Documentof International Development Association FOROFFICIAL USEONLY ReportNo: 43418-MV PROJECT APPRAISAL DOCUMENT ONA PROPOSED CREDIT INTHE AMOUNT OF SDR 8 MILLION (US$13.15 MILLIONEQUIVALENT) TO THE REPUBLIC OF MALDIVES INSUPPORT OF THE ENVIRONMENTALMANAGEMENTPROJECT May5,2008 Sustainable Development Department Social, Environment and Water Resources ManagementUnit South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without IDA authorization CURRENCY EQUIVALENTS ExchangeRate Effective: March31,2008 Currency Unit = Maldive Rufiyaa (MVR) MVR12.80 = US$1 US$1 = SDR 1.6466 FISCAL YEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS ADB AsianDevelopmentBank MOFT Ministry of Financeand Treasury BP BankProcedure MOU Memorandumof Understanding BPEO BestPracticalEnvironmentOption MPND Ministry of PlanningandNationalDevelopment CFAA CountryFinancialAccountabilityAssessment MRC MarineResearchCentre EA EnvironmentalAssessment MVR Maldivian Rufiyaa EHS EnvironmentalHealthandSafety Guidelines NCB NationalCompetitiveBidding EMP EnvironmentalManagementPlan NDP NationalDevelopmentPlan EPPA EnvironmentalProtectionandPreservationAct NDR Northern DevelopmentRegion ERC EnvironmentalResearchCentre, MEEW NIMBY "Not-in-my-backyard" FM FinancialManagement NOAA NationalOceanicandAtmospheric Administration ESIA Environmentaland Social ImpactAssessment NPV Net PresentValue FM FinancialManagement O&M OperationandMaintenance GEF GlobalEnvironmentalFacility OECD Organization for Economic Cooperation and Development GIS GeographicalInformationSystem OM OperationsManual GoM Governmentof Maldives OP Operational Policy HIV Humanimmunodeficiencyvirus PAD ProjectAppraisalDocument HR HumanResource(s) PDO ProjectDevelopmentObjective ICB InternationalCompetitiveBidding PMU ProjectManagementUnit IDA InternationalDevelopmentAssociation PRA ParticipatoryRuralAppraisal IFC InternationalFinanceCorporation RDMO RegionalDevelopmentManagementOffice IFR InterimFinancialReports RDP RegionalDevelopmentPlan IUCN InternationalUnion for the ConservationofNature ROM Republicof Maldives IWM IslandWasteManagement RSEA RegionalStrategic EnvironmentalAssessment IWMC IslandWaste ManagementCenter RWMF RegionalWaste ManagementFacility IWMP IslandWaste ManagementPlan SBD StandardBiddingDocument M&E Monitoring & Evaluation SDR SouthernDevelopment Region MCHE MaldivesCollege of HigherEducation S W M SolidWasteManagement ME Ministry of Education TES Tender EvaluationSection MEEW Ministry of Environment, EnergyandWater TEV Total Economic Value MHE Ministry ofHigher Education TOR Terms of Reference MMA MaldivesMonetaryAuthority UNDP UnitedNationsDevelopmentProgramme MOAD Ministry of Atolls Development UNEP UnitedNationsEnvironmentalProgramme MOFAMR Ministry ofFisheries,AgricultureandMarine Resources Vice President: Prahl Pate1 Country Director: Alastair J. McKechnie Sector Manager: KarinKemper Task Team Leader: Richard Damania FOR OFFICIAL USE ONLY MALDIVES-ENVIRONMENTALMANAGEMENTPROJECT PROJECTAPPRAISALDOCUMENT SOUTHASIA REGION ENVIRONMENT AND WATER RESOURCESMANAGEMENTUNIT Date: May 5,2008 Team Leader: RichardDamania Country Director: Alastair J. McKechnie Sectors: Environment Sector ManagerDirector: KarinKemper Themes: Solid Waste Management; Marine Resources Management; Public Sector Management Project ID: P108078 Environmental screening category: A: Full Assessment Lending Instrument: Specific Investment Credit [ ] Loan [XI Credit [ 3 Grant[ ] Guarantee [ ] Other: For Loans/Credits/Others: Total IDA financing (US$m.): 13.15 International Development Association 7.89 5.27 13.15 Total: 8.44 5.45 13.88 Borrowers: MinistryofFinanceand Treasury AmeeneeMagu Block379 MalC, 20379 Republic o fMaldives GeneralTel: +960 3349223 Fax: 960 3324432 / 3338034 + E-mail:erms@,finance.aov.mv Responsible Agencies: MinistryofEnvironment,Energy,andWater (MEEW) FENBuilding Ameenee Magu Male, Republic ofMaldives Tel: +960 3324861 Fax: +960 3322286 Email:env@,environment.gov.mv This document has a restricteddistribution and may be used by recipients only in the performance of their official duties. Its contentsmay notbe otherwisedisclosed without WorldBank authorization. Does the project depart from the CAS incontent or other significant respects? Re$ PAD A.3 [ ]Yes [XINO Does the project require any exceptions from IDA policies? Re$ PAD D.7 [ ]Yes [XINO Have these been approved by management? n.a. I s approval for any policy exception sought fi-om the Board? n.a. Does the project include any critical risks rated"substantial" or "high"? Re$ PAD C.5 [XIYes []No Does the project meet the Regional criteria for readiness for implementation? Re$ PAD D.7 [XIYes [ ] N o Project development objective Re$ PAD B.2, Technical Annex 3 The first Project Development Objective i s that a solid waste management system i s established and that inhabitants on targeted islands use solid waste management facilities, reducingthe risks o f contamination associated with accumulated wastes and sea dumping. The second Project Development Objective is to buildhuman and technical capacity for environmental management so that the environmental dimension i s integrated inthe planningprocess usinginformation and expertise developed inthe Project. Project description Ref: PAD B.3.a, TechnicalAnnex 4 TheProject has been organized intofour components: Component I:Regional Solid Waste Management Program Component2: Capacity Buildingfor EnvironmentalManagement Component3: Technical Assistance for Strengthened Environmental Management and Monitoring and a Pilot Regional Strategic EnvironmentalAssessment Component4: Project Management and Communications Which safeguard policies are triggered, ifany? Re$ PAD 0.6, Technical Annex 10 The Project has received an Environmental Category A rating and triggers the following safeguards: OP 4.0 1(Environmental Assessment); OP 4.04 (Natural Habitats). Significant, non-standard conditions, if any: none. Boardpresentation: June 10,2008 Credit effectiveness conditions: None Covenants applicable to project implementation: A disbursement condition would apply. The disbursement condition requires that: No withdrawal shall be made under sub components 1.3 (Construction o f Island Waste Management Centers (JWMC)), 1.4 (Waste Transfer System) and 1.5 (Construction o f Regional Waste Management Facility (RWMF)) until the completion o f (i)an Environmental and Social Impact Assessment for the RWMF and (ii) a framework for the operation and financial management o f IWMCs and RWMFs, all o fwhich are satisfactory to IDA. MALDIVES MaldivesEnvironmentalManagement Project CONTENTS Page I STRATEGICCONTEXTANDRATIONALE . ................................................................. 7 A. Country andsector issues ................................................................................................... 7 B. Rationale for Bank involvement......................................................................................... 9 C. Higher level objectives to which the project contributes.................................................. 10 I1. PROJECTDESCRIPTION ........................................................................................... 11 A. Lendinginstrument ........................................................................................................... 11 B. Project development objective andkeyindicators ........................................................... 11 C. Project components........................................................................................................... 12 D. Lessons learned and reflected inthe project design ......................................................... 19 E. Alternatives considered and reasons for rejection ............................................................ 22 I11. IMPLEMENTATION .................................................................................................... 23 A. Partnership arrangements(ifapplicable) .......................................................................... 23 B. Institutional and implementation arrangements................................................................ 23 C. Monitoring andEvaluationo f Outcomesmesults ............................................................. 23 D. Sustainability .................................................................................................................... 25 E. Critical Risks andPossible ControversialAspects ........................................................... 25 F. Loadcredit conditions and covenants............................................................................... 29 I V . APPRAISAL SUMMARY ............................................................................................. 29 A. Economic and financial analyses...................................................................................... 29 B. Technical........................................................................................................................... 31 C. Fiduciary........................................................................................................................... 31 D. Social ................................................................................................................................ 32 E. Environment...................................................................................................................... 32 F. Safeguard policies............................................................................................................. 33 G. Policy Exceptions andReadiness ..................................................................................... 34 Annex 1: CountryandSector or ProgramBackground ......................................................... 35 Annex 2: Major RelatedProjectsFinancedby the Bankand/or other Agencies .................41 Annex 3: ResultsFrameworkandMonitoring ........................................................................ 45 Annex 4: DetailedProjectDescription ...................................................................................... 53 Annex 5: ProjectCosts............................................................................................................... 65 Annex 6: ImplementationArrangements ................................................................................. 74 Annex 7: FinancialManagementandDisbursementArrangements ..................................... 78 Annex 8: ProcurementArrangements ...................................................................................... 88 Annex 9: EconomicandFinancialAnalysis ............................................................................. 93 Annex 10: SafeguardPolicyIssues .......................................................................................... 105 Annex 11:ProjectPreparationandSupervision ................................................................... 116 Annex 12: Documents inthe ProjectFile ............................................................................... 118 Annex 13: Statementof LoansandCredits ............................................................................ 119 Annex 14: Countryat a Glance ............................................................................................... 120 Annex 15: MapsIBRD#s36030 and36130 ............................................................................ 122 I. STRATEGICCONTEXTANDRATIONALE A. Country and sector issues 1. The Republic o f Maldives is a small islandnation located inthe IndianOcean southwest o f Sri Lanka. It consists o f some 26 major atolls and hundreds o f smaller islands (see map A in Annex 15). Of these islands, only 33 have an area greater than one square hlometer (km2).The total land area i s less than 300 km2.'Maldives is a country with more territorial sea than land. The populationis about 300,000 and is highly concentrated on relatively few islands. The atolls are ringed by coral reefs that are the seventh largest in the world and among the richest in terms o f species diversity and aesthetic appeal. The reefs host over 1,900 species o f fish, 187 coral species, and 350 crustaceans. Tourists are attracted to the Maldives for the pristine beaches and dive locations, the latter considered among the finest inthe world. An estimated 500,000 tourists per year visit sites inthe Maldives -nearly twice the country's population. 2. There are some 200 inhabited islands scattered across the archipelago, and some 90 additional islands given over to resorts. The populations o f inhabitedislands vary from a few hundredinhabitants to several thousand. Distances between atolls and inhabited islands are great and transport costs are high, depending on sea and air transport. Mal6 i s the location o f the country's major port and international airport (located on an adjacent island: the Hulhule Island). 3. The Maldives i s largely a service-oriented economy. Due to its small population and limited endowments o f land, the scope for agriculture and manufacturing i s limited. Nature-based tourism i s the primary industry, accounting for about 70 percent o f GDP (interms o f direct and indirect contributions), followed by fishing and fish processing (about 10 percent o f GDP). Revenues from these activities have been channeled largely into public investments in education, health and infrastructure, creating an economy that i s graduating to middle-income status. Economic performance has been robust over the past two decades with growth averaging about 7 percent per year. 4. Nature-based tourism has recently served as the engine o f growth and prosperity for the economy. The country has a tourism capacity o f about 16,000 beds with an 82 percent occupancy rate.* The sector i s poised for rapid expansion, with plans for 10 new domestic airports to be managed by the private sector, improvements to existing transport facilities and leases to 51 additional resorts by 2009, which would amount to a 50 percent increase inbed capacity. While the time frame for this expansion i s short, it signals a clear intentionto strengthen the role o ftourism as the key growthpole o fthe economy. 5. Like other small island states, the Maldives faces daunting environmental risks that threaten to undermine its economic achievements. In recent years, growing environmental pressures have emerged as a consequence o f rising population densities, increased tourism and changing consumption patterns. Some islands with high population density3confront growing problems o f solid waste management, pollution from sewage and other effluents emanating from urban settlements, hotels, fish-processing plants, ships and other sources. Inparticular, with growing prosperity and buoyant tourism, the quantities o f solid waste generated exceed disposal and treatment capacity. This poses a substantial and visible risk to the country's reputation as an unspoiled tropical "paradise". An estimated 248,000 tons o f solid waste was generated in the Maldives in 2007 and this figure i s predicted to rise over the next five years to 324,000 tons, a 30 percent increase. Current arrangements for solid waste management on inhabited islands are inadequate. Most wastes are dumped onto the island foreshore and burned at low combustion 'Bycomparison, the UnitedKingdomoccupies an area of242,495 km2. Republic of Maldives' Ministry of Tourism and Civil Aviation: Maldives Third Tourism Master Plan 2007 2011. - According to the UnitedNations World PopulationsProspectReport (ZOOS), the population density inMaldives is 1,005 personsper h2. 7 temperatures. Inaddition, approximately 510 tons per year o f medical waste i s estimated to be produced inthe Maldives. Uncontrolled disposal o f solid wastes, including medical waste, as it occurs today, is a threat to the coastal, marine and coral reef ecosystems and a blemish on the pristine marine landscape expectedby tourists. 6. Sewage disposal i s a further, though less visible, problem that can degrade seawater quality, and damage coral reefs-the keystone resource for revenues in the Maldives economy. Of particular concern are the continuing threats to marine assets from habitat degradation. Coral mining for construction and dredging o f lagoons for reclamation have been identified as the most widespread causes o f reef destruction. Other pressures include: damage caused by divers, the illegal collection o f corals and the unsustainable exploitation o f high-value reef resources such as sea-cucumber, grouper and giant clams. On the islands, timber harvesting and the destruction o f mangroves threaten terrestrial biodiversity, while pollutants from numerous sources have caused.eutrophication4o f coral reefs. 7. In addition to anthropogenic pressures, climate change poses a still more far-reaching source o f environmental risk. Geography has rendered the Maldives especially vulnerable to the consequences o f climate change. Being land scarce (96 percent o f islands occupy less than 1km2in area) and low lying (over 80 percent o f the country i s less than 1meter above sea level), the country i s exposed to the risks o f intensifying weather events such as damage caused by inundation, extreme winds and flooding from storms. 8. With the melting o f polar ice caps, the Maldives i s exposed to the risks o f sea-level rise. With future sea level projected to rise within the range o f 10 to 100 centimeters by the year 2100, the entire country could be submerged inthe worst-case scenario. Rising sea temperatures also threaten the coral reefs and cause bleaching and death, with the most severe damage in areas that are stressed by pollutants, or damaged by physical disturbance.' Coral bleaching events have been observed in the Maldives seven times since 1997 and are associated with elevated sea surface temperatures inthe Indian Ocean. Recovery o f corals from bleaching events has been slow, especially on degraded and damaged reefs. 9. The coral reefs stand as the first line o f defense for the islands against storm surges which are projectedto increase invelocity and depth with climate change. Vulnerability to climate change hazards has been magnifiedby the damage to coral reefs that has impairedtheir protective functions. Adapting to climate change would call for multiple approaches that require integrating climate risks in the planning, design and location o f new infrastructure, and may call for costly investments inprotective barriers such as sea walls6, and more proactive stewardship o f the natural protective barriers formed by coral reefs. 1O.With the Maldives' high dependence on a few key environmental assets and as pressure on these assets rises, prudent economic management calls for strengthened environmental stewardship. The substantial environmental challenges facing the Maldives could become a formidable brake on economic growth, especially if these undermine tourism. High-end tourism i s an inherently fragile activity that depends on consumer perceptions, adequate transport and a continuous effort by the private sector to maintain and improve the quality o f the tourism product in a highly competitive global market. To retain its comparative advantage, the Maldives needs to maintain a clean and attractive environment for tourists Eutrophication involves an increase in chemical nutrients-typically compounds containing nitrogen or phosphoms-in an ecosystem. It may occur on land or in water. The term is often used to imply the resultant increase in the ecosystem's primary productivity which translates into excessive and ultimately destructive plant growth leading to decay and mortality which may have even further impacts, including lack of oxygen and severe reductions inwater quality and infish and other animal populations. GZobaZ Climate Change and CordReef. IUCN2003 Report to UNEP-IOC-ASPEI Global Task Team. 6 Several sea walls have already been built around M a l t and other islands at a very highcost. 8 who, in the main, are well-to-do foreigners. This calls for a considerable improvement in environmental management with policy principles being translated into measurable outcomes and an environmental infrastructure that matches the needs o f a country on the threshold o fmiddle-income status. 11.Recognizing the economic significance o f its environmental assets, successive national development plans have emphasized the need for adopting sound environmental practices. There i s an overarching policy framework for environmental protection in the country. Tourist resorts are governed by comprehensive environmental regulations and have a strong economic incentive to protect the environment on the islands on which they hold concessions.' To address the risks posed by climate change, the Government o f Maldives has initiated a population consolidation policy with the creation o f "safe islands." The need for such a policy i s widely promotedand accepted within government.' There i s a consensus that, in the long term, as sea levels rise, it would be impossible to protect and provide services to widely dispersed populations. However, there i s little scientific information on climate risks at the atoll and islandlevel, to guide the selection o fthese safe islands. 12. Despite government commitment and past efforts, mounting environmental pressures far outpace the country's ability to manage its key environmental assets. The greatest constraint to implementation o f environmental policies i s the lack o f technical and managerial capacity. There are insufficient staff and a shortage o f slulled and qualified personnel in most environmental agencies. Information for sound policymalung i s fragmented and sparse, with little systematic data on reef health and marine habitats. There are insufficient slulls and institutional incentives to incorporate these concerns in policy development, and no organized constituency favoring environmental protection. These constraints prevent informed evaluation and evidence-based decision-malung. 13. It i s in this context that this proposed project seeks to enhance the medium-term sustainability and resilience o f growth and development in the Maldives. This will be achieved through targeted interventions that strengthen environmental outcomes addressing the risks posed by climate change, and creating enabling conditions to match the environmental needs o f a resource-dependent economy graduating to middle-income status. This would involve support for capacity building, filling critical knowledge gaps, strengthening incentives for improved environmental outcomes and improving solid waste management B. Rationale for Bank involvement 14. The proposed Project i s strongly aligned with the Government o f Maldives' priorities and the Bank's FY08-FY12 Country Assistance Strategyg(CAS). The Bank's CAS acknowledges the significant threats to economic prosperity posed by environmental degradation and the risks o f climate change. A strategic priority o f the CAS i s to selectively target limited resources where assistance i s most needed and effective. Accordingly, strengthening environmental management and building greater resilience to climate variability and change have been identifiedas major pillars o f the CAS. 15. The Bank" has extensive experience in supporting solid waste management in South Asia and in other regions. In the Maldives, the Bank is engaged in a European Union-funded solid waste 'Typically, a resort i s granted an exclusive concession to build and operate on an island that i s otherwise uninhabited. The social consequences of population concentration have not yet been adequately examined. This i s an issue that should play an important role indecision-making. The CAS was approved by the World Bank Group Board of Executive Directors inDecember 2007. (CAS Report Number: 41400-MV). loInthis document references to the BankandIDAare usedas interchangeable terms to meanthe same entity. 9 management project under the Post-Tsunami Emergency Recovery Project". The Government o f Maldives has also requested assistance to implement its newly enunciated National Solid Waste Management Policy. The Bank i s well positioned to assist in this endeavor with its expertise in institutional development, public-privatepartnerships and financial sustainability. 16. The Bank has also accumulated significant experience and expertise in general and specific areas o f the environment over the past 25 years. National Environmental Action Plans have been developed in practically all IDA countries and the Bank has supported national environmental projects in countries as varied as India, Brazil and Poland. Some o f these projects are aimedprimarily at capacity building, while others involve interventions in fi-agde ecosystems, including specialized projects dealing with climate change in islands o f the Caribbean" and projects focusing on marine, coastal and coral reef c~nservation'~. 17. Finally, climate change has emerged as an important priority in the Bank's deepening engagement in promoting responsible stewardship of global public goods. The Maldives represents the iconic case o f a small island economy facing unprecedented threats from climate change and sea level rise. H o w the country approaches these challenges could have important lessons for other Small Island Developing States (SIDS) that depend on coastal resources for economic development and environmental security. This project would therefore have important demonstration effects for other vulnerable island economies. Success in this project would provide valuable lessons for other states in learning how to build climate resilience by conserving the integnty o f coastal ecosystems. C. Higher level objectives to which the project contributes 18. The Government o f Maldives has produced a succession o f National Development Plans, three Tourism Master Plans, two National Environmental Action Plans and a National Solid Waste Policy. Each o fthese documents sets forth a vision for the country and lays out specific environmental goals to be achieved within a given time fi-ame. The proposed Project aims to advance the national development agenda by enhancing the environmental sustainability o f growth in the Maldives and improving the management o f its key environmental assets. By seeking to increase capacity and understanding o f sustainable practices in environmental management, the Project i s expected to contribute to the principles of sustainable tourism and environmental conservation which are enunciated in the Maldives Third Tourism Master Plan (2007 -2011). 19. The solid waste management aspects o f the Project are also aligned with the National Solid Waste Management Policy objectives to extend services to all inhabited islands, support sustainable development and encourage private sector participation in waste service delivery. The regional solid waste management component conforms to the principles of the Seventh National Development Plan (7' NDP). It supports the policy objectives enunciated in the 7' NDP, that is, to provide 75 percent o f all inhabited islands with adequate solid waste management facilities duringthe plan period (by 2010). This 11The project involves the constructionof 16 IslandWaste Management Centers (IWMCs) on inhabited islands and a Regional Waste Management Facility (RWMF) on an uninhabited island. 12These include Planning for Adaptation to Global Climate Change Project (P040739), Mainstreaming Adaptation to Climate Change Project (P073389), and CARIB-GEF-Implementationo f Adaptation Measures inCoastal Zones (PO97031). l3Among them, Mexico: Adaptation to Climate Change inthe Coastal Wetlands inthe Gulf o f Mexico (P100438), Integrated Coastal Zone Management Project, the completed GEF- Mesoamerican Bamer Reef System (P053349) and its follow up project underpreparation, the Conservation and Sustainable Use o f the MesoamericanBarrier Reef System I1(P103923), Tanzania: Marine and Coastal Environment Management (P082492), Seychelles: Biodiversity Conservation and Marine Pollution Abatement Project (P002383), among others. 10 component contributes toward maintaining a high level o f environmental integnty and sound environmental management in the islands. By improving the manner in which inhabited islands manage their wastes, the Project would also contribute towards achieving the objectives o f the Third Tourism Master Plan. 11. PROJECTDESCRIPTION A. Lendinginstrument 20.The proposed lending instrument i s a Sector Investment Credit (SIC). This instrument allows for targeted support, investment in solid waste facilities as well as technical assistance across a spectrum o f needs and a range o f institutions inpriority areas. The amount o f the loan i s SDR 8.00 million which i s equivalent to about US$ 13.15 million. B. Projectdevelopmentobjectiveandkeyindicators 21. The main aim o f the Project i s to provide the Republic o f Maldives with the capacity to effectively manage environmental risks and threats to fragile coral reefs as well as marine habitats resulting from tourism development, increased solid waste disposal, fisheries and global climate change. Accordingly, thisProject has two development objectives. 22. While the rapid growth o f tourism in the Maldives over the past 20 years has raised incomes and diversified livelihoods, there have been costs. Higher living standards have been accompanied by increased pressure on the country's resource base. Most notable i s the increase in the quantity o f solid waste generated and changes in the composition o f waste with growing volumes o f non-biodegradable materials and lubricant residues. Few residential islands have satisfactorily functioning solid waste management systems and many dump wastes into lagoons, while others allow wastes to accumulate on beaches. The proposed project will help address the solid waste problem. The first Project Development Objective i s that a solid waste management system is established and that inhabitants on targeted islands use solid waste management (SWM) facilities, reducing the risks of contamination associatedwith accumulatedwastes and sea dumping. 23. For the first Project Development Objective the key performance indicators are the following: (a) 50 percent o f targeted (i.e. participating) islands compost organic waste14, separate recyclables and deposit residual waste inthe IslandWaste Management Center (JWMC). (b) 50 percent o ftargeted householdspay user fees for waste management. (c) 50 percent o f targeted islands with functioning IWMCs have no observed ~pi1lage.l~ 24. The second Project Development Objective i s to build human and technical capacity for environmental management so that the environmental dimension is integrated in the planning processusinginformationandexpertise developedinthe Project. 25. The key performance indicators o f this second Project Development Objective are that: (a) products and information on environmental issues from the studies and monitoring activities are made available for the planningprocess and l4The cornposting could occur at household, island community or regional level. l5That is waste accumulation would not exceed storagecapacity of the IWMC. 11 (b) 50 percent participationrate is achieved inthe assessment, monitoring and stewardship ofkey resources such as fisheries and coral reefs incommunities where interventions have occurred. C. Project components 26. Environmental needs in the Maldives far exceed available Project resources and this has called for delicate balancing of priorities and targeting o f the project components. The proposedProject would have four components (see Annex 4 for a more detailed description o f each component): (1) A regional solid waste managementprogramfor the North CentralRegion; (2) Capacity buildingfor environmental management; (3) Technical assistance to cover a range o f targeted priorities and a pilot regional strategic environmental assessment, and (4) Project management and communications. Component 1:RegionalSolidWaste ManagementProgram(US$6.55 million) 27. Solid waste is the most visible environmental threat to the tourism and fishery industries. Ina recent survey, solid waste was identified as the most important environmental issue by 24% percent o f respondents16. The management o f solid waste i s especially challenging in the Maldives, even more so than other small island states. With a population spread across numerous islands, there i s little scope for harnessing economies o f scale. Thus, the costs o f service delivery are high. With restricted land endowments, the space available for waste disposal i s limited, calling for the waste stream to be minimized through such means as recycling and composting. The country's fragile marine ecosystem requires that special attention be given to the choice o f technology and system design to mitigate adverse impacts, particularly those that could damage the Maldives' primary asset: its relatively unspoiledmarine environment. This combination o f risks and challenges i s unique to the Maldives and demands specifically tailored solutions to develop a sustainable solid waste management system with stringent criteria applied for site selection, engineering, technology choice and management. 28. Taking account o f the Maldives' dispersed geography (see map A inAnnex 15) and fragile ecology, the program would operate at multiple levels. First, the construction o f Island Waste Management Centers (IWMCs) will provide facilities for island communities to reduce the volume o f waste requiring final disposal by sorting, recycling, and composting. The residual waste will be temporarily stored in a safe and environmentally responsible manner in the IWMC. Second, one or more Regional Waste Management Facility(ies) (RWMFs) built on an uninhabited island or an island with compatible landuse (e.g. an industrial island), will serve as the destination for residual waste from the IWMCs and participating resort^.'^ Community consultation, communication and involvement are key components o f this subcomponent and are essential to the successful operation o f IWMCs. Third, all these will be supported by allied services such as community programs, waste transfer and transportation facilities, technical assistance and financial systems, all o f which will be subject to government regulation and guided by stringent environmental criteria. The facilities will be designed and built to the highest appropriate standards to reduce the risk o f contamination from solid wastes. Special attention will be paid to medical wastes and toxic wastes that will require special handling and management. l6This was a national survey conducted by ERC in September 2006. See ERCMEEW, 2007. Public Perception of the Environment: A Maldivian Perspective. Male. l7 Currentlythere is insufficient information on basic parameters to determine the location o f the RWMF and this will be chosen through a comprehensive and thorough process designed to assure the highest feasible levels o f environmental stewardship. 12 29. The Project will support a regional solid waste management program in the North Central Region18, which i s currently under-served by waste management facilities. The program will be undertaken in one or more o f the four atolls inthe North Central Region o f the country. The "catchment" or group o f atolls and islands to be served will be defined during project implementation based on a comprehensive feasibility study. At present there is insufficient information on basic parameters to define the catchment or location o f RWMFs. The factors that will influence the choice o f catchment will depend on multiple intersecting criteria: economies of scale, population distribution, geography, environmental factors and the location o f (current and planned) resort developments. Community consultation, an assessment o f community needs and communication will be central elements in defining the catchment. Once the catchment has been defined, there will be detailed assessments o f current and future needs, technology choices for waste management and a thorough environmental and social impact assessment. Alternate sites and technologies will be weighed, keeping in mind cost and sustainability. Recognizing the significance o f the country's natural capital and reputation as an unspoiled tourist destination, environmental factors will be given high priority over economic considerations in determining both the location and design o f the system. 30. Operating costs for the system would be funded from three sources: community contributions would initially cover part o f the costs o f runningthe IWMCs, commercial organizations would be charged a fee for service and the government recognizing that S W M i s a public good that would be under-supplied without subsidy, would cover the residual expenditures. It is envisaged that community fees would initially be low to generate confidence in the system and would be raised gradually over time as a high quality and reliable system i s developed. It seems unlikely that full cost recovery will be achieved during the life o f the project. 3 1. The S W M component will consist o f the following six sub-components: Sub-component 1.1: Technical Assistancefor Feasibility Studies, Technical Designs, Environmental and Social Impact Assessment Studies, Contract Documentation and Capacity Building 32. Currently there i s insufficient information on key baseline parameters (e.g. environmental and socio- economic factors, access and geography) to identify the location o f a RWMF or the potential catchment. Under this sub-component the Environmental Research Centre (ERC), which holds the mandate for SWM, will support an assessment that would identify the catchment area, the location o f the RWMF and the waste management system (technology) that will be used for final disposal. The study will be conducted using a screening and selection process h o w n as the Best Practical Environmental Option (BPEO). The BPEO analysis involves a process o f identifying viable scenarios for waste management, followed by a process o f performance assessment against a number o f decision criteria such as environment, feasibility and cost, in order to determine which scenario i s the preferred option. This process involves a continuous interplay between the environmental dimension and the technical/financial dimension and will determine the most suitable waste management option and location for the RWMF. It will begin with a long list o f potential sites to be prepared by the Ministry o f Planning and National Development, the area o f government responsible for regionalhpatial planninginthe Maldives. 33. The first phase will generate a short list o f potential RWMF sites together with an assessment o f suitable waste management system options for each o f these. The assessment will use information from Component 3 o f this Project and other sources, will identify and anticipate environmental risks and propose a range o f technical solutions. The second phase o f the BPEO will be the selection o f the preferred regional waste management system option and a detailed technical and financial feasibility study. The NorthCentral Region comprises Baa, Raa, Noonuand Lhaviyani Atolls (see map A inAnnex 15). 13 34. Once the appropriate technology and location are determined, an Environmental and Social Impact Assessment (ESIA) will commence, with detailed engineering designs o f the RWMF. The outcome will be a detailed social and environmental impact analysis, and an environmental management plan (EMP)." The ESIAs for the RWMF and EMPs for the IWMCs will be camed out in accordance with the Environmentaland Social Assessment Framework that has beenprepared for the Project. 35. A rigorous program for systematic environmental monitoring will be established (duringthe first year and in the final year) to assure strict compliance. Technical assistance will be provided to enhance the capacity o f atolls and local communities, including the private sector to buildcapacity for environmental monitoring and evaluation and also to facilitate public-private partnerships for the transfer of waste and the operation o f the RWMF. 36. The technical assistance provided in this component would culminate in a framework for the operation and financial management o f IWMCs and RWMFs that form the basis o f a disbursement condition. The science- and evidence-based approach in this Project, and the detailed attention given to environmental factors, are unprecedentedinthe Maldives and their implementationi s expected to serve as a model for the future development o f infrastructure inthe country. Sub-component1.2: Community Consultation and theDevelopment of Island WasteManagement Plans 37. This sub-component will finance the preparation o f island waste management plans ( W P s ) on participating islands inthe catchment. These will define the level o f recycling, composting and resource recovery in each island. The planning process will commence with an extensive consultation and a communication campaign that will use the skdls o f experienced community organizations and NGOs. This will be accompaniedby a Participatory Rural Appraisal (PRA) to understandthe social structure and physical layout o f communities, patterns o f leadership, formal and informal island networks, economic activities, and entry points for community mobilization. This component will be highly interactive with communities leading the process. Sub-component 1.3: Construction of Island WasteManagement Centers 38. This sub-component will support the design and construction o f Island Waste Management Centers (IWMCs) as a focal point for island waste management activities. The precise design will be guided by the volume and composition o f waste generated in each island and the extent and type o f community (or household) level recycling, composting and resource recovery. Communities will be involved in managing, operating and maintaining IWMCs and equipment either directly or with the assistance of contract labor. Sub-component 1.4: Waste Transfer System to the Regional WasteManagement Facility 39. This sub-component will finance the procurement of one or more barges or landing craft for the transfer o f waste to RWMFs, and o f recyclables to markets. Island communities will be expected to contribute a portion o f the costs, with cross-subsidies from commercial enterprises (tourist resorts, boat l9An environmental management plan (EMP) constitutes the actions requiredto mitigate any adverse environmental impacts as well as a monitoring plan designed to detect deviations from expected ranges o f key variables. In the case o f IWMCs, for example, the EMP would monitor the frequency o f dumping, the proportion o f waste undergoing selection and separation, the amount of waste composted, the frequency o f transport o f residual waste off the island, etc.). Indicators for the RWMF(s) would focus on the correct operation o f the site, separation o f recyclable wastes for sale, the proper treatment o f leachate, etc. 14 yards, fish processors) and the Government to render the system economically sustainable.20 Inkeeping with the National SWM Policy, private-sector participation inthe operation o f the waste transfer service will be explored. Sub-component1.5: Construction and Operation of the Regional WasteManagement Facility 40. This sub-component will finance the construction o f one or more RWMF(s)on uninhabitedislands, or islands with compatible land use, taking account o f potential environmental risks. Recognizing the challenges posed by land scarcity and a fragile marine ecosystem, the waste management system chosen will give priority to environmental impacts. The options to be considered will include properly engineered-controlled landfills, incineration for combustible residues, and viable waste-for-energy options. Regardless o f the option selected, a disposal site for residue or ash will be required and will be engineered to minimize the risk o f contamination. Since the majority o f waste will be municipal, with the organic fractionremoved for composting, disposal o f the residue or ash inan engineered-controlled site i s unlikely to pose management problems. A section o f the RWMFsite will be secured and fully contained for disposal o f the small amount of medical and toxic wastes generated. The aim would be to have the RWMF operated by the private sector through a public-private partnership, in accordance with the National Policy on SWM. Sub-component1.6: Biodiversity offsets to Compensatefor Possible Impacts of the R W F 41. Recognizing the primacy o f the environment for economic growth, the Project would specify measures to offset the loss o f biodiversity and island habitat, should these occur. This will be done either through the creation o f a new protected area, or the improved protection o f an existing protected area. This approach is expected to have important demonstration effects that would serve as a model for the future development o f infrastructure. Component2: CapacityBuildingfor EnvironmentalManagement (US%2.94million) 42. The environmental agencies and regulators inthe Maldives have a broad mandate, but their capacity to manage growing environmental pressures does not match the needs o f a fragile environment on which the economy depends. At present, the environment section o f the Ministry o f Environment, Energy and Water (MEEW) has a total professional staff o f about 35, o f whom only 5 have post-secondary degrees or the equivalent. ERC has 32 staff o f which 5 have undergraduate degree and only 1 has a post-graduate degree. Likewise, MRC, with 55 staff, only has 5 with tertiary qualifications o f which 4 have pursued post-graduate studies. Iti s clear that these agencies are bothunderstaffed and under-slulled. 