The World Bank BiH Water and Sanitation Services Modernization Program (P168943) Concept Environmental and Social Review Summary Concept Stage (ESRS Concept Stage) Public Disclosure Date Prepared/Updated: 11/06/2019 | Report No: ESRSC00919 Nov 08, 2019 Page 1 of 9 The World Bank BiH Water and Sanitation Services Modernization Program (P168943) BASIC INFORMATION A. Basic Project Data Country Region Project ID Parent Project ID (if any) Bosnia and Herzegovina EUROPE AND CENTRAL ASIA P168943 Project Name BiH Water and Sanitation Services Modernization Program Practice Area (Lead) Financing Instrument Estimated Appraisal Date Estimated Board Date Water Program-for-Results 3/20/2020 9/16/2020 Financing Borrower(s) Implementing Agency(ies) Ministry of Finance and Ministry of Agriculture, Treasury Water Management and Forestry of Federation of Bosnia and Herzegovina, Ministry of Agriculture, Forestry and Water Public Disclosure Management of Republika Srpska Proposed Development Objective(s) The Program development objective is to support the government of Bosnia and Herzegovina to strengthen the institutional capacity at Entity and Municipal level for improved public WSS service delivery. Financing (in USD Million) Amount Total Project Cost 75.00 B. Is the project being prepared in a Situation of Urgent Need of Assistance or Capacity Constraints, as per Bank IPF Policy, para. 12? No C. Summary Description of Proposed Project [including overview of Country, Sectoral & Institutional Contexts and Relationship to CPF] The Program's objective is to support the government of Bosnia and Herzegovina to strengthen the institutional capacity at Entity and Municipal level for improved public WSS service delivery. The Program will specifically support Nov 08, 2019 Page 2 of 9 The World Bank BiH Water and Sanitation Services Modernization Program (P168943) the following three results areas: i. Modernization of institutional and regulatory environment; ii. Strengthening of municipal WSS service delivery framework; and iii. Improvement of access, quality and efficiency of WSS service delivery. D. Environmental and Social Overview D.1. Project location(s) and salient characteristics relevant to the ES assessment [geographic, environmental, social] Activities will take place in Bosnia and Herzegovina and are country wide in geographic scope although the geographic locations are not known at this time. Bosnia and Herzegovina (BiH) is a country in southeastern Europe that borders with Croatia and Serbia, while to the north, BiH has access to the Sava River, and to the south to the Adriatic Sea through a small section of land and town of Neum that protrudes between the two parts of Croatia. The land is mainly hilly to mountainous, with an average altitude of 500 meters, (0 m at the seacoast and 2 387 m at the highest peak, Maglić mountain). Forest lands cover about 49 % of the total land area, while forest ecosystems cover 41 % of the territory, and a relatively high number of species are endemic. Bosnia and Herzegovina ranks among the territories with the highest level of biological diversity in Europe. The total percentage of the protected areas in BiH is rather low, and accounts for less than 5% of the land, with three National Parks and other parks and lanscapes under protection regimes. There are seven river basins (Una, Vrbas, Bosna, Drina, Sava, Neretva with Trebišnjica and Cetina), of which 75.5 % belong to the Black Sea catchment region and 24.3 % to the Adriatic Sea catchment. The source fields of surface and ground water are particularly valuable natural resources. There are also numerous river lakes (on the Pliva and Una Public Disclosure Rivers) and mountain lakes (in the Dinarides range), as well as thermal and geothermal groundwater resources. D. 2. Borrower’s Institutional Capacity Bosnia and Herzegovina’s complex governance structure, with 14 governments (state, two entities, one autonomous district and 10 cantons), disperse population, political and economic transition processes, and weak vertical and horizontal coordination among them, presents a challenge for effective reforms, including those in the water sector. At the second tier of government, the FBiH is further divided into 10 cantons, each with its own governments and laws according to the FBiH legislation. Such cantonal division does not exist in the RS. At the local level, both the FBiH and RS exercise their authorities through 79 and 62 municipalities respectively. The City of Brcko is a separate administrative unit and also functions as a local self-government area, like the other municipalities in the country. A recent review of the water governance, institutional, legal and regulatory framework in Bosnia and Herzegovina shows a highly fragmented sector and lack of clarity with regards to roles and responsibilities, resulting in poor oversight over public utility performance. According to existing legislation the key competences for water