PROJECT INFORMATION DOCUMENT (PID)



PROJECT INFORMATION DOCUMENT (PID)

APPRAISAL STAGE

Report No.: AB4816

|Project Name |Solid Waste Management |

|Region |LATIN AMERICA AND CARIBBEAN |

|Sector |Solid waste management (100%) |

|Project ID |P101279 |

|Borrower(s) |GOVERNMENT OF COLOMBIA |

|Implementing Agency |Ministry of Environment and National Planning Department |

| |Calle 37 No. 8-40 |

| |Bogota |

| |Colombia |

| |Tel: (57-1) 332-3400, Ext. 1194 Fax: NA |

| |lnino@.co |

|Environment Category |[X] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined) |

|Date PID Prepared |May 21, 2009 |

|Date of Appraisal Authorization |December 12, 2008 |

|Date of Board Approval |July 7, 2009 |

1. Country and Sector Background

Waste management in Colombia faces numerous challenges.

A significant proportion of solid waste in Colombia is disposed of inadequately. Colombia’s 1,129 municipalities produce approximately 28,800 tons of solid waste per day. Approximately 35 percent—or 10,000 tons/day—of this waste is generated in Bogotá, Cali, Medellín, and Barranquilla, while medium-sized cities and smaller municipalities generate the remaining 65 percent, or 18,800 tons/day. It is estimated that a large proportion of this waste is being disposed of inadequately in open-air dumps, bodies of water and other environmentally unsustainable sites. Inadequate disposal results in environmental and health problems including surface and groundwater contamination, air pollution, and increased transmission of illness by vectors including flies and rodents. Approximately 40 percent of all municipalities, accounting for 10 percent of all waste generated, currently dispose of solid waste in open-air dumps or other inadequate sites. Although promising, these data seem to overestimate the percentage of urban solid waste being adequately disposed. First, 10 percent of adequately disposed waste is not being disposed of in regional sanitary landfills but rather in interim cells as more formal regional solutions are developed. In addition, verification by the Ministry of Environment, Housing and Territorial Development (MAVDT) of a sample of licensed sanitary landfills and transitory cells has shown that many of them do not operate as such, highlighting the lack of monitoring and control by the regional environmental authorities

Numerous existing landfills will reach capacity over the next five years. The MAVDT estimates that approximately 8 to 10 existing landfills serving important urban areas will reach capacity prior to 2012— including those for Bogotá, Barranquilla, Valledupar, Bucaramanga, Villavicencio, and Pereira, which combined accommodate approximately 7,056 tons/day. Efforts are underway to expand capacity in these facilitates to accommodate additional waste in the short term while arrangements to design, develop, and construct new regional systems are put in place.

Political and cultural challenges persist where regionalization is geographically feasible. Government initiatives to encourage the regionalization of existing municipal solid waste services have identified 130 potential regional landfill projects. In many cases, however, these systems are technically suboptimal due to a series of political, economic, and cultural constraints. Related to the not-in-my-backyard (NIMBY) factor, municipalities with optimal sites for regional landfills have resisted the development of these projects while those with existing landfills that could accommodate regionalization have obstructed disposal from neighboring local governments. In many cases, where “receiving” municipalities are willing to accommodate regionalization, citizen groups have obstructed the expansion of disposal services. Finally, suboptimal regional landfill projects have also been identified and financed through public resources across municipalities with mayors from common or allied political parties.

Professional management through specialized operators has been slow to take hold—particularly in small and medium-sized municipalities. The Superintendencia de Servicios Públicos y Domiciliarios (SSPD) estimates that, of the 1,141 registered services providers in the sector, 536 (47 percent) are municipal departments providing collection and disposal services directly to consumers disproportionately in small local governments. The direct provision of collection and disposal services by the same municipality accounts for 68 percent of those municipalities with less than 10,000 inhabitants, and this number increases to 75 percent in the case of municipalities with less than 2,500 inhabitants. Nearly all direct municipal service provision is characterized by: (a) poor overall commercial and operational management, (b) lack of standard and transparent accounting practices, (c) the inability to apply an adequate tariff structure based on cost studies, and (d) poor service quality and low coverage rates.

Second-generation reform in the sector has had limited traction. In particular, efforts to encourage waste minimization, source separation, and recycling have had limited traction in Colombia. Only 2 percent of all municipalities incorporate some form of formal recycling activity. Efforts to encourage recycling have been driven largely by the public sector—either directly by municipalities or departmental environmental authorities—leading to the construction and failure of a number of recycling plants. The few functioning recycling facilities in the country are run by private sector operators but are not currently profitable due to the absence of source separation in collection systems. Similarly, efforts to encourage waste minimization do not factor as a priority in the current sector policy framework. The Government has been cautious to advance aggressively in these areas of “second-generation” reforms; however, the new National Solid Waste Policy and associated National Advisor for Social and Economic Policy (Consejo Nacional de Política Económica y Social, CONPES) policy paper, currently under discussion, shows that this position is changing. This is one of the main areas that the Government wants to strengthen by working in coordination with municipalities, incorporating the private sector, and facilitating pre-feasibility studies. The focus will be on municipalities with more than 1 million inhabitants—where the scale of the business and an increased probability of having both supply and demand relatively close to decrease transportation costs, increase its viability.