43. The proposed Project i s designed to at least partly fill the staffing gaps and capacity needs as they relate to the Project itself. It i s apparent that it would be nearly impossible to build a large, permanent cadre o f environmental specialists with a reach extending over the entire archipelago and across all sectors. Pnority would, therefore, be given to developing: a core o f competent generalists and specialists in the MEEW, other relevant ministries (Planning, Fisheries, Tourism, and Construction) and in the private sector (particularly NGOs and the tourism sector) to guide the environmental assessment and 2o The team encountered resistance to the idea o f new taxes or fees on resorts from the Ministry of Tourism and Civil Aviation. Currently resorts transport their residual waste at their own expense to the M a l t landfill on Thilafkshi often using supply vessels returning to Malt. There i s n o certainty that resorts would volunteer to use the RWMFor the associated transport infrastructure, nor are there audits o f waste (from any source) to determine how these are disposed. However, the Government o f Maldives has tabled legislation that would make use o f the RWMF mandatory. 15 decision-making process. The emphasis would be on training existing government staff and others for whom there i s a reasonable expectation that their slulls could be utilized inthe near or mediumterm. 44. Trainingwould take place ina number ofmodalities as follows: a. Community Training: .Communitytraining o f islanders insuch areas as solid waste management (composting, recycling), reef quality monitoring, community mobilization and other similar work. Such training can be carried out inthe field close to the home islands o fthe trainees and linked to other project activities, most notably the solid waste management component. b. Undergraduate training: This will be camed out in-country by local and foreign experts. Training will be conducted by the Maldives College o f Higher Education, the only tertiary level institution inthe country. The Project will support development o f a diploma, and a full program leading to a degree in Environmental Management, with a focus on areas o f need. The program will be available as a supplement to other degree programs inmanagement or teaching. c. Formal degree programs abroad (undergraduate and post-graduate): This training will be reserved for the highest priority areas o f study having a direct application to problems o f environmental management in the Maldives and where a particularjob function requires a high level o f professional s h l l that could not be acquired in the Maldives. Inview o f the highcost o f such training, this modality would be limited to a relatively small number o f individuals, competitively selected using objective criteria. Financing o f this modality would mainly be limited to covering the cost o f university-level training innon-OECD countries21. Exceptions to this rule would be considered for specialized training needs mainly in coral reef ecology not available in non-OECD countries. This i s an area o f the highest importance for the country and its economy and i s also one where slulls are scarce. Priority will also need to be given to prospective faculty inenvironmental management and reef conservation and management 45. Project support would also include the training o f staff members in other pertinent ministries including Planning, Fisheries and Agriculture, Tourism, and Construction. Selected professionals and para-professionals from NGOs and the private sector (e.g. resorts, dive schools) would also be eligible for training. 46. The proposed Project would not be the sole source o f support for training. Among project activities would be the search for additional funding sources. The PMUwould serve as the clearing-house for such opportunities. Component3: TechnicalAssistancefor StrengthenedEnvironmentalManagement andMonitoring and a PilotRegionalStrategic EnvironmentalAssessment (US%2.85Million) 47. Sparse information and the absence o f baseline data remain one o f the key impediments to improved environmental management in the Maldives. Evidence on the magnitude and causes o f these problems would allow an opportunity to adopt policies to arrest or reverse degradation o f the country's key natural assets. The primary objective o f this component i s to expand the knowledge base regarding critical natural resources on which the Maldives ecosystem and economy depend. Recognizing that there are insufficient resources in the project envelope to fill all the information gaps, this component selectively targets issues and information gaps where assistance i s most urgently needed and promotes activities designed to stimulate discussions and policy deliberations that would lead to greater community awareness and better decision malung. 21This reflects both the Government of Maldives' policy preference and the need to exercise economy. 16 48. Among the many environmental problems that affect the Maldives, communities identify coastal erosion as a significant threat to their assets and existence. Some estimates suggest that over 80 percent o f inhabited islands are threatened with erosion and this problem i s expected to intensify with climate change. Yet there i s little information on the magnitude o f the problem, or understanding o f the complex processes o f accretion and erosion and their links to wave dynamics, terrestrial ecosystems (mangroves) and coral reefhealth. There is growing evidence that even a moderate rise insea level would have a large impact on the wave energy reaching islands.22 Reefs play a crucial role in dissipating the velocity o f waves and are essential for sustaining island life. Destruction o f reefs leads to a lowering o f the reef crest, increased wave energy reaching the shore and greater erosion. A major focus o f this component will be on addressing the issue o f building climate resilience by improved management and stewardship o f the country's coastal resources (marine and terrestrial). 49. A second major concern highlighted by communities on some islands i s the productivity o f the tuna fishery, which i s the second largest export industry and the primary source o f livelihoods on many islands. Tuna harvests depend on, among other thngs, the availability o f adequate bait which i s sourced from the coral reefs. Anecdotal reports from the industry suggest that (deep sea) tuna stocks are probably not in observable decline, but the bait fish catch (per unit "effort"23) has been decreasing rapidly in several atolls. There i s evidence that coral reef health and recovery are linked to fish diversity. This component will explore the status o f the bait fishery, the interactions between coral recovery (health) and fishstocks as well as provideinputsfor the development o fabait-fishery managementplan. 50. The geographical scope o f this component will be the North Central Region composed o f Raa, Baa, Lhaviyani and noon^*^ atolls (see map B inAnnex 15). This region i s comprised o f a total o f 224 islands o f which 44 are inhabited and 11are undergoingresort development. The total population i s an estimated 42,000. This component will also seek to establish linkages and share project information with the IFC in order to inform its operation and promote greater environmental stewardship and sustainability o f its future investments inthe North Central Region. 5 1. The Project will support monitoring by professional scientists that insome instances will be supported by communities as an effective way o f creating awareness and also collecting basic data in a systematic fashion from a large number o f sites. The capacity to monitor and acquire data will be enhanced by the acquisition o f a research vessel appropriately outfitted with and other necessary research instruments. The following i s a brief outline o f the sub-components: Sub-component3.I:Erosion and the TerrestrialEnvironment 52. This sub-component will be led by MEEWBRC and include communities. Mangroves and other vegetation are especially important to stabilizing the soil and providing a cost-effective response to coastal erosion. As climate change advances, storm surges are likely to grow in intensity and with them the power to transport sediments which i s the basis o f erosion. Another priority topic that will be investigated i s the impact o f harbor construction on erosion. All islands are ringed by protective reefs - in fact without a reef there is unlikely to be much land. Hence breaking a reefto build a harbor often invites erosion. Harbor construction i s accelerating rapidly through the inhabited islands. This sub- component will support monitoring and technical reports to address the issue of erosion, harbor impacts and design to minimize erosion, land-use alternatives and soft engineering solutions such as mangrove 22 T o be precise this is because the orbital diameter o f a wave decreases (increases) exponentially with depth (height). The implicationis that a small rise insea level has a disproportionately large impact o n wave energy. 23 The term "fishing effort" refers to the combined inputs (labor, capital and variable inputs appropriately standardized) to harvest fish. 24Noonu atoll i s only partially covered due to its division by an administrative boundary to the north. 17 seeding to arrest erosion. Awareness raising and community involvement will be central to this sub- component. Sub-component3.2: MarineEnvironmental Monitoring and Coral Reefi 53. Tlus sub-component will be led by M R C and focused on two major (and related) themes: coral reef status and bait fisheries. Data from these surveys will be compiled, processed and analyzed by MRC and reports written. This data will also inform the process o f island selection for the RWMF. The other main policy focus o f this sub-component will be on addressing the risks o f climate change and enhancing natural adaptive capacity. This will include an assessment o f coral tolerance to climate change, "reef connectivity" and critical climate-resilient reef areas. The aim i s to inform management o f actions needed to increase adaptive capacity by reducing direct stresses and identifying key resources that need to be protected. This sub-component will also strengthen the integration o f Maldivianmarine scientists into the global marine science community by supporting linkages, partnerships and internships between MRC and the GEF hnded and Bank managed Coral Reef Targeted Research and Capacity Building for Management Program. 54. Related to coral health i s the productivity o f the bait fishery which i s critical for the Maldives tuna fishingindustry.25Community monitoring combinedwith technical assistance to MRCwill feed directly into the formulation o f a national bait fishery management plan that i s currently under development inthe Ministry of Fisheries, Marine Resources and Agnculture. This will identify the ecological status of the bait fishery in the North Central Region and suggest alternative management strategies, drawing on relevant experience in other countries. Particular emphasis will be placed on seelung more sustainable alternatives to the current bait fishingpractices. Sub-component3.3: Spatial Planning 55. Parallel to these, the Ministry o f Planning and National Development will take the lead in developing its spatial database and planning capacity with the aim o f integrating the environmental dimension in planning. The Project will support acquisition o f software, hardware and processing o f satellite imagery in digital form and the training of specialists in their interpretation. This will allow the Ministry of Planning and National Development to extend its assessments into the marine environment for the first time and to take both terrestrial and marine variables into account in planning. These are pertinent to developing appropriate adaptive strategies to climate change. The database will be made available to other government agencies. This has the potential o fraising the quality o f land-use planning to a new and higher level in the Maldives, and to facilitate the integration o f environmental concerns in land-use planning. Sub-component 3.4: Integration of Findings: Reports and a Pilot Regional Strategic Environmental Assessment 56. Integrationand use of infomation will proceed at two levels. As data and analyses become available, reports, workshops or seminars would be convened by the appropriate agency to disseminate the results and to examine the implications o f studies for planning, climate-change adaptation and environmental conservation. Information from this component will also be used for creating the short list o f islands for the locationof apotentialRWMF. ''The causal links here are ambiguous. Observations suggest that reef recovery from bleaching i s higher in areas with low fishing effort. It is not certain whether high fish stocks promote reef recovery, or damage from fishing impairs recovery, or both. 18 57. Second, to bring together these activities, this sub-component would support a pilot Regional Strategic Environmental Assessment (RSEA) to (i) integrate and synthesize the assessments in ways that would inform policy and (ii)demonstrate the utility o f incorporating environmental parameters in development decisions. The aim o f an RSEA i s to examine how factors cumulatively affect ecological and human living conditions within a prescribed area. Communities are expected to play a lead role in defining the scope o f the exercise and being involved in understanding and assessing the consequences o f alternative development trajectories. Recognizing the need to incorporate environmental considerations into policies and plans, the Government has placed a high priority on conducting a pilot RSEA in the North Central Region that could serve as a model to guide development in other regions. MEEW/ERC would be the implementing agency o f the RSEA, with coordinated inputsfrom other relevant agencies. It would oversee work carried out by all participants and would provide a forum for evaluating scenarios. Component4: ProjectManagement and Communications:(US$1.54 million) 58. The Project Management Unit (PMU), with the number and qualifications described inthe Operations Manual (OM), will manage the Project in accordance with the guidelines set forth inthe OM. The PMU will include the following functions: overall project management, component management, liaison with other agencies and programs, financial management, procurement, monitoring and evaluation and project communications. The Project will have a communication sub-component that will include a communicationcampaign aimed at developing environmental awareness, action, and advocacy. 59. The Project has a communication sub-component (4.1) that includes targeted communications aimed at developing environmental awareness, action, and advocacy. Planned activities will help promote popular participation, decentralized decision malung, and sustainable economic development. The campaign will aim to foster national awareness by which policymakers, administrators, program implementers, the media, NGOs, private sector, and the public in general put the safe disposal o f solid waste and the protectiono f the coral-reef environment and marine life at the top o f their agenda. 60. As part o f this sub-component, the PMU team will include a communications specialist who will be responsible for all facets o f project communications including awareness-raising at the island and atoll levels, communication with authorities and decision makers, and communications with both the private sector and the general public. The first task o f the communications specialist will be to prepare a detailed stakeholder analysis and to define the methods and goals o f the communication program for each audience26. The communications specialist will work closely with the coordinators o f other components o f the Project. The specialist will also be responsible for transparently communicating relevant FM information to promote transparency and raise awareness. This will, at a minimum, include posting information in the public domain on procurement procedures and the publication o f contracts or awards. Envisaged communications activities will help promote popular participation and awareness. The campaign will help foster consciousness among policymakers, administrators, program implementers, the media, NGOs, private sector, and the public about the benefits o f safe disposal o f solid waste and the protection o f the environment and marine life (which i s the engine o f growth and prosperity in the Maldives). It would enable people to find ways through which they motivate the entire community to adopt the desired changes inbehavior. D. Lessonslearnedandreflectedinthe projectdesign 61. Component 1: RegionalSolid Waste Management Program. The S W M component takes account of lessons from past and existing solid waste management activities inthe Maldives as well as lessons and 26For each identified communications task, the specialist would identify an audience, the preferred medium (or media) and the timing and content o f the program. 19 best practices in the region. Maldivian islands are marked by considerable variation in local conditions, with differences in: (i) composition o fwaste betweenresort islands and inhabitedislands, (ii) the customs including the extent o f community participation; and (iii) economic enterprise. Consequently, there i s no "one-size-fits-all" solution to solid waste management at the islandlevel. 62. Several past endeavors have failed because o f inadequate consultation and insufficient assessment o f local conditions. The Project design has benefited fkom earlier experiences aimed at providing S W M including recent initiatives sponsored by the Australian and Canadian Red Cross. Four important lessons have emerged from these operations. First, there i s a need for programs to take account o f local conditions, which vary widely across atolls and within atolls. Second, strong consultation and community buy-inremains the key to a successful operation and sustainability o fthe system. IWMCs cannot operate satisfactorily unless agreement has been reached with each participating community regarding the modality o f waste management and unless islanders have agreed to collaborate. Third, it i s essential that IWMCs be linked to regional waste management facilities by means o f establishing a regular waste transfer system. Finally, given the high cost of transportation, the waste volume needs to be reduced by carrying out composting o f organic wastes on the island o f origin27. With careful attention to lessons learned from previous experiences on the Maldives, a viable S W M system can be implemented. 63. The S W M component incorporates these lessons. Considerable weight will be given to local preferences through both the PRA process and an effective public awareness program combined with a communications campaign. Technical, Financial and Social Assessments will ensure that Island Waste Management Plans reflect local conditions and requirements. The experience fkom the existing IWMCs shows that community participation in the recycling and resource recovery program i s poor in most islands because o f the need for an attitudinal change inthe community, the lack o f a mechanism for resale o f recyclables, and the absence o f facilities to transport residual wastes to a RWMF. In some instances, this has created a serious environmental and public health problem on inhabited islands, with waste accumulation spillingonto beaches. Inother cases, island communities dump mixed solid wastes along the shoreline, with adverse consequences for reefhabitat. 64. Financial sustainability o f the operations o fthe IWMCs has been identified as one o f the mainreasons for failure. Attempts to achieve full cost recovery from island communities have typically failed. It i s uncertain whether all islanders will be willing to pay a fee for SWM. This reluctance appears to have three sources: (i) some remain skeptical o f the capabilities o f service providers; (ii) feel that any some contribution i s too high for their meager earning; and (iii) there i s a perception that waste collection in Mal6 i s provided free o f charge.28 Inorder to overcome these concerns, there will be a need to persuade people that reliable services can be provided at a reasonable rate and to ensure that waste services can be tailored to the needs and preferences o f islanders. The social mobilization and outreach to be carried out by ERC andNGOs are intendedto give islandcommunities a sense o fownership. The Project will begin S W M service on each island with at least a token payment from each household. As service o f a satisfactory quality i s provided, the public should become willing to pay for the service they receive. Although recognizing that S W M i s a public good, it i s not expected that full operating cost recovery will be achieved and, as elsewhere inthe world, there will be a need for some public subsidy. 27 Composting can be done at the household level or at the community level. This can be determined by each community. Ineither case, there is a need for training and outreach to show islanders how to properly compost their organic waste. 28 This perception is only partially correct. Residents o f MalC pay for private services to haul their waste to a municipal dump site from which waste i s transshipped to Thilafushi, a landfill located on an industrial island near Mal& However, the government does pay for the operating costs of transport from MalC to Thilafushi and final deposit there. 20 65. On the positive side, there are already communities in the targeted region that pay modest fees for waste disposal that can serve as models for other communities (Fig. 1). Financial sustainability o f the waste transfer system and operation o f the RWMF i s assured here through cross-subsidization from commercial enterprises, with the shortfall financed by the Government. Fig. 1.Properly segregatedwaste at the Noonu Kudafari IWMC. Islanders on Kudafari voluntarily pay a small monthly fee for waste management. 66. Component 2: Capacity Building.Numerous donors have supported short and intensive workshops to help build skills and the knowledge in specific areas o f environmental management inthe Maldives. A central lesson learned i s that these events appear to have had little impact on the slulls base and management capacity, which have been found to be limited in scope and duration. Buildinginstitutional slulls and capacity i s a long-term process that requires continuing engagement and a gradual acquisition o f slulls. It also requires an incentive system that will help motivate and retain qualified personnel. Accordingly, this Project proposes a multi-tiered system o f capacity enhancement that targets slulls deficit across a spectrum o f environmental management needs. Capacity building at the tertiary level will help create a collection o f professionals with specialized shlls. It will also help to build the capacity in the Maldives to continue the education o f aspiring environmental managers. The migration o f qualified staff to the more lucrative private sector remains an additional obstacle to building capacity across all public agencies in the country. By addressing the supply constraint, the approach supported in this Project would create a sufficiently large number o f actors qualified technical slulls within the country that would alleviate the drain from the public sector. 67. Maldivians who receive training abroad at government expense are required to return to government service. However, many leave government service soon after their obligatory service period has ended. Inresponseto this, the Government has strongly endorsed in-countrytrainingwiththe expectationthat it will enhance the retention o f trained people, increase the pool o f trained individuals, and be more cost- effective and sustainable. 68. Component 3: Technical Assistance for Strengthening Environmental Management and Monitoring and a pilot Regional Strategic Environmental Assessment. The current system o f environmental management in the Maldives relies heavily on piecemeal approaches such as the ESLA process, or short-term project interventions where the focus i s on gaining clearance for individual projects. Experience inthe Maldives and elsewhere has shown that individual projects may have a limited impact, whereas the cumulative effect o f multiple projects can be substantive. The knowledge components seek to create the conditions for buildingthe knowledge base to facilitate informed decision- malung toward identifying emerging and cumulative risks. There i s also an emphasis on building 21 community awareness by addressing issues o f concern to communities and engaging communities in monitoring activities. 69. Constraints posed by the information deficit have been highlighted ina 2005 Strategic Environmental Assessment (SEA) report for the Maldives supported by the European Union. Its impact has been limited in light o f a low level o f awareness of the exercise, even among the country's environmental agencies. The conclusions o f the SEA were based largely on subjective assessments, and the exercise was constrained by sparse data and inadequate information. The current Project seeks to avoid these problems through strong commitment to engagmg communities in monitoring and other activities, raising awareness and supporting evidence-based decision making by establishing baseline information to help strengthen implementation and outcomes. E. Alternatives consideredandreasons for rejection 70. At the outset o f project preparation it became evident that the resources needed to tackle the environmental challenges far exceeded project funds. This required difficult trade-offs that were determined in consultation with the Government of Maldives. Considering the significant increase inthe environmental problems due to mismanagement o f solid wastes in the Maldives, a "do-nothing" alternative could not be considered. The magnitude of the problem was such that one alternative that was considered was a project entirely aimed at solid waste management. This was rejected because it would not resolve the entire solid waste problem o f the Maldives, even if all available project resources were devoted to solid waste management. It was decided that developing a highquality and effective model for S W M in one group o f atolls or a region, learning from accumulated experiences to date, could have an important demonstration effect, and that it would probably be likely to secure financing from other donors to scale up the model, once the model had demonstratedits effectiveness. 71. Another alternative considered was to devote the entire project to institutional strengthening and, in particular, to staff training in foreign institutions. However, this model has been followed in other countries with poor results. Unless staff are trained in a context with clear goals, it i s easy to expend considerable resources without tangible results. It i s necessary, therefore, that institutional development proceeds inthe context o f specific environmental quality goals, and that training needs are defined around those goals. 72. A third alternative would have omitted the information gathering component o f the Project. However, during early preparation stages, it was recognized that, although the Maldives was facing extraordinary environmental challenges, it lacks data to make informed decisions. The option o f conducting an SEA at the national level was also entertained inthe initial stages o f project design, but it was rejected based on the experience o f the 2005 SEA supported by the European Union. Despite considerable investment in the SEA process, the conclusions were largely conjectural and based on subjective assessmentsthat lacked a scientific basis for the recommendations. 73. A fourth alternative would have supported climate risk assessments to guide the location o f "safe islands". This option proved unviable because the cost o f generating the required scientific information (on wave dynamics and hydrographic data) at the island level would have exceeded all available project resources. A more pragmatic approach adopted in the Project was to focus on building and sustaining natural resilience and adaptive capacity to climate change through improved knowledge and stewardship o f natural coralreefbarriers. 74. The conclusionreachedwas to combine elements o f capacity buildingthrough selective andjudicious investments in knowledge and human capital and to develop an effective model for solid waste as a 22 means o f addressing one o f the Maldives' most pressing problems, and for which a solution has eluded planners to date. 75. Experience gained from the slow execution o f other projects in the country i s reflected in implementation design. A high-level inter-ministerial committee has been set up, chaired by the Minister o f Environment, Energy and Water to oversee and guide project activities and provide leadership to facilitate cooperation between and within ministries. This tier o f the project management structure will meet when high-level interventions are necessary to address policy and operational issues. 111. IMPLEMENTATION A. Partnershiparrangements(if applicable) 76. None B. Institutionalandimplementationarrangements 77. With its multi-agency focus, arrangements have been established to support coordination during project implementation. The Project Management Unit (PMU) i s lodged inthe Ministry o f Environment, Energy and Water (MEEW). The overall Project i s guided by a multisectoral National Project Steering Committee, chaired by the Minister o f Environment, Energy and Water. This will ensure greater visibility and policy commitment to environmental management for the duration o f the Project and beyond. A Technical Committee provides guidance and oversight to the Project. The Technical Committee i s chaired by a senior MEEW official, and it includes two additional representatives from the MEEW (appointed by the Minister o f MEEW), the Project Director, representatives o f the Marine Research Centre, the Ministry o f Planning and National Development, the Ministry o f Atoll Development, the Ministryo f Fisheries Agnculture and Marine Resources, the Maldives College of Higher Educationand the Ministryo fTourism and Civil Aviation. 78. The PMU will be responsible for monitoring progress, evaluating outcomes and implementingthe Project. Procurement and find flows will be managed by the P M U and includes an agency in the MEEW (i.e., ERC) that has had experience and involvement in donor-funded projects and, specifically, with World Bank policies and guidelines through implementation o f the South Ari Solid Waste Management Project." 79. The PMU will be kept lean with a core group o f career officials for filling the positions as overall coordinator and managers for each component. Other staff will be recruited from government, if available, or as consultants on renewable contracts, contingent on performance. The PMUwill include a Project Director, a Project Advisor, an HR Coordinator (long term), an HR Specialist (short term), a Procurement Specialist (short term) and a Procurement Officer (long term), a Financial Management Officer (long term) and a Financial Specialist (short term), an M&E expert, and a Communications Specialist (see annex 6 for details). C. MonitoringandEvaluationof Outcomes/Results 80. Overall responsibility for monitoring will be lodged inthe PMU. A monitoring matrix to track inputs, outputs and outcomes has been developed for the Project with intermediate and key performance 29 The South Ari Waste Management Project i s part of post-tsunami relief activities sponsored by the European Union. Since 2006, it has been managedby the World Bank. 23 indicators (annex 3). Project outcomes and outputs will be monitored during project supervision using data compiled by the PMU, generated by the Project, and from other sources to evaluate progress. Likewise, the P M U will keep track o f agreed indicators on a regular basis, as specified inthe monitoring matrix. 81. Monitoring and evaluation (M&E) o f the Project will be done concurrently with implementation. A member of the PMUwill have overall responsibility for this activity, with information, data and reports being provided by implementing agencies and the component coordinators. Additionally, the Project Advisor and Director will be responsible for calling together all the project stakeholders to discuss project performance, fulfillment o f benchmarks, and to propose and adopt adjustments to the project design to facilitate achievement o f the project's goals. The raw data for M&E will consist o f financial, procurement and physical progress reports, along with financial audit reports submitted by the PMU. Issues to be reviewed in these M&E conferences will be the efficacy, efficiency, sustainability, acceptance by the population o f project actions. The mere fulfillment o f project benchmarks without considering the outputs o f these actions will not be sufficient. Hence the quantitative targets will be supplemented with narrative reports. The recommended periodicity o f reports to the M&E coordinator i s 90 days and the conferences should take place not less than annually. 82. Inparticular for the S W M component, the PMUwill be supported by the Atolls Offices and the Island Offices. The MEEW through ERC will monitor implementation and performance o f the RWMF and the waste transfer system. At the island level, Island Waste Management Committees will take the lead in monitoring the performance o f the IWMCs, assisted by ERC. Technical capacity at the Atolls Offices and Island Waste Management Committees for monitoring i s weak. The Project will support an S W n v i r o n m e n t a l Officer (EO) in an Atoll Office. In addition, the Project will support training and capacity building to enable effective monitoring o f the performance o f the pilot solid waste management component at ERC and the Atoll Office. ERC has the best technical knowledge on SWM in the Maldives, but it too needs institutional strengthening, which will be supported under the Project. 83. There will be a rigorous assessment of outcomes with environmental reviews held in the first year (from the moment construction o f the RWMF begins), and one in the final year o f the Project, to be conducted by an independent party. The findings o f the review will provide a basis for improvements in the operation o f the facility, if required. The findings o f the environmental review will also assist the Government and MEEW to improve the design o f S W M projects when scaling up S W M to other regions o f the Maldives. 84. The capacity buildingcomponent will be monitored on two levels: (a) the performance o f the program as a whole in terms o f the educational inputs and outputs, and (b) the performance o f individual trainees. Each training program will have specific objective indicators o f the achievement of educational goals based on testing and instructors' evaluations. The degree and diploma level program to be delivered by the Maldives College of Higher Education will also be reviewed and evaluated by assessors, in accordance with the College's standard procedures for course evaluation and which, as in most other tertiary institutions, includes annual reports to the College's Academic Board. 85. Component 3 will be monitored in terms o f the inputs (acquisition o f measurement and monitoring tools, monitoring effort), outputs (production of data to specified levels o f accuracy, frequency, reliability) and actual use o f data (in planning, sectoral agencies and to meet global reporting requirements). Ultimate responsibility for M&E o f this component will rest with the PMU. However, each implementing agency will retain responsibility for reporting and trackmg progress. ERC will be the lead agency and will be directly responsible for trachng and reportingprogress on erosion and vegetation protection sub-components. M R C will be directly responsible for the coral reef and bait fishery studies, while MPND will be responsible for progress reports on the spatial planning and GIS components. 24 D. Sustainability 86. The Project i s designed with an emphasis on sustainability insofar as it addresses some o f the root causes o f weak environmental management - inadequate information and capacity. Strengthening environmental outcomes in the Maldives would depend on civil society, government agencies, and decision makers understanding the risks to the economy through the accumulation o f reliable information and proactively addressing these. The Project addresses these risks through vigorous communication and information gathering that will help build support in the general public and among decision makers. Through its support for in-country education in environmental management, the Project assures a supply o f relevant skills that will extend beyond its life. Sustainability o f the S W M component i s one o f the fundamental aspects o f its design as it incorporates community ownership, leadership and participation, training, strengthening capacity and i s designed to assure financial viability. Inthe final analysis, however, the Project's long-term sustainability will depend on the public finding tangible value in protectingthe environment. 87. The S W M component o f the Project will finance the cost o f preparation, design, social and environmental assessment, and capital costs o f works and equipment. In virtually all countries, solid waste management i s recognized as a public good requiring government support to meet the full operational costs. This need i s especially acute in the Maldives where the island geography drives costs higher than in other contexts. It was agreed with the Government, that it will be necessary to ascertain and provide support for operations and maintenance. Since the Government already covers part o f the operational cost o f waste management, it i s expected that such support will be forthcoming. 88. The Government o f Maldives has taken steps that demonstrate a high level o f commitment for the Project. A National Project Steering Committee chaired by the Minister o f Environment, Energy and Water has been appointed to oversee the implementation o f the Project and provide guidance when necessary. The relevant ministries and agencies o f government have agreed on a division o f labor and modes o f collaboration that did not exist prior to the Project. Close institutional and technical collaboration has been established between the MEEW and the Bank to ensure that the former's technical capacity will be developed toward improved planning and regulation o f fbture S W M projects in the Maldives. E. Critical Risksand PossibleControversialAspects 89. The most significant risks relate to environmental safeguards. The option o f continuing with current practice (the do-nothing option) i s itself environmentally destructive, highly damaging to coral reefs and it represents a visible risk to tourism and health. The S W M system and process being supported by this Project would improve upon this situation, though there are environmental risks that need to be considered and mitigated. 