FOR OFFICIAL USE ONLY Report No: PADHP00046 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROGRAM APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF EUR 223.5 MILLION (US$250 MILLION EQUIVALENT) TO THE KINGDOM OF MOROCCO FOR A MOROCCO MUNICIPAL SOLID WASTE MANAGEMENT SUPPORT PROGRAM NOVEMBER 5, 2024 Urban, Resilience and Land Global Practice Middle East and North Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective {September 30, 2024}) Currency Unit = Moroccan Dirham (MAD) EUR 0.8936= US$ 1 US$ 0.1031 = MAD 1 FISCAL YEAR July 1 - June 30 CALENDAR YEAR January 1 - December 31 Regional Vice President: Ousmane Dione Regional Director: Paul Noumba Um Country Director: Ahmadou Moustapha Ndiaye Practice Manager: Catherine Signe Tovey Task Team Leader(s): Dahlia Lotayef, Chaymae Belouali ABBREVIATIONS AND ACRONYMS CAPEX Capital Expenditure CAS-TVA Value Added Tax Account (Compte d’Affection Spécial pour la Taxe sur la Valeur Ajoutée - Part des Collectivités locales dans la Taxe sur la valeur ajoutée) CC National Auditing Office (Cour des Comptes) CCDR Country Climate Development Report CNCP National Commission for Public Procurement (Commission Nationale de la Commande Publique) CPF Country Partnership Framework DDD Sustainable Development Department (Département du Développement Durable) DGCT General Directorate of Local Governments (Direction Générale des Collectivités Territoriales) DLI Disbursement-Linked Indicator DLR Disbursement-Linked Result DPL Development Policy Loan E&S Environmental and Social ECI Intermunicipal Cooperation Entity (Etablissement de Coopération Intercommunale) eGP Electronic Government Procurement EIA Environmental Impact Assessment EPR Extended Producer Responsibility ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan ESMS Environmental and Social Management System ESSA Environmental and Social System Assessment FM Financial Management GCT Group of local governments (Groupement de Collectivités Territoriales, GCT) GDP Gross Domestic Product GHG Greenhouse Gas GoM Government of Morocco GRS Grievance Redress Service IBRD International Bank for Reconstruction and Development IEG Independent Evaluation Group IFSA Integrated Fiduciary Systems Assessment IGAT General Inspectorate of Territorial Administration (Inspection Générale de l'Administration Territoriale) IMANOR Moroccan Standards Institute (Institut Marocain de Normalisation) IPF Investment Project Financing IVA Independent Verification Agency M&E Monitoring and Evaluation MI Ministry of Interior (ministère de l’Intérieur) MIC Ministry of Industry and Trade (ministère de l’Industrie et du Commerce) MIS Management Information System MEF Ministry of Economy and Finance (Ministère de l'Economie et des Finances) MoU Memorandum of Understanding MRV Monitoring, Reporting, and Verification MSW Municipal Solid Waste MSWM Municipal Solid Waste Management MTEDD Ministry of Energy Transition and Sustainable Development (Ministère de la Transition Energétique et du Développement Durable) NDC Nationally Determined Contribution PA Paris Agreement PAD Program Appraisal Document PAP Program Action Plan PCM Private Capital Mobilization PDO Project Development Objective PEF Program Expenditure Framework PforR Program-for-Results PIU Program Implementation Unit PM Participating Municipalities PNDM National Municipal Solid Waste Management Program (Programme National des Déchets Ménagers) PNVDM National Municipal Solid Waste Management and Valorization Program (Programme National de Valorisation des Déchets Ménagers) OM Operation’s Manual PP Procurement Plan PPP Public-Private Partnership PPSD Project Procurement Strategy for Development PSP Private Sector Participation RA Results Area RDF Refuse-Derived Fuel SC Steering Committee SESA Strategic Environmental and Social Assessment STEP Systematic Tracking of Exchanges in Procurement TA Technical Assistance TCE Territorial Cooperation Entities (ECI and GCT) US$ US Dollar VGF Viability Gap Funding The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) TABLE OF CONTENTS DATASHEET ....................................................................................................................................... 1 I. STRATEGIC CONTEXT .................................................................................................................. 7 A. Country Context ............................................................................................................................... 7 B. Sectoral and Institutional Context .................................................................................................... 7 C. Relationship to the CPS/CPF and Rationale for Use of Instrument .................................................. 9 II. PROGRAM DESCRIPTION .......................................................................................................... 11 A. Government Program ..................................................................................................................... 11 B. PforR Program scope ...................................................................................................................... 11 C. Program Development Objective(s) (PDO) and PDO Level Results Indicators ............................... 14 D. Theory of Change ........................................................................................................................... 15 E. Disbursement Linked Indicators and Verification Protocols........................................................... 18 F. IPF Component................................................................................................................................ 21 III. PROGRAM IMPLEMENTATION .................................................................................................. 23 A. Institutional and Implementation Arrangements .......................................................................... 23 B. Results Monitoring and Evaluation................................................................................................. 24 C. Disbursement Arrangements.......................................................................................................... 24 D. Capacity Building ............................................................................................................................ 25 IV. ASSESSMENT SUMMARY .......................................................................................................... 25 A. Technical ......................................................................................................................................... 25 B. Fiduciary.......................................................................................................................................... 28 C. Environmental and Social ............................................................................................................... 30 D. Corporate Priorities ........................................................................................................................ 31 V. RISK ......................................................................................................................................... 33 ANNEX 1. RESULTS FRAMEWORK MATRIX ........................................................................................ 35 ANNEX 2. PROGRAM ACTION PLAN .................................................................................................. 51 ANNEX 3. RATIONALE FOR DLI SELECTION ........................................................................................ 55 ANNEX 4. SUMMARY OF RESULTS CONTRIBUTING TO CLIMATE CHANGE ADAPTATION AND MITIGATION ........................................................................................................................ 57 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) @#&OPS~Doctype~OPS^dynamics@padpfrbasicinformation#doctemplate DATASHEET BASIC INFORMATION Project Beneficiary(ies) Operation Name Morocco Morocco Municipal Solid Waste Management Support Program Does this operation have an IPF Environmental and Social Risk Operation ID Financing Instrument component? Classification (IPF Component) Program-for-Results P178768 Yes Moderate Financing (PforR) @#&OPS~Doctype~OPS^dynamics@padpfrprocessing#doctemplate Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [ ] Fragile State(s) [ ] Contingent Emergency Response Component (CERC) [ ] Fragile within a non-fragile Country [ ] Small State(s) [ ] Conflict [ ] Alternative Procurement Arrangements (APA) [ ] Responding to Natural or Man-made Disaster [ ] Hands-on Expanded Implementation Support (HEIS) Expected Approval Date Expected Closing Date 26-Nov-2024 31-Dec-2030 Bank/IFC Collaboration Joint Level Yes Complementary or Interdependent project requiring active coordination Proposed Program Development Objective(s) The Program Development Objective is to enhance the financial and environmental performance of the Municipal Solid Waste Management sector in the Program area. @#&OPS~Doctype~OPS^dynamics@padborrower#doctemplate Page 1 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) Organizations Borrower: Kingdom of Morocco , Ministry of Economy and Finance Contact Title Telephone No. Email Youssef Farhat Adjoint au Directeur du 0537677270 farhat@db.finances.gov.ma Budget Implementing Agency: Ministry of Energy Transition and Sustainable Development, Ministry of Interior Contact Title Telephone No. Email Zakaria Hachlaf Secrétaire Général du 0537576647 hachlaf@environnement.gov.ma Ministère de la Transition Enérgetique et du Développement Durable Mustapha El Habti Gouverneur, Directeur des 0537215806 melhabti@interieur.gov.ma Réseaux Publics Locaux @#&OPS~Doctype~OPS^dynamics@padfinancingsummary#doctemplate COST & FINANCING (US$, Millions) Maximizing Finance for Development Is this an MFD-Enabling Project (MFD-EP)? Yes Is this project Private Capital Enabling (PCE)? Yes SUMMARY Government program Cost 2,180.00 Total Operation Cost 380.00 Total Program Cost 374.00 IPF Component 5.37 Other Costs (Front-end fee,IBRD) 0.62 Total Financing 380.00 Financing Gap 0.00 Financing (US$, Millions) Page 2 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) World Bank Group Financing International Bank for Reconstruction and Development (IBRD) 250.00 Non-World Bank Group Financing Counterpart Funding 130.00 Borrower/Recipient 130.00 @#&OPS~Doctype~OPS^dynamics@paddisbursementprojection#doctemplate Expected Disbursements (US$, Millions) WB Fiscal Year 2025 2026 2027 2028 2029 2030 Annual 61.62 15.11 71.37 41.53 37.28 23.08 Cumulative 61.62 76.73 148.10 189.63 226.92 250.00 @#&OPS~Doctype~OPS^dynamics@padclimatechange#doctemplate PRACTICE AREA(S) Practice Area (Lead) Contributing Practice Areas Urban, Resilience and Land Environment, Natural Resources & the Blue Economy CLIMATE Climate Change and Disaster Screening Yes, it has been screened and the results are discussed in the Operation Document @#&OPS~Doctype~OPS^dynamics@padrisk#doctemplate SYSTEMATIC OPERATIONS RISK- RATING TOOL (SORT) Risk Category Rating 1. Political and Governance ⚫ Substantial 2. Macroeconomic ⚫ Moderate 3. Sector Strategies and Policies ⚫ Moderate 4. Technical Design of Project or Program ⚫ Substantial Page 3 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) 5. Institutional Capacity for Implementation and Sustainability ⚫ Substantial 6. Fiduciary ⚫ Substantial 7. Environment and Social ⚫ Substantial 8. Stakeholders ⚫ Low 9. Overall ⚫ Substantial @#&OPS~Doctype~OPS^dynamics@padpfrcompliance#doctemplate POLICY COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✓] No Does the project require any waivers of Bank policies? [ ] Yes [✓] No Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Area OP 7.60 No ENVIRONMENTAL AND SOCIAL Environmental and Social Standards Relevance Given its Context at the Time of Appraisal E & S Standards Relevance ESS 1: Assessment and Management of Environmental and Social Risks and Relevant Impacts ESS 10: Stakeholder Engagement and Information Disclosure Relevant ESS 2: Labor and Working Conditions Relevant ESS 3: Resource Efficiency and Pollution Prevention and Management Not Currently Relevant ESS 4: Community Health and Safety Not Currently Relevant Page 4 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) ESS 5: Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Not Currently Relevant ESS 6: Biodiversity Conservation and Sustainable Management of Living Natural Not Currently Relevant Resources ESS 7: Indigenous Peoples/Sub-Saharan African Historically Underserved Not Currently Relevant Traditional Local Communities ESS 8: Cultural Heritage Not Currently Relevant ESS 9: Financial Intermediaries Not Currently Relevant NOTE: For further information regarding the World Bank’s due diligence assessment of the Project’s potential environmental and social risks and impacts, please refer to the Project’s Appraisal Environmental and Social Review Summary (ESRS). @#&OPS~Doctype~OPS^dynamics@padlegalcovenants#doctemplate LEGAL Legal Covenants Sections and Description No later than ninety (90) days after the Effective Date, or such later date as agreed by the Bank, establish and thereafter maintain, throughout the implementation of the Operation, a Program Implementation Unit (“PIU”) hosted within the DGCT, responsible for the overall implementation, coordination, monitoring and evaluation of the Operation, including the preparation of consolidated Program Reports and Project Reports, and financial statements; said PIU with composition (including focal points hosted in the MTEDD) and roles and responsibilities acceptable to the Bank and as set forth in the OM No later than ninety (90) days after the Effective Date, or such later date as agreed by the Bank, establish and thereafter maintain, throughout the implementation of the Operation, a Steering Committee, chaired by the MoI and composed of representatives of the Borrower’s ministries and institutions participating in the implementation, monitoring and evaluation of the Operation (including representatives from the relevant MoI directorates, the MEF, the MTEDD, the MIC and any other relevant Borrower’s ministry/agency), responsible for strategic oversight under the Operation, all as further set forth in the OM The Borrower shall: (a) through the PIU, no later than one hundred twenty (120) days after the Effective Date, or such later date as agreed by the Bank, adopt a manual under terms and conditions acceptable to the Bank (“Operations Manual” or “OM”); and (b) immediately thereafter, carry out the Operation in accordance with the OM. @#&OPS~Doctype~OPS^dynamics@padconditions#doctemplate Conditions Type Citation Description Financing Source for DLRs under Categories (1) to (8), until and unless the Borrower has furnished Disbursement Section IV.B.1(b) IBRD/IDA evidence satisfactory to the Bank that said DLR has been achieved. Page 5 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) for Eligible Expenditures under Category (10), until and unless the Bank has notified the Borrower that Disbursement Section IV.B.1(c) IBRD/IDA the conditions set forth in Section 5.15 (a) of the Project General Conditions have been fulfilled. for Complementary Financing for the Cat DDO under Category (11), until and unless: (i) The Borrower has furnished to the Bank a request to reallocate and thereafter withdraw all or part of the Unwithdrawn Loan Balance for the Complementary Financing for the Cat DDO, and such notice specifies Disbursement Section IV.B.1(d) the Cat DDO Legal IBRD/IDA Agreement; and (ii) the Bank has accepted said request and notified the Borrower thereof, and is satisfied, based on evidence satisfactory to it, that the conditions precedent to withdrawal of the financing provided under the Cat DDO Legal Agreement have been fulfilled. Page 6 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) I. STRATEGIC CONTEXT A. Country Context 1. With sustained urbanization over the past four decades, Moroccan cities are substantially contributing to the country’s economic growth. Nowadays, Moroccan cities host 65 percent of the national population1 with the expectation to reach 74 percent by 20502. They also contribute to around 75 percent of the national Gross Domestic Product (GDP), 70 percent of investments, and 60 percent of total employment at the national level3, with large agglomerations becoming key centers of economic growth. Developing Moroccan cities’ attractiveness and livability is outlined as a key priority in the country’s strategy as part of the New Development Model (NDM). The Morocco urbanization review conducted in 2018 shows however, that Moroccan cities are being increasingly challenged in delivering quality, affordable, and inclusive municipal services to their citizens. This is further exacerbated by the current macroeconomic context, impacted by external shocks. 2. Municipalities are the forefront of the urbanization process, facing institutional and financial challenges affecting their ability to effectively deliver quality services to citizens. As part of the decentralization process launched a decade ago, the Organic Law No. 113-14 (enacted in 2015) confirmed Moroccan municipalities’ pivotal role in terms of provision of key basic services and infrastructure, as well as local administrative services. As outlined in the Urbanization Financing Study conducted in 2020, investment needs in urban infrastructure are estimated to around MAD 32 billion annually, (US$ 3.3 billion equivalent) over the period 2017–2027, with 69 percent to be financed through municipalities. However, total capital expenditures (CAPEX) on municipal infrastructure have stagnated at around 20 percent of the estimated annual investments needed4. Furthermore, institutional weaknesses at the local level are also affecting the ability of municipalities to effectively plan and implement local investment programs. 3. Climate change remains a growing concern for Morocco with increasing warming trends and declining rainfalls. Morocco is highly vulnerable to natural disasters and climate hazards as outlined in the initial disaster risk screening with namely a series of flooding and drought episodes in recent decades as well as rising temperatures and sea level in coastal areas. Under its revised Nationally Determined Contribution (NDC), disclosed in June 2021, the country has reaffirmed a high level of ambition for its climate action. This is further highlighted in the Morocco Country Climate Development Report (CCDR) that confirms that not only urban areas are experiencing the impact of water scarcity and natural disasters, namely floods and droughts, but that local governments are key stakeholders in the climate action. B. Sectoral and Institutional Context 4. Municipal solid waste (MSW) management is among the key government priorities in Morocco with marked improvements across the waste value chain. For more than a decade, the country has made tangible progress following the promulgation of Law No. 28-00 on Waste Management and Disposal in 2006, and the implementation of an ambitious sector development program, the National Municipal Solid Waste Management Program (PNDM), over the period of 2008–2022. With over US$2 billion mobilized since 2008, the PNDM’s implementation has resulted in a significant improvement in cities’ cleanliness. MSW collection has reached 96 percent coverage in urban areas compared to 40 percent5 at the start of the PNDM. Furthermore, the country has increased private sector participation in the MSW service delivery, most commonly in the form of outsourced management contracts in both MSW collection and landfill management6. The PNDM benefited from the World Bank’s technical and financial support, through four successive 1 World Bank database, based on the United Nations Population Division's World Urbanization Prospects, the World Bank, 2023 2 Leveraging urbanization to promote a new growth model while reducing territorial disparities in Morocco, the World Bank, 2018. 3 Ibid. 4 Unlocking Urban Development in Morocco, can urbanization pay for itself, and how to make it happen? The World Bank, 2020. 5 Annual report 2019–2020, National Auditing Office (Cour des Comptes, CC), 2021. 6 Under the PNDM, MSW collection as well as landfilling services were professionalized with more than 120 delegated management contracts signed for waste collection and 23 delegated management contracts for landfill management by the end of 2021 (Source: MoI/DGCT database). Page 7 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) Development Policy Financing operations (respectively in 2008, 2010, 2013 and 2015) totaling EUR 430 million7, with clear positive outcomes8. 5. Despite the noticeable progress in MSW service management, persisting challenges remain, hindering the sector’s financial and environmental sustainability. The recent completion of the PNDM has provided the opportunity to take stock of progress made to date as well as lessons learned and gaps remaining in the sector management9, namely on the environmental, financial and institutional fronts, as the Government of Morocco (GoM) puts in place the sector's programming and financing tools for the years ahead. 6. From the environmental perspective, waste management performance has exacerbated the sector’s environmental footprint, with a significant legacy to redress. Annual MSW production in Morocco is estimated at 8.2 million tons in 202010, with more than 6 million tons emanating from urban centers11. With increased urbanization and growing consumption patterns coupled with the lack of effective waste minimization policies, waste generation is expected to grow by 3 percent annually until it reaches 11.4 million tons by 203012. While collection rates have significantly improved, with nearly universal coverage in urban areas13, current disposal practices give rise to several environmental liabilities. By the end of the PNDM in 2022, only 29 controlled landfills were set up out of the 60 planned under the program14, covering the country’s waste sheds, and 67 abandoned uncontrolled landfills were rehabilitated out of the 220 identified under the latter15. Across the past two decades, landfilling remained the preferred MSW treatment and disposal option, with limited valorization and recovery (about 7 percent)16. The country also suffers from large quantities of untreated leachate accumulated in landfills (900,000 m3 with a treatment rate of only 9 percent17). This exacerbated the environmental footprint of the sector18, with MSW contributing to about MAD 2.384 billion per year (or 0.26 percent of GDP) to the cost of environmental degradation in Morocco in 2014, one of the highest levels in the Middle East and North Africa region19. 