Morocco - Sebou River Project

Report No. PIC872 Project Name Morocco-Sebou River Project (@+) Region Middle East and North Africa Sector Environment Project ID MA-PE-5506 Borrowers Kingdom of Morocco, Office National de l'Eau Potable (ONEP), Regies of Kenitra and Meknes Implementing Agencies Ministry of Environment, Ministry of Public Works, Ministry of Agriculture, ONEP and Regies of Kenitra and Meknes Contact Mme. Bani Layachi, Director of the Environment Ministry of the Environment 42, rue Oued Ziz Agdal, Rabat, Morocco. Tel: 011.212.7.76.66.62 Fax: 011.212.7.76.95.78 Date initial PID prepared July 1994 Date this update prepared March 1997 Projected Appraisal date May 1998 Projected Board date October 1998 Background 1 Since the second half of the 1980's, Morocco has been experiencing a period of sustained growth of about 5 percent per year combined with low inflation, balance of payment improvements and good debt management. Morocco's development agenda is shifting towards a more sustainable, equitably distributed income growth which will be built upon improving basic social indicators, developing the private sector, enhancing public sector management and improving environmental and water resource management. In recent years, the Government has become fully aware that its sustainable development objectives cannot be achieved if the natural resource base is degraded and the physical environment is polluted. It has therefore recognized that sustainable economic growth requires actions that: a) reduce pollution in those areas where the social costs produced are the highest; b) prevent resource waste to maintain the resource balance; c) promote proper and appropriate technologies to improve process efficiency and reduce environmental impact at the production level; and d) educate, by implementing appropriate price policies and awareness programs, people, municipalities and entrepreneurs in resource conservation. It also requires appropriate institutional management  of the environmental issues at both the local and central level. 2 In 1993, the first Environmental Management Project (EMP) was appraised and approved by the Board of the World Bank to assist the Government's environment-related institutions in establishing the institutional and regulatory framework to manage environmental protection. The scope of this technical assistance activity was to start initiating a dialogue among the Moroccan institutions on environmental priorities and management issues and to strengthen the new Under Secretariat of State for the Environment (USE) within the Ministry of Interior. A second step towards better environmental management has now been requested by the Moroccan authorities for reducing, through physical investments and implementation of institutional and regulatory measures, negative impacts on public health in selected areas of the country and preserving natural resources according to sustainable development objectives. The Sebou River Watershed (SRW) was suggested as the environmental priority of the country. 3 . The SRW covers 40,000 km2, around 6 percent of the national territory. Eighteen percent of the total population live in the basin, 40 percent of which in urban areas. The main urban conurbations of Fbs and Meknes are located in the upstream part of the basin. The basin hosts around 200 industrial units (both artisanal and modern ones) and 190,000 ha of irrigated perimeters. Thirty percent of total water resources of the country are concentrated in the basin and it is expected that the basin will produce more than 70 percent of regional water surpluses to supply the rest of the country. Water quality preservation and water conservation are, therefore, an extremely important objective in the environmental management of the watershed and of the country. 4 The ecosystem of the SRW is now endangered by numerous sources of pollution, in particular urban and industrial pollution, that is increasing with the rapid development of the basin, and by high pressure on the use of its natural resources, in particular intensive water mobilization and encroachment on forests and marginal lands. Water pollution has reached levels far beyond the renewal capacity of the river. Project Objectives and Description 5 The proposed project would explore the possibility of implementing an integrated approach to natural resource quality protection (in particular water) and pollution control in the Sebou River Watershed. This approach is based on the assumption that conservation can be maximized and costs of depollution minimized if different sources of pollution (non-point and point sources) are tackled at the same time. The proposed project is expected to: a) implement investments and actions that would produce effective and permanent mitigation of the degradation and/or mismanagement of resources; b) support the implementation of the Sebou Water Basin Agency operationalizing the use of economic incentives as indicated in the Water Law approved in 1995 and some of the environmental management measures recommended in the EMP; c) spur privatization -2 -  of some environmental services and set up the right incentive framework to involve the private sector in environmental management; and d) be used as an example to be replicated in other priority areas under future loans provided by the World Bank and other donors. 