90. Most islands inthe Maldives are small and unlikely to be o f sufficient size to accommodate the entire volume o f waste generated by island communities and resorts in the North Central Region. This requires approaches that minimize the pollution potential and quantity requiring final disposal. This will be achieved inthis Project through the removal o frecyclables and composting o f the organic waste fraction, so that the residue requiring disposalbe significantly reduced. Although 70 percent o f the waste stream i s organic, a significant portion consists of combustibles such as woody vegetation and branches that do not easily decompose. To reduce the volume o f waste requiring final disposal, community participation in composting i s essential at either the household level or at the IWMC. 91. Even after the removal o frecyclable and organic waste, adequate landmay not be available to dispose the residual waste on an uninhabited island or an island with suitable land use. In such instances, 25 incineration o f the residue or-if the calorific value permits-waste-for-energy, may be a more suitable option that will need to be considered. These decisions will be made through the comprehensive feasibility studies undertaken in this Project. The alternative to incineration will be reclamation o f near shore lagoons to create void space for waste disposal. The adverse environmental and health impacts could be significantly greater than those resulting from high-temperature waste incineration. To address these concerns and select the most environmentally suitable system, stringent criteria will be used for site selection, engineering and technology selection. A detailed Environmental and Social Assessment and Management Framework has been prepared; it outlines these criteria and the process for conductinga full Environmental Assessment o f the potential siteh and technologies. The decision to finance the RWMF depends on approval o f the EA by the Bank's Regional Safeguards Advisor and this i s made a condition for disbursement. Ifadverse environmental impacts are deemed significant, and no viable alternatives are available, the Bank would exclude this sub-component from the Project. Additionally, the Project proposes a biodiversity offset scheme to illustrate best practice for conservation of marine ecosystems, if a pristine ecosystem were to be affected by infrastructure. The overall risk rating for the regional solid waste management component i s ratedhigh. 92. Responsibility for environmental management i s fragmented across and between ministries. Although strides have been made, coordination, collaboration and communication among key officials and agencies remains uneven with evidence o f differences in priorities. The Project seeks to mitigate implementation risks by integrating cross-ministerial representation in the project management structure. High- level engagement by senior officials should provide the enhanced oversight and accountability neededneeded to facilitate project implementation. 93. The following table summarizes the operation-specific potential risks and possible mitigation measures. 26 Type of Risk Description Rating of Mitigation Strategy Residual Risk Risk Institutional Key institutions may not Substantial A Technical Committee with Moderate be able to coordinate cross-ministerial representation effectively due to internal and a high-level National differences. Steering Committee chaired by the Minister o f MEEW established. Financialrisks The S W M component cost Moderate Inthe Maldives context, this risk Low inSWM recovery aspect may be would be mitigatedthrough difficult to implement. cross-subsidies from tourist Resorts may be resistant to resorts and the Government. accepting part o f the Islandcommunities will be able burdeno f S W M costs. to select among different service options with different associated costs. Government recognizes that S W M i s a public good and it would need to cross-subsidize the system. Additionally the new draft S W Mpolicy proposes mandatory participation inS W M o f resorts. Once this legislation is passed, the fiscal risks will no longer remainproblematic. community Community participation Substantial Ina studyofenvironmental Moderate participation in i s central to the success o f perceptions, Maldivians selected S W M on the IslandWaste solid waste as their most critical islands Management Centers, but problem. With sharpened may not be forthcoming environmental awareness and since there i s little training and full participation in experience with the decision-making process, it community mobilization. is anticipated that the island communities would develop ownership to the solid waste management system within the islands. Implementation The Ministryo f Substantial Some segments within MEEW Moderate capacity and Environment, Energy and have proven to be more dynamic sustainability Water (MEEW) i s and have gained some understaffedand experience indealing with Bank overstretched with a broad and other donor-financed mandate and has limited projects. The PMUis located experience inmanaging withinthese segments o f projects. MEEW. The independent high- level Steering Committee will provide M e r accountability and oversight. Financial Although MEEW handled High A FinancialOfficer (a graduate Moderate management operationalaspects o f inaccounting) withover 5 years SouthAri Atoll component o f experience has been hired. A o fthe Post-Tsunami Chartered Accounting (CA) firm Emergency Recovery will complete installation o f Project, there i s no commercial software :xposure with handling (Quickbooks) with a provision 27 Type of Risk Description Rating of Mitigation Strategy Residual Risk Risk FMarrangements in for training additional staff from projects. MEEW has MEEW.Adequate Internal limited financial control (including internal audit management capacity and arrangements) measures are the capacity o fthe FM detailed inthe Operations staff is relatively weak. Manual. Duringproject implementation, suitable l d a g e s would be drawn from a proposed project implementation module o fthe Public Accounting Systemproject3' to strengthen and mainstream FM arrangements. The number o f transactions to be processed is low, so that FMcapacity inthe P M U will not be stretched. Procurement MEEW hashadlimited Substantial The P M U builds upon and Moderate experience inBank strengthens procurement procurement and this may experience that has been gained hamper project progress. in the SouthAri Waste Management initiative o f the ongoing Post-Tsunami Emergency Recovery Project, managedby the World Bank on behalf of the EU. A Procurement Officer with experience inBank procedures, has been contractedby the PMU. Inaddition, a Specialist willbe hired to prepare the initial set o f documents. Procurement Island Offices, with the Moderate A specialist coordinator hired for L o w assistance o f the the S W M component will communities, are expected provide the necessary technical to play a leadrole in guidance. Detailed procedures ensuring the IWMC and standardized documents will component i s successfully be translated and disseminated implemented. The degree for use among all the o f technical competence in participating IslandOffices. If the Island Offices varies community procurement proves betweenislands. unviable, PMUprocurement will be used instead for the IWMCs. Social and Weak environmental Substantial The Project would finance Moderate environmental monitoring and activities that would address this safeguards :nforcement capacity at aspect at MEEW. Supervisory MEEW could contribute consultants would be recruited toward poor compliance under the Project to supervise monitoring, especially the construction and operation o f with regard to the regional solid waste Regional Solid Waste management component, who 30This is a component o f the EU-financed Post-Tsunami Emergency Recovery Project which the Bank i s managing along with the South Ari Waste Management initiative. 28 Type of Risk Description Rating of Mitigation Strategy Residual Risk Risk Management Component. canbe tasked with ensuring safeguards compliance with MEEW. A comprehensive and rigorous Environment and Social Assessment and Management Framework was prepared by the Borrower with a full Environmental Assessment to be conducted during project implementation once the location o f the S W M facilities has been identified. The Framework includes a detailed and time-bound action plan and has been clearedby safeguard experts. The Maldives i s going Substantial An effective communications Moderate through a period o f reform programwill be put inplace and change. These could duringproject implementation to delay or undermine an stimulate broad-based and public environmental support for the Project. OVERALL RISKRATING Moderate F. Loadcredit conditions and covenants 94. There are no effectiveness conditions. However, there is a disbursement condition which requires that: No withdrawal shall be made under sub components 1.3 (Construction o f IslandWaste Management Centers (IWMC)), 1.4 (Waste Transfer System) and 1.5 (Construction o f Regional Waste Management Facility (RWMF)) until the completion o f (i) an Environmental and Social Impact Assessment for the RWMFand (ii)framework for the operation and financial management o f IWMCs and RWMFs, all o f a which are satisfactory to IDA. IV. APPRAISAL SUMMARY A. Economic and financial analyses 95. The economic analysis quantifies a subset o f the benefits that Project activities could provide to the Maldives. The benefits o f this Project are mostly associated with greater sustainability and improvements inthe services providedbycoralreefs3'. Most o fthese donotyielddirectandmeasurablemarketbenefits. Because o f the limitations o f non-market valuation techniques, their quantification remains imprecise, uncertain and requires the use o f survey-based techniques that are time and labor intensive. Other donors (UNDP-GEF) have embarked upon a comprehensive valuation exercise to be completed in about 3 years. To avoid duplication, the project economic analysis uses a number o f alternative and simpler approaches 31 Other non-quantified benefits o f the project include (i) benefits deriving from solid waste management at health community level; (ii) lower costs to resorts for the handling o f waste; (iii) human resources in public and better private sector as a consequence o f general and specific training provided by the project; (iv) improved policy making capacity by the government; and (v) improved confidence o f private sector associated with better business climate partly promoted by the Project. 29 to infer Project net benefits. These include a cost effectiveness analysis, benefit breakeven estimates and an evaluation o f financial benefits to resort operators from the S W M system. 96. Economic benefits of solid waste management were assessed based on a cost effectiveness assessment. This involved comparing the project option o f establishing a regional waste management facility serving four atolls, to the next best alternative. The alternative scenario i s one in which each island community i s responsible for disposing its residual waste in a safe and sustainable manner. The results indicate that the project option o f developing a regional (i.e. shared) waste disposal facility for residual waste i s more cost effective, than a stand-alone facility on each island, despite the high costs o f transportation. The calculations are based on a 12 percent discount rate over 15 years. The NFV o f costs o f the project approach i s US$8.6 million while individual island-based options range from US$23.O million to US$63.O million. The project approach i s therefore substantially more cost effective. 97. Financial benefits of S W M to the private sector: A further benefit from the Project will flow to tourist resorts. Recognizing that many of the activities associated with S W M are public goods and involve scale economies, it i s possible that the development o f a regonal facility for the disposal o f residual waste would generate costs savings for resort operators. To assess the magnitude o f these benefits a financial cost effectiveness analysis was performed on the project proposed waste management system. The baseline is the status-quo: resort operators are assumed to fully comply with the law in terms o f incineration standards and requirements. The law requires each resort to build and operate its own in~inerator.~'Inthe Project scenario, resort waste i s transported and managed for a fee at the common regional facility. Results show that the use o f the regional facility as compared to resort- based full incinerationcould allow savings inthe order o fUS$220,000 per year per resort despite the high cost o f transporting waste to the regonal facility. This outcome reflects the high fixed and variable costs o f incineration(a capital, energy and labor (for operation and monitoring) intensive technology), coupled withthe scope for hamessingeconomies o f scale (i.e. sharingthe highoverhead costs). 98. The economic cost effectiveness of the capacity building activities was assessed by comparing Project-funded in-country training on environmental management (four year BSC degree) with similar training innon-OECD countries. Results show that an in-country four years BSC course inenvironmental managementwould cost around US$20,000 per student for 4 years as compared to US$48,000 per student innon-OECDcountries. 99. Project economic analysis. Inthe absence o f relevant data on environmental services and their value it is difficult to quantify the magnitude o f benefits generated by the Project. A pragmatic and simple approach i s used to determine the robustness o f the cost effectiveness analysis. This involved using the threshold damage approach where (i)an estimate was made o f the minimum area o f coral reef (benefit breakeven) that the Project would have to protect to be economically viable; and (ii) malung a judgment on whether this outcome can be realistically achieved under the Project. 100. The main threats to coral reefs include coastal development, overexploitation, destructive fishing practices, impact from inlandpollution and erosion and marine-based pollution. It can be safely assumed that the Project with its strong focus on tackling the root causes o f weak environmental management will contribute to reducing inland pollution (through its S W M component), will improve monitoring and policy making and will prevent adverse environmental impacts related to coastal erosion, coral reef bleachingand bait fishery over-harvesting (through the Technical Assistance component). Inaddition, the national remote sensing survey (satellite imagery) will provide critical information to support other national environmental priorities including (i)integration o f environmental information in spatial planning; (ii) the development and identification o f a national system o f marine protected areas (MPAs); 32 Though there appears to be limited monitoring, enforcement or guidance on operation. 30 (iii) national assessment o f coastal erosion; (iv) mapping o f biodiversity "hotspots"; and (v) mitigation from climate change risks through protectiono freefs. 101. Results o f the benefit breakeven estimate suggest that under highly conservative assumed conditions, a 12 percent IRR would be achieved by preventing degradation o f 160 hectares o f coral reef per year in the project area. This would represent (i) a mere 0.14 percent o f reef in the project area (the four atolls o f Raa, Baa, Noonu and Lhaviyani are estimated to have 115,000 hectares o f reef 3 3 )or (ii) approximately one resort ("house") reef under the control o f a tourist operator. This low breakeven benefit level i s due to the highvalue o f ecosystem services provided by coral reef and i s considered to be an achievable outcome o f the Project.34 B. Technical 102. The Project aims to be flexible interms o f the varied demands for environmental improvements that it supports yet simultaneously adhere to a key principle -the need to address the root causes o f the problem by creating the enabling conditions for sustainable and durable improvements. It combines elements o f capacity building for human resources and information with support for creating a model solid waste management system that would have significant demonstration effects for other infrastructure initiatives. These have been structured inways that would provide durable and ongoing benefits beyond the Project. C. Fiduciary 103. FinancialManagement: The Project will be implemented by a Project Management Unit in the Ministry of Environment, Energy and Water (MEEW) who will also handle the financial management arrangements under the Project. The implementation arrangements are designed to ensure transparency and efficient fiduciary arrangements and will be adequate to account and report for project resources and expenditures. 104. The funds for the Project will be handled by the P M U and all expenditures will be recorded in its Books o f accounts. Although some other agencies will provide technical coordination and support to the project, they will not receive any funds or advances. An Operations Manual outlines the financial and operational controls under the Project for the various components and activities. An internal audit will be conducted under the Project to evaluate the effectiveness o f project business processes and its functioning. It will also look at technical and operational performance. An annual external audit will be conducted by an independent firm o f chartered accountants, acceptable to IDA, under agreed Terms o f Reference that are in the Operations Manual. The PMUhas hired an FMOfficer (graduate in accounting with over five years experience). A commercial accounting system is being installed by a CA firm that will enable timely preparation o f project financial statements and interim financial reporting. Disbursements will be based on quarterly interim financial reports (IFRs) that will also forecast the cash requirements for six months. There will be training o f MEEW staff, who will assist the FM officer as a means o f strengtheningand mainstreaming FMcapacity inMEEWthrough on-the-job learning. 105. Procurement: The key risks associated with procurement have been identified in the risk table presented earlier. A full-time and experienced Procurement Officer who i s familiar with IDA procedures has been hired by the PMUfor the duration o f the Project. The Officer will follow up on all procurement 33 Reef area is derived from: Naseer A, Hatcher B., Inventory o f the Maldives coral reef using morphornetrics generated from Landsat ETM+ imagery, Coral Reef, (2004) 23:161-168. 34 To gain a sense of the magnitudes involved this result suggests that were a decision to lead to better stewardship o f a single house reefat a resort, or elsewhere, the Project would be economically beneficial. 31 activities and liaise with the Tender Evaluation Board o f the G o M for approval o f large value procurement. A procurement agent will be contracted to procure small value items required for the island waste management activities. The agent will follow the same procedures as agreed with the Bank for the Project and will use approved shoppinghidding document templates. All procedures and documents to be used for procurement activities are in the Operations Manual and have been appraised and will be reviewed, updated and agreed with the Bank, as and when necessary. D. Social 106. The primary social issues to be dealt are related to the strong need for community participation and ownership in the Project. Public participation in waste management issues i s critical, especially on less populated islands where the local population will need to collaborate in the separation, collection, management and disposition o f wastes. Previous experience inthe Maldives shows that such participation i s crucial to the success o f SWM, especially on outlying islands with small populations. This will depend not only on effective communication but also on the selection o f appropriate incentives. E. Environment 107. Overall, the proposed project activities will result in improved environmental management in the Maldives. The Project i s classified under Safeguards Category "A", primarily to reflect the risks involved in the S W M Component. The Regional Solid Waste Management Program will involve community- based waste recycling and resource recovery facilities, composting o f the organic fraction as well as regional waste management facilities for residual municipal solid waste, medical and toxic waste disposal. The construction and operation o f these facilities could generate further environmental impacts even though the net environmental impact o f the component will be strongly positive. 108. Given that nature-based tourism i s the primary driver o f the economy, the economic and social well being o f the population depends largely on maintaining a high level o f environmental integnty. Sound environmental management in the Maldives is, therefore, essential to ensuring continued growth and development. Maldives established a regulatory and institutional framework for environmental protection in 1993 by enacting the Environmental Protection and Preservation Act (EPPA). A National Environmental Action Plan (NEAP) and an update to the EPPA were undertaken in 1999. The NEAPS serve as comprehensive frameworks used by the Government to ensure environmental protection and sustainable development in the Maldives during the NEAP periods. Environment plays a key role in national development under one o f the 7-P goals3*. The Ministry o f Environment, Energy and Water was established in 2004 with the mandate for environmental protection and management. Therefore, the institutional and regulatory framework for environmental management in the Maldives i s in place, although institutional capacity for effective regulation and enforcement i s weak and requires strengthening. One component o f the Project i s directly aimed at addressing this weakness. While the Maldives has demonstrated its commitment for integrationo f environmental issues into the development planning process, by inclusion o f MEEW at the very early planning stages o f development decisions, MEEW has been less than effective as it lacks the required information on the environment, natural resources and the marine environment to integrate environmental considerations into development decisions. Information gaps addressed inthis Project will go a long way towards improvingthis situation o f the MEEW and o fthe Ministry o f Planningand National Development. 35 Goal 5 states: "Protect the natural environment and make people and property safer." 32 109. One o f the greatest threats to public health from environmental-related issues i s ad hoc disposal o f solid wastes, including medical and toxic waste on inhabited islands. The proposed S W M component in the North Central Regionwill provide a model system that could be replicatedelsewhere inthe Maldives. Since the construction o f a RWMF could include potentially adverse environmental impacts, the Project may support a biodiversity offset. Such an offset would provide financial support for the protection o f another coral reef ecosystem, as well as institutional strengthening to the community to manage this offset. Considering the dispersed nature o f inhabited islands in the Maldives (see map A in Annex 15), environmental management cannot be left to central agencies which have little or no presence in the Atolls. Community groups have a critical role to play inmanaging their immediate environment. F. Safeguardpolicies Safeguard Policies Triggered by the Project Yes N o EnvironmentalAssessment (OPBP 4.0 1) [XI 11 Natural Habitats (OPBP 4.04) [XI [X 1 [I Pest Management (OP 4.09) [I Physical Cultural Resources (OPBP 4.11) [I [X 1 InvoluntaryResettlement (OPBP 4.12) [I [X 1 Indigenous Peoples (OPBP 4.10) [I [X 1 Forests (OPBP 4.36) [I [X 1 Safety o f Dams (OP/BP 4.37) [I [X1 Projects inDisputedAreas (OPBP 7.60) [I [X 1 Projects on International Waterways (OPBP 7.50) [I [X 1 110. The Technical Assistance andInstitutionalCapacity Buildingcomponents o f the Project are unlikely to have any adverse environmental impacts and will generally be beneficial to environmental management in the Maldives. While improved solid waste management will have similarly beneficial impacts on the environment in the long term, there could be potential adverse environmental impacts during the construction and operation o f the IWMCs and the RWMF. Though all activities supported under this Project will result in improved environmental outcomes, the Project has been assigned a Category A rating due to the fragile ecosystems that comprise the Maldives. 111. The Regonal Solid Waste Management Component will involve community-level waste recycling and resource recovery facilities in the islands, which will most likely involve cornposting o f the organic fraction o f waste as well as regional solid waste treatment andor disposal facilities for residual municipal solid waste, and medical and toxic waste disposal. Considering the fragile ecosystems o f the Maldives and that the atolls are ringed by coral reefs that are among the world's richest in species diversity and aesthetic appeal, the construction and operation o f these facilities could generate further environmental impacts . 112. Environmental Impacts of Signijkant Concern in the Regional S W component: Of the potential adverse environmental impacts the most serious would likely arise from the construction and operation o f the RWMF. The do-nothing option i s itself environmentally unsustainable and a risk to human health. Past experience indicates that because o f high population densities and NIMBY-type community opposition it would be difficult to locate a regional solid waste management facility on an inhabited island. Therefore, the only available alternative i s to either construct the RWMFon an uninhabited island or on an inhabited island with compatible land uses. Preliminary information suggests that it i s unlikely that there would be uninhabited islands with adequate land to construct a regional waste disposal site to receive the total unsegregated waste stream generated in the four selected atolls in the North Central Region, over a 20-year period. Therefore, recycling and resource recovery must be undertaken to 33 minimize the volume o f the waste being sent to the RWMF. With the highlevel o f organic matter in the waste stream, the easily degraded organic fraction could be composted at the island level. Ifthis happens, it may be possible to identify an uninhabitedislandwith adequate area for a RWMF.However, ifthere is an unbroken reef surrounding the islands, excavation o f the reef for a channel to enable barges and/or landing craft to access the island could result in adverse environmental impacts. Preference would therefore need to be given to an uninhabited island with easy access to its beaches. Inthe event there still i s not adequate space for residue disposal at the regional level, the residual waste may be incinerated at the RWMF and the ash landfilled in an engmeered controlled landfill. If the waste stream can be managed at the island level to improve the calorific value o f the residual waste, appropriate waste-for- energy options, too, could become viable. The alternative o f reclaiming a lagoon for waste disposal i s already talung place in the existing waste disposal site in Thilafushi in the Mal6 Atoll. This will most likely create more significant adverse environmental impacts than incinerationor waste-for-energy. 113. Alternatively, the option o f having more than one island serving as a RWMF so that no reclamation i s necessary, may need to be considered. While conventional wisdom argues for economies o f scale, where one site is better than several, inthis instance the ecological costs will need to be given precedence over financial considerations. Appropriate site and waste treatment technological options will be selected through a process that entails a systematic and balanced assessment o f a range o f different waste management options, in order to identify the option which provides the maximum environmental, economic and social benefits through a process known as the BPEO; in this manner, identified risks can be addressed adequately. 114. Institutional Capacity for Safeguards Management: The institutional capacity at MEEW is weak. A key objective o f this Project is to strengthen the institutional capacity o f environmental management institutions. While their capacity i s weak at present, significant emphasis i s being placed through the Project on improvement o f their ability to monitor and enforce environmental legislation and regulations. International consultants would be recruited to supervise the construction o f the RWMF on behalf o f the Government. A team from the MEEW (ERC) will work with the supervisory consultants which would provide them with "hands-on" training on techniques o f landfill construction and other waste management options as well as on mitigation o f environmental impacts. Safeguards compliance o f the RWMFwould be verified by a performance review carriedout inyear 1and the end o f the Projectby an independent party. 115. Public Disclosure of Safeguards Documents: The Environmentaland Social Safeguards Assessment and Management Framework has been publicly disclosed in the Maldives on February 17, 2008 and was first disclosed inthe Bank's Infoshop on February 20,2008. G. Policy Exceptions andReadiness 116. No policy exceptions are sought. 34 Annex 1: Country and Sector or ProgramBackground MALDIVES: MaldivesEnvironmentalManagementProject 1. Geography: Located in the Indian Ocean, the Maldives is a small island nation comprising 26 atolls with 1,900 islands that span a distance o f about 600 k m s from north to south (see map A inAnnex 15). The islands are typically small, have low elevation and are sparsely vegetated. They are ringed by coral reefs that are the seventh largest in the world and o f exceptional global biodiversity significance and aesthetic appeal. A total o f about 200 types o f coral and over 1,900 species o f fishhave been catalogued inthe Maldives. Ofthese, 300 were recorded for the first time inthe Maldives, seven species are new to science and several more await description. Being a country with more territorial sea than land, marine resources have played a vital role shaping the contours o f economic development, with nature-based tourism and fishing being the main drivers o f economic growth. There are some 200 inhabited islands scattered across the archipelago, and some 90 additional islands given over to resorts. The populations o f inhabited islands vary from a few hundred inhabitants to several thousand. Population densities may be fairly high, particularly on MalC, the country's capital with a population o f 130,000 living in 2 km2. Distances between atolls and inhabited islands are great and transport costs are high, depending on sea and air transport. Mal6 i s the location o f the country's major port and international airport (located on an adjacent island: the Hulhule Island). 2. Economic Pei$ormance: A mere two decades ago the Maldives was among the poorest countries in South Asia. Many o f its men migrated abroad to work as crewmen on fishingboats and merchant ships. Today it stands on the threshold o f middle-income status, with a per capita GDP approaching US$3,000 and a growth rate that has averaged 7 percent over a decade. This remarkable transformation has been accompanied by improvements in human development outcomes with almost universal literacy, declines ininfant mortality and dramatic improvements inhealthand education services. The poverty headcount has declined rapidly to about 19 percent, though there remain significant regional variations with greater prosperity in the capital, MalC, than in the remote atolls. The country has achieved all but two o f its MDGtargets -those relatingto gender equality and environmental management. 3. The Signijkance of Marine Assets: Economic success inthe Maldives has been fueled and sustained by the country's immense marineresources. Nature-basedtourism is the primary industryaccounting for the bulk o f growth, followed by fishing and fish processing. An estimated 500,000 tourists per year visit the Maldives -nearly twice the country's population. Tourism has grown by an average o f about 6 to 9 percent a year and i s poised for a dramatic expansion with new resort leases that would increase guest capacity by about 50 percent within five years. This has been accompanied by substantial investments in infrastructure that include the provision o f new airports, roads and harbors. 4. Apart from their tourist appeal, the country's marine resources are also an important livelihood asset, particularly in the remote islands and atolls where they sustain a vibrant fishing industry. Fishing employs about 30 percent o f the work force, is the second largest foreign exchange earner after tourism and i s the primary source o f animal protein in the Maldivian diet. Traditionally, the industryhas focused upon the deep sea fisheries exploiting abundant tuna stocks in Maldivian territorial waters. In recent years the reef fishery has expanded in response to tourist demands and the overseas market for exotic species such as grouper, sea cucumber, sharks, turtles and aquarium fish. However, sustainable management of coral reef fisheries remains a considerable challenge because of the high diversity and interdependence o freef species and the low "harvestable" off-take inreef systems.36 36Coral reefs maintain a balance between production and consumption with only a small harvestable excess yield. Other ecosystems such as up-welling areas canproduce 50 times more than coral reefs. 35 Environmental Issues 5. Despite the significance o f its marine assets in fueling prosperity, there i s growing evidence o f unsustainable pressures on the natural resource base. Between the resorts and other inhabited islands, there i s a marked difference in both the quality o f the environment and the incentives for environmental protection. An unspoiled marine environment i s the major draw card for tourists, hence resorts are generally well managed with sophisticated waste water treatment plants and beaches free o f debris and litter while other inhabited islands suffer from problems o f solid wastes and the flow o f raw sewage into relatively stagnant ~agoons.~' 6. Pollution, Solid WasteManagement: On the approximately 200 inhabited islands, high population densities coupled with more affluent life styles have created a litany o f new environmental problems. These include solid waste management, sewage disposal and the treatment o f effluents emanating from settlements, fish processing plants and other sources. There i s inadequate treatment o f waste water on most inhabited islands, including the capital Mal& The amount o f waste generated far exceeds the capacity o f available landfills. Sewage and solid waste can foul beaches, degrade sea water quality and damage the corals that are a magnet for tourists. The management o f solid waste remains among the most serious immediate threats to the country's reputation as an unspoiled tourist destination. Prosperity has brought many new consumer products, often contained innon biodegradable containers or packages that litter the beaches and lagoons. Prosperity also brought a government sponsored health-care program that generates medical wastes but no disposal system for them. Motorized boats, power generators, and other machinery generate wastes- particularly lubricant residues-that can foul beaches and coral reefs. Island sewage systems result in wastes being discharged into lagoons threatening the stability o f coral reefs and public health. Few residential islands have satisfactorily functioning solid waste management facilities; many o f them dump wastes into lagoons as a crude method o f land reclamation while others allow wastes to accumulate on beaches, forming rings o f trash around the perimeter o f entire islands. Resorts are required by law to bum their combustible wastes (including plastic bags) in on-site incinerators, and to crush cans and bottles.38 Food wastes are disposed o f in the deep sea. The non- combustible and non-degradable wastes are disposed o f by transporting these to the one functioning landfill in the country, Thilafushi. Some allegedly dump residual waste at sea rather than incur the expense o f transporting waste hundreds o f kdometers to Thilafushi. It i s not uncommon for waste to wash up on the shores o f other islands, includingresorts. Given the rapid scale ofthese developments, it is not surprising that there is little knowledge o f waste management technology or o f the risks o f current disposal methods. 7. Ofparticular concern i s the growing volume o f waste inareas visitedby tourists, with the appearance o f debris on dive sites, sand-banks and beaches. Waste disposal i s likely to become even more challenging inthe future as population densities rise and prosperity grows. Other threats to reef ecology include intrusive and poorly planned construction activities that damage or weaken valuable corals, damage caused by divers and dive boat anchors and the illegal collection o fmarine flora and fauna. 8. Climate Risks and Sea Level Rise: Climate change poses an additional long term environmental risk to the country. Geography has rendered the Maldives especially vulnerable to climate change. Being land scarce and low lying (over 80 percent o f the country i s less than 1meter above sea level), the Maldives i s 37 The two are linked. Waste from residential islands may adversely affect coral reefs visited by tourists, and waste dumped into the sea may wash up on the beaches o ftourist islands. 38 Itis alleged that many resorts avoid incinerating their waste because the unsightly smoke offends their guests and even blackens the trees on their islands. Some resorts pay to ship their waste to Thilafushi landfill and a few even collect solid waste from neighboring inhabited islands to avoid having sea-dumped waste washing up o n their beaches. 36 exposed to the risk o f intensifying weather events including damage caused by inundation, high winds, flooding, erosion and damage to infrastructure from storm surges. With the melting o f polar ice caps, the country faces the additional risk o f sea level rise. With future sea level projected to rise within the range o f 10 centimeters (cm) to 1 meter (m) by the year 2100, the entire country could be inundated in the worst-case scenario.39Tourist resorts on low lying coral islands or located over lagoons are among the most vulnerable to sea level rise. The loss o f these assets would have a devastating impact on economic activity. 9. Degradation o f the reefs has increased vulnerability to climate change risks. The coral reefs stand as the first line o f defense for the islands against waves which are projectedto increase invelocity and depth with climate change. There is clear evidence that reefs dissipate wave energy, and thus are essential for both creating and sustaining atoll islands. Destruction o f reefs leads to a lowering o f the reef crest and thus increased depth, as well as a loss o f structural complexity (e.g. inChagos, andpresumablyalso inthe Maldives, coral mortality in 1998 and collapse o f reef structures sometimes resulted in a meter change). This in turn leads to a loss in dissipation o f wave energy, more energy reaches the shore and erosion is likely to increase. Because the orbital diameter o f a wave decreases exponentially with depth, even a moderate increase in sea level has a great effect on the wave energy reaching the beach. Ever increasing damage to the reefs has impaired their protective functions and increased exposure to risks from storm and cyclones. One o f the major stresses to reef ecology i s sea surface warming, resulting in coral bleaching. Bleaching events have been recorded seven times since 1997, with the slowest recovery in areas that are stressed by pollutants, or damaged by physical disturbance. A well-developed network o f protected reefs could provide a cost-effective defense against the medium term risks o f climate change. 10. Erosion: Coastal erosion which i s linked to climate change remains another perennial problem for the Maldives. Intheir natural state, the islands are highly dynamic and continually changing shape. The design o f coastal infrastructure has, at times, exacerbated flood risks and erosion. The Maldives i s currently engaged in a harbor construction program to make islands more accessible. This involves dredging channels and harbors to a depth that allows larger vessels to reach the island. However, this activity can be a significant factor in causing beach erosion because o f its impact on the sea floor and onshore currents. With limited data on coastal and wave dynamics, there are few feasible strategies to address the problem. An expensive sea wall has been built around Male' and other high value public assets such as the Hulhule airport, but this approach i s not affordable for all inhabited islands, nor i s it desirable for resorts that seek unrestrictedviews o f the ocean. 11. Many o f the environmental risks that threaten the stability and sustainability o f life in Maldives are relatively new while others are the consequence o f long-term trends. Only recently have these risks become apparent. The precipitating events that led to this new awareness are the burgeoning growth o f tourism and a realization among some policy makers that tourists demand an unspoiled environment. Recent events o f coral bleaching, and the December 2004 tsunami, that caused loss o f life and major damage to infrastructure across the entire country, have reinforced these perceptions. Maldives has also become a leading advocate o f urgent measures to reduce carbon emissions in order to slow global warming that threatens its tourism industry and possibly its very physical survival. The inclusion o f environmental goals inmajor planning documents and the establishment o f the Ministryo f Environment, Energy and Water (MEEW) in2004 are evidence o f this realization. These measures, however, have not 39 As an example, inHulhule an hourly sea level o f 70 c m is currently a once in 100-year event. Under "moderate" climate change scenarios it could become a once in 10-year event. However, scientists are still discussing the impact of global climate change on the Maldives with some arguing against the theory that the Maldives faces inevitable and major flooding in the near future. See N.A Momer et al: "New Perspectives for the Future o f the Maldives", Global & Planetary Change 2004 (177-182). 37 been matchedby a commensurate investment in environmental management capacity. There i s currently a lack o f adequate humanresources to designand implement responses to environmental threats. 12. The daunting environmental challenges facing the Maldives could become a formidable brake on economic growth, especially ifthese undermine tourism. With its distance from markets and shortage o f land, opportunities for diversification are limited so tourism will continue to remain the dominant economic activity in the near-to-medium term. High-end tourism remains an inherently fragile activity that depends on consumer perceptions, adequate transport and a continuous effort by the private sector to maintain and improve the quality o f the product in a highly competitive global market. At the moment, the Maldives occupies a privilegedposition inattracting high-spending tourists interested inthe relatively costly sport o f scuba diving.40 To retain its comparative advantage the Maldives needs to maintain a clean and attractive environment for tourists who, are in the main, discerning high-end travelers. This calls for a considerable improvement in environmental management with policy principles being translated into observable outcomes. Policy Responses 13. Recognizing the need to maintain its position as an exclusive tourist destination, environmental management i s a stated national priority in the Maldives. Calls for more effective conservation and environmental management are a familiar theme in successive National Development Plans, including the most recent 7-P. Progress has also been made in establishing the overall environmental policy framework with new guidelines for Environmental and Social Impact Assessments, a small system o f marine protected areas (MPA's) and a nascent marine monitoring and surveillance system. The country i s among the most vocal advocates for aggressive mitigation o f greenhouse gas emissions based on its highlyvulnerable position. 