Vulnerable waste pickers depend for their livelihood on open-air dumps. A large—though undetermined—number of waste pickers currently derive their livelihood from open-air dumps. While often well organized, these communities remain highly vulnerable, lack access to basic services, and are frequently subject to exploitative relationships with middlemen who monopolize access to secondary markets for recycled products. It is also estimated that a large and disproportionate number of waste pickers are children. As Colombia moves aggressively to close open-air dumps and commercialize solid waste management, more attention is required to both: (a) the integration of these groups into the formal system; and (b) the development of appropriate social, entrepreneurial, and skills development programs to mitigate the adverse impacts of this transition.

2. Objectives

The project development objective is to improve the quality and coverage of integrated solid waste management (SWM) services in Colombia by ensuring that waste generated by approximately 300,000 consumers is adequately disposed of in sanitary landfills constructed under the Project.

3. Rationale for Bank Involvement

The Bank is well positioned to support the Government of Colombia’s (GoC’s) sector reform program.

First, the proposed project is a central part of the Bank’s regional strategy on solid waste management (SWM), the objective of which is to develop investment operations based on set of basic SWM principles in four main client countries, Argentina, Brazil, Colombia, and Mexico. Argentina’s operations are already being implemented, while those for Brazil and Mexico are at the preparation and identification stages, respectively. These projects share a set of principles that are the foundation of the strategy: (a) strengthening and developing national agencies and regulatory frameworks, (b) strategic planning through the preparation of regional/municipal SWM plans, (c) final disposal regionalization through the implementation of intermunicipal legal agreements, (d) cost recovery and economic sustainability, (e) social inclusion of displaced waste pickers, and (f) promotion of diversion and minimization activities. In this respect, the proposed operation would benefit from a considerable cross-fertilization of experiences from these parallel investments.

In addition, the Bank can leverage its experience in solid waste contracting and best-practice procurement models. This will be particularly useful because the project aims to incubate a regionalization process that will serve as the model for the development of subsequent regional contracts.

Second, The Project aims to support and leverage broad-reaching reforms in the sector including: (a) the promotion of regional integrated SWM systems in contrast to atomized and largely non-sanitary municipal landfills that frequently do not achieve the scale necessary to reach financial and environmental sustainability; (b) the use of a professionalized institutional framework for service provision including the formation of inter-municipal public service companies and the concession of final disposal services to a specialized operator; and (c) the adoption of a cost-recovery tariff regime in participating municipalities. The Project will also develop a framework for the appropriate social and environmental management of regional landfill systems including programs for communication and outreach that can be replicated in systems throughout the country. As such, the relatively modest proposed Bank engagement will have a broad impact in terms of leveraging reform in the sector.

Third, the Bank has also had a deep engagement with the MAVDT in the Environment and Water and Sanitation sectors in recent years that will serve as the foundation for the proposed operation. Specifically, the Bank has supported the implementation of policy reforms in various sectors including SWM through the Sustainable Development Policy Loan (DPL) Program and an associated Sustainable Development Investment loan. The DPL program and associated investment loan have supported the implementation of Decree 838 of 2005, which promoted and facilitated the localization, planning, and operation of SWM and disposal systems, and Resolution 1390 of 2005, which provide the technical guidelines for the closure, restoration, and/or technical transformation of inadequate final disposal sites to sanitary landfills. In addition, these loans have supported the provision of technical assistance to help municipalities implement their PGIRSs and to close open dumpsites. Bank engagement in the water and sanitation sector uses institutional arrangements (that is, the use of specialized operators and fiduciary agents) and instruments for investment screening and prioritization (that is, Planes Departamentales, Ventanilla Única, and Audiencias Publicas) that are highly relevant for the proposed operation.

Fourth, the project presents unique opportunities for linkages on carbon finance. The potential to access the Clean Development Mechanism (CDM) under a programmatic umbrella would enable the Project to have an impact well beyond the four to eight landfills expected to be financed under the operation. The potential for CDM resources would likely reinforce incentives for the sound commercial and technical management of landfills. The linkage would also support improved solid waste final disposal practices such as landfill gas recovery (which requires a well-operated landfill), and composting, where feasible.

Fifth, the proposed project will have a significant impact on the improvement of public health conditions in some of the poorest of Colombia’s municipalities through both the closure of existing open-air dumps and the construction of new landfills.

4. Description

Framework Approach: The project has developed as a “framework” operation under which specific regional landfill investments to be financed will not be identified during preparation. The project has, instead, a defined framework: technical, financial, economic, social, and environmental guidelines that will be applied in the preparation and implementation of proposed investments. The project has also outlined transparent eligibility criteria for the selection of subprojects. As noted elsewhere in this document, Colombia has developed a comprehensive regulatory framework in the sector that in many respects already details technical norms for the screening, development, and implementation of sector investments. The Project will work within this regulatory framework to the greatest extent possible having assessed during preparation that these existing norms meet Bank requirements. In this regard, the team has also appraised the application of existing norms in a sample of two regional landfill operations recently financed by the GoC.

