Argentina - Flood Protection Project

Report No. PIC500 Project Name Argentina-Flood Protection Project (@#) Region Latin America and the Caribbean Sector Infrastructure and Urban Development Project ID ARPA6052 Borrower Argentine Republic Implementing Agency Ministerio del Interior Secretaria de Asistencia para la Reforma Economica Provincial Mr. Juan Antonio Zapata Secretario para la Reforma Economica Provincial Hipolito Yrigoyen 340, Piso 5, Oficina 5076 (1086) Buenos Aires , Capital Federal Argentina Telephone: (54-1) 342-1030 Fax: (54-1) 342-7395 Date PID Prepared November 28, 1995 (Initial PID dated 1994) Tentative Appraisal Date January 1996 Tentative Board Date December 11, 1996 I. Country/Sector Background. Torrential rainfall in the Paran and Paraguay River Basins in 1992, produced massive flooding, seriously damaging infrastructure in seven Argentine provinces and requiring large scale evacuation of their residents. These events capped an unusual decade: five of the ten most severe floods recorded in the 20th century have occurred since 1983. A recent Bank study (An Analysis of Flooding in the Paran /Paraguay River Basin, September 1993) of this apparent bunching found that Basin flooding was both more frequent and more severe in the latter part of the 1900s than previously. This study concluded that changes in precipitation rates and patterns are by far the most important explanatory factors in the observed changes in streamflow. Independent consultants concur with these findings and conclusions. A Bank financed Flood Rehabilitation Project (Loan 3521- AR) is helping to recover the damaged infrastructure. Financing is for the rehabilitation of the most urgent transport and social facilities, as well as rehabilitation of existing flood control facilities. II. A study of past floods in the Basin concluded that investments in flood protection are justified in comparison with emergency-type rehabilitation actions. The study, which set the basis for the proposed project, also produced a mapping of the region demonstrating varying degree of risk and recommendations for its zoning in relation to economic values. The study took into consideration the Basin's conditions, and the lessons of global experience indicate that it would be inadvisable to attempt to entirely mitigate the effects of future severe floods or to control flows through large "structural" works. In several provinces, there has been excessive population, commercial, and  other development in many areas that are highly vulnerable to flood damage. The authorities appreciate that in these and some less risky areas past capital works have kindled unrealistic expectations of flood protection. This has actually increased--rather than diminished--the actual risks. The authorities also share other nations' perceptions that dikes, dams, levees, etc., in fact, have deterred flood plains from performing their natural flood control functions. III. For this reason, the Government has decided to adopt a new strategy of: (i) investment in flood protection works only in the most important economic and socially vulnerable areas (based on thorough risk analyses); (ii) initiation and tighter administration of stronger restrictions on land usage to discourage unwise development of sensitive areas leading to land owners to seek private flood insurance; (iii) stricter adherence to environmental assessments and safeguards; (iv) upgrading preparedness for and dealing with flood emergencies in areas in which protective structures are not environmentally or economically justified, including expansion of shelters, construction of safer housing, enhanced flood warning and civil defense systems; and (v) making institutional improvements to effect and sustain these changes. IV. Project Objectives. With the completion of the repairs in sight (funded under the Flood Rehabilitation Project), the Bank would now assist the Government to restore more fully the assets lost in the recent severe flooding and in strengthening national and provincial resources for dealing with future recurrences. The specific objectives would be to enhance provincial capacity to deal with periodic flooding by upgrading their flood preparedness and mitigation systems, as well as strengthening coordination within the Basin. The main emphases would be on providing the best economic and technical flood-protection to the most important areas, and on developing good institutional mechanisms to sustain them. The project also would help create the legal and institutional framework for each province to have a well-defined strategy to cope with recurrent floods, including preparation and implementation of master plans for flood defense systems, and actions targeted on areas in which flood protection works are not economically or environmentally justified. V. Project Description. The project would support the Government's Flood Protection Program. It would include the following components: (a) Structural Measures: Consisting of construction works to protect important areas of the flood plain against flood effects. It would include fortification of flood defenses in geographic areas with strong economic activity and greatest vulnerability to serious repeated flood damage. These investments would not attempt to control flows of the major rivers (Paran , Paraguay and Uruguay). Instead, they would protect the cities against floods caused by the rivers through works that would avoid waters to invade the cities without interfering with the rivers. Works would concentrate on raising bridges, improvement of existing and construction of new drainage channels, embankments and small flood control works. These investments would follow the master plans developed for each flood-prone area (approximately 79 percent of base costs). -2-  (b) Non-Structural Measures: Consisting of: (bl) New Institutional Framework: Technical assistance