Indonesia - Fourth PNPM Rural Project

INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE Report No.: AC6188 Date ISDS Prepared/Updated: 05/27/2011 I. BASIC INFORMATION A. Basic Project Data Country: Indonesia Project ID: P122810 Project Name: PNPM Rural IV Task Team Leader: Susanne Holste Estimated Appraisal Date: May 27, 2011 Estimated Board Date: July 28, 2011 Managing Unit: EASID Lending Instrument: Specific Investment Loan Sector: Water supply (20%);Irrigation and drainage (20%);Roads and highways (20%);Primary education (20%);Sub-national government administration (20%) Theme: Rural services and infrastructure (55%);Participation and civic engagement (31%);Rural markets (11%);Social analysis and monitoring (3%) IBRD Amount (US$m.): 700.00 IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: Borrower 0.00 0.00 B. Project Objectives [from section 2 of PCN] As under the ongoing PNPM Rural III operation, the Project Development Objective would remain for villagers in PNPM-Rural locations to benefit from improved socio-economic and local governance conditions. Key performance indicators for the PDO include: a) Improved household (HH) expenditure rates and improved access to economic and social services in a minimum of 4,100 sub-districts in 2012 (impacts taken from representative sample); b) Economic Internal Rate of Returns (EIRR) greater than 30 percent for major rural infrastructure works in PNPM kecamatan; c) Greater than 80 percent satisfaction levels from beneficiaries regarding improved services and local level governance in a representative subset of sub-districts. C. Project Description [from section 3 of PCN] PNPM Rural IV is a #repeater# operation, channeling additional resources to a well-established community-driven development operation in Indonesia that has evolved from a smaller-scale Bank-financed project, to a national-scale Government program. To date, since 1998 and starting with the KDP project, the Bank has provided financing totaling $2.2 billion to KDP/PNPM. Under this fourth phase of support to the scaled-up national program, there will be no substantial change to the program#s overarching objectives or components and the program will continue to address poverty and improve local-level governance in rural areas, through the provision of investment resources, decision-making and implementing authority directly to rural communities. The objective of rural villagers benefiting from improved socio-economic and local governance conditions will continue to be achieved through: (i) provision of direct grants to communities in a transparent manner to finance an open menu of basic socio-economic infrastructure and revolving funds for women#s saving and loans groups; (ii) support to communities participation in an open and inclusive planning process; (iii) enhancing the capacity of central and local governments to partner with community organisations in service provision. The design also proposes that PNPM-Rural IV continues to include provision for quick post- disaster response and crisis recovery, utilizing PNPM#s existing financial and institutional platforms; and will maintain support to operational pilots that again build upon the main PNPM platforms, testing operational hypotheses for greater impact and to inform longer-term policy and design questions (e.g., PNPM Generasi; Papua RESPEK, etc). Project components will remain similar to the ongoing operation. Financing figures are estimates, based on past experience and the Government#s annual budget, and would be finalized during the preparation and appraisal process: i. Component 1: Kecamatan Grants ($575m). Direct grants to sub-districts to support community-driven planning and investment in social and economic infrastructure, education and health, and revolving funds for women#s savings and loan groups ii. Component 2: Facilitation Support ($75m). Development of community capacity for planning, project and resource management through training, technical advice and support for local level facilitators (technical and social, at kecamatan and kabupaten levels) iii. Component 3: Implementation support and Technical Assistance ($35m). Implementation support, training and technical assistance at the national, provincial and district levels to manage and oversee the program and strengthen capacity of local governments. iv. Component 4: Project Management Support ($15m). PNPM#s special programs/pilots place several additional demands on normal government budgeting, particularly as the program scales up. Most of these operational costs will be covered by Government through their national (APBN) and local (ABPD) budgets; a minimal amount is financed from the loan. D. Project location (if known) As PNPM Rural IV will continue financing of a program that is national in scale, project activities will take place in every rural kecamatan in the country and in over 61,000 villages across Indonesia. Clearly this is a program that is substantial in scope, and which covers a geographic area encompassing great topographic, ecological, biological and social diversity. As a repeater project with the same design and project components, no new safeguard issues are anticipated. Experiences from the ongoing PNPM-Rural projects as well as their predecessor, the Kecamatan Development Projects (KDP), indicate that any adverse environment impacts are typically site specific, small in scale and can be managed locally by adopting screening criteria, good engineering designs and construction practices. Every location is assisted by an experienced engineer. Furthermore, there have been no significant adverse social impacts registered in either the KDP series of projects or the ongoing PNPM program, including in Papua, Kalimantan, Mentawai, and Nias, some of the more sensitive areas, where PNPM has been adapted to reflect unique geographical and cultural conditions, including indigenous peoples areas. Overall, social impacts of PNPM IV are expected to be positive, given the focus on the needs of the poor; strengthening of social capital, voice and empowerment; and expected improvements in improved quality of life through enhancing access to social and economic infrastructure. Nonetheless, with the substantial scope of operations under PNPM Rural IV, and an implementation area that spans environmentally and socially sensitive areas, ensuring