Peru - Lima Wastewater Management and Coastal Pollution Control Project

Report No. PIC3938 Project Name Peru-Lima Wastewater Management and Coastal... Pollution Control Project Region Latin America and the Caribbean Sector Other Water Supply & Sanitation Project ID PEPA8053 Borrower Government of Peru Executing Agency PROMAR Pasje. Monte Azul 180 Chacarilla del Estanque Lima 33, Peru tel.: (51) 1 438-9845 fax: (51) 1 438-9620 Tentative Board Date November 1997 1. Background. Water pollution is a major problem in the Lima Metropolitan Area, and in view of the rapid urbanization which still takes place the problem will grow in magnitude in the future. An inadequate water supply, sanitation and solid waste system in the Lima Metropolitan Area, and industrial, mining and domestic discharges in major rivers and waterways feeding Lima's water system are the main causes of water pollution. Raw sewage is currently discharged into the ocean at a rate of 17-18 m3 per second. The remaining wastewater is used for irrigation of food crops, mainly vegetables, and parks. Hence, water pollution generates an array of problems relating to health, productivity and environment quality. 2. Institutional Arrangements and Sectoral Reform. The legal framework for water pollution control management presently consists of the Environmental Code. The prevailing Water Law (Ley General de Agua) will shortly be replaced by the Water Resources Management Law (Ley Organica de Agua) that is currently before Congress. This new law aims to improve the efficiency in the use of water resources through the creation of water markets and establishing private water-use rights. Yet, the new water law refers to the Environmental Code and Environmental Authority to set and enforce water quality standards. Although this legal framework lays some foundation for the future development of the sector, these laws need to be further complemented to mitigate water pollution. 3. The Government uses a sectoral apprach to wastewater management and coastal pollution control. However, this approach seems to be a major cause for the fragmentation of institutional responsibilities in the sector. Currently, the Ministries of Health, Agriculture, Industry, Mining and Energy all have responsibilities for policy formulation and enforcement in water pollution control, yet there is little coordination among these ministries. The fragmentation of environmental functions has resulted in an overlap of responsibilities, and lack of transparency. Moreover, public support for and participation in wastewater management and coastal pollution control is still very limited, but will be needed to support the successful implementation and enforcement of policies and projects.  4. Implementation of measures to mitigate the impact of inadequate wastewater management and coastal pollution control has serious financial repercussions as capital investments will be large. Currently, most water pollution control instruments have a regulatory character. The Government can also use economic instruments. These instruments have the advantage that they reduce the fiscal burden of the proposed measures, because they accept the 'polluter-pay' principle as a starting point. 5. Project objectives. The main objective of the project is to restore and protect the environmentally deteriorated coast of Lima, and to improve the quality of the rivers that feed Metropolitan Lima (Rimac, Lurin, and ChillAn). Specifically, the project aims to: (i) finance environmental infrastructure for the interception, treatment, and disposal of sewage to reduce water pollution along the coast of Lima Metropolitan area--the 40 km wide zone between the rivers ChillAn and Lurin--to acceptable limits for human use, and to optimize water reuse; (ii) retrieve the coastal zone of the Miraflores Bay and the embankments of the rivers ChillAn, Lurin, and Rimac for recreation and transportation purposes; (iii) develop a legal and regulatory framework to control coastal pollution in Lima Metropolitan; and (iv) strengthen Peru's--country wide--institutional capacity to enforce water quality and pollution control regulations. 