7. On the financial front, the affordability of quality MSW services remains a key challenge in a fiscally constrained context. Major investments in controlled landfills along with upgraded private sector-led street sweeping and MSW collection services are burdening municipal finances and impacting the sustainability of MSW services management. According to an analysis conducted on a sample of urban municipalities, the cost of MSW services represents 34 percent of the recurrent budget of urban municipalities and around 28 percent of their overall budget20. Also, high levels of service coupled with growing inflationary pressures have led to the build-up of large arrears owed to MSW service providers with an overall stock of arrears estimated at US$126 million by the end of 202021. Municipalities are thus experiencing difficulties in achieving full-service costs financing, with recurrent transfers from the central state helping address some 7 Amount disbursed under the series of DPLs, Project Performance Assessment Report for the series of DPLs (P104937, P119781, P127955, P148642), IEG, the World Bank, 2021 8 Source : Project Performance Assessment Report, Municipal Solid Waste Sector Development Policy Loans 1-4, the World Bank, 2021 9 Recent evaluations published by the CC and the IEG, which informed the preparation of this new operation. 10 Annual report 2019–2020, CC, 2021. 11 Daily waste generated in urban areas is 0.78 kg/person, compared to 0.38 kg/person in rural areas. (Source: Annual report 2019–2020, CC 2021). 12 National strategy for waste valorization, MTEDD. 13 In urban areas included in the PNDM’s Program area. 14 MTEDD database. 15 Among which 44 have been closed and 23 rehabilitated and redeveloped. Additionally, during the PNDM’s implementation period, additional sites have been identified or emerged, mounting the overall number of open dumpsites to more than 400 waste hotspots. These occupy 1,234 ha with an estimated cost for rehabilitation at US$480 million. 16 National municipal waste valorization plan, MI, 2021. 17 Annual report 2019–2020, CC, 2021. 18 Suboptimal waste landfilling, poorly managed leachate treatment, and limited gas capture exacerbates mitigation risks with untapped GHG emissions reduction potential as well as risk of flooding and underground water contamination as highlighted in the Paris Alignment section, exacerbating the environmental footprint of the sector. 19 Environment and Natural Resources Global Practice Discussion Paper #5. The Cost of Environmental Degradation in Morocco, World Bank, January 2017, p. 87. 20 World Bank calculations based on data covering a sample of 100 municipalities: Ministry of Interior (Ministère de l’Intérieur, MI, 2023). 21 MI database. Page 8 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) of the arrears. The sector’s current financial performance is attributed to limited municipal financial resources, inadequate resource mobilization for the sector with the absence of normalized waste user fees, and suboptimal operational cost- effectiveness. This calls for structural efforts to improve the overall financial performance and sustainability of the sector, especially with the additional service upgrading expected. 8. Institutional and capacity aspects still need to be strengthened for future sector development. According to Organic Law No. 113-14, municipalities are responsible for managing the overall MSW service operations, including collection, treatment, recovery, and disposal. Through the PNDM, municipalities have benefited from financial and technical support to upgrade the quality of the MSW service delivery. Several MSW management masterplans were developed at the provincial level, and contractual frameworks’ templates and oversight modalities prepared for delegated service delivery to the private sector. However, challenges in planning, service delivery, sector monitoring, and oversight capacity at both central and local levels impacted the sector’s environmental and financial situation (namely leachate accumulation and mounting arrears). In parallel, sector governance practices set under the PNDM have encountered challenges, including overlapping interventions and mandates, as well as the need to further enhance sector oversight and monitoring, vertical and horizontal sector policy coordination. This called for a redefinition of clear functions, roles, and responsibilities and the adoption of effective coordination mechanisms for improved intermunicipal cooperation and coordinated sector management. 9. From the social perspective, efforts to formalize waste pickers and improve their social welfare have also had limited outreach. It is estimated that around 34,000 informal waste pickers22 operate in the country. Pilot initiatives to organize specific categories of waste pickers have been experimented under the PNDM, including the cooperative operating in the landfill of Oum Azza (Rabat), with valuable experience to build on. Given the potential social welfare benefits to the waste pickers community (jobs, particularly for women), effective support initiatives will need to be scaled up and adapted to local circumstances. 10. With the recent completion of the PNDM and its evaluation, the GoM has engaged in a second phase of MSW sector modernization, tackling persisting sector challenges and integrating emerging good international practices. Focusing on the urgent need to redressing the environmental legacy and to set the sector on an environmentally and financially sustainable path, the GoM has formulated a new sector development program, the National Municipal Solid Waste Valorization Program (Programme National de Valorisation des Déchets Ménagers, PNVDM), covering the period of 2023-2034. The PNVDM builds on the achievements and the lessons learned from the PNDM and lays down at the same time the foundations for a forward-looking vision for MSW management. It is a timely opportunity to pursue the institutional momentum and to support a new sector development phase focusing on financial and environmental performance and sustainability objectives. C. Relationship to the CPS/CPF and Rationale for Use of Instrument 11. Promoting an inclusive and resilient territorial development is a priority for the World Bank’s engagement in Morocco. The proposed operation is aligned with the World Bank Group (WBG)’s Morocco Country Partnership Framework (CPF) for FY2019–2024, discussed by the Board of Executive Directors on February 19, 2019, and extended to FY2025 at the Program and Learning Review Report (PLR) stage on August 22, 2023. It Supports the CPF through its objective 8 outlining the need to “Improve performance of key infrastructure delivery services of cities and agglomerations.” In this context, the operation complements a long-standing engagement in the municipal sector and leverages on ongoing operations aiming to improve municipal service delivery and municipal finances, namely the Municipal Performance Program (P168147) and the Casablanca Municipal Support Program (P149995). In addition, by 22 These estimates were formulated by NGOs active in the plastics recycling industry. Official numbers account for around 8000 waste pickers (Source: Conclusions de l’étude de terrain Maroc, Collège d'Entreprises – BeMed, 2020) Page 9 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) promoting improved MSW management, this operation would contribute to the climate adaptation and mitigation efforts, captured under the objective 1023 of the CPF. 12. The proposed operation is well aligned with the World Bank Middle East and North Africa Climate Roadmap (2021–2025). Landfills are the third largest source of methane pollution, which is one of the main causes of climate change. Thus, by focusing on increasing waste recovery through reuse, composting, and Refuse-Derived Fuel (RDF) production, minimizing landfilling, improving the treatment of leachate and methane gas capture, the operation addresses the “energy transition and low-carbon mobility” as well as the identified water, food, and energy challenges raised by climate change and meets the objectives of the “food systems, water security, and resilient natural capital”. Furthermore, promoting the sector’s financial sustainability, quality of service, and improved governance fits the area “Climate -smart cities and resilient coastal economies”. Finally, tackling water scarcity by protecting valuable groundwater and surface water resources is a key priority under the Morocco CCDR (2022). 13. The operation is also contributing to the GoM’s commitment on the Climate agenda under the Paris Agreement (PA). Through its revised NDC, disclosed in June 2021, the country has reaffirmed a high level of ambition for its climate action, with a critical contribution under the solid waste sector, with a 6 percent contribution to the mitigation effort by 2030. Under the MSW sector specifically, it is expected to ramp up the valorization and recycling efforts24, reflecting the Government program ambition. This operation contributes directly to achieving these objectives, with a combination of key policy reforms and investments that would contribute to Greenhouse Gas (GHG) emissions reduction as well as improved resilience. Annex 4 outlines how the Program activities will contribute to the adaptation as well as mitigation efforts. 14. The choice of the financing instrument and the rationale for retaining a hybrid financing structure (PforR with an Investment Project Financing [IPF] component) is due to the following considerations: (a) The Program-for-Results (PforR) financing instrument is the appropriate choice for a results-oriented approach addressing structural and systemic sector challenges. The PforR will specifically support the efforts of the GoM in implementing a second-generation sector development program, informed by both the findings of the Court of Accounts (CC, 2020) and the Independent Evaluation Group (IEG) evaluations (2021)25, while building the foundations for a longer term more sustainable MSW service management. It will, in this context, support strengthening the sector management systems gradually, through a mix of policy, reform, and investment agenda, enabling a gradual shift toward a more environmentally and financially sustainable sector management. The PforR instrument provides the platform for an outcome-oriented approach aligned with the objectives of a government program. The PforR financing instrument also provides effective leverage to motivate the operationalization of key sector reforms and enhance coordination across a range of actors. In addition, the GoM has long-standing experience with the PforR instrument, showing the solid foundations of the country systems. (b) Complementing this results-oriented approach with a technical assistance (TA)-focused IPF component is key. Given the expected gradual shift in MSW sector management systems, the Program requires the timely mobilization by the Government of substantial TA informing key PforR activities. The main objective of the TA component is to provide the necessary policy guidance and technical expertise, to inform the Program implementation and incorporate good international practice. It will also support the development of sector management, monitoring and oversight tools, ensuring the effectiveness and efficiency of overall Program implementation as well as opportunities for further replicability outside of the Program area, to be financed outside the Program. 23 Objective 10 of the CPF outlines the need to Strengthen Adaptation to Climate Change and Resilience to Natural Disasters 24 Targets outlined under the NDC include 20 percent recycling target for household waste, valorization of 20 percent of organic materials from such waste, and achievement of 10 percent energy recovery from waste. 25 All these elements were captured under a sector background note developed to illustrate the current sector status, challenges and areas of improvement. Page 10 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) II. PROGRAM DESCRIPTION A. Government Program 15. Building on both the achievements and the lessons learned from the PNDM, the GoM has laid down the foundations for a new MSW management vision. To tackle the persisting environmental and financial challenges in MSW, the GoM formulated a new sector development program, the PNVDM spanning over twelve (12) years (2023- 2034), with an estimated investment plan of US$ 2.18 billion. The PNVDM materializes the Government’s vision to gradually shift to a more environmentally sustainable MSW service management, through minimized landfilling and improved waste recovery, while also keeping a focus on the financial viability of the proposed business models. In this context, the PNVDM aims at (a) ensuring a universal coverage of professionalized waste collection in urban areas; (b) improving MSW valorization rates, from 7 to 25 percent in 2034; (c) upgrading the country’s-controlled landfills and establishing new ones when relevant; and (d) closing of a number of abandoned uncontrolled landfills. To ensure enhanced sector performance and business models viability, private sector participation has been embedded as one of the key pillars of the PNVDM with the signing of a Memorandum of Understanding (MoU) between key sector public stakeholders and the cement industry to secure the offtake of RDF by cement factories. This would allow for the development of viable industrial processes for the recycling and recovery of MSW and hence minimize waste landfilling, in line with the objectives of the PNVDM26. A detailed description of investments to be carried out under the PNVDM is provided in the Program’s technical assessment’s background document. 16. Complementing the investment efforts, the GoM has launched a set of policy, institutional and regulatory reforms as well as capacity building activities, to support the shift in the MSW management systems towards a more integrated, environmentally, and financially sustainable path. On the financial front, these include namely efforts to mobilize additional resources for the sector through the gradual implementation and enforcement of a dedicated waste fee, whereas on the environmental front, the GoM is promoting further circular economy principles in the sector’s management. The GoM is also providing technical assistance to municipalities to support the PNVDM’s implementation, bridging part of the capacity gaps identified above. Investments and operations for MSW service upgrading, policy, regulatory and institutional reforms as well as capacity building efforts to be carried out under this second generation MSW program are considered as the Government program to be supported under this operation. B. PforR Program scope 17. The proposed PforR Program (referred to as “the Program”) will support the implementation of the PNVDM including key priority reforms and investments, aiming at enhancing the environmental and financial performance of the MSW sector. The Program is in that respect designed around three main result areas: (i) Strengthening the Governance, Policies and Management of the MSW Sector; (ii) Improving the Financial Performance of the MSW Sector; and (iii) Enhancing the Environmental Performance of the MSW Sector. In alignment with the PNVDM, the Program will only cover household and similar waste, referred to as MSW in the context of this operation, and will be implemented over a six-year time frame (2024–2030). 18. The Program will finance a mix of costs incurred to upgrade MSW management across the value chain including the following: (a) Service operations and investments. These include: (i) MSW collection and street sweeping investment as well as operations and maintenance (O&M) costs; (ii) modernization of existing transfer centers as well as upgrading of existing landfills into controlled landfills meeting environmental and social requirements; (iii) treatment and disposal of accumulated leachate; (iv) methane capture and flaring27; (v) closure and 26 Objective of a 45 percent maximum landfilling by 2030 27 when deemed economically viable, captured methane will be combusted to generate electricity to feed into the landfill plant grid Page 11 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) rehabilitation of abandoned28 uncontrolled landfills; (vi) establishment of new or upgrading of existing waste presorting and sorting facilities for recyclables and compost; and (vii) establishment of RDF preparation facilities. Any investments that may cause significant adverse impacts on the environment and/or nearby population as defined in the World Bank Policy and Directive on PforR Financing will be excluded from the Program. (b) Studies and technical assistance for the preparation of MSW sector regulations and policies, technical support to Participating Municipalities (PM) and capacity building activities. 19. The Program’s geographic area includes a sub-set of individual municipalities and territorial cooperation entities (TCE)29 covered under the Government program, as shown in figure 1, which will be referred to as ‘’PM’’ across the Program Appraisal Document (PAD)30. Figure 1. Program geographic coverage 20. Methodology for the selection of Program financed investments and operations . Investments and operations costs financed under the Program will be selected on the basis of three sets of criteria, in alignment with the Government program eligibility criteria and the PforR requirements. These include: (a) technical readiness of proposed investments; (b) environmental and social assessment of proposed investments; and (c) institutional and fiduciary capacity of implementing municipalities. An annual assessment will be carried out to determine which PM meet the expected characteristics, and/or to verify their compliance over time. A preliminary list of criteria and assessment methodology is indicated below. The detailed description of the criteria and screening methodology will be included in the Operation’s Manual (OM). (a) Technical readiness of Program investments. The technical readiness of investments is based on the availability of feasibility studies, Environmental and Social (E&S) impact studies, and technical specifications (cahier de prescriptions spéciales, CPS). (b) E&S risk assessment. Investments and operations to be included in the Program Expenditures will be screened to ensure that any activity susceptible of causing significant adverse impacts on the environment and/or nearby 28 Landfills that are no longer receiving waste. 29 This covers ECI and GCT 30 The list of Participating Municipalities will also be defined in the Operation’s Manual (OM). Page 12 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) population, as defined in the World Bank Policy and Directive on PforR Financing, is excluded. Criteria used for this assessment include the following: ▪ For landfills: The E&S assessment is based on the level of associated risk evaluated through the following items: (i) typology of waste entering the landfill; (ii) location of the landfill; (iii) land tenure; (iv) land use compatibility and regulatory compliance; (v) labor management; (vi) cultural heritage; (vii) stakeholders’ engagement; and (viii) known or reported impacts. Based on the assessment, investments in landfills presenting one the following characteristics will be excluded: (i) land tenure not confirmed or allocated for public use; (ii) uncontrolled landfill located outside the catchment area of an existing controlled landfill (and retained as part of this Program); (iii) presence of industrial waste (greater than 5 percent of the total); (iv) documented history of demonstrations/protests/legal proceedings related to landfill contamination; (v) location in the immediate vicinity of a legally protected or internationally recognized area. ▪ For waste collection operations and other sorting and recovery investments outside landfills, the related waste should be transferred to a controlled landfill assessed as per the criteria mentioned above. (c) Institutional and fiduciary assessment. The following elements will be used to assess the institutional and fiduciary readiness of PM : (i) confirmation of budget availability for intended investments ; (ii) existence or designation of a basic structure to oversee MSW management at the local level (e.g. designated Focal Point, financial officer, etc.); (iii) whenever relevant, existence of inter-municipal cooperation; (iv) sharing of available MSW technical and operational data at municipal level; (v) signing of an agreement (“convention”) to confirm the commitment to Program activities implementation; (vi) confirmation that the MI reform guidance has been incorporated into the MSW collection contracts with service providers; and (vii) commitment to prepare and implement an institutional and financial readiness action plan, with the support of the TA component. The readiness action plan will cover the following: (i) identification and implementation of measures to improve municipal revenues to finance the operating costs of MSW services; and (ii) MSW contract monitoring plan established at the municipal level, including monitoring capacity building actions, of both human resources and systems. Table 1. Government program and PforR Program Boundaries Government program PforR Program Objectives • Upgrade MSW sector in urban areas. • Improve the MSW sector’s financial and environmental • Achieve a recovery rate of approximately 25% by performance in line with the Government program 2034. objectives, across 3 Result Areas. • Achieve a professional collection rate in urban areas of 100% in 2034. • Close and/or rehabilitate existing landfills by 2034 Duration 2023-2034 2024-2030 Waste Municipal Solid Waste category Geographic The urban areas covering the national territory A sub-set of individual municipalities and territorial coverage cooperation entities covered under the Government program, as defined in figure 1 and the OM, referred to as ‘PM’. Activities Service operations and investments: MSW collection Service operations and investments: MSW collection and and street sweeping investment as well as operations street sweeping investment as well as operations and and maintenance (O&M) costs, Modernization of maintenance (O&M) costs, Modernization of existing existing transfer centers, Establishment or upgrading transfer centers, Upgrading of existing landfills into of existing landfills into controlled landfills meeting controlled landfills meeting environmental and social Page 13 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) environmental and social requirements (including requirements, Establishment of new or