The World Bank West Bank and Gaza Integrated Solid Waste Management Project-Phase I (P500392) @#&OPS~Doctype~OPS^blank@pidaprcoverpage#doctemplate Project Information Document (PID) Appraisal Stage | Date Prepared/Updated: 28-Nov-2024 | Report No: PIDA0301 The World Bank West Bank and Gaza Integrated Solid Waste Management Project-Phase I (P500392) @#&OPS~Doctype~OPS^dynamics@pidaprbasicinformation#doctemplate BASIC INFORMATION A. Basic Project Data Project Beneficiary(ies) Region Operation ID Operation Name West Bank and Gaza MIDDLE EAST AND NORTH Integrated Solid Waste West Bank and Gaza P500392 AFRICA Management Project- Phase I Financing Instrument Estimated Appraisal Date Estimated Approval Date Practice Area (Lead) Investment Project 13-Nov-2024 30-Jan-2025 Urban, Resilience and Land Financing (IPF) Borrower(s) Implementing Agency Palestinian Authority on Municipal Development behalf of the Palestine and Lending Fund, Ministry Liberation Organization of Local Government Proposed Development Objective(s) To upgrade, sustain and support integrated solid waste management system in the West Bank. Components Priority Infrastructure Strengthening Sector Policy and Institutional Capacity Contingency Emergency Response Component Project Management @#&OPS~Doctype~OPS^dynamics@pidprojectfinancing#doctemplate PROJECT FINANCING DATA (US$, Millions) Maximizing Finance for Development Is this an MFD-Enabling Project (MFD-EP)? No Is this project Private Capital Enabling (PCE)? No SUMMARY Total Operation Cost 36.00 Total Financing 36.00 Financing Gap 0.00 Page 1 The World Bank West Bank and Gaza Integrated Solid Waste Management Project-Phase I (P500392) DETAILS Non-World Bank Group Financing Other Sources 11.00 FRANCE: Govt. of [MOFA and AFD (C2D)] 11.00 Trust Funds 25.00 Partnership for Intrastructure Development MDTF 5.00 Special Financing 20.00 @#&OPS~Doctype~OPS^dynamics@envsocriskdecision#doctemplate Environmental And Social Risk Classification Substantial Decision The review did authorize the team to appraise and negotiate Other Decision (as needed) B. Introduction and Context Country Context The ongoing conflict in the Middle East continues to have a catastrophic impact on the Palestinian economy, pushing the territories into a crisis of unprecedented magnitude. The conflict has resulted in a staggering number of casualties, widespread displacement, and massive destruction of infrastructure in Gaza. The continuation of the hostilities has led to a sharp reduction in economic output and a collapse of basic services in both the West Bank and Gaza, amid deepening poverty and inequality across the territories. The economic downturn triggered by the conflict surpasses the impact of any previous shocks over the last three decades. Real GDP has plummeted, with the West Bank experiencing a 23 percent contraction in the first half of 2024, and Gaza suffering an 86 percent decline, year-on-year. For 2024, the World Bank estimates a real GDP decline of 17 percent year on year, for the Palestinian territories. All sectors have been severely affected, with construction, manufacturing, and trade experiencing the most significant declines. Poverty has reached unprecedented levels and unemployment has surged. Current estimates show that nearly every Gazan lives in poverty. West Bank's households also suffer from the hostilities. In the face of this economic deterioration, Page 2 The World Bank West Bank and Gaza Integrated Solid Waste Management Project-Phase I (P500392) unemployment has reached record highs in both the West Bank and Gaza, with rates of 35 percent and 80 percent, respectively. The PA’s financing gap is projected to increase significantly, and the financial sector is under strain. The financing gap is expected to reach US$2 billion in 2024, according to World Bank estimates, or 12 percent of GDP up from 4 percent in 2023, which may pose elevated risks for a systemic failure, primarily affecting public service delivery. Worryingly, the gap is primarily financed by borrowing from domestic banks and increasing arrears to the private sector, public employees, and the pension fund. There is an urgent need for measures to safeguard the sector's integrity, increase predictability and support its recovery. The impact of the current conflict is particularly acute on the Solid Waste sector whereby customers have long suffered from inadequate waste disposal infrastructure and dilapidated equipment, poor service quality and operational standard exacerbated by highly constrained financial management capacity of operators. Sectoral and Institutional Context Solid waste management (SWM) in the West Bank is characterized by high inadequacy, with major gaps in infrastructure and operational capacity for collection, transfer, treatment and disposal services. Although primary waste collection was high (over 90%) prior to the conflict, the overall service