Philippines - Solid Waste Ecological Enhancement Project (SWEEP)

Report No. PID5758 Project Name Philippines-Solid Waste Ecological (@) Enhancement Project (SWEEP) Region East Asia and Pacific Region Sector Urban Project ID PHPE48587 Borrower(s) Government of Philippines Implementing Agency Department of Environment and Natural Resources Visayas Avenue, Diliman, Quezon City, Metro Manila Telephone (632) 922-6991 Environment Category A Date this PID prepared September 9, 1999 Projected Appraisal Date February 2000 Projected Board Date July 2000 I. Country and Sector Background Solid Waste Management (SWM) sector in the Philippines is in a critical condition. Deficient SWM, resulting from inadequate urban infrastructure and weak institutions, severely constraints urban productivity in the Philippines. Lack of proper recycling and irregular collection of garbage due to shortage of collection equipment and dumpsites and administrative inefficiency in SWM, force people to dump their garbage in the streets, vacant lots, and waterways. Out of the total 16,400 tons of waste generated daily by the current urban population, only an estimated 2,600 tons are disposed in controlled dumpsites. Urban areas will face increased pressure to improve SWM, as urban populations have grown rapidly, especially in many secondary cities in the Philippines. Projections for the next 15 years indicate that an additional 12 million poor people in cities will generate 4,000 more tons of daily waste, most of which will not be collected. To improve SWM, the GOP should substantially enhance its institutional capacity both at the local and the national level. Institutional capacity enhancement at the local level is more critical since main responsibilities of SWM were exclusively assigned to Local Government Units (LGUs) through the passage of Local Government Code (LGC) in 1991. At the local level, LGUs need to be equipped with appropriate staff, equipment, and cost recovery mechanisms to carry out the devolved SWM functions. Most of the LGUs depend on grant-in-aid free trucks from donors, which are currently underutilized and will turn out to be counter-productive due to their high O&M costs. The SWM offices of LGUs are generally under-staffed, lack appropriate technical expertise, and have limited budgets. At the national level, designated as a chair of the Presidential Task Force on Waste Management (PTFWM) in March, 1994, the Department of Environment and Natural Resources (DENR) has been assigned responsibility to develop a  national policy framework and support program on solid waste management. In April 1998, PTFWM adopted new SWM sector strategy and administrative orders to guide LGUs on site selection and incremental upgrading of landfills. DENR, however, does not have the staff to keep statistics, undertake design, offer technical and outreach services to LGUs, and monitor performance of this sector. Appropriate modality of inter-governmental transfer mechanisms is also lacking in the SWM sector which has salient characteristics of spatial externalities and economies of scale. Recently the private sector started showing interest in this sector by proposing a couple of unsolicited BOT deals in and out of the Metro Manila area. The Government, however, is not able to make appropriate decision on the modality of private participation in the sector mainly due to the lack of appropriate frameworks for cost recovery and risk sharing, and technical expertise to evaluate the unsolicited proposals. It is against this general background that the current Project has been designed. In June 1996 during the programming mission, DENR requested the Bank to assist in preparing a Solid Waste Management Project. In contrast to the previous request, for the first time in the sector in the Philippines, the Government requested Bank support for a comprehensive nation-wide approach. The new approach would involve key decision makers, while addressing the fundamental policy issues such as cost recovery mechanisms, and the modalities of inter-governmental transfer and private sector participation, and improving technical and administrative capacities both at the national and local levels. This is a major departure from the previous city-specific approaches that did not address fundamental policy issues or enjoy the current high-level of support verified by the recent identification mission. II. Project Objectives The project will support national policies aimed at promoting environmentally sound, cost effective, and socially acceptable solid waste management by local government units (LGUs) out of Metro Manila. This objective will be achieved by: assisting participating LGUs in intermediate cities to undertake pilot projects that are based on strategic planning of integrated solid waste management (SWM) systems and have demonstration impacts; and establishing national and local support mechanisms in the sector to safeguard the environment and encourage private sector involvement. III. Proposed Components To achieve the above stated objectives, the Project will include the following components: COMPONENT 1. DEMONSTRATION SUB-PROJECTS IN LGUS: This component will support the capital investment and institutional capacity building in participating LGUs through: capital investment in collection, recycling, transfer, landfills, and disposal equipment and facilities; capital investment in dumpsite closure and rehabilitation; and technical assistance for institutional capacity building in participating cities (i.e. preparation of integrated SWM strategies and action plans, - 2-  strengthening SWM operational capacity and financial systems, and landfill siting, design and operation). COMPONENT 2. SWM INSTITUTIONAL STRENGTHENING: This component will institutionalize SWM function at the national level and strengthen DENR's capacity to provide technical assistance to LGUs through: national policy enhancement (national goal setting, roles of various national agencies and LGUs, modality of inter-governmental transfer, pricing mechanisms for solid waste management services and recycling, special waste, etc.); development of technical guidelines for LGU management of solid waste management systems; training activities for DENR and LGU staff on solid waste reduction, source segregation, collection, recovery/recycling, alternative disposal systems, environmental assessment and monitoring, operational and financial management, and Information, Education, and Communication (IEC); and capacity enhancement measures to solicit, evaluate, award, and manage contracts and concessions for SWM COMPONENT 3. SOCIAL AND ECOLOGICAL SUPPORT PROGRAM: This component will provide support for: social rehabilitation of waste pickers through training, esteem building, community organizing, and livelihood programs; micro-finance to microenterprises and associations/cooperatives of waste pickers; city-specific activities to promote recycling/composting; and strengthening national and local public awareness campaign. IV. Project Financing The total project cost is estimated to be US$ 55 million, of which the World Bank is expected to finance US$ 40 million (about 70 percent). The loan proceeds for the sub-project component would be mainly channeled through the Land Bank of the Philippines (LBP). Part of the loan proceeds may be provided to LGUs as specific national matching grant to eligible capital investment under the sub-project. LGUs would also be required to provide an equity contribution, to help finance the sub-projects. The other two component would be funded by a mix of World Bank loan proceeds, and national and local government counterpart contribution. Co-financing from GTZ for institutional strengthening component is also expected. V. Project Implementation Presidential Taskforce on Waste Management (PTFWM) would oversee and coordinate project implementation. DENR, as a secretariat of PTFWM, would provide specific technical assistance to the participating LGUs. The participating LGUs would prepare and implement sub-projects that would be financed by the on-lending of IBRD loan through LBP. Appraisal of sub- projects would be jointly conducted by DENR and LBP (Financial appraisal by LBP and technical clearance by DENR). Entire appraisal process would be supported by the Bank as a capacity building exercise. Implementation arrangement for social and ecological support component (i.e. support to waste pickers and micro-financing arrangement) will be defined during the project preparation. VI. Project Benefits and Sustainability - 3-  The following main benefits are expected to be delivered through the proposed project. Physical benefits a. Mitigation of environmental problem and health hazards caused by the current inadequate collection and disposal systems. b. Improved and extended coverage of solid waste services in participating cities. Institutional benefits a. Improved legal and regulatory framework and cost recovery mechanisms of the solid waste management sector to safeguard the environment and encourage private sector involvement. b. Strengthened capacity of DENR to provide technical assistance to LGUs for solid waste management. c. Clear demarcation between the technical assistance (future Solid Waste Management Authority) and regulatory (DENR) capacities at the national level. d. Increased technical, administrative, and regulatory capacities of LGUs to improve sector management and operations. Social benefits a. Impact mitigation of modern waste collection and disposal systems on the waste pickers. b. Extended service coverage to the urban poor areas. The sustainability of project benefits depend on the following four key factors: (a) the full and appropriate participation of stakeholders in the design, implementation and operation of sub-projects; (b) implementation of clear cost recovery measures through local ordinance; (c) flexibility in engineering design of landfill in order to meet specific local conditions and local affordability; and (d) efficiency with which capacity building components are implemented in DENR and LGUs. VII. Lessons of Experience The following specific issues are incorporated into the basic project design. These project design issues are identified in the review of previous Bank-wide operations in the solid waste management sector and lessons learnt in municipal sector in the Philippines. Strong political will and commitment by the LGUs are essential for the successful project implementation. Throughout the project preparation and implementation, explicit commitment by the local executive and legislative offices will be verified as a condition to proceed to the next stages. Initial forms of local commitment expression were agreed with DENR during the identification mission. Public clamor for better solid waste services and awareness for individual responsibilities are essential. Substantive support for public awareness campaign is being built in the project design. Clear nation-wide regulatory framework and the line of institutional responsibility are pre-condition of successful project implementation. A major sectoral analysis will be done as part of project preparation which will update the current long-term policy and institutional framework for the - 4 -  operations. Emphasis should be placed on strategic waste management plan approach that take into account all physical, technical, legal, institutional, financial, environmental, and socio-cultural aspects of solid waste management. Institutional strengthening and sound management practices at the local level are needed to achieve expanded coverage for low-income groups, efficient service provision, and environmentally sound disposal operations. Most physical investments will need to be accompanied by broader improvements in municipal finance, accounting, and budgetary control. Introduction of cost recovery practices is essential. As a part of conditionality, participating LGUs should pass ordinance on appropriate tipping fees. Lack of appropriate public consultation for siting and environmentally-sound management of landfill are often the major factors of previous project failure. VIII. Poverty Category The primary Program Objective Category is environmentally sustainable development, to provide a safe environmental setting to sustain the long term growth of participating intermediate cities. The proposed project would generate benefits in terms of improvement in environmental quality, health, municipal services, and institutional capacities. IX. Social and Environmental Aspects In the selection of potential landfill sites, care would be exercised in avoiding or minimizing impacts to vulnerable groups, especially existing scavengers. Specific program of rehabilitation will be designed for waste pickers, when existing dumpsites are closed. In all the participating LGUs enhanced economic opportunities will be investigated for scavengers, waste pickers and recyclers during project preparation. If proved to be viable, a pilot program will be designed. Each of the participating LGUs, as sanitary landfill proponents, would submit an Environment Impact Statement to the DENR and World Bank for review and clearance. Once the location-specific EISs are completed, they will be synthesized into a project-wide Environment Assessment. This will be prepared by DENR with the assistance of the consultant. Since the investment component of the project will be in the mode of financial intermediary lending, the institutional and processing arrangements required by LBP will also be addressed in the report. Site Evaluation and Ranking Process and Public Consultation Process will form a part of the EIS process for this project. X. Program Objective Categories Environmentally Sustainable Development XI. Contact Points: The InfoShop The World Bank 1818 H Street, NW Washington DC, 10433 Telephone: (202)458-5454 Fax: (202)522-1500 - 5 -  Task Manager Toru Hashimoto The World Bank 1818 H Street, NW Washington DC, 10433 Tel: (202) 576-3062 Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. Processed by the InfoShop week ending November 26, 1999. - 6 -