upgrading of leachate treatment and methane capture), existing waste presorting and sorting facilities for Establishment of new or upgrading of existing waste recyclables and compost, Establishment of RDF preparation presorting and sorting facilities for recyclables and facilities, Closure and rehabilitation of abandoned compost, Establishment of RDF preparation facilities, uncontrolled landfills. Closure and rehabilitation of abandoned Service operations and investments to be selected based on uncontrolled landfills the screening and methodology described in paragraph 20. Studies and technical assistance (soft activities) for Any activity that may cause significant adverse impacts on the preparation of MSW sector regulations and the environment and/or nearby population as defined in policies, technical support to Municipalities in the the World Bank Policy and Directive on PforR Financing, is implementation of the PNVDM investments as well excluded. as capacity building activities and the development of Studies and technical assistance (soft activities): monitoring and oversight tools Preparation of MSW sector regulations and policies, and all other categories of the government program, in connection with the PM. Overall US$ 2.18 Billion US$ 374 Million (excluding parallel TA under IPF Financing component) 21. PforR financing. The proposed Program amounts to 17 percent of the Government program, that is US$374 million of a total of US$2.18 billion as described in table 2 below. The World Bank financing is expected to contribute to 65 percent of the Program Expenditure Framework (PEF). Table 2. Government program and PforR Costs and Financing Sources Source Amount (US$, millions) % of Total of PforR % of Total of Government program Total Government program 2,180.00 — 100 PforR scope 374 100 17 Counterpart funding 130 35 6 IBRD 244 65 11 Exchange rate : US$ 1 = MAD 9.6975 (as of September 30, 2024) C. Program Development Objective(s) (PDO) and PDO Level Results Indicators 22. The PDO is to enhance the financial and environmental performance of the Municipal Solid Waste Management sector in the Program area. 23. The PDO indicators include the following: • PDO Indicator 1: Increase in operational cost recovery for MSW management services in a number of PM. • PDO Indicator 2: Reduction in overall value of contract payment arrears in delegated MSW services in a number of PM. • PDO Indicator 3: Population covered by improved MSW services in PM. • PDO Indicator 4: Increase of waste recovery and recycling in a number of landfills in PM. Program Results Areas 24. The Program will support the Government’s objective of transitioning to a financially and environmentally better performing MSW management system in Morocco as per the PDO. The operation will in this context include three main Results Areas (RAs): • RA I: Strengthening the Governance, Policies and Management of the MSW Sector. This RA will support the GoM in consolidating existing elements into a MSW sector development note, outlining the long-term sector development vision and goals as well as the expected policy reforms, financing strategy, sector governance, and institutional and regulatory arrangements. The RA will in parallel enhance the operational planning, monitoring, Page 14 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) supervision capacity and coordination through : (a) the development of a MSW management information system (MIS) that will monitor the sector’s operational, environmental and financial performance, and the preparation of annual reports covering these three aspects; (b) the development of a MSW Monitoring, Reporting, and Verification (MRV) system, as part of the overall government commitment under the Paris Agreement (PA) for selected emitting sectors; and (c) the strengthening of the sector's supervision capabilities by improving the regulatory framework of the environmental police. This RA will also support policy and regulatory reforms promoting circular economy in MSW management through: (a) the proposed amendment of Law 28-00 on waste management and disposal, with the introduction of key principles such as the Extended Producer Responsibility (EPR), and (b) the development of quality standards for MSW compost and recycled plastics, thus unlocking the market potential for organic waste and enabling further waste diversion. Finally, the first RA will focus on enhancing citizen engagement in MSW service delivery through beneficiary satisfaction surveys, action plans, and dissemination to relevant stakeholders. • RA II: Improving the Financial Performance of the MSW Sector. The second RA will support the Government’s efforts for a financially sustainable path in MSW management, focusing on enhanced revenue mobilization as well as overall improved financial management (FM) in the sector. On one hand, the RA captures efforts to mobilize additional financing sources for the sector, namely through the gradual enforcement of a MSW fee as well as unlocking carbon finance potential and climate financing sources. On the other hand, the RA will also focus on improving the overall sector FM and performance, by reducing contractual arrears and improving the resources mobilized by municipalities to cover the sector costs. • RA III: Enhancing the Environmental Performance of the MSW Sector. This RA will support the GoM’s efforts to achieve environmental sustainability in MSW management by (a) improving the sector’s environmental performance, (b) strengthening control, monitoring and supervision of landfill management operations, and (c) addressing the legacy of environmental hazards and risks caused by current landfill management in the country. The RA will, in this context, support the upgrade of controlled landfills covering Participating Municipalities, the setup of waste recovery and recycling facilities at those landfills as well as the rollout of environmental control actions plans in landfills and preparation of annual reports, based on agreed guidelines and plans, as well as the production and transmission of monitoring reports on delegated management contracts. In parallel, this RA will help in tackling the sector’s environmental legacy through the treatment of accumulated stocks of leachate in upgraded landfills and the closure and rehabilitation of selected abandoned uncontrolled landfills within the Program area. This RA will also support the deployment of a demonstration intervention in one Participating Municipality to gradually evolve toward an integrated MSW management model aiming at waste reduction, sorting, and recycling and promoting circular economy. D. Theory of Change 25. The Program will promote a gradual shift in MSW services management. This will aim at supporting the sector in improving its financial and environmental performance, toward a more sustainable path in the longer term. The institutional, financial, and environmental challenges identified will be tackled through the respective RAs of the Program, outlined in figure 2, with a mix of policy reforms and investments. 26. Sustainability and replicability of proposed outcomes. Interventions in the Program area will promote systemic changes in the sector’s environmental and financial management. The set of tools deployed as well as lessons learned would be further replicated beyond the Program area. Policy reforms at the institutional and financial levels as well as monitoring and oversight tools at both the central and local levels will strengthen sector management and improve the efficiency of service delivery leading to enhanced replicability of sector engagement. 27. Synergies with parallel engagements in Morocco. Parallel PforRs under implementation, namely the Municipal Performance Program (P168147) and the Casablanca Municipal Support Program (P149995), will serve as effective levers Page 15 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) for sector reforms and investments targeted by the Program, particularly in terms of municipal capacity enhancement or intermunicipal cooperation strengthening. Page 16 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) Figure 2. Theory of Change for the Morocco Municipal Solid Waste Program Page 17 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) E. Disbursement Linked Indicators and Verification Protocols 28. Disbursement-linked indicators (DLIs) have been identified to reflect critical outputs and outcomes required under each RA, to achieve the PDO. Table 3 presents the Program DLIs and the amount allocated to each DLI. Table 3. DLIs Allocation and Targets IBRD Allocated Final Implementi DLIs Baseline (US$, Target31 ng Agency millions) RAI: Strengthening the Governance, Policies and Management of the MSW Sector (US$56.5 million) DLI 1: Enhancement of MSW sector planning, monitoring and oversight 30.00 • DLR#1.1: A MSW sector development note (“note de vision”) is adopted Sector develop 10.00 PNVDM32 MI ment note • DLR#1.2: Number of annual reports on MSW sector status produced, based on 6.00 0 3 MI the newly developed MSW services management information system. • DLR#1.3: A Monitoring, Reporting and Verification (MRV) system for the MSW 12.00 No Yes MTEDD/MI sector is operational. • DLR#1.4: The decree regulating the environmental police and its relationship/coordination with the technical, scientific and administrative staff 2.00 No Yes MTEDD of the MTEDD’s Sustainable Development Department, has been amended, for enhanced environmental control capacity. DLI 2: Introduction of regulations and policies to promote circular economy 22.50 • DLR#2.1: Draft Law No. 48-23 amending and supplementing the Solid Waste Management and Disposal’s Law 28-00, promoting circular economy principles 17.50 No Yes MTEDD in MSW management, is adopted by the Government Council. • DLR#2.2: Quality standards for MSW compost and plastic recyclables are 5.00 No Yes MTEDD published by IMANOR. DLI 3: Enhancement of citizen engagement in the MSW sector management 4.00 • DLR#3.1: Number of Citizen Engagement interventions carried out, each citizen engagement intervention to include: satisfaction surveys, an action plan, and 4.00 0 3 MI/PM disseminations to the relevant stakeholders, as described in the OM. RA II: Improving the Financial Performance of the MSW Sector (US$85.5 million) DLI 4: Mobilization of additional sources of financing for MSW 47.50 • DLR#4.1: A circular of the Ministry of Interior clarifying the implementation 17.50 No Yes MI modalities of the MSW fee is issued. • DLR#4.2: Number of Participating Municipalities that have introduced a MSW 20.00 0 8 PM/ MI fee. • DLR#4.3: A carbon finance potential assessment has been carried out for 10.00 No Yes MI investments in the Program area. 31 Final targets are to be reached by the end of the Program (2030). For intermediate targets by indicator, please refer to Annex 1. 32 In connection with the Program area Page 18 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) IBRD Allocated Final Implementi DLIs Baseline (US$, Target31 ng Agency millions) DLI 5: Improvement of MSW Sector Financial Management in the Program Area 38.00 • DLR#5.1: The level of MSW costs covered by municipal own-source revenues is 10.00 70% 90% PM/MI improved in six (6) Participating Municipalities • DLR#5.2: An action plan to improve the management of arrears on collection 14.00 0 6 PM/MI and disposal contracts is adopted in six (6) Participating Municipalities. • DLR#5.3: The overall value of payment arrears in delegated MSW services has decreased in percentage, compared to a baseline in 2023, in six (6) Participating 14.00 0% 60% MI/PM Municipalities. RA III: Enhancing the Environmental Performance of the MSW Sector (US$102 million) DLI 6: Improvement of environmental performance in landfills 53.00 • DLR#6.1: Number of controlled landfills in Participating Municipalities that have enhanced their landfilling operations in accordance with existing regulations and 23.00 0 6 PM/MI technical specifications model as set forth in the OM. • DLR#6.2: Waste recovery rate is improved in five (5) controlled landfills in 21.00 0% 20% PM/MI Participating Municipalities. • DLR#6.3: Annual reports are produced on the results of the environmental control plans of landfills in Participating Municipalities rolled out in accordance 4.00 0 3 MTEDD with operational guidelines developed. • DLR#6.4: Annual reports monitoring delegated service delivery are transmitted 5.00 0 15 PM/MI by five (5) Participating Municipalities. DLI 7: Addressing the Environmental Legacy of the MSW Sector 39.00 • DLR#7.1: Accumulated leachate stock in five (5) existing controlled landfills, in Participating Municipalities, is treated in accordance with applicable discharge 25.00 0 5 PM/MI standards. • DLR#7.2: Number of abandoned uncontrolled landfills, in Participating Municipalities, closed and rehabilitated in accordance with environmental 14.00 0 5 PM/MI standards. DLI 8: Promoting the development of circular economy 10.00 • DLR#8.1: Deployment of a local integrated MSW management system in one (1) PM/ MI/ 10.00 No Yes Participating Municipality, with a focus on plastics and packaging material. MTEDD PforR component – Subtotal 244.00 IPF component 5.375 Front-end fee 0.625 Total 250.00 Note: DLR = Disbursement-Linked Result; PM = Participating Municipalities; IMANOR = Moroccan Standards Institute (Institut Marocain de la Normalisation) . 29. DLI 1: Enhancement of MSW sector planning, monitoring, and oversight (US$30 million). First, the DLI supports the consolidation of the strategic aspects of the MSW sector management through the adoption of a consolidated MSW sector development note outlining the long-term sector vision, objectives, pillars of intervention as well as the related institutional, governance and financing structure. This strategic document would include the key foundations already laid out under the PNVDM as well as additional reforms focusing on the technical, financial, institutional, and regulatory elements needed to achieve the sector development goals (under preparation or to be introduced gradually). It will also help reinforce vertical and horizontal coordination and streamline the institutional framework with clarified mandates, in Page 19 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) line with the solid waste legislation. Second, the DLI would support enhanced sector monitoring at the central level with the regular issuance of annual sector monitoring reports, based on the MSW service management MIS to be developed under the IPF component. Sector monitoring reports are expected to include data on collection services, finances, recycling/recovery volumes, waste disposal, contract arrears, citizen satisfaction (segregated by gender), etc. In addition, the MIS hosted at DGCT would benefit from inputs from the various local and central level stakeholders and would allow for more efficient coordination and improved cost optimization. In parallel the DLI aims to introduce a GHG emissions monitoring framework in line with the country’s climate change commitments. This would also contribute later to unlock carbon finance. Finally, the DLI would support a reform aiming at strengthening the mandate and action of the environmental police and associated functions, allowing for greater oversight capacity at the Sustainable Development Department (DDD) level. 30. DLI 2: Introduction of regulations and policies to promote circular economy (US$22.5 million). This DLI will provide the regulatory and policy tools to advance the circular economy agenda in the MSW sector, through the proposed introduction of key principles promoting circular economy, including segregation at source and EPR in the existing legislation on solid waste management and disposal. Additionally, the DLI will support the introduction of quality standards for MSW compost and plastics recyclables, unlocking the potential to recover organic waste and minimize disposal. 31. DLI 3: Enhancement of citizen engagement in the MSW sector management (US$4 million). This DLI consists of carrying out, in three PMs, satisfaction surveys at the household level to systematically collect citizens’ feedback on MSW services delivery. The findings of the surveys will inform the preparation of an action plan aiming to improve MSW service delivery at the municipal level, which will be presented to key stakeholders. The surveys will be carried out in these three PM, at the beginning, midterm, and end of the Program, allowing for an assessment of any improvement of citizen satisfaction as well as the incorporation of potential recommendations during the Program implementation time frame. Citizen feedback and corrective measures taken will be presented to the key relevant stakeholders. Data collected through the households’ surveys will be handled in line with the national regulations on data privacy. 32. DLI 4: Mobilization of additional sources of financing for MSW (US$47.5 million). This DLI will first focus on clarifying the scope to systemize the introduction and enforcement of a MSW fee. It also covers the implementation of this fee in selected PMs, informed by the analytical work carried out on the sector financing. In parallel, the DLI will also help advance the dialog on the development of a carbon finance market, through an initial assessment of carbon finance potential that can be leveraged through investments under the PNVDM in the Program area. 33. DLI 5: Improvement of MSW Sector Financial Management in the Program Area (US$38 million). On one hand, the DLI focuses on reducing MSW services contracts payment arrears, through the adoption of municipal level plans to reduce the Arrears on MSW Services (stock and flow) in selected PM and their actual reduction within the Program area. On the other hand, the DLI also incentivizes an overall improvement in the levels of funding of Municipal Solid Waste Management (MSWM) costs, through municipal own source revenues, contributing to improve the sector's costs recovery, considered as one of the key expected outcomes of the operation, securing the path toward financial sustainability. 34. DLI 6: Improvement of environmental performance in landfills (US$53 million). This DLI consists of upgrading landfill operations and expanding MSW recycling and recovery capacity at landfills, in the Program area, in accordance with existing regulation and environmental good practices. Upgrading of MSW landfills consists of investments and enhanced management and operation, leading to the reduction of negative impacts and nuisances on surrounding areas and populations, and aiming at increasing waste treatment options thus reducing the landfilled portion of waste. The DLI will also support strengthened operations monitoring, environmental oversight and control in landfills with the preparation of annual reports including recommendations to improve landfill operations, but also through the production and transmittal of monitoring reports on the implementation of delegated management contracts. Page 20 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) 35. DLI 7: Addressing the Environmental Legacy of the MSW Sector (US$39 million). This DLI focuses on redressing the sector’s environmental legacy and consists of treating the accumulated stock of leachate in accordance with applicable discharge standards in selected PM. In parallel, the DLI will also support the rehabilitation and closure of a subset of abandoned uncontrolled landfills already included as part of the Government program. 36. DLI 8: Promoting the development of circular economy (US$10 million). This DLI consists of setting up and deploying a demonstration intervention of a local integrated MSW management system, in a targeted municipality, including reduction, sorting, collection, and setting up of recycling initiatives, with a focus on plastics and packaging materials. F. IPF Component 37. Complementing the PforR Program will be an IPF-financed TA component (US$5.375 million). This component is designed to support the effective implementation of the Program and facilitate its replicability, with sustainable outcomes. It provides policy guidance, technical specifications, quality control, and oversight for several design elements of the Program, benefiting from international experience and good practices. It will also ensure effectiveness and efficiency of overall Program implementation, including program coordination, monitoring, and verification of development results, bearing in mind the institutional complexity and the need to facilitate fluid implementation arrangements. In addition, this component will contribute to facilitating the replicability of good practices established within the framework of the PforR beyond the Program area33, notably through support for the adoption of sector management standards and norms, as well as planning and monitoring tools. More specifically, this TA component would support the following activities, summarized in table 4. Table 4. Technical assistance activities and responsible entities Description of Proposed Activities Responsible Entity MSW Sector Financing Study MI MSW Sector Governance Study MI Development of a MSW MIS MI Development of Environmental Performance Guidelines for MSW Landfills, Treatment Facilities and MTEDD Closure of Uncontrolled Abandoned Landfills Technical and Financial Assessment of Treatment of Accumulated Stocks of Leachate MI Study for the development of an Integrated MSW Management System Promoting Circular Economy MTEDD and Assessment of its Socioeconomic Impacts Waste Pickers Integration in MSW Management MI Technical Assistance to PIU and PM MI 38. MSW Sector Financing Study (MI). The study will include an in-depth analysis of the sector’s costs and revenues’ structure, with a quantitative assessment of the potential for mobilizing additional resources and optimizing costs. The study will also highlight the sector’s financing ratios and help set performance criteria for improving cost recovery and sector efficiency. The TA will include a focus on the waste fee’s rollout, through a detailed analysis of the various modalities proposed for its implementation, as well as the expected socioeconomic impacts. The analysis will include a citizens’ ‘Willingness and Ability to Pay’ (WAP) survey for a sector-specific fee. Outputs of the study will also inform the ongoing local finances reform and the gradual expansion of the scope of the existing waste fee. 39. MSW Sector Governance Study (MI/MTEDD). This TA aims to provide the key stakeholders in MSW management with options to strengthen and optimize the overall MSW sector governance, addressing the identified coordination gaps 33 Such activities will not be financed through the Program. Page 21 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) and ensuring overall efficacy in key functions (sector planning, implementation, monitoring, and oversight capacity). The TA will first take stock of the mandates, current roles and responsibilities of the different key stakeholders involved in MSW management at the central and local levels, lessons learned from the PNDM, and previous analytical work carried out. Based on the findings of the sector diagnostic as well as selected international benchmarks, the study will propose MSW governance scenarios to optimize the sector’s management model. The study will consider the needed additional arrangements to be introduced into the regulatory framework and overall management system, allowing for the implementation of new concepts (such as waste segregation at source, EPR, and carbon finance). 