would be provided to help create and implement an institutional framework in each province to deal with recurrent floods. It would result in: (i) plans to rationalize land usage in flood-prone areas including possible incentives to private flood insurance; and (ii) creation of a unit that would coordinate civil defense, flood warning, consultation on hydraulic works, maintenance of flood defense facilities, and provision of environmental safeguard related to flooding issues (approximately 1 percent of base costs); (b2) Flood Preparedness and Civil Defense: For vulnerable areas not considered to warrant further investment in structural defenses, the proposed assistance would provide shelters (multi-purpose installations) and improved housing for lower income families in flood-prone zones. The housing component would follow the same principles of the previous project, providing funding for a voluntary program of self-construction of houses by the community. Improvements in the civil defense arrangements are also envisaged (approximately 13 percent of base costs); (b3) Early Flood Warning System: This component would aim to ensure the development of a more adequate and extensive flood warning system linked to the National Institute of Hydrological Sciences and Technology (INCYTH) and provincial systems. It would include a new hydro metering system, new computational equipment, new software, new communication system, and the creation of local flood warning system in each province (approximately 1 percent of base costs); (b4) Project Implementation and Administration: Technical assistance would be provided to help implement the project and carry out a related training program for improving the provinces' capabilities in flood forecasting, early warning, civil defense and environmental activities. The project would include consultant services for the design of the flood defense works, supervision of construction and environmental activities (approximately six percent of base costs). VI. Project Financing. Total financing requirements (including US$65 million of interest during construction) are estimated at US$465 million. Foreign exchange costs are calculated at US$300 million. These figures (in June 1995 prices) would be refined during appraisal. The proposed Bank loan of US$200 million would finance some 43t of total financing requirements. The tentative financing plan envisages that the Export-Import Bank of Japan (JEXIM) would provide cofinancing of US$100 million (or 22t of total financing requirements), with the Government and provinces dividing the balance (US$165 million). The appraisal team would determine if retroactive financing is required. VII. Project Implementation. The implementation arrangements would remain essentially the same as those governing the ongoing Flood Rehabilitation Project. The proposed project would be overseen by the Ministry of Interior's Provincial Reform Secretariat (SAREP). The "Sub- Unidad Central de Coordinacion para la Emergencia (SUCCE) ," a subsidiary unit of SAREP's Central Executing Unit (CEU), would manage the - 3 -  operation. SUCCE would supervise and coordinate the provinces' own central executing units (Sub-unidades Provinciales de Coordinacion para Emergencia - SUPCEs), which would continue to remain responsible for sub-project formulation and implementation. In view of the provinces' disparate implementation capabilities and performance, two annual reviews at an early stage of implementation would be held to determine if the initial provincial allocation require revision. This review would allow possible transfer of funding from slow-moving provinces to projects not initiated in better performing provinces. VIII. Project Sustainability. The investments in civil works would aim at protecting existing infrastructure. Their sustainability would be enhanced by the proposed project conditions governing future operations and maintenance of these facilities. The required new local laws and river-basin-wide coordinating arrangements should help strengthen the provincial governments' concern for, capacities to regulate, and resources devoted to flood preparedness and mitigation systems. The proposed carryover of the experience and competent staff of SUCCE and the SUPCEs, should provide strong grounds for sustaining project works. The amount of investment in each province and the financing plan (with JEXIM participation) were taken into consideration to adapt provincial counterpart requirements to their financial implementation capacities to assure sustainability of implementation. IX. Lessons Learned from Past Operations in the Country/Sector. While the rationale and short-term nature of disaster remediation activities do not equally apply in this case, some of their characteristics are nonetheless pertinent. In this connection, experience of past recovery assistance has shown a number of useful lessons: (a) Reconstruction by itself is not enough. Hence, measures must be taken to reduce the risk of future disaster damage as well as to safeguard people at risk. The proposed project is directed to help lessen this vulnerability. (b) The June 1993 OED audit of the Mexico Earthquake Rehabilitation Project pointed out the importance of quick responses to disaster. However, this review and the March 1994 audit of the Sfax Flood Protection Project (Tunisia) stressed that it was also important to take account of other elements that otherwise might be overlooked and, which might reduce long-term benefits. In the Tunisian case, the acceleration of works design resulted in inadequate attention to such underlying problems as the disposal of storm water. By contrast, the proposed Argentine project is based on an early Government appreciation of the inherent risks entailed in these potential tradeoffs. Therefore, as noted, in parallel with the Flood Rehabilitation repair works, the authorities