14. Population consolidation and the creation o f safer islands are promoted as part o f the solution to the risks o f sea level rise. There i s a consensus that as the sea level rises the construction o fphysical defenses would be impossible and prohibitively expensive across all islands. The creation o f "safe islands" i s the favored strategy that i s also perceived to bringbenefits arising from the economies o f scale inproviding public goods and social services to concentrated population centers and potential market agglomeration benefits. However, there remain concerns that the process by which safe islands are selected remains opaque, with little evidence o f scientific assessments o f climate risks being incorporated into the decisions. InstitutionalArchitecture 15. Recognizing the importance o f the environment in sustaining development, the mandate for environmental protectioni s spread across several agencies: 0 In2005 environmental protection was given elevated status with the creationo f the Ministry o f Environment, Energy and Water (MEEW). The Environment Section o f this Ministry i s responsible for policy formulation, policy implementation and environmental monitoring. 0 The Environment Research Centre (ERC) i s an agency o f MEEW and is entrusted with data collection, coordination, ESIA processingand it carries out environment research. 0 The Ministry o f Fisheries, Agnculture and Marine Resources (MFAMR) has the mandate for the conservation and use o f all marine resources in the waters o f the Maldives. The Agriculture Section o fthe Ministryhas responsibility for conserving terrestrial flora and fauna on the islands. 40The New York Times Travel Section recently listed the Maldives as number 7 on its list o f the "The 53 Places to Go in2008." htt~://travel.nvtimes.comi2007/12109/trave1/09where.html 38 The Marine Research Centre (MRC) o f the MFAMR focuses on fisheries related research, data collection and coral reefmonitoring. All matters concerning tourism are under the jurisdiction o f the Ministry o f Tourism and Civil Aviation which i s also responsible for environmental management and conservation in islands developed as tourist resorts. The Ministryhas published environmental regulations, standards and guidelines for the tourism sector. Following the December 2004 tsunami the Government established a National Disaster Management Centre (NDMC) as the organizational mechanism for the coordination and operation o f disaster relief, recovery and reconstruction efforts. Finally, the Ministry o f Planning and National Development (MPND) formulates the National Development Plans, Regional Development Plans and the Strategic Economic Development Plans. It carries out detailed land-use planning and i s responsible for designating islands for specific uses.41 This Ministry also has the mandate to develop the population policy o f the Maldives. Limitations and Constraints 16. The overarching constraint to implementation o f environmental policies is the lack o f technical and managerial capacity to either deliver the required environmental infrastructure or monitor and control environmental impacts. The staffing profile across agencies is heavily skewed with a small number o f qualified professionals, supported by inexperienced juniors. For instance, the environment section o f MEEW has a staff strength o f 35 o f which 5 have graduate qualifications. With limited capacity and funding (the 2004-2008 allocationo fthe Government's budget to the Environment section o fthe MEEW i s MVR 31 million), it i s no surprise that monitoring and enforcement o f environmental regulations i s uneven, particularly inremote islands where resources are limited.42 Environmental protection i s largely practiced on a voluntary basis on the islands, since the Atoll administrations, though meant to represent all o f the ministries on the atolls, have neither the means nor the mandate to enforce environmental regulations. 17. With the fragmented and often overlapping mandates and responsibility for environmental management there i s considerable rivalry between and within ministries and agencies. Coordination and communication i s uneven and remains a considerable impediment to policy formulation and implementation. Addressing these problems would call for considerable reforms inthe public service that go beyond the environment sector. 18. The Maldives have relied heavily on foreign donors to support their environmental policies. Financial support has come from the Asian Development Bank, the European Union, AUSAid, UNDP, and the Government o f Spain, among others, but this support i s uncoordinated and intermittent. It does not provide a firm base for planning and implementing a solid environmental protection program in government. Support from government funds has, so far, been meager. Additionally, there i s some conflict within government for control over externally funded programs. 19. Despite the importance o f the coral reef ecosystem to the economy, information for sound policy malung remains fragmented and sparse with little data on reef health and quality. Fifteen monitoring 41 Ingeneral, each island inthe Maldives has a specific use designation. There are fishing islands, boat-building islands, industrial islands, agricultural islands, a landfill island, a small number of urban islands, and an increasing number of resort islands. This designation is, inpart, a function o f the small land area o f most islands (often just a few hectares), such that mixed-use would very likely cause conflicts. 39 stations have been established, but the information collected from these remains rudimentary and unrepresentative o f other reef structures. Likewise the location and size o f Marine Protected Areas has been guided primarily by the interests o f the dive industry and resorts, rather than being based on biological and economic factors. Without better information and appropriate skills, policy making remains largely reactive resulting in irreversible economic and ecological losses o f unknown magnitude. Potential losses inthe future loom even larger. With increaseddevelopment and tourism, pressures on the environment are set to escalate, suggesting an urgent need to improve the information base and the management of critical environmental assets that are neededto sustaineconomic growth. 20. It i s in this context that focus o f this Project i s on building capacity, slulls and information, and it also seeks to address the most visible environmental problem o f solid waste management. 40 v) .r Q) V % Vl r! 0 4 L 8w M 0 e c s9 3 L 'G; sn A9 e9 99) ah FV9El G Y8 v1 El 'C) a F Y .')2 eed L 3.. 0 c.l 43El L s2 E i z i z Annex 3: ResultsFrameworkandMonitoring MALDIVES: Maldives EnvironmentalManagementProject 1 1.A solid waste management systemis T o measure progress and established andinhabitantsof targeted composting organic waste, separating difficulties duringproject islandsuse S W M facilities financed under recyclables and depositing residual implementation and draw the Project, reducingthe risksof waste inthe IWMC.43 lessons from these contaminationassociatedwith l(b) 50% oftargeted households pay observations. accumulatedwastes andsea dumping. user fees for waste management. l(c) 50% of targeted islands with functioning IWMCs have no observed spillage. 2. To build human andtechnicalcapacity 2(a) Products and information on for environmentalmanagementso that the environmental issues from the studies environmentaldimensionis integratedin and monitoring are made available for the planningprocessusinginformation the planningprocess. and expertisedeveloped inthe Project. 2(b) 50%participation rate is achieved inthe assessment, monitoring and stewardship o fkey resources such as fisheries and coral reefs in communities where interventions have IntermediateOutcomes Use of Intermediate Outcome - Monitoring ~PDO 1 1. Islanders are trained insound solid waste l(a) Community-based Island Waste To measure progress in management practices such as composting Management Plans are developed on project implementation andrecycling. participating islands. and to take remedial 1(b) Island Waste Management Plans measures as necessary. are implemented on participating islands. l(c) At least one community member on each participating island successfully trained in S W M practices to manage the IWMC.~ 2. IslandWaste Management Centers built. IWMCs built and ~perational~on~ participating islands. 43 Includes a range o f composting options: home composting, community composting and/or commercial composting as identified duringthe community mobilizationprocesses. 44The number that would need training would depend on the size o f the island and the quantity and composition of waste generated. Accordingly training would correspond to needs. 45 The number o f centers to be built will de determined during the first year o f implementation through the feasibility study. 45 3. Environmentally sustainable and 3 (a) At least one RWMF built and economically viable Regional Waste operationa~~~. Management facility(-ies) built and 3 (b) Environmental impacts monitored operational and evaluated duringbothRWMC construction and its operation. 4. Regional transport system for waste 4 (a) At least one bargellanding craft i s established. procured and being used to transport waste to the RWMFls. 4 (b) Waste accumulationdoes not exceed IWMC capacity inat least 50% o f islands with IWMCS~~. PDO2 1. Cadre o f civil servants and private 1 (a) Number o f people enrolled in To measure progress in citizens successfully trained according to the program as percentage o f target. project implementation respective training modality. and to take remedial measures as necessary. 2. Technical assistance for informing 2 (a) Number o f reports on terrestrial policy on problems o f erosion, vegetation, monitoring, marine monitoring and bait reefs and bait fishery. fisheries4'. To determine progress 2 (b) Progress in community-based towards project monitoring for each area (% o f target objectives, evaluate the islands participating). level o f community engagement and 3. Environmental information developed 3. Percentage o f new ESIAs, MEA government utilization o f and used inESIAs, Multilateral Reports and Sectoral Plans employing the information. Environmental Agreements Reporting environmental information generated (MEAs), Sectoral Plans bythe Project infocal areas . Arrangementsfor resultsmonitoring 1. For the S W M component, the PMU will be supported by the Atolls Offices and the Island Offices. MEEW through ERC will monitor the implementation and performance o f the regional waste management facility and the waste transfer system. At the Island level, Island Waste Management Committees will take the lead inmonitoring the performance o f the IWMCs, assisted by ERC. Technical capacity at the Atolls Offices and Island Waste Management Committees for monitoring i s weak. Therefore, the Project will support training and capacity building to enable effective monitoring o f the performance o f the regional solid waste management component. MEEW/ERC has the best technical knowledge on S W M inthe Maldives, but MEEW/ERCitself needs institutional strengthening, which will be supportedunder the Project. 2. Environmental Reviews, conducted by independent consultants, are proposed for the RWMF. These will be timed as follows. There will be one inthe first year and one at the end o f the Project. The findings o f the review will enable the improvement o f the operation o f the facility, ifrequired. The findings o f the environmental review will also assist the Government and MEEW/ERC inimproving the design o f S W M projects when up-scaling this Project. 46 The feasibility study to be carried out during the first year o f implementation will determine if more than one RWMFis needed. 47This would involve different frequencies o f transport taking account o f logistics. 48One o f each except bait fishery where assessment is expected to conclude after 2 years. 46 3. On the capacity building component, the Maldives College o f Higher Education has a robust and proven quality assurance process that will be used for the modalities supported by this Project. In addition to internal accountability and quality processes, independent faculty are hired from abroad to review the quality o f the cumculum and the performance o f the program and its students at two-year intervals. 4. On component 3, project monitoring results will be compiled by the relevant specialist coordinator o f the PMU. At intervals not greater than one year, a workshop will be held at which monitoring results will be reviewed, and compared with project targets. A comprehensive mid-term evaluation will be conducted for this component after 24 months. The main purpose o f this evaluation will be to determine progress towards project objectives, evaluate the level o f community engagement and government utilization of the information. This will enable the P M U to refine and modify its operation and re-focus its efforts by drawing lessons fkom experience. 5. The services of an M&E expert will be engaged in the early stages of project implementation to assist inthe operationalizationofthe M&Earrangements. 47 Q s 0 G .- 5 0 E ..- 5 0 E 0 s .- 5 0 0 m E 0 .- 5 E 3 0 0 0 0 0 s - W g c v, 5 s c e, d 0 vi c 9 e, x s s c a, 0 m M 5 0 2 c .... N 5 0 s c 0 0 g 0 s 0 Annex 4: Detailed Project Description M A L D I V E S : Maldives Environmental Management Project 1. The proposedProject willhave four components which are describednext indetail. Component 1:Regional Solid Waste Management Program 2. As described in Annex 1, solid waste remains among the most visible environmental threats to the tourism industry. With a highly dispersed population spread across numerous islands the scope for harnessing scale economies i s limited and the costs o f delivering services are high. In addition, with restricted endowments o f land, the space available for disposing waste i s limited, calling for the waste stream to be minimized through incentives for recycling and composting. Finally, a fragile marine ecosystem requires that special attention be given to the choice o f technology and system design to mitigate adverse impacts, with further cost implications. To address these risks and challenges stringent criteria needto be applied for site selection, engineering, technology choice and management. 3. Reflecting the Maldives' uniquely challenging geography and fragile ecology, the program will operate at multiple levels: The construction o f an Island Waste Management Center (IWMC) in each inhabited island will provide facilities for island communities to sort, recycle, compost and store their residual waste in a safe and environmentally responsible manner. A key objective at an IWMC is to minimize the amount o f residual waste requiring final disposal. One or more Regional Waste Management Facility (-ies) (RWMF), built on an uninhabited island or an islandwith compatible land use such as an industrial island, will serve as the destination for residual waste from the IWMCs. These will be supported by allied services such as transportation facilities, technical assistance, community programs, and financial systems-all o f which will be guided by stringent environmental criteria. The facilities will be designed and built to the highest appropriate standards to reduce the risk of contamination from solid wastes. Special attention will be paid to medical wastes and toxic wastes which will require special handlingandmanagement. 4. The Project will support a regional solid waste management program in the North Central Region, which i s currently under-served by waste management facilities. The following criteria were decisive in determining the region for priority investment in waste management: (i) absence o f any Regional the Waste Management Facility; (ii)the existence o f a collective mass o f resort developments and future developments inthe pipeline; and (iii) a population distribution sufficient to create the economies o f scale necessary to sustain a regonal collection and disposal system. In the North Central Region o f the archipelago, there are four administrative atolls which are all relatively closely configured, although the inhabited islands (44) within the atolls themselves are somewhat dispersed. The atolls are: Raa, Baa, Lhaviyani, and Noonu. Raa and Baa atolls sit to the west o f the archipelago and Lahaviyani and Noonu atolls sit predominantly to the east o f the archipelago (see map B in annex 15). The population in the North Central Region i s 42,000. The per capita waste generation in inhabited islands i s approximately 700 grams/person/day resulting inapproximately 30 tons o f solid waste requiring management on a daily basis. 5. There are currently 11 tourist resorts operating in the North Central Region with the greatest concentration beingwithin Baa Atoll (6 resorts) and Lhaviyani Atoll (4 resorts), with Raa Atoll having 1 resort. A total of 2,900 beds are available within this region at present but with new resort developments planned, it i s anticipated that the bed stock will increase by 4,500 by 2020. With a solid waste generation rate o f 3.5 kgfbedday, the 11 resorts generate approximately 10 tons o f solid waste per day. This i s expected to increase by over 50 percent by 2020. 53 6. The SMW program will be undertaken inone or more atoll groups inthe North Central Region o f the country (see map B inAnnex 15) and will be defined duringproject implementation. The factors that will influence the choice o f catchment include economies o f scale required for the delivery o f viable waste management services, the distribution o f population, the geography and environment o f the archipelago, the distribution o f (current and planned) resort development and the availability o f suitable sites for RWMFs. Once suitable sites for locating the RWMF and the catchment have been identified, there will be detailed assessments o f current and future needs, technological choices for waste management and a thorough environmental and social impact assessmentundertaken. 7. Environmental factors will be given highpriority over economic considerations in siting the RWMF, determining catchment size and in selecting treatment and disposal technology. This component specifically contributes towards the 7%DP by developing infrastructure for the purpose o f improving sanitation and maintainingthe environmental integrity o f inhabited islands outside o f Mal& 8. Attitudes and behavior by the general public are probably indicative o f the level o f development achieved inrecent years. Maldives relative prosperity i s recent. Previously, the economy rested heavily on fishing and on remittances from employment abroad, particularly in the merchant marine. Incomes were low and consumption was commensurately low. As tourism rose in importance since the early 1980's, incomes rose rapidly and people had access to a much wider range o f goods than ever before. While many Maldivians once lived in simple houses with few clothes, few implements, few luxuries and no electrical appliances, nowadays, the shops o f Mal6 and other larger towns are full o f clothing, toys, appliances, tools, canned and bottled foods and many items contained inplastic and foil packaging. This has led to a rapid proliferation o f new lunds o f waste that are more problematic to dispose. Inthe past, island waste could be disposed o f inthe lagoon (even serving as a hnd o f landfill) or left on the beach for the tide to carry out to sea, while this form o f disposal today i s highly disfunctional and potentially destructive o f important environmental assets such as coral reefs, reef fish, etc. As in many other developing countries, it could take many years for peoples' habits to catch up with their consumption patterns. 9. Resort waste disposal takes a different form. Waste volumes per capita are higher and the composition includes higher proportions o f non degradable waste from packaging materials, guest supplies, etc. Resorts inMaldives are required to incinerate their waste although they are often reluctant to do so because the smoke and ash are nuisances to their guests. Many resorts use supply boats arriving from Mal6 to ship waste back to the Thilafushi landfill near Malt, which i s an uncontained "open dump". Some resorts are rumored to practice sea-dumping o f wastes, but this cannot be verified. 10. In either o f the two cases, a communication campaign could help to enlighten people and business owners about the risks o f sea dumping to the Maldives' fragile environment and to encourage them to participate in the regional solid waste management system under development. Inboth cases, it will be beneficial for people to understand better the consequences o f indiscriminate waste dumping for the environment on which the economy depends so heavily (see component 4). 11. There are six sub-components inthis component. These are describednext. Sub-component 1.I: Technical Assistance for Participatoly Rural Assessments, Feasibility Studies, Technical Designs, Environmental and Social Impact Assessment Studies and Capacity Building 12. Maldives confronts distinct problems in the safe management and disposal o f wastes that are not encountered elsewhere, even in other small island states, so that experiences from other countries are o f limited relevance in developing a safe and environmentally sustainable solid waste management system. Ecological implications o f siting a waste management facility in the fragile ecosystems o f the Maldives 54 take precedence indetermining the most suitable technology and site, resulting in the need for an iterative process o f optimization for selection o f location and technology. Accordingly this sub-component would assess options to address the technical, economic and environmental challenges. 13. Initially, Participatory Rural Appraisal (PRA) techniques will be used to understand the social structure and physical layout o f communities, patterns o f leadership and relations with formal and informal island networks, economic activities, transportation, current patterns o f waste disposal, willingness to pay for improved solid waste management, entry points for community mobilization, and the kinds o f incentives to which individuals and communities are likely to respond. Thereafter, ERCwill support an assessment that will identify the catchment area, location o f the RWMF and the waste management system (technology) that will be used for final disposal under this sub-component. A technical and financial feasibility study will be initiated to select the most suitable waste management option and location for the RWMF. The study will be conducted using a screening, optimization and selection process known as Best Practical Environmental Option (BPE0)53. This process involves a continuous interplay between the environmental dimension and the technical/financial dimension. It will begin with the presentation o f a long list o f potential sites to be prepared by the Ministry o f Planning and National Development, the area o f government responsible for all land-use planning in the Maldives, in consultation with ERC. 14. The political economy o f the Maldives i s closely linked to the rapidly developing tourism sector. Like tourism everywhere, there are conflicts between good environmental stewardship and the preservation o f the natural assets on which tourism i s based. Many national policies have been adopted favoring tourism development such as, for example, the development o f an international airport capable o f handling all sizes o f aircraft. A fixed-bed tax i s levied on every occupied tourist bed, and there are import duties on many products imported for consumption by tourists, but there are relatively few other taxes or fees levied on tourism or other sectors and there i s great reluctance to impose additional fees. Tourism enterprises are requiredto file environmental impact statements based on EA studies and there i s some enforcement o f the environmental regulations. However, it i s fair to say that tourism occupies a special position in the Maldives and therefore concerns o f long-term sustainability must be introduced carefully inorder to avoidnegative outcomes. 15. The study will be carried out in three phases: the first phase will generate a short list o f potential RWMF sites from the long list provided by the MPND together with an assessment o f suitable waste management system options for each o f these sites. This phase will include sensitivity analyses to determine the robustness o f the assessments. A scoping procedure, that will use information from other components o f this Project as well as alternative sources, will identify environmental features that could affect the outcome. The scoping will also involve anticipating any potential environmental risks that could arise, the range o f technical solutions that mightbe applied and their cost. 16. The second phase o f the BPEO will be the selection o f the preferred regional waste management system option best suited for the optimal site and a detailed technical and financial feasibility study. The trigger for moving from Phase Ito Phase I1will be the identification o f one or more suitable location(s) and corresponding waste management system(s). Inputsfrom the Technical Assistance Component 3 will inform and complement this process. 53 A BPEO analysis involves a process o f identifying viable scenarios for waste management, followed by a process o f optimization o f location vs. performance assessment against a number o f decision criteria such as environment, feasibility and cost, in order to determine which scenario i s the preferred option. The fmal site selection will be undertaken with inputs from Component 3, which will provide the strategic framework and environmental data inputswhich will ultimatelyintegrate the BPEOand site selectionprocesses. 55 17. Once the appropriate technology and location have been determined, a detailed social and Environmental and Social Impact Assessment will commence, with conceptual and detailed engineering designs o f the RWMF (Phase III). The outcome o f this phase will be a detailed social and environmental impact analysis, and an environmental management plan.54 Technical assistance will be provided to key agencies (ERC and Atolls Offices) to build capacity for environmental monitoring and evaluation and also facilitate public-private partnerships for the transfer o f waste and the operation o f the RWMF. This sub-component will finance the development o f contracts appropriate for regional waste transport and operation and maintenance o f the RWMFs. 18. The Environmental and Social Impact Assessments (ESIA) for the RWMF and Environmental Management Plans for the IWMCs will be camed out in accordance with the Environmental and Social Assessment Framework that has been prepared for the Project. A program for systematic environmental monitoring will be established to allow for greater emphasis to be placed on assuring compliance with safeguard requirements and vigorous environmental monitoring programs. The science- and evidence- based approach in this Project, and the detailed attention given to environmental factors, are unprecedented in the Maldives and their implementation i s expected to serve as a model for the future development o finfrastructure inthe country. Sub-component 1.2: Community Consultation and the Development of Island WasteManagementPlans 19. This sub-component will finance the preparation o f island waste management plans (IWMPs). Experience inthe Maldives and elsewhere consistently shows that community participation i s an essential element o f solid waste management at the island level to assure sustainability o f the system. The aim of this sub-component i s to engage communities to lead and participate in developing IWMPs. Data from the Participatory Rural Appraisal (PRA) will be used to understand the social structure and physical layout o f communities, patterns o f leadership, formal and informal island networks, economic activities, transportation, patterns o f waste disposal, willingness to pay for improved SWM, entry points for community mobilization, and the kinds o f incentives to which individuals and communities are likely to respond. Community-based recycling and resource recovery will be promoted at IWMCs in order to reduce the volume and pollution potential o f the residual waste requiring transport to RWMFs. Since approximately 70% o f the waste i s organic in nature, composting either at household level or at the IWMC could significantly reduce the amount o f residue requiring final disposal at the RWMF. It i s anticipated that about 50% o f the waste generated on the islands could be recycled andor composted. The compost produced can be used within the islands for improving soil conditions for agriculture or in home gardens. A ready market for compost would be the resort islands that presently import compost from neighboring countries. Since the soil in most islands is largely coral sand, soil fertility i s poor, amending the soil with compost over the longer term will result in enhanced soil fertility. 20. Alternatives to the current systems o f waste collection within the island and transport to the IWMC will be examined to develop a sustainable system with the right incentives for community participation. Community participation in the IWMCs will be ensured through Framework Agreements between the Island Waste Management Committee and ERC outlining the roles and responsibilities o f the each party in the SWM process. Ultimately, if the Island Waste Management Committee is not formed and 54An environmental management plan(EMP) constitutes the actions required to mitigate any adverse environmental impacts as well as a monitoring plan designed to detect deviations from expected ranges o f key variables. In the case o f IWMCs, for example, the EMP would monitor the frequency o f dumping, the proportion of waste undergoing selection and separation, the amount o f waste composted, the frequency o f transport of residual waste off the island, etc. Indicators for the RWMF(s) would focus on the correct operation o f the site, separation of recyclable wastes for sale, the proper treatment of leachate, etc. 56 community procurement activities are not undertaken within the agreed time frame the island will be considered ineligible for JWMC funding under the Project. Sub-component1.3: Construction of Island WasteManagement Centers 21. This sub-component will finance the construction o f IWMCs as a focal point for island waste management activities, based on the extent and type of community based recycling, resource recovery programs agreed with the communities in the Island Waste Management Plans. The community will be involved in managing, operating and maintaining (either directly or through contract labor) the IWMCs. The number and exact location o f centers to be built will be determined through the community consultation process under sub-component 1.2. The final footprint o f the individual IWMCs would depend on the population size, commercial and industrial activities on the island and agreements with the local community on island waste management activities to be undertaken at the IWMCs. Solid waste brought to the I W M C would be separated into organic wastes, recyclables, hazardous (including medical) wastes and residuals requiring final disposal and treated appropriately. The predominant component o f the waste stream (70%) i s organic and would most likely be composted locally, thereby reducing the volume o f waste requiring ultimate disposal and the transport and disposal cost for the island community. Although recyclables will be separated at the M C s the quantity collected i s unlikely to be adequate to attract buyers to the islands. Therefore, all recyclables that have a market will be separated at the IWMCs and transported to the RWMF with the residual waste. It i s anticipated that there will be enough recyclables at the RWMF(s) to make it viable for buyers to collect it from the RWMF. This sub- component will also include funding for equipment for operating the IWMCs and resource recovery and recycling activities as well as transport facilities for waste to be brought to the IWMCs, if needed. Communities will retain ownership and responsibility for maintenance and replacement o f the equipment and machinery requiredto operate the IWMCs. Sub-component 1.4: Waste Transfer System to the Regional Management Facility 22. Regular transfer o f residual waste to the regional waste disposal facility and recyclable material to markets will be necessary. This sub-component will finance the procurement o f barges or landing craft for sea transfer o f waste to RWMFs. The feasibility o f island communities contributing some fi-action o f the costs will be explored, while cross subsidies from participatingtourist resorts or other local enterprises and the Government will be used to render the system economically ~ustainable.'~Inkeeping with the National S W M Policy, private-sector participation in the operation o f the waste transfer service will be explored through competitively bidcontracts. Sub-component I.5: Construction and Operation of the Regional WasteManagement Facility 23. This sub-component will finance the construction o f one or more RWMF(s) on uninhabited islands, or islands with compatible land use, tahng account o f environmental risks. Land i s scarce in the Maldives and most uninhabited islands are surrounded by contiguous coral reefs with limited harbor access. Recognizingthis constraint, the waste management system would give priority to environmental impacts in the choice o f technology. The options to be considered will include properly engineered- 55The team encountered resistance to the institution of new taxes or fees on resorts from the Ministryof Tourism and Civil Aviation. Currently resorts transport their residual waste at their own expense to the Mal6 landfill o n Thilafushi often using supply vessels returning to Malt. There i s no certainty that resorts would volunteer to use the RWMFor the associated transport infrastructure, nor are there audits of waste (from any source) to determine how these are disposed. However, the Government of Maldives has tabled legislation that would make use of the RWMF mandatory. 57 controlled landfills, incineration for combustible residues and viable waste-for-energy options. Regardless o f the option selected, a disposal site for residue or ash will be required and will be engineered to minimize the risk o f contamination. The majority o f waste will be municipal, with the organic fraction removed for composting. Consequently, the disposal o f the residue or ash in an engineered-controlled site i s unlikely to pose serious management problems. A section o f the RWMF site will be secured and fully contained for disposal o fthe small amount o fmedical and toxic wastes generated. The RWMFwill be operated by the private sector through a public-private partnership, in accordance with the National Policy on SWM, and a competitive selection process. Additionally, the Project supports a rigorous monitoringprogram to assure compliance. Sub-component 1.6: Biodiversity msets to Compensatefor Possible Impacts of the RWMF 24. Recognizing the primacy o f the environment for economic growth, the Project will specify measures to offset the loss o f biodiversity and island habitat, should this occur in the location o f the RWMF. This will be done either throughthe creation o f a new protected area, or the improvedprotection o f an existing protected area. This approach i s expected to have important demonstration effects that would serve as a model for the future development o f infrastructure. Component 2: Capacity Buildingfor EnvironmentalManagement: 25. The environmental agencies and regulators in the Maldives have a broad mandate, but their capacity to manage growing environmental pressures does not match the needs o f a fragile environment on which the economy depends. At present, the environment section o f the Ministry o f Environment, Energy, and Water (MEEW) has a total professional staff o f about 35, o f whom only 5 have post-secondary degrees or the equivalent. ERC has 32 staff o f which 5 have undergraduate degree and only 1has a post-graduate degree. Likewise, MRC, with 55 staff, only has 5 with tertiary qualifications o f which 4 have pursued post-graduate studies. It i s clear that these agencies are both understaffed and underskilled. 26. The proposed Project i s designed to at least partly fill staffing gaps and capacity needs areas relating to the project itself. It i s apparent that it will be next to impossible to build a large, permanent cadre o f environmental specialists with a reach extending over the entire archipelago and across all sectors. The stress will therefore be on developing a core o f competent specialists and generalists in MEEW, other relevant ministries (Planning, Fisheries and Apculture, Tourism, Atoll Administration and Construction) and in the private sector (particularly NGOs and the tourism sector) to guide the environmental assessment and decision-making process. Priority will be given to training existing government staff and to others for whom there i s a reasonable expectation that their shlls could be utilized in the near or medium term. 27. Capacity building will be highly targeted at the environmental management skills and priorities defined inthe project objectives and components. There i s an acute need for qualifiedprofessionals inthe environmental area. At the same time, it i s necessary to take special care to use the scarce resources that are available efficiently. Capacity building activities will be carried out in five different modalities describedbelow: a. Community Training: Community training o f islanders insuch areas as solid waste management (composting, recycling), reef quality monitoring, bait fish stocks, community mobilization and other similar work. Such training can be carried out in the field close to the home islands o f the trainees and linked to other project activities, most notably the solid waste management component. b. Undergraduate Training: This will be carried out in-country by local and foreign experts. Training will be conducted by the Maldives College o f Higher Education, the only tertiary level 58 institution inthe country. The Project will support development o f a diploma, and a full program leading to a degree in Environmental Management, with a focus on areas of need. The program will be available as a supplement to other degree programs inmanagement or teaching. c. Formal degree programs abroad (undergraduate and post-graduate): This training will be reserved for the highest priority areas o f study having a direct application to problems o f environmental management in the Maldives and where a particular job function requires a high level o f professional skill that could not be acquired inthe Maldives. Inview o f the high cost o f such training, this modality will be limited to a relatively small number o f individuals, competitively selected using objective criteria. Financing o f this modality will mainly be limited to covering the cost o f university-level training in non-OECD countries. Exceptions to this rule will be considered for specialized training needs mainly in coral reef ecology not available in non-OECD countries. This i s an area o f the highest importance for the country and its economy and i s also one where skills are scarce. Priority will also needto be given to prospective faculty in environmental management and reefconservation andmanagement 28. The Project supports the Government's preference for in-country training, whenever possible, which i s a more efficient and cost effective. It opens access to advanced training and career opportunities to Maldivians at all income levels and can also yield more humanresourcesthan training abroad. In-country training will also partially alleviate the problem o f attritionby increasing the sheer numbers o f individuals trained. Experience inthe Maldives has shown that to assure quality, only qualified trainers representing priority disciplines should be selected, and training should be done in depth over a substantial period. The in-country tertiary training programs will be evaluated by experts from overseas. Shorter workshops and seminars will be used sparingly, and mainly as refresher courses. The issue o f proper incentives to encourage people talung in-country training will be considered. 29. Most undergraduate programs in the Maldives have relatively few applicants who are A-Level students. For this reason, the MCHEhas developed a "Foundations" Program designed to bringO-level students up to A-level, thereby qualifying them for college-level work. Normally, stipends are not available for these students. In order to assure an adequate number o f qualified candidates for the EnvironmentalManagement Course, it was agreed that a supplemental year will be made available with a mix o f foundation subjects and specialized subjects in environmental management that will prepare students for the diploma/degree program in environmental studies. Stipends will be available for these students. 30. With regard to the distinction between diploma- and degree students, the selection will occur naturally after the second-year o f studies. Those students who have satisfactorily completed two full years o f study in the Environmental Management Program will be eligible for a diploma. Those who successfully complete three full years o f study in Environmental Studies will be eligible for the BSc degree. 31. Project support will also include the training o f staff members in other pertinent ministries including Planning, Fisheries and Agriculture, Tourism, Construction and Atoll Development. The training program will need to be implementedwith great care to avoid conflicts and imbalance. First,priorities will be set among training areas. Second, there needs to be a balance between university-level skdls and non- university-level slull levels. 