sufficient attention to relevance and application of Safeguards guidelines, and their adequate monitoring and oversight, is a priority. E. Borrower’s Institutional Capacity for Safeguard Policies [from PCN] Implementation arrangements would remain the same as under the ongoing PNPM-Rural portfolio. The responsibility for project implementation will rest with the Ministry of Home Affairs (MOHA), with day-to-day responsibility under the Project Management Unit housed within the Directorate General of Village Community Empowerment (PMD). The PMD Secretariat is in charge of policy, monitoring, government reporting and overall budget management and is assisted by the National Management Consultant team (NMC), as the apex technical oversight body. This arrangement is mirrored at the provincial level and district levels. While this arrangement has created certain implementation challenges, in many ways, the program has benefited from a cadre of officers with long experience in implementing KDP/PNPM and therefore familiarity with both operational and Bank procedures, including those relating to Safeguards. It is the responsibility of PMD and NMC to ensure that the program will not implement activities that cause adverse impacts to environmental and social aspects. However, recent management weaknesses highlight that an organizational review and adjustments to capacity level and staff strength would now be needed in accordance with the increased demands of a scaled-up program. Some positions have remained unfilled at the central level for some time, and identification of clear functional counterparts, accountable for results in key thematic areas, including Safeguards, has lagged. The existing PNPM project has an Environmental Category B classification, with community subprojects subject to screening and simple impact assessment criteria as detailed in the project Operational Manual (PTO) approved by the Bank. No adverse environmental or social impacts have been documented to date, and the team does not foresee that continuation of the expanded PNPM would trigger any new safeguard policies, nor raise the Category B classification, as it would fund community subprojects similar in scale and scope, which have been demonstrated to be small-scale, not irreversible and site-specific. With the scale-up, however, and with recent evidence from some program locations of patchy quality in staff training and uneven oversight of Safeguards-related issues, the task team feels it is timely and appropriate to assist GOI in a review of the existing guidelines in the operational manual, to assess their efficacy and efficiency, to learn lessons from recent implementation, to identify any capacity gaps and reflect these in updated operational documents and training plans/modules. The task team is partnering with GOI to constitute a taskforce to lead this Review and lesson learning. The results from this exercise would be examined during the Appraisal process, and the team would be seeking assurance that key recommendations and any adjustments to the PTO would be completed in time for Negotiations. F. Environmental and Social Safeguards Specialists Mr Juan Martinez (EASER) Ms Indira Dharmapatni (EASIS) Ms Catrini Pratihari Kubontubuh (EASIS) Mr Dennie Stenly Mamonto (EASIS) Mr Virza S. Sasmitawidjaja (EASIS) II. SAFEGUARD POLICIES THAT MIGHT APPLY Safeguard Policies Triggered Yes No TBD Environmental Assessment (OP/BP 4.01) X PNPM Rural promotes the environmental improvement of rural villages through the construction of rural infrastructure such as concrete pathways, drainage, water supply, bridges, and the like. The environmental impacts from such civil activities is relatively small, localized, non adverse and relatively easy to mitigate. All civil works have some impact on the environment although the works built by villagers with assistance from PNPM-Rural are very small and have mostly negligible negative impacts. Guidelines for management of environmental risks have nonetheless been established and implemented in PNPM Rural as its Environmental Code of Practice. The same guidelines, captured in the operational manual, are being updated to reflect lessons learnt through recent implementation experience, and will continue to be applied for this project. Mitigation of minor negative environmental impacts requires improvements in facilitator training on the awareness and knowledge of environmental issues, in the tools provided in the Operational Manual and in improvements in the engineering design and construction of the sub- projects. Intensified supervision, including the involvement of an environmental specialist in supervision missions, is recommended and will be continued. An illustrated field manual of good and bad practices in environmental management of small village infrastructures which is expected to help facilitators and villagers to minimize adverse environmental impacts has been published and distributed. The project will continue to internalize environmental impact mitigation measures in all stages of the project activities in order to minimize the negative impacts. Safeguard Policies Triggered Yes No TBD Natural Habitats (OP/BP 4.04) X The project will not finance sub-projects that would be undertaken in prohibited, critical natural habitats (including of critical forest, coastal and marine habitats), nor will it result in significant conversion of natural habitats. This will be clearly defined in the negative list of the project. The OM will also provide specification for the management of small construction works to avoid any potential degradation or conversion of natural habitats on a small scale. Forests (OP/BP 4.36) X It is not foreseen that the project will affect critical forest areas or related critical natural habitats. Activities will not affect the health/quality of forest or involve any forest management. Pest Management (OP 4.09) X It is not foreseen that the project will procure any pesticides, nor will an increased use of pesticides result from the project. Physical Cultural Resources (OP/BP 4.11) X It is expected that the proposed project will not adversely affect any sites with archeological, paleontological, historical, religious or of unique natural value as defined under the policy. Indigenous Peoples (OP/BP 4.10) X PNPM#s ongoing implementation has demonstrated some best-practice