PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Project Name Region Sector Project ID Borrower(s) Implementing Agency PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Environment Category Date PID Prepared March 22, 2005 Date of Appraisal April 18, 2005 Authorization Date of Board Approval June 23, Country and Sector Background Bahia Integrated Urban Development Report No.: AB1480 LATIN AMERICA AND CARIBBEAN General water, sanitation and flood protection sector (50%);Housing construction (25%);Other social services (25%) P STATE OF BAHIA CONDER - Companhia de Desenvolvimento Urbano do Estado da Bahia Colina de Sao Lazaro, 203 Federacao Bahia Brazil Tel: Fax: SEDUR - Secretaria de Desenvolvimento Urbano do Estado da Bahia Av. Tancredo Neves, Ed. Suarez Bahia Brazil Tel: Fax: [X ] A [] B [ ] C [ ] FI [ ] TBD (to be determined) In Brazil s cities, most of the poor live in unplanned or informal settlements of various kinds, which usually constitute a large part of the urban area. In varying degrees, these areas are characterized by poor access to basic infrastructure and services, environmental degradation, lack of economic and educational opportunities, poor health care and day care facilities, lack of security of land tenure, social exclusion and violence. The consequences include: (i) a deterioration in health conditions and quality of life in general, particularly of the most vulnerable the elderly and the young; (ii) negative economic impacts due to higher costs of health care, loss of productivity, and a poorly trained and uneducated workforce; and (iii) a perpetuation of the vicious cycle of poverty, through poor health, lack of opportunities, and lack of capacity to compete in the job market and generate income. According to data from the 2000 Census, there are about 15 million households in urban informal settlements in Brazil.

2 Additionally, a Bank 2002 study of the dynamics of household formation found that, every year, upwards of 600,000 new urban households nationwide have no housing alternative but the informal sector. In this context, the state of Bahia is no exception. Roughly a third of Bahia s urban dwellers around 3 million people live in households that fall below the poverty line, and urban poverty correlates strongly with informal housing and slums. At 35.7% of households in 2001, the relative extent of urban poverty in Bahia is now higher than in the 1980s (Verner 2004). Sprawling squatter settlement areas in Salvador, such as Alagados or Pau da Lima, are by-words for urban degradation. In the state s intermediate cities, such as Feira de Santana, Ilhéus, Itabuna or Juazeiro, large and growing areas of informality display similar features to those of Salvador. This situation poses serious obstacles to achieving social justice and cohesiveness, a clean environment and competitiveness/economic diversification, which, along with spatial integration, are the key components of the state s medium-term strategic development plan Plano Estratégico da Bahia (PEB ). The PEB dimensions are very similar to those of the Bank s Brazil CAS 1. The state s strategic plan identifies widespread poverty as Bahia s key challenge, which was reflected by the creation of a new Department and Fund for Poverty Reduction by the state government, covering both rural and urban poverty. PEB proposes a comprehensive urban poverty reduction strategy, materialized and translated into a program called Viver Melhor II, among other government policies. The proposed Project would finance part of the implementation of the Viver Melhor II Program. The strong correlation between urban poverty and informal settlements in Bahia was demonstrated by the targeting exercise that was carried out by the state government for the Viver Melhor II Program. The poverty and social exclusion mapping methodology introduced by Aldaiza Sposati in São Paulo was adapted for use in Bahia, and employed with data from the 2000 Census in Salvador and twelve other municipalities. At the same time, informal settlement areas were identified and mapped out. The strong correlation led the government to base its urban poverty reduction strategy on geographic targeting, coupling slum upgrading, i.e. an access to basic infrastructure and services package, with other social spending in the same geographic areas, identified by poverty mapping. Such geographic targeting of poverty reduction actions, leading to improved targeting of social spending, is a key recommendation of a recent Bank study of poverty in Bahia (Verner 2004), which shows that currently only 14 percent of social spending reaches the 1 st quintile of the income distribution. The concept of coupling a slum upgrading package with social support actions is not new. In addition to experiences in Bahia itself, projects like the Bank-funded Guarapiranga in São Paulo (Loan 3504 BR, closed in 2002), the recently launched PROMETROPOLE in Recife (Loan 4690 BR), the PAT-PROSANEAR Program to extend water supply and sanitation service coverage to the poor (Loan 4532 BR) and Rio s Favela-Bairro (financed by IADB) have utilized integrated approaches to slum upgrading, at a large scale. One of the lessons from such large- 1 The social justice and cohesiveness dimension roughly corresponds to the Bank s equity pillar; the competitiveness/economic diversification to the CAS s competitiveness pillar and the clean environment to the CAS s sustainability pillar.