32. With regard to undergraduate and post-graduate training, priority will be given to students who plan to study a technical discipline inwhich slulls are needed inthe Maldives. The highest such need i s inthe area o f coral reef ecology and marine science, given the country's high economic dependence on its marine resources. 59 33. Finally, the proposed Project will not be the sole source o f support for training. Among project activities will be the search for additional funding sources among the many national and multilateral programs available. The P M U will serve as a clearing-house for such opportunities, help recruit candidates for these awards, assist applicants with their paperwork, and identify appropriate programs related to MEEW'swork to which Maldivians will be encouraged to apply. Component 3: Technical Assistance for Strengthening Environmental Management and MonitoringandPilotRegionalStrategicEnvironmentalAssessment 34. Sparse information and the absence o f baseline data remain one o f the key impediments to better environmental management in the Maldives. Evidence on the magnitude and causes of these problems will allow an opportunity to adopt policies to arrest or reverse degradation o f the country's key natural assets. The primary objective o f this component i s to expand the knowledge base regarding critical natural resources on which the Maldives ecosystem depends for stability and the Maldives economy depends for continued growth. Recognizingthat there are insufficient resources inthe project envelope to fill all the information gaps, this component selectively targets issues where more information is most urgently needed. In addition to filling data gaps this component will also promote activities designed to stimulate discussions and policy deliberations that will lead to greater community awareness and better decision malung. 35. Among the many environmental problems that affect the Maldives, coastal erosion has been identified as a threat to over 90 percent o f inhabited islands and i s expected to intensify with climate change. Yet there i s little information on the magnitude o f the problem, or understanding o f the complex processes o f deposit and erosion and their links to wave dynamics, terrestrial ecosystems (mangroves) and coral reef health. There i s growing evidence that even a moderate rise in sea level will have a large impact on the wave energy reaching islands. This i s because the orbital diameter o f a wave increases (decreases) exponentially with sea depth (height). The implication i s that a small rise in sea level has a disproportionately large impact on wave energy. Destruction o freefs leads to a lowering o f the reef crest, increased wave energy reaching the shore and greater erosion. A major focus o f this component will be on addressing the issue o f building climate resilience by improved management and stewardship of the country's coastal resources (marine and terrestrial). 36. It i s worth noting that while climate change poses a major threat to reef health and sustainability in the Maldives and elsewhere (through coral bleaching, ocean acidification, disease, etc), reducing stress on reefs from local development and human pressures i s the most effective way o f enhancing the natural resilience o f reefs to climate change. Probably the most important forms o f such stress are from over- fishing (which alters reef community structure and the function o f key ecosystem processes), destruction o f reefs (primarily to make way for structures), and pollution (which affects water quality and in the ability o f corals to grow, reproduce and compete effectively with algae for space). 37. A second major concern on many islands i s the productivity o f the tuna fishery, which i s the second largest export industryand the primary source o f livelihoods inthe country. Tuna harvests depend on the availability o f adequate bait which i s sourced from the coral reefs. Anecdotal reports from the industry suggest that the bait fishery may be in long term decline in several atolls. There i s evidence that reef health and recovery i s linked to fish stocks. This component will explore the status o f the bait fishery, the interactions between coral recovery (health) and fish stocks as well as provide inputsfor the development o f a bait-fishery management plan. 60 38. The geographical scope o f this component will be the North Central Region composed o f Raa, Baa, Lhaviyani and Noonus6atolls (see map B inAnnex 15). This region i s comprised o f a total o f 224 islands o f which 44 are inhabited and 11are undergoingresort development. The total population i s an estimated 42,000. 39. The Project will support monitoring by fishers and professional scientists. Community monitoring i s supported since it i s an effective way o f creating awareness and also collecting basic data in a systematic fashion from a large number o f sites. The second kind o f monitoring will be conducted on a more intensive basis by professional scientists from the small Maldives research community led by ERC and MRC. The capacity to monitor and acquire data will be enhanced by the acquisition o f a research vessel appropriately outfitted, other necessary research instruments and the purchase of (basic) diving equipment. The following i s a briefoutline o fthe sub-components: Sub-component3.I:Erosion and the TerrestrialEnvironment 40. This sub-component will be led by ERC. Mangrove cover and other vegetation are especially important to stabilizing the soil, providing a cost-effective response to coastal erosion. As climate change advances, storm surges are likely to grow in intensity and with them the power to transport sediments which i s the basis for erosion. Moreover, there i s limited recording o f medicinalplants and the geography o f vegetation across the islands. Inventorization and identification o f flora across select islands will be supported. Another priority topic that will be investigated i s the impact o fharbor construction on erosion. Harbor construction, supported by the Government, i s accelerating rapidly through the inhabited islands. There i s anecdotal evidence that once constructed (dredging and filling, breaching the island reef, and `using dredged materials for landfills) the harbors greatly accelerate erosion, leading to the loss o f substantial areas o f land and occasionally infrastructure on inhabited islands. The design o f harbors and the allocation o f living space on islands may require some adjustments to deal with this reality. This sub- component will support monitoring and technical reports to address the issue o f erosion, harbor impacts and design to minimize erosion, land-use alternatives and soft engmeering solutions such as mangrove and vegetation protectionto arrest erosion. Sub-component3.2: MarineEnvironmental Monitoring and Coral Reefi 41. This sub-component will be led by M R C and will focus on two major themes: coral reef status, and bait fisheries. The main emphasis o f this component will be on addressing the risks of climate change and enhancing natural adaptive capacity. This will include an assessment o f coral tolerance to temperature increases, "reef connectivity", critical climate resilient reef areas and refugia. The aim i s to inform management actions needed to increase adaptive capacity by reducing direct stresses and identifying key resources that will needto be protected. 42. The unprecedented coral bleaching event in 1998 combined with over fishing, reef reclamation and improper disposal o f waste have negative synergistic impacts that are leading to rapid degradation o f the marine environment. Long-term monitoring data from select sites show highly variable recovery to bleachingalong and across the Maldives archipelago. The annual coral reefrecovery as a function o f live coral cover was highest in the southern atoll and lowest in the northern atolls. Variable recovery i s also confirmed from the coral settlement and recruitment data collected from Mal6 and Vaavu atoll reflecting the complexity o f the recruitment patterns. Little information i s available on the factors influencing success or failure o f coral recruitment and recovery where ocean currents play an important role in short and long distance dispersal o f larvae. Understanding the causal links -co&ectivi& of reefs and their 56Noonuatoll is onlypartially covereddue to its divisionby an administrative boundaryto the north. 61 role as source or sink reefs -are important in securing the health o f the marine environment and the Maldives economy as it mustprepare for the vagaries o f climate change. 43. Accordingly this sub-component addresses four closely related themes: First, it seeks to improve the existing monitoring program by measuring new parameters (such as the coral reef fish community, particularly herbivorous fish) and expanding the spatial area o f monitoring to encompass the North Central Region. The overall objective i s to develop a solid database with appropriate information for environmental managementplanning. Second the sub-component will support activities that will improve understanding o f the biological processes that influence the recovery of coral reef communities following disturbance and blea~hing.'~Third a series o f integrated studies will be conducted to determine spatial and temporal recruitment patterns and identify source and sink reefs. Identifying and protecting source reefs, that could endure climate change, i s especially important for sustaining the country's marine habitat and its natural capital. Finally, this sub-component provides funding to facilitate linkages, partnerships and internships between M R C and the GEF-funded and Bank-managed Coral Reef Targeted Research and Capacity Buildingfor Management Program. 44. Related to coral health i s the productivity o f the bait fishery which i s critical for the Maldives tuna fishing industrys8. Bait fish are caught in lagoons and reefs close to shore. Community monitoring combined with technical assistance will feed directly into the formulation o f a national bait fishery management plan that i s currently under development in the Ministry o f Fisheries, Marine Resources and Agriculture. This will identify the ecological status o f the bait fishery in the North Central Region and suggest alternative management strategies, drawing on relevant experience in other countries. There will be an examination o f sustainable bait fishing alternatives. 45. Specific outputs o f this sub-component include: 0 Resource maps andbaseline environment information 0 Improved and additional parameters included in the monitoring program to determine the status and the pattern ofreefrecovery 0 Improved understanding on reef resilient and resistance factors to coral bleachmg and anthropogenic impacts 0 Information from marine environmental monitoring linked to spatialplanning 0 A bait fishery managementplan. Sub-component3.3: Spatial Planning 46. Parallel to these, the Ministry o f Planning and National Development will take the lead in developing its spatial database and planning capacity with the aim of integrating the environmental dimension in planning. The Project will support acquisition of software, hardware and support activities to utilize satellite imagery in digital form and the training o f specialists in the interpretation o f remotely sensed data. The floor o f shallow seas will be explored usingparticular applications that allow observations o f issues such as reef conditions, erosion, reef damage, etc. This will allow the Ministry o f Planning to extend its view into the subsurface marine environment for the first time and to take both coastal and 57 An integrated program has been designed around two main themes: (i)spatial and temporal patterns o f reproduction and spawning inscleractinian corals and (ii)settlement and recruitment o f scleractinian corals. 58The causal links here are ambiguous. Observations suggest that reef recovery from bleaching i s higher in areas with low fishing effort. It i s not known whether high fish stocks promote reef recovery, or damage from fishing impairs recovery, or both. 62 marine variables into account in planning. These are pertinent to developing appropriate adaptive strategies to climate change. The database will be made available to other government agencies. This has the potential o f raising the quality o f land-use planningto a new and higher level inthe Maldives, and to facilitate the integration o f environmental concerns in land-use planning as well as facilitating adaptation to climate change, includingbenefithost analyses o f alternatives. Sub-component 3.4: Integration of Findings: Reports and a pilot Regional Strategic Environmental Assessment 47. Integrationand use o f informationwill proceed at two levels. As data and analyses become available, and reports are issued, workshops or seminars will be convened by the appropriate agency to disseminate the results and to examine the implications o f studies for planning, climate-change adaptation, environmental conservation and enhancement o f the quality o f life inthe Maldives. Information from this component will also be used for creating the short list o f islands for the location o f a potential RWMF. 48. Second, to bringtogether these activities, this sub-component will support a pilot Regional Strategic Environmental Assessment (RSEA) to (i) integrate and synthesize the assessments in ways that will inform policy and (ii) demonstrate the utility o f incorporating environmental parameters in development decisions. An RSEA i s an environmental assessment tool that examines how factors cumulatively affect ecological and human living conditions within a prescribed area. Recognizing the need to incorporate environmental considerations into policies and plans, the Government has placed a high priority on conducting a pilot RSEA inthe North Central Region that could serve as a model to guide development in other regions. ERC will serve as the implementing agency o f the RSEA, with coordinated inputs from other relevant agencies. It will oversee work carried out by all participants and will provide a forum for evaluating scenarios. Component4: ProjectManagementand Communications(US$1.54 Million) 49. The Project Management Unit (PMU) with members and qualifications as described in the OM will manage the Project in accordance with the guidelines set forth in the OM. The PMU will carry out the following functions: Overall Project Management, Component Management, LiaisodCoordination with other agencies and programs, financial management, procurement, monitoring and evaluation and project communications. 50. Project Communications will be a sub-component (4.1) to this component. Strategic communication i s one of the key means through which access to and application o f knowledge and information are facilitated. It helps establish a common understanding among all participants o f a development initiative, creating a base for common action. It empowers stakeholders with knowledge and information that can be applied to effective decision-mahng, accountable management, social and political mobilization, and behavior change. It i s a comprehensive and holistic vision o f the communication activities needed for designing and implementing successful policies and projects, and it should not be considered a cost but rather a resource-saving device which reduces the risk o f less than optimal design, wrong measures, poor implementation, poor results, and even social unrest. Strategic communication works best when interventions are planned, funded, implemented, evaluated, and scaled up as an independent component or sub-component o f a project or program. 51. Traditional approaches to communication typically involve top-down public education campaigns by line ministries. This process rarely produces desired results and is an inadequate substitute for a well- designed strategic communication interventionbased on a multipurposeand multidimensional framework that fosters the process o f change by aiming to achieve the following: (i) educate, learn, and effect behavior change; and (ii) buildrelationships and coalitions, andbuildcapacity. 63 52. This Project envisages a communication campaign to develop environmental awareness, action, and advocacy. Envisaged activities will help promote popular participation, decentralized decision malung, and sustainable economic development. The campaign would aim to: Foster an overall national consciousness, by which policymakers, administrators, program implementers, the media, NGOs, private sector, and the public put the safe disposal o f solid waste and the protection o f the environment and marine life (which i s the engine of growth and prosperity inthe Maldives) at the top oftheir agenda. Enable people to find ways through which they motivate the entire community to adopt the desiredbehavior. 53. A researched communications program (includes opinions, beliefs, attitudes and knowledge into the baseline) i s central to promoting transparency and accountability. The strategy to promote participation would aim at informing, sensitizing and motivating the various stakeholders involved with the proposed efforts. This can be and i s done in many ways e.g. by: organizing conferences, seminars and visits; inviting key government officials in field trips and workshops and also in inter-country workshops dealing with similar issues; using mass-media and audio-visuals; distributing and showing o f concise promotional materials such as pamphlets, slide shows, films, etc. In addition, an outreach education program targeted at residents and the business community would be established to address attitudes toward solid waste issues and generate consciousness about this issue. 64 Annex 5: Project Costs MALDIVES: MaldivesEnvironmental ManagementProject Project Cost By Component andor Activity Local Foreign Total U S $million U S $million U S $million 1.Regional Solid Waste Management 3.13 3.22 6.35 2. Capacity Buildingfor EnvironmentManagement 2.23 .62 2.85 3. Regional Strategic EnvironmentalAssessment 1.70 1.08 2.78 4. Project Management 1.13 .37 1.50 Total Baseline Cost 8.19 5.28 13.47 Physical Contingencies .o1 .o1 .02 Price Contingencies .24 -15 .39 TotalProject Costs' 8.44 5.45 13.88 Interest duringconstruction 0 0 0 Front-end Fee 0 0 0 TotalFinancingRequired 8.44 5.45 13.88 1Identifiable taxes and duties are US$0.98 million and the total project cost, net o f taxes and duties, i s US$12.91 million. Therefore, the share of project cost net o f taxes i s about 93 percent. 1. This annex describes the assumptions underlying the calculation o f project costs for the Maldives Environmental Management Project (MEMP); it then presents the Project costs and the details o f the financingplans. Costs have been derived usingthe COSTAB software package. 2. The first section (A) presents the main assumptions related to project duration and estimated start date, physical and price contingencies, percentage o f foreign exchange and local costs in total costs, specific unit costs breakdown, and percentage o f financing by expenditure or disbursement categories. The second part (B)provides an overview o f project costs and financing. A. ASSUMPTIONSFORCOSTCALCULATIONS ProjectCosts 3. All costs presented in the COSTAB include 20 percent custom duties and levies for imported goods. The tax component for all project costs will be financed by GoM, with the exception o f infrastructure investments where exemption o f import duties for those contracted to undertake the works i s unfeasible. InthiscaseIDApays 100percentofcosts,includingtaxes. Project Durationand StartDate 4. Project duration is 65 months. The Project was appraised in March 2008. Discussions with the Government indicate that a project effectiveness date o f August 1, 2008 i s feasible. The implementation periodwill conclude on December 31,2013. PhysicalContingencies 5. To allow for changes in quantities or uncertainty o f unit costs according to local specification differences, a physical contingency rate o f 2 percent has been assumed for civil works (construction o f 65 waste management facilities). No provision for physical contingencies has been applied to other expenditure categories. PriceContingencies 6. Price Contingencies in Foreign Currency. Foreign inflation i s based on the forecast evolution o f the Manufactured Unit Value (MUV) Index o f exports from the five most industrialized countries (G-5) to developing countries, expressed inUS$, as calculated by the World Bank. The forecasts over the project implementation period (2008 to 2013) shows an average annual increase o f 0.65 percent per year). This rate has thus been applied to the foreign exchange content o fproject costs. 7. Price Contingencies in Local Currency. Inflation in the Maldives as measured by the year on year change o f the CPI in MalC5' have been erratic in the last 10 years. Inflation was negative in 1998 (-9.3 percent) and in 2000 (-3 percent), went up to 7 percent in 2001, became 0 percent in 2002 and negative again in 2003 (-3 percent). It gradually increased to 4 percent in 2006 and i s estimated to be 4.6 percent for 2007. A rate o f 5 percent was usedto project inflation over project duration (2008-2013). ExchangeRate 8. The Rufiyaa (Rf) i s pegged to the US$ and it has been quite stable innominal terms against the US$. The exchange rate was 11.77 Rf/US$ in 1998, went up to 12.8 in 2001 and remained stable since then. The rate o f 12.75 RE/US$ i s thus used for projection over the project duration (2008-2013). 9. Assumptions for inflation used inthe COSTAB are summarized intable 5.1 below. Table 5.1: InflationassumptionsusedinCOSTAB Up To Period Project 2008 2009 2010 2011 2012 2013 Start Foreign Inflation (%) 0.8 0.8 0.8 0.6 0.5 0.6 0.8 Local currency Inflation(%) 4.0 5.0 5.0 5.0 5.0 5.0 5.0 UnitCosts 10. Project costs are estimated based on January 2008 prices. Estimates for costs o f equipment are based on data provided by dealers in the Maldives as well as on costs incurred by ongoing World Bank and other projects. Estimates o f annual running costs o f boats i s based on data provided by boat rental companies. Costs include all consultants provision for fees, international travel, per diems and insurance. Tax andForeignExchangeContent 11. The tax and foreign exchange content of unit costs have been calculated. Tax assumptions are derived from data provided by the Ministry o f Finance and Treasury. Imported goods are subjected to custom duties only that apply to the cost, insurance and freight (CIF) value o f imported goods. For locally 59 Monthly Statistics (December 2007) of the Maldives Monetary Authority in website: http:l/www.mma.gov.rnv/MonthlyStatisticsldec07.pdf 66 purchased goods and services, tax content i s assumed to be zero6'. Assumptions by expenditure categories are presented below (table 5.2): Table 5.2: Foreignexchange and tax content by expenditure category I ExpenditureCategory Percentageof ForeignExchange Percentage of Taxes Investment costs Works 60% 20% Goods and equipment 70% 20% Specialized services 20% 0% Training 20% 0% Research and studies 20% 0% Recurrent costs Staff Salaries 0% 0% Travel 40% 0% Operation & maintenance 50% 10% Financiers and Disbursement Categories 12. The Project will be financed from the following sources: (a) IDA (part o f the World Bank Group); and (b)The Government o fthe Maldives (GoM), 13. Potential additional financiers include: (a) Resort operators that would fund waste management activities at resort level as well as transport o f residual waste to the regional facility; and (b) Beneficiaries from participating inhabited islands inthe project implementation area that would fundpart o f the waste management activities at islandlevel. 14. The World Bank will finance 100 percent o f costs (without taxes) o f investments (excluding works where taxes will also be financed) as well as 100percent o f salaries o f PMUstaff, PMUboat purchase or rental, and O&M for the first two years. G o M would fund all taxes6' (except works), office O&M cost (PMU inM a l i and office inthe North Central Region), operating costs for the PMU, and monitoring and printing/publishingcosts for PMUactivities. B. PROJECTCOSTS Total Costs 15. Total project costs including price contingencies (3 percent o f base costs), over a 65-month implementation period, are estimated at US$13.9 million. The foreign exchange component will amount to US$5.5 million (39 percent). Duties and taxes are estimated at the equivalent o f US$0.98 million (7 percent o f total costs). The local currency content o f the Project will be US$8.4 million (61 percent). Investment and recurrent costs will respectively represent 96 percent and 4 percent o f total costs. 6oThe maintaxes inthe Maldives are limitedto import duties anda tax onresorts. 61Thishas beenauthorizedby the President'sOffice for import duties of goods. 67 Table 5.3: TotalCostsSummary Maldives MaldivesEnvironmentalManagement Project % %Total Components Project Cost Summary (Rufiyaa `000) US$ `000 Foreign Base Local Foreign Total Exchanae costs 1. RegionalSolid Waste Management 41,168 42,297 83,465 3,130 3,215 6,345 51 47 2. Capacity Buildingfor EnvironmentManagement 29,333 8,162 37,495 2,230 620 2,850 22 21 3. Regional Strategic EnvironmentalAssessment(RSEA) 22,381 14,164 36,544 1,701 1,077 2,778 39 21 4. ProjectManagementand Communications 14,836 4,833 19,669 1,128 367 1,495 25 11 Total BASELINE COSTS 107,717 69,456 177,173 8,188 5.280 13.468 39 100 PhysicalContingencies 124 159 283 9 12 22 56 PriceContingencies 22,046 13,894 35,940 241 154 394 39 3 Total PROJECT COSTS 129.888 83.509 213,397 8,439 5,446 13,884 39 103 16. The Regional Solid Waste Management component will be the main component in terms o f costs with US$6.4 million and 47 percent o f base costs. The capacity building component will amount to US$2.9 million and 21 percent o f base costs. The base cost o f the TA for evaluation, monitoring, and Regional Strategic Environmental Assessment i s estimated at US$2.8 million and 21 percent o f base costs. Base costs for "Project management and communication" will amount to US$1.5 million and will account for 11percent ofbase costs. FinancingPlan 17. The IDA credit will cover about US$13.15 million (representing 95 percent o f total costs). GoM's contribution i s estimated at US$0.74 million (representing 5 percent o f total costs) from import duties (US$0.3 million) and office O&M and monitoring costs (US$0.41 million). The potential amount to be financed by resort operators for waste management activities at resort level as well as transport o f waste to the regional facility i s not known at this stage and will be assessed through the component feasibility study. Communitieswill finance part of the waste management cost (labor for waste separation activities and operation o f IWMCs). The financing plan by components and category of disbursement i s detailed in tables 5.4 and 5.5, respectively. Table 5.4: FinancingPlanby Components(US%OOO) Maldives Maldives EnvironmentalManagement Project Componentsby Financiers (US$ `000) Local -------IDA The Government Total For. (Excl. Duties & Amount % Amount % Amount % Exch. Taxes) Taxes 1. Regional Solid Waste Management 6,429 98.1 122 1.9 6,551 47.2 3,323 2,453 775 2. Capacity Buildingfor Environment Management 2,921 99.3 21 0.7 2,942 21.2 640 2,281 21 3. RegionalStrategic Environmental Assessment (RSEA) 2.380 83.5 470 16.5 2,851 20.5 1,104 1,570 176 4. ProjectManagementand Communications 1,419 92.1 122 7.9 1,541 11.1 379 1,155 7 Total PROJECT COSTS 13,150 94.7 735 5.3 13,884 100.0 5,446 7,459 979 68 Table 5.5: FinancingPlanby Disbursement Accounts (US$OOO) Maldives Maldives Environmental Management Project DisbursementAccounts by Financiers Local (US$ '000) IDA The Government Total For. (Excl. Duties & Amount % Amount % Amount % Exch. Taxes) Taxes 1. Works 4,335 99.7 13 0.3 4,348 31.3 2,609 1,073 666 2. Goods and equipernent 1,257 80.1 312 19.9 1,569 11.3 1,098 159 312 3. Specialised services 4,122 97.9 87 2.1 4,209 30.3 842 3,367 4. Training 2,763 100.0 0 - 2,763 19.9 553 2,210 5. Research and studies 484 100.0 0 484 3.5 97 387 7. Operation and maintenance 188--- --- 36.8 324 63.2 512 3.7 247 263 2 Total PROJECT COSTS 13,150 94.7 735 5.3 13,884 100.0 5,446 7,459 979 18. Additional, more detailedcost tables are found inthe appendixto this annex. 69 md .3 .% a P m .. B L .-m e C 8 0 gf K '0 C m L n m u r h l r 7 7 u c In 0 8 Component 4: Project Managementand Communications Summary Costs In US$ (thousands) 1. InvestmentCosts A Salariesand Fees/a 1,232 B. Equipmentand Furniture 20 C. SWM North CentralOffice & Accomodationlb 62 D. Trainingfor FinancialManagement, Procurement,and M&E 26 Total InvestmentCosts 1,339 II.RecurrentCosts A Travel 86 B. Operationsand Maintenance 116 Total RecurrentCosts 202 Total 1.541 \a ConsultancyServicesof Project Adviser, LocalAccounting Firm, Financial ManagementOfficer, ProcurementSpecialist, ProcurementOfficer, M & E Techical Assistance, CommunicationsOfficer, and cost of communicationacitivities \b Cost of Rental,purchaseof furniture, office equipmentand generator 73 Annex 6: ImplementationArrangements MALDIVES:MaldivesEnvironmentalManagementProject 1. Implementation Period: The credit is expected to become effective in August 1, 2008, an expected project completion date on December 31, 2013. 2. The multi-sectoral nature o f the Project is reflected in the implementation arrangements. Project management and implementation will be carried out under the direct supervision o f the Ministry o f Environment, Energy and Water (MEEW). An MEEW official leads and oversees project activities as Director o f the Project Management Unit (PMU). The P M U includes a Project Advisor, a Procurement Specialist and Procurement Officer, a Financial Management Officer, an HR specialist and HR Coordinator, a Communications Officer, and technical specialists located in other relevant Ministries and agencies. Awareness raising and communications are crucial to creating support for environmental stewardship; hence the need for a communications specialist. 3. The PMU will report to a multi-sectoral Steering Committee appointed and chaired by the Minister o f MEEW. The Steering Committee is comprised o f the Deputy Minister o f Environment, the Deputy Minister o f Water, and high-level representation from the Ministries o f Planning and National Development, Finance and Treasury, Fisheries and Agnculture and Tourism and Civil Aviation. 4. A Technical Committee provides guidance and oversight to the Project. The Technical Committee i s chaired by a MEEW official, and it includes, among others, the Project Director, representatives o f the Marine Research Centre, the Ministry o f Planning and National Development, and the Ministry o f Atoll Development and two additional representatives from MEEW appointed by its Minister (figure 6.1 illustrates the structure o f the PMU). Figure6.1:PMUStructureof MaldivesEnvironmentalManagementProject (PMU) HumanResources, Procurement, Communications, Financial Management - Solid Waste Technical Management Capacity Building AssistanceRSEA I I 1 I 1 I Component 1: RegionalSolidWaste ManagementProgram 5. The solid waste component will be managed directly by ERC which has the mandate for S W M planning at the national level. T h i s will include assisting Island Offices in discussions o f alternative strategies, helping islands to formulate Island Waste Management Plans, providing contract supervision for works on IWMCs, equipment orders and RWMFs, placing solid waste management on Atoll 74 Development Committee agendas, actively encouraging discussion o f waste issues that islands face, loolung for opportunities to work in coordination and being involved in monitoring atoll-wide waste management activities. 6. At the island level, it has been agreed that Island Waste Management Committees will be established on all participating islands. IWM Committees will include a representative from the Island Office, Women's Development Committee, Island Development Committee, and two members from the island community. The N M Committee will interface with MOAD and ERC in the development o f the Island Waste Management Plan and then help to enlist the cooperation o f islanders in the particular scheme adopted. During the implementation phase, IWM Committees will oversee the operation o f IWMCs, report on problems that arise and participate in their solution. Island Waste Management Plans will be implemented by the communities themselves and will include both voluntary and paid positions. Each participatingisland will have the opportunity to select the level and type o f service it desires. 7. Dependingon the outcome o f the feasibility study, it is likely that waste transfer and operations o f the RWMFwill be carried out by the private sector under public-private partnership agreements. Technical assistance will be provided to the Government to select a suitable private sector operator for waste transfer operations and to establish a regulatory and monitoring fiamework to ensure effective operations o f the private sector contract. Private sector participation i s strongly encouraged by the National Solid Waste Management Policy. ERC (with the assistance o f consultants, ifneeded) will set up an appropriate regulatory mechanism and set performance standards, review performance and set fees at a level that allows the facilities to earn a profit while considering the public interest as well. 8. Memoranda o f Understanding (MOU) will be signed between the PMU and both the Island and Atoll Offices, defining the roles and responsibilities o f each party, for the implementation o f the IWMCs and other community waste management activities. 9. Procurement and fund flows for this component will be managed by the PMU with the assistance of the respective Atoll Offices. Training may be managed by the PMU or in the context o f the capacity buildingcomponent. Component2: CapacityBuildingfor EnvironmentalManagement 10. This component will also be implemented by the PMU under the supervision o f the Steering Committee and the guidance o f the Technical Committee. An HR Specialist recruited as a consultant by the PMU will employ the agreed selection criteria and priorities to choose candidates for training, the training modality and to take measures that will insure that the Maldives and its unique environment benefit from the capacities that these people acquire. The HR Specialist will also be responsible for training an HR Officer appointed by the PMU. Procurement and fund flows will be managed by the PMU. 11. The Maldives College o f Higher Education(MCHE), incollaboration with the PMU, will put inplace a core curriculum at the undergraduate level for training in Environmental Management. This curriculum will lead to award o f diploma-level andor degree-level credentials to Maldivians who undertake this career path. Using support from the credit, the MCHEwill select and contract specialists to develop the curriculum and will contract consultants as instructors untilMaldivian instructors are available to take on teaching roles. MCHE will promote the course, recruit and enroll students, and provide the classroom and laboratory facilities necessary. The P M U will provide oversight, procurement and financial support for this activity. 12. Reporting on Monitoring and Evaluation o f program results will be a responsibility of the PMUbut each line agency involved will be responsible for keeping track o f progress and malung sure staff who 75 have received training overseas return to apply the acquired knowledge inthe particular agency where the need for a particular skill was identified at the outset o f the Project. Progress reports will be made available to the P M Uby the actors/line agencies involved on a quarterly basis. Component 3: Technical Assistance for Strengthening Environmental Management and MonitoringandPilotRegionalStrategicEnvironmentalAssessment 13. ERC will serve as the implementing agency o f the RSEA, with direct responsibility for terrestrial studies (vegetation, mangroves, coastal erosion) and indirectly for inputs from other agencies, primarily M R C and MPND. ERC will oversee work carried out by all participants and will provide a forum for evaluating development scenarios. A regional committee will be formed with representatives from each o f the targeted atolls and some island communities reflecting a cross-section o f community sizes and characteristics. The regional committee will examine various scenarios for the development o f the region basedon data produced by the Project and other sources. 14. The P M U will be responsible for monitoring progress, evaluating outcomes and facilitating implementation o f this component. This component has the highest need for cross-sectoral coordination and interaction. The Project i s novel and faces challenges in seeking to encourage inter-disciplinary and inter-agency collaboration. The PMU will be responsible for assuring collaboration and coordination between the key agencies. For some o f the activities there will be direct participation by communities and will includethe Atoll and IslandOffices, participatingresort islands and schools. 15. The activities under this component will be managed inaccordance with the mandates o f the various government agencies: ERC will be directly responsible for dealing with beach erosion, vegetation and mangroves (terrestrial monitoring). M R C will lead the activities related to bait fishery and coral reefs (marine monitoring). MPND will lead the spatial and GIS components. ERC will lead cross-sectoral activities and, inparticular, the conduct o f the RSEA process and reporting. Component4: ProjectManagement and Communications 16. The PMU, located in the MEEW, will have primary responsibility for project management, and for assuring that the Project i s implemented according to the Operations Manual and the Financing Agreement. Specialists located in the PMU will be responsible for procurement o f goods, works. In cases where another agency will implement part o f the Project (such as MCHEin Component 2, MRC or M P N D in Component 3), the agency will provide technical specifications or Terms o f Reference to the PMU which will implement the appropriate steps to achieve the needed good, work or service. As necessary, technical personnel from other agencies will participate in pre-bid conferences and in the technical evaluation o fbids or proposals. 17. The P M U will also be responsible for financial management, accounting, record-keeping, reporting and for responding to audits. The PMUwill contract an independent auditor to audit all project accounts on an annual basis as provided for inthe Financing Agreement. 18. A Communications Officer will be recruited by the PMU. The functions o f this communications specialist will be twofold. First, she will be responsible for designing and implementing a public information campaign about the program so that various stakeholders including government officials, ordinary citizens, and others are well informed about the Project and its activities. Second, the specialist will be responsible for designing and helping to implement a specific program information campaign designed to enlist the support and cooperation o f specific stakeholder groups in project activities. For example, the Communications Officer will prepare materials such as brochures, posters, radio spots, etc. aimed at informing islander about the S W M component and enlisting their cooperation therein. Such 76 materials could also be posted on MEEW/ERC's website. This campaign will be focused on the participating islands in the North Central Region. The Officer will also be responsible for transparently communicating relevant FM information to promote transparency and raise awareness. This will, at a minimum, include posting information inthe public domain on procurement procedures and publication o f contracts or awards. 19. The PMU will also hire specialist staff as required on short term basis for project monitoring and evaluation. Project monitoring activities will focus on periodic collection o f data regarding project performance centering on the agreed implementation targets. This data will be compiled at regular intervals and provided to the Minister o f Environment, the Bank supervision team and other interested parties. The PMU will organize meetings and retreats involving implementing agencies to review and evaluate progress and to recommend adjustments in implementation strategy as necessary. Each component coordinator inthe P M Uwill be responsible for monitoring activities under their jurisdiction. 77 Annex 7: FinancialManagementandDisbursementArrangements MALDIVES: MaldivesEnvironmentalManagementProject A. Summary of FinancialManagementAssessment 1. The Project will be implemented by a Project Management Unit (PMU) in the Ministry of Environment, Energy and Water (MEEW). The implementation arrangements are being designed, in a manner which will ensure transparency and efficient fiduciary arrangements and will be adequate to account and report for projectresources and expenditures. B. GovernanceArrangementsandOversightResponsibility 2. This Project requires coordination among several agencies and to facilitate this process, a PMU has been created. The overall Project will be overseen by a National Project Steering Committee, chairedby the Minister o f Environment, Energy and Water, to ensure greater stakeholder consultation and policy commitment to environmental management for the duration of the Project and beyond. 3. Inaddition, a technical committee, chaired by an MEEW official, will provide technical guidance and oversight for the Project which will also include two additional representatives from MEEW (appointed by the Minister), the Project Director, representatives of the Marine Research Centre, the Ministry o f Planning and National Development, the Ministry o f Atoll Development, and the Ministry o f Tourism and Civil Aviation. The solid waste component will be managed by ERC which has the national mandate for S W M planning and implementation. ERC will assist islands to formulate Island Waste Management Plans, and contract for constructiodsupervision o f IWMCs, and related equipments. ERC will also be responsible for contract and design o f RWMFs. At the island level, Island Waste Management Committees6' will be established and will oversee the operation o f IWMCs, report on problems that arise, and participate in their solution. Island Waste Management Plans are to be created and implemented by local communities themselves and may include both voluntary and in some islands paid positions. Reflecting the diversity o f economic activity across islands, each participating island will have the opportunity to select the level and type of service it desires. C. Project ManagementUnit 4. The P M Uwill be responsible for implementingthe financial management arrangements o f the Project and will also be responsible for monitoring progress, evaluating outcomes, and handling procurement. The PMU will also coordinate with other agencies that are providing technical inputs or are involved in implementing the Project. These include the Marine Research Centre, the Maldives College o f Higher Education, the Ministryo f Planning and National Development and the Ministry o f Atolls Development. The PMU will include a Project Advisor, Procurement and Financial Management personnel, an HR specialist and HR Coordinator, a Communications Officer, and technical specialists. 