particularly for secondary collection and disposal is inadequate. For disposal, there are only two1 sanitary landfills (SLF) operating in the West Bank, Zahrat Al Finjan and Al Minya, in the North and South of the West Bank, respectively. Currently, there is no landfill serving the central part of the West Bank due to the long-lasting delays incurred to construct the Rammoun landfill2. As a result, several local government units (LGUs) in the middle area of the West Bank are burdened by hefty transportation cost for transferring and disposing waste at the referred two SLF. The ongoing conflict has intensified these existing challenges in SWM and has introduced new ones . Lack of adequate disposal facilities, the expensive transportation costs and newly introduced movement restrictions are leading to the proliferation of dumpsites across the West Bank. Many LGUs are unable to afford the costly transportation and disposal costs, and illegal dumping becomes the cheaper option. As a result, the landfills and dumpsites footprints are creating negative environment and public health externalities, including contamination of ground water. Without urgent infrastructure interventions such as extension of two existing SLFs and construction of strategically located transfer stations to reduce transportation costs, the operation of the current two waste sheds and the proposed third waste shed will be financially and environmentally unsustainable. Constrained financial resources further impede capital investments in new disposal infrastructure and maintenance of existing solid waste facilities, significantly impacting the quality and reliability of service delivery . Cost recovery of SWM services has remained a challenge for LGUs consisting of Joint Service Councils (JSCs), municipalities and village councils which have been providing the SWM services. The current fiscal crisis of the PA has worsened the financial situation of 1 In addition to these two sanitary landfills, the Jericho and Beit Anan semi-controlled landfills/dumpsites are being used but both sites are oversaturated and have reached their maximum capacity and are now considered environmental hotspots. 2 The Rammoun landfill has been planned to be constructed in area C to serve the Central West Bank area through the support of KfW and AFD since 2009. Israeli permission is needed to construct the landfill in area C. If granted the landfill could be constructed and operational after 4-5 years. Page 3 The World Bank West Bank and Gaza Integrated Solid Waste Management Project-Phase I (P500392) LGUs which mostly rely on central government funding to cover their operational budget. Significant resources are required to bring the current SWM facilities to an acceptable standard (infrastructure, equipment, and maintenance support) and to build new disposal facilities to accommodate the ever-increasing waste generation. Inadequacy and gaps in the existing SWM policies and weak enforcement mechanisms further constrain the effectiveness of SWM institutions. The sector suffers from policy gaps, and in cases where the policies exist, from lack of enforcement mechanisms to properly monitor and/or enforce solid waste directives. The existing policies are generally lacking in critical areas such as policies targeting waste minimization (laws and bylaws for 4Rs (Reduce-Reuse-Recycle- Recover)), promotion of circularity in waste management and creating enabling environment and incentives for private sector participation. To address these policy gaps, Japan International Cooperation Agency (JICA) has been providing support for the formulation of 4Rs guidelines, laws, and bylaws (including policy formulation for Extended Producer Responsibility and single-use plastic ban) which are all in the process of being rolled out by LGUs. Further, the existing laws, regulations, and enforcement mechanisms for environmentally sound management of waste and prohibition of large-scale dumping are acutely insufficient. Sector-wide financial policy reforms are also urgently needed to revisit the current flat tariff setting structure, strengthen the enforcement mechanisms and improve the overall revenue management and administration system for SWM in WB&G. While the PA, through its National Solid Waste Management Strategy (NSWMS), formulates the national targets and plans in the right direction, translating these into actions on the ground has been a key challenge due to lack of capacity, resources, leverage, and gaps in institutional arrangements. The key institution responsible for managing the SWM sector is the Ministry of Local Government (MOLG). The MOLG, as part of its overall responsibility for LGUs, has the mandate to regulate the sector and to update the NSWM in partnership with the Environment Quality Agency (EQA). The SWM services on the ground are assigned to fragmented LGUs (municipalities, JSCs and village