Page 1 PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB1267 Project Name ID-Western Java APL2 Region EAST ASIA AND PACIFIC Sector Solid waste management (40%); General water, sanitation and flood protection sector (40%); Flood protection (20%) Project ID P082388 Borrower(s) REPUBLIC OF INDONESIA Implementing Agency Environment Category [X ] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined) Safeguard Classification [ ] S 1 [ X] S 2 [ ] S 3 [ ] S F [ ] TBD (to be determined) Date PID Prepared December 5, 2004 Estimated Date of Appraisal Authorization November 14, 2005 Estimated Date of Board Approval April 15, 2006 1. Key development issues and rationale for Bank involvement 1. Context . The Adaptable Program Lending (APL) for the Western Java Environmental Management Project is a nine- year program to improve living conditions and Indonesia’s international competitiveness by addressing local governments’ highest priority environmental problems. The first phase (APL1) was designed to lay out the strategic framework for sustainable environmental waste management among the participating provincial and local governments, and prepare detailed designs for investments to be implemented during the subsequent two phases. 2. Borrower’s objectives . The new Government has only recently issued a proposal for its first 100 days and is in the process of elaborating medium-term objectives and actions. However, there is clear intent to pursue improved governance, consolidate decentralization and address environmental challenges. In fact, one of the priority problems to be resolved on the 100-day agenda is a conflicted landfill site in Bogor, West Java (not part of WJEMP). Thus, the proposed project, with its emphasis on management, participation, local governance, and priority environmental problems is broadly supportive of the new Government’s objectives 3. Results from the first phase . Given the breadth and scope of the problem, APL1 has funded a wide range of studies and pilot experiences. The 35 technical assistance packages can be summarized as follows: ¨ Waste management – eight packages aimed at improving metropolitan and local solid waste management as well as a special focus on industrial and medical waste ¨ Flood control for Greater Jakarta – four packages to assess flood control options in Jakarta and the surrounding drainage basin Page 2 ¨ Provincial and local environmental strategies – 11 packages (two provincial and nine local) to develop management strategies and identify priority investments ¨ Public and community initiatives – three packages for environmental awareness, education and community environmental management ¨ Sanitation – three packages addressing domestic wastewater management ¨ Composting – one package to design the GEF compost grant mechanism ¨ Various – five packages covering project management, identification of APL2 and specialized studies such as the Cilegon-Serang emergency preparedness program Besides studies, APL1 is also financing pilot work to support a model landfill site, three landfill- based composting facilities and initial community environmental facility grants. 4. Experience from implementing the first project has yielded the following lessons: ¨ The project’s implementation structure requires simplification (it involves five ministries, two provinces and nine local governments) ¨ The project’s scope should be more selective, focusing on fewer activities (there are 35 technical assistance packages in seven substantive areas involving over 50 consulting firms) ¨ New institutional arrangements, e.g. metropolitan waste management corporations and procedures for environmental strategizing, require time to build political support and capacity ¨ To ensure continuity and achievement of objectives, “must have” components include support for JWMC, GBWMC and composting ¨ Local government participation will depend upon clarification of funding arrangements (KMK35, KMK538 and UU33/2004) One consequence of these lessons is that there have been significant delays in contracting and achievement of triggers. 5. Rationale for Bank involvement . Design of the second phase in order to address priority environmental problems in Indonesia’s most urbanized and polluted region is consistent with a range of Bank strategies and policies. Regionally, the EAP environment strategy (2004) stresses themes that are central to WJEMP: improving urban and peri-urban environmental conditions, reducing vulnerability to natural disasters and climate change, improving policy and regulatory frameworks, strengthening institutional capacity, and engaging the private sector and civil society in improving environmental management. The project is part of the regional/provincial development business line of the Bank’s Indonesia urban strategy. Key elements of the APL are fully supportive of the current Country Assistance Strategy, especially the local services and community-driven development platforms and the pillar for making service delivery responsive to the needs of the poor. Also, the WJEMP can be a mechanism for following up on the policy advice that has been given to the newly-elected Government, especially regarding helping local governments to tackle the solid waste management challenge and reforming the system of environmental governance. Finally, no other donor is engaged in a comprehensive to work with and across the local governments and provinces of Western Java. Page 3 2. Proposed objective(s) 6. The second phase (APL2) will build on the accomplishments, processes and lessons of APL1 by seeking to improve local environmental quality and governance through: a) consolidating reforms for solid waste management; b) financing locally-prioritized environmental investments in the areas of solid waste and water resource management; c) reducing waste-related greenhouse gas emissions; and d) strengthening the framework for local environmental planning and management, including public information and participation. Much of this can be done based on work being completed in APL1. 