5. The PMU will be lean with a core group o f mid-career officials and specialists serving as overall coordinators and managers for each component. An FMOfficer (graduate inaccounting with over 5 years o f experience) has recently been hiredand i s currently being trained by an FM expert, who i s well versed IWMCommittees would include a representative fiom the Island Office, the Women's Development Committee, the Island Development Committee, and two members f i o m the island community. The IWM Committee would interface with MOAD and ERC inthe development o f the Island Waste Management Plan and then help to enlist the cooperation o f islanders inthe particular scheme adopted. 78 with Bank-financed projects. The FM Officer will work with a local accounting firm63(mobilized on March 2, 2008) to install off-the-shelf software to maintain books o f accounts and implement other FM arrangements. Further support staff for FM functions will be identified from within MEEWERC and will be posted to the PMUas needs arise. Additionally, the creation ofFMcapacity inthe PMUcould be potentially usedas an opportunity to buildthe slulls o f other staff inE R C M E E W who will also assist the FMOfficer. 6. The PMU will be responsible for coordinating procurement and contract management for all activities. In the case o f construction o f IWMCs, the Island Waste Management Committees, which will include representatives fiom the local community, will provide inputs in the planning, procurement, construction and supervision process. The Tender Evaluation Section (TES) o f the G o M will process all contracts above MVR 1,500,000 and the PMUwill be responsible for processing o f contracts below MVR 1,500,000 (inconsultation with TES). Other staff will be recruited from government ranks if available, or as consultants on renewable contracts. Detailed implementation arrangements are provided inAnnex 6. D.Strengths a. A Country Financial Accountability Assessment (CFAA) camed out in late 2000 concluded that although public financial management (PFM) and accountability in Maldives i s at a nascent stage, there i s an understanding and commitment within the Government to strengthen this area. Important steps have already begunto reform P F M arrangements, including a public accounting system across the entire Government o f Maldives. Implementation o f the PAS i s expected to be in place by late 2009 along with the establishment o f a single treasury account for the GoM. In addition, a project management module i s also to be implemented in various ministries o f Government by 2010. It i s expected that the PMU will be able to take advantage o f this module for the proposed Project sometime during the later years o fproject implementation. b. ERC, which is a unit within MEEW, has been handling the EU-financed South An Atoll Project through the Tsunami Reliefand Reconstruction Fund, Ministryo f Finance and Treasury (MoFT) and i s familiar with Bank policies and procedures. Although there have been no fund flows to MEEW (all payments are made through the Tsunami Relief and Reconstruction Fund established under a presidential decree), internal controls in respect o f operations and financial processing (such as certificationo f invoices) have been established inERC and these will also be used under this Project. C. The P M U i s in the process o f establishing a delineated and sound financial management system incorporating financial arrangements, control processes, and funds flow arrangements to meet the objectives o f the Project. Weaknesses Mitigating actions FM capacity is rather limited in ERC/ A local accounting firmhas been hired for a period o f 5 MEEW.Managers o fthe proposedPMU months (spread over the initial year) and i s in the have no prior experience in handling process o f installing the financial accounting and financial management activities o f reporting system (an off-the-shelf accounting system). similar operations. The firm will also assist in writing the FM manual. Simultaneously an FM Officer (graduate in accounting with about 5 years o f experience) has also been recruited and i s working with the accounting firm to implement the FM arrangements. This Officer is 63The local accounting fmhas beenhired for a period o f about 5 months that will be used over a period o f year, to help install and maintainthe off-the-shelf financial and accounting package (Quick books), design chart o f accounts, train finance personnel and also assist inwriting the FinancialManagement Manual. 79 currently being familiarized with Bank processes by an FM expert who is well versed with donor-funded project implementation and financial management arrangements. There will be adequate support staff for the FMfunction. nternal controls in MEEW/ERC are not An Operations Manual has been developed. It details well developed the implementation arrangements, the operational controls and financial controls under the Project to ensure complete transparency and accountability inits operations. A detailed Financial Management manual will be separately preparedby end o fJune 2008. The PMU's structure will be supportedby oversight providedby other accountability institutions in Maldives like Anti CorruptionBureau and Tender Evaluation Section (TES). A disbursement condition has been stipulated for components 1.3, 1.4 and 1.5 (works and transfer facility) o f the solid waste component. The condition will require the establishment o f further FMarrangements before funds begin to flow and this will further help inmitigating FM risks for these sub-components. Adequate oversight mechanisms will be establishedby the PMUincluding internal audit and external audit. E. FinancialManagementRisksand Mitigation thereof Residual Risks Remarks (and possiblemitigationstrategies) I risk rating INHERENTRISKS Country 4lthough public financial management and accountability inMaldives i s at S level Inascent stage, there i s an understanding and commitment within the Sovernment to modernize inthis area. Important steps have already begun :orefomPFMarrangements including apublic accounting system across :he entire Government o f Maldives. -Entity level MEEW/ERCis a core government department andlike other government M PMUin departments has rather limited FMcapacity, as concluded inthe 2000 MEEW CFAA. The PMUestablishedinthe ERC section o f MEEW i s being strengthened to ensure adequacy inFMarrangements and fiduciary oversight. Projectlevel The Project will require a substantial amount o f coordination with various S agencies for the various components, sub-components and activities. Although the PMU i s currently located in ERC (MEEW), which i s a core government department, coordination among the stakeholders will be ensured by the technical committee and the National Project Steering Committee. The FMOfficer has recently been appointed and i s well trained with over 5 years o f experience. In line with project implementation arrangements, the FM arrangements have been designed to allow for 80 Residual Risks Remarks(and possiblemitigationstrategies) risk rating Idelineation o f project activities from those o f MEEW, which will help in . . ensuring transparency and accountability. OVERALLINHERENTRISK S CONTROL RISKS (MPBUonly) Budget The Project i s requiredto have a separate budget line item with the overall S annual budget o f G o M for the counterpart funding and also for the IDA share. For this purpose, the project management needs to interact with MoFT and get this established. Budgeting capabilities inthe PMUwill need further strengthening. Accounting A new commercial software has been installed inthe PMU to account for M the Project. Coordination will be required with several agencies for the various components which will render the finance and accounting function complex. An FM Officer with the requisite experience required for accounting under the Project has beenrecruited. Internal As discussed in the CFAA, GoM's (and also MEEW's) internal controls S Controls need strengthening and the PMU's internal controls will need to be suitably enhanced to ensure full transparency and accountability in the operations. An internal control framework will be provided in the Operations Manual and detailed internal controls will be designed and captured inthe Financial Management Manual under preparation by the PMU with significant input from a CertifiedAccounting firm hired (i.e. the Financial Specialist referred to inAnnex 6 and elsewhere inthe PAD). Funds flow The flow o f funds from IDA to the PMUwill be through a special account M set up with MMA until the PAS i s fully operational in 2010. Although several agencies are involved in the planning and coordination o f the various components o f the Project, it has been agreed that all funds will be spent at the level o f PMU. For civil works and the residual waste transfer system found under the solid waste component, adequate FMarrangements will be established prior to fund flows as a disbursement condition. For the construction o f IWMCs, it i s envisaged that payments will be made directly by the PMUto contractors on the basis o f certificationreceivedfrom island committees. Counterpart contribution for the running o f IWMCs in later years will need to be provided by GoM, as detailed in the disbursement condition. Financial The Operations Manual details the reporting aspects including IFRs. M Reporting Component-wise and activity-wise reporting will become possible through the use o f the commercial software beingput inplace. Auditing There are serious capacity issues with the Audit Office o fMaldives. For the S Project, external audits will be conducted by a firm of independent chartered accountants under Terms o f Reference agreed to with IDA. Several activities under the Project will likely require technical and financial coordination among several agencies. The Auditor General i s required to audit accounts o f MEEW as a whole under the new Public Finance Act o f 2006 but this i s not likely to happen prior to 2010. 81 Residual Risks Remarks(and possiblemitigationstrategies) risk rating OVERALL CONTROLRISK H-High S - Substantial M-Modest L-Low F. ExpendituresandFundFlowsunderComponents 7. A designated account ("special bank account") o f the PMU will be set up with the Maldivian Monetary Authority (MMA), i.e., the Central Bank, to receive the funds from IDA65IDA will advance an amount to this bank account, to meet estimated expenditures over a 6-month period, as forecasted in the interim financial reports (IFRs). From this Bank account, payments will be made to suppliers, vendors and to consultants for the Bank share and the counterpart funding, if any, will be paid separately by the PMU (located in ERC). The PMUwill identify an existing bank account o f ERC at MMA which could be used for this purpose. The PMU will also have the option o f paying for these eligible expenditures (from funds received from GoM) and then getting reimbursements from this designatedbank account and it may seek replenishments to the account later on by furnishing completed FRs. Inrespect o f large contracts, MMAwill have the option o frequesting IDA to make direct payments to the supplier. 8. Although several agencies are involved in the planning and coordination o f the various components of the Project, it has been agreed that allfunds will bepaidfor and spent at the level of the PMU which will help not only in simplifyingthe fund flow and FM arrangements o f the Project but also establish proper internaland operational controls from a fiduciary perspective. 9. Solid Waste Management Component. For this component, consultancies will be paid directly by PMU for conducting studies, pre-feasibility studies, participatory rural appraisals, awareness campaigns, mobilizing communities, providing training to stakeholders, and for developing Island Waste Management Plans (under sub-components 1.1, 1,2 and 1.6). As detailed in Annex 2 and Annex 6, the detailed implementation arrangements (during the construction, operation and maintenance phases) and concomitant FM arrangements will be firmed up for IWMCs (Component 1.3) and RWMF(s) (sub- components 1.4 and 1.5, respectively) during year 1 o f the Project, as these studies, consultations and plans are completed. It has been agreed that disbursement under sub-components 1.3, 1.4 and 1.5 will proceed only after a framework for the operation and financial management o f IWMCs and RWMFs specifying implementation arrangements and concomitant FMarrangements i s preparedto the satisfaction o f IDA. It is envisaged that payments will be made directly by the PMU to contractors on the basis of certification received from island committees or supervision consultants (such as an NGO), as per contractual milestones. 10. Capacity BuildingComponent.This component involves several types o ftraining and the following expenditures will take place: (i) curriculum development consultants will be employed under a contract with the PMU, after a competitive evaluation process to follow IDAprocurement guidelines is completed by the Maldives College o f Higher Education (MCHE), in coordination with the PMU; (ii) additional teaching faculty (who could be either local or international) will be deployed as consultants under consultancy contracts, also procured in accordance with IDA guidelines; (iii) the M C H E will be paid for additional costs (library expansion, equipment) based on actuals; (iv) scholarships/stipends will be 64Although the overall FM risk rating falls in a continuum between Moderate to Substantial, it i s classified as Moderate to be inline with rating guidelines. 65 A designated account has been recently established for receiving PPF funds, which could also be used for receiving funds under the Project. 82 providedto studentstraveling overseas along with incidentals on the basis o f actuals. Certification will be providedby the relevant coordinating agencies. 11. Technical Assistance and Regional Strategic EnvironmentalAssessment Component. This will involve both consultancies and the acquisition o f a marine researchvessel,, survey equipment, hardware, software, and a digitalizing and map-malung system, all o f which will be paid directly by the PMU to suppliers on the basis o f certification received from the recipient organizations (MRC, Ministry o f Planningand National Development and ERC). 12. The Project Management and CommunicationComponentwill fund personnel hired by the PMU as consultants as well as the costs associated with hiring the Communications Officer, undertalung communication activities, and M&E activities. Counterpart contribution will be provided by G o M in the budget starting from FY2008 onwards, as discussed andagreed with MoFT. G. Staffing 13. The P M U i s intended to be lean with a core group o f mid-career officials serving as overall coordinator and managers for each component. A local accounting fim has been hired for a period o f 5 months spread over an initial period o f one year. This firm will have completed installation o f the financial accounting and a reporting system (a commercial accounting system) by Negotiations and will also assist inwritingthe FinancialManagement Manual by June 30,2008. 14. As mentioned earlier, an FM Officer (graduate in accounting with 5 years o f experience) has been hired and i s working with the accounting firm to delineate and implement the FM arrangements. This officer i s currently being trained by an FM expert who i s well versed with donor-financed projects. The FM support staff will include an Accounts Assistant who will be identified from GoM personnel within MEEW and will be posted to the Project as needed. This personwill be trainedby the FMOfficer on the job so as to mainstream the function over time. 15. In respect o f financial management arrangements, the FM Officer will be responsible for implementing the internal control arrangements in the PMU, facilitating the payment process, ensuring proper accounting and submittingthe financial reports in an agreed format to various stakeholders and donors. H. Manuals OperationsandFinancialManagement - 16. MEEW i s in the process o f establishing and adopting a strong financial management system to account for and monitor the utilization o f funds for the Project, and has prepared an Operations Manual. The management, organizational structure, governance arrangements and implementation arrangements are detailed in the FM section o f the OM66o f the Project, which has been appraised and found to be satisfactory. The OM provides an overview o f the fiduciary arrangements (both procurement and financial) o f the Project which include arrangements in respect o f budgeting, accounting, funds flow, financial reporting, and audit arrangements including the Terms of Reference (TOR) o f the auditors. 17. The C A firm is inthe process o f installinga commercial accounting system at the PMUwhich will be completed prior to Negotiations and will be designed and installed at the PMU, to facilitate preparation o f the financial and other reports. Inaddition, the CA firm (i.e., Financial Specialist) is also inthe process o f preparing a Financial Management Manual for the Project which will detail the chart o f accounts (to be 66For this purpose, the final OperationsManualwill be approvedat an appropriate levelfor adoptionby the MEEW. 83 designed in line with the components, activities and sub-activities under the Project), the formats for accounting registers and books o f accounts, the fixed asset and inventory management process, the internal control framework and detailed business process flow mapping in respect o f each o f the components for preparation o f proposals, delegation o f powers, approval/decision, payment and accounting arrangements. This manual will be prepared by the end o f June 2008 and will thereafter serve as an overall guide to the Project. I.AccountingPoliciesandProcedures 18. All funds for the Project will be routedthrough the recently set up PMUwhich will be responsible for funding all project expenditures, accounting for them, and for reporting on the financial and physical progress o fthe Project. 19. Books o f accounts will be maintained on a cash basis of accounting and all applicable international accounting standards and policies (detailed in the OM & FMM) will be applied. Coordination will be required with several agencies for the various components which will make the accounting function difficult and. for this purpose. close liaison will be required with the personnel who are appointed as coordinators for each o f the components o f the Project. On the other hand, the number o f transactions in the Project i s expected to be low, which will enable more focused attention on each transaction. The Interim Financial Reports (IFRs) will be prepared on a cashbasis and will also forecast funds required for the next 6 months. J. FinancialManagement andother InformationSystems 20. To distinguishproject activities from those o f the MEEWERC, a separate financial statement for the Project (including a trial balance) will be prepared by MEEWERC. All books o f accounts as detailed in Financial Management Manual will be kept by this Unit.This accounting system will be voucher based, computerized, and based on a double entry accounting system. This system will be able to generate expenditure information along the lines o f the expenditure classification in the government budget, identifying the funding source. 21. MEEW currently maintains 9 bank accounts and ERC maintains 4 bank accounts with MMA under the G o M budget for the various agencies that currently report to the Ministry. These accounts are reconciled on a monthly basis and the books o f accounts, as prescribed by the Audit Office, are maintained. MEEW has the same FM and other information systems which exist in other government departments (i.e, manual books o f accounts comprising o f cash book, ledgers, registers, fixed asset, inventory management records) which will be replaced by a new Public Accounting System (PAS) by 2009-10. This will provide a single treasury account and a computerized accounting and payment process. This system will also have the provision of a stand-alone project implementation module which could be used for this Project in later years. K. FinancialReporting 22. The other government agencies and field departments involved in the supervision and monitoring o f project activities will provide the physical reporting, procurement progress and other documentation that may be required from an accounting and audit perspective, on a monthly basis, to the PMUinERC. The IDA-related reporting requirements and the formats are spelled out in the OM and include the financial progress reports, physical progress reports and procurement, contract progress information to enable progress monitoring on an integrated basis. The P M U will submit quarterly IFRs to IDA within 45 days of the end o f the quarter, starting from the end o f the first calendar quarter after effectiveness. The OM will provide details on the reportingmechanisms that should be adoptedby the Project. 84 L. InternalControls 23. The 2000 CFAA o f Maldives concluded that basic controls over budgeting, disbursements, receipts, accounting, and reporting are in place in the core government (including MEEW) and will need further strengthening. These have been established over the years in financial regulations and circulars, and are also subject to audit as conducted by the Auditor General. Key aspects include controls over operation o f bank accounts, requirements for basic accounting records, certification and authorization controls over payroll and other expenditures, and preparation o f monthly accounting reports. Current government regulations o f 1992 as applicable to G o M are also applied to the MMA in practice. The new financial government regulations (currently under draft), as and when adopted under the new Finance Act, will also apply to MEEW and will require enhancement inbusiness procedures. The current regulations set out the requirements for the internal controls and recording o f public revenue; expenditure including payroll; assets including cash in custody, property and equipment, consumable items and items printed for sale; procurement and contract management. 24. PMU's internal controls need (i)to be suitably enhanced to ensure full transparency and accountability in the operations, (ii) to ensure that they allow for smooth coordination o f the multiple agencies under this Project, and (iii) to integrate data in a timely manner to allow the production o f internal and external reports. These are being currently designed by the recently-hired CA firm and documented in detail in the FMM. The internal controls o f the PMU, documented in the FMM, will be designed in a manner similar to ERC'sMEEW's own arrangements with enhancements wherever required, to ensure full transparency and accountability in operations. These will be based upon existing government financial regulations and will amplify the internal and financial controls (such as in the area o f fixed asset and inventory management, and monitoringphysical progress vs. financial progress) to suit project needs. Special attention will be paid to the large contracts for RWMFs, contracts for construction o f IWMCs, contract for acquiring GIS systems, and acquisition o f equipmen and a marine vessel under the Project - some o f these may be complex and risks will be mitigated by implementing a design that uses existing government controls and ensures appropriate usage o f funds. 25. Internal Audit: Inaddition to the regular financial statement audit, the Project will be subjected to a regular internal audit by a firm o f chartered accountants to assess whether the funds have been disbursed on a timely basis, reached the intended recipients, and whether transactional controls and propriety have been maintained and used effectively and efficiently for the intended purposes. The intemal audit will also examine the physical and qualitative aspects o f the assets constructed or acquired under the Project. Internal audit Terms o f Reference have been detailed in the OM and include physical verification. This process will result inperiodic: (i) performance audit with identification o f recommendations for enhanced accountability and transparency, and (ii) timely corrective actions by management and its implementing agencies. The selection process for the internal auditors i s likely to begin after effectiveness by September 2008 and they are expected to be inplace by December 2008. The first audit will begin inJanuary 2009- and will be conducted on a half-yearly basis. The internal audit reports will be shared with IDA. M. ExternalAudit 26. The financial statements o f the Project, as prepared by PMU, will be audited by an independent firm o f chartered accountants (using international standards o f auditing) to maintain full transparency and provide adequate assurance to all the stakeholders. They will also review the procurement undertakenby the Project to ensure that it has followed IDA guidelines for procurement. A reasonable level o f physical verification will also be conducted under the Project. An independent audit firm, who will be acceptable to IDA, will be selected out o f the shortlist o f the approved audit firms which i s maintainedby the Office o f the Auditor General. The selection will follow IDA procurement guidelines and will be reimbursed under the Project. The Terms o fReference for the external audit will be agreed to by IDA and is included 85 in the OM. This will also be used for receiving fiduciary assurance, as the financial statements of the PMU will identify the activities specifically agreed to be financed by IDA. The external audits will be conducted every year and will be submitted within 6 months o f the end o fthe fiscal year. 27. The following audit reports will be monitored inthe Audit Report Compliance System (ARCS): Implementing Audit Opinion Auditor Timing Agency P M U located in OnPMU's Financial An independent firmo f Within6 ERCMEEW Statements including chartered accountants months o f the IDA-financed activities approved by the Auditor end o f the and the special account General fiscal year 28. The proceeds o f the credit will be disbursed against eligible expenditures inthe following categories: No. Disbursement Category Amount Disbursement % (US$ million) Goods, Consultants' Services, 8.12 100% o f expenditures for Incremental Operating Costs and Consultants' Services, Incremental Training for sub-components 1.1, Operating Costs, Training, and 1.2, 1.6, and Components 2, 3 and locally procured Goods, and 80% 4 o fthe Project of expenditures for Goods imported specifically for the Project Goods, Works, Consultants' 5.03 100% o f expenditures for Works, Services, and Incremental Operating Consultants' Services, and locally Costs for sub-components 1.3, 1.4 procured Goods, and 80% o f and 1.5 o f the Project expenditures for Goods imported specifically for the Project Total 13.15 29. Project funds will be disbursed by IDA on the basis o f periodic interim financial reports (IFRs) incorporatingfinancial, physical and procurement/ contract monitoring progress reports in agreed formats (including component wise and activity wise progress), submitted by the Project on a quarterly basis. Supporting documentation, including completionreports and certificates, will be retainedby the fund and made available to the Bank during project supervision. IFRs will be used by IDA to reimburse/replenish moneys to the Special Account. The IFRs and the withdrawal application will be prepared by the PMU and forwarded to MOFT for approval and transmission to the Bank. 30. RetroactiveFinancing: Retroactive financing under the PPF will cover expenditures incurred on or after August 1, 2007 up to an extent o f $72,000. The PPF will be refinanced from IDA credit at effectiveness. This will also include the expenditures made after the appraisal date and incurred within a year prior to the date o f Financing Agreement signing. The expenditure must be backed by adequate documentation including evidence o f payment and will have been procured according to IDA procurement guidelines. 86 31. Special Account advance: IDA will advance a sum as forecasted for the next six months by the P M U into the special account opened by the Borrower at the MMA (Central Bank). 0. ImpactofProcurementArrangements 32. Procurement under the Project will largely be centralized at P M U and TES levels and will be largely coordinated by the Procurement Specialist and the Procurement Officer. Large procurements and contract implementation aspects will require close coordination with finance officials o f the PMU to ensure a transparent and accountable process ina timely manner. There will be a need to closely track procurement progress and physical progress against the financial progress under the Project. P. SupervisionPlan 33. As financial management capacity i s evolving, this Project will require intensive supervision efforts inthe initial year to ensure that adequate arrangements are being putinplace for financial accountability and adequate usage o f funds, as the P M U i s established and fully staffed. Duringsubsequent years, after the project activities gain momentum, supervision efforts will lay emphasis on smooth fund flow, internal audit and its impact, external audit report, implementation o f the OM & FMM, review o f a sample o f transactions, and to evaluate ifthere i s a need to strengthen the internal control framework. 87 Annex 8: ProcurementArrangements MALDIVES: MaldivesEnvironmentalManagementProject A. General 1. Procurement for the proposed Project will be carried out in accordance with the World Bank's "Guidelines: Procurement Under IBRD Loans and IDA Credits" dated May 2004 and revised in October 2006; and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated M a y 2004 and revised inOctober 2006, and the provisions stipulated inthe Financing Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank inthe Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. 2. Procurement of Works. Works procured under this Project will include: Construction o f Island Waste Management Centers (IWMCs) and Regional Waste Management Facilities (RWMFs). Procurement o f the RWMFworks will be done under the National Competitive Bidding (NCB) method, usingthe Bank's Standard BiddingDocuments (SBD) for smaller works and International Competitive Biddingfor larger transactions. Inthe case o fthe IWMCs-which involve simple containment structures, each costing less than $30,000 -contracts will be awarded for each island separately to local contractors. Community-based organizations will be encouraged to bid for the IWMC contracts, subject to an assessment o f their capacity and capability. Contracts will be signed between the Island Offices and the respective contractors, while payments to the contractors will be made directly by the central Project Management Unit (PMU). Simplified biddingcontract documents to be used for the IWMCs (which will not require bid/advance/performance guarantees) will be based on documents used for the rWMCs under the Bank-administered Tsunami Reconstruction Project and agreed with IDA prior to Negotiations. These documents have been included inthe procurement section o f the Operations Manual. There will be a fall back position whereby all procurement will be undertaken by the PMU, in the event o f there being no bids fiom local contractors and contracts will be packaged inthis instance. 3. Procurement of Goods. Goods procured under this Project will include: research equipment; a marine research vessel; GMS equipment; development & installation o f a centralized data distribution system (GIs); remote sensing data acquisition; marine and terrestrial sampling and monitoring equipment; laboratory equipment for ERC, M R C and College courses; island and regional waste management equipment; inter-island waste transport facilities (barges); office equipment; and purchase or hire o f inter-island sea transport for field staff. Goods will generally be procured under the International Competitive Bidding(ICB) method. Goods contracts estimated to cost below $100,000 may be procured under the NCB method, depending on market availability. Goods may be procured under the shopping method for contracts estimated to cost below $30,000. The procurement will be done using the Bank's SBD for all contracts procured under ICB, while National SBD and shopping documents, agreed with IDA, will be usedfor goods procured underNCB and shoppingmethods, respectively. 4. Procurement of non-consultingservices. Media programs on waste management awareness will be procuredunder non-consulting services. 5. Selection of Consultants. Individual consultants will be hired for specialist inputs in the areas of spatial and GIS planning; remote sensing; coral ecology; coastal erosion; fish replenishment; baseline 88 studies; development o f a framework for community-managed islandwaste management; marine research vessel design; and legal services for development o f a public-private partnership arrangement and contract documentation for operation o f the RWMF. In addition, individuals will be hired for providing project advisory, monitoring and evaluation, communication, humanresources, financial management and procurement services to the PMU and specialist coordinators will be appointed to monitor and report on their respective sub-components. Firms or non-governmental organizations (NGOs), where appropriate, will be required for: (i)participatory rural appraisals (PRAs), community mobilization and identification o f community waste management activities; (ii) technical and financial feasibility studies for the RWMF, Environmental and Social Impact Assessments (ESIAs), and Environmental Performance reviews for the RWMFs; (iii) detailed design, preparation o f bidding documents and construction supervision for the RWMFs; and the sub-components o f Components 2 and 3. Short lists of consultants for services estimated to cost less than $100,000 equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines. The procurement o f consultants will be done using the Bank's standard RFP for all consultant services, and customized as appropriate and agreed with IDA for small-value assignments. 6. OperatingCosts. These include: rental o f boats, expenditures for project staff travel and per diem, office supplies, communication services (including telephone and internet costs), publication services, translation services, and maintenance o f office equipment, manual labor for W M C s and environmental monitoring, but excluding civil service salaries o f officials o f the Borrower's civil service. The administrative procedures usedby the implementing agencies were reviewed and found acceptable. 7. Training. Fair and transparent criteria for selection o f courses and scholarship recipients for overseas training will be detailed in the Operations Manual. The Maldives College o f Higher Education will develop and deliver degree and certificate courses in agreed subject areas for in-country training. Resource persons for designing the course curricula and lecturers/instructors for delivering the courses will be hired by the PMU based on the recommendations o f the College, and following the Bank's guidelines for selection o f individual consultants. The PMU will procure the necessary laboratory equipment for the courses. Community training inwaste management and environmental monitoring will be provided through firms or non-governmental organizations, selected in compliance with the Bank's Guidelines for selection o f consultants 8. Memoranda o f Understanding (MOU) will be signed between the PMU and the Island and Atoll Offices, defining roles and responsibilities o f each party, for the implementation o f the IWMC and other community waste management activities. 9. The procurement procedures and SBDs to be used for each procurement method, as well as model contracts for works and goods procured, are presented inthe OM. 10. Project PreparationFacility (PPF) and RetroactiveFinancing. A PPFof US$360,000 has been allocated for advance procurement activities, which include technical assistance for PRAs, feasibility studies, regional planning and assessments; hiring o f core support staff for technical advisory services, financial management, procurement and human resource development; office facilities; and training. Retroactive financing up to US$72,000 i s permittedunder the PPF for expenditures incurred on or after August 1,2007, subject to procedures followed beingacceptable to IDA. B. Assessment ofthe agency's capacity to implementprocurement 11. Exceptfor the islandwaste management centers (IWMCs), planningand reporting on all procurement activities will be the responsibility o f the PMU, under the Ministry o f Environment, Energy and Water (MEEW). The MEEW currently has a Budget and Procurement Section with a staff o f four, which 89 handles procurement up to a threshold o f MVR 1,500,000 (about US$117,000). The staff in this section have no experience inBank procedures and devote most o f their time to financial administrationactivities for MEEW. A Procurement Officer with experience in Bank-financedprojects has been appointed to the P M U for the duration o f the Project. Additionally, the PMU will hire a Procurement Specialist on a part- time basis for the first year o f implementation, to provide general guidance to the PMU and the implementing agencies, provide training on consultant evaluation procedures and review the W M C contracting procedures and documents. The Tender Evaluation Section (TES) o f the GoM i s mandated to process all contracts above MVR 1,500,000. The TES has a cohort o f competent staff who are familiar with the Bank's procurement guidelines and standard documents. The PMU will be responsible for processing o f contracts below MVR 1,500,000, liaising with the Tender Evaluation Section (TES) for contracts estimated to cost MVR 1,500,000 and above, and preparing the necessary documentation (draft bidding and request for proposal documents, and evaluation reports) for all the procurement activities. Specific requirements, technical specifications and Terms o f Reference under each sub-component o f the Project will be provided by the respective implementing agencies. 12. In the case o f the IWMCs, contracting for construction o f the IWMCs, each estimated to cost less than $30,000, will be carried out by the Island Offices based on the recommendations o f the Island Waste Management Committees, under the guidance o f the PMU. Communities will be involved in the contracting and supervision process through representation in the Island Waste Management Committees set up by the Island Offices. Procedures for selection o f contractors for construction o f the IWMCs, as agreed with the Bank and detailed inthe Operations Manual, will be providedto the Island Offices. 13. An assessment o f the capacity o f the Implementing Agency to implement procurement actions for the Project has been carried out by Miriam Witana, Procurement Accredited Specialist, in January-March 2008. The assessment reviewed the organizational structure for implementing the Project and the interaction between the Project's staff responsible for procurement, the Ministry's relevant central unit for finance and administration, the TES andthe administrative setup inthe Island and Atoll Offices. 14. The key issues and risks concerning procurement for implementation o f the Project have been identified and include limited in-house procurement capacity, and the need for all high-value contracts to be processed by the Tender Evaluation Section, which handles a large volume o f work as it processes all high value contracts for the public sector. The corrective measures which have been agreed are: (i) the recruitment o f a procurement specialist familiar with Bank procedures to provide guidance duringthe first year o f implementation; (ii) training to be provided to the full-time project Procurement Officer; (iii) procedures and documents to be agreed upfront and described in detail inthe OM; (iv) close coordination with andpreparation o fall documentation for the TES; and (v) guidance onbiddingdocument preparation and evaluation procedures to be provided by the Bank's designatedprocurement specialist. 15. The overall Project risk for procurement is moderate. C. ProcurementPlan 16. The Borrower, at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the Project Team on March 18, 2008 and i s included in the OM. It will also be available in the Project's database and inthe Bank's external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required, to reflect the actual project implementation needs and improvements in institutionalcapacity. 90 D. FrequencyofProcurementSupervision 17. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment o f the ImplementingAgencies has recommended six-monthly supervision missions to visit the field to carry out post review o fprocurement actions. E. Detailsofthe ProcurementArrangements InvolvingInternationalCompetition 1. Goods, Works, andNonConsultingServices 7 (a) List of contract packages to be procured following ICB and direct contracting: 1 2 3 4 5 6 7 8 Ref. Contract Estima- Procure P-Q Domestic Review Expected Comments No. (Description) ted ment Preference by Bank Bid- Cost Method (yedno) (Prior / Post) Opening (US%) Date 1 ResearchVessel 396,000 ICB no d a Prior Jun. 2009 2 GIShardware& 143,OO ICB no no Prior Dec. 2008 3 IDigitizing&map I320,000 I ICB I no no Prior I May2009 making 4 RWMF equipment 1.5 mln ICB no no Prior Feb. 2010 depends on selected 5 Speedboat, engine & 90,000 ICB no no Prior Sept. 2008 accessories 6 ERCsurvey 105,000 ICB no no Prior Jun. 2009 equipment 7 Waste transport 300,000 ICB no no Prior Feb. 2010 depends on vessels selected 8 IConstructionof I 2 d n . I ICB 1 no no Prior IFeb.2011 (b) ICB contracts estimated to cost above US$lOO,OOO per contract and all direct contracting will be subject to prior review by the Bank. 2. Consulting Services (a) List o f consulting assignments6'. 