INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE Report No.: ISDSC606 Public Disclosure Copy Date ISDS Prepared/Updated: 04-May-2012 I. BASIC INFORMATION A. Basic Project Data Country: Brazil Project ID: P126452 Project Name: Rio Grande do Norte: Regional Development and Governance (P126452) Task Team Leader: Maria de Fatima de Sousa Estimated Appraisal Date: 20-Aug-2012 Estimated Board Date: 20-Nov-2012 Managing Unit: LCSAR Lending Instrument: Specific Investment Loan Sector: General agriculture, fishing and forestry sector (30%), Public administration- Information and communications (20%), General educati on sector (20%), Health (20%), Irrigation and drainage (10%) Theme: Rural markets (40%), Public expenditure, financial management and procurement (30%), Municipal governance and institution building ( 10%), Education for the knowledge economy (10%), Health system performance (10%) Financing (In USD Million) Financing Source Amount Borrower 40.00 International Bank for Reconstruction and Development 360.00 Total 400.00 Environmental Category: B - Partial Assessment Is this a Repeater project? No B. Project Objectives 22. The proposed project will support the State strategy to promote more inclusive and equitable economic, social, and human development, as well as to modernize public sector management to improve service delivery. Therefore, the project would support an integrated approach to promote sustainable development and improved living conditions, with special attention to lagging regions of the State. Public Disclosure Copy C. Project Description 26. The proposed project would be a US$ 360 million Specific Investment Loan (SIL) to support implementation of the government's program over a four year period. Two forms of support would be provided through two separate components: a. Component A – Integrated Economic and Human Development: This component will have a total amount of USD 306 million and will provide technical and financial support to prioritized investments and implementation of key elements of the government's strategy in social and economic development, infrastructure, health and education actions. b. Component B – Public Sector Management: This component, with a total amount of USD 54 million will offer technical and financial support to selected sector programs that are part of the government's strategy to foster more efficiency in public service management and delivery. 27. The preliminary project design represents the government's integrated approach to promote social and economic development in the state with the ultimate goal of improving living conditions of the population and reduce poverty and extreme poverty indicators. Special attention would be given to the lagging regions of the state. The component will be organized in the following fashion to fulfill the State's strategy: 28. Component A: Integrated Economic and Human Development. Component targeted at supporting initiatives to promote rural development in the state, with a focus on reducing regional inequalities and based on social, environmental and economic sustainability, as well as at supporting the improvement of access and quality of fundamental public services, with a focus on education and health. Prompt support will be given to the state in the development of its social protection program and related monitoring mechanisms. It will be divided into three subcomponents: 29. Subcomponent A1: Social and Economic Development. The project would support the government's social and economic development strategy by: (a) improving the inclusion and competitiveness of small family farmers in the priority action territories (Territórios da Cidadania); (b) aiming at fostering sustainable agriculture in those micro-catchment areas most susceptible to environmental degradation; (c) promoting the inclusion of women and youth in the marketplace; and (d) promoting the expansion and quality of infrastructure to further develop an integrated logistics for regional development. 30. Subcomponent A2: Health. In light of the main challenges faced by Rio Grande do Norte in the health area, the government designed a strategy to improve the quality of service provision and ensure adequate access to specialized treatment in the state. The strategy aims to introduce changes to the health care model by improving the primary health care deliveries provided in municipalities, focusing child and maternal care, oncology care, as well as structuring specialized emergency care. 31. Subcomponent A3: Education. The government's overall objective for the education sector is to ensure that all children in Rio Grande do Norte have access to good quality education. Among the key challenges identified are to increase access and retention in basic education, reduce over-age students and improve student learning outcomes. Therefore, the government has identified six main objectives grouped in four main programs which include inter alia: (i) education quality through the improvement of learning and teaching standards and practices as well as a longer school-day; (ii) education access through the expansion of service delivery as well as the rehabilitation and repair of school facilities; (iii) professional development through training of teachers and valorization of the teacher profession; and, (iv) modernization of education Public Disclosure Copy management through the development of education partnership with municipal Governments and a better integration of schools within their community. 