Project Components: The proposed operation will finance three main investment and technical assistance components.

Component 1: Regional Solid Waste Disposal Systems (US$25 million, of which US$20.0 million is Bank financing)

The component would primarily finance the construction of an estimated four to eight commercially viable regional landfills, ranging in size from approximately 40 tons/day to 300 tons/day. It would also finance the construction of transfer stations in selected sites and closing of open-air landfills, principally in areas where investments in new regional landfills are funded under this component. The component would also potentially finance the rehabilitation and expansion of landfill sites that may currently be operating at non-sanitary levels. The rehabilitation and expansion of existing sites has numerous benefits since collection patterns can be maintained and the subprojects are less likely to encounter siting opposition by host communities be locations have already been “impacted” environmentally.

The component would also finance technical assistance for the development of regional landfill subprojects, including engineering designs, Environmental Impact Assessments, social assessments, and other related studies required under the sector regulatory framework and Bank guidelines. The component would also finance activities included under the potential to develop social inclusion, capacity building, and entrepreneurial programs for waste pickers to mitigate the adverse impact on livelihoods caused by the closing of open-air dumps. The component would also finance costs associated with the development and implementation of Resettlement Action Plans (RAPs), which include costs associated with the relocation, and compensation for loss of property in the event such adverse impacts emerge under subprojects.

Component 2: Institutional Strengthening in Solid Waste Management (US$0.7 million of Borrower financing)

The component would finance three key areas of technical assistance as outlined below.

• Strengthening Sector Regulatory Framework and Capacity Building: The component will finance at the national level through technical assistance the review, adjustment, and development of the sector regulatory framework. At the subnational level, the project would finance capacity building for local governments and regional environmental authorities in: (a) elements of the regulatory framework, (b) the tariff regime, (b) use of the Sistema Única de Información (SUI), and (d) technical norms and benefits associated with sanitary landfills.

• Strengthening of Solid Waste Management Planning Systems: The component will finance the updating and strengthening of regional Integrated Solid Waste Management Plans (PGIRS). The planning instruments would focus on: (a) improved diagnostics of solid waste management systems; (b) regional integration of collection, transport, and disposal systems; (c) institutional modernization through the transfer of service provision to professionalized operators; (d) adoption of tariff systems; and (e) the promotion of recycling, waste minimization, and carbon finance practices.

• National Assessment of Recycling Markets and Strategy Framework: The component would finance: (a) a national market and demand assessment for recycling products and associated cost-benefits analyses for recycling, composting, and waste minimization; and (b) the development of a national draft strategy framework for recycling.

Component 3: Project Management (US$0.8 million of Borrower financing)

The component would finance costs associated with project management including goods, works, services, and operating expenses associated with financial audits and midterm and end-project evaluations. The component will also be used to reinforce technical, environmental, community outreach, communications, administrative, and fiduciary capacity within MAVDT.

5. Financing

|Source: |($m.) |

|Borrower |6.5 |

|International Bank for Reconstruction and Development |20.0 |

| Total |26.5 |

6. Implementation

Proposed implementation arrangements are based on experience with three ongoing Bank national and regional operations in Colombia—the Water Sector Reform Assistance Project (Loan 7077-CO), the Water and Sanitation Sector Support Project (Loan 7281-CO), and the La Guajira Water and Sanitation Infrastructure and Service Management Project (Loan 74340-CO). The prevailing policy and legal framework in the solid waste sector in Colombia defines municipalities as the primary entities responsible for service provision with important policy, financing, and regulatory functions being served by MAVDT, the CRA, the Superintendency of Public Services (SSPD), and other key national agencies.

The section summarizes institutional arrangements for the project, which are outlined in greater detail in Annex 6.

Link to Plan Departamental and Audiencias Publicas 2009–2011. The Government has indicated that the project will be financed using US$20.0 million of the fiscal space of Audiencias Publicas 2009–2011. This round of Audiencias will be linked to the implementation of Departmental Plans for Water and Sanitation (Planes Departamentales), which includes solid waste.

As such, loan proceeds to finance investments under Component 1 of the operation will be channeled through MAVDT to a “ring-fenced” project subaccount within a single national-level Patrimonio Autónomo structure set up for all of the Departmental Plans. Audiencias resources committed to each Department will be channeled to a departmental subaccount within this national Patrimonio structure. Each Department will exercise control over these resources through Technical Management Units (Gerencia Tecnica Departamental, GT Departamental) and Project Management Entities (Gestor) appointed by the Department themselves and in coordination with MAVDT based on an agreed departmental investment program.

The Government passed Presidential Decree 3200 on August 28, 2008, under which the technical, fiduciary, and institutional norms and guidelines have been established for the Departmental Plans program. As such, the Government has met a critical condition for Project appraisal. A noteworthy aspect of the decree (Article 7) is that it permits Departments—otherwise the sole entities responsible for the execution of Audiencias Publicas—to delegate contracting responsibility to capable service providers. This provision will be used under the project to enable Empresas de Servicios Públicos (ESP) to manage the contracting of subprojects, as specified in greater detail below.