resources management in BiH are distributed among four different government levels: i) State level; ii) Entity Level; iii) Cantonal level (only in FBiH); and, iv) Municipal level. The legislative authority in the area of water services rests at Entity and Cantonal level. The main legislation in the area of water and water services are the Law on Water and the Law on Communal Affairs on Entity level. In FBiH, each of its 10 Cantons have their own Law on Water and the Law on Communal Affairs. However, existing laws fail to clearly define the responsibilities for provision and development of water services. The two laws are not harmonized with each other, nor are they harmonized with Entity Laws on Local Self-Governance, which should also regulate service provision by the local governments. Another main piece of legislation relevant to water utilities are the Entity Laws on Public Enterprises / Utility Services. Nov 08, 2019 Page 3 of 9 The World Bank BiH Water and Sanitation Services Modernization Program (P168943) The PIU for the project has not yet been established, and may present a challenge in the fact that the different levels have different responsibilities, where the key implementing structures would be at the lowest - municipal levels. The PIU will need to have a full time environmental specialist on board. II. SCREENING OF POTENTIAL ENVIRONMENTAL AND SOCIAL (ES) RISKS AND IMPACTS A. Environmental and Social Risk Classification (ESRC) Substantial Environmental Risk Rating Substantial The Technical Assistance which is subject to this ESRS will not have any civil works financed, and will guide the development of overall project initiative including the capacity building and discrete technical support. Due to the close linkages of such TA with the PfR that is being prepared and which will include both physical works and improved efficiency measures, the risk is assessed as substantial. The risk associated with the activities under the PforR are assessed as having a substantial risk, due to the spread out nature of the project, multiple implementing agencies and levels and the need to further define the overall scope of the interventions under the Program. Rating of TA is substantial to be consistent with main P4R project. Social Risk Rating Substantial Technical Assistance activities are anticipated to have a net positive impact on the population by supporting the efficiency and delivery of water. There are no civil works under the TA and very low risk of any potential negative Public Disclosure social impacts. Although net positive impact is expected and no civil works envisaged under the TA the spread out nature of the Project and multiple implementing agencies, country wide, with diverse regulatory frameworks justify the rating to be substantial and is to be consistent with the main P4R project. B. Environment and Social Standards (ESSs) that Apply to the Activities Being Considered B.1. General Assessment ESS1 Assessment and Management of Environmental and Social Risks and Impacts Overview of the relevance of the Standard for the Project: In terms of potential social impacts, improving the capacity of implementing entities have substantial ripple effects. Access to clean drinking water and sanitation reduces health risks and frees up time for productive activities, as well as increases the productivity of the general labor force. The activities also have the potential to strengthening a culture of accountability in service delivery and enhance the capacity of water sector workforce. An initial social risk screening identified potential risks stemming from the complex governance structure, weak vertical and horizontal coordination among them, presenting a challenge for effective reforms, including those in the water sector and utilization of the TA provided under the IPF Component of the PfR. Republika Srpska, already shows a high-level commitment to include the communal services (including WSS) as part of the broader economic reform program, and there is a proposal developed by the line Ministry with regards to institutional arrangements for regulatory oversight and provision of TA to local governments and WSS utilities. Provided political commitment, the sector modernization program could become a part of the Reform Agenda 2.0 for the entire BiH thus decreasing the risk from dispersed authorities country wide Nov 08, 2019 Page 4 of 9 The World Bank BiH Water and Sanitation Services Modernization Program (P168943) Effective stakeholder engagement to build ownership and provide a platform is the engine of succesfull implementation and will be key to mitigating risks associated with this activity. This focus will be part of the TA that looks at the working and outreach of the water utility. There will be an ESSA prepared for the PforR.The risk associated with the PforR is assessed to be substantial due to the spread out nature of the project, multiple implementing agencies and levels and the need