Argentina - Pollution Management Project

Document of The World Bank Report No. 17305-AR PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF US$18 MILLION TO THE ARGENTINE REPUBLIC FOR A POLLUTION MANAGEMENT PROJECT January 21, 1998 Environmental, Rural and Socially Sustainable Development Sector Unit Argentina, Chile and Uruguay Country Unit Latin America and the Caribbean Regional Office  CURRENCY EQUIVALENTS (Exchange Rate Effective November 1997) Currency Unit = Argentine peso US$1.00 = Arg$1.00 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS BCSD - Business Council for Sustainable Development CICACZ - Comite Interindustrial para la Conservaci6n del Ambiente Campana Zarate, or the Inter-industrial Committee for Environmental Conservation in Campana and Zarate CP - Cleaner Production EMS - Environmental Management Systems FPN - Fundaci6n Patagonia Natural, a Non-Governmental Organization INA - Instituto Nacional de Agua y Ambiente, or the National Water and Environment Institute, under SRNyDS ISO - International Standards Organization, Geneva, Switzerland JIA - Joint Implementation Agreements NGO - Non-Governmental Organizations PEU - Project Execution Unit SME - Small and Medium Enterprises SRNyDS - Secretaria de Recursos Naturales y Desarrollo Sustentable, or the Natural Resources and Sustainable Development Secretariat TA - Technical Assistance Vice President: Shahid Javed Burki Country Director: Myrna Alexander Sector Director: Maritta R. V. B. Koch-Weser Task Team Leader: Fernando R. Manibog  Argentina Pollution Management Project CONTENTS A. Project Development Objective ......................................................... 2 1. Project development objective and key performance indicators ........................ ................... 2 B. Strategic Context ..........................................................2 1. Sector-related CAS goal supported by the project .......................................................... 2 2. Main sector issues and Government strategy . .........................................................2 3. Sector issues to be addressed by the project and strategic choices ................... ................... 3 C. Project Description Summary ..........................................................4 1. Project components ..........................................................4 2. Key policy and institutional reforms supported by the project .............................................5 3. Benefits and target population ......................................................... 6 4. Institutional and implementation arrangements ..........................................................6 D. Project Rationale ..........................................................8 1. Project alternatives considered and reasons for rejection .....................................................8 2. Major related projects financed by the Bank and/or other development agencies ..................9 3. Lessons learned and reflected in proposed project design ....................................................9 4. Indications of borrower commitment and ownership ......................................................... 10 5. Value added of Bank support in this project ......................................................... 10 E. Summary Project Analysis ......................................................... 11 1. Economic assessment .................11.. ,,....... 1 2. Financial assessment and fiscal impact of recurrent costs .............................1............ 1 3. Technical assessment .................12.,,,,,,,,,,,,,,,,,,,,,,,,,,,.,,,,,.,.,,..............................,,,,..... 12 4. Institutional assessment ................. 12 5. Social assessment ..................... 12 6. Environmental assessment ..................... 12 7. Participatory approach ..................... 13 F. Sustainability and Risks ..................... 13 1. Sustainability ......................... 13 2. Critical risks ..................... 14 3. Possible controversial aspects ..................... 14  G. Main Loan Conditions ....................... 15 1. Effectiveness conditions ....................... 15 2. Other ....................... 15 H. Readiness for Implementation ....................... 15 I. Compliance with Bank Policies ....................... 15 Annexes Annex 1. Project Design Sumary .16 Annex 2. Detailed Project Description .18 Annex 3. Estimated Project Costs .23 Annex 4. Financial Summary .24 Annex 5. Procurement and Disbursement Arrangements .25 Table A. Project Costs by Procurement Arrangements .26 Table Al. Consultant Selection Arrangements .27 Table B. Thresholds for Procurement Methods and Prior Review .28 Table C. Allocation of Loan Proceeds .29 Annex 6. Project Processing Budget and Schedule .30 Annex 7. Documents in the Project File. 3 1 Annex 8. Statement of Loans and Credits .33 Annex 9. Country at a Glance ............ 37 Map  Argentina Pollution Management Project Project Appraisal Document Latin America and the Caribbean Regional Office Argentina, Chile and Uruguay Country Management Unit Date: January 21, 1998 Task Team Leader: Fernando R. Manibog Country Director: Myrna Alexander Sector Director: Maritta Koch-Weser Project ID: AR-PE-6050 Sector: Environment Program Objective Category: EN Lending Instrument: Specific Investment Loan Program of Targeted Intervention: [ ] Yes [X] No Project Financing Data [X] Loan [ Credit [] Guarantee [ Other [Specifyl For Loans/Credits/Others: Amount (US$ni/SDRm): $18 million Proposed terms: [] Multicurrency [X] Single currency (US dollar) Grace period (years): 5 [ Standard Variable [] Fixed [X] LIBOR- based Years to maturity: 15 Commitment fee: 0.75% Service charge: Financing plan (US$m): Source Local Foreign Total Government 8.5 3.4 11.9 Beneficiaries 6.1 0.0 6.1 IBRD 2.5 15.5 18.0 Total 17.1 18.9 36.0 Borrower: Argentine Republic Guarantor: N/A Responsible agency: Secretariat of Natural Resources and Sustainable Development (SRNyDS) Estimated disbursements FY1998 FY1999 FY2000 FY2001 FY2002 FY2003 (Bank FY/US$M): Annual 0.2 6.0 3.8 3.5 3.4 1.1 Cumulative 0.2 6.2 10.0 13.5 16.9 18.0 Implementation period: 5 years Expected effectiveness date: May 15, 1998 Closing date: June 30, 2003  2 A: Project Development Objective 1. Project development objective and key performance indicators (see Annex 1): The main objectives of the Argentina Pollution Management Project are: (i) to strengthen the institutional capacity of the Natural Resources and Sustainable Development Secretariat (SRNyDS) of the Government of Argentina (GOA) to pilot, demonstrate and coordinate the mainstreaming of innovative pollution management instruments, through technical assistance and selected investment activities to address priority pollution problems, and (ii) for the SRNyDS to internalize the lessons learned from the pilots and strengthen its capacity to replicate the positive results. The key performance indicators are: (i) the degree of responsiveness of stakeholders to environmental initiatives, services and facilitation provided by SRNyDS in fulfillment of its mandate to coordinate environmental policy, to be measured by client surveys; (ii) the rate of private participation in the pilot programs to promote environmental management systems (EMS) and ecoefficiency in small and medium industries (SMEs), as measured by the take-up rate of the project's EMS training and cost-sharing grant scheme; and (iii) the extent to which municipal capacities to manage "brown" contamination have been strengthened, in the pilot municipalities and Gran Buenos Aires, as measured by a number of concrete examples of policy formulation or investment decision processes in which integrated pollution management methodologies have been applied. B: Strategic Context . Sector-related Country Assistance Strategy (CAS) goal supported by the project: CAS document number: 16505-AR Date of latest CAS discussion: CAS discussed by the Board of Executive Directors on May 15, 1997. The project would support the CAS policy objective of sustainable environmental protection and management, specifically the objective of improving performance and the institutional capacity of the Government to provide key environmental services. To achieve this goal, the specific actions would be to support improvements in the coordination of environmental management at the national and subnational levels, pilot integrated approaches to reduce serious pollution problems, promote innovative partnerships between the public and private sectors, and strengthen participatory and conflict resolution processes. 2. Main sector issues and Government strategy: The 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 very serious groundwater contamination. Localized air pollution, uncontrolled solid waste dumps (which contain hazardous wastes), and surface water contaniination from industrial effluents and untreated sewage, are also major areas of concern. The country's continued environmental degradation is not being addressed adequately due to the lack cf comprehensive strategies, fragmented federal and subnational policies, and weak monitoring and enforcement. Environmental institutions remain weak and regulatory compliance has been largely non-existent. Responses to pollution issues have been driven mainly by urgency, in cases where some emergency actions have been taken. In many cases, these responses have been slow, deterred by the lack of analytical tools and technical knowledge to prioritize issues, weigh the options, and develop least-cost action plans. GOA has recognized recently that relying purely on a regulatory command-and-control system is not the most cost-effective approach and does not take advantage of rapidly evolving global best practices in motivating polluters to comply with environmental regulations. Consequently, GOA's strategy is to develop a culture of industrial environmental compliance, by testing and demonstrating the viability of a complementary menu of innovative pollution management instruments that are based on market incentives. In concrete terms, GOA's strategy is to pilot and replicate experiences with environmental management systems (EMS) and ecoefficiency programs among volunteering industry groups, whereby industry leaders are motivated to continuously promote,  3 lead and partly finance EMS programs internally and within their supplier chain of small and medium enterprises. The outcome of GOA's strategy is to complement the strict enforcement approach (the "stick") with an innovative set of non-regulatory instruments, which, while keeping within the regulatory framework, will offer to polluting companies a menu of positive incentives (the "carrots"), driven by trade competitiveness concerns, the demonstrated financial savings from implementing ecoefficiency measures, and other market considerations. 3. Sector issues to be addressed by the project and strategic choices: The project would address the need for a complementary approach to the key sector issues of weak compliance and enforcement, as well as the lack of coordination required for mainstreaming best practices in environmental policy and management among other country's national and subnational agencies, and vis-a-vis the private sector. The project would address these issues by piloting and demonstrating pollution management instruments that promote ecoefficient responses by industry and rely more on public-private partnerships and market mechanisms. The process of designing the project required several strategic choices, as explained below. Given the lack of institutional capacity and high costs of relying solely on command-and-control systems for environmental compliance, GOA's first strategic choice is to add to its enforcement arsenal the complementary approach of promoting trade competitiveness and improved efficiencies of resource use as incentives for private polluters to engage in continuous programs in environmental improvement. This approach is in addition to its ongoing efforts to strengthen compliance via regulatory and legal means. In designing this complementary approach, GOA's second strategic choice is to adopt a "bottom-up" instead of "top-down" project design, in recognition of: (i) the responsibility of provincial governments to establish regulations and standards; (ii) the authority vested upon municipalities to carry out monitoring and enforcement; and (iii) the greater chances of project success by building upon already existing and emerging private initiatives to improve industrial environmental behavior. This emphasis on starting from and responding to client demand has resulted in an implementation framework that limits the federal-level interventions to agenda-setting, information dissemination, stakeholder consultation, facilitation, and conflict resolution services. Implementation would revolve around building public-private partnerships at the subnational level, specifically through: (i) municipal pilots, since monitoring and enforcement are the weakest links in the chain of events leading to environmental compliance; and (ii) industry pilots focused on highly selected small and medium enterprises (SMEs) who are engaged in polluting activities, and who are volunteering to move toward compliance, possibly led by environmentally advanced, larger firms which are in a supplier chain relationship with these SMEs. Consequently, the municipalities of Campana, Zarate and Puerto Madryn have been selected mainly because of the existence of committed industry, public sector and civil society groups (including effective non-governmental organizations, NGOs) who are already pioneering pollution control and prevention programs, which therefore increase the possibility