promptly undertook activities to address the basic causes of the accelerated Paran Basin flooding and how best to contain it. The proposed project is aimed at these long-term issues. X. Program Objective and Poverty Categories. The project aims to help the environmentally sustainable development of the provinces (Category EN) by avoiding the economic losses caused by frequent floods. It would also stimulate employment generation in the construction sector, and improve physical and social infrastructure. Project implementation is - 4 -  expected to generate about 68,500 person-years of construction employment, or the equivalent of 13,500 persons permanently employed during the five year project period. Other sectors would also benefit from new jobs in transport, goods supply and other services to the project. The housing component, in particular, would improve considerably the living conditions of their inhabitants, mostly lower- income segments of the population. XI. Participatory Approach. Project preparation took into consideration consultations with local communities and all municipalities. The consultants who prepared the Master Plans were responsible for gathering data and obtaining feed-back from the communities involved. The SUPCEs also made contacts with all municipalities in the affected areas. Public hearings were held in the areas in which works are envisioned. They were very productive, resulting in modifications of the original engineering solution in some locations due to suggestions from local communities (e.g. in Gualeguay, Resistencia and Goya). Project implementation will also seek strong communitary participation, especially in the installation of the shelters of multiple use for the community and the housing component based on self construction in communitary groups. XII. Environment. Positive environmental consequences are envisaged from the fuller restoration of damaged health, water, sewerage, and housing facilities, as well as the Bank-encouraged fuller public participation, especially regarding environmental aspects of flood protection proposals. A regional environmental assessment for the whole Basin was carried out in accordance with terms of reference approved by the Bank. A seminar for public consultation on the project and for comments on the preliminary environmental assessment report was held in Buenos Aires in May 1995. The seminar included participation of provincial public entities and national and provincial NGOs. Every sub- project included in the project satisfactorily met environmental analysis as part of its preparation. The final environmental assessment report is concluded and will be discussed in a seminar open to the public. The final report is available to the general public in Buenos Aires at "Biblioteca del Honorable Congreso de la Nacion Argentina" (Calle Alsina 1816 - Piso 1) and in Washington, D.C., at the Bank Public Information Center. A summary is attached. XIII. Project Benefits. Major benefits would accrue from the fuller restoration of the damaged infrastructure in one of the most productive areas on the country and the area closest to Brazil and Paraguay, two of Argentina's partners in MERCOSUR. The reduction of the frequency and range of flood-caused damage would improve the efficiency of the productive and commercial sectors in this area and reduce the damage to transport facilities, thus facilitating Argentina's competitiveness within MERCOSUR. The project works also would reduce health hazards and waterborne diseases in flood-prone areas. Other benefits would include the provision of substantially more flood-secure housing and the generation of sizeable civil works and construction employment. The economic rate of return is expected to be 38 percent (to be confirmed during appraisal). XIV. Project Risks. There are four possible main risks: (a) time and - 5 -  cost overruns; (b) inadequate management and control due to weak and bureaucratic public entities in the provinces; (c) possible abuses in the housing component; (b) lack of funds for project implementation. During preparation, steps were taken to address those issues and design suitable safeguards. The major risk concerns project timely implementation. Therefore, project management was streamlined based on the experience gained in risk management during the previous project. In this connection, the project would be implemented by the same units (SUCCE in the central government and SUPCEs in the provinces) that are successfully implementing the Rehabilitation Project. Additionally, a full-time, independent supervising engineer reporting to SAREP and to the Bank would again be hired. Adequate funding for technical assistance was also included in the project to help reduce implementation risks. The housing component was designed following the excellent experience of use of vouchers for acquisition of material used in the previous project. The same management systems would be used (not a single case of abuse has occurred in the previous project). Also profiting from the experience of the previous project when some provinces have confronted difficulties in obtaining counterpart funds, cofinancing is being pursued to design a financing plan of the project which would permit the provinces to ensure sufficient resources for project works. And the afore-mentioned contingent arrangements for possible transfer of funding from slow-moving provinces to better performing provinces, should contribute to effective project implementation. XV. Contact Point. Contacts on the proposed project should be directed to: Note: Environmental Assessment Summary is available from the Public Information Center upon request. Contact Point: Public Information Center The World Bank 1818 H Street N.W. Washington D.C. 20433 Telephone No.: (202)458-5454 Fax No.: (202)522-1500 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. - 6 -