India - Environmental Management Capacity Building Technical Assistance Project

Report No. PIC3529 Project Name India-Environmental Management Capacity... Building Technical Assistance Project Region South Asia Sector Environment Project ID INPA43728 Borrower INDIA, acting by its President Implementing Agency Ministry of Environment and Forests, Paryvaran Bhawan C.G.O. Complex 70 Lodi Road New Delhi 11003, INDIA Telephone Number: 91-11-436-0721 Fax Number: 91-11-436-0678 Date This PID Was Prepared May 23, 1996 Appraisal Dates April 23 - May 10, 1996 Projected Board Date July 30, 1996 1. Country and Sector Background. India is one of the ten most industrialized countries in the world. It has the eighth largest economy which has grown by an average of 5t per year during the Eighth-Five Year Plan period (1992 -1997). The past four years of economic liberalization have seen the country move towards a market economy and greater global integration. The industrial licensing system has been largely dismantled, foreign companies can now invest freely, import tariffs on capital goods have been substantially lowered, and macroeconomic indicators have improved. 2. However, India's rapid economic, population and industrial growth are causing severe environmental degradation and pollution problems with local, regional and global impacts. Urbanization with its concomitant expansion of vehicular transportation, industrialization, high-intensity agriculture, and the growing demand for consumer goods, increase pressure for the extraction, procurement, and conversion of natural resources for energy. With the success of economic growth, India has simultaneously witnessed a significant deterioration in the quality of its air, water, and soil. 3. Air Pollution. Air quality in India's major cities indicate that ambient levels of NOx, S02, lead and suspended particulate matter are often higher than World Health Organization and Indian standards. Sulfur dioxide levels in nine of the country's major cities exceed national standards. Other harmful substances such as ozone are not monitored. Major contributors to air pollution problems in India include thermal power stations, industrial factories, vehicles, and the use of non-commercial fuels such as coal briquettes, animal dung and trash by large sections of the population. The negative environmental effects from increased fossil fuel use will likely increase as India seeks to meet the energy demands of its expanding economy. Coal will play a predominant role in this expansion. The  major pollutants from coal exploitation include the principal green house gases (GHGs), particulate air emissions, coal mining runoff and wastes, and coal ash solid wastes which pose a large-scale disposal problem. 4. Water Pollution. Most of the rivers, streams, and large stretches of the coastal marine environment in India are highly polluted with municipal waste, waste generated from industry, chemical agents from fertilizers, pesticides from crop protection, and silt from degraded catchments. Untreated sewage and other non-industrial wastes account for four times as much pollution as industrial effluent. In the major cities, less than 509 of the total wastewater generated is collected and less than one-fourth is treated. The consequence of such pollution is high levels of waterborne diseases which account for two-thirds of all illnesses in India with a significant loss in productivity. Although there is a Coastal Regulation Zone Notification designed to protect the coastal marine ecosystems, implementation is weak and marine pollution continues largely unabated. 5. Soil and Solid Waste Pollution. Soils covering about 20t of the country are partially degraded from animal overgrazing, deforestation, improper irrigation practices, and poor land use patterns. In addition, intensive agriculture and over-cultivation has resulted in nutrient-depleted soils. The amount of garbage generated in most India cities in increasing. Per-capita solid waste generation is estimated to be about 350 to 500 gms. Only about 60t of this waste is collected and even then it is irregular (not daily) and disposed of in ways which result in ground water and air pollution. Apart from household wastes, other waste materials derived from the maintenance of streets and drains, animals, commercial establishments particularly stores and markets, construction sites and hospitals, adds to the volume and seriously affect their composition and represent a major public health problem. 6. The Legal, Regulatory and Institutional Framework. The regulatory and institutional decision-making framework for environmental protection in India is embodied in eight major acts of the Indian Parliament. These are; the Water (Prevention and Control of Pollution) Act of 1974 which established the Central Pollution Control Board (CPCB) and State Pollution Control Boards (SPCBs); the Air (Prevention and Control of Pollution) Act of 1977 which added the monitoring of air emissions to the responsibilities of the various Boards; the Environment (Protection) Act of 1986; the Forest (Conservation) Act of 1980, amended in 1988; the Motor Vehicle Act of 1938, amended in 1988; the Public Liability Insurance Act of 1991; and Notifications on the Coastal Regulation Zone, 1991; and Environmental Impact Assessment of Development Projects, in 1994. 7. Issues in Environmental Management. Most of the above Acts and Notifications are aimed at strengthening the command-and-control regime. New initiatives, especially in the form of a mix of regulations and legislation, fiscal incentives for technology acquisition, voluntary agreements, educational programs and information campaigns are required. Although the Government of India - 2-  (GOI) has introduced some of these measures, more is required because the regulatory structure of a central authority i.e. the Ministry of Environment and Forests (and other Ministries) and the Central Pollution Control Board linked to state level implementation agencies; the Departments of Environment, Forests, and the State Pollution Control Boards (and other agencies), have proved to be largely unsuccessful in effectively managing the protection of the environment. 