Argentina - Pollution Management Project

Report No. PIC5043 Project Name Argentina-Pollution Management Project (@+) Region Latin America and Caribbean Sector Environment Project ID ARPA6050 Borrower Republic of Argentina (GOA) Implementing Agency Secretaria de Recursos Naturales y Desarrollo Sustentable (SRNyDS) San Martin 459 - Primer Piso (1004) Capital Federal, Argentina Contact: Dra. Mabel Behal and Lic.Ana Corbi Tel.: (54-1) 348-8306 Fax: (54-1)348-8312 Date this PID was prepared April 25, 1997 Project Appraisal Date September 1997 Projected Board Date March 5, 1998 1. Country and Sector Background. Argentina has the highest GDP per capita in Latin America but has more serious environmental problems and less institutional capacity for addressing them than expected at that income level. A recent World Bank sector study on pollution problems in Argentina (Managing Environmental Pollution: Issues and Options, Report No. 14070-AR, October 16, 1995) ranked the key issues as groundwater contamination, air and noise pollution, uncontrolled solid waste dumps, surface water contamination, weak institutions, and the virtual absence of environmental monitoring information and analysis. Coverage of water supply and sanitation infrastructure is one of the lowest in the region, resulting in serious groundwater contamination. Localized air pollution, uncontrolled solid waste dumps (which contains hazardous wastes), and surface water contamination from industrial effluents and untreated sewage, are also major areas of concern. The country's continued environmental degradation is the result of weak institutions, the lack of comprehensive strategies, fragmented federal and subnational policies, and weak monitoring and enforcement. 2. Project Objectives. The main objectives of this pilot project are to: (i) improve local environmental conditions by strengthening institutional capacities to apply integrated pollution management (IPM) techniques, in a few, highly selected municipalities located in two provinces; and (ii) strengthen the capacity of the SecretarUa de Recursos Naturales y Desarrollo Sustentable (SRNyDS) and the Environmental Policy Secretariat of the Province of Buenos Aires (EPS/PBA) to develop, test and demonstrate innovative pollution management instruments with subnational and private stakeholders, and replicate lessons learned elsewhere in Argentina. The main global environmental objective of the associated GEF project is to ensure the sustainable management of the Patagonia coastal zone through the prevention and mitigation of coastal  pollution and the sustainable use of fisheries and marine resources. 3. Project Description. The Pollution Management Project would have two components and an associated GEF Project. The two components are: (i) Technical assistance (TA) to SRNyDS and EPS/PBA to strengthen their capabilities to pilot, demonstrate and replicate integrated pollution management instruments and techniques; and (ii) TA and low-cost, priority investments to address pollution problems in three pilot subprojects, as follows: (a) urban industrial contamination in the municipalities of Campana and Zarate (Buenos Aires Province); (b) air pollution in selected municipalities in the Greater Buenos Aires area; and (c) municipal pollution management in the municipality of Puerto Madryn (Chubut Province). The project's implementation would have a Phase I which will focus on TA for applying integrated pollution management techniques, supported by some high priority, low-cost equipment and facilities. About the end of Year 2, the project's Phase II to finance investments would be triggered subject to a satisfactory midterm review on the validity of the prior IPM process. Associated GEF Project: The GEF Coastal Contamination Control and Prevention Project would finance TA and investments in three areas: (i) plans, institutional strengthening, equipment and facilities to abate and prevent land-based and water-based contamination; (ii) the development of an integrated fisheries management program to prevent overfishing and protect the long- term, harvest capacity of marine resources, focusing on regulatory, enforcement and policy reforms particularly vis-a-vis private operators; and (iii) the implementation of an electronic marine information infrastructure system where justified, as a cost- effective measure to implement the policy reforms related to fisheries management and coastal contamination. 4. Project Financing. The overall project cost is estimated at about US$30 million, of which the Bank would finance US$18 million, the Government (GOA) about US$2 million, the concerned provinces and municipalities about US$1 million, bilateral cofinanciers (Japan Exim Bank) US$4 million, and the GEF about US$5 million. GEF would cofinance Component ii(c) of item 3. above (the Puerto Madryn subproject), by providing a grant to cover the incremental costs beyond those costs which if invested would yield only national benefits. The cost estimate will be firmed up during appraisal. 