Borrower and Executing Agencies. The Borrower for the Loan would be the Government of the Republic of Colombia with project execution the responsibility of the Ministry of Environment, Housing and Territorial Development (MAVDT). The Project will not involve the use of specialized project implementation units (PIUs). The proposed operation will be implemented by the Office of Business Management (Dirección de Gestión Empresarial, DGE) within MAVDT under the Vice Ministry for Water and Sanitation, with coordination support from the Office of Multilateral Investment (Oficina de Banca Multilateral, OBM), within the Ministry. A Solid Waste Management Unit (Grupo de Residuos Sólidos, GRS) within DGE will house core technical, fiduciary, social, environmental, and related expertise for project management.

7. Sustainability

The Borrower has demonstrated a strong commitment to a solid waste reform program in the context of which the proposed operation has been developed. The Government approved a National Strategy Framework in June 2008 for the solid waste sector,[1] which outlines a policy and investment program organized around the following priorities: (a) integration of regional solid waste systems to exploit economies of scale; (b) strengthening the regulatory, compliance, and enforcement system including the capacities of decentralized entities; (c) ensuring universal use of the tariff model developed in 2005 to ensure commercial sustainability of solid waste services; (d) closing open-air dumps and deepening the coverage of sanitary landfills; (e) promoting sustainable recycling activities; and (f) promoting the use of a specialized operator model for the management of solid waste services. The proposed operation reinforces many of these core strategy pillars.

The proposed Project has been designed to ensure the sustainability of subproject investments through a careful consideration of environmental, economic, institutional, and social factors. The closure of open-air dumps, emphasis on enforcement capacity, and compliance with environmental standards for the construction of new sanitary landfills within a contiguous market will enhance the environmental sustainability of solid waste services in the regional system. The Project will also encourage the use of the “specialized” operator model for landfill construction and management under a commercially viable tariff regime to ensure the economic and institutional sustainability of investments. The Project will also support a series of measures including the use of hosting fees, public education campaigns, and social inclusion and capacity-building programs for waste pickers to enhance the social sustainability of subproject investments.

8. Critical Risks and Proposed Mitigation Measures

| |Mitigation Measures |Risk After |

|Description of Risk | |Mitigation |

|Country- and Sector-Level Risks | |

|Country Ownership: There appears to be no significant |No major mitigation measures are required at this time at the national level. Nonetheless, |L |

|country-ownership risks for the proposed reform program. |MAVDT will continue to communicate to key political, civic, and private sector stakeholders | |

|The key principles of the reform program all have been |to maintain momentum for the policy agenda. | |

|included in the Plan de Desarollo 2006–2010, which has | | |

|been approved by Congress and the President. These include| | |

|the: (a) closing of open-air dumps; (b) a commitment to | | |

|regionalize and commercialize SWM services; and (c) the | | |

|directing of targeted subsidies as incentives to these | | |

|processes. Nonetheless, political risks at the subnational| | |

|level do exist and are outlined in greater detail in the | | |

|operation-specific risk section below. | | |

|Transparency: Colombia has made substantial progress in |Major amendments to the national procurement law (Law 80) were approved by Congress on June |M |

|improving transparency of public expenditures, |19 2007 and are scheduled to be enacted by the President on July 16, 2007. The reforms, which| |

|establishing a medium-term fiscal framework, and |would go into effect in January 2008, are meant to bring in a modern and sensible approach to| |

|conducting impact evaluations of key government programs. |public procurement by: (a) reformulating the selection processes taking into account the | |

|Public procurement has suffered from longstanding issues |nature of the good or service (not the peso amount); (b) redefining the institutional scope | |

|of lack of transparency and efficiency, but recent reforms|of the law, introducing entities that had no reason to be exempt while removing others that | |

|suggest improvements will be observed in the near future. |operate under market conditions; and (c) establishing an enabling environment for a | |

| |transactional e-procurement platform. The reforms represent a big step forward in the | |

| |selection of consultant services, where the law now makes the “merit-” (read: “quality-”) | |

| |based selection method mandatory for contracting consultant services by virtually all | |

| |government entities. On the other hand, in general procurement, the law made the RUP a | |

| |condition sine qua non for everybody to have the right to submit bids/offers. This is a | |

| |regression compared to the current practice of (as an exception) allowing project | |

| |coordination teams to certify bidder qualification. | |

| | | |

| |Article 20 of the law could have been more explicit in terms of the applicability of the law | |

| |for procurement financed under Bank loans and grants. This might bring about ambiguity in the| |

| |interpretation of this rule by Bank clients. | |

|Systemic corruption: Colombia ranks 59th out of 163 |Improvements in the transparency of government accounting and reporting procedures. At the |L |

|countries in the Transparency International Corruption |subnational level, the Bank engages in tailored institutional risk assessments and takes | |

|Perception Index—ahead of Mexico, but behind countries |special implementation/control arrangements. | |

|like Chile, Uruguay, Costa Rica, and El Salvador. At the | | |

|local level, the ability to detect and control corruption | | |

|varies dramatically across jurisdictions. | | |

|Operation-specific Risks |

|Technical – Pipeline Risk: A risk that the pipeline of |The SWM team within MAVDT has been actively involved in reviewing the findings of the |M |

|investment subprojects is not robust or technically |diagnostic studies for the Planes Departmentales being implemented in 2007–08 and ensuring | |

|suboptimal exists. MAVDT has worked intensively over the |the project proposals identified therein reflect preliminary technical criteria and are | |

|past six months to identify a pipeline of 10 potential |consistent with government policy on regionalization. These diagnostic studies will inform | |

|operations. A reaonable risk exists nonetheless that |the Audiencias Publicas process through which subproject proposals will be nominated by | |

|certain subprojects might not materialize if |municipalities. Under implementation, the project will finance a series of technical studies | |

|municipalities are unable to sustain a willingness to |to assist the Government to further analyze alternatives for regional projects and optimize | |

|cooperate. |the design of currently identified regional SWM systems. TORs for these studies have been | |

| |developed jointly with the Bank during preparation. The Government will also deepen efforts | |

| |through Technical Assistance, training, and public education during project implementation to| |

| |build consensus across municipalities on the utility of achieving greater scale in service | |

| |provision. In parallel, the Government hopes to make operational the program of fiscal | |

| |incentives mentioned above for receiving municipalities. | |

| | | |

| |The project will not finance regional subprojects below a certain tons/day threshold | |

| |identified during preparation for commercial viability. The diagnostic studies referenced | |

|Technical – Commercial Viability Risk: A large number of |above would also ensure that recommended subprojects meet these commercial viability | |

|the potential subprojects previously identified by MAVDT |criteria. The project will also support the Government with TA that would aim to model | |

|in consultation with CARs and municipalities were found |potential regional systems to enhance efficiencies. These measures would ideally mitigate the| |

|too small to be commercially viable regional landfills. A |risk that the Government would finance regional landfills with own-resources that are not | |

|risk that these projects are financed would significantly |commercially viable. | |

|compromise the Government’s overarching objective of | | |

|developing commercially viable regional systems. | | |

| | | |

|Technical – Subsidy Targeting Risk: A risk that the |The Government has not asked the Bank to finance subprojects where one large city or | |

|proposed Central Government subsidy (financed by the |municipality would serve as the main waste generator. These projects are precisely those | |

|operation) would be poorly targeted to support landfill |where there is the greatest likelihood of commercial viability. | |

|projects that are commercially viable and would otherwise | | |

|attract significant interest from private or specialized | | |

|public operators. | | |

|Implementation complexity, capacity, and sustainability: |The ability of MAVDT to develop a strong core team to oversee all aspects of project |S |

|A risk exists that the sheer complexity of implementation |management will be a key factor in mitigating these risks. A core team of nine professional | |

|arrangements including the involvement of departmental |staff is being assembled in the SWM group within MAVDT with diverse technical, fiduciary, | |

|entities and the link through the Planes Departamentales |environmental, social, and M&E-related responsibilities. Key actors in the sector— MAVDT, | |

|and Audiencias window will cause significant delays; |SSPD, CRA, and regional environmental authorities—have demonstrated considerable capacity in | |

|complicate fiduciary, technical, and safeguards |recent years to deliver on key sector priorities, including the design and implementation of | |

|management; diminish transparency; and create |the new tariff regime, closing of over 270 open-air dumps, and the promotion of regional | |

|disincentives for PSP. A related risk is that MAVDT, ESPs,|landfill solutions, among other achievements. The project will rely on the execution capacity| |

|regional CARs, and other key actors fail to develop |of specialized operators—of which there are numerous capable actors in the SWM market. The | |

|adequate capacity to effectively enforce sector regulatory|team will employ intensive supervision and the presence in Bogotá of a team member during the| |

|framework, supervise fiduciary and safeguards management, |first year of implementation to work with the client to ensure that adequate capacity in | |

|and implement investment programs. |MAVDT is built and sustained and to work with the client on the structuring of the initial | |

| |sample of regional landfill investments. Nonetheless, this remains a significant risk. | |

|Disbursement risk: A significant risk exists that the |The project is of an overall moderate size (US$26.5 million), and under Component 1 for |M |

|project will encounter challenges in disbursement given |investment, this will likely correspond to no more than 4 to 8 landfill subprojects. The Bank| |

|the four-year time frame for Project execution (2009–12). |worked with MAVDT prior to appraisal to evaluate the political and technical feasibility of | |

|This risk is particularly acute given the long gestation |the pipeline investments, the results of which are presented in Annex 4. The assessment | |

|period that regional solid waste projects require from |identified projects with a preliminary validation of “political will” through the Audiencias | |

|consensus building to completion. |process scheduled to be completed before the end of calendar 2008. The first six months of | |

| |implementation will involve pre-feasibility and institutional development work by MAVDT on a | |

| |sample of 4 to 8 of the most ready investments. The team, as noted above, will integrate an | |