8. Environmental management is a continuous process that consists of three interconnected steps: (a) the collection and analysis of relevant data; learning from worldwide best practices' and incorporating these in the planning, formulation, and implementation of policy including the setting of standards; (b) program implementation, monitoring results and active compliance enforcement; and (c) periodic verification through independent auditing. An assessment of India's environmental management system suggests that weaknesses are evident at each of these three main steps and at every administrative level i.e. center, state and district (municipality and panchayat). Further, despite the support provided by the Bank and other donors under specific investment projects, more needs to be done in the area of industrial pollution, particularly air emissions, coastal zone management, urban land use including the citing of industries, and mitigating environmental degradation in the mining sector. 9. In brief, environmental management capacity has to be enhanced. This will require more effective professional and technical integration of environmental concerns into policy planning, formulation and implementation; changes to, and or enhancing institutional structures to strengthen monitoring, compliance and enforcement of environmental laws and standards; decentralizing center level command-and-control of environmental initiatives to the state, district and community both for local ownership and local relevance; introducing more non-traditional approaches to environmental management including an increased role for community-based non- governmental organizations; and a recognition that training and upgrading of staff and officials who operate the environmental management institutions and agencies is a sound investment. 10. GOI's Sectoral Strategy. In December 1993, the GOI through the MOEF issued the Environment Action Program - India (EAP). This plan was developed after consultations with other Ministries, States and Non-Governmental Organizations (NGOs). The EAP was submitted to the Bank by GOI in conformity with the requirements of Operational Directive 4.02: Environment Action Plans. The EAP identified seven environmental priorities for GOI as follows: (a) conservation and sustainable utilization of biodiversity in selected ecosystems including forests, mangroves, wetland, coral reefs, mountain ecosystems; (b) afforestation, wastelands development and conservation of soil and moisture and ensuring that water sources are not polluted; (c) control of industrial and related pollution with an accent on the reduction and or management of wastes, particularly hazardous wastes; (d) improving access to clean technologies; (e) tackling urban environmental issues; (f) an alternative energy plan; and - 3-  (g) strengthening scientific understanding of environmental issues, as well as strengthening structures for training at different levels, orientation and creating environmental awareness. 11. Country Assistance Strategy and Rationale for IDA Involvement. The proposed project is an integral part of IDA's Country Assistance Strategy (CAS) for India (May 19, 1995). Specifically, the project directly responds to the statement in the CAS (para. 70) that The Bank is also discussing with the Government possible environmental projects which would strengthen the capabilities of the institutions and agencies in charge of formulating and implementing environmental policies; monitoring and enforcing environmental legislation; and also financing public investments where required to address area-wide environmental issues such as air pollution; solid waste management, including hazardous wastes, sewage disposal and sanitation.' 12. Another specific strategic thrust of the 1995 CAS was the increased role of economic and sector work (ESW) in the policy dialogue with GOI. In January 1996, the India, Nepal, Bhutan Country Department (SA2), South Asia Regional Office, completed a study which began in January 1995: 'India's Environment: Taking Stock of Plans, Programs, and Priorities. An Assessment of the Environment Action Program - India. The analytic framework for the study consisted of assessing each of the seven GOI-identified priority areas to determine whether issues additional to those identified by the Government required attention; understand better the major programs developed by the government; assess the range, type, and impact of the support provided by the World Bank and other donors; and outline policy (legal, regulatory, economic) and institutional (administrative, organizational), technical and scientific, and financial areas for further concerted action. Estimates were also made of the magnitude of the economic costs associated with environmental degradation as measured by the impacts on health and productivity. 13. Among the numerous findings of the study, two in particular provide additional rationale for IDA involvement. These findings were that: (a) despite a strong legal framework and various Ministries at the center, Departments and Boards at the state level; and local agencies involved in environmental management, implementation remains weak. Institutional capacity building to strengthen monitoring, enforcement, and compliance with existing laws can have a high payoff; and (b) recognizing that the government alone cannot be responsible for environmental management, stronger efforts have to be made to involve the large non-governmental organization community in programs ranging from biodiversity conservation to alternative energy programs. This cooperation will require transparent policies and practices such as early involvement in the environmental impact assessment process, access to information, and actions to increase involvement through public participatory processes. 