1 2 3 4 5 6 7 Ref. Descriptionof Estimated Selection Review Expected Comments No. Assignment Cost (US%) Method by Bank Proposals (Prior / Submission Post) Date 1 SocialAssessmentPRA 198,000 QCBS Prior Jul. 2008 1 67 This list does not include Consulting Services to be procured using the QCBS method contemplated to be financedfromthe PPA. 91 2 Pre-feasibility study and 163,000 QCBS Prior Oct. 2008 island scoping - Phase 1 3 Feasibility study of 132,000 QCBS Prior Sept. 2009 RWMF-Phase I1 4 RWMF designand 146,000 QCBS Prior Mar.. 2010 bidding documents preparation 5 Formulationof Island 124,000 QCBS Prior Oct. 2008 Waste Management Plans 6 EIAforRWMF 50,000 QCBS Post Dec. 2009 7 RWMF construction 58,000 QCBS Post Feb.2011 supervision (b) Consultancy services estimatedto cost above US$lOO,OOO per contract, individual consultant contracts estimated to cost above US$50,000 and single/sole source selection of consultants will be subject to prior review by the Bank. 92 Annex 9: Economic and Financial Analysis M A L D I V E S : Maldives EnvironmentalManagement Project A. Introduction 1. This annex presents the financial and economic analyses o f the Maldives Environmental Management Project (MEMP). The main objective o f the Project i s to provide the Republic o f Maldives with the capacity to effectively manage environmental risks and threats to fragile coral reefs as well as coastal and marine habitats resulting from tourism development, increased solid waste disposal, fisheries and global climate change. The Project i s to be implemented over 65 months. 2. The main economic benefits o f the Project are associated with improvement in the eco-services and functions o f the coral reefs. Most o f these do not have an explicit market value and are difficult to measure and monetize. Quantification o f environmental benefits requires the use o f survey-based techniques that are time and labor intensive. A valuation exercise has been commissionedby UNDP-GEF and i s not attempted here to avoid duplication. In the absence o f data on the monetized value o f environmental benefits the analysis adopts a pragmatic approach and provides economic assessments for those benefits that are measurable. Two approaches are used - the first relies on cost effectiveness to evaluate project efficiency, the second uses a benefit break-even estimate and calculates the minimum area o f coral reef (benefit break-even) that the Project will have to protect in order to be economically viable and makes a judgment on whether this objective can be realistically achieved under the Project. The discussion below starts with the cost effectiveness analyses o f Components 1and 2 of the Project. B. Cost Effectiveness 3. Lacking data on the benefits o f the Project, a cost effectiveness assessment i s undertaken for the solid waste management component andthe in-country training component. 4. Economic cost effectiveness of solid waste management (Component 1).The cost effectiveness o f the solid waste management component i s determined by comparing the "project option"-involving the establishment o f one or possibly two RWMFs serving the four atolls inthe targeted area-with an option entailing island-level community-based waste management activities, where each island establishes its own waste disposal site. This alternative is not without justification. The "project option" i s characterized by economies o f scale associated with the centralization o f waste disposal, but it incurs substantial transport costs. Results o f the cost effectiveness analysis are summarized intable 9.1. They suggest that the "project option" for S W M i s more cost effective with a NPV o f costs (12% discount rate over 15 years) o f US$8.6 million than the individual island-based options, whose NPV o f costs ranges from US$ 23 million to US$63 million. 5. Economic cost effectiveness of the capacity building activities (Component 2). This was assessed by comparing project-funded in-country training on environmental management (i,e., a four-year BSC degree) with similar training in non-OECD countries. The comparison requires estimating the cost o f a four-year degree course in a steady state. This exercise i s based on the following assumptions: (i) 25 new students are admitted each year for 10 years; (ii) the attrition rate i s 5 students per year; (iii) to nine up Maldivians will be trained and hired as instructors; (iv) the stipend and book allowances will be maintained throughout a 1O-year period. 6. Estimates presented in table 9.2 show that an in-country BSc course in environmental management will cost US$20,659 per student as compared to almost US$44,467 per student in non- 93 f $ i; ; T E E C i; a C 0 8f4 B 6 8 e .-8 P Table 9.2: Cost effectivenessof environmentalmanagementtraining Component OverseasTraining In-Country Non-OECD Training (US$) (US$) . Tuition Fee a 28,215 6,94 1 Travel 1,250 Supplies 396 186 Stipend 13,534 11,294 Establishment/Other Allowances/CaDital Cost I C. FinancialAnalysis 7. A further likely benefit generated by the SWM component is a financial saving for those resorts that adequately comply with regulations. The financial attractiveness o f the current situation (i.e. baseline) i s compared with the Project's scenario. 8. In the baseline scenario, resort operators are assumed to fully comply with the law, construct incineration plants o f the appropriate capacity, and use these on a regular basis.68 The project scenario assumes that resorts use the RWMFfor a fee. 9. Table 9.3 shows that the use o f the regional facility as compared to full incineration could allow savings in the order o f US$220,000 per year per resort despite the high cost o f transporting waste to the regional facility. This i s because the incineration technology i s capital, energy and labor (for operation and monitoring) intensive69 . D. EconomicAssessment 10. Given the difficulties inmonetizing many o f the project outcomes, a threshold approach can be used to further assess whether project benefits are likely to be sufficient to cover costs. This i s done by (i) estimating the minimum area o f coral reef (benefit breakeven) that the Project will have to protect in order to be economically viable and (ii) a judgment on whether this objective can be realistically making achieved under the Project. 11. The economic costs considered in the analysis include: (i) project economic costs over 5 years7'; all (ii) operationandmaintenancecostsofthewastetransportsystemfrombothcommunityandresort the islands to the RWMF; and (iii) the operation and maintenance cost o fthe RWMF. 68 At present, the legislation mandates resorts to construct an incineration plant. The law does not specify the incinerator standards and monitoring and control by the government i s all but absent, fuelling speculation o f underinvestment and underutilization o f plants. Some o f the waste i s incinerated, some shipped to the only disposal site inThilafushi near Malk, or dumped inthe sea as permitted by legislation (for organics). 69 The operation cost o f these obsolete or undersizedincinerators i s quite significant. 70 They include both investment and recurrent costs. Economic costs are calculated by eliminating direct transfer payments (mostly taxes) and applying a standard conversion factor o f 0.9. 95 Table 9.3: Cost effectiveness of solid waste management options in tourist resorts Cost items Option "full" incinerator Option without incinerator and with full use of regional disposal facility Assumptions Waste generation rate (t/d) 0,6 0,6 Incinerator type (kg/h) 75 0 Incinerator base Resort none Gas cleaning 0 0 Residule transport frequency (per year) 12 52 Disposa I Destination T hilafushi RWMF Monitoring frequency (per year) 2 0 0 perational hours 8 3 0 perating 5 taff 3 2 0 perationaIarrangernents Salary Salary Electricity consumption (KWh) 15 5 Fuel Lts/Hr (Itrs) 18 0 Residule (96) 6% 100% P ayrn e nt terms N/a N/a Capital cost Incinerator 1.285.000 0 Glass crusher 45.000 45.000 Can crusher 85.000 85.000 Import duty 0 0 1.698.000 156.000 Working life (years) 10 10 unit cost uss amount unit cost amount US$/year us $ US$hear Variable Costs Electricity 7,OO 4.070 7,OO 1.260 Fuel 11,oo 427.680 11,oo 0 Total Variable cost 431.750 1.260 Fixed Costs 5 taff 77.500 77.500 12.000 12.000 Repair glass crusher 2,5% 1.125 2,5% 1.125 Repair can crusher 2,5% 2.125 2,5% 2.125 Repair incinerator 2,5% 32.125 2,5% 0 Monitoring 20.000 40.000 20.000 0 Residue disposal (per T ) 500 6.570 500 108.000 R es idua I tra nsport 0 0 2000 438.000 Total fixed Cost 159.445 561.250 Depreciation Glass crusher 10,0% 5.400 10,0% 5.400 Can crusher .10,0% 10.200 10,0% 10.200 Incinerator 12,5% 192.750 10,0% 0 TotaI deprec iation 208.350 15.600 Total Expenses 799.545 578.110 96 12. The main economic benefit o f the Project is represented by the reduced human and natural impacts on both marine and terrestrial environment. Given the nature o f the archipelago, environmental benefits will be dominated by the economic values o f coral reefs and the project contribution to the conservation o f these reefs represents its main economic justification. Other non-quantifiedbenefits o f the Project include (i) benefitsderivingfromsolidwastemanagementatcommunitylevel;(ii) coststoresorts health lower for the handling o f waste; (iii) better human resources in public and private sector as a consequence o f general and specific training provided by the Project; and (iv) improved policy malung capacity by the government. 13. Economic benefits of coral reefs. The economic valuation o f coral reefs benefits requires thorough analysis linhng natural and human factors to environmental degradatiodenhancement. The types o f economic value to be found in coral reefs are use values and non-use values. Use values refer to willingness to pay to make use o f forest goods and services. Such uses may be direct, e.g. extractive uses, or indirect, e.g. watershed protection or carbon storage. Use values may also contain option values, willingnessto pay to conserve the option o f future use even thoughno use is made o fthe coral reefs now. Such options may be retained for one's own use or for another generation (sometimes called a `bequest' value). Non-use values relate to willingness to pay which i s independent o f any use made o f the coral reefs now or any use inthe future. 14. The functions o f coral reefs are numerous. They include (i)food and other resources (fish, aquaculture, jewelry, aquarium items, etc.); (ii) construction material (sand, rocks); (iii) pharmaceuticals and other industrial chemicals; (iv) tourism and recreation (diving); (v) educational and scientific interest; (vi) biological support (e.g. breeding and feeding for offshore fish); (vii) coastal protection (to prevent sand erosion); (viii) genetic resources; (ix) global heritage; etc. (Bakus, 1982; Tomascik and others 1993). Each o f these functions has an economic value that refers to the classification mentionedabove. 15. These values together can be taken to calculate the Total Economic Value (TEV) for altemativt: uses o f coral reefs (e.g. preservation area, tourism area, multiple use area, etc). The valuation of these benefits i s complex. It requires gathering relevant information on benefits that have market values (fish, construction material). In the worst case scenario, it requires using (i)survey-based techniques for estimating the willingness to pay for recreation and existence values or (ii) a replacement costs approach for assessing the value o f environmental services. The aggregation o f economic values needs also to take into account the potential conflicts among different resource uses such as in the case o f fisheries and environmental protection and/or recreation (Spurgeon, 1992; Barton, 1994). Given these difficulties, the present analysis has not attempted to conduct a direct evaluation o f the economic benefits o f coral reef in the Maldives but instead uses what i s termed "benefit transfer"-that is, it borrows values from the existent literature. A description o f coral reef values from the international literature i s presented below and this i s followed by a benefit breakeven analysis. 16. Coral reefs are among the most valuable and charismatic o f marine resources in the oceans o f the world. They resemble tropical rainforests intwo ways: both thrive under nutrient-poor conditions (where nutrients are largely tied up in living matter), yet support rich communities through incredibly efficient recycling processes. Additionally, both exhibit very highlevels o f species diversity. Coral reefs and other marine ecosystems contain more varied life forms than do land habitats. Coral reefs are noted for some o f the highest levels o f total (gross) productivity on earth. They are based on rigid lime skeletons formed through successive growth, deposition and consolidation o f the remains o f reef-building corals and coralline algae. The basic units o freef growth are the coral polyps and the associated symbiotic algae that live in the coral tissues. This symbiotic relationship i s the key factor explaining the rather strict environmental requirement o f corals since the symbiotic algae require light for photosynthesis and can be easily destroyedby sedimentation. 97 17. Fisheries. Coral reefs and mangroves support numerous different types o f fishery: artisanal, commercial and recreational; food, curios and souvenirs, bait, and items for decoration; and fish, lobsters, crabs, mollusks, sea cucumbers and many other species. However, much o f the harvesting o f these species, as well as o f species taken for non-food purposes, is unsustainable, and current economic benefits may thus be short term. Of the estimated 30 million small-scale fishers inthe developing world, most are dependent to some extent on coral reefs for food and livelihood. Inthe Philippines, more than 1 million small-scale fishers depend directly on coral reefs for their livelihood. Sustainable annual catches o f fish from reefs vary from 0.2 to 30 tons/km2, with an average o f 5 t o n s h ' (Jennings and Polunin,1995). Depending on the value o f the fish, reef fisheries are thus potentially worth US$15,000-150,000/km2 a year, based on catch values o f US$1-10 per kg (Talbot and Wilhnson, 2001). Reef fisheries in South-East Asia generate some US$2.4 billion a year (Burke et al., 2002), and in the Caribbean US$310 million a year (Burke and Maidens, 2004). 18. Inthe Maldives, reef fish provides benefits interms o f live bait input for the tuna fishery, fish exports, consumption by locals and tourists, value for tourist catching and viewing, ecosystem value as it contribute towards overall reef ecosystem functioning and option value against the collapse o f skipjack and yellowfin stocks o f the Indian Ocean due to overfishing (Anderson, 2007). The main species include sharks, grouper, lobster, sea cucumber, jacks (Carangidae), snappers (Lutjanidae) and emperors (Lethrinidae). 19. The capture o f small live baitfish from coral reef i s absolutely essential for the successful prosecution o f the pole and line tuna fishery. Without live bait, the pole and line fishery would collapse. Current tuna catches are o f the order o f 150,000 metric tons (MT) per year, tuna export value now exceeds US$80 million per year, and tuna remains the main and preferred source o f protein for the Maldivian population. The livebait fishery has been in existence for hundreds o f years, and without doubt it i s still the single most important inshore fishery inthe Maldives. 20. Exports o f reef fish (including frozen, live and other fish products) were worth US$5.6 million in 2006. There appear to be no estimates o f reef fish consumption by Maldivians and expatriate residents, but with some simple assumptions, an estimate o f average local consumption for the decade ahead o f the order o f 4,000 MT (k1,OOO MT) o f reef fish per year seems reasonable (Anderson, 2007). At 2005 prices paid for exports o f frozen or chilled reef fish, that quantitywould be worth about U S $ 8 million. 21. Reef fish features highly on many resort and safari boat menus. Indeed, many visiting tourists expect to eat fresh reef fish, as part of their tropical island holiday experience. At the same time, tourism operators are happy to supply relatively cheap local reef fish rather than more expensive imported products. It has been estimated that about 1.67 hlograms o f reef fish i s required per tourist night in the Maldives, for guests and staff combined (Van der Knaap et al., 1991). Tourism i s growing rapidly, with the number of resorts set to grow from 108 at present to 144by about 2012. With a projection o f over 1 million tourist arrivals per year withinjust a few years, and an average length o f stay o f about 8 days, it is calculated that there will soon be a demand for over 13,000 MT o f reef fish per year from the tourism sector. At 2005 prices paid for exports o f frozen or chilled reef fish, it would be worth about US$26.0 million per year. Similarly, the value o f locally-caught lobsters in 2001 (the last year for which data are available) was reported by MOFAMR at US$0.3 million. 22. Even in the absence o f tourism, inshore fishery resources do have a substantial non-extractive value. They contribute towards overall reef ecosystem functioning and health, which inturn provides a range of benefits, including sea defense. The whole country i s built on coral reefs and, ultimately, it depends quite literally on the health o f the reefs. Examples o f exploited species that have wider ecological importance are the top predators such as reef sharks and large groupers (which play a key role in fish population structuring and also, according to tuna fishermen, are valuable in concentrating baitfish). Sea cucumbers 98 must also be o f great ecologcal importance, although the effect on local ecology o fremoving millions o f these detritus-eaters i s unknown. In the broadest terms, all reef life i s interconnected, and removing any part o f the system is likely to have unknown and most likely undesirable consequences. The importance o f maintaining healthy inshore ecosystems has never been greater than now, with global warming and the imminent threat o f sea levelrise. 23. The tuna fishery i s the most important fishery in the Maldives, but the resources that it exploits are not under Maldivian control. Skipjack and yellowfin tuna are considered to belong to ocean-wide stocks, which are exploited by a large number o f countries. In contrast, the inshore fishery resources o f the Maldives are essentially local stocks, which are under Maldivian control. It i s possible that the shpjack and yellowfin stocks o f the Indian Ocean may collapse due to overfishing. This i s not predictedto happen soon but, as the history o f many other major fisheries shows, it i s certainly possible (Anderson, 2007). If the tuna stocks collaps--and the Maldives has already overexploited its reef resources--it will have nothing to fall back on. If, on the other hand, reefresources were harvested at sustainable levels, benefits to the country would be maximized with strategic reserves to provide employment, export earnings and food security. 24. Tourism. Coral reefs add significantly to the value o f coastal tourism, supporting activities such as scuba diving, snorkeling and glass-bottom boat operations. They also contribute to the formation o f white sandy beaches. The 2004 tsunami clearly showed the economic value o f coastal and reef-based tourism, since this i s vital to the economies o f the Maldives, Sri Lanka and Thailand. InSri Lanka, coastal tourism contributed about US$20 million a year to the national economy in the mid-1990s (Berg et al., 1998). A study in 2003 o f the reefs o f the Phi Phi Islands in Thailand, subsequently heavily damaged by the tsunami, valued them at US$624,300/km2 a year for tourism. 25. A study on the impact o f coral bleaching on tourism in the Maldives and Sri Lanka (Cesar et al., 2000) concluded that the global welfare loss due to 1998 bleaching event in the Maldives i s around US$ 19 million (NPV o f a 25-year stream)71. The low value obtained appears to be a substantial underestimate o f the role o f corals as a tourist attraction and i s likely a consequence o f the methodological approach usedto elicit values. 26. Many tourists visit Maldives to dive and snorkel. The major attraction i s the abundant fish life, with larger species such as reef sharks, large groupers and Napoleon wrasse being especially appreciated. The natural beauty o f the underwater environment i s one o fthe major selling points for Maldives tourism. The best known example o f the economic valuation o f reef resources for tourism i s that o f reef sharks, which were valued in 1992 at US$2.3 million per year as a sustainable tourist attraction (Anderson and Ahmed, 1993), compared with US$0.5 million for what turned out to be an unsustainable fishery. The economic value o f sharks and other `charismatic megafauna' for tourist watching will increase as tourist arrivals increase, and probably also as reefresources are overexploited inother divingdestinations. 27. Many tourists visiting the Maldives enjoy fishing. Some take just a single night fishing excursion as part o f their overall holiday package, while a few make fishing a major focus o f their holiday. For all participants, the thrill o f a good catch becomes a part o f their overall Maldives experience, and this would be diminished if reef fish stocks were overfished. While some argue that night fishing by resort tourist groups should be banned (because it i s seen as incompatible with the more popular and sustainable activities o f diving and snorkeling) there i s no doubt that organizing fishing excursions i s a profitable activity for the tourism sector. Doubly so since the operators can keep the catch for guest consumption. An estimate o f the monetary value o f these activities does not appear to be available, but must run into millions o f dollars per year. 71This i s based only on a survey focusing on tourists' willingness to pay for better reef quality. 99 28.Coastal protection. Although reefs form natural barriers along the coast and thus inevitably provide some protection to the shore, there i s surprisingly little scientific data to back this up. Most o f the evidence i s observational and anecdotal. The calm lagoons inside reefs and behind mangroves are immediately evident on tropical coastlines. Fishers use these sheltered waters as navigationroutes and for fishing, particularlyduringbadweather or the rough seasonmonsoons. Tourists benefit fromthe sheltered waters for numerous recreational activities. The breakwater role o f reefs i s emphasized by the importance accorded to the channels through them. These allow safe passage to the lagoon and shore for fishing, navigation and recreational activities, particularly inbad weather, a hnction recognized by both coastal communities and port authorities. 29. Reefs also play a role in the accretion o f coastlines. Reefs produce sand that forms and replenishes sandy beaches and islands, the sediment accumulating when corals and other calcified organisms break down after their death. 30. The role o f reefs as breakwaters i s also demonstrated by the many artificial structures that are being installedfor shoreline protectioninlocations with no naturalreefs. The waves normally seen on the ocean are generated by wind, and have most o f their energy in the surface waters. The reef flat (the zone o f a reef extending seaward across the lagoon) and the reef crest (the seaward edge o f the reef flat) absorb most o f a wave's force, often up to or more than 90 per cent (Brander et al., 2004; Lugo-Fernandez et al., 1998; Roberts and Suhada, 1983). The greater the width o f reef flat between the reef edge and the shore, the more wave energy i s lost. InEgypt, for example, the reef flat and reef crest o fthe hngingreef o f f the tourist resort o f Hurghada dissipate wave energy considerably, protecting marinas and beaches (Frihy et al., 2004). Compared with a wind-generated wave, a tsunami has a much longer wave length and the wave energy i s distributed throughout the entire water column and i s on a much greater scale. As a tsunami approaches the shore and water depth decreases, the wave height increases dramatically as energy i s converted to surface layers, this effect being more pronounced on gradually shallowing shores (Kowalik, 2004; Mojfeld et al., 2000). Tsunamis can cause substantial damage at locations protectedfrom wind-generated waves, as they tend to accelerate through channels and up inlets, rapidly increasing in height. They can also be reflected o f f obstacles and travel in different directions (Yeh et al., 1994). It is thus perhaps not surprising that the roles o freefs and mangroves as buffers inthe 2004 tsunami, and the damage they received, varied considerably. 31. InSri Lanka, erosion on the south and west coasts now averages an estimated 40 centimeters a year, considered to be partly due to damage to reefs. Some US$30 million has already been spent on breakwaters and other constructions to curtail this, and it has been estimated that the cost o f replacing the coastal protection provided by these reefs would be US$246,000 - 836,000 per lulometer (Berg et al., 1998). A hotel in West Lombok, Indonesia, spent an average o f US$125,000 a year over a seven-year period restoring its 250-meter-long beach, which had been eroded largely because of offshore coral mining(Riopelle, 1995). 32. Inthe Maldives, a reef flat adjacent to the capital o f Mal6 was filled using coral rubble and causing sedimentation o f nearby reefs. Their degradation was partly responsible for reduced shore protection and extensive flooding in 1987, which resulted in 20-30 percent o f the new infill being lost. Subsequently, artificial breakwaters o f concrete tetrapods were installed at a cost o f US$lO,OOO per meter (or US$lO million per km) (Brown, 1997). Not only was this expensive, but it did not prevent serious flooding duringthe 2004 Tsunami. 33. Beach erosion affects well over 90 percent o f the country's inhabited islands and i s likely to increase in severity over time with climate change associated effects (e.g., sea-level rise, higher intensity storm surges). On several islands, a significant increase in beach erosion i s linked by the islanders to the construction o f harbors and sea walls. However, this linkage has not been established conclusively. 100 34. Global carbon cycle. Reefs play an importantrole inthe carbon budget, contributing 7-15 percent o f global calcium carbonate production. Sedimentary carbonates, including corals, coralline algae and the shells o f other marine organisms, are the largest reservoir o f carbon on Earth, and so fluctuations in the global calcium carbonate budget influence atmospheric carbon dioxide concentration. Reef do not help with carbon sequestration and in fact are `sources' or net producers o f carbon dioxide, albeit on a small scale in terms o f the global carbon budget, through the process o f calcification (Suzuki and Kawahata, 2004). 35. Pharmaceuticals. Marine organisms often contain pharmaceutically active compounds, many o f the source species coming from reefs. Reef organisms have provided an HIV treatment and a painluller, while a large part o f current cancer drug research focuses on coral reef species (Millennium Ecosystem Assessment, 2005). 36. Valuation of coral reef. Numerous examples o f valuation o f coral reef economic benefits exist inthe international literature. Riopelle (1995) estimated the total economic value o f coral reefs as high as US$ 58.2 million for West Lombok in Indonesia, which corresponds to more than US$IO,OOO per hectare of reef. A thorough review on the value o f ecosystem services72 has been carried out by (Costanza et al. 1997). The results are presented in table 9.5 below. The assessment suggests that coral reefs can, on average, generate a total economic flow o f about US$6,000 per hectare per year. This estimate i s in the same order o f magnitude o f (Riopelle, 1995) above. Table 9.5: Total economic value of coral reef services Ecosystemservices Economic value 37. Cesar (1996) conducted a thorough analysis o f the value o f Indonesianreefs. The results are presented in table 9.6. The valuation listed does not attempt to assess the total economic value of coral reef but considers some specific functions, in order to calculate the economic loss due to the destruction o f these 72Costanza et al., "The Value o f the World's Ecosystem Services and Natural Capital," Nature, vol. 387, 15 M a y 1997. This valuation i s based on a thorough literature review that synthesized the information, along with a few original calculations, during a one-week intensive workshop at the new National Center for Ecological Analysis and Synthesis (NCEAS) at the University o f California at Santa Barbara. Supplementary Information lists the primary results for each ecosystem service and biome. Supplementary Information includes all the estimates that could be identified from the literature (from over 100 studies), their valuation methods, location and stated value. Each estimate was converted into 1994 US$/ha/year using the U S A consumer price index and other conversion factors as needed. For some estimates, the service estimate was also converted into US$ equivalents using the ratio o f purchasing power GNP per capita for the country o f origin to that o f the USA. This was intended to adjust for income effects. 101 functions. The functions that were analyzed in some detail are: (i) fisheries; (ii) coastal protection; and (iii)tourism. This does not imply that the other functions are less important, only that it i s harder or even impossible to get reliable estimates for these other functions. For the three mentioned functions, values can be estimated relatively straightforwardly with techniques mainly based on market prices. Combined, these monetary values form a lower bound for the total cost o f destruction o f coral reefs. Results suggest that potential losses due to coral reef ecosystem destruction could be inthe range o f US$0.7 - 2.5 million per km' o freef (NPV @lo percent over 25 years) roughly equivalent to a constant loss o fUS$770 - 2,900 per hectare per year innon-discounted terms. This again i s inthe same order o fmagnitude o f estimates on total economic value o f coral reefmentioned above. Table 9.6: Total net benefits and losses due to threats to coral reef (NPV @ 10 percent over 25 years, US$ `OOO/km2) Source: Herman C., Economic Analysis of Indonesian Coral Reefs, World Bank EnvironmentalDepartment, December 1996, p. 65. 38. Economic analysis approach and results. A simple and pragmatic approach i s used to determine whether project benefits generate an adequate rate o f return. An estimate i s made o f the minimumarea of coral reef(benefit breakeven) that the Project would have to protect inorder to be economically viable. A judgment i s then made on whether this can be realistically achieved under the Project. 39. The main threats to coral reefs include coastal development, overexploitation and destructive fishing practices, impact from inland pollution and erosion and marine-based pollution. It can be safely assumed that MEMP will strongly contribute to reducing beach pollution and contamination o f ground water and reefs through its S W M component. It can also be assumed that Component 3 (Technical Assistance for Strengthened EnvironmentalManagement) will improve monitoring and policy malung to reduce the pace o f environmental degradation. 40. The "breakeven benefit" estimate is presented in table 9.7. The global literature suggests that corals reefs generate US$6,000 per hectare per year o f total economic value (TEV). T o guard against exaggeration and illustrate the significance or otherwise o f coral protection, the analysis assumes that the Maldives corals are only half as productive and generate a value o f US$4,000 per hectare per year, though it is generally accepted that the Maldivian reefs are of critical importance for the country and likely o f higher value. 102 Table 9.7: Economic benefit break-even analysis ""it ""It cost IUSII 2006 2wO 2010 2011 2012 2013 2015 2020 2023 C& of MEMP 81 718 1.M5 3.M6 1Bs 1% 45 4 2 722 ea9 511 M2 uo 1.m 43s 182 231 158 206 Y I P 270 271 273 218 612 3,010 3.056 4.978 1.101 1,012 mUS$ 1384 8.020 8,642 10,690 3,142 2.758 734 734 734 ""it ""It sost lUSSl 2W8 2W0 2010 2011 2012 2013 2015 2020 2023 -1s bswm Ba.slln. Resf.IO. In MEN Baullne totaly.Iw of nsf bneflt. in MEMP . .IO. (US$'W 0M)USS 4 . m 458.WO.O 437.308.7 456,756.4 436.118.9 155,480.4 u4.842.7 453.570.0 450.403.9 448.514.0 - wmpmject dtwtion R ~ ~ I O MEMP( b s d t acenmnt) . in . o x o ) ( o ) ( ~ O x OK ox o)( NW"" ha 50.070 50.070 50.070 50,070 50.070 m.070 50.070 50,070 50.070 RBB ha 22,350 22.350 22,350 22,350 22.350 22.350 22,350 22.350 22,350 Baa ha =,280 26,290 28.280 28.280 28,280 28,290 26,290 28.280 26,290 Lhavivani ha 158M 1 5 8 M 158M 158W 158M 1 5 8 M 15603 15.520 158W Yohi 114,510 114,510 114,510 114,510 114,510 114.510 114,510 114.510 114,510 mmpmj& dtwtion tohiMIU.of rrfhneflt. in MEMPa m (us$'m) wous$ . 4.m 436.~0o ~ . W oO~ 8 . o~ 405 8 . ~ 0o a 8 . w o~ ~ . W oO 436.010 o 4~8.040o c . 6 . o ~ ~ mUS$ 0 MI 1/82 1.921 2 . W 3.187 4.470 7.858 8525 Economiccashflow wo Us6 42040 -5,378.7 -5,3204 4,700.9 -5824 4393 3,7380 8,902.1 11,791.1 ERR Economicbreakevenpoint ha of mr3 reef 41. Results suggest that, under these conditions, preventing degradation o f 160 hectares o f coral reef per year inthe project area would make the Project economically viable (i.e. generate a 12percent IRR).It i s important to put this into context. This would represent (i)mere 0.1 percent o f reef in the project area a (the four atolls o f Raa, Baa, Noonu and Lhaviyani are estimated to have 115,000 hectares o f reef73)or (ii) approximately one "house reef'74ringing a resort. This low breakeven benefit level i s due to the high value o f ecosystem services provided by coral reef and i s considered to be an achievable outcome o f the Project. E. Fiscal Impact 42. Long-term budget cost savings are expected from the Project. Cost savings would come from (i) establishing an RWMF; (ii) developing in-country as compared to overseas training; (iii) sustained receipts from tourism; and (iv) more rational spatial planning for infrastructure investment. The only quantifiable cost saving i s the operation o f a regional facility versus a baseline scenario that would require establishing and operating a waste management facility in each participating island. A very preliminary estimate o f these savings would be inthe order o f US$77,000 per year. These budget savings are largely 73 Reef area is derived from: Naseer A, Hatcher B., Inventory o f the Maldives coral reef using morphornetrics generated from Landsat ETM+imagery, Coral Reef, (2004) 23:161-168. 74 This is a term used for the reefarea around an island resort that i s managed by the resort owners. Local users are typically excluded from these areas that are the exclusive domain o f the resort. 103 underestimated as they do not account for most o f the non-quantifiable benefits that will be generated by the Project nor do they take account o f the impacts o f scaling up the approaches piloted by the Project. 43. It should also be noted that during the implementation period, the Government will benefit from incremental tax revenues associated with infrastructure works, for which IDA will pay all taxes. This i s necessary as works will be conducted by private contractors, for whom exemption o f import duties i s unfeasible. This additional revenue, amounting to US$608,000 will offset many o f the costs accruing to the Government as a result o f foregone tax revenue (US$326,000) and direct expenses (US$411,000); the latter deriving primarily from O&M and monitoring costs. As a result, the total negative cash flow incurred by the Government declines from US$736,000 to US$114,000. The net fiscal impact o f the Project will therefore be negligible. 104 Annex 10: SafeguardPolicyIssues MALDIVES: MaldivesEnvironmentalManagementProject 1. Background. The Project aims to strengthen the Maldives' capacity for environmental management through three different components: (1) a regional solid waste management program for the North Central Region, (2) a capacity buildingfor environmental management; (3) technical assistance for strengthening environmental management and monitoring and a pilot Regional Strategx Environmental Assessment which will assess the impact o f human activities, global warming and other factors on the local environment in the North Central Region. Components 2 and 3 would have little or no adverse environmental and social impact and in fact would be environmentally beneficial, particularly in future development planning efforts. However, Component 1 that involves the development o f Island Waste Management Centers (IWMCs) located on participating islands, supported by a regional waste transfer and transport system for residual waste and a Regional Waste Management Facility (RWMF) for residue management, could have adverse environmental impacts, mostly inthe short term. 2. Component 1 aims to develop a socially and environmentally sustainable system o f solid waste management that reduces the environmental and public health risks in the North Central Region that can subsequently be replicated and scaled up across the country. The Project i s classified under Safeguards Category "A", primarily to reflect the risks involved in the construction and operation o f the regional solid waste management facility. Current systems o f waste disposal are highly damaging to coral reefs, unsanitary and environmentally risky. Hence the net environmental impact o f the component would be strongly positive. Despite this expected environmental benefit, this Project i s classified under Safeguards Category "A", as a precaution accounting for the fragile ecosystem o f the Maldives. 3. The Need for an Environmental and Social Assessment Framework. It i s unlikely that Components 2 and 3 would have any adverse environmental or social impacts. Infact, both components would lead to improved environmental planning and management in the Maldives. The regional solid waste component, however, could generate adverse environmental impacts, over the short term, although the net environmental and social impacts are expected to be highly beneficial. At present waste i s disposed in an ad hoc and unsanitary manner on most islands with considerable risks to human health and to the ecosystem. Floating debris, plastic bags, bottles, PET containers, cans, discarded electronic equipment and lubricant wastes are a growing and highly visible hazard to the coral reefs. By developing an environmentally secure system o f waste disposal, this Project i s expected to yield net environmental benefits. A detailed Environmentaland Social Impact Assessment will be conducted for this component in accordance with OPBP 4.01 to identify and mitigate potential adverse environmental and social impacts o f the Project duringproject implementation. 4. Based on the lessons learned from solid waste management in the islands with no formal waste management and also from the experience o f existing IWMCs in inhabited islands, it i s clear that community participation i s essential for effective operation and long-term sustainability o f the IWMCs. Community participation inwaste management has been shown to lead to effective management o f these facilities. This can be achieved by building community leadership in the preparation o f Island Waste Management Plans (IWMPs) and also by stimulating interest and commitment by community members in the selection o f recycling and resource recovery activities to be undertaken at the TWMCs. Specific activities to be undertaken at IWMCs will be determined by the communities themselves when preparing IWMPs during project implementation. Participatory Rural Assessments (PRA) which will be used to understand the social structure and physical layout o f communities, patterns o f leadership and relations with formal and informal island networks, economic activities, transportation, current patterns o f waste disposal, willingness to pay for improved solid waste management, entry points for community mobilization, and the kinds o f incentives to which individuals and communities are likely to respond will 105 be undertaken prior to the Island Waste Management planning process. This i s an essential pre-requisite as each island has its own cultural diversities and the IWMPs should take this into account. The P u s , community mobilization and environmental awareness process which are needed before development o f community-based IWMPs could take approximately one year o f the project implementation period. 5. The type o f regional waste management facilities, location and the technology choices, can be determined only after the IWMPs identify the amount and nature o f the waste being transported to the RWMF(s). The level o f engineering required for containment o f contamination would depend on the pollution potential o f the waste arriving at the site. The fragile ecosystem o f the Maldives dictates that the site for the RWMF(s) cannot be dependent purely upon the waste composition. The unique characteristics o f the Maldives archipelago and the potential for significant ecological costs calls for an iterative process that selects the most optimal site and waste management technology. Therefore, the Best Practicable Environmental Option (BPEO) process will be used for optimizing the selection o f the preferred regional waste management system option. Based onpreliminary assessmentsundertaken inthe Maldives, three technological options have been identified as being potentially viable for inclusion inthe BPEO process. These are (i) engineered, controlled landfills; (ii) incineration; and (iii) waste-for-energy processes. The possibility o f incineration or waste-for-energy through steam recovery would similarly depend on the calorific value o f the residual waste transported to the RWMF(s). This can be determined only after an analysis o f the quality and quantity o f the residual waste i s undertaken after the IWMPs are prepared. Several factors in the Maldives pose challenges to the selection o f appropriate locations for siting the RWMF(s). First, the islands are small and most are unsuitable for siting o f an RWMF due to inadequate land area. Second, inhabitedislands are widely scattered within each atoll, requiring transport o f residual wastes from IWMCs to the RWMF. Finally, there i s the fragile marine and terrestrial environment. These problems are unique to the Maldives-a country where land i s scarce and islands are invariably surroundedby coralreefs that serve as a protective barrier against erosion and storms. 