3 scale projects has been the importance of support to resident communities extending beyond the period of the physical works, in the areas of income generation and social development, as well as in the use and upkeep of the new facilities and infrastructure. A promising new approach to urban poverty reduction is emerging from these projects, using urban upgrading as an entry point for a range of social programs. This new approach seems poised to make a key contribution to the attainment of the "Cities Without Slums" Millennium Development Goal (Target # 11). 2. Objectives The project development objective is to reduce urban poverty in a sustainable manner, targeting the poorest and most vulnerable sections of Salvador and strategic cities of the state of Bahia with access to basic services and improved housing and social support services. Specific objectives are: (i) improved quality of life and asset base for the poor through the provision of basic infrastructure services, improvement of housing conditions and access to urban land, and regularization of land tenure and buildings in slums and unplanned settlements; (ii) improved access to social programs in the areas of income and employment generation, direct support to families survival strategies (e.g. through better and easier to access daycare facilities), health care, education and job training, and initiatives in the area of community security at the local settlement level; and (iii) enhanced state and local government capacity to plan, implement, monitor and evaluate integrated urban poverty reduction strategies involving several different departments, undertake urban upgrading and land delivery, coordinate social policy on the ground through participatory planning, and monitor and evaluate government programs through poverty and quality of life indicators. 3. Rationale for Bank Involvement The Brazil Country Assistance Strategy CAS , approved December 2003, highlights the increasing poverty trends in metropolitan areas, expressed in urban violence and high unemployment. It suggests a stronger focus on metropolitan poverty reduction, and calls for an integrated approach in support of multisectoral, rural and urban development strategies at the sub-national level. The strategic goals of a more equitable, sustainable, and competitive Brazil include as long-term development outcomes reducing extreme poverty, vulnerability, and social exclusion, more equitable access to local services and under strategic goal #4 good governance. The proposed operation is in line with these challenges. The Project fits into at least two of the four building blocks for assistance within the Bank s urban strategy: (iii) scaling up programs to provide services to the poor; and (iv) expanding assistance for capacity building, particularly at the municipal level. The Bahia Integrated Urban Development Project is explicitly envisaged in the CAS (see CAS Annex B3 Brazil: Bank Group Program Summary Proposed IBRD Higher Range Base Case Lending Range Program, FY , in FY04-05, under the Competitiveness pillar). The CAS also calls for transformation of the cooperation with state governments into integrated state strategies and projects, including public expenditure and policy analysis, covering both the rural space and urban centers. In this context, the Viver Melhor II Program is part of a comprehensive poverty reduction strategy to be supported by the Bank in Bahia. This

4 strategy, which is the object of a policy document currently under preparation by the state government, would be supported by Bank-financed projects in health, education, income generation, protection of vulnerable groups, slum upgrading, urban poverty reduction, logistics infrastructure, water resources management, rural poverty reduction, public sector management and institutional strengthening at the local and state government levels. Some of these projects are ongoing, while others have been proposed. It is envisaged that each of the proposed operations will include components aimed at enhancing state capacity to plan, monitor and evaluate integrated public programs and actions, coordinate multisectoral programs and further improve fiscal management. The Bank Project in support of Viver Melhor II will also include a range of institutional capacity-building actions which would contribute to the implementation of the comprehensive strategy under discussion between Bahia and the Bank, including, importantly, capacity-building aimed at local governments, strengthening their capacity to deal with poverty-related issues. The proposed Bahia Integrated Urban Development Project would support the implementation of the Viver Melhor II Program. The proposed loan amount is $49.3 million. The counterpart funding to be provided by the state is in the amount of $31.9 million (40% of Project cost), making up a total of $81.2 million for the Project. It is important to note that the Viver Melhor II Program will also include investments from other sources. Therefore, a distinction will be made throughout this document between the state s wider Viver Melhor II Program and the Bank-financed Bahia Integrated Urban Development Project. Bank support to the Viver Melhor II Program through the proposed Project will add to