5. Project Implementation. The Ministry of Economy has assigned the project preparation and execution responsibility to SRNyDS, which will provide overall coordination of the integrated pollution management process, aspects of the pilot projects that may be related to national environmental policy, and financial issues requiring decisions at the national level. SRNyDS will also be responsible for managing directly the funds associated with the technical assistance component. For the three pilot subprojects, the EPS/PBA, municipality(ies), private companies, and NGOs concerned, will directly execute their respective components and manage the corresponding funds from the Japan PHRD Grant, the loan, and the GEF grant funds during the preparation and implementation stages. -2 -  6. Project Sustainability. The integrated pollution management process is designed to be a self-sustaining approach toward solving priority pollution problems in a participatory manner. It provides stakeholders with a framework in which pollution problems are diagnosed and economic, technical, financial, and institutional criteria are applied to determine options and select a least-cost and financially-sustainable solution. Private financing prospects and tariff issues will be studied in depth during project preparation to promote financial sustainability of the investments. 7. Lessons Learned from Previous Bank Involvement. There has been little formal evaluation of lessons learned from comparable Bank-financed projects in Argentina, where there has been no previous free-standing environmental project. However, drawing on the experience from ongoing projects in the region's relatively young environment portfolio and previous ESW, the main applicable lessons are: (a) the coordination of environmental policies is weak among the three Government levels in Argentina, as well as vis-a- vis the private sector, and needs to be strengthened on the basis of achieving better compliance with pollution control regulations; (b) the weakness of environmental agencies (including SRNyDS) can lead to significant delays unless the building of adequate capacity is supported by the project; (c) public and private financing for environmental investments has been successful in addressing problems only where a clear strategy and location-specific environmental targets were defined for such problems, and financial support was linked to a very tight program of enforcement; and (d) careful analysis of the impact of pollution and comparison of different investment options is necessary to ensure the cost- effectiveness of interventions. Taking these lessons into account, the project would emphasize building linkages, strengthening multi- party negotiations and conflict resolution mechanisms, and sharpening the respective roles of the federal, provincial and municipal stakeholders, while promoting the financing role of the private sector. The project would also promote the application of economic cost-effectiveness, technical, financial, institutional and other key criteria to develop options and select a solution in a participatory manner that reflects community commitment and ownership. Finally, instead of prematurely launching an ambitious national program, the project would focus on priority pollution problems and involve a few, highly selected municipalities and private participants in order to enhance prospects for successful implementation. With respect to the GEF project, the technical evaluation of the UNDP/GEF Phase I Project, entitled Patagonian Coastal Zone Management Project, is still being carried out. Once completed and reviewed, its agreed findings and recommendations will be incorporated into the design of this proposed new GEF project. 8. Poverty Category. Not applicable. 9. Environmental Aspects. The environmental category is "B." The project will achieve significant positive environmental impacts for the population affected by pollution problems in the three pilot areas. An environmental analysis will be carried out for investments associated with the project (e.g., landfills) that - 3 -  could have negative impacts, and mitigation measures will be built into project design. 10. Program Objective Category. Environmentally sustainable development (EN). 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. Processed by the Public Information Center week ending May 30, 1997. - 4 -  Annex Environmental Aspects The project does not include any component with a significant adverse environmental impact. The proposed project is comprised of components designed to address specific priority problems in water pollution, solid waste management, and urban air pollution. The project is intended to introduce integrated pollution management in Argentina and serve as a demonstration of cooperative inter- governmental and private sector institutional arrangements. The activities to be supported include technical assistance and pollution management investments (e.g., disposal facilities for municipal waste, water and air quality monitoring and testing facilities) to address the priority pollution problems. In supporting pollution management investments, the project is expected to reduce pollution impacts although it may transfer residual impacts from one media to another (e.g., from water to soil) or, possibly create localized impacts (e.g., siting of new municipal waste facility). The project will be designed to mitigate these impacts by incorporating environmental assessment techniques into investment planning. The air pollution component is not conceived to introduce any additional environmental impacts because it is concentrated on the planning and analytical stages of pollution management. Implementation of the project would result in a significant improvement in the management of these three pollution sources.