| |intensive supervision program for the first year of effectiveness and include a field | |

| |presence to support the client in structuring the first sample of investments. | |

|Financial management and procurement: An overall fiduciary|Fiduciary supervision of the project will be performed by the DGE within MAVDT, using |S |

|risk does exist given the complexity of the operation and |existing expertise from within the Ministry’s administrative units. The Bank has a | |

|recent performance of the client (MAVDT) in fiduciary |long-standing engagement with MAVDT across a range of operations; for the ongoing projects | |

|management under the Loans 7077 and 7281, which have |financed with loans 7077 and 7281, that last FM ISR ratings were (MU) and (MS); action plans | |

|received MU and MS ratings during their most recent ISRs. |to improve them have been agreed with the borrower and are being followed through supervision| |

|Component execution through specialized operators not |missions. | |

|familiar with Bank financial management and procurement | | |

|procedures enhances this risk. |The project will, however, finance TA to Specialized Operators in Bank procedures to ensure | |

| |adequate compliance. The DGE’s role will be to strengthen and ensure adequate supervision and| |

| |oversight. | |

|Social and environmental safeguards: A range of potential|The team has assessed prior to appraisal the capacity of MAVDT with respect to safeguards |M |

|environmental and social safeguard risks may exist. These |management—and parallel regulatory agency capacity—and will outline in the Operations Manual | |

|potentially include: (a) limited oversight and technical |capacity requirements. The team has assessed, as part of the ESMF, the capacity of a sample | |

|capacity with MAVDT—and parallel regulatory bodies—is |of operators already operating regional facilities to adequately exercise environmental and | |

|developed to adequately enforce and facilitate the use of |social management practices. This analysis is summarized in Annex 11 and presented in detail | |

|environmental and social mitigation measures; (b) private |in the ESMF and finds that the operators exhibited satisfactory or highly satisfactory | |

|sector operators are unable to meet similar environmental |performance with respect to environmental and social management. A review of site selection | |

|and social management measures; and (c) landfill site |processes in these same cases found a high level of transparency and consultation, with final| |

|selection is based disproportionately on political |site selection decisions largely taken balancing technical/environmental criteria with the | |

|considerations and less on technical and optimal criteria.|willingness of citizens and political leaders. | |

|In addition, a principal social safeguard risk involves | | |

|the rehabilitation of waste pickers. See below for | | |

|description and mitigation measures. | | |

|NIMBY (Not-In-My-Backyard) factor: A sustained and |The project will finance sanitary landfills already included in the Land Development Plans |M |

|deepening NIMBY factor within both municipalities and |(POTs) and that have already gone through the public consultation process. The Government | |

|communities could limit the potential impact of the |recognizes that this risk will require persistent attention—through public education, | |

|regionalization program. The NIMBY factor at the political|incentives, and enforcement. The project will finance a series of public education and | |

|level manifests itself in the unwillingness of |capacity-building activities under Component 2 that aim to change attitudes of public | |

|municipalities with existing landfills that can be |officials and citizens regarding landfills—differentiating commercially and environmentally | |

|scaled-up or with optimal sites for regional landfills to |sustainable landfills from the image of open-air dumps. Second, the Government recognizes the| |

|support such solutions out of concern over receiving large|need to create incentives for municipalities (i.e., hosting fees) to locate regional | |

|volumes of waste from other municipalities. At the social |landfills in their jurisdictions. The National Development Plan 2006–2010 outlines such a | |

|level, communities in host municipalities resist receiving|fiscal incentive framework to be financed out of Central Government transfers. MAVDT aims to | |

|waste from other areas. |operationalize the incentive in 2009. Finally, the Ministry recognizes the need to improve | |

| |enforcement of the regulatory and policy framework as a final resort. Key measures either | |

| |under consideration or implementation by MAVDT, SSPD, and regional environmental authorities | |

| |include: (a) expanding the powers of the Central Government to mandate regional landfill | |

| |solutions, (b) scaling-up efforts to close all open-air dumps, (c) preventing municipalities | |

| |from restricting other municipalities from disposing, and (d) deepening the enforcement of | |

| |sanctions. | |

|Social risks associated with waste pickers: A large—but |The Government is conducting an extensive review of information on waste pickers to develop a|M |

|undetermined—number of waste pickers depend for their |more accurate understanding of the scale and key characteristics of these communities. In | |

|livelihood on open-air dumps. A risk exists that these |addition, the Government has agreed to build social inclusion and livelihood diversification | |

|populations will resist altering their habitual livelihood|programs into the contracts for specialized operators. Prior to the concession, operators are| |

|patterns or be unable to be accommodated within the |evaluated in part based on their ability and willingness to absorb waste pickers into their | |

|framework of commercially managed landfills—leading to |formal operations. Finally, the project will support the Government to develop and pilot a | |

|adverse social outcomes. |series of social and livelihood programs targeting waste pickers. | |

|Intermunicipal cooperation risk: The challenge of |MAVDT will develop and implement a series of capacity-building instruments under the project |M |