32. Component B: Public Sector Management. Component aimed at supporting actions to modernize public sector management in the state, through measures grouped around three goals: planning, budgeting and finance management integration, institutional modernization, and more strategic and efficient human resources management. It will be divided into three subcomponents: 33. Subcomponent B1: Planning, Budgeting and Finance Management Integration. This subcomponent would support activities aimed at improving the efficiency of revenue collection, strengthening debt management and administration of fiscal risks. Moreover, it would also support the revision of the expenditure commitment and execution process and the strengthening of the internal control function. Potential activities include: (i) develop of a strategic plan for the Finance Secretariat; (ii) prepare an IT master plan for the Finance Secretariat; (iii) revise and reform the tax collection process; (iv) assess the functioning of the debt management department and devise an action plan for strengthening procedures and capacity; among others. These potential activities will be further discussed and agreed upon during preparation. 34. Subcomponent B2: Institutional Modernization. One of the main objectives of the government strategy is to increase the effectiveness and efficiency of the state’s public administration. As part of this strategy, the government intends to undertake a functional review, identifying the key roles of its agencies and promoting a discussion on alternative service delivery modes. A first initiative under this subcomponent is to review the role and administrative structure of government entities. Modernization efforts would also focus on the revision of administrative procedures and processes, with the aim of increase efficiency. Strengthening planning capacity, monitoring, evaluation and policy making will also be supported under this subcomponent. The new administration has already initiated efforts to revamp its planning capacity and use the multi-year plan (PPA) as an actual tool for expressing the government's policy intentions, as per the available fiscal space. These efforts have made clear that some sectors will need additional help in clarifying their key goals and strategies, as well as defining intermediate and results indicators. Activities t o strengthen the budgeting procedures and to allow for strategic allocation of resources to policy priorities will also be supported. Furthermore, it would be advisable to undertake a review of existing IT systems and their functionalities, in order to devise a plan for actual system integration. Finally, support will be given to the introduction of performance agreements by the government. 35. Subcomponent B3: More Strategic and Efficient Human Resources Management. A more effective and efficient government will require strengthening the State's workforce more strategically by focusing on attracting and retaining professional personnel, in particular in the center-of- government institutions. Rio Grande do Norte’s goal should be to move gradually from a pyramidal to a quasi diamond-shaped staff structure, increasing quality of personnel expenditures. It will require state's efforts to professionalize and in turn, putting in place adequate controls over the state's payroll to create the fiscal space needed. 36. Potential activities to be supported under this pillar are expected to include: (i) detailed survey and diagnostic of the human resources framework of the State I order to identify the challenges and opportunities to reform; (ii) preparation of an strategic workforce plan with long-term vision and a short-term action plan; (iii) development of a planning, budgeting and management career; (iv) preparation of operational manuals for Public Disclosure Copy center-of-government secretariats; (v) technical assistance for aligning the state's pay policy and HRM to the state's objectives; (vi) monitoring systems; and (vii) a communications strategy for the planning and implementation of HRM reforms. D. Project location and salient physical characteristics relevant to the safeguard analysis (if known) 37. For Component 1 – Integrated Economic and Human Development, the project interventions will be located across the State territory, with 8 development regions already defined by the State’s government. The selection of targeted beneficiaries and areas would be based on explicit demands from vulnerable groups and in sensitive environmental areas, as well as on beneficiaries below extreme poverty line. E. Borrowers Institutional Capacity for Safeguard Policies F. Environmental and Social Safeguards Specialists on the Team Judith M. Lisansky (LCSSO) Alberto Coelho Gomes Costa (LCSSO) Clarisse Torrens Borges Dall Acqua (LCSEN) II. SAFEGUARD POLICIES THAT MIGHT APPLY Safeguard Policies Triggered? Explanation (Optional) Environmental Assessment OP/BP 4.01 Yes Component 1 of the proposed project may support small and medium-scale investments in rural development, health and educational infrastructure. Possible negative impacts from these investments are expected to be small, localized and reversible. Given these characteristics of the project, a category B is proposed. The Environmental Assessment safeguard is mandatory to all sub- projects that may potentially have an environmental and social impact. The Borrower would carry out a regionally focused Environmental and Social Impact Assessment (ESIA), which defines strict environmental “screening�, to ensure that selected sub-projects demonstrate low potential negative impacts. The Terms of Reference (ToR) of this study are being prepared by the Borrower and will be submitted to the Bank for approval before the hiring process. Criteria and screening procedures for the selection of interventions to be financed will be finalized during preparation. Final selection of interventions will be done during implementation. The Borrower would apply the environmental “screening� before the final selection of each investment subproject. Project preparation will include Public Disclosure Copy the preparation of an Environmental and Social Management Framework (ESMF) for all project interventions to assess potential impacts and propose a framework for preventing or mitigating them. These studies will also include health waste management issues due to the health sector components of the operation, and also building construction and safety in the education components, consistent with Bank and national standards. Principles of OP 4.01 with regards to proper consultation will be applied as part of project preparation and ESMF will be reviewed by the Bank and publicly disseminated prior to appraisal. Given the multiple stakeholders and third parties affected by the activities to be supported by this project, the ESMF will be supported and informed by high quality social assessment and robust consultation processes. This social assessment will include: an initial socio-cultural scoping; stakeholders mapping, broad information and consultation; and the analysis of risks and potentially beneficial and adverse impacts. Criteria and screening procedures for the selection of interventions to be financed will be finalized during preparation. Final selection of interventions will be done during implementation. The Borrower would apply the environmental “screening� before the final selection of each investment subproject. Project preparation will include the preparation of an Environmental and Social Management Framework (ESMF) for all project interventions to assess potential impacts and propose a framework for preventing or mitigating them. These studies will also include health waste management issues due to the health sector components of the operation, and also building construction and safety in the education components, consistent with Bank and national standards. Principles of OP 4.01 with regards to proper consultation will be applied as part of project preparation and ESMF will be reviewed by the Bank and publicly disseminated prior to appraisal. Given the multiple stakeholders and third parties affected by the activities to be supported by this project, the ESMF will be supported and informed by high quality social assessment and robust consultation processes. This social assessment will include: an initial socio-cultural scoping; stakeholders mapping, broad information and consultation; and the analysis of risks and potentially beneficial and adverse impacts. Public Disclosure Copy Natural Habitats OP/BP 4.04 Yes Component 1 of the proposed project may also support investments for the recovery of degraded areas in rural areas, whose selection activities will follow the prioritization and definitions of the State Program to Combat Desertification and also the provisions of the Brazilian Forest Code. Furthermore, all planed activities in areas considered by the state to be environmentally sensitive (i.e., in riparian areas) - Permanent Preservation Areas (APP) and Legal Reserves (RL), will undergo an environmental screening and any potential direct or indirect impacts on those areas will be assessed.). The OP 4.04 is triggered and all planning activities that may affect natural habitats must follow World Bank policies, identifying monitoring and management activities to prevent or mitigate any possible negative impact. Springs and river margins areas are classified as Permanent Preservation Areas (APP) and legally protected by Brazilian Legislation (Federal Law 4771/65). APP use for water systems development, intake and pipelines, requires specific permitting, mitigation and regeneration measures. Despite the expected positive impacts, the ESIA and ESMF will include clear guidance regarding direct and indirect impacts on natural habitats. Special attention will be given to areas where desertification process was already identified by the State (SEMARH, PAE, 2010). As noted in the Carta Consulta, only 2.4% of the State’s areas do not show susceptibility to desertification. The more critical area is the desertification process in Seridó, with 2,800 km2 (5.7% of the total desertification process). Forests OP/BP 4.36 Yes It is not expected that the Project implementation will have negative impacts on forest resources. Sub-projects with the potential for conversion or degradation of natural forest or other natural habitats that are likely to have significant adverse environmental impacts, which are sensate, diverse or unprecedented, are ineligible. Nevertheless, OP 4.36 is triggered given the potential for rehabilitation activities for APPs and Legal reserves. It is expected that the Borrower defines a negative list to exclude activities that may affect forest areas. Additionally, if any demand driven activities that could involve reforestation could be included, the ESMF will contain provision for the design and management of these activities in compliance with the policy. Pest Management OP 4.09 Yes The Project would not finance any pesticides or other chemical amendments that would trigger OP 4.09. Nevertheless, minor amounts of pesticides would probably continue to be used in the short term by a small portion of targeted small-scale farms. The Project would encourage and support technical Public Disclosure Copy assistance for the adoption of organic agriculture and of proven, economically- and environmentally-sustainable Integrated Pest Management (IPM). This approach would increase farmer’s productivity, reduce input costs and human health risks, and minimize adverse environmental impacts through the virtual elimination of pesticide use. The IPM approach further improves the sustainability of agro-ecosystems by focusing on the knowledge and skills of farmers to better enable natural resource management. The need to use pesticides or herbicides will be indicated in each sub-project, as well as the IPM measures to be adopted. When the use of pesticides or herbicides is justified, an analysis of potential negative impacts resulting from the use of