and contract documents. Poverty Impact: The project is expected to .wve a significant impact on poverty through the extension of service to marginal areas in cities which otherwise would not be able or willing to provide garbage collection. The project also includes schemes to improve the living and working conditions of scavengers, one of the poorest and most vulnerable sectors of urban society, many of whom are women with children, through: (i) their resettlement from open dumps or inadequately maintained landfills which will be closed or rehabilitated under the project; (ii) investments for more organized recycling activities; and (ili) training to open up other employment opportunities.  iv -r Risks: The technology involved in tie investments required for solid waste management is standard and does not present any unusual risks. The main risks to the project are: (a) weak institutional -apacity at the local government level to operate and maintain the investments and the inhernt difficulties which municipitie will face in introducing and maintaining adequate tariffs where previously none existed; (b) failure by SEDESOL and BANOBRAS to ensure that subprojects are of good technical quality and that subloan eligibility conditions and covemnts are met in the face of pressures from state and municipal governments to lend; (c) resistance from scavengers in adapting to new solid waste systems; and (d) insufficient annual budgetary allocations to SEDESOL which would delay subloan commitments and technical support to municipalities. The above nsks have been reduced through the design of the loan's conditionality and remedies available to the Bank. To address the risks related to execution of investments and operation of the new systems by the municipalities, the project includes a strong technical assistance component, extensive capacity building through the National Training Progrm and support to municipalites and states for establihsing and implementing regulations for solid waste under the strengthening program for environmental management. To ensure subproject technical quality and enforcement of eligibility criteria the projeet includes institutional stegening programs for SEDESOL and BANOBRAS. The use of the integrated plans that take into account all components of municipal solid waste services, technical assistance to help municipalities meet the project's eligibility criteria and the operating and financial parameters to be agreed for subloan agreements for each city would all serve to reduce this risk further. The risk related to the role f scavengers in the new systems is mitigated by the social plans to be prepared and assistance to be provided under the project's social component as well as a strong public participatory process. The risk related to adequate federal budget for the project will be addressed through annual consultations prior to the Government's budget cycle to identify federal financing requirements for the following year. Inadequate counterpart funds would be a condition of default of the Bank loan. Close supervision combined with the annual and mid term reviews will permit the Bank to address implementation difficulties and any budgetary issues that 'nay anse. Given the above actions and loan conditionalities, the above risks are acceptable in view of the substantial project benefits. Economic Rate of Returhn Not applicable. All subprojects would be subject to least cost analysis.  v Project Cost Summary: L asXttlonul Strengthening SEDESOL Capacity Building 5.4 2.S 7.9 Strengthening Program for Environmental Management 2.0 0.2 2.2 Studies 0.9 1.6 2S BANOBRAS Caaity Building 0.5 0.2 0.7 Local Government Strer4.thening Technical Assitce 3.8 1.S 5.3 National Training Piogram 1.5 1.0 2.5 SUBTOTAL PartdI 2I1 7id IL Investment Support for tmpvmentatIon of ! degrated Solid Waste Mangemet Plas Civil Works 122.3 88.7 211.0 Equipment 41.0 47 4 88.4 Land 5.1 - 5.1 SUBTOTAL Part H 168,4 164 .. Socal Component for Scavengers Infrastutu 2.3 - 2.3 Technical A ance, Training 2.9 - 2.9 and Studies SUBTOTAL Part I =- TOTAL BASE COST 187.7 1 Physical Contingencies 18.7 14.4 33.1 Price Contingencies 12.2 7.8 20.0 TOTAL (excludig taxes) 218.6 = Taxes 31.6 - 31.6 TOTAL CO-ST 16S3= n1u1  vi Flaning Plan: Bank 34.7 165.3 200.0 48.1 GOM Contribution 155.5 - 155.5 37.4 Local Government 60.0 - 60.0 14.5 Contribution TOTAL 250.2 165.3 415.5 100.0 % of Total 60.2 39.8 100.0 Esthmated Bank Disbursement: Bank Fiscal Years (US$ million) I _ 3 ~ .