of demonstrating successful pilots and replicating the lessons learned. Finally, since provincial regulatory nonms and standards are well established and are not the real issue, GOA's third strategic choice is to address the real constraints of lack of knowledge and technical capacity to diagnose pollution and map out a program of responses, which would be supported by a cost-sharing grant program. This strategy is based on intemational experience, including countries in Latin America, that the formal regulatory system for environmental protection is complicated and enforcement is largely ineffective, hence compliance is very poor. Consequently, a new approach to improve compliance includes the following: (i) to clarify and simplify regulatory requirements (without compromising the objectives of the existing legislation) by developing a consensus on what the regulations require; and (ii) to demonstrate the financial and commercial advantages of better environmental management in industry (a major source of pollution), including SMEs (frequently the most polluting), by building on the experiences of private firms that are leading innovations in these areas. Experience in many parts of the world has shown that considerable environmental improvement can be achieved at little or no net cost, if firms adopt changes in production systems to achieve more efficient use of input resources, and reduce quantities and types of waste through cleaner production measures. The keys to success are to express the  4 regulatory requirements in clear and easily understood terms, including interim compliance targets, and link firm- level environmental improvements to meet these requirements. C: Project Description Summary 1. Project components (see Annex 2for a detailed description and Annex 3for a detailed cost breakdown): The Pollution Management Project is a pilot lending operation to test and demonstrate the viability of promoting regulatory compliance through a menu of innovative instruments, including public-private partnerships, to address priority "brown" pollution problems in Argentina. The project includes one national and three municipal-level components as explained briefly below; the detailed description of project activities and the replication plan for the pilots is presented in Annex 2. The national component includes the following three subcomponents: (i) studies, training and technical assistance (TA) to SRNyDS to strengthen its capabilities to pilot and mainstream among other public and private agencies the application of integrated approaches to pollution management; the studies would lead to workshops to disseminate policy and develop action plans; one of the key studies is to identify measures to address regulatory bottlenecks to private investments in facilities for hazardous wastes, a critical problem in Argentina; (ii) a SRNyDS-coordinated training program to develop the technical capacity in Argentina for promoting environmental management systems (EMS), ecoefficient practices and certification programs for industry; and (iii) a SRNyDS-sponsored cost-sharing grant program targeted at SMEs to support, inter alia, environmental diagnoses, emissions inventories and information disclosure, plant-level environmental audits, the implantation of EMS and cleaner production practices (possibly leading to environmental certification), ecoefficiency programs, and total cost accounting. The key objectives of the national component would be to: (i) catalyze the process of building coalitions among public and private stakeholders; (ii) strengthen policy coordination and regulatory clarification among national and subnational government agencies; and (iii) replicate the lessons learned from the pilots in other areas of Argentina with serious pollution problems. The three pilot components will provide TA and finance priority investments to test and demonstrate the applicability of pollution management instruments in three different problem situations that have strong potential for replicability elsewhere in Argentina, as follows: (i) urban and industrial contamination in the municipalities of Campana and Zarate (Buenos Aires Province), where TA will be provided to strengthen municipal environmental management, demonstrate participatory processes to address pollution in a local river basin, and support industry-led initiatives to promote environmental improvements in SMEs that are in a supplier chain with larger, export-oriented large industry leaders; (ii) air pollution in the Gran Buenos Aires area, which would provide TA and finance investments for air quality and noise monitoring, a vehicle certification laboratory and technical center, the preparation of an air quality management plan for Gran Buenos Aires, and the strengthening of the vehicle inspection and maintenance program; and (iii) the strengthening of municipal pollution management initially in the municipality of Puerto Madryn (Chubut Province), to be replicated in the Patagonian region, which was chosen because it provides a strong information and institutional base for replication, and where cross-media contamination is threatening tourism and the natural resource base, as well as marine biodiversity.  5 Comionent Catezorv Cost Inc. % of Bank- % of Contingencies Total financing Bank- (US$M) (US$M) financing A. Public-Private Partnerships for Institution- 17.5' 49% 10.0 56% Pollution Management Building and Policy Strengthening of SRNyDS's Role in Pollution Management Environmental Management Systems (EMS), Ecoefficient Practices and Certification Programs for hldustiy supported by a Cost-Sharing Grant Program B. Campana-ZArate: Integrated Institution- 2.0 5% 1.6 9% Management of Environmental Quality Building and Policy Technical Assistance for Municipal Environmental Management Integrated Pollution Management for a Local River Basin Support for Industry-Led Initiatives in Pollution Management C. Gran Buenos Aires: Air Quality and Institution- 15.1 42% 5.3 29% Noise Management Building, Physical Air Quality and Noise Monitoring Network Investments Motor Vehicle Emission Laboratory and and Policy Certification Center Gran Buenos Aires Air Quality Managemenit Plan Strengthening of Vehicle Inspection and Maimtenance Program D. Municipal & Regional Pollution Institution- 1.4 4% 1.1 6% Management Building and Policy Puerto Madryn Municipal Management Component Patagonian Coastal Zone Component Total 36.0 100% 18.0 100% lOf the US$17.5 million, US$12 niillion is the fiull cost of the Cost-Sharing Grant Program, which will be jointly financed by private beneficiaries (USS6 niillion) and by the loan (US$6 million). 2. Key policy and institutional reforms supported by the project: The key policy reform to be supported by the project is to bridge gaps in regulatory compliance by putting in place, on a pilot basis, a system of positive, market-based incentives that would induce polluters to comply. This would complement, but not substitute for, the evolving but still very weak enforcement framework in Argentina. The regulatory framework, which is generally satisfactory in termns of its norms and standards, is being strengffiened under other multi'aterally and bilaterally financed projects, notably the SRNyDS institutional strengthening project financed by the Inter-American Development Bank. Given the continuing lack of compliance, however, there is an urgent need to apply more rapid-response measures to develop positive incentives for industry to comply with environmental regulations.  6 The project's key institutional reform is to move SRNyDS -- a national environmental agency -- toward the role of a "learning institution" in a modem state, and to strengthen its effectiveness in the new functions which this role calls for, as follows: (i) to manage knowledge and act as a dynamic catalyst for information exchange among private partners and civil society stakeholders, disseminating information ranging from baseline environmental diagnoses to experiences with non-regulatory instruments in other countries; (ii) to lead the process of bridging gaps in regulatory compliance, through the promotion of private-public cooperative environmental programs predicated on market incentives related to international commercial competitiveness and financial savings from industrial processes and product improvements; (iii) to convoke and facilitate negotiated processes for formulating national environmental policy, with the credible involvement of stakeholders including civil society representatives; and (iv) to coordinate the mainstreaming of national environmental policy among other public agencies at the national and subnational levels. 3. Benefits and target population: The inmmediate target population of the project are polluting small and medium enterprises (SMEs) that are part of industrial groupings, and weak public agencies in the participating municipalities. It is expected that the main participants for the project's ecoefficiency activities and cost-sharing grant program will be SMEs in polluting sectors, such as leather and tanning, food processing, machine parts and metallurgy, and petroleum. For the private firms, the direct project benefits would be: (i) greater knowledge and understanding of ecoefficiency measures, as well as improved capacity for applying better pollution control and prevention techniques; and (ii) initial financial savings through the implementation of ecoefficient practices. An indirect private benefit would be the potential increases in export competitiveness. For the public agencies, the main direct benefit would be the experience that they will gain in establishing transparent and participatory processes for improving environmental compliance using market-based, non-regulatory instruments. This, in turn, would greatly facilitate their task of managing "brown" pollution problems and replicating the lessons learned elsewhere in Argentina, for which SRNyDS has already developed a plan (see Annex 2). Although there may be actual environmental improvements in some cases, the project's goal is to evolve a culture of industrial environmental compliance by piloting instruments and incentives that lead to voluntary changes in policy and behavior at the enterprise level. 4. Institutional and implementation arrangements: Project Coordination and Management The Project would be executed by the Natural Resources and Sustainable Development Secretariat (SRNyDS), through a Project Execution Unit (PEU) that has been implementing effectively the Japanese PHRD Project Preparation Grant. The PEU will be responsible for procurement of civil works, goods, equipment and consulting services, including the Gran Buenos Aires air quality management component. Given the expected increase in work volume during project implementation, the SRNyDS PEU would be assisted by specialized consultants financed under the project who would provide technical, procurement, and financial advisory services. Financial Management SRNyDS would maintain adequate financial management systems--including accounting, financial reporting, and auditing systems--to ensure that they can provide the Bank accurate and timely information regarding project resources and expenditures, in accordance with: (i) the Financial Accounting, Reporting, and Auditing Handbook (Washington, D.C.: World Bank, 1995), and (ii) the Bank's Operational Policy (OP) and Best Practice (BP) 10.02, dated July 1996. Efforts are being made on a country basis to discuss with the Government the revised Bank financial management standards to comply with OP and BP 10.02, dated August 1997. During negotiations, the Bank received the Government's assurances to carry out an action plan, supported by training and technical assistance, to strengthen the financial management systems for the project. Project Implementation For the national component, SRNyDS would sign joint implementation agreements (JIAs) with the other national-level agencies and groups of private enterprises, with whom SRNyDS would be jointly carrying out the project components through working group arrangements. As of the December 1997 project a,ppraisal, seven  7 private industry groups have signed up for the ecoefficiency programs under the national component. These JIAs would define the objectives, work plan, roles, responsibilities and contributions of the stakeholders in the respective working groups. The agencies with whom SRNyDS would be signing JIAs were consulted during preparation and have indicated agreement with the project's objectives and implementation program. In some cases, some JIAs may already exist, which SRNyDS will build upon; this is the case of the environmental management systems (EMS) promotion program for which SRNyDS already has an agreement ("Acta-Acuerdo") with the Argentine Business Council for Sustainable Development (BCSD). An international firm would provide technical and implementation supervision services to the SRNyDS PEU, especially to ensure the effective transfer of global knowledge and mainstreaming of best practices, as well as to facilitate the continuous effort at coalition- building that this component will require. Under the overall supervision of the SRNyDS PEU, the small EMS promotion cost-sharing grant program within the national component will be administered independently through a management contract, following specific eligibility criteria and an Operational Manual. SRNyDS would coordinate closely with the Industry Secretariat and the Secretariat for Small and Medium Enterprises, to maximize synergies with their ongoing programs. Much effort has been placed during preparation on building the coalition between the Environment and Industry Secretariats, up to the Secretary level. The cost-sharing grant scheme would start upon completion of the national component's training phase, which, following the approach of the "training of trainers" and "certification of certifiers", would develop first the critical technical skills for delivering seirvices to the SME clients of the cost-sharing grant scheme. These services could include studies on environmental requirements of foreign export markets, carrying-out of environmental audits, plant-level training programs on cleaner production, advice and assistance on environmental certification, and so forth. For the Campana-Zarate and Puerto Madryn municipal environmental management components, SRNyDS would sign JIAs with Work Groups that would include public, private and NGO representatives. SRNyDS would be part of these Work Groups, where services and equipment to be procured would be agreed. The SRNyDS PEU, however, will serve as the lead implementing agency and be responsible for carrying out procurement in line with the Bank's procedures. During implementation, these Work Groups will carry out the activities of their respective component, as they have done so during project preparation, with SRNyDS providing technical advice and exercising functions related to information dissemination, coordination, facilitation, and conflict resolution. For the Puerto Madryn component, it is expected that a strong and effective NGO -- the Fundaci6n Patagonia Natural (FPN) -- would continue to be involved in project implementation. During preparation, FPN designed a Participation Plan for the component and conducted an assessment of the environmental impacts of tourism in the area. FPN has implemented successfully a GEF/UNDP Patagonia Coastal Zone Management Planning Project- Phase I and is now starting Phase II. With respect to the Gran Buenos Aires air and noise pollution component, a consultative air quality commission would be established in order to develop anid coordinate the implementation of an air quality and noise management plan for Gran Buenos Aires, as well as monitor and feed into the policy process the data collection efforts and studies included in the component. As regards the motor vehicle laboratory and technical center, it was agreed with SRNyDS during negotiations that, for the cntire duration of the project, SRNyDS will own the air quality monitoring network and the motor vehicle testing and certification laboratory, which will be established in the premises of, and operated by the National Water and Environment Institute (INA), a decentralized agency of SRNvDS. It was furtlher agreed that the operational relationship between SRNyDS and INA will be governed by a joint resolution between the Environment Secretary and the President of INA; this resolution would contain the provisions for the use of future INA revenues to: (i) meet operation and maintenance requirements, and (ii) finance teclmical studies for the air quality management plan. Project Monitoring and Evaluation, and Project Adiustment The project would be guided by annual reviews of results, on which basis the PEU and the Bank supervision mission would identify specific measures to: (i) pursue more vigorously any new opportunities to enhance the role of SRNyDS as a "learning environment institution"; (ii) address any areas of implementation weaknesses; and  8 (iii) accommodate changes in priorities in case some pollution problems worsen unexpectedly. These measures for improvement would be reflected in the SRNyDS proposal for the forthcoming year's budget. The mid-term review is scheduled for the end of the second year. It is expected that the PEU would involve two or three third- party, independent evaluators from renowned academic institutions with strong ecoefficiency programs, NGOs, international environmental agencies and similar external institutions. The indicators for the mid-term project review are presented in the Project Implementation Plan, which will be reviewed with stakeholders during the project launching. The SRNyDS PEU will be responsible for maintaining separate Project accounts, financial management and reporting, monitoring and evaluation, and audits. The project will be implemented over a five- year period. D: Project Rationale 1. Project alternatives considered and reasons for rejection: The option of a large-scale intervention was considered initially. A national project, however, would have been premature given the lack of experience and capacity in pollution management, the innovative nature of the non- regulatory processes to move polluters toward compliance, and hence the need to learn first by testing, demonstrating and later institutionally mainstreaming successful results. During the course of preparation, various alternatives for financing private and municipal-level investments were also considered. The option of establishing a funding mechanism as in the Municipal Development Project was considered, but was not pursued to avoid duplication with this ongoing project and its extensive coordination framework for implementation. Moreover, in the case of municipal investments, the municipalities still lack the technical capacity to avail themselves of this facility, as demonstrated by the relatively low demand for the project's "environment" and "'solid waste management" funding categories. Therefore, the project would pilot integrated pollution management approaches in selected municipalities to strengthen their capacity to diagnose their contamination problems in sound technical terms, weigh options and apply economic criteria to select a course of action, and convert the results into a financially sustainable investment proposal, while ensuring adequate public participation throughout this process. Finally, the option of establishing a credit line for industrial pollution control was also rejected because the experience with credit lines in previous projects has been unsatisfactory, and the target population of SMEs still lack the knowledge and experience to identify specific measures and take actions to move toward regulatory compliance. Once the pilots are successfully demonstrated, one of the positive impacts expected is that private firms would recognize the positive returns on environmental investments and seek or provide financing on fully commercial terms.  9 2. Major related projects financed by the Bank and/or otlher development agencies: Sector Issue Project Latest Supervision (Form 590) Ratings (Bank-financed projects only) Implementation Development Progress (IP) Objective (DO) Bank-financed Industrial Pollution Control Brazil-Environmental S S Conservation and Rehabilitation (CVRD) Project Brazil-Sao Paulo Industrial U S Pollution Control Project Brazil-Industrial Pollution S S Control II Project Environmental Institutions Development Chile-Environmental HS S Institutions Development (CONAMA) Project Environmental Management Systems Mexico-Guadalajara S S Environmental Management Pilot Non-Lending Service Environmental Management Technical China-Environmental S S Assistance Management Project Export Development (including IS09000 Argentina-Export Development S S certification component) Project Other development agencies Environmental Institutions Development IDB: Argentinia-Institutional Strengthening Program for Environmental Management Cleaner Production GTZ: Argentina- Environmental Protection in the Small and Medium Industries of the Argentina Chemical Industry IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), tU (Unsatisfactory), HUJ (Highly UJnsatisfactory) 3. Lessons learned and reflected in the project design: With the exception of the Brazil-Environmental Conservation and Rehabilitation Project, there are no Bank projects yet with a major focus on the promotion of environmental management systems in industry, hence the proposed operation is a pioneering project. The projects listed above are related to the proposed project on the basis of having some components related to industrial pollution control technical assistance and financing, the building-up of partnerships, and the use of participatory techniques and negotiations processes. Drawing on the experience from ongoing projects in the region's relatively young environment portfolio and previous economic and sector work, the main applicable lessons are: (a) the coordination of environmental policies is weak among Government agencies at various levels, as well as vis-a-vis the private sector, and needs to be strengthened through coalition-building around key priorities in order to achieve better compliance with pollution control regulations; (b) the weakness of environmental agencies 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 (d) based on the experience with the ongoing Export Development Project, some key ingredients to build up and sustain demand include early and effective dissemination of information on innovative financing schemes, proactively supporting client access to the financing program, and maximizing the demonstration impact of early successes. Taking these lessons into account, the project would emphasize building linkages, strengthening negotiations capabilities and conflict resolution mechanisms, and clarifying the respective roles of the federal, provincial and municipal stakeholders, while promoting the financing role of the private  10 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's pilot design was guided by the following conceptual parameters: (a) imprcve access to information on global best practices, promote public disclosure of pollution data, and gain experience in building coalitions around priority pollution problems in a specific geographic area; (b) test positive, market-based incentives to motivate polluters to change company policy and operational behavior, and thus achieve environmental improvements and move toward regulatory compliance; and (c) involve a few committed and volunteering municipalities and private participants in order to enhance prospects for successrul implementation, which could possibly lead to an adaptable program lending operation. 4. Indications of borrower commitment and ownership: During project preparation, SRNyDS at the highest levels of management supported the building of coalitions around the project's pilot components, involving private, public and NGO representatives. Some examples are provided below: (i) During pre-appraisal, the CEO of one of Argentina's largest companies submitted a letter to the PEU of SRNyDS to sign up for the project's environmental management systems (EMS) and ecoefficiency program. The CEO nominated the Executive Director of the Argentine Business Council for Sustainable Development (BCSD) and the company's Environment Director to be the private representatives in the Work Group that was formed for the project's EMS program. In addition, the Inter-industrial Committee for Environmental Conservation in Caampana and Zarate (CICACZ) and the Metallurgical Industries Chamber of C6rdoba have also submitted letters to SRNyDS to sign up for the Project's EMS Program. By the appraisal mission, four other groups had also submitted written expressions of interest to participate, including the Argentine Industrial Council, one of the largest SME chambers; the Argentine Accreditation Organization, a national certification institute; the Business Development Institute of the Province of Buenos Aires; and the Government of the City of Buenos Aires. (ii) The Government attaches high priority to the project, judging from: (a) the Environment Secretary's public endorsement of the pollution management sector report's findings; (b) SRNyDS' actions to accelerate the processing of the Japan Grant Agreement, and to replace a slow counterpart team with a more proactive Project Execution Unit, after which preparation made significant progress; and (c) SRNyDS' support for external partnerships, such as the participation of United Nations Environment Program (UNEP) staff from its Industry and Environment Department during project preparation to help define the project's Cleaner Production Program. (iii) In November 1996, a Regional Entity for Canpana-Zarate component was created, reflecting a joint agreement among the provincial and municipal stakeholders. A Campana-Zarate Work Group was also created, and has been continuously functioning since early-1997. (iv) For the municipal components, provincial ministries, municipalities and private industries are also strongly interested in the project and continue to support it by taking actions required for processing. The Parlamento Patag6nico has worked with the Bank's project team in field visits and will facilitate the application of the Pan- American Health Organization's solid waste planning methodology in selected areas of the Patagonian region, in order to prepare a regional solid waste management plan. In Puerto Madryn, a Work Group for the project is being formed, comprised of the municipal Environment Secretary, the Fundaci6n Patagonia Natural (an NGO), and the Centro Patagonico (a research laboratory providing technical support to the whole component). 5. Value added of Bank support in this project: The Bank's single most important contribution is to be a catalyst and source of specialized advice drawn from a global knowledge base in the areas of innovative pollution management instruments and the modernization of public sector environmental agencies. For example, the project is designed to transfer knowledge and experiences from external universities, foundations, research institutes and NGOs who are practitioners in EMS and ecoefficiency programs. The Bank would also draw from its experiences in Brazil, Chile and Mexico where  11 industry has been responding positively to these measures. A second Bank contribution is to develop a policy agenda and disseminate relevant new knowledge around a policy theme. For example, the project features a study to identify and develop measures for addressing the weaknesses in the regulatory framework which impede private investments in environmental equipment, infrastructure and services. In addition, the Bank's Economic Development Institute (EDI) is developing a sustained training program to strengthen the regulatory and enforcement capacities of SRNyDS and subnational participants. Finally, the Bank also has a high capacity to: (a) coordinate and establish complementarities between provincial and municipal projects, and (b) maximize synergies between the proposed project and the ongoing Export Development Project, which is supporting IS09000 certification and is therefore developing a potential client base for environmental certification programs. E: Summary Project Analysis 1. Economic Assessment: The pilots in the project are not subjected to benefit-cost analysis because the outputs are related to institutional strengthening. During project implementation, however, the project will promote the use of economic analysis methods in the manuals and training programs, in order to ensure that the pilots lead the municipal participants to use least-cost methodologies as they weigh environmental investment options and decide on specific solutions. The data to be generated under the air quality component, in particular, will be used as inputs to the analysis of cost-effective investment solutions that would be incorporated within the Gran Buenos Aires air quality and noise management plan. With respect to the 50% grant to private small and medium enterprises (SME) participating in the cost-sharing grant program, the partial subsidy is justified on the basis of addressing market failures which inhibit firms from taking actions that improve environmental performance. The negative externalities resulting from industrial pollution are high, and an initial subsidy to a small set of screened firms participating in the pilots is required in order to demonstrate the viability of positive, market-based incentives. Making information generally available is insufficient to achieve this behavioral change, since the required policy decisions and investment actions are non- traditional and have unclear reward-to-expenditure ratios, thus making the firms averse to innovation. Pro-active technical assistance inputs are required, involving direct advisory services that diagnose the specific pollution conditions generated by the firms and tailor the package of solutions to their individual operational requirements. This process of diagnosing and designing innovative solutions would be supported by the cost-sharing grant program, in which the partial subsidy component will be small with clear boundaries in time and amount, and would be too small to generate economic distortions, for example, by realigning prices, distorting relative competition, or reallocating resources. Ultimately, the objective of the program is to promote sustainability by demonstrating that investing in technical assistance and pollution abatement are recouped by: (i) increased export capability; (ii) improved market positioning and competitiveness; (iii) financial savings from efficiencies of resource use; and/or (iv) future compliance with environmental regulations and hence avoidance of penalties and negative public pressure. 2. Financial Assessment and Fiscal Impact of Recurrent Costs: The project's claim on the Government's recurrent spending is expected to be small, given the project's strong emphasis on mobilizing private financing for promoting environmental management in industry, and generating revenues from private vehicle certification. The project's counterpart financing is estimated at US$18 million, of which 34% or about US$6.1 million would be financed by the private beneficiaries of the Cost-Sharing Grant Program for the promotion of environmental management systems, ecoefficient practices and certification programs for industry. Of the remaining US$11.9 million, around US$9.3 million are related to the air quality component's management plan and the investments in a motor vehicle emissions and certification laboratory, which are expected to generate revenues from motor vehicle testing fees, thus ensuring the financial sustainability of this investment component beyond the project life. The revenue stream from the motor vehicle testing will be sufficient to cover the counterpart costs of operations and maintenance, teclnical assistance, and the amortization of equipment under the Gran Buenos Aires Air Quality Management component. The remaining US$2.6 million  12 are the project's technical assistance, studies and institutional strengthening activities, as well as the local cost of the project's civil works and goods and equipment, which represent a modest Governnent counterpart funding. 3. Technical Assessment: The project has a significant technical component, since the target leading companies and SMEs that would participate in the pilots and cost-sharing grant scheme are from polluting industries (e.g., leather and tanning, food processing, petroleum, among others) that offer significant opportunities for technological improvements. The project's EMS and ecoefficiency programs are designed to provide a high degree of technical knowledge drawn from: (a) international expertise on more resource-efficient technologies; (b) best practices in cleaner production; and (c) the role of leading technologies, production cost-efficiency, and total quality (including environmental aspects) in enhancing global market competitiveness. The project's technical design responds to the urgent need of Argentina to modernize the instruments that it employs to manage pollution. The project would help clarify regulatory requirements and provide assistance to SMEs in developing a monitorable plan to achieve compliance. This process is expected to lead to overall environmental management and performance improvements, including the implementation of EMS, which may lead to international certification such as ISO 14000 standards. 4. Institutional Assessment: The institutional framework for the environment in Argentina is weak yet highly complex, with overlapping and sometimes conflicting jurisdictions between the national, provincial and municipal levels, thus often confusing the issue of authority and accountability. A significant amount of institutional strengthening is required, which is being supported by an IDB project. A positive trend, however, is the growing number of leading individuals within SRNyDS who understand the policies and actions required to address environmental issues in Argentina. The Project Execution Unit (PEU) within SRNyDS includes or has mobilized the involvement of these environmental leaders. The PEU has proven highly effective during project preparation, particularly with respect to the coordination and conflict resolution processes that are critical to a project of this type, which involves private industry, nationaVsubnational levels of government, and non-governmental organizations (NGOs). The PEU provides a strong, competent base for project implementation, but will need strong and consistent technical support. The project's core substance.(i.e., private-public partnerships and modem instruments for pollution management) is very innovative, not only in Argentina but in most countries as well, and hence the specialized skills base is nascent and needs to be developed. Therefore, a major program of training and transfer of global best practices is required from an international firm that would provide overall technical supervision and advisory services, ensuring that the critical knowledge base is transferred to SRNyDS as a "learning institution". 5. Social Assessment: Public awareness of environmental issues has come much stronger in Argentina and hence the pressure on private polluters has increased in recent years. Although promoters of environmental causes and governmental or private targets of criticism are still often polarized, there are increasing cases of efforts to address environmental problems through participatory approaches. These examples, which the project will build upon, include: (a) the joint efforts of the Fundaci6n Patagonia Natural, the municipality and private plants in Puerto Madryn; and (b) the Working Group of CICACZ and municipal governments of Campana and Zarate. The air quality management component will lay the basis for an iinovative participatory process (based on the successful experience of the Bank-financed project that included the development of the Decontamination Plan for Santiago, Chile) that would be piloted and applied to other project components (see Section 7 below). A Participation Plan was prepared for the municipal and regional pollution management component (see Section 7 also). 6 EnvironmentalAssessment: Environmental Category[ A [X] B [ C The project's TA components are expected to result in pollution prevention and control in the pilot industries participating in the enviromnental management systems promotion and cost-sharing grant program. The institutional strengthening of SRNyDS and the selected municipalities is expected to improve the diagnosis and monitoring of environmental conditions. The pilot investments in the project (air pollution and other monitoring equipment, and the vehicle emissions laboratory) are expected to result in environmental improvements. In the  13 interest of mainstreaming the environment, one of the proposed project's activities is to improve the environmental assessment methodologies of the project preparation manuals under the Municipal Development II Project. 7. Participatory Approach: Preparation Implementation Operation Beneficiaries/community groups CON COL COL Intennediary NGOs CON/S COL COL Academic institutions CON/IS COL COL Local government CON/IS COL COL Other donors CON COL COL Note: IS = Information Sharing, CON = Consultation, COL = Collaboration For the air quality management component, quarterly reports on air and noise quality will be disseminated to the public to serve as the basis for the development of a participatory air quality management plan, which could be similar to the Santiago Decontamination Plan completed in June 1997 under the Bank-financed Chile- Environmental Institutions Development Project. The participation processes for the Gran Buenos Aires air quality management plan would be similarly designed, albeit on a smaller scale and less complex due to the lower severity of air pollution in Gran Buenos Aires compared to Santiago. For the municipal and regional pollution management component, a Participation Plan was prepared by the Fundaci6n Patagonia Natural. For the Campana-Zarate Component, a participatory approach, including private stakeholders, has already started during project preparation and will continue to demonstrate the use of integrated pollution management techniques in the context of a local river basin. F: Sustainability and Risks 1. Sustainability: The project's sustainability depends on the likelihood of the pilots being successful, the institutions' abilities to absorb and replicate the lessons, and the continuation of financing. A measure of sustainability would be the continued demonstration and promotion of positive, market-based incentives to drive the replication of successes from the pilots. This would be enhanced significantly by: (a) drawing upon the private sector's technical expertise and mobilizing private counterpart financing, motivated by potential gains in trade competitiveness and financial savings that would result from environmentally responsible corporate behavior; and (b) having a replication plan that is being adjusted and developed as experiences start being gained from the pilots (see the end of Annex 2 for the replication prospects identified by SRNyDS). As regards public agencies, the project's sustainability would be ensured by the project's approach, which is to: (i) strengthen the capacity of SRNyDS to diagnose Argentina's pollution problems, promote transparency and public disclosure of emissions data, set the agenda of priority issues, catalyze the analysis of the technical, economic and financial parameters, and coordinate the process of policy analysis; and (ii) devolve policy formulation to other parts of government that should share responsibilities for Argentina's environment, such as the energy, transport, municipal development, industry and economic agencies. As regards the project's municipal components and investments, 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 properly and economic, technical, financial, and institutional criteria are applied to determine options and select a least-cost and financially-sustainable set of solutions.  