councils) which often lack sufficient capacity and funding to provide quality and reliable services and/or properly enforce the existing regulations and bylaws set by the MOLG and EQA. The World Bank has been supporting the PA in the solid waste sector, through sequences of Investment Lending and TA engagements since the early 2000s. Over the past two decades, the Bank has sponsored several flagship solid waste projects, both in the West Bank and Gaza that have achieved successful outcomes and rated as highly satisfactory3 by the Independent Evaluation Group (IEG). The interventions have been transformational in provision of SWM services, both in the West Bank and Gaza Strip while operating in a very fragile and capacity-constrained environment. Key contributions supported through WB support included establishment of a modern sanitary landfill and ancillary facilities; upgrade of transfer stations; rehabilitation of dumpsites and elimination of open waste dumping; support to improved cost recovery; establishment of O&M standards for solid waste facilities and improved service delivery. While the support of the World Bank and other donor partners have been instrumental, particularly in establishing critical infrastructures, there is an ever-increasing need for an integrated and more programmatic waste management approach, focused on resilient infrastructure, waste minimization, and operational efficiency across the whole solid waste service chain. The programmatic approach will identify and prioritize construction of urgently needed infrastructure while at the same time introduce an incremental and gradual shift from the traditional ‘take-make-use-discard’ to that of 3 Southern West Bank Solid Waste Project (P105404, 2014); West Bank and Gaza - Solid Waste Management OBA Pilot in West Bank Project (P132268, 2018); Gaza Solid Waste Management Project (P121648, 2022) Page 4 The World Bank West Bank and Gaza Integrated Solid Waste Management Project-Phase I (P500392) circularity4, particularly given the context of increasing waste, proliferating dumpsites, scarcity of land and financial constraints faced in the WB. C. Proposed Development Objective(s) Development Objective(s) (From PAD) To upgrade, sustain and support integrated solid waste management system in the West Bank. Key Results i) Increased waste disposal capacity created at ZAF and AM landfills ii) Proper operation and management of ZAF and AM landfills iii) Improved financial management for JSCs and solid waste operators targeted under the project iv) People with enhanced resilience to climate risks (People benefiting from climate resilient infrastructure) D. Project Description The proposed Integrated Solid Waste Management Project (ISWMP-1) will be part of a Series of Projects (SOP) to address WB&G’s complex SWM sector issues, major infrastructure deficits, and incremental policy reform needed to support the improved SW management. The SOP framework will allow ISWMP-1 to address urgent infrastructure and equipment gaps in the existing three waste sheds in the West Bank, such as addressing operational gaps and adding disposal capacity at the existing two sanitary landfills in Northern and Southern waste sheds and construction and rehabilitation of selected transfer stations in Middle waste shed. The first phase will also lay the groundwork for much needed policy reforms and strengthening enforcement capacities of key SWM institutions in the sector that will enable the long-term operational, financial and institutional sustainability of the sector. ISWMP-2 on the other hand will focus on tackling long-term measures and activities that require in depth-assessments, longer implementation timeframe and stability, and significant level of financing such as collection optimization of the primary and secondary collection, upgrade of semi-controlled landfills and dumpsites to sanitary landfills and/or their closure, closure of major illegal dumpsites, construction of waste sorting facilities as well as providing implementation support for the legal and institutional reforms incubated under the ISWMP-1. ISWMP-1 is proposed as the first in a Series of Projects (SOP) focused only on the West Bank solid waste sector. This programmatic approach will help address the complex issues requiring incremental and sustained interventions while responding to immediate infrastructure and service provisions and capacity building demands. While the first phase recognizes the urgent infrastructure gaps for basic disposal, waste transfer and landfill remediation in the West Bank, it also covers the need to advance the sector reforms and strengthen the capacity of the SWM institutions leading to improved service performance and sector regulation. The latter will take time but is critical to ensure the effectiveness and sustainability of investments prepared and implemented under ISWMP-1 and its implementation transition towards ISWMP-2. Thus, engagements under planned ISWMP-2 will largely depend and build on policies and measures introduced under ISWMP-1. 