PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: PIDA2584 Public Disclosure Copy Project Name DRINA FLOOD PROTECTION PROJECT (P143844) Region EUROPE AND CENTRAL ASIA Country Bosnia and Herzegovina Sector(s) Irrigation and drainage (100%) Theme(s) Water resource management (67%), Rural services and infrastructure (33%) Lending Instrument Investment Project Financing Project ID P143844 Borrower(s) Ministry of Finance and Treasury Implementing Agency RS APCU (Republika Srpska Agriculture Project Coordination Unit), FBiH PIU (Federation of Bosnia and Herzegovina Project Implementation Unit in Forestry) Environmental Category B-Partial Assessment Date PID Prepared/Updated 11-Feb-2014 Date PID Approved/Disclosed 12-Feb-2014 Estimated Date of Appraisal 27-Jan-2014 Completion Estimated Date of Board 16-May-2014 Public Disclosure Copy Approval Decision Retroactive approval of appraisal mission granted at decision meeting of February 06, 2014. Other Decision Decision to proceed to negotiations March 5-6 granted at decision meeting of February 06, 2014. I. Project Context Country Context The Drina River, at 346 kilometers in length, is the largest tributary of the Sava River, which in turn is the largest tributary of the Danube. The river and its basin are critically important to all three of its riparian countries: Bosnia and Herzegovina (BiH), Montenegro and Serbia. Originating in the snowy Dinaric Alps in Montenegro at an altitude of 2,500 meters, it drains a vast karst plateau which receives the highest annual rainfall in Europe (up to 3,000 mm), resulting in the highest specific runoff in Europe (up to 50 l/s/km2). This rapid draining has made the river notorious for its extreme high and low flows; only part of the baseflow is due to snowmelt. This natural characteristic has been changed by the construction, over the past 50 year, of eight reservoirs with hydropower pants. These reservoirs mostly attenuate the natural extremes, although their comparatively modest volumes are not capable of fundamentally altering the flow regime. In periods of prolonged high precipitation, the releases from the hydropower plants can take into Page 1 of 7 account the downstream riverbed flow capacity only to a certain extent. The Upper Drina is formed by the confluence of the Tara and Piva rivers, both of which rise in Public Disclosure Copy Montenegro and converge on the border of Montenegro and BiH. Downstream, the Middle Drina flows past the town of Gorazde and Bajna Basta, and it forms on its way to its mouth the Lower Drina; they form the border between BiH and Serbia over a length of 220 km, before emptying into the Sava River in northeastern BiH, near Bijeljina. The Middle Drina and the Upper Drina are hemmed in by deep valleys and steep banks. In its downstream reaches, in the Pannonic plains of the Sava River, the Lower Drina meanders and flows along several channels, often changing course. The Drina River Basin (DRB) is about half the size of Switzerland and is home to almost one million people, with most settlements concentrated along the Drina River proper or its main tributaries. The Basin is shared equally among the three riparians. In BiH, it covers 14% of the country’s territory. However, it is of most importance to the Republika Srpska (RS) Entity as it covers over a quarter of the Entity’s territory; the Basin is crucial as well to the eastern part of the Federation of Bosnia-Herzegovina (FBiH) Entity. GDP per capita in BiH (2011) is about US$4,372. However, the national average masks the significant income disparity within the country. The local economies of many communities in the Basin tend to be depressed due to difficult transportation links, comparatively long distances to markets, and the perilous state of the old local industries and the infrastructure. The downstream municipality of Bijeljina (in RS) has a stronger agricultural, industrial and service-based economy thanks to its proximity to Serbia and Croatia. Gorazde in the Middle Drina is more isolated, however, its local economy is improving thanks to investments in agriculture and eco-tourism, and new industrial investments. The need for flood control was identified decades ago, and during the former Yugoslav Republic numerous flood protection investments were made in the Basin. The 1964 Drina Master Plan Public Disclosure Copy provided for numerous flood protection works along the Drina; most of these protective works have been implemented but some components have never been completed. Two areas have remained particularly vulnerable, namely the Bijeljina and Gorazde