14 2. Critical Risks (reflecting assumptions in the fourth column ofAnnex 1): Risk Risk Rating Risk Minimization Measure Annex 1, cell "from Outputs to Objective" SRNyDS' weak institutional capacity to: (a) medium This risk has been minimized by SRNyDS' develop pollution management instruments that effective Project Execution Unit, strong are sustainable in the local context; (b) sustain commitment to the project, much improved the interest of multiple stakeholders; and (c) relations with subnational governments as harmonize regulations with subnational reflected in Joint Agreements, and its governments demonstrated intent to work with the private sector as evidenced by: (i) the Environment Secretary's existing Agreement with the President of the BCSD, and (ii) the intent to provide regulatory streamlining for private firms involved in pollution prevention and control. SRNyDS has also signed an agreement with the Buenos Aires Province to harmonize hazardous wastes legislation. Risks inherent in changing environmental medium-high The pilot approach of screening, testing practices of the public and private sectors, given and demonstrating innovative pollution the complicated legal and institutional management instruments to address frameworks, lack of knowledge and experience, pollution problems while working to and the often conflictive nature of the strengthen the capabilities of both the environmental problems that need to be resolved public and private sectors should minimize this risk. Annex 1, cell "from Components to Outputs" Poor credibility and prospect for enforcement low The project's design is based on positive action, hence low private incentive to implement incentives like trade competitiveness and non-regulatory measures financial savings from ecoefficiency measures; private companies have already signed up for the program even without enforcement threat. Overall Risk Rating medium-high The project is designed as a pilot, since the development of environmental institutions is inherently risky. 3. Possible Controversial Aspects: The hazardous wastes issue is conflictive in Argentina and, although not part of the project except for a study on addressing regulatory bottlenecks to private investments in hazardous waste treatment plants and waste management in general, the issue may be grafted on to the project by different local interests. The study should develop a solid methodology for participatory approaches and consultative processes, and prepare Participation Plans for the identified priority sites.  15 G: Main Loan Conditions 1. Effectiveness Conditions: Establishment of the Project Execution Unit by SRNyDS, with staffing, functions and responsibilities satisfactory to the Bank. 2. Other: Conditions of disbursement: (a) completion and Bank approval of an Operational Manual for the cost-sharing grant; and (b) establishment of an inter-jurisdictional consultative mechanism to which all official agencies with responsibility for air quality management in Gran Buenos Aires are invited. H. Readiness for Implementation [ ] The engineering design documents for the first year's activities are complete and ready for the start of project implementation. [X] Not applicable. [X] The procurement documents for the first year's technical assistance activities will be completed before loan effectiveness and made ready for the start of project implementation. [XI The Project Implementation Plan will be reviewed with stakeholders during project launching, particularly (i) the training program related to environrnental management systems and (ii) the eligibility criteria of the Cost- Sharing Grants Program. I. Compliance with Bank Policies [X] This project complies with all applicable Bank policies. Task Team Leader/Task Ma_ ger: Fernando R. Manibog Principal Environmental Specialist LCSES Sector Manager/Director: Maritta Koch-Weser Environmental, Rural and Socially Sustainable Development Sector Unit LCSES Country Manager/Director: Myrna Alexander Argentina, Chile and Uruguay Country Unit LCC7C  16 Annex 1 Project Design Summary Argentina Pollution Management Project Narrative Summary Key Performance Monitoring and Evaluation Critical Assumptions Indicators . Sector-related CAS Goal: (Goal to Bank Mission) Support GOA strategy of - Integration of enviromnental Clarification of respective roles, - Critical assumption: sustainable environmental concerns into the mainline responsibilities and commitments, Continued priority for protection and management functions of sector ministries through: these issues by GOA and and other levels of - .Toint Inter-Govermnental Policy cooperation by the government Statements subnational and private - Increasing adoption by - Working Groups and Agreements stakeholders industry of long-tenn among stakeholders pollution reduction strategies - Private sector commitment through - Risks: changes in resource inputs and use of the political appointments or project's products and services major macroeconomic problems Project Development (Objective to Goal) Objective: - Critical assumvtion: Successful demonstration and - Adoption of improved - Development of demand-driven Progressively stronger adoption of innovative environmental management private services for pollution private industry and pollution management approaches by private sector, management, such as training, commumity demand for instruments involving the especially SIvEs changes in corporate enviromnental action on urban/ industrial private sector - Increased ability anid policy that translate into budgets anid pollution because of its credibility (tlrough client operational planis and procedures for relation to trade and other Strengthened capabilities of response as measured by environmental managemenit commercial objectives, as SRNyDS to disseminate and stakeholder surveys) of - Establisluhent of mechaniisms anid well as local impacts mainstream the lessons of SRNyDS in leading and niunber of partnerships, to be success and to take the lead in catalyzing the dialogue on measured by the international finn - Risk: unwillingness to new initiatives pollution policy with providing technical supervision pay the costs of pollution subnational, private and NGO control and prevention stakeholders measures Project Outputs: (Outputs to Objective) - Demonstrations and - Development and credible - Adoption by the private sector in the - Critical assumption: refinements of innovative application of pollution pilots (especially SMEs) of improved Continued high level of pollution management, maniagement instnuments environmenital management, to be commitment of involving private sector - Institutionalizationi of measured by audits and/or evaluation stakeholders in public and - Institutionalization of these "lessons learned" from the reports private sectors new approaches through pilots, and incorporation of - Numllber anid effectiveness of training programs best practices dissemination fora for case studies, - Risk: inability to develop - Improvement of SRNyDS - Agreements on target measured by stakeholder sLurveys instruments and capabilities to take the lead pollution problems, - Extent and quality of tecluiical, approaches which are on key issues and to involve priorities, and action plans, economic anid finanicial anialysis in the sustainable in the local other stakeholders in partnerships with pilot municipalities, judged from context; lack of - Improved technical subniational, private, and mnuber of investment decisions where involvement of capabilities in environmental civil society implementation these methodologies were applied stakeholders data collection and use agents (in the pilot - Development of fonnal working (especially the acquisition and munticipalities and selected groups or other mechanism for key monitoring of emissions data industry groups in the issues at national or local level under the air quality national component) - Preparation of a number of broad- component) based planis to tackle priority problems - Cooperative and stake- holder-based approaches to pollution management  17 Project Components Inputs: (budget for each Monitoring and Critical Assumptions ___________________ component) Evaluation (Components to Outputs) 1. Partnerships for - training and workshops Pollution Management on policy mainstreaminig - clarification/agreements * Stability and continuity 1.1 Strengthening of Teclnical assistance, pilot on regulatory issues anid of key interlocutors and SRNyDS's role in projects, and cost-sharing complianice agreements cotunterpart staff pollution management grant: $17.5 million - agreement on options to * Continued and increased 1.2 Enviromnental address hazardous waste support from the private management systems issues sector (EMS), ecoefficient - success of pilot projects practices and certification - institutionalization of programs for industry training materials and lessonis - demand for advice and assistance - disbursement of Cost- Sharing CTrant 2. Campana-ZArate: - analytical and data * SRNyDS and Integrated Management of maniagement capacity municipalities cooperate Environmental Oualitv - training undertaken anld formalize - completion of implementation 2.1 Technical assistance Tecluhical assistance and enviroiunental diagnosis agreements in a timely for municipal laboratory equipment to - communications program manner environmental participating - baseline water quality management municipalities: - agreement on water * CICACZ continues to 2.2 Integrated pollution $2.0 million quality targets promote actively management for local river - feedback on advisory participation of industry basin services 2.3 Support for industry- (Does not include - EMS pilot programn led initiatives in pollution substanitial inputs in kind - follow-up to firns management from industry) - other industry-led activities 3. Gran Buenos Aires: * foniial agreements with Air Quality Management Teclmical assistance and - air quality monitoring other ministries anid investment in monitoring and data management subnational govenuments 3.1 Establish scientific stations and testing - baseline data established to prepare air quality base and institutional laboratory: - emission laboratory management plan framework for urban air $15.1 million - progress on testing * effective operation of air quality management - institutional framework qutality data system 3.2 Air quality and noise (Includes operation and * cost-effective operation monitoring network maintenance, and studies of emissions testing lab 3.3 Motor vehicle to be financed by INA's * enforcement of emissions laboratory and revenues from vehicle requirements for vehicle technical center testing certification) testing 3.4 Strengthening of vehicle inspection and maintenance 4. Municioal & Regional - environmental diagnostic * enviroumnental Pollution Management for Puerto Madryn diagnostics updated and Techliical assistance and - infonration system maintained as useful tools 4.1 Puerto Madryn monitoring equipment to - involvement of * skills developed at municipal component participating stakeholders mtuicipal level transferred 4.2 Patagonian coastal municipalities: - resolution of landfill to other municipalities and zone component. $1.4 million issues agencies - diagnostic for coastal * participatory planning Patagonia process successftully - participatory process replicated across the region TOTAL: $36 million  18 Annex 2 Argentina Pollution Management Project PROJECT COMPONENTS AND ACTIVITIES The main objectives of the Argentina Pollution Management Project are: (i) to strengthen the institutional capacity of Government of Argentina's Natural Resources and Sustainable Development Secretariat (SRNyDS) to pilot, demonstrate and coordinate the mainstreaming of innovative pollution management instruments, through technical assistance and selected investment activities to address priority pollution problems, and (ii) for the SRNyDS to internalize the lessons learned from the pilots and strengthen its capacity to replicate the positive results. The project components are: (A) Public-Private Partnerships for Pollution Management (Strengthening SRNyDS's Role in Pollution Management; Environmental Management Systems (EMS); Ecoefficient Practices; and Certification Programs for Industry); (B) Campana-Zarate: Integrated Management of Environmental Quality (Technical Assistance/Investments for Municipal Environmental Management; Integrated Pollution Management for Local River Basin; and Support for Industry-Led Initiatives in Pollution Management); (C) Gran Buenos Aires: Air Quality Management (Air Quality and Noise Monitoring Network; Motor Vehicle Emission Laboratory and Technical Center; and Institutional Framework for the Preparation of an Integrated Air Quality Management Plan for Gran Buenos Aires); and (D) Municipal and Regional Pollution Management (Puerto Madryn Municipal Management and Patagonian Coastal Zone Component). A. PUBLIC-PRIVATE PARTNERSHIPS FOR POLLUTION MANAGEMENT The main objectives of this component are to strengthen the capacity of SRNyDS to promote and coordinate the development, testing and demonstration of innovative pollutioni management instruments with private stakeholders through a series of pilots, as a complement to environmental regulation and enforcement. Building such public-private sector partnerships will lead to improved, capabilities, in both government and industry, to effectively manage critical pollution problems, while achieving measurable progress in selected areas. To achieve this goal, this subcomponent consists of three main areas of activity: Strenvothenin, SRNvDSs Role in Pollution Manafement This subcomponent is focused on strengthening the policy-setting, planning and coordination capabilities of SRNyDS, especially in working with private industry. It will seek to strengthen SRNyDS' capacity to: (i) identify and address critical environmental priorities, and assume a leadership role in transferring these skills to provinces and municipalities; (ii) lead, coordinate, and disseminate the application of innovative pollution management instruments; and (iii) mainstream the environment with other national agencies. Concept-to-Practice Studies: Selected by client demand, these studies will support the development of SRNyDS's practical skills base to catalyze improvements in pollution management. These improvements include: * Clarify regulatory overlaps and the basis for use of iinovative pollution management instruments, including compliance agreements * Identify regulatory barriers and options for private sector investment in waste management * Replicate lessons learned from the pilots in other parts of Argentina * Strengthen environmental aspects of Project Preparation Guides for the Provincial and Municipal Development II Projects * Formulate the Rio de la Plata/Frente Maritimo Integrated Pollution Management Strategy Training: A training program will be developed that focuses on improving pollution management capabilities within SRNyDS. It will include the following areas: * Training in regulatory enforcement and strengthening (to be provided by the World Bank's Economic Development Institute) * Workshops and training in policy implementation * Development of public participation, conflict resolution and coalition-building capacity * Seminars for judges on environmental issues  19 Overall Management of the Pollution Management Project: This activity will include the overall coordination and supervision of the project by SRNyDS' Project Coordiniation Unit, as well as technical advisory services to supervise project implementation while ensuring that international best practices are applied. Cost-Sharing Grant Program for Promoting Environmental Management Systems (EMS). Ecoefficient Practices and Certification Programs for Industry With the support of a small grants program for SMEs on a 50% cost-sharing basis, the pilot activities under this subcomponent will introduce and promote approaches that stress the benefits to industry of improved environmental management and build on competitive and market forces. The cost-sharing scheme would support technical assistance, advisory services, and other non-investment activities related to gaining knowledge and experience in the following main areas: market assessments of environmental requirements in export trade, environmental audits and diagnoses, Environmental Management Systems (EMS) possibly leading to certification (e.g., under ISO14000 standards), Cleaner Production (CP) techniques, Ecoefficient Practices, and Total Cost Accounting. The cost-sharing grant scheme will be administered through an external management contract, following specific eligibility criteria and an Operational Manual. Each individual proposal would be less than US$175,000, of which a maximum of 50% may qualify as a grant. This would be in the same range as the cost-shared grant scheme of the ongoing Export Development Project, which served as a model for the processes, limits, contracting procedures, SME participants, and other operational aspects that would be reflected in the proposed project's Operational Manual. The core of this component is to start with a set of demonstration projects for the design and implementation of environmental management systems in selected firms to be replicated elsewhere in Argentina. The demonstration projects, each involving 10 to 15 firms (SMEs), will be based on a "learning by doing" approach, where systems and techniques are implemented in the participating firms by the firms' own staff through stages of formal training. In order to maximize replicability, each of these "pilot groups" would represent different organizational characteristics. For example, some pilot groups would belong to SME chambers of commerce, or business development agencies, or volunteer independently as a group. Other pilot groups would be part of the supplier chain for larger industries who already have a corporate environmental policy and who would lead the pilot program. These large firms, who would not be beneficiaries of the grant scheme, would contribute financial or in-kind resources, as well as services. In order to maximize the ultimate economic benefit of environmental improvements when the programs are replicated elsewhere, the pilot groups will be selected from highly polluting industrial activities, such as leather and tanning, food processing, metal and machine parts, petroleum and other industries generating significant amotnts of waste and effluents. In addition, the following technical assistance will be provided: * Development and promotion of EMS and environiental certification programs by SRNyDS, in collaboration with the Industry Secretariat and the Secretariat for Small and Medium Industries e Institutionalization of EMS and lessons learned from the pilots by: (i) strengthening curricula of technical institutes to support EMS; (ii) building and sustaining a cleaner production network; and (iii) establishing international partnerships with universities and/or research institutes * Provision of advisory services to promote sector-specific pollution prevention techniques in industries, such as leather/tanning, food processing, tourism and/or petroleum induistries, possibly including Cleaner Production centers where justified. B. CAMPANA-ZARATE: INTEGRATED MANAGEMENT OF ENVIRONMENTAL QUALITY The purpose of this component is to demonstrate models of cooperation between public and private stakeholders for addressing urban aind industrial contamination oni the municipal level, in the municipalities of Campana and ZArate. It will be considered the first pilot under the Partnerships for Pollution Management component (as described above in component A) and is composed of the following three subcomnponents: Technical Assistance/lInvestments for Municipal Environmental Management The objective of this subcomnponent is to improve the capacity of local institutions to address pollution by strengthening environmental quality monitoring, information maanagement, regulatory enforcemenit, and communication/negotiation skills. The subcomponent will finance the following: * Completion, dissemination and regular updating of environmental diagnoses * Design and implementation of communications and outreach strategy * Execution of technical studies and implementation of their recommendations  20 * Design and implementation of training program for municipal staff * Civil works, goods and services for upgrading laboratory facilities Inter-ated Pollution Manaeement for Local River Basin This subcomponent will demonstrate integrated pollution management in the context of a local river basin (the system is composed of the three arroyos of Pesqueria, de la Cruz, and Portrero) through a participatory process involving the primary polluters. This subcomnponent will finamce the following: Technical Assistance: * Water quality baseline study, monitoring, and modeling to assess the current environmental conditions of the basin and define alternative water quality improvements scenarios * Provision of a professional facilitator (support to local and provincial governments to formalize pollution load reduction targets and compliance schedules with private stakeholders, and to monitor compliance) * Advisory services for evaluation and follow-up Support for Industry-Led Initiatives in Pollution Management This subcomponent intends to develop skills and draw lessons from a model of industrial pollution management and transfer such skills to small firms in the supply chain. The project will provide the leverage to promote environmental improvements through industrial initiatives on a collective basis. This subcomponent will finance the following: Technical Assistance: * Provision of a professional services for pilot evaluation - Comprehensive training program on EMS and assistance to SMEs in EMS implementation - Advisory services, to help design and implement other industry-led activities, such as a program to promote waste minimization in the region, and improvements in port maintenance C. GRAN BUENOS AIRES: AIR QUALITY MANAGEMENT This component is designed to establish the technical base and institutional framework for urban air quality management in the Gran Buenos Aires region and to lay the foundation for the teclnical infrastructure needed for the development of effective regulation of sources of air emissions in Gran Buenos Aires. Air Quality and Noise Monitoring Network T'his subcomponent would complement the noise monitoring network for the City of Buenos Aires, to be financed under the Buenos Aires Urban Transport Project, by providing a limited number of new air quality monitoring stations and equipment in the greater metropolitan area. It would provide data on the levels and distribution of air and noise pollution in the urban periphery, including Avellaneda and Quilmes which are affected by significant levels of air pollution. Motor Vehicle Emission Laboratory and Certification Center This subcomponent would finance the establishment of a motor vehicle emissions and testing laboratory and an associated technical center to be formed witlhin the Instituto Nacional del Agua y Ambiente (INA), through modification of the existing building and acquisition and operation of modem equipment. The laboratory would check and confirm compliance with emission standards for new vehicles manufactured in Argentina; sample and measure emissions from vehicles in use to improve emissions factor estimates and to monitor the effectiveness of emission control programs. The associated technical center would carry out research and regulatory development on mobile source emission issues, and would serve as a technical resource for SRNyDS in developing emission control policies and air quality and noise management plans. Institutional Framework for the Preparation of an Integrated Air Oualitv Management Plan for Gran Buenos Aires This institutional strengthening technical assistance will focus on developing and implementing the institutional framework that is a prerequisite to preparing a comprehensive air quality management plan for Gran Buenos Aires. This subcomponent includes special studies in support of vehicle emission control and air quality and noise management programs. Strengthenine of Vehicle Inspection and Maintenance (IIM) This subcomponent will provide: (i) technical assistance to review existing l/M programs anid develop recommendations; and (ii) equipment for I/M oversight and on-road emissions enforcement.  21 D. MUNICIPAL and REGIONAL POLLUTION MANAGEMENT This component will test and demonstrate innovative pollution management instruments on the municipal level, initially in the municipality of Puerto Madryn (Chubut Province), to be replicated in the Patagonia region, where cross-media pollution is threatening the natural resource base, marine biodiversity, and tourism. This component is associated with a proposed GEF Project for Coastal Contamination Prevention and Sustainable Fisheries Management. Puerto Madrvn Municipal Management Component This subcomponent will provide the following studies and technical assistance to strengthen the pollution management capabilities and address the solid waste priority problem of the Municipality of Puerto Madryn. Studies and TechnicalAssistance: * Preparation of a integrated environmental diagnosis of the miunicipality (including air quality monitoring data) * Pilot program to train tourism operators on pollution prevention practices Provision of training to municipal officials (e.g., strengthening environmental enforcement) * Provision of training to municipal staff (e.g., strengthening environmental monitoring and technical capacity) * Wastewater management studies * Preparation of study on containment and closing old urban solid waste site * Establishment of an Environmental Information Network * Environmental education program Investments: Information systems and monitoring equipment * Containment and closure of solid waste site Pataeonian Coastal Zone Component This subcomponent will provide the following technical assistance with respect to improving pollution management in the coastal zone of Patagonia: Technical Assistance: * Carry out environmental diagnoses, including environmental monitoring and testing, with a focus on marine pollution issues in selected coastal areas * Identify priority investment options, particularly with respect to solid waste and land-based contamination, and their environmental impacts * Promote regional approaches to pollution management, iniclutdinig participatory processes REPLICATION PLAN This section provides information on the concrete prospects for scaling-up the pilots described above. This replication plan is not financed from the project. The national component and the Campana-Zarate component will start with a pilot involving a large industry and small/medium enterprises (SME) supplier chain located in the Campana and Zarate municipalities, which already has an organized and proactive environmental grouping in industry (the Inter-industrial Committee for Environmental Conservation in Campana and Zarate, or CICACZ) with an interest in EMS programs, possibly leading to ISO14001 certification. This pilot could be replicated in many congested and contaminated urban/industrial areas in the Greater Buenos Aires area and possibly neighboring provinces (Santa Fe, C6rdoba), by leveraging the private initiatives of CICACZ members, the Business Council for Sustainable Development, the Argentine Industrial Council, the Buenos Aires Province's Institute for Enterprise Development, and others. The Bank would also draw upon work already being done in Guadalajara, Mexico, and under the Conservation and Rehabilitation Project in Brazil with the Companhia Vale do Rio Doce, which is a major effort by one of Brazil's largest companies to obtain ISO 14000 certification throughout its operations.  