4 Circularity in solid waste management refers to the application of circular economy principles to the management of waste. Unlike the traditional linear economy model, which follows a "take-make-dispose" approach, a circular economy aims to minimize waste and make the most of resources by reusing, repairing, refurbishing, and recycling existing materials and products. Page 5 The World Bank West Bank and Gaza Integrated Solid Waste Management Project-Phase I (P500392) The project will finance the following four components: Component 1: Priority Infrastructure (US$16.75 million) This Component will finance the construction and rehabilitation of critical solid waste infrastructure in the West Bank. Proposed activities cover: (a) Zahrat-Al-Finjan (ZAF) landfill that serves the northern waste shed in West Bank. Investments include construction of new cells, remedial rehabilitation of existing cells, including improved leachate collection and treatment system, necessary infrastructure for gas collection and energy generation, sludge management, and provision of essential landfill O&M equipment, (b) Al Minya landfill that serves the southern waste shed in West Bank. Investment includes construction of new cell, remedial rehabilitation of existing cells, including improved leachate collection and treatment system, necessary infrastructure for gas collection and energy generation, and provision of essential O&M equipment for Al Minya landfill and supply of medical waste treatment equipment, (c) construction of transfer station (s) (quantity, location and capacity of transfer stations will be determined based on the waste shed feasibility study that will be conducted prior or after project approval); and (d) supply of waste bins. Component 2: Strengthening Sector Policy and Institutional Capacity (US$4.50 million) Component 2 will support integrated SWM for national agencies and LGUs. At the national level it will provide support to the MOLG and EQA which oversee the policy formulation, implementation, and enforcement within the sector. At the local (LGU) level, it will provide technical assistance, capacity building, and performance-based support to selected JSCs to improve the overall solid waste management and service delivery. Sub-Component 2.1. National-Level support. This subcomponent will support central ministries and national agencies through technical assistance to prepare sector policy reforms, regulations and initiatives focused on three key areas: (i) policy initiatives promoting waste reduction through ‘Reduce-Reuse-Recycle-Recover�, circularity in waste management, and enabling framework for private sector involvement; (ii) policies and regulations preventing uncontrolled dumping and unsanitary disposal, and (iii) improve the financial sustainability of the sector through preparation of financial management toolkits. Sub-component 2.2: LGU support. This subcomponent will finance the performance-based support to selected JSCs and other solid waste operators as well as provide capacity building support and technical assistance. Sub-component 2.3. Collection optimization studies and waste management plans. This sub-component will finance, inter alia: (i) studies to optimize primary and secondary collection services in the West Bank to optimize the waste sheds operation and reduce the operating costs of JSCs; (ii) feasibility studies and detailed designs to upgrade and extend existing landfills in the West Bank; and (iii) prepare National Hazardous Waste Management Plan. Component 3: Contingency Emergency Response Component (CERC) (US$0) This is currently a zero-sum component to make funds available to the government by reallocation in the event of a natural, man-made or health crisis. Page 6 The World Bank West Bank and Gaza Integrated Solid Waste Management Project-Phase I (P500392) Component 4. Project Management (US$3.75 million) This component will finance the direct costs of management and operation of the project to ensure smooth delivery and compliance with World Bank policy and guidelines. Total project costs. The total operation cost is US$36 million, including US$25.0 million from the World Bank (Trust Fund for Gaza and the West Bank) and ~US$11.0 million from Agence Française de Développement (AFD) in parallel financing. parallel financing from @#&OPS~Doctype~OPS^dynamics@pidaprlegalpolicy#doctemplate Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Area OP 7.60 No Summary of Screening of Environmental and Social Risks and Impacts The Risks involved include an array of environmental and social risks during the construction and operational phases of the project. At both phases, the risks to project workers include OHS risks, and heightened safety risks due to