the expertise in urban upgrading projects and municipal development that has already been provided to Bahia through the PRODUR loan (Loan 4140 BR) and the Bank s supervision of the Cities Alliance-funded TA to the Ribeira Azul Program. In Salvador and selected medium-size cities this new program will continue the capacity building actions undertaken by PRODUR (Loan 4140 BR). The State of Bahia has shown commitment to working with the Bank by organizing a Project Management Unit UGP within SEDUR, which is supported by staff from the state s urban development company (CONDER). Following a rigorous fiscal adjustment in the early 1990s and the modernization of fiscal management that ensued, the Bahia state government has earned a reputation as a fiscally responsible administration. This reputation is borne out by analysis of the Lei de Responsabilidade Fiscal (LRF) indicators for , which show Bahia in a very comfortable position, in absolute terms and also vis-à-vis other states. Its capacity to take on new debt is high. In addition, the state s high primary surplus in the last four years bodes well for payment capacity. These figures confirm the indication that Bahia, of all Brazilian states, is in the best position to take on new debt, which was given by STN during the CAS/Portfolio Review held on 27 and 28 September With regard to the Bahia Integrated Urban Development Project, the proposed operation is specifically included in the fiscal adjustment agreement signed between the Bahia state government and STN. 4. Description The proposed Project consists of three major components, as follows:

5 - Component A - Urban Infrastructure Delivery (66%): This component will finance urban upgrading of informal settlements and will have three subcomponents. The first will finance urban infrastructure investments (urban drainage, roads, street paving, water supply and sewage, solid waste management, home improvement, replacement housing) with impacts within the targeted communities. The second will finance macro-level infrastructure with impacts within and beyond the target communities, such as road links to enhance citywide mobility, macro drainage and green areas / parks. The third will finance lowcost housing alternatives for the poor. - Component B- Social Services and Facilities Delivery (25%): This component will finance social service delivery and the provision of the physical facilities needed to deliver such services. The nature and scope of the necessary social services and facilities will be identified within the Social Development Plans, which will be part of the Integrated Local Development Plans (PDLI). The interventions under this component will benefit approximately 60,000 families, both in the areas targeted for upgrading works (component A1) and those of their immediate neighborhoods with similar social disadvantages - Component C- Institutional Strengthening and Project Management (9%): This component will include three sub-components: The first will finance the preparation of studies on topics such as Local Economic Development, affordable land delivery mechanisms and cost recovery and subsidy mechanisms for infrastructure, and others required for Project implementation. The second will finance institutional capacity building for slum upgrading and urban poverty reduction. The third will finance project management, including monitoring and evaluation. 5. Financing Source: ($m.) BORROWER (40%) INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (60%) Total Implementation Project will be implemented through individual subprojects at the municipal level. Selection of municipalities will be dealt with in the context of the preparation of the State of Bahia Housing and Urban Development Policy and related Plan, which will be supported by the Project. While the Policy and Plan are being prepared, a provisional list of 8 municipalities will underpin investments during the project s rollout phase. In order to address concerns regarding the ability of the municipalities to comply with a series of requirements, especially those related to operation and maintenance of the infrastructure and services created by the subprojects, it was decided to prepare and sign a Memorandum of Understanding for each subproject, clarifying the roles and responsibilities of all parts involved (including the state government s own Secretarias). Municipalities will thus access Project investments on the basis of MOUs in which they make themselves responsible for certain activities and investments, among which participation in subproject selection and planning,