22 For the air pollution component, the prior sector work indicates C6rdoba, Mendoza, Santa Fe and others as the pext group of cities with air pollution problems, where the airshed quality management approach (which considers policy and strategy aspects and not just pollution control technologies) could be replicated. Innovative participatory approaches for developing the Gran Buenos Aires Air Quality Management Plan will be piloted, from which lessons will be applied to other, perhaps more difficult, situations. For the municipal and regional pollution management component, the integrated pollution management approach could be replicated in the group of Patagonian coastal municipalities with similar problems as Puerto Madryn; the group of Andean municipalities equally dependent on tourism but impacted by pollution problems from solid wastes and liquid effluents discharged into lakes and possibly affecting groundwater; numerous municipalities in the provinces of Neuquen, Rio Negro and Mendoza affected by petroleum contamination; the municipalities directly impacted by water pollution from the sugar industry which is discharging liquid and solid wastes directly into the Rio Sali-Dulce; and so forth. The ongoing Provincial and Municipal Development Projects both have "Environmental Projects" and "Solid Waste Management Projects" as eligible categories for funding under these two operations.  23 Annex 3 Argentina Pollution Management Project Estimated Project Costs Project Component Local Foreign Total ----------- US$ million --- A. Public-Private Partnerships for Pollution Management1 8.2 8.8 17.0 Strengthening of SRNyDS's Role in Pollution Management Environmental Management Systems (EMS), Ecoefficient Practices and Certification Programs for Industry, supported by Cost-Sharing Grant Program B. Campana-ZArate: Integrated Management of Environmental Quality 1.1 0.7 1.8 Technical Assistance for Municipal Environmental Management Integrated Pollution Management for Local River Basin Support for Industry-Led Initiatives in Pollution Management C. Gran Buenos Aires: Air Quality Management2 6.9 7.7 14.6 Air Quality and Noise Monitoring Network Motor Vehicle Emissions Laboratory and Certification Center Gran Buenos Aires Air Quality Management Plan Strengthening of Vehicle Inspection and Maintenance Program D. Municipal and Regional Pollution Management 0.3 0.9 1.2 Puerto Madryn Municipal Management Component Patagonian Coastal Zone Component TOTAL BASELINE COSTS 16.5 18.1 34.6 Physical Contingencies 0.3 0.4 0.7 Price Contingencies 0.3 0.4 0.7 TOTAL PROJECT COST 17.1 18.9 36.0 1 Of US$8.2 million in local costs, US$6 million is the local cost of Cost-Sharing Grants to be financed by private beneficiaries. 2 Of US$ 14.6 million total cost, approximately US$9.3 million is the cost of operation and maintenance, technical assistance and studies to be financed from the revenues of INA.  24 Annex 4 Argentina Pollution Management Project Financial Summary Years Ending December 31 (US$, 1998 base year) Implementation Period 1998 1999 2000 2001 2002 2003 Project Costs Investment Costs 0.2 8.0 5.5 6.5 7.2 2.0 Recurrent Costs 0.1 0.6 1.1 1.3 1.6 1.9 Total 0.3 8.6 6.6 7.8 8.8 3.9 Financing Sources (% of total project costs) IBRD/IDA 67% 70% 58% 45% 39% 28% Government 33% 28% 32% 29% 31% 53% Beneficiaries 2% 10% 26% 30% 19% Total 100% 100% 100% 100% 100% 100%  25 Annex 5 Argentina Pollution Management Project Procurement and Disbursement Arrangements Procurement Project Costs by Procurement Arrangements (Table A) Consultant Selection Arrangements (Table Al) Thresholds for Procurement Methods and Prior Review (Table B) Disbursement Allocation of Loan Proceeds (Table C)  26 Annex 5, Table A: Project Costs by Procurement Arrangements (in US$million equivalent) Expenditure Category Procurement Method Total Cost (including contingencies) ICB NCB Othera N.B.F 1. Works 0.9 0.1 1.0 (0.0) (0.0) (0.0) 2. GoodsandEquipment 5.2 0.8 0.2 6.2 (4.8) (0.6) (0.0) (5.4) 3. Consultants' Servicesb 10.1 10.1 (6.6) (6.6) Cost-Sharing Grant 12.1 12.1 (6.0) (6.0) 4. Miscellaneous Workshops' 0.5 0.5 Operating CostSd 6.1 6.1 Total 5.2 1.7 22.5 6.6 36.0 (4.8) (0.6) (12.6) (18.0) Note: ICB = International Competitive Bidding NCB = National Competitive Bidding N.B.F. = Not Bank-financed Figures in parenthesis are the amnounts to be financed by the Bank loan/IDA credit a Includes three quotations for civil works, shopping for goods and equipmenit. and consultant services. b Services should be procured in accordance with World Bank, Guidelines: Selection and Employment ofJ('onsultants by World Bank Borrowers (Washinlgtoni, D.C., Januiary 1997. Revised September 1997). c Includes expenses incurred by Project Executioni Unit. d Includes Project Execution Unit's managemiient of the Pollultion) Managemenit Project and operating costs and maintenance of investments under the Air Quality Maniagemiient component.  27 Annex 5, Table Al: Consultant Selection Arrangements (.n US$nmillion equivalent) Selection Method Total Cost Consultant Services (including Expenditure Category contingencies) QCBS QBS SFB LCS CQ Other N .B .F.______ A. Firms 7.5 0.8 0.6 8.9 (4.3) (0.8) (0.6) (5.7) B. Individuals 1.2 1.2 (0.9) (0.9) Total 7.5 2.0 0.6 10.1 (4.3) (1.7) (0.6) (6.6) Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultant Guidelines), Commercial Practices, etc. N.B.F. = Not Bank-financed Figures in parenthesis are the amounts to be financed by the Bank loan.  28 Annex 5, Table B: Thresholds for Procurement Methods and Prior Review Expenditure Contract Value Procurement Contracts Subject to Category (Threshold) Method Prior Review / Estimated Total Value Subject to Prior Review US $ thousands US $ millions 1. Works <1,000 NCB First two <350 Three quotations None 2. Goods >350 ICB/NCB All 100 to 350 ICB/NCB First two contracts <100 Shopping None 3. Services Firms >100 QBS/CQ All <100 QBS/CQ Review of TORs only Individuals >50 CQ/Other All <50 CQ Review of TORs only Procurement of works, goods and services, as well as contracting of consultants with Bank funds, would be carried out in accordance with Guidelines for Procurement under IBRD loans and IDA credits (January 1995, revised September 1997) and the Guideliies for the Use of Consultanits (January 1997, revised September 1997). Procurement would be carried out at the central level by the Project Execution Unit. The Project Execution Unit will include a procurement officer whose main responsibility will be to prepare and to: (a) submit to the Bank all procurement documents which will require Bank's prior review; (b) carry out any procurement at the central level; (c) coordinate and monitor any procurement carried out by each executing unit; and (d) prepare and submit to the Bank at the beginning of each calendar year a detailed procurement schedule. The appointment of the procurement officer will be done in consultation with the Bank. Civil Works. The project would finance civil works for: (i) new laboratory facilities under the Campana- Zarate Municipal Environmental Management component; (ii) air quality monitoring facilities and modifications of existing plant under the Gran Buenos Aires Air Quality Management component; and (iii) monitoring equipment and closure of a solid waste site under the Municipal and Regional Pollution Management component. It is estimated that about US$1.0 million of the project's costs would be allocated to civil works. Goods. The project would finance goods and equipment for: (i) new laboratory facilities in Campana-ZArate; (ii) an air quality monitoring network, a motor vehicle emissions laboratory, and strengthening of a vehicle inspection and maintenance program; and (iii) environmental monitoring and testing facilities in Puerto Madryn. It is estimated that about US$6.2 million of the project's costs would be allocated to goods and equipment. Consultant Services. The project would finance consulting services, including training and studies (about US$10. 1 million) and the cost-sharing grant programs (about US$12.1 million), for a total estimated US$22.2 million.  29 Annex 5, Table C: Allocation of Loan Proceeds Expenditure Category Amount in Financing US$million Percentage 1. Partnerships for Pollution Management a. Consultants' Services 4.0 100% b. Cost-Sharing Grant Scheme 6.0 50% of amounts disbursed 2. Campana-Zarate: Integrated Management of Enviromnental Quality a. Goods and Equipment 0.2 100% (net of taxes) b. Consultants' Services 1.4 100% 3. Gran Buenos Aires: Air Quality Management a. Goods and Equipment 4.8 100% (net of taxes) b. Consultants' Services 0.5 100% 4. Municipal and Regional Pollution Management a. Goods and Equipment 0.4 100% (net of taxes) b. Consultants' Services 0.7 100% Total 18.0  30 Annex 6 Argentina Pollution Management Project Project Processing Budget and Schedule A. Project Budget (US$000) Planned Actual (At final PCD stage, reviewed Feb. 1997) Staff time, travel, consultants US$132 US$127 (to date) B. Project Schedule Planned Actual (At final PCD stage) Time taken to prepare the project (months) 9 months 9 months First Bank mission (identification) 06/1996 06/1996 Appraisal mission departure 09/1997 11/30/1997 Negotiations 02/1998 12/17/1997 Planned Date of Effectiveness 05/19/1998 05/1998 (est.) Prepared by: Secretariat of Natural Resources and Sustainable Development (SRNyDS) Preparation assistance: Japanese PHRD Grant TF029189; Second Japanese PHRD Grant TF027062 Bank staff who worked on the project included: Fernando Maunibog (Team Leader, Principal Environmental Specialist), David Hanrahani (Senior Environmental Specialist), Laura Tlaiye (Environmental Specialist), Joachim von Amsberg (Environmental Economist), Michelle Keene (Environmental Specialist), Angela Annstrong (Operations Assistanit), Renan Poveda (Consultant), Rocio Sarmiento (Staff Assistant), Ditas Ledesma (Staff Assistant)  31 Annex 7 Argentina Pollution Management Project Documents in the Project File Ahmed, Kulsum. 1997. Guadalajara Environmental Management Pilot Non-Lending Service (Concept Paper, Mission Back-to-Office Reports, and other Memoranda). Washington D.C.: The World Bank. Casa de la Paz; Participa; Practica, NGO's. 1995. Manualfor Public Participation in the Environmental Impact Evaluation Process. Santiago, Chile. Clichevsky, Nora; Pirez, Pedro. 1993. Garbage in the C.ity of Buenos Aires - Research Proposal. Buenos Aires: Center for Social and Environmental Studies. Interindustrial Committee for the Environmental Conservation of Campana and Zarate-CICACZ. 1996, Program of Environmental Improvementfor the Campana-Zdrate Region, Proposal of Activities. Campana, Argentina: CICACZ. Dixon, John; Kunte, Arundhati; Pagiola, Stefano. 1996. Environmental Performance Indicators, A First Edition Note. Washington D.C.: Environment Department, The World Bank. Engine, Fuel, and Emissions Engineering Incorporated. 1997. Preparation of the Air Quality Component of the Argentina Pollution Management Project: Inception Report (June 2); Task 2 Report - Emission Inventory and Preliminary List of Control Measures (August 2); and Summary of the Air Quality Component (December 17). Sacramento, California. Fundaci6n Patagonia Natural. 1997. Preliminary Diagnosis of the Environmental Impact of Tourism Activities in Puerto Madryn, Chubut, for the Argentina - Pollujtion Management Project. Puerto Madryn, Argentina. Fundaci6n Patagonia Natural. 1997. Final Report - Participation Plan for the Argentina- Pollution Management Project. Puerto Madryn, Argentina. Gidhagen, Lars. 1997. The Air Quality Situation in Gran Buenos Aires (first report) and Campana and Zcrate (second report), Argentina - A Diagnostic Study Including Recommendations on Future Air Quality Monitoring. Final Report for the Pollution Management Project. Stockholm: Swedish Meteorological and Hydrological Institute. National Commission of the Environment (CONAMA) - Metropolitan Region. 1997. Santiago Cleans the Air of Santiago: Annex Document to the Plan preparedfor the Participatory Process for the - Decontamination Plan of Santiago. (With the collaboration of the Government of the Metropolitan Region). Santiago, Chile: CONAMA. Pirez, Pedro; Gamallo, Gustavo. 1994. Private Garbage, Public Service - Waste in Two Argentineant Cities. Buenos Aires: The Foundation of Science and Man, Editorial Center for Latin America.  32 Rovere, Marta Brunilda. 1997. Environment and Puiblic Health: (Compilation qf C(ommented Case Law. Buenos Aires: Interdisciplinary Center for Studies on Latin American Development. Konrad Adenauer Center. Sabsay, Daniel Alberto; Tarak, Pedro. 1995. (Community Participation and Environmental Management: Public Audits and Local Government. Buenos Aires: Environment and Natural Resources Foundation, FARN. Wells, Richard. 1997. Reportfrom Argentina Trip (including information on: Objectives and Structure for a Supply Chain Environmental Management Systems (EAM) Training (Course; TeachingMaterialsfor the EMS Training Course; The Relationship between FMSand Cleaner Production; and Human Infrastructure Needs to Implement Government/Industry Environmental Partnerships). Lexington, Massachusetts: The Lexington Group. The World Bank. 1995. Argentina - Managing Environmental Pollution: Issues and Options, Volumes I and II. Environment, Rural and Socially Sustainable Development Sector Unit, Latin America and the Caribbean Region, Washington D.C. The World Bank. 1997. Pollution Prevention and Abatement Handbook, Parts I, II, and III. Washington D.C. * Developing a (7ulture of Industrial Environmental Compliance; * Pollutant Release and Transfer Registers; * Implementing (leaner Production; and * Environmental Management Systems and ISO 14000.  33 Annex 8 Argentina Pollution Management Project A. Statement of IBRD Loans and IDA Credits in Argentina (as of December 10,1997) Difference Between Original Amount in USS Millions enxpectead ad actual Loan or Fiscal disbursements al Project ID Credit Year Borrower Purpose IBRD IDA Cancellat Undisbur No. ions sed Number of Closed Lcans.credits: 53 Active Loans A.R-PE-596L IBRD 28540 1987 SEGBA SEGBA V 276.00 0.00 0.00 67.07 67.06 AR-PE-6D'D9 IBRD 32970 1991 GO-VT OF ARGENTINA INA AG SERVCES&INST DEV 33.50 0.00 0.00 3.31 2.39 AR-PE-597 IBRD 3281: 1991 ARGENTINE REPUBLIC *eTR SUPPLY II 100.00 0.00 0.00 64.84 62.58 AP-PE-5D?5 IERD 328DD 1991 REPUBLIC DF ARGENTINA PRDVIIJC DEV PROJ 200.0; 0.00 3.3? 