working in security zones which require close coordination with the Israeli Authorities. Risks resulting from the construction activities are OHS, generation of dust during excavations and the significant earth works. The operations of the existing landfills include risks related to proper pest management, smell, and scatter of waste, and health and safety to workers. Risks also include community health and safety due to expansion of the operation of the landfills without adequate leachate management, management of sludge, and/or hazardous waste. Risks to living natural resources, olive trees farms, agricultural lands surrounding the landfills during the construction phase resulting in significant amounts of dust emitted during the earthworks. As a matter of principle, the project will apply the mitigation hierarchy including for dealing with the potential risk of land acquisition. Construction and rehabilitation of the solid waste disposal infrastructure are planned to be implemented in the footprint of the existing landfills and land for a transfer station using public land. No private land acquisition or physical resettlement are anticipated at this stage. The engagement of informal waste pickers in the existing facilities is yet to be determined. The engagement of vulnerable population of waste pickers in recyclables recovery activities particularly in uncontrolled and informal dumping areas is a very common practice. More detailed analysis for the existence of waste pickers in the respective facilities will be done. Risks of excluding those individuals from the project and subsequently loss of livelihoods for the waste pickers remain relevant to this project because preventing access to construction sites is likely to be encountered at one point of the construction and operation cycles. The project will address existing SWM facilities in West Bank that are encountering operational challenges and are creating legacy of communities' dissatisfaction. Risk of continued citizen mistrust still applies and can pose a critical risk that calls for commitment to apply meaningful, inclusive, transparent and proactive approach in stakeholder engagement. E. Implementation Page 7 The World Bank West Bank and Gaza Integrated Solid Waste Management Project-Phase I (P500392) Institutional and Implementation Arrangements The project will be implemented by the MOLG through the Municipal Development Lending Fund (MDLF). The MDLF had successfully implemented the recently completed GSWMP (P121648) (2014-2022) and MDP3 (P159258) (2019- 2023) and possesses substantial implementation knowledge of the World Bank’s project preparation and implementation cycles, including safeguards and fiduciary policies as well as SWM related interventions. As such, the proposed project will heavily capitalize on MDLF’s implementation capacity, experience and qualified staffing. The Environmental Quality Authority (EQA) will also be involved throughout the project implementation particularly related to project activities supported under Component 2. The MDLF will follow the implementation arrangements that have been used for recently closed Integrated Cities Urban Development Project (P150991) where MOLG has been in the “driving seat� while MDLF facilitated an overall implementation. MOLG/JSCs will be involved in three major phases: a) providing inputs to technical documents and clearing those; b) participating to evaluation of bidders/consultants and deciding on a final award recommendation; and c) contribution to designs, supervising the works and taking over all completed works, supplied goods and consultant deliverables. The specific framework conditions through which these JSCs will be beneficiaries of project funds will be highlighted in the Project Operations Manual. The specific targets for the payment of performance-based grants will be included in these agreements and will be agreed with the WB prior to their signature. @#&OPS~Doctype~OPS^dynamics@contactpoint#doctemplate CONTACT POINT World Bank Haji Huseynov Senior Infrastructure Specialist Dana Mohammad Luai M. Almubaied Urban Development Specialist Borrower/Client/Recipient Palestinian Authority on behalf of the Palestine Liberation Organization Laila Sbaih Director General slaila@pmof.ps Implementing Agencies Page 8 The World Bank West Bank and Gaza Integrated Solid Waste Management Project-Phase I (P500392) Municipal Development and Lending Fund Mohammad Ramahi Director mramahi@mdlf.org.ps Ministry of Local Government Yosrea Ramadan Head of Solid Waste Unit,Ministry of Local Government yosrear@molg.pna.ps FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects @#&OPS~Doctype~OPS^dynamics@approval#doctemplate APPROVAL Task Team Leader(s): Haji Huseynov, Dana Mohammad Luai M. Almubaied Approved By Practice Manager/Manager: Catherine Signe Tovey 05-Nov-2024 Country Director: Stefan W. Emblad 28-Nov-2024 Page 9