principles for indigenous people#s involvement. Participation is entirely voluntary, and there are documented cases of highly remote communities initially not accepting PNPM facilitators. Actions taken by PNPM-Rural to mitigate social safeguard issues associated with inclusion of indigenous people include: recruitment and tailored training for facilitators from the same ethnic groups; local language translation; independent reviews by cultural specialists; and modifications to the planning process to reflect more closely traditional social units. For ensuring indigenous peoples participation, two simple definitions will primarily be used to fulfill the Bank policy: (1) Masyarakat Adat /Adat communities/Customary law communities. These are based on lineage or locality and are bound by customary law. Characteristics of these communities include: (i) self identification as a distinct indigenous cultural group, (ii) collective attachment to ancestral territories and to the natural resources in the territories; and (iii) customary cultural, economic, social, or political institutions; and (2) Komunitas Adat Terpencil (KAT)/Isolated and Vulnerable communities (IVPs): This is a government-designated category of customary law communities that live in isolated areas. The characteristics attributed to these communities include: (i) collective attachment to ancestral territories and to the natural resources in the territories; (ii) customary cultural, economic, social, or political institutions; (iii) an indigenous language. They are also identified by government as: (i) having a subsistence economy, (ii) using simple tools and technology, (iii) having a high dependence on the environment and local natural resources, and (iv) having restricted access to social, economic, and political services. It is noted, however, that should the task team or implementers identify any communities as IPs, even where they are not officially identified as such according to the above formal definitions, IP related guidelines would apply, including the documentation of free and prior informed consultation leading to broad community support for the subproject, etc. As a project that is grounded in principles of grassroots participation and flexible project designs/procedures determined through local planning and decision-making by communities themselves, PNPM-Rural has been successful in involving indigenous communities as key Safeguard Policies Triggered Yes No TBD stakeholders, participating and accessing project benefits, as documented in Bank supervision visits and monitoring and evaluation activities. Experience has shown that incorporating approaches for indigenous peoples in the planning processes of the operational manual is key to implementation progress. The project will prepare some revisions and updates to the operational manual based on the recent experiences under the scaled up program, to accommodate the lessons learned. Additional training is also being included in the project to improve the quality of facilitators. Involuntary Resettlement (OP/BP 4.12) X There is no use of eminent domain or government land acquisition in any PNPM project. Community contributions (e.g., land, labor, materials) are voluntary and frequent. PNPM#s operational manual includes a planning and verification framework to ensure that any land acquisition is well-documented both in terms of its voluntary nature and the lack of any significant economic impact on villagers. PNPM-Rural has a land acquisition/compensation guideline embedded in its Project Manual. Application of the guideline, measured through field reviews of both KDP and PNPM- Rural, reports generally good results from implementation of the policy. A recent review of about 350 representative sites found no cases of involuntary displacement. Land acquisition assessments are part of the proposal review process and must be approved by the district level oversight engineer. Nevertheless the community must be continuously reminded that land documentation and resettlement have to be recorded in the village registration and reviewed during field supervision. If there are any cases where engineers do not adequately follow the safeguard review rules or villagers have felt some pressure to contribute land, proposed works are canceled or redesigned. PNPM’s training is being improved to strengthen facilitator skills and oversight by district consultants. The project will review field application and update the Guideline for land acquisition/compensation as necessary to accommodate lessons learned, particularly in the proper phasing for submission of a letter of willingness for donation prior to the program proposal verification, and to be revised once the proposal is agreed. The project also documents land acquired through donations from villages. Safety of Dams (OP/BP 4.37) X The project will not finance dam construction or rehabilitation of any dams larger than one meter. Projects on International Waterways (OP/BP 7.50) X The project will not operate in or affect international waterways. Projects in Disputed Areas (OP/BP 7.60) X None of the project components is located in any known areas under territorial dispute as defined by the policy. Environmental Category: B - Partial Assessment III. SAFEGUARD PREPARATION PLAN A. Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS would be prepared: N/A B. For projects that will not require a QER, the target date for preparing the PAD-stage ISDS: 05/30/2011 C. Time frame for launching and completing the safeguard-related studies that may be needed. The specific studies and their timing1 should be specified in the PAD-stage ISDS. The government, supported by the Bank team, will be undertaking a review of safeguards- related implementation under the existing PNPM portfolio. Initial meetings to finalize the TOR have taken place in mid March, with the full exercise launched at the beginning of April, and completed, with an update of existing Operational Manual/Safeguards-related guidelines, by end of May. IV. APPROVALS Signed and submitted by: Task Team Leader: Ms Susanne Holste 03/25/2011 Approved by: Regional Safeguards Coordinator: Mr Panneer Selvam Lakshminarayanan 05/27/2011 Comments: Sector Manager: Mr Franz R. Drees-Gross 05/27/2011 Comments: Approved. 1 Reminder: The Bank’s Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected persons.