4?.03 40.01 AR-PE-6D34 IBRD 34603 1992 -GOVERNME NT TAX ADI-IN II 20.00 0.00 0.00 1.82 1.27 AR-PE-5613 IBPD 36110 1993 G_vT OF ARGENTINA INA RD MAINT & REHAB 340.01 0.00 0.00 139.49 114.22 SCT AR-PE-6DS1 IBRD 3521: 1993 ARGENTINA FLOOD 170.00 0.00 0.00 3.18 3.79 REHABI LITATIOIJ AP-PE-6D36 IBPD 3520: 1993 GOVERNMENT YACYRETA II 300.00 0.00 0.00 3.28 3.27 AR-PE-6D62 IBPD 37110 1994 MIN DF ECOND-Nr CAPITAL MKT TA 8.50 0.00 0.00 4.53 4.16 AR-PE-6 25 IBR9 3643D 1994 GOVT OF ARGENTINA IIIA IITNAL CHILD HLTH & 100.00 0.00 0.00 40.07 22.69 N AR-PE-6`1S IED 3877D 1995 ARGENTINE REPUBLIC PROV DEVT II 225.00 0.00 0.Q0 210.79 16.78 AF-PE-696D 0IBr 386D: 1995 G,VT DF ARGENTINA lIUNIC DEVT II 210.00 0.00 .?00 197.30 -1.87 AR-PE-5992 I9RD 37940 1995 GOVT OF ARGENTINA INA SECONDARY ED I 159.?0C, 0.00 ?. 165.80 114.24 AR-PE-4568 IBRD 4D:4D 1996 REP. OF ARGRNTINA H.INSURPACE TA 25.00 0.00 0.00 13.83 .02 AR-PE-4D9`9 IBR0 40:30 1996 REP. OF ARGEtNTINA H. INSURANCE REFORII 100.00 0.?0 0.00 100.00 33.33 ..R-PE-65 D 5 IB 0 3971: 2 996 S ZVT OF ARGENTINA SECONDARY ED 2 115.50 r.?? 0.00 112.50 32.6? AR-PE-3883 IEF9. 396:D 1996 REPUBLIC DF ARGENTINA ENT.EXPORT DV. 38.50 3.30 0.33 32.93 26.57 AP-PE- 3 D49 IBR 3958D 1996 GOrVT OF ARGENTINA PUB.INV.STRENGTH 16.00 0.00 0.00 15.50 5.90 AR-PE-5495 IERD 3957: 1996 SEC.DF SOC.DE:.eT 2FFICE SCCIAL PROTECTION 152.00 0.00 0.00 13.05 7.66 AR-PE-6D4 0IBR 3948: 1996 9OVERNI4ENT FORESTRY'DV 16.00 0.00 0.00 14.82 .82 AR-PE-6D3 2IBR 3931: 1996 REPUB OF ARGENTINA PROVCL HLTH SCTR 101.4' 0.00 0.00 94.38 28.29 DEV AP-PE-6`55 IBR0 3927: 1996 GOVT. DF ARGENTINA IINING SCTR DEVT 31.?: 0.00 3.00 17.00 -1.30 AR-PE-40 94 IBRD 3926: 1996 REPUBLIC OF ARGENTINA BAINK REFORII 5??.0 0.00 3.00 166.0: 166.0 AR-PE-34D91 IB9R 3921: 1996 REP DF ARGENTINA HIGHER ED REFOPI 165.9: 0.00 D.00 147.35 68.18 AR-PE-49268 IBRD 41951 199 ARGENTINE REPUBLIC S_C.PROTECT.2 200.00 0 0.0D.39 175.00 8.34 AR-PE-43418 IBRD 4168: 1997 REPUBLIC OF ARG AIDS PREJ.&STD CTRL 15.10, 0.00 C. 15.0?o i 1.75 AR-PE-6359 IBRD 4164: 1997 ARENTINE REPUBLIC lITL.CHD.HTH.2 10.39 0.00 J.33 103.00 .34 AR-PE-39584 IBRD 4163: 1997 GOVT OF ARGENTINA B.A.URB.TSP 203.?0 0.00 ?.35 200.00 3.34 AR-PE-6? 20IBRD 4150: 1997 GIA PROV AG DEVT I 125.00 0.00 125.00 2.60 AR-PE-46821 IBRD 41311D 1997 GOVT.OF ARG PENSION TA 20.?0 0.00 0..0 16.71 -.94 AR-PE-6052 IBRD 41171' 1997 GOVT OF ARGENTINA FLOOD PROTECTION 200.00 0.00 0.00 200.00 2.68 AR-PE-44445 IBR2 41160 1997 REPUBLIC DF ARGENTINA PROV.PENSION1 301.00 Q0.0 0.00 75.00 25.00 AR-PE-598D IBR9 40931D 1997 GOVT OF ARGENTINA PRSV ROADS 300.0: ?.?0 3.3? 3Q0.0 20.33 AR-PE-4Q808 2990 40850 1997 GOA N.FORESTVPROTC 19.50 0.? ?.?00 19.13 -.24 AR-PE-6??'6 IBRD 4221: 1998 MIN. nOF ECNOMrf P.REFI!TUCU1MAN% 13?.00 0.?? 0.00 1?0.?0 -4.34 AR-PE-51694 IBRD 42201 1998 GOVERNMENT P.RF14(S.JUANJ) 50.00 0.00 0.00 50.00 0.00 AR-PE-51693 IBRD 42190 1998 GOVERNIMENT P.RFEM(SALTA) 75.00 0.00 0.00 75.00 0.00 AR-PE-51695 IBRD 42180 1998 GOVERNMENT P.RFM(R.NEGRO) 75.00 0.00 0.00 75.00 0.00 AR-PE-6041 8BRD 42120 1998 GOVERNMENT SMALL FARMER DV. 75.00 0.00 0.00 75.00 -.04 Total 5,286.90 0.00 0.00 3,269.68 877.48  34 Active Loans Closed Loans Total Total Disbursed (IBRD and IDA): 2,01 6,721.56 8,738.79 of which has been repaid: 18 2,957.65 3,143.65 Total now held by IBRD and IDA: 5,10 3,765.57 8,866.47 Amount sold 12.79 12.79 Of which repaid 12. 79 12.79 Total Undisbursed : 3,26 1.64 3,271.32 a. Intended disbursements to date minus actual disbursements to date as projected at appraisal. Note: Disbursement data is updated at the end of the first week of the month.  35 B. Statement of IFC's Committed and Disbursed Portfolio As of 30-Sep-97 (In US Dollar Millions) Conmitted Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1960 Acindar 37.50 0.00 25.00 15.56 12.50 0.00 25.00 15.56 1977 Alpargatas 25.38 6.05 6.37 93.43 20.38 6.05 6.37 79.93 1978 Minetli 12.71 0.00 10.00 32.56 10.09 0.00 10.00 24.71 1987 BGN-TBR .18 0.00 0.00 0.00 .18 0.00 0.00 0.00 1987 BGN-Bolland .22 0.00 0.00 0.00 .22 0.00 0.00 0.00 1987 BGN-Flichman .17 0.00 0.00 0.00 .17 0.00 0.00 0.00 1987 Terminal 6 19.84 0.00 0.00 5.96 9.84 0.00 0.00 5.96 1987 BRLP 9.64 0.00 0.00 1.27 2.11 0.00 0.00 1.27 1988 Bunge y Born 3.72 0.00 0.00 28.07 3.72 0.00 0.00 28.07 1989 BGN-Algodonera .27 0.00 0.00 0.00 .27 0.00 0.00 0.00 1989 BGN-Fenum .83 0.00 0.00 0.00 .83 0.00 0.00 0.00 1989 BGN-FRIGOTOBA .13 0.00 0.00 0.00 .13 0.00 0.00 0.00 1989 BGN-Genaro .68 0.00 0.00 0.00 .68 0.00 0.00 0.00 1989 BGN-Interpack .25 0.00 0.00 0.00 .25 0.00 0.00 0.00 1989 BGN-Parafma .63 0.00 0.00 0.00 .63 0.00 0.00 0.00 1989 BGN-Willmor .68 0.00 0.00 0.00 .68 0.00 0.00 0.00 1989 ROB-COMESI .28 0.00 0.00 0.00 .28 0.00 0.00 0.00 1989 ROB-Fracchia .14 0.00 0.00 0.00 .14 0.00 0.00 0.00 1989 ROB-INTA .28 0.00 0.00 0.00 .28 0.00 0.00 0.00 1989 Banco Frances 43.23 0.00 0.00 .86 6.94 0.00 0.00 .86 1990 CIP 0.00 .08 0.00 0.00 0.00 .08 0.00 0.00 1990 Petroken 21.82 0.00 5.00 4.80 21.82 0.00 5.00 4.80 1991 BCA 1.57 0.00 0.00 2.00 1.57 0.00 0.00 2.00 1991 ROB-Alimenticia .14 0.00 0.00 0.00 .14 0.00 0.00 0.00 1991 ROB-Emprigas .19 0.00 0.00 0.00 .19 0.00 0.00 0.00 1991 ROB-Guilford .13 0.00 0.00 0.00 .13 0.00 0.00 0.00 1991 ROB-Interpack .17 0.00 0.00 0.00 .17 0.00 0.00 0.00 1991 ROB-Longvie .34 0.00 0.00 0.00 .34 0.00 0.00 0.00 1991 ROB-Mendoza .19 0.00 0.00 0.00 .19 0.00 0.00 0.00 1992 FEPSA 8.05 0.00 0.00 8.80 8.05 0.00 0.00 8.80 1992 OleaginosaOeste 6.87 0.00 5.00 10.27 6.87 0.00 5.00 10.27 1992 Rioplatense 5.33 1.00 0.00 1.67 5.33 1.00 0.00 1.67 1992 San Jorge 0.00 27.00 0.00 0.00 0.00 0.00 0.00 0.00 1992 Malteria Pampa 12.79 0.00 1.00 11.91 12.79 0.00 1.00 11.91 1992 Bridas 40.32 10.00 15.00 69.22 40.32 10.00 15.00 69.22 1993 Argentina Equity 0.00 2.93 0.00 0.00 0.00 2.93 0.00 0.00 1993 NuevoCentral 6.88 3.00 0.00 11.25 6.88 3.00 0.00 11.25 1993 Yacylec 8.25 5.04 0.00 27.55 8.25 5.04 0.00 27.55 1993 Molinos 0.00 5.55 0.00 0.00 0.00 5.55 0.00 0.00 1994 Aceitera General 15.00 10.00 0.00 0.00 15.00 10.00 0.00 0.00 1994 BGN 12.00 0.00 3.00 0.00 12.00 0.00 3.00 0.00 1994 LBAR 0.00 1.17 0.00 0.00 0.00 .64 0.00 0.00 1994 LBAV 0.00 3.62 0.00 0.00 0.00 3.62 0.00 0.00 1994 Quilmes 11.86 0.00 0.00 10.00 11.86 0.00 0.00 10.00 1994 EDENOR 17.88 0.00 15.00 77.42 17.88 0.00 15.00 77.42 1994 Aguas 73.59 7.00 0.00 239.61 73.59 7.00 0.00 239.61 1994 La Maxima 0.00 14.39 4.00 0.00 0.00 12.12 3.96 0.00 1995 Banco Roberts 0.00 0.00 20.00 0.00 0.00 0.00 20.00 0.00 1995 CEPA 11.67 0.00 0.00 3.00 11.67 0.00 0.00 3.00 1995 Kleppe/Caldero 5.64 0.00 0.00 0.00 5.64 0.00 0.00 0.00 1995 Mastellone 35.71 0.00 0.00 28.00 35.71 0.00 0.00 28.00 1995 Nahuelsat 30.00 5.00 0.00 0.00 30.00 5.00 0.00 0.00 1995 SanCor 20.00 0.00 20.00 27.00 20.00 0.00 20.00 27.00 1995 Socma 22.92 0.00 0.00 55.00 22.92 0.00 0.00 55.00 1995 SIDECO 0.00 15.00 0.00 0.00 0.00 15.00 0.00 0.00 1995 Tenninales Port. 9.50 2.00 0.00 0.00 8.50 2.00 0.00 0.00 1995 Tower Fund 0.00 15.73 0.00 0.00 0.00 4.68 0.00 0.00 1995 Tower Fund Mgr 0.00 .14 0.00 0.00 0.00 .04 0.00 0.00 1996 Banco Galicia 30.00 0.00 0.00 200.00 30.00 0.00 0.00 200.00 1996 Bansud 25.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1996 Brahma- ARG 18.50 0.00 0.00 33.00 18.50 0.00 0.00 33.00 1996 CAPSA 12.00 0.00 5.00 33.00 12.00 0.00 5.00 33.00 1996 Grunbaum 8.00 0.00 2.00 5.00 8.00 0.00 2.00 5.00 1996 MBA 0.00 .16 0.00 0.00 0.00 .16 0.00 0.00 1996 Neuquen Basin 0.00 26.40 0.00 0.00 0.00 18.56 0.00 0.00 1996 Refisan 20.00 0.00 0.00 30.00 20.00 0.00 0.00 30.00 1996 Transconor 25.00 0.00 20.00 210.00 25.00 0.00 20.00 210.00  36 C'omilutted Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Pauic 1996 Zanon 14.00 0.00 6.00 0.00 14.00 0.00 6.00 0.00 1997 FRIAR 10.00 0.00 2.50 7.00 6.47 0.00 2.50 4.53 1997 Guipeba 15.00 0.00 5.00 0.00 15.00 0.00 5.00 0.00 1997 Milkaut 10.00 0.00 10.00 5.00 10.00 0.00 10.00 5.00 1997 T61 10.00 0.00 5.00 0.00 0.00 0.00 0.00 0.00 1997 Vicentin 25.00 0.00 0.00 10.00 25.00 0.00 0.00 10.00 Total Portfolio: 758.07 161.26 184.87 1,298.21 632.10 112.47 179.83 1,274.39 Approvals Pending Commitment Loan Equity Ouasi Partic 1996 AGUAS II - INC 15.00 0.00 0.00 75.00 1997 ARGIE MAE 0.00 .40 0.00 65.00 1997 BANCO DEL SUQUIA 0.00 0.00 10.00 0.00 1996 EDESUR II BLINC 0.00 0.00 0.00 108.00 1996 EDESUR REHAB 40.00 0.00 0.00 80.00 1998 FAID 0.00 5.00 0.00 0.00 1993 FEPSA (II) 0.00 0.00 0.00 4.00 1997 KLEPPE II 6.00 0.00 0.00 0.00 1997 ROBERTS NOA CL 30.00 0.00 0.00 0.00 1997 TGN 11 BLINC 0.00 0.00 0.00 10.00 Total Pending Commitment: 91.00 5.40 10.00 342.00  37 Annex 9 Argentina at a glance Lafin Upper- POVERTY and SOCIAL Amerlca mIddle- rgentina & Carib. Income Deveopment damond- POputIion lSOlm1996 (mons) 35.1 485 479 GNP percat 10 (US0 8,410 3,710 4,540 Life expectancy GNP 1006 (ilns USS) 295.0 1,799 2,173 Averag annual growth, 19904-6 Population X 1.3 1.7 1.5 p G Lsbo to c%) 2.0 2.3 1.8 GN i I Moeet recet eslatel(Nfyearavala sls sea 1989) capita enrodhiut Poveuy headwwut ide (% of piIn) 26 Ubn populaton (X ofbtwpopuaon) 88 74 73 LUfexpectancy d bfl (yea,s) 73 69 69 itmortsy srO ) 22 37 35 Acce to safe w Child tn Vfino (X odchkdxn under 6J. . . A t)a a Acces to safe wate F opo uf*Son) 64 S0 86 IlWAcy (%olppopWIbonaSP15+) 4 13 13 Gos prmnay enrmt (% dsd*d-agepopWaffon) 11I 110 107 A na Male .. .. .. Uppr-midde4ncoe goup KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1076 1988 1985 130 Economic rtoe GDP (bEans USS 52.4 S8.4 280.8 300.5 Grcssdomuestosbw mWGDP 29.4 17.6 18.3 18.5 Opennessdeconomy Exctbfdgoodsand svCeiG P 5.8 11.7 8.5 9.0 Grs domwesc ewMgGDP 29.3 23.1 18.4 18.1 GiOsrntloGaDvGoP 28.4 16.8 17.5 17.2 Curant account balmrceGP -2.5 -1.1 -0.9 -1.3 Interes paymnts/GDP 0.9 5.0 2.1 2.3 Savings lnvesme Toal debU/GP 14.7 57.6 32.0 33.2 Totadebtd sec/xpXfts 44.7 60.1 47A 48.7 Presn vskv dofdebtWGDP 29.5 Present value o debWexports 332.1 Indebtedness 19786 19U5 -96 19ff 1996 109745 (averageannu gmwh) - Argentina GDP 0.6 2.9 -4.6 4.4 5.0 Upper-middle4nowne grup GNP per capia -1.8 2.0 -8.4 2.8 3. Exports of goods nd servIces 51 7.6 26.4 7.4 8.0 STRUCTURE of the ECONOMY 1976 1988 1998 1996 (% of GDP) Growth mtes of output and Invesment I%) AgrIculture 6.6 7.6 7.4 7.1 40 Industry 50.1 39.3 36.0 36.2 30 Manufaduring 38.2 29.7 5 20 . Sevices 43.3 53.1 566. 5.7 0 410 .~91 92 03 94' 9H Private consumption 58.1 72.3 73.3 -20 General government consumption 12.6 .. 9.4 8.5 Imports of goods and services 6.0 6.3 8.5 9.3 GDI G OP 1975-65 1986.96 1995 1998 (average annusl growth) Growth rates of exports and Imports (I% Agriculture 1.6 1.5 2.3 0.3 so Industy -1.5 2.7 4.5 4.9 so Manufacturing -1.6 0.9 Services 2.2 3.3 -3.0 4.6 40 Private consumptilon -8.6 5.7 20 General govemment consumption -6.6 -5.4 0 Gross domestic hivestment -3.5 5.7 -11.9 5.4 -20 Imports of goods and services 2.4 14.5 -14.0 10.0 Gross natonal product -0.3 3.4 -5.1 4.0 xpons Imrts Note: 1996 data we prellmnary estimtes. Figures I Italics are for years other than those speciried. The dImonds show four key indators in the country (in bold) compared with Its income-group average. If data are missing, the darmond vill be hcompte.  38 Argentina PRICES and GOVERNMENT FINANCE 1975 1985 1995 1996 Domec pc Infladon (% (% change) 3,000 Consumer prices 182.6 672.3 3A 0.1 2 Impliit GDP defltor 198.2 618.2 4.5 2.5 2,000 Goveniment finnce s.00 (% of GD) o . _ Current revenue .. .. 16.7 16.5 9 52 U 94 90 9e Currer budet balance . .. -0.2 -1.1 GDPdW. C--PI Overal surplus/defifc .. .. -1.1 -2.4 TRADE 1976 1985 10965 19S5 (millions USSJ Export nd Import levels (rdll. US$) Totl exports (fob) 2,961 8.396 20,964 23.774 25O000 Food ,, , 1,969 2,203 Meat 1,582 1,955 20.000 Manufactures 10,836 12,004 Total imports (cH) 3,947 3,814 20,120 23,733 Food . Fuel and energy a 4 Capit goods. . 4,746 5,647 0 Exportpricelndex(1987-100) .. .. 118 124 9e 91 92 93 94 95 se Import prce index (1987-100) .. .. 115 120 o Exports a imports Termssoftrtde(1987=100) ., .. 102 103 BALANCE of PAYMENTS 1975 1986 1908 199e (mIlIons US$) Cunrent account balance to GDP rato (%) Exports of goods and "Nkcs 3,498 10,039 23,889 27,076 Imports of goods and serv 4,324 5,285 23,826 27,900 Resource balance -826 4,754 63 -824 Net ncome -466 -5,706 -2,941 -3,523 0| Notcurrenttransfers 6 0 432 334 90 S 2 U 3 94 1 99is Currentaccount balance, I2 beforefficial capital transfes -1,286 -952 -2,446 -4,013 Financing iteMs (net) 208 2,200 2,515 231 Changes in net reserves ,078 -1,248 -69 3,782 4 -4 Memo: Reserves including gold (mfl. US$) 848 4,703 15,992 19,774 Conversion nte (local4JS) 3.7E-10 6.0E-05 1.0 1.0 EXTERNAL DE3T and RESOURCE FLOWS 1975 1985 1995 1996 (millions US$) ComposIton of total debt, 1906 (mill. US$3 Total debt outstanding and disbursed 7,723 50,946 89,719 99,701 IBRD 341 700 4.913 5,372 G A IDA 0 0 0 0 10170 4913 C 6131 Total debt service 1,603 6,209 9,732 14,529 D IBRD 43 114 565 608 4473 IDA 0 0 0 0 E 11709 Composition of net resource flows Offcial grants 0 6 36 Oflcialcreditors 59 217 1,411 Private creditors -111 2,350 5,674 Foreign direct investment 0 919 1,319 .. F Portfolio equity 0 0 211 .. 52323 World Bank program Commitments 0 0 2,272 946 A - IBRD E - Bilateral Disbursements 19 144 941 1,077 B-IDA D-Othermultlateral F-Private Principal repayments 17 68 259 282 C-IMF G - Short-termm Net fows 1 75 682 795 1_r Interest payments 26 46 306 326 Net transers -25 30 376 469 Devepment Economrics 8128/97  IBRD 29314 -20' ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~20'- BOLIVIA ( PARAGUAY f , ,San jaIvador ! oP' B R A Z I L- .,e Jujuy P41 SRA I !Salta / ---- S A L TA > --' Formosa! Tuium6n CHACC %, . f TU TCUMA8NSANTIAGO Resistenciat.,_ Posadast\ [ L. ,s X 4