these chemicals and the risks associated with the inappropriate handling or storing of their containers will be conducted. The projects will also include measures to reduce those risks, in compliance with Law No. 7,802/89. A Pest Management Plan (PMP) will be prepared and incorporated into the ESMF and the Project Operational Manual. The PMP would make use of the World Health Organizations Recommended Classification of Pesticides by Hazard and Guidelines to Classification (GENEVA; WHO 1994-95). The PMP would also exclude finance under the proposed project for formulated products that fall into WHO classes IA and IB, or formulation of products in Class II, if: (i) the country lacks restrictions on their distribution and use, or (ii) they are likely to be used by, or be accessible to, lay personnel, farmers, or other without training, equipment, and facilities to handle, store, and apply these products properly. Physical Cultural Resources OP/BP 4.11 Yes Project implementation would not cause any negative impact on known physical cultural resources (PCR). Proposed sub-projects with expected direct and negative impact on known archaeological, palaeontology's, historical or other culturally significant sites will not be eligible. However, they may include historical sites and/or archaeological findings. As such, impacts and procedures for "chance findings" from specific investments under Component 1 (if applicable) will be assessed within the ESIA, and the resulting ESMF will include relevant provisions to mitigate any potentially adverse impacts. Such provisions will include compliance with the guidelines defined by the National Institute for Historical and Cultural Heritage (IPHAN) regarding historical sites and/or archaeological findings. Indigenous Peoples OP/BP 4.10 No A screening was carried out using information from the Brazil’s National Indian Public Disclosure Copy Foundation (FUNAI) and the Socio-Environmental Institute (ISA) indicating that there are presently no indigenous groups nor recognized indigenous lands in the State of Rio Grande do Norte. As such, the OP 4.10 is not triggered. Involuntary Resettlement OP/BP 4.12 Yes Component 1 of the proposed project may support small and medium-scale investments in rural development, health and educational infrastructure in areas to be chosen during project implementation from explicit demands made by vulnerable groups. Potential sites of intervention are not yet known and will not be selected until during project implementation. The team has evaluated the types of subprojects proposed under Component 1 and concluded that some proposed activities (such as the building of rural schools, productive infrastructures with small facilities to support production, health facilities, and the expansion of logistics infrastructures, such as roads rehabilitation for better connectivity between areas of production and consumption) might require land acquisition and, consequently, could potentially cause involuntary resettlement. While this is relatively unlikely, as a consequence OP 4.12 has been triggered and a Resettlement Policy Framework (RPF) will be prepared, consulted and publicly disseminated prior to appraisal. Safety of Dams OP/BP 4.37 Yes It is not expected that the investments in water supply and irrigation projects will depend on the storage capacity and operation of existing dams. However, as a precautionary measure, the OP 4.37 is triggered, not to limit any possibility of using existing water sources, but to ensure that no new dam construction will be financed by this operation. Therefore, in the preparation phase of the project, the Borrower will prepare a conceptual framework of procedures to be adopted during the implementation phase. The Borrower will arrange for one or more independent dam specialist to: (a) inspect and evaluate the safety status of the existing dam, its appurtenances, and its performance history; (b) review and evaluate the owner's operations and maintenance procedures; and (c) provide a written report of findings and recommendations for any remedial work or safety-related measures necessary to upgrade the existing dam to an acceptable standard of safety. Previous assessments of dam safety or recommendations for improvements needed in existing dam may also be accept by the Bank, if the Borrower provides evidence that (a) an effective dam safety program is already in operation, and (b) full-level inspections and dam safety assessments of the existing dam, which are satisfactory to the Bank, have already been conducted and documented. Projects on International Waterways OP/BP No Not applicable. The Project will not finance interventions that may interfere with Public Disclosure Copy 7.50 dams or be directly dependent of them. Projects in Disputed Areas OP/BP 7.60 No Not applicable. The whole state area and natural resources are located in the national territory. Therefore, none of the Project activities are located in international waterways. III. SAFEGUARD PREPARATION PLAN A. Tentative target date for preparing the PAD Stage ISDS: 22-Jun-2012 B. Time frame for launching and completing the safeguard-related studies that may be needed. The specific studies and their timing1 should be specified in the PAD-stage ISDS: Environmental assessment and social framework studies and Resettlement Policy Framework should be finalized and disclosed by June 22, 2012. IV. APPROVALS Task Team Leader: Name: Maria de Fatima de Sousa Approved By: Regional Safeguards Coordinator: Name: Glenn S. Morgan (RSA) Date: 16-May-2012 Sector Manager: Name: Ethel Sennhauser (SM) Date: 08-Feb-2012 Public Disclosure Copy 1 Reminder: The Bank's Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the InfoShop and (ii) in country, at publicly accessible locations and in a form and language that are accessible to potentially affected persons.