|sustaining intermunicipal cooperation is considerable in |to build a deeper understanding within municipalities of the regulatory framework and tariff | |

|the medium term. A risk exists that municipal |regime, including the costs of not entering or exiting a regional SWM system. The Government | |

|collaboration under a regional solid waste management |has also strengthened its commitment in recent years to enforce the closing of open-air dumps| |

|system could break down due to a range of factors |thereby eliminating an option for municipalities to “exit” from regional arrangements. | |

|including political transition, community pressure, poor |Finally, the Government has deepened efforts since January 2007 to universally enforce the | |

|operator performance, etc. |new tariff model that provides a strong incentive to regionalize. | |

|Overall Risk |M |

9. Lessons Learned from Past Operations in the Country/Sector

The Project builds on important lessons from the Bank’s international and regional practice in integrated solid waste management (SWM). The Project is one in a series of regional SWM operations under implementation or preparation in Argentina, Brazil, and Mexico with a common focus on the regionalization of SWM systems, support for recycling and waste minimization, the integration of carbon finance and an inclusive approach to informal waste workers. These broad pillars are reflected in the Latin America and the Caribbean (LAC) Solid Waste Strategy[2] and build on a review of best international practice in middle-income countries. Specifically, the following lessons from regional and international practice have been built into project design.

Regionalization of SWM systems. The Project also builds on international best practice to promote the optimization of regional SWM systems. In Colombia, as in many developing countries, sanitary landfills have frequently been developed by municipalities to service their own populations. Outside of the large metropolitan areas, this trend in sector investment largely resulted in the development of multiple small municipal landfills that lacked the scale to be commercially viable, given prevailing tariffs and subsidy levels. As a result, a large number of these landfills do not benefit from professional management and operate under nonsanitary conditions. Under the operation, MAVDT will lead an aggressive effort to promote optimal regional landfill systems. This will include technical feasibility and optimization studies under Component 2, the terms of reference for which have been developed in collaboration with the Bank during preparation. The model for regionalization includes a menu of technologies for the use of transfer stations developed also in collaboration with the Bank. The introduction of transfer stations serves as a significant advance as such technologies are not currently used in the Colombian system.

Adaptive and proactive strategies to combat Not-In-My-Backyard (NIMBY) risk. The project recognizes the significant challenge that NIMBY-related opposition to landfills can pose to the social and political viability of potential subprojects. With this risk in mind, the project has included among eligible investments under Component 1 the rehabilitation and expansion of non-sanitary landfills. An undetermined number of landfills or temporary landfill cells in Colombia are currently operating at nonsanitary levels but may already have land use permissions and/or environmental licenses. The operation would aim to restore these sites to sanitary conditions and potentially expand them to accommodate further regionalization. These sites are already impacted environmentally and neighboring communities—while not necessarily supportive of the landfill—would likely have an incentive to see improvements in the technical and environmental management of the site. These communities may already be organized with identified recommendations for improved site management. The rehabilitation of existing sites in a location obviates the need for a new landfill that would likely generate a greater NIMBY-related resistance from local residents. The project also includes—as discussed in Annex 4 and outlined in the section on project risks below—plans for a communications and education campaign and the use of fiscal incentives from the Central Government to municipalities that agree to site regional landfills in their jurisdiction.

Carbon finance and landfill gas capture. The Project aims to encourage landfill gas (LFG) capture where appropriate in subprojects financed under Component 1, and potentially in existing sanitary landfills through technical assistance that the Bank and Government will aim to mobilize in parallel to the Project. Driven by the availability of carbon financing, LFG constitutes good practice in landfill operation and, if operated well, carbon funds can potentially cover the cost of the LFG recovery system plus a limited proportion of the total cost of landfill operations.

10.

Social inclusion of waste pickers. International experience points to the importance of proactively including waste pickers adversely impacted by the formalization of SWM services. During preparation the project conducted a review of international experience in the inclusion and formalization of waste pickers (see analysis of international experience included in Project files). The review found that, while successful experiences of waste picker formalization are cited in the literature, many of these experiences are “movement-based,” that is, that they emerge from the grassroots organizing and advocacy of waste picker communities. The review found very few examples of successful public-sector-driven waste picker formalization experiences. The GoC has also recently reviewed formal recycling experiences involving the rehabilitation of waste pickers financed by public entities and found them to be largely unsuccessful and/or heavily dependent on public subsidies. In this context, the project takes a pragmatic approach to the rehabilitation of waste pickers, which includes support for formal recycling initiatives only when they can be demonstrated to be commercially viable, access to alternative employment in municipalities or within the formal landfill to be financed, and/or access to a range of livelihood training activities.

The project also builds on relevant implementation lessons from past and ongoing Bank operations in Colombia.

Implementation, disbursement, and safeguards management challenges associated with the Audiencias Publicas[3] financing window. MAVDT will use part of the fiscal space of Audiencias Publicas 2009–2011 for the proposed project. The Bank is currently financing the Water and Sanitation Sector Support Project Adaptable Program Loan (APL) I (Loan 728160) under which it assists the Government to finance a range of water and sanitation sector investments throughout the country under the last phase of Audiencias Publicas. Despite intricate arrangements for subproject screening, eligibility, and supervision at the national level, the project has performed below expectations with respect to effective disbursement, subproject quality, and safeguards management problems, among other aspects of implementation. The challenge of managing over 350 subprojects centrally within the Ministry accounts for a significant proportion of these weaknesses. Institutional arrangements for the proposed operation reflect lessons learned by the GoC from the earlier phase of Audiencias Publicas including: (a) the incorporation of decentralized technical and fiduciary management at the departmental level; (b) the identification of potential projects through a combination of audiencias with municipal authorities and detailed technical diagnostic studies as the basis for each Plan Departamental; (c) the role of departmental-level technical advisory bodies with authority to adapt project proposals to optimize technical and financial feasibility; and (d) a requirement that financing be linked to ex ante institutional reform in the sectors along the lines of national policy.

11. Safeguard Policies (including public consultation)

Although no specific investments have yet been selected for the project, a process screening for potential environmental impacts was undertaken. Due to the project’s long-term and sectorwide effects, the Bank’s Regional Safeguards Advisory Team has assigned the project an Environmental Screening Category of A. The selection of this category specifically takes into account the following aspects:

i) Specific subproject sites are as yet undetermined.

ii) Project impacts may potentially have significant environmental impacts.

iii) Some of these impacts may be irreversible.

iv) The surrounding environment may be affected as a result of mismanagement.

v) There may be significant NIMBY issues surrounding the location of new sanitary landfills.

i) Many of the potential environmental impacts can be mitigated through proper siting of new sanitary landfills.

The Project has been deemed to trigger the following Bank safeguard policies: Environmental Assessment (OP 4.01), Natural Habitats (OP 4.04), Pest Management (OP 4.09), Physical Cultural Resources (OP 4.11), and Involuntary Resettlement (OP 4.12). Given that the project would finance the construction of regional landfills and closure of existing open-air dumps, the specific locations of which are not identified ex ante, the team has developed a set of management instruments to address future safeguards issues under the project. These are: (a) an Environmental and Social Management Framework (ESMF), covering OPs 4.01, 4.04, 4.09, and OP 4.11; and (b) a Resettlement Policy Framework (RPF), covering OP 4.12, both of which include specific screening procedures to ensure that subprojects are appropriately designed and sited. The ESMF includes detailed guidelines for the development of Environmental Impact Assessments (EIAs), Environmental Management Plans (EMPs), and Resettlement Action Plans (RAPs), and for monitoring and evaluation of the management and mitigation procedures for addressing any identified subproject impacts.

Appropriate screening procedures have been built into the ESMF document to ensure that subproject investments follow Bank safeguard policies.

|Safeguard Policies Triggered by the Project |Yes |No |

|Environmental Assessment (OP/BP/GP 4.01) |[X] |[] |

|Natural Habitats (OP/BP 4.04) |[X] |[] |

|Forests (OP/BP 4.36) |[] |[X] |

|Pest Management (OP 4.09) |[X] |[] |

|Physical Cultural Resources (OP/BP 4.11) |[X] |[] |

|Indigenous Peoples (OP/BP 4.10) |[] |[X] |

|Involuntary Resettlement (OP/BP 4.12) |[X] |[] |

|Safety of Dams (OP/BP 4.37) |[] |[X] |

|Projects on International Waterways (OP/BP/GP 7.50) |[] |[X] |

|Projects in Disputed Areas (OP/BP/GP 7.60)* |[] |[X] |

* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties’ claims on the disputed areas.

12. List of Factual Technical Documents

The following key technical documents are part of Project Files:

• Marco de Gestión Social y Ambiental [May 21, 2009]

• Análisis Económico y Financiero del Proyecto

• Technical Document on Solid Waste Management Sector Tariff Framework

• Waste Picker Social Inclusion Strategy and Best Practice Review

• Carbon Finance Programmatic Framework Document

• Environmental Guidelines for Closing Waste Dumps and Environmental Restoration of Waste Dumps [2002]

• Environmental Guidelines for the Design, Construction and Closure of Landfills [2002]

13. Contact point

Contact: Taimur Samad

Title: Urban Specialist

Tel: (202) 473-7047

Fax:

Email: tsamad@

14. For more information contact:

The InfoShop

The World Bank

1818 H Street, NW

Washington, D.C. 20433

Telephone: (202) 458-4500

Fax: (202) 522-1500

Email: pic@

Web:

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[1] See CONPES 3530, “Lineamientos Estratégicos para Fortalecer el Servicio Publico de Aseo en el Marco de Gestión Integral de Residuos Sólidos,” approved on June 23, 2008.

[2] The LAC strategy for SWM—the “Regional Framework and Strategy for Improving Municipal Solid Waste Management”—is currently under development and scheduled for review and approval in FY09.

[3] Audiencias Publicas refers to a Uribe Administration program in the water, sanitation, and solid waste sectors that provides federal financing to municipal and regional projects on a demand-driven basis. A first phase of projects linked to Audiencias was financed during 2005–08.

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