6. Project description. The proposed project consists of three major components: Part I: Infrastructure for wastewater management in the Lima Metropolitan Area, including: (US$230 million) - construction of about 20 km of large interceptors to transport sewage to treatment and final disposal facilities - two primary treatment plants for the elimination of solids and floating materials - several small secondary treatment plants for the treatment of domestic sewage, for disposal in the metropolitan rivers (ChillAn, Lurin, and Rimac) and reuse - two ocean outfalls for final wastewater disposal in the ocean Part II: Infrastructure for coastal management and river channel recovery, including: (US$50 million) - clean-up and protection of beaches and cliffs in the coastal zone of the Lima Metropolitan Area - restoration of river channels and embankment protection of the ChillAn, Lurin, and Rimac rivers - construction of about 10 km long coastal road between the district of San Miguel and La Punta (Callao) recreation facilities and linear parks along the coastal zone and river embankments Part III: Develop the regulatory and institutional framework for pollution control in the coast of Lima, and to improve environmental management of the coastal zone and urban channel sections of the rivers ChillAn, Lurin, and Rimac, including: (US$20 million) -2 -  - development of a regulatory and legal framework for pollution control in the Lima Metropolitan Area; - development and enforcement of a water quality monitoring system in the Lima Metropolitan Area - supporting the creation of a management entity for the coastal zone of Lima - strengthening the management capacity of municipalities to operate and maintain linear parks, river channels and embankments - community mobilization and civil society involvement programs to support environmental management in Lima Metropolitan - training and human resource development - project management 7. Project Financing. The project is tentatively sheduled to be cofinanced jointly by the Bank (33%), OECF (33%) and the Government of Peru (33%). The overall preparation of the project has been supported by a Japanese PHRD grant of US$ 2.5 million. 8. Project implementation. The borrower would be the Government of Peru, and the executing agency would be the Ministry of the Presidency. The project will be prepared by a project management unit, Proyecto de Manejo de Aguas residuales de Lima (PROMAR) within the Ministry of the Presidency. The investments under Part I of the proposed project are the responsibility of SEDAPAL, and the private operator after the privatization of SEDAPAL. Part II will be carried out by the municipalities of Lima and Callao. Project management of the overall project will be under PROMAR, including implementation of Part III of the project. 9. Project sustainability. The 1994 Ley General de los Servicios de Saneamiento requires cost recovery for investments in the water and sanitation sector. Hence, treatment and final disposal of sewage will have to be fully recovered through tariffs. These tariffs should internalize externalities. During project preparation, the feasibility of recovering the costs of large infrastructural investments through tariffs, user fees and charges will be analyzed. Moreover, the creation of a institutional and regulatory framework for managing the coastal zone in the Miraflores Bay and the urban sections of river channels, and the subsequent development of a water quality monitoring system for the Lima Metropolitan Area will help to ensure the long-term sustainability of the project. 10. Lessons from Past Operations in the Sector. There has been no previous IBRD project in Peru that has directly focused on wastewater management and coastal pollution control. The Lima Water Rehabilitation and Management Project included a large water demand management component, aiming at reducing the consumption of water and hence the production of wastewater. Experience in other countries indicate the importance of widespread participation in the preparation and implementation of these type of projects, full government commitment, and a suitable institutional and regulatory framework. These lessons will be fully incorporated in the project design. 11. Poverty Category. Not applicable. -3-  12. Environmental aspects. The project has been classified as Environmental Category A. Therefore, a full environmental assessment (EA) will be prepared before appraisal. Although the project is directed towards improving deteriorated environmental conditions in the Lima metropolitan area, key environmental issues remain to be resolved: (i) water quality and ecological impacts in wastewater discharge areas in both river and marine water bodies; (ii) social and economic impacts (including needs to resettle population) on or along major infrastructure site; (iii) human health impacts of wastewater reuse; (iv) groundwater pollution and depletion; (iv) and cumulative impacts from inadequate solid waste disposal along beaches and aquatic ecosystems and industrial pollution. Feasibility studies will analyze alternatives on their technical, economical and environmental merits. Public and community consultation will take place during EA preparation 13. Program Objective Categories. The project's principal contribution is toward environmentally sustainable development. It would also address the program objective of economic management through strengthening the public sector's capacity to manage its water resources more efficiently. 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 June 14, 1996. - 4 -