40. Development of a MSW MIS (MI). The TA will cover the complete design (up to operational deployment) of an MIS, enabling more efficient decentralized management of the service and close monitoring and establishment of missing baselines. This MIS will enable the collection and monitoring of technical data (waste volumes, waste characterization, collection rates, landfilling rates, recycling and recovery rates, etc.), financial data (costs of the various segments, resources mobilized, cost recovery rates, etc.), and social data (number of jobs generated, segregation by gender, etc.) relating to MSW. It will be housed at DGCT, with access provided for users at both the central and local levels to strengthen coordination and monitoring in the sector. Performance monitoring in the MSW sector aims to inform decision-makers at both the sectoral and site-specific levels. 41. Development of Environmental Performance Guidelines for MSW Landfills, Treatment Facilities and Closure of Uncontrolled Abandoned Landfills (MTEDD). This TA will develop operational guidelines for an enhanced environmental performance of these facilities. It will support the setup of an operational management framework and performance benchmarks agreed between the stakeholders, which could also serve as a reference for inspection purposes. These guidelines will cover different categories of landfills and treatment facilities, depending on the size of the municipalities, the volume of waste to be treated, and the technologies adopted. Operational guidelines for closing abandoned uncontrolled landfills will also be developed to set a common approach with pre-determined environmental standards to be followed for all similar sites. This TA will draw on good environmental practices and international experience while considering the country’s regulations and specificities. 42. Technical and Financial Assessment of Treatment of Accumulated Stocks of Leachate (MI). This study will assess various leachate treatment options with a recommended solution for Moroccan municipalities, based on the country’s specifics as well as international experience. The TA will review various technologies used in other countries with similar conditions. It will cover the priority landfills (as defined in the existing studies of MI and the Ministry of Energy Transition and Sustainable Development [Ministère de la Transition Energétique et du Développement Durable, MTEDD]) in connection with the Program area, and formulate recommendations on technically and financially viable options for treatment of the stocks considering the specificity of the Moroccan context, meteorology, geophysical conditions, and site-specific leachate composition. The TA will inform the investments planned under the Program and allow, through the different recommended options, the scaling-up of interventions for the treatment of accumulated stocks of leachate beyond the scope of the Program. Such scaling-up will be financed outside of the Program. 43. Study for the development of an integrated MSW management system promoting circular economy and assessment of its socioeconomic impacts (MTEDD). This TA will explore the modalities and potential business models that could enable the gradual rollout of waste segregation at source as well as enhanced upstream waste recycling and recovery, starting with the plastics recycling and the packaging material value chain. The study will propose modalities for setting up an EPR system and enhance private sector participation in this upstream waste recovery model. It will also conduct a feasibility study assessing the economic, environmental, financial and social impacts of implementing the proposed system in selected municipalities, in line with the Government’s ambition ahead of the 2030 Fédération Internationale de Football Association (FIFA) World Cup. The study will in this context make recommendations on options for the gradual implementation of integrated waste management models, capitalizing on both international experience and pilot projects launched in Morocco. Page 22 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) 44. Waste Pickers Integration in MSW Management (MI). The TA will build on the previous and ongoing experience of Morocco, as well as the experience of other countries in terms of integrating the informal sector and waste pickers into the overall MSWM system, both upstream (at the collection and transportation phase) and downstream (at the landfills) the waste lifecycle. The TA will first assess the current arrangements of waste pickers operating across the MSW value chain, based on studies already conducted, and carry out focus groups consultations with key stakeholders to help develop suitable modalities that can be adapted to local conditions. An assessment of women’s needs will be carried out to inform training programs and guarantee the employability of participants. 45. Technical Assistance to PIU and PM (MI). This TA will mobilize expertise on the overall management and implementation of the Program by supporting the PIU positioned at DGCT. More particularly, it will support Program implementation, monitoring and reporting activities as well as technical, fiduciary, and E&S requirements of Program implementation. The TA will also provide PM with capacity-building, ensuring that the investments made comply with the prerequisites of a PforR, and that local level technical, fiduciary, and environmental and social capacity building aspects are adequately addressed. This would complement the technical support already provided under the Government program supporting the preparation and monitoring of technical investments as well as the generic municipal capacity- building effort carried out under the Municipal Performance Program (P168147), namely on fiduciary aspects. III. PROGRAM IMPLEMENTATION A. Institutional and Implementation Arrangements 46. The institutional arrangements for the implementation of the Program consist of: (i) a Program steering committee, (ii) a Program Implementation Unit, and (iii) Program implementing agencies. Figure 3. Program’s Institutional and Implementation Arrangements 47. A Program Steering Committee (SC) will be established to ensure efficient cooperation and ownership of the Program’s objectives and activities across all relevant core and line ministries. The Program SC will be chaired by a representative of MI and will include representatives from other stakeholder institutions, including MTEDD, MEF, and MIC. The SC will confer on high-level MSW policy issues and their relevance for each represented sector institution, review Program implementation progress, and ensure coordination among key Program stakeholders. It will oversee overall Program reporting, including the results verification process, results achievement notifications, and Program audits. The SC will also review the draft Annual Program Report submitted by the PIU. Page 23 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) 48. A PIU will be established at DGCT and will be responsible for monitoring all RAs, preparing consolidating regular progress reports both to the World Bank and to the SC for review and guidance, and overseeing the overall implementation of the Program. DGCT will have appointed: (a) a Program coordinator, (b) a MSW MIS manager, (c) an E&S Coordinator, and (d) two fiduciary officers covering both financial and procurement aspects of the TA component. It will be supported through TA, by sector experts and fiduciary and E&S consultants. 49. Program implementing agencies. Program activities will be carried out at both the national and local levels by implementing agencies (MI, MTEDD, and PM) as described in figure 3. Each implementing agency will appoint one focal point. The policies, regulations and TA will be led by the MI and the MTEDD. Specific investments in landfills upgrading, valorization capacity, and closure of uncontrolled abandoned landfills will be carried out at the local level by PM. At the municipal level, implementation arrangements may vary depending on the local context (direct municipal contract management, designation of an Intermunicipal Cooperation Entity (ECI or a GCT) that will manage the service on behalf of the municipality, and designation of a municipal company [Société de Développement Local] that can technically manage on behalf of the municipality) and should be clarified as part of the investments’ selection process. Contractual arrangements and commitment at the municipal level will be required to clarify the role and obligations for PM benefiting from the Program financing, translated into specific agreements, under the PNVDM. 50. DLI verification. General Inspectorate of Territorial Administration (Inspection Générale de l'Administration Territoriale, IGAT), operating under the MI, will verify DLIs under the responsibility of DGCT (MI) as well as PM as described in the verification protocols in annex 1. The DDD Inspectorate General will verify DLIs under the responsibility of the MTEDD. 51. IPF component implementation arrangements. The TA component will be implemented by MI (DGCT) and MTEDD (DDD), which will each be in charge of implementing activities within its responsibility, as highlighted in Table 4, and will ensure compliance with all fiduciary and E&S requirements of the Project. The two TA component teams will each have the responsibility of preparing an action plan for all TA activities and will also be responsible for the oversight of these activities. 52. Financial audit of the Program. The General Inspectorate of Finances (Inspection Générale des Finances, IGF) will carry out the financial audit of the Program in accordance with terms of reference agreed with the World Bank for the audit of PforRs, including any relevant audits of PM. The terms of reference of the audit will include both financial and procurement audits. B. Results Monitoring and Evaluation 53. The Results Framework (annex 1) sets out measures to assess Program achievements toward meeting its objectives. The PIU chaired by DGCT will be responsible for Program results monitoring and evaluation (M&E). Data will be collected at baseline and monitored throughout implementation. Using tools developed at the onset of the Program, the PIU will also produce an annual report in collaboration with the entities involved in Program implementation. C. Disbursement Arrangements 54. Disbursements of the World Bank loan proceeds under the Program, are made at the request of the borrower upon DLI achievement. These disbursements will be made into a dedicated account, and repayments of the loan will also be made on this account. Scalability as well as the specific amounts to be disbursed against each achieved and verified result is determined in accordance with the methodology presented in annex 1 and the OM. Verification protocols and responsibilities are also clarified in annex 1 and the OM. 55. Disbursement under the IPF component will be made primarily in the form of reimbursements based on the Statements of Expenditures. Page 24 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) D. Capacity Building 56. Capacity building and institutional strengthening will be utilized to support all RAs of the Program. Targeted TA has been embedded in the Program design as described under the IPF component (section II.F). IV. ASSESSMENT SUMMARY A. Technical Strategic Relevance and Technical Soundness of the Program 57. The Program is of strategic relevance to the GoM as well as for the World Bank. For the past two decades, MSWM has been a key priority in Morocco given its impacts on public health, quality of life, natural resources as well as economic development. Leveraging on the achievements and lessons learned from the PNDM, the Program is supporting the GoM in gradually shifting toward a more environmentally and financially sustainable MSWM, in line with the high- level objectives of the PNVDM. On one hand, the Program activities will help in strengthening the sector’s environmental performance, with a focus on urgently addressing the problem of accumulating leachate at landfills, as well as improving landfills operations to avoid regeneration of these stocks. In addition, the Program will support enhancing Morocco’s circular economy through downstream waste recycling, composting, and RDF preparation for use in cement factories. Policy and analytical work will also be carried out to inform the development of integrated and gradual transition to more upstream recovery schemes in MSW management, with a demonstration intervention in a one Participating Municipality. On the other hand, the sector’s financial sustainability is also a government strategic priority, allowing to provide the means for an environmentally sustainable management. In this context, the Program focuses on improved sector costs recovery with the mobilization of additional resources and improved sector financial management. Strategies and actions for deepening the engagement of the private sector are of interest to the Government as well. Finally, the climate focus is aligned with both the commitments of Morocco under its NDC and the PA, but also would enable tapping into additional potential financial resources. 58. The design of the Program was informed by an extensive analytical background and policy dialogue but also draws on lessons learned from past engagements in the sector. The World Bank has had a long-standing engagement in the sector and in-depth country’s context knowledge. Analytical work carried out, providing the basis for the preparation and the adoption by the GoM of the PNDM. This was followed by a series of four Development Policy Loans (DPLs) which supported the implementation of the PNDM and led to tangible results highlighted by IEG. Evaluations of the PNDM achievements (CC’s annual report of 2021) as well as the Bank past engagements (2020 IEG report) were carried out, with lessons learned that informed the design of the Program as captured in the Program’s technical Assessment’s background document. Additional lessons learned from global experiences contributed to the design of the Program34. Furthermore, substantive analytical work was conducted to inform the preparation of the PNVDM with a particular due diligence on the environmental and the financial sustainability aspects, highlighting key investments and reforms needed. These include a study on the valorization of MSW, a review of MSW sector financing, an initial screening of existing landfills etc. The different elements informing the Program design were captured in a standalone Sector background note. 59. The Government program is deemed technically sound, although some areas will require capacity building, and actions will need to be sequenced over time. As described in paragraph 15, The PNVDM and associated reforms tackle the challenges identified in the sector management, namely on the governance aspects, as well as the financial and environmental performance, in alignment with international best practices and taking into considerations the country’s specificities and past experience in the sector. Capacity gaps remain however with a need of a gradual and sequenced shift toward and environmentally and financially viable MSWM. The country must also integrate new challenges, given 34 IEG published an approach paper evaluating Bank engagements in the sector across a decade (2010-2020). Page 25 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) the limited experience beyond outsourcing waste collection and landfill operations services. The Program addresses persistent institutional and governance challenges, as well as technical and financial capacity building. It is also designed to reinforce the Government’s ambitious decentralization agenda, positioning municipalities to substantially improve one of their most critical mandated functions. Financial benefits for PMs, in the form of investment subsidies, will serve as an incentive to carry out needed reforms at the local level. In this context, a gradual approach is intended, and TA designed to support the GoM in modernizing its procedures and practices is required, with capacity building at the central and local levels. 60. Paris alignment. The operation is aligned with the goals of the PA on both mitigation and adaptation. 61. Assessment and reduction of mitigation risks. With respect to climate change mitigation, the operation is not at material risk of having a negative impact on the country’s low GHG emissions development pathways. On one hand, several activities financed under the Program are on the universally aligned list, including : (i) composting and anaerobic digestion of biowaste under DLI#2, (ii) the digital infrastructure and data monitoring equipment that will be used for monitoring performance of MSW and GHG emissions under DLI#1 (MRV system), (iii) waste valorization and recycling at landfills that will reduce waste volume disposed in landfills and help recycle or recover waste under DLI#6, and (iv) gradual upstream efforts in a selected city under DLI#8. On the other hand, selected activities carry a moderate mitigation risk with appropriate actions embedded in the Program design to reduce the risk to a low level. These include : (i) the rehabilitation and upgrading of landfill operations under DLI#6 and the closure of uncontrolled abandoned landfills under DLI#7 , and (ii) the adoption of a MSW sector development note under DLI#1 . In this context, wherever economically viable, gas capture systems will be installed in landfills financed under DLI#6 and 7, keeping landfill size into consideration. In addition, activities involving waste recycling and safe disposal, which contribute to lower GHG emissions are clearly outlined as part of the government sector development note to be adopted under DLI#1. Furthermore, the Program introduces policy reforms and capacity-building activities aimed at advancing the circular economy agenda and promoting progress in Morocco’s waste hierarchy. Within this framework, the Program supports policy dialog on waste minimization policies and waste segregation at the source. Hence, the Program integrates measures to reduce moderate mitigation risk to a low level. 62. Assessment and reduction of adaptation risks. The Program is aware of the climate-related risks that could affect its activities, with droughts and floods and heatwaves being the primary concerns. Morocco’s exposure to recurrent droughts, extreme temperatures, heavy precipitation, and flooding is assessed as high, with moderate impacts on physical infrastructure and assets. These conditions can lead to increased odors, groundwater contamination, flooding and the potential for landfill fires. First, the Program addresses the risk of heavy precipitation and flooding that can lead to drainage network blockages and potential damage to MSW management infrastructure. In this context, the Program involves upgrading controlled landfill infrastructure and operations, focusing on bolstering slope stability, isolation, and leachate drainage to prevent flooding-related challenges under DLI#6 and DLI#7. In addition, the Program would finance investments to improve leachate management, with the treatment of accumulated stocks, under DLI#7, that pose a risk of groundwater pollution in a context of water scarcity. The Program also support improved landfilling practices and methane gas capture, under DLI#6 and DLI#7, reducing the risk of landfill fires that could be exacerbated by extreme temperatures. Finally, the Program incorporates recent and future climatic trends into its site selection criteria to evaluate vulnerability to these hazards35. Information available in technical studies, namely feasibility studies, impact studies, E&S assessments, and detailed engineering design studies, included on the investments to be financed under DLI#6, DLI#7 and DLI#8, will enable accurately evaluation of climate and disaster risks and their associated risk reduction measures. These measures will be integrated into the detailed design of the investments financed through the Program. These measures 35 Investment site selection include landfills and transfer stations. Page 26 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) are aimed to ensure that the residual risk is reduced to an acceptable level, and the Program achieves its development objective. Program Expenditure Framework 63. The Program’s expenditures are well aligned with the Government program priorities. The Program’s RAs and expenditures focus on tackling the institutional, financial and environmental challenges identified as part of the evaluations of the PNDM, contributing to the implementation of the PNVDM and associated reforms. A comprehensive MSW investment program with an estimated cost of US$2.18 billion over 12 years has been recently adopted, under the PNVDM, constituting the basis of the PEF, of which US$374 million of the Program would be supported by this operation as mentioned in table 5 below. Investments and operations accounted for under the PEF will be selected annually, within PM, based on the methodology described in section II.B (paragraph 20), to ensure compliance with the PforR Policy. The World Bank will monitor expenditures under each specific program to ensure that the Government’s actual expenditures for the PforR Program are greater than the amount disbursed by the World Bank over the life of the World Bank financing. Table 5. Program Expenditure Framework Amount % of the PforR % of the PNVDM (US$ million) Total Government Program (PNVDM) 2,180 - 100% PforR investments and operations in selected 374 100% 17% Participating Municipalities including Landfill upgrading and closure 155 Collection management - Delegated management 154 Collection management - Purchase of equipment 62 Technical assistance 3 Government funding 130 35% 6% World Bank's Contribution 244 65% 11% Economic Justification 64. Economic and financial analysis and expected impacts. The legacy created by decades of poor landfilling practices still contributes to a significant portion of the environmental degradation costs incurred in Morocco as mentioned in the context section. Waste valorization and recycling rates remain low, translating also into rapid depreciation of landfill asset life, where recyclable materials are consuming valuable landfill space rather than generating revenue streams from recycling and waste recovery programs. While the costs and benefits of the Program are difficult to assess at the Program’s onset, due to the Framework Approach adopted that will screen investments during the Program implementation phase, the range of costs and benefit streams resulting from the Program are expected to be substantial on the elements mentioned above, with improved environmental performance. Beyond environmental costs, MSW services have been delivered by municipalities at a premium cost. The Program will also have additional financial and fiscal benefits induced by measures adopted to improve the efficiency and effectiveness of MSW operations, including : (i) Financial allocations to municipalities for MSWM but also provision for CAPEX subsidies (subsidy policy) necessary for waste valorization , (ii) new revenue streams such as a dedicated waste fee, and (iii) additional resources from potential carbon finance sources, etc. The Program will also aim to introduce mechanisms that will effectively mobilize private sector engagement beyond service provision to include private sector investment and financing, thus reducing the reliance on fiscal resources. The proposed Program will generate additional socioeconomic externalities, such as developing a viable market for waste recycling and recovery, with a positive impact on green job creation and private investment attraction. The Program would also have direct and tangible benefits for informal waste pickers by providing them with formalized contractual arrangements and improved health and safety practices. In terms of global public goods, the Program will help reduce Page 27 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) GHG emissions and can provide opportunities to mobilize carbon credits and other forms of green financing. An initial GHG emissions reductions estimation has been carried out for a sample of landfills in the Program area, awaiting the final identification of eligible investments under the Program, as highlighted below, in section IV.D. Preliminary results indicate a possible 54 percent reduction in GHG emissions under the Program, as described below. Using the MSW MIS to be established under the Program, all baseline costs will be recorded, allowing for ex post analysis of the Program's overall benefits and costs. 