7. If the project is successful, the principal outcomes for the target group (the residents of Western Java, especially poorer communities) would include: ¨ Reduced environmental impact from improper solid waste disposal and poor water resource management ¨ Fewer socio-environmental conflicts arising from waste disposal ¨ Lower health and economic impacts from priority local environmental problems such as flooding ¨ Reduced impact of consumption patterns on global warming (fewer tons of CO2- equivalent emissions per capita) ¨ More effective environmental management at the local level through planning and greater public involvement 3. Preliminary description 8. The CPSU identified three design options that would build on the results of APL1 and help achieve the specified objectives: BASIC OPTION – this consists of support for the organization and operations of the Jabodetabek Waste Management Corporation, the Greater Bandung Waste Management Corporation and greenhouse gas reduction efforts (both composting credits program and opportunities for landfill gas control); institutionalization of the provincial and local environmental strategies and “state-of-the-environment” reporting; and expansion of the Community Environment Facility, both in terms of geographical coverage and number of sub-projects. OPTION TWO – the Basic Option plus financing of eight local government sub-projects that have emerged from the provincial and local environmental strategies (examples include a new landfill in Serang, watershed management in West Java province and lake management in Depok) plus financing of drainage works in the Bopunjur basin that were identified in APL1. OPTION THREE – Option Two plus financing of follow-up investments for medical waste management and emergency preparedness Page 4 9. Following discussions between the EASUR sector manager and the project’s technical team, there is growing consensus for a version of the second option. Preliminarily, the project would consist of two thematic components: solid waste management and flood control/drainage . The SWM component would encompass: institutionalization of the metropolitan waste management corporations, expansion of composting credits, promotion of landfill gas recovery, medical waste management, and financing of waste-related investments at the local level. The water component would include: drainage and flood control investments in the Bopunjur basin as well as in DKI Jakarta, and water management projects at the local and provincial level. A capacity-building and institutional development component would support community environmental management initiatives, institutionalization of the provincial and local environmental strategies and “state-of-the-environment” reporting, and project management as well as monitoring. 10. The PAD anticipates a loan/credit of $49.3 million for APL2, up to $7.5 million of GEF resources and a counterpart of $16.2 million. However, the client may pursue a larger loan depending on the financing needs identified during preparation. The blend of IDA and IBRD resources will need to be determined at the time of negotiations, reflecting Indonesia’s eligibility for IDA at the time. A PHRD grant of $755,670 has been secured to assist the borrower with project preparation. 4. Safeguard policies that might apply 11. Depending on the final choice of components, the project may trigger the following safeguards: ¨ Environmental assessment – while the project is environmental in nature, it could raise environmental issues such as siting and development of new sanitary landfills, the need to control leachates from new and rehabilitated landfill sites, proper handling and disposal of medical wastes, safety at drainage works, etc. For these reasons, the project is preliminarily being listed as a Category A, requiring a full environmental impact assessment with mitigation measures. ¨ Involuntary resettlement – the siting of new landfills, done in cooperation with local communities, may require some mutually acceptable resettlement. Similarly, priority drainage works may require resettling at-risk dwellers to remove them from flood-prone areas. A resettlement action plan will be prepared to guarantee that any necessary resettlement takes place according to World Bank guidelines. ¨ Forests – there is a more remote chance that a local or provincial water management project could involve improved watershed management. Problematic watersheds are usually areas with degraded forests so the project might finance forest rehabilitation. While this is not normally a problem, any such activities will be designed to be in compliance with the World Bank’s forest policy. Page 5 5. Tentative financing Source: ($m.) BORROWER/RECIPIENT 4 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 50 INTERNATIONAL DEVELOPMENT ASSOCIATION 15 Total 69 6. Contact point Contact: Josef Lloyd Leitmann Title: Lead Environmental Specialist Tel: 62-21-5299-3052 Fax: 62-21-5299-3111 Email: Jleitmann@worldbank.org Location: Jakarta, Indonesia (IBRD)