to further define the overall scope of the interventions under the Program. The scope of the proposed activities and the objective of the Program itself, at this stage, indicate that there will be no activities with a high environmental risk, or those with significant adverse impacts that are sensitive, diverse, or unprecedented on the environment and/or affected people As the full details and activities of the Program are not yet defined the ESSA will include a screening criteria that would help screen out any high risk activities if they are proposed at a later date during the Program implementation. However, there are no additional ESF instruments that are anticipated to be prepared at this time given the nature of the activities in the IPF component of this project. All of the Terms of Reference and outputs that may have direct or indirect environmental implications will be prepared for the technical assistance studies will be in line with WB’s ESF and ESSs. At this stage, the focus of the TA would be to provide support for program coordination (i.a. financing of the PIUs), qualitative assessments of Program results and verification of the DLIs. Small portion of the TA can consider local-level technical support for the implementation of the PforR and some planning, systems strengthening, capacity building, and financial management Public Disclosure improvement activities. Full list of TA specific activities would be prepared by project appraisal, and the draft ToRs in line with the ESF and ESSs will be completed at this time as well. The Terms of Reference for the identified activities will be prepared prior to Appraisal and be considered as due diligence for the subject activities. Areas where “Use of Borrower Framework” is being considered: Use of Borrower Framework is not being considered for this project. However, as per PforR guidelines, the PforR activities will use national standards, in line with the ESSA prepared for the PforR. ESS10 Stakeholder Engagement and Information Disclosure The Ta will have as per the nature of the designed activities, positive impacts to other interested parties as it focuses on building the capacity of the Government staff and systems with aim to set institutional capacities which will continue activities upon project completion with overall vision to set basis for future regulatory body for the sector on Entity level The list of these interested parties is at this time not known in details but will include staff from The Ministry of Finance, the Ministry of Foreign Trade and Economic Relations various other Ministries, State as well as Cantonal Government, municipalities, public water utility companies, and citizens water users at all levels in BiH . The TA supports achievements of Results area one of which is Improved citizen engagement in water sector management through raising and promotion of the water service sector at all levels in BiH. As the results indicator of Nov 08, 2019 Page 5 of 9 The World Bank BiH Water and Sanitation Services Modernization Program (P168943) the TA and PfR are expected to bring evidnet benefits for citizens water users across the country are the Projects stakeholders. One of the objectives of this project is to develop implementing entity capacity for stakeholder engagement and information disclosure, particularly in the area of increasing the awareness of the public on water safety. As this IPF is TA in nature, and the issue of stakeholder engagement will itself be the focus of project implementation design the Bank will review the Governments stakeholder engagement provisions in place and, if necessary, develop and implement a supplemental Stakeholder Engagement Plan (SEP) to ensure adequate stakeholder engagement going forward. B.2. Specific Risks and Impacts A brief description of the potential environmental and social risks and impacts relevant to the Project. ESS2 Labor and Working Conditions While the project will mostly be implemented by government employees, it is anticipated that consultants will be hired to support certain TA objectives. A labor GRM will be made accessible to the Project Workers including direct workers, contracted worker. Further discussion is needed with the implementing entities to comply with the ESS2 standards. ESS3 Resource Efficiency and Pollution Prevention and Management Public Disclosure Although this standard is not assessed as relevant at this stage, and as per the description of the TA to be provided, since the major aim of the activity is to help improve the water supply and improve efficient use of water, this standard will apply to all Terms of Reference and Outputs provided under the TA. Both the TA and the PforR will primarily focus on the efficiency of water use in the water supply and sanitation networks. They will include a number of institutional measures that would allow for a more direct management of the water supply systems and therefore better response times for any immediate