14. Lessons from Previous Bank/IDA Operations. There are no previous technical assistance credits to India for the environment or other sectors. However, the Bank/IDA has an active program of support for GOI's environmental priorities. Several of these Bank Group assisted- projects include components to strengthen environmental management capacity. Experience in India and elsewhere in the world suggests - 4 -  that implementation (and disbursements) for these small components in larger investment projects are slower-than-projected largely because of inadequate preparation, overly ambitious and complex expectations; and a lack of support and ownership by key Ministries and implementing agencies. Technical assistance to cover training, expert services, particularly expatriate consultants for software and other developments, have been considered as a residual in many investment projects. 15. Coordination with Other Donors. IDA works closely with other multilateral and bilateral donors to provide support for India's environmental protection programs. For example, the UNDP financed the preparation of the EAP. Japan PHRD grants are being used to prepare several environment projects including the proposed Hazardous Waste Management and Urban (Delhi and Surat) Environmental Management projects. The Bank also worked closely with Japan's Overseas Economic Cooperation Fund (OECF) in the design of its Industrial Pollution Prevention project in West Bengal. The United Kingdom Overseas Development Agency is supporting the Bank/GOI study of Environmental Issues in the Power Sector. Extensive consultations were held with the UNDP, Asian Development Bank, USAID, UK-ODA, NORAD, DANIDA, Australia, OECF, Canada, GTZ, and the Netherlands during the environmental stocktaking exercise and the preparation of the proposed project. 16. Project Objectives. The goal of the proposed project is to assist the GOI to implement its environmental priorities as outlined in the EAP of December 1993. (Para. 10) The specific objective of the project is to enhance environmental management capacity to ensure effective implementation of EAP priorities. This objective would be achieved by: (a) strengthening environmental policy planning; (b) strengthening environmental monitoring and compliance at center, state and local government levels; and (c) supporting community and non-governmental organization environmental mitigation initiatives. 17. Project Description. The project has four components. The summary description of each component is presented below. (a) Strengthening Environmental Policy Planning. This component has six sub-components. The project would support (i) the MOEF's Environmental Research Program (ERP) including a review of program priorities and procedures, and training in research management; (ii) upgrading and expanding MOEF's Environmental Information Service (ENVIS); (iii) establishing an Environmental Economics, Indicators, and Project Planning Cell in the MOEF and developing and implementing a program of environmental economics in several major universities and policy research institutes; (iv) developing and implementing a program of training in environmental law as well as undertaking a comprehensive review of current environmental legislation; (v) the acceleration of the CPCB's review and updating of existing - 5 -  environmental standards; and (vi) developing environmental indicators and indices to provide policy makers with appropriate tools to make rational environmental and economic decisions. (b) Strengthening Environmental Monitoring and Compliance. This component has four sub-components. The project would support programs to: (i) review the functions, staffing, workload and location of the Regional Offices of the MOEF to ensure the effective monitoring and compliance with clearance conditions for MOEF-approved Environmental Management Plans (EMPs) of development projects; (ii) train and undertake demonstration projects to ensure that mining sector projects comply with environmental regulations; (iii) expand the CPCB's zonal atlas/industrial siting and ambient air quality monitoring programs; and (iv) assist the Department of Ocean Development to implement a program of studies and the development of Integrated Coastal and Marine Area Management Plans (ICMAMPs) in selected states. (c) Community and Non-Governmental Organization Initiatives. This component has three subcomponents. The project would provide support for: (i) a review and expansion of the National Environmental Awareness Campaign (NEAC); (ii) the expansion of the Paryavaran Vahini (Environmental Brigade) community-based environmental monitoring program; and (iii) the establishment of a NGO Environmental Action Fund in Gujarat to assist consortia of NGOs to undertake larger scale mitigation programs. (d) Gujarat. This component is designed to bring together all of the elements of an effective environmental management system in one state. Gujarat is the fastest industrializing state in India. Investments estimated around Rs. 730 billion is expected in the next five years. About Rs. 430 billion would be in highly polluting bulk drugs, chemicals and dyestuff industries and port development. Managing the tradeoffs between rapid industrial development and protection of the environment is a key issue in the state. In addition to assistance to be provided for the development of an ICMAMP, the development of state environmental indicators and indices; and the NGO Environmental Action Fund, the project would support the strengthening of the Department of Environment and the Gujarat Ecology Commission; and the preparation of a State Environment Action Program (SEAP); 18. Project Financing. Project costs are estimated at Rs 2,733.0 million (US $65.29 million equivalent). An IDA credit of US$50.0 million is being proposed. A second IDA credit may be considered at the mid-term review in 1999, to cover the other high priority technical assistance activities which have been identified. 