areas, in RS and FBiH, respectively. Three reasons exist for this vulnerability. First, the Bijeljina area has remained unprotected because the dikes on the left Drina bank (in BiH), although included in the 1964 Plan, were never built, while the dikes on the right bank (in Serbia), were erected for the greater part. Similarly, some locations in the Gorazde area are suffering from severe erosion of the riverbed and banks due to incomplete construction of revetments and crests. Moreover, these structures were designed to protect only against high-frequency, low-inundation discharges of up to 2730 m3/sec instead of about 4080 m3/sec (1-in-100 year flood), the minimum standard protection for commercial and (semi-) urbanized areas. A third major factor that raises the imminent flooding risk is that the structures, where in place, are no longer adequate or will soon lose theirfunctionality due to lack of maintenance and modernization during the past two decades in the wake of the armed conflict. The need for this infrastructure is confirmed by recent analytic studies (see further) and newly acquired orthogrammetric maps and survey data. While the regularly occurring floods do represent a substantial livelihood risk, the emergency services and authorities are relatively well-prepared to handle the emergencies, as was the case as in 2010. However, the destruction from floodsis costly and seriously affects the local economy and detracts investments in the region, stressing the priority to invest in protective measures. Page 2 of 7 The project’s works are high-urgency and priority investments because these locations have a local topography that keeps them especially vulnerable to high water as water overtops the river banks in Public Disclosure Copy these spots that are low compared to other areas along the Drina and its tributaries. This has been the case in the 19th and early 20th centuries, as well as in the period after the construction of the hydropower plants on the river. Irrespective of the fact that, later on, with better understanding of the modified hydrology of the river and of future regional development scenarios, further improvements can be identified for flood prevention and mitigation, the proposed protection investments are very basic, essential and urgent given the very high recurrence of the inundation; this is also reflected in the high Economic Rate of Return of the protection works. Sectoral and institutional Context In both Entities of BiH, the Drina Basin is at the forefront of the water management agendas, because of its development opportunities (i.a. hydropower and tourism) but also because the Drina and its tributaries are historically known for recurrent floods. In the past decade, particularly wet conditions leading to severe inundation along the Drina in BiH were observed in 2001, 2004, 2005 and, most recently, in December 2010 and February 2013. The floods are caused by a combination of high rainfall, early snowmelt and, occasionally, ill-synchronized water releases from the hydropower reservoirs. The flood events are most frequent and damages most pronounced in the downstream Lower Drina tract between Zvornik and the confluence with the Sava affecting the left- bank Municipality of Bijeljina and the Amajlije and Janja settlements in RS; and in the Middle Drina and its local tributaries, around the town of Gorazde, in the FBiH. The December 2010 flood inundated about 8,360 ha of land east of the Bijeljina town center for up to 2 weeks. In the Bosnia Podrinje Canton area in FBiH which includes the Municipalities of Gorazde, Foca-Ustikolina and Pale-Praca, almost 400 ha was flooded or affected along the Drina and its tributaries, for several days. Records show that the recurrence period of these discharges is Public Disclosure Copy about 1 in 50 to 60 years for Bijeljina, and 1 in 80 years for Gorazde. Smaller parts of the Bijeljina and Gorazde areas are flooding annually. In Bijeljina, the land at risk concerns primarily (very productive) agricultural and horticultural land, farm houses, commercial and hotel facilities, residences and roads and other utility infrastructure. In the Gorazde area, the areas at risk comprise parts of the Gorazde town center, roads and utilities infrastructure, horticultural land and some industries. In response to the flood emergency in 2010, the Bank reallocated about US$ 8.0 million of the Agricultural and Rural Development Project to help with immediate emergency interventions to repair dike breaches, and support the replanting of orchards and crops that had been destroyed. Hydrological