- Annual 0.0 10.3 1V 42.5 46.7 57.1 33.2 10.2 Cumulative 0.0 10.3 52.8 99.5 156.6 189.8 200.0 J/ Includes US$5 millon in initial deposit to Special Account and up to US$5 million in retroactive financing for eligible expenditures incurred ater February 15, 1994. Map: IBRD 25666  MEXICO SECOND SOL1D WASTE MANAGEMENT PROJECT L THE SOLID WASTE SECTOR A. SOCIO-ECONOMIC SE1TNG 1.1 Faced with the aftelmath of the debt crisis of 1982, Mexico broke with its earlier policies of protection and state regulation and adopted an outward-oriented, pnvate sector-led development strategy. The new policies have succeeded in stabilizing the economy and have set the basis for resumed growth. The key elements in the success of the strategy have been fiscal austerity, the opening of the economy and a changing role for the Government. Inflation has dropped sharply to less than 10% in 1993, down from an average of 90% per annum during 1982-88. Through a combination of expenditure cuts and increases in revenue, the overall public sector fiacial balance went from a deficit of 16.9% of GDP in 1982 to a surplus of about 0.5% in 1992. The Government's direct role in the economy has been reduced through the implementation of a sweeping privatization program which has generated funds in excess of US$21 billion. Recent passage of the North American Free Trade Agreement will further strengthen the transformation of the Mexican economy. 1.2 During the last several decades, urbanization in Mexico has been expanding at a fast rate, with nearly 619% of the population living in urban areas. Urban growth rates have accelerated, especially in many intermediate and secondary cities partly as a response to changes in the location of economic activities. At the same time, successive Mexican administrations have initiated reforms to enhance the participation of local governments in the provion of basic services and the protection of the environment. These developments have placed significant demands on municipalities. Nowhere is this pressure greater than in the solid waste sector. B. LEGAL FRAMEWORK AND SECTOR INSTTUTIONS 1.3 Ardcle 115 of the Mexican Constitution (amended in 1983) gives municipalities the responsibility to create, transform, and deliver services for municipal solid waste collection and disposal. Regulation of toxic and hazardous wastes remains a federal responsibility. The principal environmental law in Mexico is the 1988 "Ley General de Equilibrio Ecol6gico y Protecci6n al Ambiente" (General Law for Ecological Equilibrium and Environmental Protection). Although over 100 standards and ecological criteria have been promulgated by December 1993, comprehensive standards for the solid waste sector do not exis, as the current standards are limited to toxic and hazardous wastes and incineration effluent air quality. The preparation and emission of federal standards and state and municipal regulations for solid waste would be supported under the project (para. 1.29).  2 1.4 At the federal level, a number of agencies are involved in solid waste management. The Secretariat of Social Development (SEDESOL) has responsibility for sector planning and policy formulation. Federal environmental regulation and its enforcement rests, respectively, with SEDESOL's autonomous agencies: the National Ecological Institute (NE) and the Office of the Attorney General for Protection of the Environment (PFPA). The Secretariat of Finance and Public Credit (SHCP) plays a crucial role in developing the federl budget, ensuring that investment prionties are reflected in the budgets of federal agencies. The National Development Bank for Public Works and Services (BANOBRAS) plays an important role in channeling financing to municipalities and providing technical assistance. 1.5 Most medium and large cities manage solid waste services through a separate municipal division with little or no autonomy. In major conurbated areas, municipalites often opeAte solid waste systems under informal cooperative schemes, the exception being the Monterrey metropolitan area where final disposal is carried out by an autonomous state entity (SIMEPRODE). The project supports improvements in organizational and adminisve structures and the development of autonomous operating agencies when appropriate. C. SECTORAL ISSUES 1.6 The extent and quality of solid waste services vary by city, but most are affected by common problems. These include: (a) weak institutions at the federal, state and local levels; (b) limited availability of professional staff with adequate technical, financial and managerial skldls; (c) insufficient service coverage and lack of controlled final disposal which has led to clandestine dumping and surface and groundwater pollution; (d) little or no cost recovery which has not permitted sustainable investments; (e) an undeveloped regulatory framework and inadequate analysis and monitonng of environmental impacts of solid waste investments; and (f) scavenging by individuals and families for reusable materials which has made movement to modern waste systems difficult because of the inefficiencies caused during the collection and final disposal processes. Lastly, recycling efforts are minimal, carried out through an informal, low productivity process run by scavengers with no clear federal or local policy guidance or planning. InstituIons 1.7 At the federal level, SEDESOL has been charged with responsibility for applying the General Ecology Law which includes support for federal solid waste programs and technical and financial advice to municipalities. In 1986, with the initiation of the Bank-supported Solid Waste Management Pilot Project (Ln. 2669-ME), the informal unit then in plac, since 1984 in SEDESOL's predecessor (the Secretariat of Urban Development and Ecology - SEDUE) was reorganized with its responsibilities divided among three departnents focusing separately on standards and vigilance, studies and technical support. SEDUE's efforts regarding solid waste were mainly concentrated in implementing the Bank project and channelling federal grant financing on an ad hoe basis through direct negotiations between SHCP and the individual states and municipalities for civil works construction and equipment purchases.  3 1.8 SEDESOL was formed in late MP' 1992 by the transfonration of SEDUE, and is organized in three sub-secretariats, one of which is for Urban Development and Infastructwe which contains a separate office responsible for the solid waste sector (Direccidn de Proyectos de Residuos Solidos y Preservacidn del Medio Ambiente - DPRS). The activities of this office have been limited by an inadequate number of technical staff with experience in the solid waste sector. The project will provide technical assistance to strengthen the capacity of the DPRS and train its personnel (para. 2.23). SEDZ3SOL's strengthening program is described in Annex A. 1.9 BANOBRAS is the main source of finance for municipal solid waste investments. In the past, BANOBRAS concentrated on its role as a financial intermediary with minimal technical oversight of projects prepared by other federal agencies. This function was reinforced by the lack of qualified and experienced technical staff and insufficient management direction. During the last few years, BANOBRAS has carried out several restructuring programs to reduce staff, improve efficiency and strengthen its development role. In 1993, BANOBRAS increased its efforts to decentralize its functions to its state representatives. The project includes technical assistance, training and equipment to strengthen BANOBRAS' capacity (para. 2.22). BANOBRAS' strengthening program, which has been prepared in coordinaton with other ongoing or proposed Bank projects that include support for BANOBRAS, is described in Annex B. 1.10 Although recent environmental legislation has established organizational structures at the state and municipal levels for assessment and monitoring of environmental impacts of urban infrastructure investments, the lack of specific solid waste regulations, and insufficient and inadequately trained personnel, compounded by litde if any institutional experience in this area, have hanpered their effecdve functioning. Institutonal problems common to most cities also include the mixing of solid waste financial and cost accounts with those of other municipal services, excess personnel without the necessary technical background and shortages of finance for investments and operations. The project would provide both training and technical assistance to states and municipalities to improve environmental management and system administration (paras. 2.6 and 2.8). 1.11 The lack of municipalt. perience for establishing tariffs and granting concessions as wel as nonexistent federal regulations govening landfill consuction and operation have hampered private sector participation. Private sector involvement would be facilitated under the project through improved federal regulations and enforcement for the sector, development of adequate tariffs or user charges and collection mechanisms and the preparation of a guide and model bidding and contract documents for concessioning. 1.12 Solid waste servces are becoming one of the main and more urgent items on the agenda of many local officials as result of increased demand by the population, rising costs and management complications associated with a large working force, usually the largest in the municipal government. Local officials have to make decisions on investnents and management options for which they normally do not have the adequate background information. Moreover, the multiple aspects of these services, such as environmental and health impacts, social  4 consequences, cost recovery characteristics and alternative technical and managerial options available, are not known or understood, hindering their choice. This situation is furither complicated by the continuous and sometimes biased information they receive from equipment suppliers and interested possible private operators. The introduction of modern services under the proposed project and the requirement for adequate operation and management of the infrastructure, equipment and service costs will put a strong demand on local technical staff who will be in charge of these services. Similarly, state government and SEDESOL and BANOBRAS delegations officials who will be in charge of appraising, supervising and supporting implementation and control of subprojects will require specialized training to properly fulfill their roles. 1.13 The sustainabiity of the specific investments and direct technical assistance to improve the services in selected medium size cities which are proposed to be financed by the Second Solid Waste Management Project, and the full achievement of the expected synergic effect on other Mexican municipalities, require the existence of improved sector wide management and technical capacity. Similarly, the introduction of federal standards to be developed under the project and the adoption of state and municipal regulations for solid waste will make it necessary to generate a sector-wide capacity that is not available today. To meet these demands, the Govemment has proposed to mount an extensive National Training Program (NTP) to be financed on a grant basis under the proposed project (para. 2.25). The NT? is described in detail in Annex C. 1.14 Federal financing for the sector has been limited and provided in the past mainly to meet urgent needs. Once an investment has been identified, the municipality or state lobbies the federal government for direct financial assistance. Such assistance can take several forms including grants which are placed in the annual development agreements with the states and municipalities, other special allocations and through loans given by BANOBRAS. Since federal financing has not been provided on the basis of an over-arching sectoral program, there has been limited incentive to the municipalities to develop comprehensive solid waste policies or investments. Under the program, finance for solid waste investments will only be provided to those municipalities which meet the criteria for participation in the program and only for projects which meet the criteria for grant and loan allocation. Since the Federal Government has agreed that federal investment funds for solid waste projects in medium size or priority cities in the future will not be made available through other means (para. 2.21), there is a strong incentive for municipalities to comply with the criteria. Service Levels and Efficiency 1.15 Collection, transfer and final disposal of solid waste are inadequate in most cities in Mexico. Waste generation is estimated at 0.7 kg/person/day resulting in an over 60,000 tons per day for the country. There are significant variations in volume of solid waste generated between the different zones, as shown in Table 1.1 below, with Mexico City accounting for more than 13% of the total. Data collected in 1993 in the context of project preparation in five cities in the norther border area (Tijuana, Torre6n, Monclova, Matamoros and Reynosa) suggest  S an accelerated increase in solid waste generation to about 0.9 kg/person/day in the last three years. 1.16 It is estimated that only 70% of solid waste in Mexico is collected, although some cities in the border area and Querdtaro provide almost universal coverage. Collection is impeded by poor management, equipment fleets which are antiquated and poorly maintained and the impact ef on-truck scavenging (pre-pepena) which has been estimated to slow collection time by 40%. Collection routes are frequently set based on the expenence of the workers and on the functioning equipment available rather than a careful study and efficient planning of routes. Waste is also collected through informal means, especally in marginal areas, but can be a significant feature of municipal systems in some cities. Table 1.1 Solid Waste Generation by Zone ,jorkder _0. 749 5,887 9.8 -North i0Q762 |10,346 17.2 center 0.642 26,249 43.6 Federal District 1.019 8,273 13.7 Soutleost 0.693 9,430 15.7 Avrage/Total 0.7 60,185 100.0 Sowrw SEDESOL and World Bank Estimates 1.17 Generally final disposal of solid wastes has been through open dumps situated in barren areas, rines or waterways. In the past decade there have been important advances in developing sanitary disposal but the overall situation of the sectr rema poor. According to INE, in 1993 Mexico had 97 controlled final disposal sites, of which only 11, mostly located in the northern zone, had equipment and instrumentation feaus that could allow them to be considered sanitary landfills. Many of these face significant operational and environmental problems as access and disposal are uncontrolled and leachates not contained, treated or monitored. As shown in Figure 1.1 below, only 15% (9,000 tons per day) of solid waste is adequately disposed of. Uncollected waste is burned, left in the streets or discarded in open land or waterways. Clinical wastes, especially pathological wastes, are also improperly collected, treated and disposed of, presenting serious public health risks.  6 Fi'gure 11 Management of Solid Waste In Mexico rN Uncosectd 30%os 18,000 Ton/day Productlon 60,000 r Open Oumps TonidayCollec4e0 otl 29,400 Ton/day 42,000 9 Ton/day Sanitwy Landfills 70v l 9.000Controlled m 000 Ton/day 12,600 ] Toniday Landfills Wifth 1