or even long term interventions on improving the network. The TA and PforR will also focus on better financial management of the water supply companies which would help lead the utilities on a more sustainable path and again help them better manage the water supply systems. Finally, a series of interventions on reconstruction of the water supply networks will be undertaken to help improve the delivery of water the the end users through decreasing the number of leaks, decreasing the number of illegal connections and basically to decrease the overall amount of non revenue water. ESS4 Community Health and Safety The activities proposed do not have direct impacts on community health and safety. Relevance of this ESS will be further assessed during Project preparation as part of the ESSA process. ESS5 Land Acquisition, Restrictions on Land Use and Involuntary Resettlement The activities under this project do not necessitate land acquisition or restrictions on land use. Relevance of this ESS will be further assessed during Project preparation as part of the ESSA process. Nov 08, 2019 Page 6 of 9 The World Bank BiH Water and Sanitation Services Modernization Program (P168943) ESS6 Biodiversity Conservation and Sustainable Management of Living Natural Resources Relevance of this ESS will be further assessed during preparation and will be incorporated into the TORs or Outputs in particular for any activities that may require replacement of old water supply networks or new networks. ESS7 Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities Not relevant. ESS8 Cultural Heritage Relevance of this ESS will be further assessed during Project preparation as part of the ESA process. ESS9 Financial Intermediaries This ESS is not relevant due to the anticipated project implementation structure. No FIs will be involved. B.3 Other Relevant Project Risks Public Disclosure The team needs to ensure that the activities prepared under this TA and following the World Bank ESS's are also binding if the said activities are to be financed under the PforR. This needs to be noted and mandated through the ESSA for the PforR. C. Legal Operational Policies that Apply OP 7.50 Projects on International Waterways Yes The territory of BiH falls within two international watersheds (the Danube and the Adriatic Sea Watersheds). However, as the investments envisioned under the program appear to focus on rehabilitation of existing infrastructure and small scale new water connections, it may be possible to apply the ongoing schemes exception to the notification requirements. During preparation the team will confirm the scope of investments eligible under the program, make sure that all the policy exception requirements are met, and review the memo that would need to be approved by the RVP. OP 7.60 Projects in Disputed Areas TBD III. WORLD BANK ENVIRONMENTAL AND SOCIAL DUE DILIGENCE Nov 08, 2019 Page 7 of 9 The World Bank BiH Water and Sanitation Services Modernization Program (P168943) A. Is a common approach being considered? No Financing Partners None identified at this moment. B. Proposed Measures, Actions and Timing (Borrower’s commitments) Actions to be completed prior to Bank Board Approval: Details of the Labor GRM should be confirmed prior to appraisal and the Terms of Reference in line with the World Bank ESS’s should be prepared prior to appraisal. Possible issues to be addressed in the Borrower Environmental and Social Commitment Plan (ESCP): The Borrower's Environmental and Social Commitment Plan shall ensure overall and comprehensive commitment to comply with ESS1, ESS2 and ESS10 including any outputs expected by the Technical Assistance. All Terms of Reference for activities financed under this TA will include reference to the specific ESS (ESS1, ESS2 and ESS3 at this stage, as well as any other relevant ESSs) and will integrate provisions of the standards in its development. C. Timing Public Disclosure Tentative target date for preparing the Appraisal Stage ESRS 01-Jan-2020 IV. CONTACT POINTS World Bank Contact: Patricia Lopez Martinez Title: Senior Infrastructure Finance Specialist Telephone No: 5220+70738 Email: plopez@worldbank.org Contact: IGOR PALANDZIC Title: Water Supply and Sanitation Specialist Telephone No: 5244+1519 / Email: ipalandzic@worldbank.org Borrower/Client/Recipient Borrower: Ministry of Finance and Treasury Implementing Agency(ies) Ministry of Agriculture, Water Management and Forestry of Federation of Bosnia and Implementing Agency: Herzegovina Implementing Agency: Ministry of Agriculture, Forestry and Water Management of Republika Srpska Nov 08, 2019 Page 8 of 9 The World Bank BiH Water and Sanitation Services Modernization Program (P168943) V. 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 VI. APPROVAL Task Team Leader(s): Patricia Lopez Martinez, IGOR PALANDZIC Practice Manager (ENR/Social) Kseniya Lvovsky Recommended on 06-Nov-2019 at 18:19:5 EST Public Disclosure Nov 08, 2019 Page 9 of 9