19. Project Implementation. The MOEF would be responsible for ensuring overall coordination among the various ministries and institutions involved in the implementation of the project. A Project Steering Committee (PSC), chaired by the Secretary, MOEF and including the Secretaries of the Department of Ocean Development, the Chairman of the Central Pollution Control Board; the Additional Chief Secretary, Gujarat, and a representative from the Department of Economic Affairs, Ministry of Finance would be established. The PSC would be serviced by a Project Cell in the MOEF. The PSC would ensure the timely flow of funds, orderly reporting on project implementation, - 6 -  and resolve implementation issues as soon as they arise. Specific sub-components would be managed by the various project agencies, inter-agency, and Advisory Committees established for the environmental economics, environmental law, and mining sector subcomponents. 20. Poverty Category. This project will not be included in the Program of Targeted Interventions. However, indirectly better environmental management will contribute over time to an improvement in environmental conditions in rural and urban areas. This would have a high benefit for the poor. 21. Environmental Aspects. There should be no direct adverse impacts on the environment as a result of this technical assistance project. Its outcome should contribute over time to an improvement in environmental conditions in India. Therefore, the project has been rated as Category 'C' for environmental review purposes. 22. Project Objective Category. The project falls under the main program category of 'Environmental Institutions'. 23. Participatory Approach. The IDA Team, the Ministry of Environment and Forests and the other implementing agencies interacted closely throughout project preparation and appraisal. It should be noted that one of the major justifications for the proposed project was the review of the EAP which IDA undertook throughout 1995. This process involved extensive consultations with Ministries at the center, States, local authorities, and a wide range of non- governmental organizations. 24. Project Benefits. The primary benefit of the proposed project is that it would strengthen the institutional capacity of the Ministry of Environment and Forests, its Regional Offices, other ministries and agencies particularly the Central Pollution Control Board at the center to effectively implement, monitor and ensure compliance with the environmental laws, policies, priorities, and programs of the Government at center, state, district and local levels. Project activities which will encourage ministries other than the MOEF to lead in managing specific environmental problems will foster inter-agency cooperation, build more capacity for environmental management, and lead to a more integrated approach to environmental protection and economic development. The project would also complement other environmental institutional development efforts which are on-going under other Bank/IDA assisted projects. 25. Another benefit of the project is that a concerted effort would be made to improve and expand the role of non-governmental organizations and other grassroots organizations in the environmental management system of India. The project would integrate splintered environmental initiatives such as the National Environmental Awareness Campaign, Paryavaran Vahini, media campaign and others into a focused and thematic program of behavior change that would evolve from raising awareness' to action. Several project activities will also assist the Government to start the movement away from a pure command- and-control regime to a more 'mixed-policy' approach of environmental - 7-  management. Financial and other incentives will invite industry and other development actors to be partners in the protection and preservation of the environment. 26. Project Risks. There are two major risks. First, implementation of a project with multiple sub-components involving several different ministries and agencies at the center, state and local levels will be difficult. Second, although the MOEF, CPCB and MOUAE have been the recipients of previous Bank/IDA-assisted projects, they are still relatively inexperienced in implementation given existing procedures and practices. The solution to these risks lie in the fact that many of the sub-components will be implemented on a pilot basis, have been piloted already, or are on-going programs which will be revised and gradually expanded. This level of preparation coupled with the design-implement-design approach should ease some of the limitations to speedy and effective implementation. Early contracting for technical assistance services including 'twinning' will also help in overcoming implementation constraints. The problem of coordination and institutional capacities to implement will be addressed by the arrangements for project management. The key is the establishment of the Project Steering Committee and Advisory Committees with specific tasks, responsibilities and authority. 27. Status of Project Development. The appraisal has been completed. 28. Project Processing Timetable. Negotiations are tentatively scheduled for June 17-21, 1996 and Board Presentation on July 30, 1996. Contact Points: Public Information Center Richard Cambridge The World Bank Principal Operations Officer 1818 H Street N.W. Environment (SA2DR)-The World Bank Washington D.C. 20433 Washington, D.C. 20433 Telephone No.: (202)458-5454 Telephone No.: (202)458-0302 Fax No.: (202)522-1500 Fax No.: (202) 477-4510 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 July 5, 1996. - 8 -