analysis shows that high-water discharges and flood events are becoming more frequent in these areas over the past 3 decades. This is likely caused by the progressing urbanization and land use changes, and changes in the local climate. The hydropower reservoirs generally attenuate extreme discharges, however, their volumes are relatively small compared to the large water volumes discharged per month, and thus, although the river hydrology has been altered, it is still driven by natural events and circumstances. Several studies and plans exist that analyze water management and flood protection, including the highly detailed 1964 Drina Master Plan, and, more recently, the more generic ICPDR Danube River Basin Management Plan (2004) and the Sava River Basin Management Plan (2013). While these plans comply with the EU Water Directive, they focus on water quality and the status of the ecological quality. They also set generic policy for flood management, but do not propose specific Page 3 of 7 investments. In 2007, the EU financed IPA support for developing the B&H Water Policy, which defines institutional responsibilities for the water sector. In 2013-15, EU IPA is likely to support additional digital terrain and flood risk mapping of the Drina basin area in BiH and Serbia that will Public Disclosure Copy complement existing topographic and orthogrammetric data. Early-warning and flood-forecasting mechanisms are existing and proved effective in the 2010 flood event, however, their accuracy and effectiveness can be improved; this will be reviewed in the upcoming new TA operations. In general, BiH and Serbia are cooperating increasingly frequently on Drina management. The three riparian countries are receiving support under the International Sava River Basin Commission, to which they are signatory. The Drina Basin is also benefiting from the Bank’s West Balkans Regional Flood and Drought Initiative, a non-lending TA Program, which has led to a Rapid Trans-boundary Diagnostic Scan and Analysis (2012) founded on a basin-wide data collection and cross-sectoral dialogue, and a Framework for Flood Management on the Drina River (2012) that reviewed parameters for flood management for BiH on the Drina. The proposed project is in line with the Bank’s overall objectives for poverty alleviation and fostering shared prosperity as the benefits from reduced flood risk will accrue directly to all those affected by flooding but also to those that have refrained from investing in the project areas due to the risk posed by recurring floods. The Project will have a positive impact both on economic growth and productivity thanks to avoided disruption of the regional transport and utility links, and on poverty as lower-income families tend to suffer disproportionately from flood events. This is the case, for example in the Janja area in Bijeljina and in some of the Gorazde suburbs as the poor tend to live in areas prone to flooding. The project is also fully consistent with the CPS for FY2012-2015 (dated August 30, 2011). It will contribute to the key objectives under the CPS, to promote: (i) competitiveness; (ii) social inclusion; and (iii) environmental sustainability, including for improved water resource management. One of the specific CPS outcomes is “…better flood preparedness and management Public Disclosure Copy along the Drina River Basin” which the government recognizes as critical not only to protect the lives and livelihoods of people in the basin but also to protect the overall health of this unique ecosystem. The Project will also enhance the hydraulic capacity of the riverbed, thereby contributing to increasing the environmental sustainability of hydropower production, and thus assist BiH’s efforts towards energy security in the light of climate change impacts. II. Proposed Development Objectives The Project's objective is to provide increased protection from flood events to agricultural and commercial interests and communities in the project areas. III. Project Description Component Name Flood protection works and support for Bijeljina area (Republika Srpska) Comments (optional) This component will fund the civil engineering works and related investments for the flood protection in the Bijeljina area, in the downstream flat plains near the confluence with the Sava. Component Name Flood protection works and support for Gorazde area (Federation of Bosnia Herzegovina) Comments (optional) Page 4 of 7 This component will fund the civil engineering works and related investments for the flood protection in four clusters of works in the