6. Selection o f an island for the proposed RWMF(s) i s highly constrained by social and environmental factors. Public opposition-a reflection o f the "NIMBY" syndrome-would likely preclude the selection o f an inhabited island as a site for the RWMF. The highpopulation density on most inhabited islands could further detract from siting a RWMF on a populated island. There are prospects for using islands with more compatible land uses such as an industrial island site for a RWMF,but this i s uncertain since data on land availability and use patterns i s sparse. Siting the RWMF on one o f the 180 uninhabited islands in the North Central Region i s also problematic. Most uninhabited islands are densely vegetated and surrounded by contiguous reef systems, both likely to contain high biodiversity. Furthermore, location o f an RWMFinan uninhabitedisland in the North Central Region could require excavation o f a navigation channel (unless the lagoon depth i s adequate and there i s an opening in the reef) to provide access for waste transfer barges or landing craft with potential impacts on the reef, the lagoon and, possibly, also on coastal erosion. Such a decision would need to be based on a detailed environmental assessment. However, there i s little data on the physical features or quality o f reef ecosystems, the geography o f islands or the surrounding marine habitat, at present. Accordingly, the first step in constructing a RWMFwould be conducting a scoping exercise o f a long list o f potential sites, followed by intensive data collection and assessment through the first phase o f the BPEO process to select the preferred regional waste management system". It i s necessary to approach site selection with a view to minimizing adverse impacts and maximizing the benefits o f the RWMF. For this to occur, information i s needed on the basic ecological and geographic parameters o f potential locations from about 180 sites. Butthisisnot available andwill needto be obtainedduringprojectimplementation. Eveninformation on basic ecological parameters i s sparse and fragmented, thereby precluding site selection duringpreparation because primary data collection for the long list o f sites i s necessary. 75 The BPEO process i s described inAnnex 4 and the Environmental and Social Assessment Framework. 106 7. Projects financed with IDA resources need to comply with World Bank Operational Policies. World Bank OP 4.01 requires environmental assessment (EA) o f a project proposed for Bank financing to help ensure that these projects are environmentally sound and sustainable. Given that the location o f RWMFs, the catchment area, participating islands and technology for the RWMF cannot be determined without detailed assessments and studies, an environmental assessment cannot be carried out during project preparation. To guide the preparation o f the EA once the sites have been identified, a detailed Environmental and Social Assessment Framework (the Framework) has been prepared by the Government, in lieu o f a project-specific EA: This Annex summarizes the Environmental and Social Assessment Framework, which i s a template, which will form the basis for undertakmg detailed environmental assessments o f the RWMF(s) once the specific site(s) are identified. The Framework has been submitted in lieu o f a project EA and will form the basis for appraising the environmental implications o f the Project. The Framework contains precise time-bound action plans to assure compliance. Compliance with the Framework requirements o f EAs for the RWMFs and EMPs for the IWMCs to the satisfaction o f IDA will be a disbursement condition for these activities. The Framework has been made available for public review and comment in appropriate locations in the Maldives and in IDA'SPublic InformationCenter inaccordance withBP 17.50 requirements o fdisclosure. 8. RegionalSolid WasteManagementComponent The Project proposes to establish a regional solid waste management system over four atolls in the Northern Central Region o f the Maldives Archipelago. Taken together, Noonu, Raa, Baa and Lhaviyani Atolls have some 44 inhabited islands with a population o f approximately 42,650. The atolls also host 11 resort developments with approximately 2,906 beds. Several new resorts are under development that will add significantly to the bed count. The total mass of waste generated inthe atolls i s estimated at approximately 14,250 tons per year and is predictedto rise to around 25,000 tons per year by 2020. It i s estimated that the total volume o f non-organic waste requiring disposal by 2020 would be approximately 293,000 m3.There i s currently no waste collection, transfer and disposal system available inthese at01ls.'~ 9. To dispose o f a volume o f 293,000 m3o f uncompacted, non-organic waste would require void space o f 13 hectares (1.5 meters below ground, 1.5 meters above ground, plus cover material and a land buffer). The area requirement could be reduced to 8.25 hectares by semi-compaction o f the waste using a bulldozer, and to 5.5 hectares by usingheavy compaction. These estimates are not unrealistic under semi compaction and heavy compactionscenarios. 10. Within the North Central Region, there are several industrial islands, and plans for additional resort development. A recent study conducted for the Ministry o f Energy, Environment and Water (MEEW) suggests that the industrialislands could be consumers o f steam producedfrom waste-for-energy systems. This study identifiesthe use o f steam for applications such as electricity generation to replace fossil fuels, conversion o f waste to alternate fuels such as charcoal pellets for coolung fuels, and the use o f combustion-related heat energy in the production o f potable water as possible waste-for-energy options. While the calorific value and quantity o f waste available for such applications i s a concern, removal of the biodegradable fraction o f the waste for composting and inorganics for recycling could result in malung the residue more combustible with higher calorific values than mixed waste. Waste incineration without energy recovery may be another option to be considered in the North Central Region. Although incineration and waste-for-energy technologies are often associated with adverse environmental impacts and high costs, the use o f fragile island ecosystems with damage to coral reefs could result inpotentially irreversible environmental and ecological damage with significant environmental costs. This, in addition to the scarcity o f large islands for waste disposal inthe Maldives calls for all available waste management options to be carefully assessedinthe context o fthe unique constraints inthe Maldives. 76The exception to this statement are some of the resorts that ship residual wastes and incinerator ash to the landfill at Thilafushi, near Mal& 107 11. Regardless o f the option selected for implementation, an ultimate disposal site is required, albeit a small site if incineration or waste to energy i s the chosen option. Ash disposal would be an issue and an engineered disposal site i s required for this purpose. Since the amount o f ash for disposal i s about 10-15 percent o f the volume o f waste burned, a disposal site o f less than 1hectare would be adequate. 12. Small amounts o f hazardous and health care waste will be segregated at the IWMCs and collected for disposal at the RWMF. In light o f this, an area o f around 2 hectares must be engmeered to be fully contained so that hazardous and health care waste can also be disposed o f with adequate precautions to minimize contamination and adverse public health impacts. If all the waste at the RWMF i s to be incinerated, then a 1hectare ash disposal site will be adequate for ultimate disposal o f ash from hazardous and health care waste. 13. Purpose and Scope of the Environmental and Social Assessment Framework. All activities necessary for achieving the objectives o f this Project would be required to satisfy the World Bank's safeguard policies, in addition to the environmental regulations o f the GoM. The objectives o f the Framework are to: 0 Enhance positive and sustainable environmental and social outcomes associated with principle project components; and 0 Support the integration o f environmental and social aspects associated with the numerous subprojects into the decision-making process. 14. The Framework describes the principles, approach and processes to be followed in minimizing and mitigating the adverse environmental and social impacts caused, as a result o f the implementation o f the project activities, in particular, the regional solid waste management component. It serves as a template for undertaking environmental assessments in accordance with the World Bank's Safeguard Policies and those o fthe GoM. 15. The Framework addresses the following aspects: a) Overarching due-diligence principles; b) Roles, responsibilities andmanagement framework; c) Relevance of, and compliance with World Bank policies, guidelines, and procedures; d) Relevance o fNational Policies Laws, Regulations, Notifications andTraditionalRights; e) The Environmental Review capacity o f MEEW and the adequacy o f the Environmental Review process inthe Maldives; f, Precisetime-bound actionplans for implementation 16. Due Diligence Principles. The Framework considers and incorporates principles o f due diligence that would be applied duringproject preparation and implementationinmanaging potential environmental and social risks that may be encountered. The key due diligence principles are as follows: 0 Principle I: Review and Categorization -The RWMF(s) and each I W M C and its associated activities would be subject to a social and environmental review and shall be categorized as Category A or B based on the magnitude o f potential impacts and risks in accordance with environmental and social screening criteria. Principle 2: Social and Environmental Assessment - A Social and Environmental Assessment (hereinafter, "the Assessment") process would be undertaken to address, as appropriate, the relevant social and environmental impacts and risks posed by the RWMF(s) and IWMCs and their associated activities according to their respective environmental categories. It has been agreed between the G o M and the World Bank that the RWMF i s a Category A activity and will 108 be subject to a full environmental and social assessment in accordance to OP/BP 4.01. The IWMCs will be subject to an environmental analysis and categorized into Category A or B based on the potential for adverse environmental and social impacts. The Assessment would also propose mitigation and management measures relevant to the nature and scale o f the proposed Project. As stated above, Category A activities such as the RWMF would be subject to a full Environmental and Social Impact Assessment (ESIA) while the adverse environmental andor social impacts o f IWMCs and their associated activities would likely be considered Category B activities and would be subject to an Environmental Analysis and preparation o f Environmental Management Plans (EMPs). Categorization would be done in consultation with IDA and would be based on the World Bank's safeguards categorization criteria. 0 Principle 3: Applicable Social and Environmental Standards - The Assessment would refer to applicable World Bank Operational Policies, Performance Standards and Specific Environmental Health and Safety (EHS) Guidelines. The Assessment would establish the Project's overall compliance with, or justified deviation from, the respective World Bank Operational Policies, Performance Standards and EHS Guidelines. The Assessment would address compliance with relevant Maldivian laws andregulations pertainingto social and environmental matters. Principle 4: Environmental Management Plans - The ESIA or Environmental Analyses conducted would result in the preparation o f Environmental Management Plans (EMPs). The EMP would be a time bound Action Plan developed to address the relevant findings. The EMP would describe and prioritize the actions needed to implement mitigation measures, corrective actions and monitoring measures necessary to manage the impacts and risks identified in the Assessments. A Social and Environmental Management System would be established to address the management o f the impacts, risks, and corrective actions required as identified inthe EMP so that compliance with applicable World Bank Operational Policies, Performance Standards, EHS Guidelines and relevant Maldivian laws and regulations i s assured. The costs and institutional requirements o f implementation o f EMPs would also be presented. 0 Principle 5: Consultation and Disclosure -For all ESIA and Environmental Analyses conducted, affected communities would be consulted within a structured and culturally appropriate manner. Ifproject activities arejudged to have significant adverse impacts on affectedcommunities, the process would ensure extensive and continuous consultation as a means to establish whether those activities have adequately incorporated affected community concerns. T o accomplish this, the environmental assessment documentation and EMPswould be made available to the public by the Borrower for a reasonable period (a minimum o f 30 days prior to letting o f contracts for works) in the local language and in a culturally appropriate manner. The process would be documented and account would be taken o f the results o f the consultation, including any actions agreed resulting from the consultation. Public disclosure o f the relevant safeguards documentation i s a pre-requisite for signing civil works contracts. 0 Principle 6: Grievance Mechanism - To ensure that consultation, disclosure and community engagement continues throughout project implementation, a gnevance mechanism would be established, scaled'to the risks and adverse impacts o f the project or subproject, as part of the management system. The gnevance mechanism would allow for concerns and complaints about the Project's social and environmental performance raised by individuals or groups from among project-affected communities to be received and to facilitate resolution o f those concerns and grievances. 0 Principle 7: Independent Review - For all Category A activities such as the RWMF, an independent social or environmental expert would review the environmental assessments, EMPs and consultation process documentation. In addition, independent environmental and social safeguards compliance reviews would be conducted at the RWMF during the first year o f operation and at the closure o f the Project. 109 17. Roles, Responsibilitiesand Management Framework The G o M has constituted a multi-sectoral national steering committee headed by the Minister o f Environment, Energy and Water for planning, coordination and monitoring o f the overall Maldives Environmental Management Project o f which the Regtonal Solid Waste Management Program i s a component. A Project Management Unit (PMU) has been appointed to coordinate and monitor project implementation. The primary responsibility for implementing the Framework would lie with the P M U with the ultimate responsibility resting with the Project Director. 18. Planning and implementation o f the Regional Solid Waste Management Component i s the responsibility o f the Environment Research Centre (ERC) as the responsibility o f solid waste management related activities in the Maldives has been delegated to ERC by the Ministry o f Environment, Energy and Water. While planning and designing activities at the island level i s the responsibility o f ERC, implementation at island level would be handled through the respective Island Offices and supported by ERC and the relevant Atoll Office. The PMUwould, according to the guidance inthe Framework, ensure that the following will beundertaken: environment and social reviews; environmental and social impact screening processes for project activities; environmental managementplans; 0 establishment o f Island Waste Management Committees; 0 site selection criteria and Island Waste Management Center location, approval procedures; and 0 monitoring andreporting formats. 19. The Project Director would designate a Coordinator to oversee the implementation and monitoring o f the Environmental and Social Assessment Framework. IDA approval o f the EA for the RWMF i s a pre- requisite for disbursement o f funds for sub-components 1.3: Construction o f Island Waste Management Centers; sub-component 1.4: Waste Transfer System for the Regional Waste Management Facility; and sub-component 1.5: Construction and Operation o f the Regional Waste Management Facility. During project supervision, the IDA team would assess the implementation o f the Framework and recommend additional measures for strengthening the management o f environmental and social safeguards, ifneeded. 20. Compliancewith Applicable WorldBankPolicies, Guidelinesand Procedures.Having evaluated the activities supported under the regional solid waste management component with respect to the Operational Policies, Performance Standards and Environmental Health and Safety Guidelines o f the World Bank, it i s anticipated that the Operational Policies that will be triggered under this Project are OP/BP/GP 4.01 - Environmental Assessment and OP/BPGP 4.04 Natural Habitats. The Performance - Standards that will be applicable to this component are: Performance Standard 1: Social and Environmental Assessment and Management System and Performance Standard 3: Pollution Prevention and Abatement. The EHS that will be applicable to this component i s Industry Sector: Waste Management Facilities. The Environmental and Social Framework ensures that the above Safeguard Policies, Performance Standards and Guidelines are adhered to under the Project. Relevance of OP/BP/GP 4.01 on Environmental Assessment and OP/BP/GP 4.04 on Natural Habitatsto the Project 21. Environmental Assessments would be undertaken to identify environmental and social consequences o f activities proposed under the regional solid waste management component. The EAs should cover physical/chemical, biological, socio-economic and cultural impacts that are likely to arise during the design, construction and operational activities at the RWMF and IWMCs. Potentially the most serious impacts are likely to occur in the construction and operation o f the RWMF, which would require a full 110 EA, while the IWMCs would most likely require preparation o f EMPs based on environmental analyses undertaken. Although specific activities plannedfor the IWMCs are unlikely to cause irreversible adverse environmental impacts, they should be subject to screening to determine their relevance to the EA process and whether a more detailed environmental assessment i s required. 22. It i s possible that there will be adverse environmental impacts on natural habitats depending on the final site selection, facility design, and the specific activities that would be carried out at the RWMF, therefore, OP/BP 4.04 on Natural Habitats has been triggered. Duringthe operation phase, poor design or improper management could result in leakage o f wastes or leachate into the immediate habitat. Periodic environmental reviews to ensure compliance and independent reviews o f the designs will reduce this risk. Accordingly, care will be taken to ensure that the project activities will not involve significant conversion or degradation o f critical natural habitats. The Relevance of Performance Standard 1: Social and Environmental Assessment and Management System and Performance 23. Considering that a solid waste management facility has the potential for creating adverse environmental and social impacts during operation, even though proper environmental safeguards have been integrated into the design, care needs to be taken to ensure that the facility operates in compliance with environmental and social safeguards. Accordingly, relevant Performance Standards which ensure that the RWMF would manage social and environmental performance throughout the project life cycle will be included as a condition o f the RWMF Operators Contract. In addition to implementation of the EMP, the RWMFOperator will be expectedto undertake the following: a. Community Engagement and Consultation: The Project would be based on a strong participatory approach. Therefore, the RWMF Operator, Atolls Office and ERC would make all reasonable efforts to consult relevant stakeholders in the preparation and implementation o f the RWMF activities prior to the finalization o f the project design, during construction and throughout the life o f operations. The consultations would be carried out in a way that i s appropriate for cultural, gender based and other differences among stakeholders. These consultations would be initiated as early as possible, and provide relevant material in a timely manner prior to consultation. The views and needs o f the vulnerable groups would be given due consideration. The public consultation process would be a continuous process throughout the life o f the Project. b. Disclosure: Disclosure of relevant RWMF information would help affected communities if any, understand the risks, impacts and opportunities o f the Project. The P M U will ensure that the implementing agencies/organizations would publicly disclose all Social and Environment Assessment documentation, the environmental management plan and time-bound action plan(s) for public review and comment in appropriate locations in the area where the RWMF will be located. The documentation would also be made available on the implementing agencies'/organizations' web sites. Newspaper and other media outlets would alert the community to the availability o f the documentation. The website would also enable affected communities the opportunity to provide comment electronically. Documentation would also be made available at IDA'SPublic Information Center inaccordance with BP 17.50 requirements o f disclosure. c. Monitoring and Reporting: The EMP would establish procedures to monitor and measure the effectiveness o f the mitigation measures. The implementing agencies (ERC, Atoll Office and RWMF Operator) would use mechanisms, such as inspections and reviews, where relevant, to verify compliance and progress toward the desired outcomes and would engage qualified and 111 experienced independent experts to verify its performance. In order to measure effectiveness o f the EMP, it may be necessary to carry out baseline studies on soil and water quality in and around facilities constructed with project support. The Relevance of Standard 3: Pollution Prevention and Abatement to the Project 24. This Performance Standard outlines a project approach to pollution prevention and abatement inline with internationally disseminated technologies and practices. Since the RWMFwould likely be operated by the private sector, this Performance Standard promotes the private sector's ability to integrate such technologies and practices as far as their use i s technically and financially feasible and cost-effective in the context o f a project that relies on commercially available skills and resources. 25. During the design, construction, and operation o f the IWMCs and RWMF(s), the implementing agency would consider baseline ambient conditions and apply pollution prevention and control technologies and practices (techniques) that are best suited to avoid adverse impacts. Where avoidance is not feasible, the R W operator would seek to minimize adverse impacts on human health and the ecosystem within the limits o f financial feasibility. However, in cases where it i s impossible to avoid irreversible harm to ecosystems, endangered species or human health, there should be a reevaluation o f the technology choice and the site inorder to find a more suitable environmental solution especially given the fragility and economic significance o f the Maldivian environment. The Project-specific pollution prevention and control techniques applied would be tailored to the hazards and risks associated with emissions and includedinthe EMPs. The Relevance of Industry Sector E H S Guideline: Waste Management Facilities 26. These guidelines apply to the design, construction and operation o f facilities for the management of hazardous and non-hazardous wastes, including landfills and incinerators and take account o f World Bank Operational policies. Since the RWMF will be used for management o f hazardous waste and medical waste, the PMU will ensure that this guideline i s complied with to minimize the potential for adverse impacts from management o f hazardous and medical wastes, regardless to the volume o f such wastes beingvirtually insignificant. Compliance with Industry Sector E H S Guideline: Waste Management Facilities 27. Duringthe design, construction, operation o f the IWMCs and the RWMF, the implementing agency would consider the following: Site or island access routes taking environmental factors into consideration including impacts on natural resources, land use patterns, sensitive ecosystems and cultural resources; surface and subsurface investigation o f geology, soils, groundwater and surface water resources as appropriate to determine leachate mitigation potentialand for additionaldesign requirements; the proximity to developed areas (i.e. inhabited islands) and potential impacts resulting from air emissions, odor, contamination o f water resources, and disease vectors such as rodents and insects; methane control systems to minimize the risk o f explosion or toxic conditions resulting from accumulation o f landfill gas inbuildings; separate receiving and handlingareas for hazardous and non hazardous wastes; appropriate air control measures to minimize fugitive dust from materials loadinghnloading and odors from landfill sites, waste storage areas and composting systems; inclusion of appropriate contained storage areas for materials that can not be treated or disposed of immediately; 112 0 sourcing o f daily and intermediate cover material to minimize odors and access to disposed o f wastes; 0 treatment o f leachate to meet requirements for liquid effluents 0 air quality emissions from incinerator or boiler stacks that do not exceed the limits specified in Industry Sector EHS Guideline: WasteManagement Facilities; 0 provision o f appropriate personal safety equipment such as gloves, goggles, boots, tools, etc. 0 development o f an Employee Health and Safety program, environment monitoring programs, employee training programs; and development o f standard operational procedures for recordkeeping and reporting. Relevance of Republic of Maldives National Policies, Laws, Regulations, Notifications and Traditional Rights 28. This section lists relevant nationalpolicies and legislation and highlightsthe salient features o f select policies and laws which have a particularly important bearing on the design and implementation o f the regional solid waste management component: 0 Draft Solid Waste Management Policy 0 Technical MinimumStandard(TMSO1) for the Operation o f Large-scale Dumpsites 0 Law No. 4/93: The Environment Protection and Preservation Act 0 EnvironmentalImpact Assessment Regulation, 2007 0 By-law, Cutting Down, Uprooting, DiggingOut and Export o f Trees and Palms from one island to another Law No. 20/98:UninhabitedIslandManagement Law 0 Law No. 5/87:Law on Fisheries 0 Traditional rightsto land 29. Briefoverviews o f the most relevant policies and legslation are given below: National Solid WasteManagement Policy 30. The National Solid Waste Management Policy was announced in February 2008. It has been prepared to reflect the current status o f solid waste management in the Maldives. The policy contains strategic principles that create the underlying logical and philosophical structure o f the policy. They also represent universally accepted practices inwaste management: Polluter pays principle Integrated solid waste management Waste management hierarchy Best Practical EnvironmentalOption (BPEO) Best Available Technology Not EntailingExcessive Costs (BATNEEC) Equity Proximity principle Private Sector Participation(PSP) Law No. 4/93: TheEnvironment Protection and PreservationAct 3 1. The EnvironmentalProtection and Preservation Act o f the Maldives i s concerned with the protection o f the natural environment and resources including land, water, flora, fauna, beaches and reefs. Islands 113 with special ecological characteristics have been identified, protected and conserved as no-take zones under this Act. 32. The Act makes reference to prohibited waste activities like disposing o f wastes in the marine environment, disposing o f hazardous, toxic or radioactive waste in the territorial waters o f the Maldives, and trans-boundary movement o f such wastes elsewhere. Environmental Impact AssessmentRegulation, 2007 33. Law No. 4/93 on Environmental Protection and Preservation stipulates under Article 5, any development work or project should have an Environmental and Social Impact Assessment consented to bythe Ministryof Environment, EnergyandWater. Environmental Review Capacity of the Ministry of Energy, Environment and Water (MEEWJ and adequacyof theEnvironmental ClearanceProcess 34. Under Law No. 4/93 Environmental Preservation and Protection Act, the Ministry o f Environment, Energy and Water (MEEW) has the responsibility for enforcing ESIA regulations, specified under the Environmental and Social Impact Assessment Regulations. 35. The Maldives has reasonably good experience in implementing the Environmental and Social Impact Assessment process. The Act, as stipulated under Article 5, requires an Environmental Decision Statement to be issued prior to the commencement o f development projects. Schedule D o f the Act specifies the development projects that require an Environmental and Social Impact Assessment study undertaken prior to granting approval. Proponents o f all activities listed Schedule D are expected to prepare a project brief, based on which a scoping meeting will be held by MEEW and a Terms o f Reference for the ESIA i s prepared. An ESIA or an IEE will be prepared as required by the project proponent. MEEW has delegated the function o f ESIA process management to the Environment Research Centre (ERC). ERC invites two independent reviewers who are considered experts in the field o f the relevant project to submit comments on the quality o f the ESIA, including the level o f environmental analysis undertaken to identify the environmental impacts and concerns o f the proposed project and the adequacy o f the mitigation measures proposed. The review comments form the basis o f the ESIA evaluation by ERC and consent i s granted with conditions by the Minister o f MEEW. 36. While technical capacity at ERC i s reasonably good, the proposed Project will provide training to improve this capability further. The ESIA review process appears to be adequate at this stage because independent reviewers used to review the ESIA appear to have the requiredtechnical expertise to evaluate the ESIA satisfactorily. 37. ERC has the responsibility o f monitoring implementation of the ESIA clearance conditions. This i s not uncommon in most developing countries. Although monitoring ESIA clearance conditions could be further strengthened, the Project will support two independent environmental compliance reviews in year 2 o f operation o f the regional waste management facility and at project closure. Inaddition, clearance o f all ESIA, IEEEMPs by the World Bank i s a disbursement condition for the respective activities. Inorder to ensure transparency inthe ESIA process, the ERC website has all ESIAs and the status o f evaluation o f the ESIA at any given time The ESIA clearance conditions are also placed in the website so that civil society can be aware o f the environmental and social mitigation measure that are required to be in place duringproject construction and implementation. 114 Conclusions 38. ERC has the capacity to implement the Environmental and Social Framework. Any weaknesses can be strengthened during project implementation through the Capacity Building Component. The F'roj ect would finance a S W M Component Coordinator stationed inthe Atoll Office where the RWMF would be located. In addition, the independent environmental compliance reviews proposed for the first year of operation o f the RWMF and at project closure would provide the required information to reduce any weaknesses in environmental and social safeguard compliance. ERC will also undertake annual monitoring o f the regional solid waste management component. 115 Annex 11:Project Preparation and Supervision MALDIVES: Maldives Environmental Management Project 1. Below is the project schedule. Planned Actual PCNreview October 10,2007 October 10,2007 Initial PID to PIC October 29, 2007 October 26,2007 Initial ISDS to PIC October 29,2007 October 26,2007 Appraisal March 10-19,2008 March 10- 19,2008 Negotiations April 28 -29,2008 April28,29,2008 Board/RVP approval June 10,2008 Planneddate of effectiveness August 1,2008 Planneddate ofmid-ternreview February 11,201 1 Plannedclosing date June 30,2014 Keyinstitutionsresponsiblefor preparationofthe project: MinistryofEnvironment, Energy andWater (MEEW) FENBuilding Ameenee M a p Mal& Republicof Maldives Tel: +960 3324861 Fax: +960 3322286 E-mail: env@,environment.gov.mv Bank staff andconsultantswho worked ontheproject included: Name Title Unit RichardDamania Sr. Environmental SASDN Economist SumithPilapitiya LeadEnvironmental SASDN Specialist Daniel Gross Consultant SASDN Shafiul Ahmed Water Supply & Sanitation ETWSA SDecialist 116 Carla Vale de Holguin Operations Analyst SASDN Random DuBois Consultant FAO-CP Carlo Bravi Consultant FAO-CP Aiden G~lliver~~ Consultant FAO-CP MiriamWitana Operations Officer/ ProcurementAccredited SACSL Staff Manoj Jain Sr. FinancialManagement SARFM Specialist Cecilia Belita Senior Program Assistant SASSD Thao L e Nguyen Sr. Finance Officer LOAFC Roch Levesque Legal Counsel LEGES Azma Didi Operations Analyst SACMV Najfa Razee Senior Operations Officer SACMV Vandana Mehra Communications Officer ETWSA Bankfinds expendedto date onproject preparation: 1. Bank resources: US$418,787.75 (including FAO-CP expenditures) 2. Trust funds: $ 0 3. Total: US$418,787.75 EstimatedApproval and Supervision costs: US$370,000 Remaining costs to approval: US$20,000 Estimated annual supervision cost: US$350,000 77Replaced Mr.Carlo Bravi inearly February 2008. 117 Annex 12: Documents inthe ProjectFile MALDIVES: MaldivesEnvironmentalManagementProject 1. Maldives CountryAssistance Strategy (2008) 2. Draft 7thNational Development Plan, Government o fMaldives 3. Environmental and Social Management Framework 4. Report on the Economic Analysis o fthe Project with appendices and full references list 5. Project Preparation Agreement, Procurement Plan and Disbursement Letter, March 7, 2008. Countersigned on April 23,2008 6. Letter from the Environment Research Centre titled "Confirmation o f Arrangement for Managing Import Duties" dated February 16,2008 7. Letter o f approval o f the Project's draft Financing Agreement from Government o f Maldives (MOFT) dated April 29,2008 8. Project Cost Details 118 Annex 13: Statement of Loansand Credits MALDIVES: MaldivesEnvironmentalManagementProject Differencebetween expected and actual Original Amount inUS$Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. 7 Orig. Frm.Rev'd PO18523 2005 Integrated HumanDevelopmentProject 0.00 15.60 0.00 0.00 10.01 8.41 1.96 2.80 PO94193 2005 MaldivesPost Tsunami Emergency Project 0.00 8.40 0.00 0.00 0.00 2.94 1.45 0.00 Total: 0.00 24.00 0.00 0.00 10.01 11.41 9.41 2.80 MALDIVES STATEMENT OF IFC's HeldandDisbursedPortfolio InMillions ofUS Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2001 MFLC 2.61 1.25 0.00 0.00 1.61 1.25 0.00 0.00 2004 Taj Maldives 1.59 0.00 0.00 1.59 1.59 0.00 0.00 1.59 Universalhotels 30.00 0.00 0.00 0.00 30.00 0.00 0.00 0.00 2002 Villa Shipping 6.00 0.00 3.00 0.00 6.00 0.00 3.oo 0.00 2006 Wataniya Maldive 20.00 0.00 0.00 0.00 18.00 0.00 0.00 0.00 Total portfolio: 66.26 1.25 3.00 1.59 63.26 1.25 3.oo 1.59 Approvals PendingCommitment FY Approval Company Loan Equity Quasi Partic. Total pending commitment: 0.00 0.00 0.00 0.00 119 Annex 14: Country at a Glance MALDIVES: MaldivesEnvironmentalManagementProject 1 Lower- POVERTY and SOCIAL South middle- Maldives Asla income 3evelopment diamond. 2006 Population.mid-year(millmns) 034 1493 2276 GNIpercapita(At/asmefhod, US$) 2,680 768 2,037 Lifeexpectancy GNI(Aflas method, vS$ billions) 090 1%3 4,635 Average annual growth, 2000-06 Population(s/d 25 17 0.9 Laborforce (%) 52 2.1 14 M o s t recent estimate (latest year avallable, 2000-06) Poverty(%Ofpopulafion bdownafnnalpoverlyline) Urbanpopulation(%of fotalpopulafion) 30 29 47 Lifeexpectancyatbirth(pars) 68 61 71 1 Infantmortality(per .CooOlivebirths) 33 82 31 Childrnalnutntion(%of childrenunder5) 30 13 Access to improvedwatersource Access to animprovedwtersource (%ofpopulafion) 83 84 81 I Literacy(%of population age 98 58 89 Grosspnmaryenrollment (%of school-agepopulatmn) 94 m n3 - Maidives Male 95 IE IT Loner-mlddl~incomegroup ~ Female 93 0 5 1% KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1986 I996 2005 2008 Economlc ratios' GDP (US$billions) 014 045 0.75 0.93 Grosscapitalformation/GDP 305 Emrts of goods andservices/GDP 681 917 Trade Gross domestic savingsIGDP 49 2 Gross nationalsavingsIGDP 441 Currentaccount ba4ancelGDP -0.2 -17 -36.0 -39.8 Interest paynents1GDP 15 0 8 12 Total debt/GDP 484 373 49.1 Total debtservicelexports P I 31 6.9 Presentvalueof debt1GDP 411 1 Presentvalueof debtlexports 622 Indebtedness B86.96 1996-06 2005 2006 2008-10 I (averageannualgrouth) GDP 6 9 -51 23.5 - Maidives GDP percapita 41 -74 20.7 -- - Loner-middieincomegroup Exportsof goods andservices 73 STRUCTURE of the ECONOMY I986 1996 2005 2006 Growth of capltal and GDP ('4 (%of GDP) Agnculture 80 T Industry Manufacturing Services Householdfinalconsumption expenditure .. 35.0 Generalgov't finalconsumption eqenditure .. 15.9 Importsof goods andservices 60.7 73.1 -GCF -GDP 1986-96 1996-06 2005 2006 (averageannualgmuthj Growth of exports and Imports ('4 Agnculture 34 52 P2 -07 Industry 94 93 3.0 0 6 Manufacturing 74 65 -9.9 73 Services 87 61 -8.3 24 0 Household finalconsumption expenditure 13 Generalgov't finalconsumption expenditure .... 0.7 Gross capitalformation 74 I Imports of goods andservices .. 6.5 -Exports - 0 - I r r p O r t S I Note 2006 dataare preliminaryestimates. This tablewas pmducedfrom the DevelopmentEconomics LOB database. 'Thediamonds showfourkeyindicators inthecountry(in bo1d)comparedwithits incomegroupaverage.Ifdataaremissing,thediamondMll 120 Maldives PRICES and GOVERNMENT FINANCE 1986 1996 Domestic prices (%change) Consumer pnces 62 ImplicitGDP deflator 3 7 Government finance (%of GDP,includes currentgrants) Currentrevenue 296 Currentbudgetbalance 116 -03 6 0 Overallsurplusideficit -2.5 - 0 9 -71 TRADE 1986 1996 2o06 (US$ millions) /Export and Import levels (US$ mill.) I Totalexports (fob) 80 Marineexports 49 M2 0 3 Garments a 1 I Manufactures Total imports (cif) 266 656 825 Food 113 Fuelandenergy 27 125 8 1 Capitalgoods E~portpnce index(ZOOO-TJ0) MO Import price index(2000=#0) MO Tens of trade (2000=#0) 99 BALANCE of PAYMENTS 1986 1996 2o06 1 (US$ millions) /Current account balance to GDP (%) Exportsof goods andservices 97 369 485 698 0 Imports of goods andservices 86 353 860 1048 Resource balance M B -375 -350 lo Net income -19 -22 -31 -41 20 I Net current transfers 8 1 0 6 22 Currentaccount balance 0 -7 -270 -369 30 Financingitems (net) 3 51 246 4% Changesinnet reserves -2 -44 Memo: Reserves includtnggold(US$ millions) 7 76 8 6 231 Conversion rate (DEC,/oca//US$) 7.2 118 P.8 Q.8 EXTERNAL DEBT and RESOURCE FLOWS 1966 1996 2005 2006 (US$ millions) Composition o f 2005 debt (US$ mill.) Total debt outstanding anddisbursed 69 168 368 IBRD 0 0 0 0 I IDA 5 37 64 70 G56 B 64 Total debt service P e 34 IBRD 0 0 0 0 C 6 IDA 0 0 1 2 Cornposition of net resource flow Gfficial grants M 51 1 F 9 0 Official creditors 7 20 Private creditors 2 5 Foreign direct investment (net inflow) 5 9 Portfolio equity(ne1inflow) 0 0 E 41 Wodd Bank program I Commitments 0 8 0 Disbursements E- Biiaterd 1 5 3 i B IDA 1 A -- IBRD D -Other mltilaterd F- Private Pnncipal repayments 0 1 1 i C-IMF G- Short-term Netflows 1 4 2 l I blterest paynents 0 1 I Net transfers 1 3 2 Note This table was producedfrom the DeveiopmentEconomics LDB database 9/28/07 121 71º 72º 73º 74º Dhidhdhoo 7º HAA ALIFU 7º MALDIVES THILADHUNMATHI UTHURUBURI ENVIRONMENTAL MANAGEMENT HAA DHAALU THILADHUNMATHI Kulhudhuffushi PROJECT DHEKUNUBURI MAP A MILADHUNMADULU UTHURUBURI Project Area (North Central Region) Funadhoo SHAVIYANI 6º Atoll Administrative Capitals 6º MILADHUNMADULU National Capital MAALHOSMADULU UTHURUBURI DHEKUNUBURI Atoll Administrative Boundaries* Manadhoo Ugoofaaru NOONU *Local Atoll Names shown in green; Official Atoll Names shown in white. LHAVIYANI RAA Naifaru BAA FAADHIPPOLHU Eydhafushi For detail, see IBRD 36130. 5º 5º MILES 0 25 50 MAALHOSMADULU KAAFU DHEKUNUBURI KILOMETERS 0 25 50 75 100 KardivaChannel MALÉ ATOLL ALIFU Rasdhoo Thulusdhoo ALIFU ARI ATHOLHU UTHURUGOFI Malé 4º 4º Mahibadhoo ALIFU DHAALU ARI ATHOLHU Fulidhoo DHEKUNUGOFI VAAVU FELIDHE ATOLL FAAFU Magoodhoo NORTH NILANDHE ATOLL 3º Muli 3º INDIAN MEEMU Kudahuvadhoo MULAKU ATOLL DHAALU SOUTH NILANDHE ATOLL OCEAN THAA KOLHUMADULU Veymandoo 2º 2º This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Fonadhoo Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. LAAMU 71º 72º HADHDHUNMATHI 10º 75º Suheli Par (India) INDIA 80º 10º One and Half Degree Channel Minicoy I. (India) SRI LANKA GAAFU ALIFU 1º HUVADHU ATHOLHU 1º UTHURUBURI 5º 5º MALDIVES Viligili MALÉ Thinadhoo INDIAN OCEAN GAAFU DHAALU 0º 0º HUVADHU ATOLL Equator 0º DHEKUNUBURI EquatorialChannel 0º Foamulaku SEENU GNAVIYANI ADDU ATOLL FOAMULAKU 5º 5º ATOLL Hithadhoo IBRD British Indian MA Ocean Territory 36030 Y (UK) 2008 Diego Garcia 75º 80º 73º 74º IBRD 36131 38°N 8°E 10°E 12°E Mediterranean Sea Sicily (ITALY) La Galite TUNISIA S t r a i t BizerteRAS JEBEL O.GUENNICHE Golfe de o f Tunis Tabarka BIZERTE Atlas ARIANA MANOUBA L'Ariana S i c i l y Beja Manouba Ben Arous Pantelleria TUNIS GROMBALIA (ITALY) JENDOUBA BEJA MORNAG KORBA Jendouba BEN AROUS NABEUL Zaghouan Nabeul ZAGHOUAN MellegueLe Kef SILIANA Golfe de Hammamet O.KHAIRAT 36°N Siliana 36°N LE KEF SOUSSE Isole Pelagie Kalaa Kbira (ITALY) Sousse SBIBA Kairouan Monastir Lampedusa Thala KAIROUAN MONASTIR (ITALY) KASSERINE Mahdia A L G E R I A M A H D I A ElHateb Zeroud El Djem Jabal ash Shanabi (1544 m) Kasserine Sidi Bou Zid SIDI BOU S F A X Mediterranean ZID Sfax Îles de Sea G A F S A Maharès Kerkenna Gafsa Skhira Golfe de 34°N 34°N Tozeur Gabès Gabes T O Z E U R El Hamma Djerba Île de Chott el Jerid Djerba Kebili G A B E S Zarzis MEDENINE K E B I L I Medenine Tataouine Plaine Source: Prof. Besbes. Evaluation of artificial d'Al-Jifarah L I B Y A recharge in Tunisia. 2008. Data from the Remada Ministry of Agriculture DGRE Oriental T A T A O U I N E 32°N Dehibat 8°E Grand Erg El Borma SELECTED CITIES AND TOWNS T U N I S I A GOVERNORATE CAPITALS WATER SECTOR INVESTMENT NATIONAL CAPITAL GEOGRAPHIC DISTRIBUTION OF DIFFERENT RIVERS TYPES OF INVESTMENTS IN ARTIFICIAL RECHARGE GOVERNORATE BOUNDARIES OF GROUNDWATER FINANCED BY THE PROJECT INTERNATIONAL BOUNDARIES LIMIT OF AQUIFERS 0 25 50 75 100 Kilometers AQUIFER RECHARGE RECHARGE USING TREATED WASTEWATER (BASIN) 0 25 50 75 Miles RECHARGE SITES This map was produced by the Map Design Unit of The World Bank. WELLS The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank BASINS Group, any judgment on the legal status of any territory, or any 30°N endorsement or acceptance of such boundaries. CLOSED/CONVERTED QUARRIES 10°E MAY 2008