6 participation in project-sponsored capacity-building, construction of pre-school, day care and/or primary health facilities, operation and maintenance of such facilities (also when built by the project), and operation and maintenance of road networks, drainage works and other infrastructure built by the project. Municipalities will have a strong performance incentive, since their performance of obligations under the MOU will be closely monitored, and well-performing municipalities will have preferential access to further investments under the Project. This approach, which borrows from the Contrats de Ville or City Development Contracts concept that is being used by Bank projects in West Africa, will ensure allocative efficiency of funds and reward better-prepared and more efficient municipalities. Two key tools will be used in subproject selection: the poverty and social exclusion maps, and the Cost-Beneficiaries Estimate System (SECB). Together, these tools will allow the state government and partner municipalities to target the poor in the most vulnerable urban areas in a given municipality and select the lowest-cost intervention. These tools will be the main instruments for the negotiation on subproject selection in each pre-selected municipality. The Bahia State Department of Urban Development (SEDUR) will be the decision making institution, responsible for planning, overall supervision and control of all Project activities and monitoring and evaluation, assisted by a Project Management Unit (UGP). UGP, composed of a small group of professionals, will review and submit to the Bank the required documentation during Project implementation. SEDUR will also interact with the Bank and with other relevant state entities and municipalities that are implementing other actions complementary to the Project in each subproject area. UGP will provide support to the Project s Steering Committee, chaired by the Governor of the State of Bahia. The Project Technical Unit (UTP) established at the State Company for Urban Development (CONDER) will be responsible for subproject management and direct supervision. CONDER, a state-owned company, is staffed with well trained personnel with vast experience in the urban sector and is currently involved in the implementation of several other programs. UTP will be composed of a coordinator, financial and procurement specialists, as well as 7 specialists in planning, environment, social development and community organization, and monitoring and evaluation. UTP will: (a) assist municipalities in the preparation of subproject proposals and ensure their compliance with established eligibility criteria; (b) prepare all required documentation for the participation of executing agencies in the Project; (c) prepare implementation and procurement plans for each subproject; (d) plan, prepare and carry out the required bidding processes for civil works, goods and services; (e) prepare draft contracts, agreements and working plans; (f) provide information for UGP to use in Project reporting and monitoring; (g) support the activities of the Executive Committee; (h) assist UGP during Bank missions. CONDER will also assist municipalities in the establishment of Casa do Viver Melhor II and provide management and technical support for the Local Development Forum. 7. Sustainability There are several levels of sustainability in this project. With regard to the physical infrastructure, sustainability would depend on the proper maintenance of structures developed with project support. This would be primarily a responsibility of municipal government to repair

7 streets and walkways, maintain drainage ways, collect waste, etc. At a financial level, improved public services such as water, sanitation and electricity will be subject (in many cases for the first time) to payment of normal utility tariffs. These aspects are often fragile in slum upgrading projects, due to the following issues: (a) lack of involvement in the planning, design and works phases, of the organizations that will be responsible for the post-intervention day-to-day operations and management of infrastructure and services created by the project (local government, municipal council, utility companies); (b) emphasis on the creation of new services rather than the strengthening of existing local public sector facilities or private non-profit organizations already providing services; (c) absence of a clear and previously negotiated handover policy for the post-intervention stage, including a funding strategy for the new recurrent expenditures linked to the new services and infrastructure; (d) lack of negotiated service use and cost recovery arrangements leading to clear contractual relationships with project beneficiaries, leading to poor cost recovery and persistence of illegal connections and other instances of non-compliance. These problems will be dealt with in a systematic way in the Project. The highly participatory nature of the Project, in which neighborhood residents are involved at every stage of planning and execution, increases the likelihood that the project works will be properly maintained since the communities involved will have a stake in the new infrastructure. This factor will also contribute to sustainability since local residents and utilities will have a financial stake in maintaining physical infrastructure and discouraging improper use. Finally, the social sustainability of the project will depend in large measure on the effectiveness of the community mobilization, the post intervention services provided and the capacity of the community to take over management and operation of community facilities such as day-care and job training so that such facilities will become self-sustaining. CONDER has accumulated a great deal of experience in this area and can point to successful experiences in developing community-based social services in the Alagados and Ribeira Azul areas