Bosnia Podrinje Canton (around Gorazde), in the Middle Drina. Public Disclosure Copy IV. Financing (in USD Million) Total Project Cost: 28.00 Total Bank Financing: 24.00 Financing Gap: 0.00 For Loans/Credits/Others Amount BORROWER/RECIPIENT 4.00 International Development Association (IDA) 24.00 Total 28.00 V. Implementation The project will be implemented by the FBiH Ministry of Agriculture, Forestry and Water (MoAFW) Project Implementation Unit (PIU) and the Agriculture Project Coordination Unit (APCU) in the RS Ministry of Agriculture, Water and Forestry (MoAWF). In the FBiH, the project is technically supported by the Water Agency for the Sava River (based in Sarajevo); it operates under the FBiH MoAFW and has significant experience in planning and managing the implementation of flood protection works. The Ministry’s PIU will carry out project management including procurement, FM and M&E. In the RS, the Public Institution “RS Waters” in Bijeljina, under supervision of the RS MoAWF APCU will support the project at the technical level. Although the name and legal status of this latter institution are new, it has long-term experience in implementing similar works on river bank and flood control infrastructure. The Ministry’s APCU will carry out project management including the procurement, FM and M&E. Both PIU and APCU are staffed with experienced staff for the execution of daily project activities. The Bank assesses the PIU and APCU as adequate and acceptable. The land acquisition will be carried out by the Public Disclosure Copy respective Municipalities, and these committed budget for this purpose in 2015 - 2016. The environmental permitting and land acquisition systems are in place in BiH, and are carried out at the level of the Entities with functional ministries dealing with environment. The EIA laws and requirements are in line with those established in the EU. The Entities handle water management through two semi-independent Water Agencies (in FBiH) and the Public Institution “RS Waters” in Bijeljina (in RS) that are operational and that focus on integrated river basin management, guided by the EU Water Framework Directive; as such they are better positioned to manage water than some of the neighboring countries. Water permits are issued for all developments and activities that require water use or wastewater releases. Such Water Management Permits are issued based on the water balance and assessment of the competing demands for water. The project will closely interface with the complementary GEF and WBIF projects that are being prepared by the same agencies that are currently responsible for the technical and engineering aspects of the flood project. The Bank’s TTL for all these operations is the same and will facilitate coordination and cooperation to ensure that the institutional and long term management issues that affect the sustainability of the investments in works under this project will be adequately addressed. VI. Safeguard Policies (including public consultation) Page 5 of 7 Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 ✖ Public Disclosure Copy Natural Habitats OP/BP 4.04 ✖ Forests OP/BP 4.36 ✖ Pest Management OP 4.09 ✖ Physical Cultural Resources OP/BP 4.11 ✖ Indigenous Peoples OP/BP 4.10 ✖ Involuntary Resettlement OP/BP 4.12 ✖ Safety of Dams OP/BP 4.37 ✖ Projects on International Waterways OP/BP 7.50 ✖ Projects in Disputed Areas OP/BP 7.60 ✖ Comments (optional) While significant land acquisition is expected, the risks related to this activity are considered moderate and RPFs have been prepared that will be complemented by RAPs that are prepared as part of the detailed design of the sites. The Project is not expected to affect any residential houses, objects or businesses either. VII. Contact point World Bank Contact: Guy J. Alaerts Title: Lead Water Resources Specialist Tel: 458-7288 Email: galaerts@worldbank.org Borrower/Client/Recipient Name: Ministry of Finance and Treasury Public Disclosure Copy Contact: Title: Tel: Email: Implementing Agencies Name: RS APCU (Republika Srpska Agriculture Project Coordination Unit) Contact: Mihajlo Stevanovic Title: Assitant Minister Tel: 0038751338368 Email: m.stevanovic@mps.vladars.net FBiH PIU (Federation of Bosnia and Herzegovina Project Implementation Unit in Name: Forestry) Contact: Hazima Hadzovic Title: Assistant Minister Tel: 0038733726550 Email: hazima.hadzovic@fmps.gov.ba Page 6 of 7 VIII. For more information contact: The InfoShop The World Bank Public Disclosure Copy 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop Public Disclosure Copy Page 7 of 7