65. Financial viability of proposed investments. Given the Framework Approach adopted, specific individual economic and financial assessments will be carried out as part of feasibility studies of investments selected during the program’s implementation phase. However, the team conducted an initial exercise to assess the attractiveness of proposed investments for private operators under the PNVDM, the expected level of returns as well as the Viability Gap Funding (VGF) needed. Overall, assumptions and market conditions considered confirm the financial viability of the proposed investment model, including landfilling and valorization capacity, provided that a VGF is available. Under the Public-Private Partnership (PPP) model proposed under the PNVDM, and with a 50 percent public subsidy of the CAPEX, a gate fee of US$ 20 and considering the proceeds of the RDF offtake by cement operators, the private operator can expect a 16 percent internal return rate, which is deemed attractive. B. Fiduciary 66. An Integrated Fiduciary Systems Assessment (IFSA) of the Program was carried out following the World Bank Policy on PforR Financing, which concluded that the existing fiduciary systems of the Program’s implementing entities meet the World Bank PforR financing requirements, subject to the implementation of the agreed fiduciary mitigation measures and actions included in the Program Action Plan (PAP). 67. The overall fiduciary risk is deemed to be Substantial, and appropriate mitigation measures are included in the Program. Municipalities, ECIs and Groups of Local Governments (GCTs), responsible for managing collection contracts and controlled landfills show weaknesses in existing municipal fiduciary systems with mitigations measures to implement. The IFSA was informed by (a) the assessment conducted on a sample of PM, (b) existing data on historical performance of PM36 and (c) the information on contracts award results sourced from the Moroccan electronic government procurement (eGP) platform. The main fiduciary risks identified are: (a) delays in executing the budget of the Fonds d’Assainissement Liquide et Solide et d’Épuration des Eaux Usées et leur Réutilisation; (b) issues with budgeting performance at municipalities and TCEs due to a limited capacity in monitoring delegated management services; (c) delays in reporting and submitting consolidated financial statements of the Program due to the involvement of numerous municipalities with varying capacities in program implementation; (d) discrepancies in procurement performance, where specific municipalities encounter notably high rates of unsuccessful bid processes; (e) inconsistencies in the data published on eGP platform; (f) Potential perception of conflict between compliance with the World Bank’s “Guidelines on Preventing and Combating Fraud and Corruption in Program-for-Results Financing” and the procurement decree; and (g) lack of systematic verification of bidders’ sanctions by the World Bank to ascertain their eligibility. 68. The Program design and PAP incorporate specific systems and capacity-strengthening measures to mitigate risks and ensure effective budget and procurement execution, accountability, transparency, and achievement of desired outcomes. Key actions include: (a) appointment of fiduciary focal points and associated TA under the IPF component to support PM in budget planning and procurement, and implementing robust fiduciary monitoring tools; (b) provision of capacity building to PM for preparing consolidated reports and financial statements; (c) enhancing coordination among implementing entities by appointing fiduciary focal points in PM; (d) consulting National Commission for Public Procurement (CNCP) on including eligibility verification clauses in tender documents to prevent debarred 36 Data gathered from the implementation progress for the Municipal Performance Program (P168147) Page 28 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) entities from benefiting from the Program; (e) implementing key fiduciary performance indicators (KPIs) monitored through periodic reports; (f) ensuring accuracy and transparency of data on the eGP platform; and (g) refining the evaluation and selection processes to promote competition. 69. Given the Framework Approach adopted, investments and operations to be financed under the Program will undergo a selection process during the implementation phase, incorporating both E&S and fiduciary assessments. As mentioned in the selection methodology described in section II.B (paragraph 20), investments and operations to be financed under the Program will be screened on an annual basis on technical, fiduciary and E&S aspects. The fiduciary assessment criteria include: (a) the presence of a dedicated local team in PM for managing delegated landfill contracts, and (b) the budget availability and resource mobilization capacity of PM to fund planned investments and ensure adequate cost recovery. For TCEs serving as implementing entities, their financial sustainability will be periodically assessed to ensure adequate annual budgeting. Implementation of the readiness fiduciary action plan will be supported through the IFP component. It would allow the strengthening of the fiduciary capabilities of PM with investments to be financed through the Program. Additional fiduciary actions will be further determined by evaluating the screening outcomes, once they become available, which are derived from a thorough selection of fiduciary criteria as described above. 70. The implementing entities will execute the activities following the World Bank’s ‘Guidelines on Preventing and Combating Fraud and Corruption in Program-for-Results Financing’ (dated February 1, 2012, and revised July 10, 2015). Adequate ex ante and ex post arrangements are in place to manage these risks effectively. They will collaborate with anti- corruption institutions like the National Authority for Probity, Prevention and the Fight against Corruption to report any fraud or corruption allegations promptly to the World Bank. The PIU will investigate credible allegations, report actions taken to the World Bank, and cooperate with any inquiries conducted by the Bank. Implementing entities will also monitor compliance with the Bank's list of debarred/suspended firms. A protocol for compliance with Anti-corruption Guidelines will be included in the OM, outlining reporting formats and content. The Borrower shall furnish, or cause to be furnished, each ACG Report to the Bank together with the Program Report not later than forty-five (45) days after the end of each calendar year covering the calendar year. Portfolio-level arrangements for governance and anti-corruption management are being finalized with the Government and will apply once the MoU is signed and implemented. 71. Procurement exclusion. The Program is not expected to procure any large contracts valued at or above the Operational Procurement Review Committee (OPRC) thresholds (US$75 million for works, US$50 million for goods and non-consulting services, and US$20 million for consultant services), which are based on a “Substantial” risk rating. This conclusion is drawn based on an analysis of procurement data of the IAs. The latter shall report to the World Bank if large contracts appear throughout the Program implementation. In addition, the World Bank team will analyze and monitor the Program performance of fiduciary systems and contract management reports to identify any large-value contracts that may appear throughout the Program implementation. 72. FM arrangements for IPF component. The PMU’s FM team is not familiar with Bank FM procedures and requirements. Arrangements for the IPF part of the operation are similar to those already in place in the portfolio, notably (a) opening a Designated Account at the Central Bank on terms acceptable to the Bank (e.g. ceiling and disbursement methods will be stated in the DFIL); (b) setting up financial management tools; (c) preparing a work plan and annual budget and; (d) preparing periodic financial and annual audit reports. The fiduciary assessment background document describes these arrangements in more details. 73. Procurement arrangements for the IPF component. Procurement of the TA activities under the Operation (the “Project”) will mainly consist of consulting services and will be carried out in accordance with the World Bank Procurement Regulations for IPF Borrowers (Regulations) dated September 2023 and other provisions stipulated in the Financing Agreement. The World Bank’s ‘The Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants,’ dated October 15, 2006, and revised in January 2011 and as of July 1, 2016, shall apply to the Project. All complaints shall be recorded by the borrower in Systematic Tracking of Exchanges in Procurement Page 29 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) (STEP). Complaints arising in connection with contracts for which the World Bank’s SPDs are required to be used shall be administered and handled in accordance with the World Bank’s Procurement Regulations. The Project’s procurement will be carried out by the MI and the MTEDD, with clear responsibilities and business standards for various steps, as outlined in the MO. Both implementing agencies, with support from the World Bank, will determine the most appropriate consultants’ selection approaches and arrangements for the Project within the boundary of the Project Procurement Strategy for Development (PPSD) and the provisions stipulated in the Loan Agreement. A Procurement Plan for the first 18 months of the Project has been prepared as part of the PPSD. The Procurement Plan will be updated in agreement with the World Bank team annually or as required to reflect the annual project implementation needs. The MI and MTEDD will use the STEP system to prepare, request Bank no-objection, and update the Procurement Plans and to document procurement transactions. C. Environmental and Social 74. An Environmental and Social Systems Assessment (ESSA) has been conducted to inform the preparation of the Program. It examines the Environmental and Social Management Systems (ESMSs) applicable to the Program to evaluate compliance with the provisions of the World Bank Policy and Directive on PforR Financing and ensure that the E&S risks of the Program are well managed. The results of the ESSA inform the Program design, and key measures to improve E&S risk management are included in the PAP and/or the Results Framework. The development of the ESSA additionally provides a platform to engage stakeholders in consultations regarding E&S aspects. The draft ESSA report was shared with counterparts and discussed during a consultation workshop organized on September 24, 2024. 75. The investments and operations to be financed under the Program will adopt a framework approach. The list of PM benefitting from investment and operations financing under the Program will be finalized by DGCT based on the selection criteria mentioned in section II.B (paragraph 20) of the PAD and Section 2.1 of the ESSA and subject to due diligence by the World Bank. The list of E&S criteria is also established to ensure that the choice of investments and operations in PM complies with the World Bank’s Program for Results (PforR) policy approved by the Board of Directors (paragraph 10): “Activities deemed likely to have significant, diverse or unprecedented negative impacts on the environment and/or affected people are not eligible for PforR funding and are excluded from the PforR Program.” In the event of interventions requiring minimal resettlement and/or limited land acquisition, the borrower will proceed with the preparation of an abbreviated RAP and ensure its implementation prior to carry out the works. 76. The potential adverse environmental and social effects of the proposed activities are substantial. The risks and impacts of the investment-related activities that will be carried out in Participating Municipalities will be for the most part temporary, predictable, and/or reversible, and the nature of the Program does not exclude the possibility of avoiding or reversing them, their magnitude and/or spatial extent is medium, and there are known and reliable mechanisms available to prevent or minimize such incidents. Indeed, the E&S selection criteria of the Participating Municipalities make it possible to exclude all investments and operations that present high E&S risks. In addition, the related investment sites will not be in sensitive areas or areas of biological and ecological interest, and certain risks and impacts may be significant. In addition, mitigation and/or compensation measures can be designed more easily and be more reliable than those for high-risk projects. However, there are some concerns regarding the capacity and experience of stakeholders in environmental risk management, but these could be easily addressed thanks to measures identified in the Program Action Plan and through implementation support. 77. For investment activities with moderate to substantial social and environmental effects, mitigation measures will be identified by the respective Environmental and Social Impact Assessments (ESIAs) and implemented at each phase (summary preliminary design, detailed preliminary design, project execution, appeal file of tenders, installation of the site, during the works, restoration of the site, and the operation phase of the landfill). The ESSA offers a screening sheet which will first verify the eligibility of activities and then categorize the activities selected according to their level of E&S risks. Depending on the level of E&S risk, the focal point will determine, using these screening sheets, the appropriate Page 30 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) E&S instruments which will support the implementation of the activity in question and will ensure E&S monitoring and reporting. 78. An IPF technical assistance component complements this Program. This component is designed to support the effective implementation of the Program and facilitate its replicability, with sustainable results. The E&S risk of this component is moderate, and the Environmental and Social Commitment Plan (ESCP) presents the provisions for the Labor Management Plan (LMP) and the Stakeholder Engagement Plan (SEP). 79. Morocco has a legal framework concerning E&S management and impact assessments and reliable country systems in place to manage the risks associated with the Program’s activities. The analysis of the regulatory and institutional frameworks that constitute the national environmental management system has shown their adequacy with the PforR policy. The scope, procedures, and principles of the Environmental Impact Assessments (EIA) in Morocco are generally aligned with international practices. Environmental management and EIA procedures are both clear at the technical level and sound at the institutional level. The main gaps identified are (a) limited integration of social aspects in impact assessment studies; (b) gaps in implementation of public consultations involving the parties affected by the Program; and (c) constraints regarding integration of Environmental and Social Management Plans (ESMPs) in impact assessment studies, including documented M&E of mitigation measures. Capacity strengthening is needed for the various national institutions responsible for managing E&S aspects of program activities. Aiming to fill the gaps identified in the ESSA, the Program will support specific measures to strengthen the performance of the Moroccan ESMS involved in the operation, especially through M&E and E&S management capacities. 80. As per the municipal capacity of managing E&S risk, DGCT has developed an ESMS through the ongoing Municipal Performance Program (P168147) effective since April 2020. This program covers around 100 municipalities whose E&S focal points have been trained and equipped to (a) identify the E&S risks of activities subject to financing within the framework of this PforR, (b) analyze the eligibility of these activities, (c) ensure monitoring of the E&S action plan of the Program, and (d) ensure reporting to the E&S focal point of DGCT. The latter has developed an E&S management guide which constitutes the E&S operations manual (OM) of the Program on the one hand, and the basic support for developing E&S training sessions for the various stakeholders on the other. The DDD responsible for managing the EIA system has good experience and necessary skills, particularly in EIA review, project implementation control, and environmental monitoring (air, water, soil), through the National Environmental Laboratory. Since 2022, this department has developed an ESMS as part of the implementation of the Blue Economy Program for Results (P172926). An E&S focal point was designated, and screening, monitoring, and reporting tools were developed. Their use was reinforced through training sessions. 81. Communities and individuals who believe that they are adversely affected because of a World Bank-supported PforR operation, as defined by the applicable policy and procedures, may submit complaints to the existing program grievance redress mechanism or the World Bank’s GRS. The GRS ensures that complaints received are promptly reviewed to address pertinent concerns. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the World Bank Inspection Panel, please visit http://www.inspectionpanel.org. Morocco has numerous institutions with a mandate to hear and decide on grievances and claims related to activities supported by the proposed PforR. The existence of grievance and appeal mechanisms and their recent promotion to the constitutional level provide them with the necessary independence and financial autonomy, as well as expanded powers for self-referral. The World Bank’s GRS system does not minimize the value of the Moroccan system of grievance management. D. Corporate Priorities 82. Gender. Gender inequalities in MSW management do exist in Morocco. Though data on female employment in the waste sector in Morocco is scarce, an initial assessment in Lahraouyine’s neighborhood of Casablanca in 2016, indicated that among the 3,000 active waste-recyclers counted, the majority were young men, with only 500 to 600 Page 31 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) women mainly assigned to sorting tasks37. In neighboring Tunisia, which shares many of the social as well as consumption characteristics, women’s formal representation in the solid waste management sector is only around 18 percent38. Women in MSWM are often limited to lower-income tasks, such as waste picking and waste separation with men usually taking control over waste materials with higher value for recycling. In addition, with women labor at landfills being limited to sorting waste intended for recycling, women waste pickers are exposed to raw waste materials, thereby increasing their risk of contracting diseases. Finally, men are more likely to become waste recycling business owners compared to women. The operation will address the above gender gaps by providing capacity building to women waste pickers, in the PM covered by the Program to both register businesses and improve their contractual agreements with the waste pickers cooperatives and landfill operators. Such support will be carried out through the TA based activity on the integration of waste pickers that would indeed identify the prospects, needs and priorities of women in the sector that would in turn inform tailored capacity building and awareness raising related to entrepreneurship and formal employment. This will inevitably both encourage and empower women to consider starting a business or enroll as employees or members of cooperatives in the recycling business across the solid waste value chain. The proposed intermediate result indicator will reflect the expected outcome to redress the gaps identified through the monitoring of the percentage increase of women employed39 in the recycling business and who have benefitted from technical and legal advisory services as well as capacity building in the Program area. 83. Climate change. Morocco is highly vulnerable to natural disasters and climate hazards as outlined in the initial climate and disaster risk screening carried out for the Program, with namely a series of flooding and drought episodes in recent decades as well as rising temperatures and sea level in coastal areas. The proposed operation addresses mitigation and adaptation risks across the different RAs and activities with a detailed description of these contributions in annex 4. In addition, a preliminary assessment of emissions reduction was carried out in selected medium- and large-capacity landfills in the Program area. The said assessment compared the baseline scenario with the Program intervention scenario, using the International Panel on Climate Change Waste Model (2006). Parameters included current population served by the landfill, population growth, current waste volumes arriving at disposal sites, national municipal waste characterization, and expected recovery rates and methane capture under the Program. Given that the investments selection will be done during the Program implementation, preliminary emissions reduction assessment was carried out on a selected sample of landfills with the available information as the exact sites for implementation are not known at this stage. Preliminary results showed a 54 percent reduction in GHG emissions as outlined in figure 4. Figure 4. Estimation of Methane Emission Reduction with the PforR Program 37 Source: “What to do with leftovers? Re-employment in Accumulation Societies”, Nathalie Benelli, Delphine Corteel, Octave Debary, Bénédicte Florin, Stéphane Le Lay, Sophie Rétif, 2017 38 Source: International Labor Organization Statistics, ILOSTAT, 2019 39 This refers to formal job opportunities including wage employment, entrepreneurship as well as enrolment in cooperatives. Page 32 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) Source: Results of the IPCC Waste Model with data from What a Waste 2.0 report (2018) and the PNVDM 84. Maximizing Finance for Development. Mobilizing private capital is critical for the sustainability of MSW services in Morocco. This necessitates broadening the sources of financing and increasing Private Capital Mobilization (PCM) in combination with improving domestic revenues. Under this operation, an approach to creating an environment conducive to PCM will be adopted, focusing on setting the scene for the deployment at a later stage of a mix of financing and guarantee instruments and providing PPP transaction advisory. The operation contributes towards strengthening public sector financing while addressing critical regulatory and institutional reforms. It enhances the municipal financial capacity and promotes improved MSW costs recovery, improving the sector’s credibility among private investors . In parallel, and as part of the Sector Financing Strategy, this operation will identify drivers and constraints to PCM and will provide recommendations and an action plan for addressing these. 85. Citizen Engagement. Mainstreaming citizen engagement and improving municipal governments’ accountability in MSWM is at the core of this operation. This will be achieved by mobilizing a dual track approach consisting of adopting an Open Data approach to waste management and carrying out waste management satisfaction surveys at the household level to systematically collect citizens’ feedback and increase opportunities for citizen’s engagement and implementing innovative citizen engagement strategies by securing civil society and beneficiaries’ participation through townhalls with public representatives, technical experts, and local community groups to ensure stakeholders’ consultation on service quality and cost. V. RISK 86. The overall risk is assessed as Substantial. Key risks that may impair the effective implementation of the program include (a) political and governance, (b) technical design, (c) institutional capacity for implementation and sustainability, (d) environment and social, (e) fiduciary, and (f) financial sustainability. 87. Political and Governance. This risk is considered Substantial given the multi-layered nature of the sector governance. To mitigate this risk, the Program will support counterparts in streamlining the overall sector governance with clarified roles and responsibilities among central and local stakeholders under the MSW sector development note to be established under DLR 1.1. 88. Technical Design. This risk is assessed as Substantial given the technical complexity of investments under the Program. These will require (a) sophisticated Private Sector Participation (PSP) schemes; (b) clear contractual provisions; and (c) integrated business models and technological choices for the treatment of the accumulated leachates, upgrading landfills operations and RDF preparation facilities. To mitigate these risks, the Program will instill rigorous due diligence for the technical design and support targeted capacity building under the IPF component, through TA. 89. Institutional capacity for implementation and sustainability. Implementation capacity building needs, especially at local level as well as coordination challenges have been identified, posing a substantial risk on the delivery of selected Program activities, justifying the inclusion of targeted technical assistance as part of the operation’s design for Program implementing agencies and the PIU to mitigate this risk. 90. Environment and social. The current E&S risk rating is Substantial. Given the framework approach adopted, the Program design has included investments and operations selection criteria allowing for the financing of activities presenting moderate to substantial E&S risk as per the PforR policy. In parallel, Program implementing agencies’ capacities in terms of E&S management will be strengthened. Identified mitigation measures include (a) a screening of PM and selected investments, (b) a review and validation of E&S instruments for each investment, and (c) capacity-building activities for E&S focal points. Page 33 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) 91. Fiduciary. The fiduciary residual risk for this Operation has been assessed as Substantial. This rating is mainly due to (a) weaknesses in fiduciary capacity at the municipal level, with intermunicipal bodies yet to strengthen; (b) the limited availability of revenues for the sector and the large stock of contractual arrears impacting the sector’s financial sustainability; and (c) the involvement of multi-sectoral stakeholders requiring strengthened coordination efforts. Measures to address these risks such as capacity-building actions have been included in the Program design (DLI) and/or PAP. More particularly, the sector financial sustainability risk is mainly due to weaknesses in the FM capacity of Municipalities, as well as their limited revenues to finance the growing sector costs. Mitigation measures have been embedded in the Program design and are reflected in its key objectives, with efforts to mobilize additional resources while improving the overall sector FM to improve cost recovery. Page 34 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program(P178768) ANNEX 1. RESULTS FRAMEWORK MATRIX @#&OPS~Doctype~OPS^dynamics@padpfrannexpolicyandresult#doctemplate Program Development Objective(s) The Program Development Objective is to enhance the financial and environmental performance of the Municipal Solid Waste Management sector in the Program area. PDO Indicators by Outcomes Baseline Period 1 Period 2 Period 3 Period 4 Period 5 Closing Period Enhanced financial performance of the MSW value chain in the Program area Increase in operational cost recovery for MSW management services in a number of participating municipalities (Percentage) Dec/2023 Dec/2025 Dec/2026 Dec/2027 Dec/2028 Dec/2029 Dec/2030 70 70 75 80 85 90 90 Reduction in overall value of contract payment arrears in delegated MSW services in a number of participating municipalities (Percentage) Dec/2023 Dec/2025 Dec/2026 Dec/2027 Dec/2028 Dec/2029 Dec/2030 0 0 10 20 30 40 60 Enhanced environmental performance of the MSW value chain in the Program area Population covered by improved MSW services in participating municipalities (Number) Dec/2023 Dec/2025 Dec/2026 Dec/2027 Dec/2028 Dec/2029 Dec/2030 0 0 0 1,000,000 1,500,000 2,000,000 3,000,000 Increased waste recovery and recycling in a number of landfills in participating municipalities. (Percentage) Dec/2023 Dec/2025 Dec/2026 Dec/2027 Dec/2028 Dec/2029 Dec/2030 0 0 0 0 5 10 20 Intermediate Indicators by Results Areas Baseline Period 1 Period 2 Period 3 Period 4 Period 5 Closing Period Strengthening the Governance, Policies and Management of the MSW Sector Page 35 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program(P178768) IRI 1.1 : Adoption of a MSW development development note (note de vision) (Text) Dec/2023 Dec/2025 Dec/2026 Dec/2027 Dec/2028 Dec/2029 Dec/2030 PNVDM Sector Development Sector Development Sector Development Sector Development Sector Development Sector Development Note Note Adopted Note Adopted Note Adopted Note Adopted Note Adopted Adopted IRI 1.2 : Development and operationalization of a MSW management information system (Yes/No) Dec/2023 Dec/2025 Dec/2026 Dec/2027 Dec/2028 Dec/2029 Dec/2030 No No No Yes Yes Yes Yes IRI 1.3 : Adoption of quality standards for MSW compost and for products made from recycled plastics (Yes/No) Dec/2023 Dec/2025 Dec/2026 Dec/2027 Dec/2028 Dec/2029 Dec/2030 No No Yes Yes Yes Yes Yes IRI 1.4 : Adoption of performance guidelines for landfills and treatment facilities operations (Yes/No) Dec/2023 Dec/2025 Dec/2026 Dec/2027 Dec/2028 Dec/2029 Dec/2030 No Yes Yes Yes Yes Yes Yes Improving Financial Performance IRI 2.1: Adoption of a MSW service financing strategy (Yes/No) Dec/2023 Dec/2025 Dec/2026 Dec/2027 Dec/2028 Dec/2029 Dec/2030 No Yes Yes Yes Yes Yes Yes IRI 2.2: Implementation of a waste fee through a municipal tax ordinance (Arrete fiscal) in participating municipalities within the Program area (Number) Dec/2023 Dec/2025 Dec/2026 Dec/2027 Dec/2028 Dec/2029 Dec/2030 0 0 3 6 10 10 10 IRI 2.3: MSW management contracts' template revised to incorporate the findings of consultations with the private sector (Yes/No) Dec/2023 Dec/2025 Dec/2026 Dec/2027 Dec/2028 Dec/2029 Dec/2030 no Yes Yes Yes Yes Yes Yes Enhancing Environmental Performance IRI 3.1: Landfills benefiting from investments to expand landfilling capacity in participating municipalities in line with existing standards and targeted technical specifications (Number) Dec/2023 Dec/2025 Dec/2026 Dec/2027 Dec/2028 Dec/2029 Dec/2030 0 0 0 1 3 4 6 IRI 3.2: Waste recovery and valorization facilities set up within the Program area (Number) Dec/2023 Dec/2025 Dec/2026 Dec/2027 Dec/2028 Dec/2029 Dec/2030 0 0 0 1 3 4 5 IRI 3.3: Beneficiary satisfaction on MSW management (Percentage) Dec/2023 Dec/2030 TBD 60 IRI 3.4: Percentage increase in the share of women working in the municipal waste management sector after benefiting from capacity building in the Program area (Percentage) Dec/2023 Dec/2030 Page 36 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program(P178768) 0 50 Disbursement Linked Indicators (DLI) Period Period Definition Period 1 Jan-Dec 2025 Period 2 Jan-Dec 2026 Period 3 Jan-Dec 2027 Period 4 Jan-Dec 2028 Period 5 Jan-Dec 2029 Period 6 Jan-Dec 2030 Baseline Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 1:DLI1: Enhancement of MSW sector planning, monitoring and oversight (Text ) - DLR#1.1 : A MSW DLR#1.3: A Monitoring, - DLR#1.2: 1 annual DLR#1.2: 2 annual DLR#1.2: 3 annual reports sector development Reporting and report on MSW sector reports on MSW on MSW sector status are note (note de vision) Verification (MRV) status is produced, sector status are produced, based on the is adopted (10 system for the MSW based on the newly produced, based on newly developed MSW million) sector is operational. (12 developed MSW the newly developed services MIS (cumulative) million); DLR#1.4 : The services MIS MSW services MIS - (2 million) decree regulating the (cumulative) - (cumulative) - (2 environmental police and (2million) million) its relationship/coordination with the technical, scientific and administrative staff of the MTEDD’s Sustainable Development Department, is amended, for enhanced Page 37 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program(P178768) environmental control capacity (2 million) 0.00 10.00 14.00 0.00 2.00 2.00 2.00 DLI allocation 30.00 As a % of Total DLI Allocation 12.3% 2:DLI2: Introduction of regulations and policies to promote circular economy (Text ) - - DLR#2.2: Quality DLR#2.1: Draft Law - - - standards for MSW No. 48-23 amending Compost and plastic and supplementing recyclables are issued by the Solid Waste IMANOR - (5 million) Management and Disposal Law 28-00, promoting circular economy principles in MSW management, is approved by the Government council (17.5 million) 0.00 0.00 5.00 17.50 0.00 0.00 0.00 DLI allocation 22.50 As a % of Total DLI Allocation 9.22% 3:DLI3: Enhancement of citizen engagement in the MSW sector management (Text ) - DLR#3.1: 1 citizen - - DLR#3.1: 2 citizen - DLR#3.1: 3 citizen engagement engagement engagement intervention carried interventions carried interventions carried out, out, each citizen out, each citizen each citizen engagement engagement engagement intervention to include: a intervention to intervention to satisfaction surveys, an include: satisfaction include: satisfaction action plan and surveys, an action surveys, an action disseminations to the plan and plan and relevant stakeholders, as disseminations to the disseminations to the described in the OM - relevant stakeholders, relevant stakeholders, (1.34 million) as described in the as described in the OM - (1.33 million) OM - (1.33 million) 0.00 1.33 0.00 0.00 1.33 0.00 1.34 DLI allocation 4.00 As a % of Total DLI Allocation 1.64% 4:DLI4 : Mobilization of additional sources of financing for MSW (Text ) Page 38 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program(P178768) - - DLR#4.1: A Circular of the DLR#4.2: 6 DLR#4.2: 8 - - MoI clarifying the participating participating implementation municipalities have municipalities have modalities of the MSW introduced a MSW introduced a MSW fee is issued (17.5 Fee (cumulative) - Fee (cumulative) - (5 million); DLR#4.2: 3 (7.5 million) million) municipalities have introduced a MSW Fee (7.5 million); DLR 4.3 : A carbon finance potential assessment has been carried out for investments in the Program area (10 million) 0.00 0.00 35.00 7.50 5.00 0.00 0.00 DLI allocation 47.50 As a % of Total DLI Allocation 19.47% 5:DLI5: Improvement of MSW Sector Financial Management in the Program Area (Text ) - - DLR#5.1: The level of DLR#5.1: The level of DLR#5.1: The level of DLR#5.1: The level of DLR#5.3: 60 percent MSW costs covered by MSW costs covered MSW costs covered MSW costs covered decrease in the overall municipal own-source by municipal own- by municipal own- by municipal own- value of payment arrears revenues is improved by source revenues is source revenues is source revenues is in delegated MSW 5%, in six (6) Participating improved by 10%, in improved by 15%, in improved by 20%, in services, compared to a Municipalities, (2.5 six (6) Participating six (6) Participating six (6) Participating baseline in 2023, in six (6) million); DLR#5.2: An Municipalities (2.5 Municipalities, (2.5 Municipalities (2.5 participating action plan to improve million); DLR#5.2 : An million); DLR#5.3: 30 million); DLR#5.3: 45 municipalities (3.5 the management of action plan to percent decrease in percent decrease in million) - cumulative arrears on collection and improve the the overall value of the overall value of disposal contracts is management of payment arrears in payment arrears in adopted in 4 arrears on collection delegated MSW delegated MSW participating and disposal contracts services, compared to services, compared to municipalities (9.33 is adopted in 6 a baseline in 2023, in a baseline in 2023, in million); DLR#5.3: 10 participating six (6) participating six (6) participating percent decrease in the municipalities (4.67 municipalities (2.33 municipalities (3.5 overall value of payment million); DLR#5.3: 20 million) - cumulative million) - cumulative arrears in delegated percent decrease in MSW services, compared the overall value of to a baseline in 2023, in payment arrears in Page 39 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program(P178768) six (6) participating delegated MSW municipalities (2.33 services, compared to million) a baseline in 2023, in six (6) participating municipalities (2.33 million) - cumulative 0.00 0.00 14.17 9.50 4.83 6.00 3.50 DLI allocation 38.00 As a % of Total DLI Allocation 15.57% 6:DLI6: Improvement of environmental performance in landfills (Text ) - - - DLR#6.1: 1 controlled DLR#6.1: 3 controlled DLR#6.1: 4 controlled DLR#6.1: 6 controlled landfill in landfills in landfills in landfills in participating participating participating participating municipalities that have municipalities that municipalities that municipalities that enhanced their landfilling have enhanced their have enhanced their have enhanced their operations in accordance landfilling operations landfilling operations landfilling operations with existing regulations in accordance with in accordance with in accordance with and technical existing regulations existing regulations existing regulations specifications model as and technical and technical and technical set forth in the OM (7.67 specifications model specifications model specifications model million); DLR#6.2: Waste as set forth in the OM as as set forth in the as set forth in the OM recovery rate is improved (3.83million) OM (7.67million); (3.83 million); by 20% in the 5 DLR#6.2: Waste DLR#6.2: Waste controlled landfills from a recovery rate is recovery rate is baseline of 0 in improved by 5% in improved by 10% in Participating the 5 controlled the 5 controlled Municipalities (10.5 landfills from a landfills from a million) (cumulative); baseline of 0 in baseline of 0 in DLR#6.3: 3 annual reports Participating Participating on the basis of Municipalities (5.25 Municipalities (5.25 environmental control million); DLR#6.3: 1 million) (cumulative); plans at landfill sites annual report is DLR#6.3: 2 annual rolled out in accordance produced, on the reports on the basis with guidelines results of the of environmental developed (1.33 million) environmental control plans at (cumulative); DLR#6.4: 15 control plans of landfill sites rolled out annual reports landfills rolled out in in accordance with monitoring delegated accordance with guidelines developed service delivery are Page 40 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program(P178768) operational guidelines (1.33 million) transmitted by five (5) developed (cumulative); Participating (1.33million); DLR#6.4: 10 annual Municipalities (1.67 DLR#6.4: 5 annual reports monitoring million) (cumulative). reports monitoring delegated service delegated service delivery are delivery are transmitted by five (5) transmitted by five (5) Participating Participating Municipalities (1.67 Municipalities (1.67 million) (cumulative). million). 0.00 0.00 0.00 3.83 15.92 12.08 21.17 DLI allocation 53.00 As a % of Total DLI Allocation 21.72% 7:DLI7: Addressing the Environmental Legacy of the MSW sector (Text ) - - DLR#7.2: 1 abandoned DLR#7.2: 2 DLR#7.1: DLR#7.1: DLR 7.2: 5 abandoned uncontrolled landfill, in abandoned Accumulated stocks Accumulated stocks uncontrolled landfills, in participating uncontrolled landfill, of leachate is treated of leachate is treated participating municipalities, closed in participating in one (1) existing in three (3) existing municipalities, closed and and rehabilitated in municipalities, closed controlled landfill in controlled landfills in rehabilitated in accordance with and rehabilitated in Participating Participating accordance with environmental accordance with Municipalities, in Municipalities, in environmental standards. standards. (2.8 million) environmental accordance with accordance with (2.8million) DLR#7.1: standards (2.8 applicable discharge applicable discharge Accumulated stocks of million) (cumulative). standards (5 million); standards (10 million) leachate is treated in five DLR#7.2: Three (3) (cumulative); DLR 7.2: (5) existing controlled abandoned Four (4) abandoned landfills in Participating uncontrolled landfills, uncontrolled landfills, Municipalities, in in participating in participating accordance with municipalities, closed municipalities, closed applicable discharge and rehabilitated in and rehabilitated in standards (10 million) accordance with accordance with (cumulative); environmental environmental standards (2.8 standards (2.8 million) (cumulative). million) (cumulative). 0.00 0.00 2.80 2.80 7.80 12.80 12.80 DLI allocation 39.00 As a % of Total DLI Allocation 15.98% 8:DLI8: Promoting the development of circular economy (Text ) Page 41 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program(P178768) - - - - - DLR#8.1: Deployment - of a local integrated MSW management system in one (1) participating municipality, with a focus on plastics and packaging material. 