in Salvador, Bahia. There will also be an emphasis on clear contractual relationships with partner institutions, stakeholders and beneficiaries. The MOU that will be signed with the municipality and participating state Secretarias for each subproject, the clear handover terms for infrastructure and services, the contract-based partnerships that will be established with local organizations providing social services for their strengthening and for enhanced service provision, and clear contracts with beneficiaries specifying rights and obligations will be key features of the Project. Many of these features, such as the contracts with existing local organizations to enhance service provision, have been successfully introduced and tested in the Ribeira Azul Program, while others, such as the subproject MOUs and beneficiary contracts, will be introduced by the Project. As mentioned above, the subproject MOUs will be based on a successful experience in other Bank projects, i.e. the Contrats de Ville or City Development Contracts in West Africa. 8. Lessons Learned from Past Operations in the Country/Sector

8 Some slum upgrading interventions implemented in Bahia in recent years have allowed the state government, with assistance from the World Bank, the Cities Alliance and bilateral donors, to develop an approach to slum upgrading that is particularly integrated, in the sense that it includes a very strong emphasis on social program content. The pilot project at Novos Alagados, in Salvador, which was financed by the Bank s PRODUR loan (Loan 4140 BR), was based on an integrated and participatory methodology, seeking to address the many dimensions of poverty and enhance the asset base of the poor, in one of Salvador s poorest areas. Begun in 1995, the Novos Alagados Urban Upgrading and Social Promotion Project was implemented in the northernmost part of the area known as Ribeira Azul. In 1999, the Government of Bahia launched the Ribeira Azul Program, aiming at replicating the methodology of Novos Alagados in the remaining parts of Ribeira Azul, including the series of squatter settlements on stilts known as Alagados. The Ribeira Azul Program benefits from a Cities Alliance-funded and NGOexecuted TA and social support project, through a $5 million grant from the Italian Government, whose execution is supervised by the Bank. 2 In addition to the standard slum upgrading package of provision of basic urban infrastructure, housing improvements and environmental rehabilitation, the Ribeira Azul Program devotes significant resources to community-driven development and participatory planning, plus a range of actions that address social exclusion, inter alia access to basic education, improvement of the quality of education, improved public health services, support to families (and especially women-headed households) through enhanced day care services and income and employment opportunities. 3 The Novos Alagados Project and the Ribeira Azul Program were part of the investments undertaken since 1995 by the state of Bahia to improve the housing and infrastructure conditions of the urban poor, with financing from various sources, including the recently completed World Bank PRODUR loan (Loan 4140 BR). These investments were collectively known as the Viver Melhor Program. The success of the participatory and integrated approach used at Novos Alagados and Ribeira Azul 4 has led the state government to propose a new phase of Viver Melhor hence Viver Melhor II which will scale up and expand the scope of the previous housing and infrastructure program, transforming it into the comprehensive urban poverty reduction program for Salvador and Bahia s largest cities that is envisaged in the state s strategic plan. Beyond the magnitude of the need for urban poverty reduction, the momentum and critical mass of local capacity generated by Novos Alagados and Ribeira Azul have encouraged the government to launch Viver Melhor II as a statewide intervention along the same integrated and participatory lines. The poverty reduction strategy of Ribeira Azul and its spending allocation methodology, which will be replicated at a larger scale in Viver Melhor II, are based on a study of poverty correlates in the area. The findings are similar to, and the approach matches key recommendations of, the recent Bank study on poverty in Bahia (Verner 2004): inter alia, the use 2 The success of the Ribeira Azul TA project has led the Italian Government to pledge a new grant, of Euro 6 million, which will be used to replicate the Ribeira Azul technical assistance arrangements in Viver Melhor II. 3 This integrated and community-driven approach to slum upgrading and urban poverty reduction is based on the same premises that have led to the development of the approach to rural poverty reduction that is being implemented with similar local arrangements by the Bank-financed Produzir rural poverty reduction project series in Bahia. 4 Although final quantitative evaluation results for Novos Alagados and Ribeira Azul are not yet available, there is much anecdotal evidence of positive impact, which is confirmed by the preliminary findings of the Poverty and Social Impact Analysis studies and the perceptions of stakeholders, partner organizations, and the government.