6 The project area was chosen in such a way as to be representative of Moroccan environmental priorities, but limited in size. The project was identified with the goal of being comprehensive in its approach, but limited in the number of components in order to increase the chances of successful implementation. The following components have been identified and discussed with the authorities: a) Depollution of the Sebou River Water Basin: i) investments in the treatment of wastes (liquid, in particular) from polluting industries; and ii) investments for the treatment of solid, domestic and hospital wastes of the main towns in the river basin and privatization of their management. The possibility of setting up a regional system of waste disposal and treatment will be also explored during project preparation. b) Conservation of Natural Resources: i) preparation of management plans for setting up one or two protected areas at the water basin level where land and forests are submitted to intense pressure from urban and tourism activities; ii) safeguarding fishing activities in the river, through the implementation of a master plan, to revitalize the production of the "alose" fish and identify the potential for development of fishing activities in the large reservoir system; iii) financing of surveys to determine the impact of agricultural pollution on the water quality of the river and the investments and actions needed to mitigate that impact; groundwater quality will be also studied at the watershed level; and iv) investments, if needed, in soil conservation and anti-erosion works, in particular in areas surrounding the existing dams. c) Institutional and Regulatory Component: i) training and technical assistance to improve Environmental Impact Assessment (EIA) units within the USE and other ministries; ii) strengthening of a monitoring and enforcement system for implementing environmental permits and monitoring effluent and ambient standards; iii) implementation of an economic incentive system including pollution charges and their monitoring; and iv) studies for the institutional set-up and implementation of a Regional Sebou River Environmental Fund and the National Environmental Fund. Project Cost and Financing 7. The preliminary total project cost is around US$240 million, with an estimated Bank loan of $70 million. Cofinancing is being sought. Project Implementation 8. The funds of the proposed loan will be: (a) used by the - 3 -  concerned Ministries; and (b) onlent to ONEP and the Regies of Kenitra and Meknes. Sustainability 9. The setting-up and performing during project implementation of the new Water Basin Agency managing pollution prevention and control and water quantity in an integrated manner will provide for a sustainable model of water resources management. Such a model will be based on the polluter-pays principle and user fees guaranteeing at least partial cost-recovery of prevention and pollution control investments and 0 & M costs. Rationale for Bank Involvement 10. The Bank's current lending strategy for Morocco emphasizes protection of the environment and private sector development. The Moroccan authorities are aware that the current unregulated exploitation of environmental resources and pollution is causing increasing costs. They, therefore, have expressed interest in developing the proposed approach putting in place institutional, economic and financial mechanisms that are essential to the successful implementation of the project. Bank experience can play a catalytic role in addressing, simultaneously, sewerage and sanitation problems and environmental issues. Environmental Aspects 11. The project has received a Category B rating. Please see attached Annex. Contact Point: Ms. L. Raimondo, Task Manager 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 March 28, 1997 - 4 -  Annex Environmental Aspects The main objective of the project is to improve the environmental quality and management of the Sebou River Watershed (SRW). Therefore, major positive environmental impacts are expected in terms of water quality improvements, more efficient sustainable use of natural resources and improvement of sanitation. Negative environmental impact may be caused by the construction of sanitary landfills, disposal of sludge from treatment of industrial wastes, and constuction of aerated ponds for treating olive oil production wastes. The project is expected to produce sanitation improvements, diffuse cleaner technologies, improve resource use and enhance natural resource values. It is currently suggested that the project be rated as category "B" for environmental purposes. However, this might change after a final decision regarding investment components to be covered under the project is taken. An economic assessment of the main environmental issues in the SRW was completed. An environmental assessment will be carried out as soon as agreement on major project physical investments is reached. Both the study, together with data on the pollution level and pollution control for the basin, will help prioritize investments according to the most urgent needs and sensitivity of the ecosystem.