0.00 0.00 0.00 0.00 0.00 10.00 0.00 DLI allocation 10.00 As a % of Total DLI Allocation 4.1% Page 42 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) Monitoring & Evaluation Plan: PDO Indicators by PDO Outcomes PDO Indicator 1: Increase in operational cost recovery for MSW management services in a number of Participating Municipalities The indicator measures the percentage of MSW operating costs, covered by municipal expenditures in the sector Description (excluding sector targeted central state transfers) in a number of PMs. Six PMs are targeted under this indicator and the list will be defined under DLR 5.1. in the OM. Frequency Annual Data source PMs and MSW service MIS manager Methodology for Data Reporting prepared by DGCT based on inputs from PMs and MSW service MIS when operational Collection Responsibility for Data DGCT Collection PDO Indicator 2: Reduction in overall value of contract payment arrears in delegated MSW services in a number of Participating Municipalities The indicator measures the overall volume of payments arrears for ongoing delegated services delivery contracts in a number of PMs for both collection and disposal services. Six PMs are targeted under this indicator and the list will be Description defined under DLR 5.3. in the OM. The nominal baseline will also be clarified in the OM for arrears by end of Q1 CY 2023. Frequency Annual Data source PMs/DGCT, then MSW Service MIS manager Methodology for Data Reporting prepared by DGCT based on inputs from PMs and MSW service MIS when operational Collection Responsibility for Data DGCT Collection PDO Indicator 3: Population covered by improved MSW services in Participating Municipalities The indicator captures the population served by upgraded landfills with investments financed under the Program, Description covering selected PMs. Six PMs are targeted under this indicator and the list will be defined under DLI 6 in the OM. Frequency Annual Data source PMs/DGCT, then MSW service MIS manager Methodology for Data Reporting prepared by DGCT based on inputs from participating municipalities on the upgraded controlled landfills Collection operating in line with the existing regulations and standards Responsibility for Data DGCT Collection PDO Indicator 4: Increased waste recovery and recycling in a number of landfills in Participating Municipalities This indicator measures the percentage of waste recycled or recovered from the volume arriving to a number of Description landfills in PMs. This would allow for landfilling minimization contributing to climate mitigation efforts. Five PMs are targeted under this indicator and the list will be defined under DLR 6.2 in the OM. Frequency Annual Data source PMs/DGCT, then MSW service MIS manager Methodology for Data PMs will submit Program performance data to MSW MIS generating Program reports submitted to DGCT Collection Responsibility for Data DGCT Collection Monitoring & Evaluation Plan: Intermediate Results Indicators by Results Areas IRI 1.1: Adoption of a MSW sector development note Page 43 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) MSW sector development note is completed and officially adopted by the Program’s SC, including key sector public Description stakeholders. Frequency Once Data source DGCT Methodology for Data DGCT submits officially adopted MSW sector development note. Collection Responsibility for Data DGCT Collection IRI 1.2: Development and operationalization of a MSW management information system A computerized data base, capable of generating Program and other on-demand reports with sector operational and Description financial data is set-up at DGCT. PMs will also have access to the MIS, for inputs and access to selected reporting. Frequency Once Data source DGCT Methodology for Data Reports on the development of the MIS as well as proof of its operationalization is submitted by DGCT. Collection Responsibility for Data DGCT Collection IRI 1.3: Adoption of quality standards for MSW compost and for products made from recycled plastics New MSW composting quality standards and regulations are prepared by IMANOR, in consultation with the relevant Description stakeholders and endorsed by (METDD/MIC) before being officially issued as regulations. Frequency Once Data source DDD Methodology for Data DDD submits the officially published regulations and standards related to composting and plastics recycling. Collection Responsibility for Data DDD Collection IRI 1.4: Adoption of performance guidelines for landfills and treatment facilities operations Landfills and treatment facilities operations performance standards and guidelines are prepared by MTEDD/DGCT and Description disseminated to municipalities. Frequency Once Data source DDD Methodology for Data DDD submits the finalized standards and guidelines disseminated to municipalities. Collection Responsibility for Data DDD Collection IRI 2.1: Adoption of a MSW service financing strategy MSW Sector financing strategy completed and adopted by the SC. The results of this strategy will have to be incorporated as part of the sector development note. The sector's financing strategy should include the expected Description financing schemes and sources (including the level of subsidy and the cost recovery strategy as well as supplemental financing sources explored). Frequency Once Data source DGCT Methodology for Data DGCT submits the adopted MSW Sector financing strategy and uses it as an annex to the overall sector strategy. Collection Responsibility for Data DGCT Page 44 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) Collection IRI 2.2: Implementation of a waste fee through a municipal tax ordinance (Arrêté fiscal) in Participating Municipalities within the Program area Description This indicator will track the enforcement of a waste fee by individual municipal councils. Frequency Annual Data source PM Methodology for Data Selected municipalities will provide DGCT with the fiscal ordinance reflecting the adoption of a waste fee at the Collection municipal level. Responsibility for Data DGCT Collection IRI 2.3: MSW management contracts' template revised to incorporate the findings of consultations with the private sector Regular individual consultations and focus groups are organized with private operators to seek feedback on contractual Description arrangements. This indicator will capture the outputs of the 2023 consultations and the recommended inputs introduced in new MSW contracts template. Frequency Annual Data source PM, DGCT Methodology for Data DGCT submits MSW model contract evidence. Collection Responsibility for Data DGCT Collection IRI 3.1: Landfills benefiting from investments to expand landfilling capacity in participating municipalities in line with existing standards and targeted technical specifications Documentation from DGCT confirming that landfills within the Program area meet the controlled landfill operational Description guidelines and standards as well as the targeted technical specifications based on the Independent Verification Agency (IVA) verification. Frequency Annual Data source DGCT and PMs Methodology for Data Municipalities submit upgraded landfill documents/certification to IGAT to be verified under DLI 6. Collection Responsibility for Data DGCT and participating municipalities Collection IRI 3.2: Waste recovery and valorization facilities set up within the Program area Using 2023 as baseline year, this indicator captures the number of valorization operations documented by contracts in Description landfills. Frequency Annual Data source DGCT and PMs Methodology for Data DGCT submits evidence of valorization operations in place (contracts) as documented in MSW MIS, Program Report. Collection Responsibility for Data DGCT Collection IRI 3.3: Beneficiary satisfaction on MSW management The indicator captures citizen feedback on the improvement of the MSW services quality based on responses collected Description through 3 surveys. Frequency Periodic (Beginning, midterm and end of the Program) Data source PMs Page 45 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) Methodology for Data Reporting prepared by DGCT based on inputs from eligible municipalities on the operational sanitary landfills Collection Responsibility for Data DGCT Collection IRI 3.4: Percentage increase in the share of women working in the municipal waste management sector after benefiting from capacity building in the Program area The indicator captures the percentage increase in the number of women working in the municipal waste management sector in general, either employed or running their own waste recycling business in the Program area after benefitting Description from training and capacity building. This includes formal employment in cooperatives, business creation or wage- employment. The Operation is expected to support DGCT in establishing a better understanding of the informal sector in MSW in Morocco through targeted TA. This would also feed into the MIS system to be developed under the Operation and that will strengthen and facilitate M&E. Frequency Annual Data source PMs Reporting prepared by DGCT based on inputs from PMs. The original baseline of women in the sector will be Methodology for Data calculated as part of the TA activities, which will serve as the point of comparison to calculate the percentage Collection increase. Responsibility for Data DGCT Collection Page 46 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) Verification Protocol Table: Disbursement Linked Indicators DLI 1: Enhancement of MSW sector planning, monitoring and oversight • DLR#1.1: An integrated MSW sector development note is adopted. The DLR captures the adoption of a document, as defined in the OM, reflecting the expected policy reforms, financing and institutional, regulatory arrangements as well as sector governance, to achieve the sector development goals formulated and implement the investments identified. • DLR#1.2: Number of annual reports on MSW sector status produced, based on the newly developed MSW services management information system. This DLR aims to improve sector management, through enhanced monitoring and Description oversight on MSW services management. Services will be managed through a newly developed MIS. • DLR#1.3: A Monitoring, Reporting and Verification (MRV) system for the MSW sector is operational. This DLR will monitor the MSW sector emissions and enable the reporting on emissions reductions as per the commitments under the Paris Alignment. • DLR#1.4: The decree regulating the environmental police and its relationship/coordination with the technical, scientific and administrative staff of the DDD at MTEDD, is amended, for enhanced environmental control capacity. The total amount allocated to DLI will be disbursed following the below formula: • DLR#1.1: US$ 10 million - Not scalable. Total amount to be disbursed upon result completion • DLR#1.2: US$ 6 million - Disbursement is scalable - From a baseline of 0, for each additional report produced, US$2 Formula million will be available for disbursement • DLR#1.3: US$ 12 million - Not scalable. Total amount to be disbursed upon result completion • DLR#1.4: US$ 2 million - Not scalable. Total amount to be disbursed upon result completion Data source/ Agency DGCT/DDD Verification Entity IGAT/DDD’s inspection • DLR#1.1: DGCT will submit to IGAT the officially adopted MSW sector development note by the SC with minutes of the SC endorsing the document. • DLR#1.2: DGCT will submit to IGAT the reports produced based on an MIS that is fully operational. Templates of those reports will be included in the OM once the functionalities the MIS are fully set. Procedure • DLR#1.3: DDD will submit to the DDD’s inspection department or a selected IVA, the design document as well as proof of reporting under the newly implemented MRV system for MSW. • DLR#1.4: DDD will submit to the DDD’s inspection department or a selected IVA the officially issued text. The amended decree is expected to be approved by the Governement Council and issued in the official Gazette. DLI 2: Introduction of regulations and policies to promote circular economy This DLI will support enhancements to the legal and regulatory framework of Solid Waste management, toward circular economy. Description • DLR#2.1: Draft Law No. 48-23 amending and supplementing the Solid Waste Management and Disposal Law 28-00, promoting circular economy principles in MSW management, is adopted by the Government Council. • DLR#2.2: Quality standards for MSW compost and plastic recyclables is issued by IMANOR. The total amount allocated to each DLR will be disbursed upon its completion, based on the following distribution. Formula • DLR#2.1: US$ 17.5 million - not scalable. Total amount to be disbursed upon result completion • DLR#2.2: US$ 5 million - not scalable. Total amount to be disbursed upon result completion Data source/ Agency DDD Verification Entity DDD’s inspection • DLR#2.1: The IVA will verify that the Draft Law No. 48-23 was adopted by the Government Council. DDD will share with the IVA the finalized project submitted by the SGG and the minutes of its approval by the Government Council. Procedure • DLR#2.2: The IVA will verify the issuance by IMANOR of new composting standards as approved by the regulating authority based on consultations with the relevant stakeholders. DLI 3: Enhancement of citizen engagement in the MSW sector management This DLI will support enhanced citizen engagement in MSW sector management through the achievement of the following Description result: Page 47 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) • DLR#3.1: Number of Citizen Engagement interventions carried out, with each including : satisfaction surveys, an action plan and disseminations to relevant stakeholders. Three surveys will be conducted in three Participating Municipalities at the beginning, mid-term and end of the Program (to be agreed with DGCT) with results to be presented and discussed with civil society. The frequency of the surveys and consultations will be further clarified in the OM. Action plans will be formulated as described in the OM for this sample of Participating Municipalities. The total amount allocated to DLI will be disbursed following the below formula: Formula • DLR#3.1: US$ 4 million - Disbursement is scalable - From a baseline of 0, upon the completion of each Citizen Engagement intervention, US$1,33 million will be available for disbursement. Data source/ Agency DGCT Verification Entity IGAT • DLR#3.1: IGAT will verify that the selected municipalities have conducted satisfaction surveys and prepared reports Procedure summarizing the key findings and recommended actions, as specified in the OM. These findings should be presented and captured in the meetings minutes. DLI 4: Mobilization of additional sources of financing for MSW This DLI will record and track measures to support improved revenues and financing in the sector through: • DLR#4.1: A circular of the Ministry of Interior clarifying the implementation modalities of the MSW fee is issued. Description • DLR#4.2: Number of Participating Municipalities that have introduced a MSW fee. The implementation of the MSW fee is subject to a decision by the municipal council. • DLR#4.3: A carbon finance potential assessment has been carried out for investments in the Program area. The total amount allocated to each DLR will be disbursed following the below formulas: • DLR#4.1: US$ 17.5 million - not scalable. Total amount to be disbursed upon result completion. Formula • DLR#4.2: US$ 20 million - Disbursement is scalable - From a baseline of 0, for each additional municipality introducing a waste fee, US$2.5 million will be available for disbursement • DLR#4.3: US$ 10 million - not scalable. Total amount to be disbursed upon result completion Data source/ Agency DGCT Verification Entity IGAT • DLR#4.1: DGCT will submit to IGAT the published text (circular) issued to clarify the modalities of the implementation of a waste fee based on law 28-00 as well as local finances regulatory framework and to specify the terms provided for by Circular No. D13015 dated December 17, 2012, relating to the establishment of said fee. • DLR#4.2: A number of participating Municipalities will, through DGCT, submit to IGAT the municipal level fiscal Decision (Arrêté fiscal) allowing for the collection of a waste fee, in line with the newly issued ministerial ordinance, namely in Procedure terms of targeted populations (initially large waste producers), as well as tariffs and collection methodology. The selected municipalities will be specified in the OM and should cover different size categories. • DLR#4.3: IGAT will verify a report submitted by DGCT outlining the assessment carried out on the carbon finance potential that can be leveraged through investments in the Program area, based on a methodology to be clarified in the OM DLI 5: Improvement of MSW Sector Financial Management in the Program Area This DLI will focus on improved MSW services financial management through the following results: • DLR 5.1: The level of MSW costs covered by municipal own-source revenues is improved in six (6) Participating Municipalities, from an average baseline (2019-2023). The ratio refers to the percentage of municipal expenditures, excluding targeted, sector specific state transfers, covering MSW operations and maintenance (O&M) costs (excluding Capital expenditures). Description • DLR 5.2: An action plan to improve the management of arrears on collection and disposal contracts is adopted in six (6) participating municipalities. The action plan would cover both the stock and the flow and should be endorsed by the relevant municipal councils’ presidents. • DLR 5.3: The overall value of payment arrears in delegated MSW services has decreased in percentage, compared to a baseline in 2023, in six (6) Participating Municipalities. The total amount allocated to each DLR will be disbursed, based on the following formulas: • DLR#5.1: US$ 10 million - Disbursement is scalable - From an average baseline of 70% between 2019 and 2023, with a Formula target of 90% by 2029, for each percent point increase in MSW cost recovery, US$ 500,000 will be available for disbursement Page 48 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) • DLR#5.2: US$ 14 million - Disbursement is scalable - For each action plan adopted out of six (6), US$ 2.33 million will be available for disbursement, from a baseline of 0. • DLR#5.3: US$ 14 million - Disbursement is scalable - From a baseline of 0% in 2023 and a target of 60% in 2029, for each percent reduction in MSW arrears, US$ 233,333 will be available for disbursement. Data source/ Agency DGCT Verification Entity IGAT • DLR#5.1: IGAT will evaluate the progress of MSW cost financing level by municipalities in six (6) Participating Municipalities, from an average baseline of 50% over the 2019-2023 period, based on data from municipal financial accounts, delegated service delivery contracts the MIS when operational. The ratio will be calculated following this formula (CR): CR = Municipal expenditures in MSW (excluding special authorizations for the sector) / MSW O&M costs. For delegated services these costs are defined in the related contracts and would be represented by the gate fee paid by municipalities. The selected municipalities will be defined in the OM. • DLR#5.2: IGAT will verify the adoption by each Participating Municipality of individual action plans, to improve Procedure management of arrears on collection and disposal contracts, through their endorsement by municipal councils' presidents. The list of municipalities targeted under this DLR will be defined in the OM. • DLR#5.3: From a baseline of a stock of arrears in 2023 for municipalities in the Program area, IGAT will evaluate the percentage of decrease in arrears in a number of Participating Municipalities based on data populated from municipal financial accounts, commitments under delegated service delivery contracts and the MIS when operational. The list of municipalities targeted under this DLR will be defined in the OM. The nominal value of arrears to be considered as a baseline is 747,266,097.30 recorded by end of March 2023 (to be confirmed in the OM). DLI 6: Improvement of environmental performance in landfills This DLI will measure improvements in landfills environmental performance as well as efforts to promote circular economy: • DLR#6.1: Number of controlled landfills in Participating Municipalities that have enhanced their landfilling operations in accordance with existing regulations and technical specifications model as set forth in the OM. Description • DLR#6.2: Waste Recovery rate is improved in five (5) controlled landfills in Participating Municipalities. • DLR#6.3: Annual reports are produced, on the results of the environmental control plans of landfills in Participating Municipalities rolled out in accordance with operational guidelines developed. • DLR#6.4: Annual reports monitoring delegated service delivery are transmitted by five (5) Participating Municipalities. The total amount allocated to each DLR will be disbursed, based on the following distribution and a scalable formula to discuss: • DLR#6.1: US$ 23 million - Disbursement is scalable - From a baseline of 0, for each controlled landfill in participating municipalities demonstrating enhanced operations, on a total of six (6) controlled landfills, US$ 3,83 million will be available for disbursement. • DLR#6.2: US$ 21 million - Disbursement is scalable - From a baseline of 0 and a target of 20%, for each additional Formula percentage improvement in the recovery rate in the 5 targeted landfills, US$1.05 million will be available for disbursement. • DLR#6.3: US$ 4 million - Disbursement is scalable - From a baseline of 0, for each report established out of three (3), US$ 1,3 million will be available for disbursement. • DLR#6.4: US$ 5 million - Disbursement is scalable - For each annual report produced, out of a targeted total of fifteen (15) reports, US$ 0.33 million will be available for disbursement. Data source/ Agency DGCT/DDD Verification Entity IGAT and DDD’s inspection • DLR#6.1: IGAT will confirm the actual completion of investments in upgraded landfills in accordance with the contractual arrangements as well effective site operations based on reporting from the Participating Municipality as well as site visits to confirm the compliance with guidelines and standards developed. IGAT will need prior confirmation of landfills compliance with the Government Program and PforR selection criteria, to be shared by DGCT and WB (no Procedure additional diligence is needed from IGAT). • DLR#6.2: DGCT/Participating Municipalities will submit to IGAT a report on the waste entering the selected landfills, the proportion valorized vs landfilled based on the monitoring reports officially transmitted by Participating Municipalities. IGAT will confirm the actual completion of investments in identified sites in accordance with the reports and with the contractual arrangements to enhance valorization rates. IGAT will need prior confirmation of landfills Page 49 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) compliance with the Government Program and PforR selection criteria, to be shared by DGCT and WB (no additional diligence is needed from IGAT). • DLR#6.3: MTEDD will submit the landfill annual control plans, control guidelines and minutes of the visits and recommendations each year for verification by IVA. The 3 annual plans expected to be rolled out under the Program are expected to cover a set of Participating Municipalities each year. • DLR#6.4: The DGCT will submit each year to the IGAT the five (5) annual reports sent by the selected Municipalities for verification, over the period 2026-2029 (or other as agreed with the WB). The municipalities selected by the DGCT will be part of the Participating Municipalities, and must be clarified in the OM. A template of the report will be included in the OM also. DLI 7: Addressing the Environmental Legacy of the MSW Sector This DLI will measure the extent to which specific measures have been taken to reduce the environmental footprint of the MSW Sector. This will be done through the following measures: • DLR 7.1: Accumulated stocks of leachate in five (5) existing controlled landfills, in participating municipalities, is treated Description in accordance with applicable discharge standards. • DLR 7.2: Number of abandoned uncontrolled landfills, in participating municipalities, closed and rehabilitated in accordance with environmental standards. The total amount allocated to each DLR will be disbursed, based on the following distribution: • DLR#7.1: US$ 25 million - Disbursement is scalable - For each landfill fully treating its leachate stock, US$ 5 million will Formula be available for disbursement • DLR#7.2: US$ 14 million - Disbursement is scalable - For each completed investment and closed and rehabilitated abandoned uncontrolled landfill, US$ 2,8 million will be available for disbursement Data source/ Agency DGCT Verification Entity IGAT • DLR#7.1: Participating municipalities will submit a report confirming the treatment of the stock of leachate based on reporting prepared by landfills operators. This would be verified by MI before submission to IGAT who will confirm the results based on a sample of field visits. Procedure • DLR#7.2: Participating municipalities will submit a report confirming the closure of the selected abandoned uncontrolled landfills in alignment with environmental standards. These standards will be defined in the OM. This would be verified by MI before submission to IGAT who will confirm the results based on a sample of field visits. DLI 8: Promoting the development of circular economy This DLI will measure the extent to which specific measures have been taken by a selected municipality to implement an integrated MSWM system as a demonstration and to promote circular economy. This will be done through the following Description measures: • DLR#8.1: Deployment of a local integrated MSW management system in one (1) participating municipality, with a focus on plastics and packaging material. The total amount allocated to each DLR will be disbursed, based on the following distribution: Formula • DLR#8.1: US$10 million - Not scalable - Disbursement upon completion of the result. Data source/ Agency DGCT Verification Entity IGAT • DLR#8.1: The selected municipality will submit a report on the identified actions taken to implement this demonstration activity, focusing on plastics and packaging material and including waste reduction, sorting, and recycling activities Procedure facilitated by the municipality and implemented by associations, micro and small enterprises, and private operators, as well as a voluntary deployment of an EPR system for plastics. The scope and the outline of the report will be further detailed in the OM. Page 50 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) ANNEX 2. PROGRAM ACTION PLAN @#&OPS~Doctype~OPS^dynamics@padpfrannexprogramactionplan#doctemplate Action Completion Description Source DLI# Responsibility Timing Measurement The PIU is Technical NA DGCT Other 3 months after A Program staffed and a effective date Coordinator has technical and thereafter been appointed assistance is maintain and PIU hired to support throughout members are in overall Program designated with Program implementation a clear job implementation, description, monitoring and including a reporting fiduciary as well as E&S focal points at central and local levels. A TA is hired to support the PIU. An eligibility Fiduciary NA IAs Recurrent Continuous An eligibility verification Systems clause is clause is introduced in introduced in tendering tendering documents, process with verification during each procurement process. No debarred or suspended firm by the Bank is awarded a contract under the Program An annual Technical NA DGCT Recurrent Yearly A screening screening for document Program-eligible specifying the investments and annual set of operations in selected Page 51 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) Participating investments Municipalities is and operations, carried out eligible for Bank financing applying prior agreed selection criteria, as listed in the Operation's Manual (OM) is submitted for WB non- objection. An ESIA is Environmental NA DGCT/Participating Other Before the start An ESIA is approved for and Social municipalities of the work and carried out for selected Systems thereafter each investments implemented investment confirmed throughout the carried out under the Program under the framework implementation Program. A approach, with, Bank review if relevant, and approval is ESMP for each expected site, a before starting resettlement the work. For action plan each site, if (PAR), a relevant, an livelihood ESMP, a RAP, a restoration plan, LRP, public public consultation consultation, and public and public dissemination dissemination are required for each site. Notification to Environmental NA DGCT/ Recurrent Continuous Periodic E&S the bank of and Social Participating monitoring corporate Systems municipalities sheets incidents and (monthly) and accidents no reports (semi- later than 48 annual). hours after their occurrence. Page 52 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) Preparation and Environmental NA DGCT/METDD Other 90 days after Plan prepared implementation and Social effectiveness by the MoI and of stakeholder Systems METDD on the engagement TA activities plan under the IPF component Deployment of Environmental NA DGCT Other 90 days after GRM is grievance and Social effectiveness operational management Systems with regular mechanism reporting centralized by the PIU. Development of Environmental NA DGCT Other 90 days after Development a training and Social effectiveness and module on E&S Systems implementation management, of a training including module and monitoring plan. tools, and relevant training sessions, including for subcontractors. A fiduciary Fiduciary NA DGCT Other 90 days after Training capacity- Systems effectiveness sessions on building preparing (a) program is performance- carried out and based grant "standard" requests, and procedures (b) semi-annual manual are financial reports developed for for IPF the component and administrative, annual Program financial, and financial accounting statements. management of Standards program manual activities at the prepared and municipal and validated by ECI level DGCT and Page 53 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) disseminated to municipalities. Strategic E&S Environmental NA DGCT Other 6 months after SESA and ESMF Assessment and Social the sector submitted and (SESA) with Systems development approved by ESMF note adoption the Bank Page 54 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) ANNEX 3. RATIONALE FOR DLI SELECTION RA/DLIs Justification for DLI selection RA I: Strengthening the Governance, Policies and Management of the MSW Sector (US$56.5 million) DLI #1. Despite the efforts under the PNDM, challenges remain in planning, service delivery, sector monitoring, and oversight capacity Enhancement of at the central level and more particularly at the local level, which have led to negative impacts on the sector’s environmental and MSW sector financial situation. In parallel, institutional and implementation arrangements set under the PNDM present areas for planning, improvement such as streamlining interventions, clarifying mandates, enhancing vertical and horizontal sector policy monitoring and coordination, and strengthening sector oversight and monitoring. oversight This DLI would support the development and enhancement of sector monitoring and oversight tools (management information US$30 million system, data collection system, annual reports produced, empowered environmental police, GHG emissions monitoring). It will also help consolidate the vision and the strategic framework for the sector management, reflecting the mix of reforms and investments needed to achieve the objective stated above, in line with the vision and government program mentioned above. This strategic framework would also clarify the institutional arrangements for a more efficient and coordinated intervention of key stakeholders. It will outline the financing sources to be mobilized to cover the expected financial effort as well as any capacity- building or communication efforts. DLI #2. Regulations fostering the development of circular economy and promoting waste hierarchy in Morocco are yet to be Introduction of strengthened. The Program is expected to support the preparation and adoption of regulations enhancing circular economy in regulations and the sector. The principles of gradual waste segregation at source as well as EPR will be introduced as part of the proposed policies to promote amendment of the Law 28-00, allowing for greater waste recovery and minimization of waste generation. The operationalization circular economy of both will be covered under additional results or TA. The Program will also support the development of composting norms and US$22.5 million standards for the development of a viable composting market and will do likewise for recyclable plastics. DLI #3. Interventions under this DLI are expected to improve transparency and accountability in the sector’s management through the Enhancement of public dissemination of sector data. They will also allow for greater citizen engagement through a series of surveys, action plans citizen allowing for the incorporation of beneficiaries’ feedback in the service management in a sample of participating municipalities. engagement in the These processes should lead to the implementation of action plans by municipalities, to improve MSWM services delivery. This MSW sector would also allow for a greater uptake of expected sector reforms with effective communication, namely the progressive management introduction of a waste fee. US$4 million RA II: Improving the Financial Performance of the MSW Sector (US$85.5 million) DLI #4. Sector financing has been a key bottleneck in the MSWM services upgrading with mounting levels of payment arrears and Mobilization of accelerating trend of central-level subsidies to bridge the gap. Based on the in-depth analytical work to be conducted under the additional sources IPF component, the Program will pave the way for the mobilization of new financial resources (via a dedicated waste fee). It will of financing for also be provisioning for VGF that will be essential in mobilizing private sector finance and operators. MSW In addition, the DLI will further explore the potential of tapping into carbon finance mechanisms in alignment with the PA. US$47.5 million DLI #5. MSW delegated services suffer from large payment arrears, affecting the cost and the quality of the service. The Program will Improvement of support DGCT in an in-depth analysis of the sector arrears, identify the root causes, and prepare an action plan in several MSW Sector participating municipalities, to redress both the stock and the flow. This would need both central and local-level financial and Financial technical commitment. Reduced arrears and payment delays allow for enhanced PSP. It addresses the crucial issue of cost Management in recovery rates, and the financial weight of these services in municipal budgets. the Program Area The DLI will also ensure that expected outcomes under RA II in terms of cost recovery are achieved. US$38 million RA III: Enhancing the Environmental Performance of the MSW Sector (US$102 million) DLI #6. Landfilling practices as well as limited implementation to this date of waste recovery and recycling practices have led to a Improvement of significant environmental degradation under the PNDM, calling for improved environmental management more particularly on environmental the downstream segment, in alignment with the GoM’s vision in terms of waste valorization. The objective of this DLI is to performance in improve environmental performance in landfills, tackling both landfilling practices as well as enhanced valorization and landfills recycling to minimize landfilling. US$53 million This will also be an opportunity to enhance monitoring and oversight capacity, through the rollout of annual landfills control plans and the submission of annual reporting on delegated service delivery at the local level. Page 55 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) RA/DLIs Justification for DLI selection DLI #7: Addressing The environmental legacy under the PNDM is significant (stocks of accumulated untreated leachate and abandoned the Environmental uncontrolled landfills), with a potential impact on existing resources. In parallel to the upgrading of landfilling operations and Legacy of the MSW ramping up of valorization efforts, there is also an urgent need to start redressing this legacy. The objective of this DLI is to Sector plan, budget, and implement priority interventions to redress the environmental legacy in the MSW sector. US$39 million DLI #8: Promoting An ambitious approach to reduce overall waste is awaited by all stakeholders, and a demonstration intervention of a local the development integrated MSW management system, focusing on plastics and packaging material, is the first step toward integrated of circular production and reuse systems on a national scale. economy. US$10 million Page 56 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) ANNEX 4. SUMMARY OF RESULTS CONTRIBUTING TO CLIMATE CHANGE ADAPTATION AND MITIGATION Financing Amount DLIs Climate Activity (US$, millions) DLI #1: Under DLR1.1. the MSW integrated sector development note, to be established, is expected to formalize the sector 30.0 Enhancement of management’s overarching framework with a set of policies, incentives, and reforms to enhance MSW management MSW sector and environmental and financial sustainability. In this context, the strategic framework sets out a cross-cutting planning, priority to enhance resilience to extreme climate events, namely under the planned upgrading and new investments monitoring and in the sector. This will be further detailed in the ESIA’s and engineering studies embedded in each investment plan. oversight The framework would also have a focus on promoting gradual circular economy, i.e. Waste sorting and valorization at landfills, with a gradual integration including waste separation at source, the setup of EPR, the expansion of composting, with organic materials representing 65% in the Morocco waste composition40. The MSW sector strategy would also explore waste generation minimization avenues that are aimed to reduce GHG emissions. DLR1.3. will support establishing an MRV system facilitating the collection of data and monitoring of GHG emissions at a sectoral. DLR 1.2 will track relevant waste volumes metrics along the value chain (waste produced, collected, landfilled, waste composition ….). The reports produced are expected to include progress on establishing circular economy, tracking the setup of valorization capacity and their effective operationalization. In addition, granular sector data would also help inform future policies for more integrated MSW management, in line with the waste hierarchy principles. DLI #2: DLR2.1. and 2.2. will support legal and regulatory reforms fostering circular economy within the MSW sector. 22.5 Introduction of Activities financed include the following: (i) The adaptation by the Government Council of a proposed amendment regulations and to the Law 28-00 on waste management and disposal, promoting circularity principles through the introduction of policies to EPR principles as well as segregations at source. Further analytical work will be conducted under the IPF component promote to assess the socioeconomic feasibility of a gradual rollout of segregation at source considering financial constraints circular as well as social norms, and (ii) the adoption of composting and plastics recyclables quality standards, allowing for economy the development of a composting market, and minimized landfilling given the high organic fraction of Moroccan municipal waste. It would also facilitate a gradual segregation at source and separate collection for biowaste (biowaste includes biodegradable garden and park waste, food, and kitchen waste from households and commercial and food processing plants). The compost produced will be used as a natural fertilizer or soil conditioner, and greater plastic waste diversion in the upstream segment will pave the way for an EPR system. Since IMANOR is only responsible for creating quality standards, putting in place a monitoring plan or other mitigation measures for methane emissions is outside the scope of this DLR and can be tracked under DLR 1.3, once the MRV system is operational DLI #3: This DLI supports citizen awareness-raising efforts with a dissemination of current service management practices 4.0 Enhancement of impacts (rising waste volumes collected, greater collection and disposal costs, important environmental legacy, and citizen unsustainable financing effort with a need to introduce additional municipal fees). This constitutes an opportunity engagement in to strengthen communication about the sector’s environmental footprint and the need for more sustainable the MSW sector practices. It will also in parallel support the gradual rollout of separation at source with targeted communication management encouraging citizens to minimize waste generated and presort/segregate secondary materials, such as metals, glass, plastic, paper, cardboard, wood, textiles, textile fiber, brick, and other inert construction material. The surveys will measure citizen satisfaction DLI #4: This DLI supports the gradual introduction of a waste fee. As highlighted in the sector’s literature, collecting 47.5 Mobilization of earmarked revenues will not only improve cost recovery and financial sustainability in the sector but also gradually additional incentivize users in contributing to the recycling and waste minimization efforts, starting with large producers financing (hotels, restaurants, …). A study from the US Environmental Protection Agency41 has estimated that by participating sources for in a pay-as-you-throw program, annual GHG emissions are reduced by an average of 0.085 metric tons of carbon MSW equivalent per person. DLR4.3. will also assess the carbon finance potential for investments in the Program area, as a first step for leveraging emissions reduction efforts through the MRV system to be set. 40 Source : National Strategy of Waste Reduction and Valorization, MTEDD (2018) 41 https://archive.epa.gov/wastes/conserve/tools/payt/web/pdf/climpayt.pdf. Page 57 of 58 The World Bank Morocco Municipal Solid Waste Management Support Program (P178768) Financing Amount DLIs Climate Activity (US$, millions) DLI #6: Morocco is vulnerable to the impacts of flooding and water scarcity, induced by erratic rainfall patterns and 53.0 Improvement of increased temperature, leading to drought conditions and an increase in the intensity of floods. Flooding poses the Environmental biggest threat to MSWM infrastructure. Without proper catchment systems around a landfill, heavy rain events can Performance in degrade the landfills, causing breaks in the containment structure that allow leachate to escape and contaminate Landfills local resources, including groundwater. Flooding may also undermine landfill foundations releasing leachate into groundwater or block collection routes. This DLI will contribute to financing investments in upgrading controlled landfills. This would help set up improved landfilling practices, allowing for minimized leachate generation and its proper management, as well as treatment facilities preventing the generation of new stocks and accumulation of new leachate. In parallel, large and medium- size landfills, with a substantial potential of methane generation, will include gas capture, allowing for an overall reduction in emissions resulting from landfilling. Controlled landfills under this DLR 6.1 will incorporate climate change considerations, for example, in selection of landfills that have reliable access to dumping sites but away from body of water and areas with high water tables. Compliance with environmental standards will also assess climate risks and vulnerabilities to the landfills, and measures such as physical infrastructure to protect groundwater resources from contamination and landfills from the impacts of floods will be incorporated. Moreover, reduced risk of groundwater contamination from leachate leakage will help protect degradation of local water sources such as groundwater and reduce exacerbation of the water scarcity issue. In addition, DLR 6.2 will support the setup of waste valorization and recycling investments within landfills to increase waste recovery rates in line with the national strategic framework. This would minimize disposal while enabling additional revenues to be collected from commercialization of waste byproducts (recyclables, RDF for cement industry, and green compost). These actions contribute to the mitigation efforts. A preliminary quantitative assessment of expected emissions reductions has been conducted with results outlined in paragraph 82. In parallel, targeted investments on landfilling operations will also enhance landfills resilience to climate shocks (that is, flooding as mentioned above), contributing to the adaptation efforts. The DLI also focuses on monitoring and oversight mechanisms related to the proposed investments above, improving the above-mentioned risks management, i.e. the annual reports under DLR 6.3. and 6.4. will track activities that systems in place to ensure the investments’ resilience to identified climate risks such as floods, are effective. The reports will also track methane capture in targeted landfills. DLI #7: This DLI supports treatment of the stock of leachates at landfills which would remove biological oxygen demand, 39.0 Addressing the and the methane released will be captured for energy use or in production processes in medium to large-capacity Environmental landfills. Leachate treatment would facilitate water conservation for domestic and commercial use in a country Legacy of the vulnerable to water scarcity induced by climate change. Closures of abandoned landfills under this DLI would MSW Sector incorporate landfill gas capture abatement and utilization as part of the closure whenever economically justified. DLI #8: This DLI supports a demonstration circular economy approach, which should reduce greatly the production and 10.0 Promoting the waste of plastics and packaging material in the municipality in which it is implemented. development of circular economy Page 58 of 58