9 of a geographic targeting mechanism, in which spending allocations are guided by overlaying poverty and service coverage maps; focusing public spending on items that disproportionately benefit the poor, such as basic services in slum areas; beneficiary participation in design and implementation; the emphasis given to day care and early childhood 5 programs; the emphasis given to education as the strongest poverty reduction correlate; and the resources devoted and emphasis given to monitoring and evaluation, including, importantly, impact evaluation. Given the importance of the Novos Alagados and Ribeira Azul experience to the concept of the proposed Project, a Poverty and Social Impact Analysis was carried out with a view to learning the lessons in a systematic way and reflecting them in Project design. The preliminary findings of the PSIA studies confirm the findings of the study of poverty correlates in the area and the soundness of the integrated approach suggested. Project design also benefited from the experience acquired through previous Bank operations in urban development in Bahia, and especially the recently completed Bahia Municipal Development Project (PRODUR Loan 4140BR). Lessons learned from PRODUR include the need to: (i) base partnerships between the state government and the Project s participating municipalities on the latter s active participation in the subproject identification and planning process; (ii) develop clear contractual arrangements spelling out the rights and obligations of the partners; (iii) monitor compliance with these covenants and use it as an incentive for access to further subprojects under the Project; and (iv) continue organizing and financing Project-related capacity-building for municipalities. 9. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP/GP 4.01) [X] [ ] Natural Habitats (OP/BP 4.04) [ ] [X] Pest Management (OP 4.09) [ ] [X] Cultural Property (OPN 11.03, being revised as OP 4.11) [X] [ ] Involuntary Resettlement (OP/BP 4.12) [X] [ ] Indigenous Peoples (OD 4.20, being revised as OP 4.10) [ ] [X] Forests (OP/BP 4.36) [ ] [X] Safety of Dams (OP/BP 4.37) [ ] [X] Projects in Disputed Areas (OP/BP/GP 7.60) [ ] [X] Projects on International Waterways (OP/BP/GP 7.50) [ ] [X] 10. List of Factual Technical Documents 3 Poverty and Social exclusion Maps of thirteen municipalities in the State of Bahia. CONDER 3 Cost-Beneficiaries Estimate System (SECB). COBRAPE 3 Integrated Local Development Plans (PDLI). Golder/Higesa 3 Viver Melhor II Program Executive Summary. TC/BR. 3 Social Development Strategic Plan. AVSI. 3 Environmental Impact Assessment report (Preliminary version). Alexandre Fortes 5 One of the key poverty correlates in Bahia is young heads of households with young children; furthermore, the gender of head of household affects poverty more in Bahia than in Brazil as a whole (Verner 2004).

10 3 Environmental Impact Assessment executive summary. Alexandre Fortes 3 Resettlement Framework executive summary. Soraya Melgaço 11. Contact point Contact: Ivo G.P. Imparato Title: Sr Urban Spec. Tel: Fax: iimparato@worldbank.org Location: Sao Paulo, Brazil (IBRD) 12. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C Telephone: (202) Fax: (202) Web: