INTEGRATED SAFEGUARDS DATASHEET
APPRAISAL STAGE
I. Basic Information
Date prepared/updated: 07/01/2011 / Report No.: 631091. Basic Project Data
Country: Argentina / Project ID: P110612
Project Name: Argentina Sustainable Industrial Development Project
Task Team Leaders: Renan Alberto Poveda and Anjali Acharya
Estimated Appraisal Date: June 27, 2011 / Estimated Board Date: August 4, 2011
Managing Unit: LCSEN / Lending Instrument: Adaptable Program Loan
Sector: General industry and trade sector (100%)
Theme: Pollution management and environmental health (50%); Regulation and competition policy (25%);Climate change (25%)
IBRD Amount (US$m.): 40.00
IDA Amount (US$m.): 0.00
GEF Amount (US$m.): 0.00
PCF Amount (US$m.): 0.00
Other financing amounts by source:
Borrower 10.00
10.00
Environmental Category: B - Partial Assessment
Repeater []
Is this project processed under OP 8.50 (Emergency Recovery) or OP 8.00 (Rapid Response to Crises and Emergencies) / Yes [ ] / No [X]
2. Project Objectives
22. The objectives of the Project are to control and reduce industrial pollution in Argentina by: (a) improving the environmental performance of Participating SMEs through a voluntary clean production matching grants program; (b) strengthening key Participating Provinces and Participating Municipalities to enhance environmental monitoring and enforcement; and (c) developing incentives and alternative approaches to pollution control through the establishment of an environmental public disclosure system, all aimed at stimulating local development, enhancing competitiveness and productivity in Participating SMEs, and contribute to environmental sustainability.
3. Project Description
Component 1: Matching Grants for Financing Cleaner Production in SMEs (US$32 million).
1. This component will assist in carrying out of demand-driven investments within Selected Industrial Sectors, which investments shall consist of the improvement of the environmental performance of Participating SMEs and fostering their compliance with environmental regulations through, inter alia: (i) the adoption of cleaner production technologies and/or processes to control, reduce and/or eliminate pollution emissions/discharges to legal limits or below; (ii) a decrease in the use of natural resources, promoting reuse and recycling; (iii) the control, reduction and/or elimination of toxic inputs and emissions to legal limits or below; and (iv) the improvement of Participating SMEs’ general productivity through, inter alia, the carrying out of activities such as the paving of access to roads, fencing perimeters for cattle, and the purchasing of engraving machines for tanneries, all acceptable to the Bank.
2. During APL-1, subprojects would be piloted in four key sectors viz. tanneries, electroplating, meat processing and dairies. These sectors were prioritized in consultation with the Ministry of Industry, and on the basis of their pollution intensity, potential competitiveness and interest expressed by SMEs. While SME participation in the project is voluntary, SMEs would have to meet eligibility criteria to qualify.[1]
3. Successful projects in this phase can be replicated in APL-2 throughout the country, and could encourage more industries to adopt clean production practices as a business and environmental management strategy. During APL-2, the lessons from Phase 1 would be embedded in project design and the matching grants program would be deepened to engage more intensively in SMEs in the initial four targeted sectors and/or broaden to include SMEs from other polluting industrial sectors as well as potential industrial parks, based on diagnostic studies financed under APL-1.
Component 2: Technical Capacity and Institutional Strengthening (US$5 million)
4. This component would complement the efforts carried out by SMEs (under Component 1) by providing TA to SMEs that implement cleaner production processes and by building technical capacity within provincial and municipal governments through the following activities:
(a) Provision of technical assistance to Participating SMEs through the carrying out of technical studies and preparation of related guidelines, for the purposes of, inter alia: (i) developing cost-effective Cleaner Production Subprojects; (ii) supporting Cleaner Production Subprojects implementation; (iii) improving Participating SMEs’ access to commercial credit; and (iv) raising awareness among commercial financial institutions about the potential market for SMEs’ financing.
(b) Strengthening of Participating Provinces and Participating Municipalities’ institutional capacities, on a demand-driven basis, for purposes of improving their environmental management and enforcement and monitoring systems, through, inter alia, the provision of technical assistance and training, and the acquisition and utilization of equipment required thereto.
(c) Carrying out of a viability analysis for the establishment of a cleaner production center within MI, and provision of administrative support for its initial set up in case it is established.
(d) Design and implementation of an environmental performance disclosure program for purposes of, inter alia, ranking the overall standing of industries with regard to adherence to environmental principles, compliance with emissions standards, and overall commitment to cleaner production, including the carrying out of technical assessments, data-gathering and monitoring required thereto.
(e) Provision of: (i) technical assistance to Participating SMEs seeking to obtain the ISO 14,000 certification for their industrial processes; and (ii) financial support to cover processing and administrative fees incurred by Participating SMEs that receive such certification
Subcomponent 2.1: Technical Assistance for Subproject Implementation (US$2 million)
5. Under this sub-component, technical assistance would be provided by cleaner production specialists (contracted by the Ministry of Industry with support from industrial chambers and associations) to eligible SMEs in order to: (i) identify cleaner production measures that would help improve their environmental compliance, by sector; (ii) prepare technical guidelines for subproject preparation; (iii) support SMEs in preparing executive subproject proposals; (iv) develop detailed subproject proposals if these have passed the first screening process;[2] and (v) provide overall technical assistance during subproject implementation. These TA activities would help build knowledge and capacity among SME owners and staff about best available technologies to improve environmental compliance by sector. Technical assistance will also be provided to SMEs interested in improving access to commercial credits for investments by building credit histories, developing formal audited financial statements, etc.[3] Furthermore, in preparation for APL-2, analytical studies will be undertaken to identify other potential industrial sectors and common cleaner production activities and investments in industrial parks that might benefit from such financing.
Subcomponent 2.2: Institutional Strengthening (US$3 million)
6. This subcomponent would focus on providing support to the environmental licensing, audits, monitoring and enforcement to be carried out by selected municipalities and provincial governments. Interested municipal and/or provincial governments would be required to submit a detailed proposal to MI, indicating the specific areas of support. Only provinces or municipalities with large concentrations of polluting industries would be considered. The requests would be prepared based on guidelines prepared by the PCU, indicating the scope and dimension of the institutional strengthening that can be requested. This subcomponent will finance specialized consultants for capacity building, preparation of technical guidelines to support institutional enhancement technical exchanges with other municipal governments in the region that are addressing similar challenges in regulating pollution from SMEs. Furthermore, this subcomponent will finance the equipment required to carry out environmental audits and monitoring (i.e. including laboratory equipment and supplies).
In addition, the project will contribute to assessing the establishment of a Cleaner Production Center (CPC) within MIT that could contribute to mainstreaming the sustainable industrial production agenda within the institutional structure of the ministry. Initially serving as a clearinghouse for cleaner technology promotion issues, the CPC could also coordinate the identification of potential subprojects and provide technical advice on identifying industrial competitiveness measures for industries (i.e., large firms) outside the project. As mentioned above (d and e), this subcomponent will also support the design and implementation of an environmental performance disclosure program (EPDP)[4] as well as SMEs that wish to obtain their ISO 14,000 certification.
Component 3. Project Administration (US$3 million):
7. This component will finance the provision of support for the operation and maintenance of the Project Coordinating Unit (PCU) for the implementation, supervision, monitoring and coordination of the Project. This will involve the financing of (i) human resources necessary for the functioning of the PCU[5] including procurement, financial management, as well as environmental and social safeguard specialists; (ii) the physical space and equipment for the PCU; (iii) a communications strategy aimed at promoting project activities among SMEs, disseminating lessons learned, conducting outreach programs and helping build public support for environmental programs within industry associations and local governments; (iv) technical guidelines and monitoring studies; and (v) the provision of expert support to provide periodic advice and technical assistance in conjunction with project implementation.
8. The PCU would coordinate project activities with SMEs, liaising with the clean production unit within SAyDS, specific relevant sectors (i.e., agriculture), and other key stakeholders. The PCU would also be in charge of coordinating and channeling technical assistance and capacity building to SMEs as well as to municipalities on a broad range of subjects. The PCU would also call upon and liaise with the members of the independent evaluation committee (IEC) for the review and endorsement of subproject proposals. The PCU will benefit from the technical and operational experience gathered in the implementation of the Reduction of Ozone Depleting Substances Project (also within MI).
4. Project Location and salient physical characteristics relevant to the safeguard analysis
The environmental baseline context for this project will be geographic areas where the specific SME interventions will occur, which are anticipated to be primarily in urban and semi-urban areas in the provinces of Buenos Aires, Santa Fe, Cordoba, Rosario, and Mendoza and the city of Buenos Aires. Many of these areas are suffering from different degrees of industrial and municipal pollution. Industrial discharges are a major source of air, water and solid waste pollution in Argentina. In the Buenos Aires metropolitan area, industrial sources account for nearly half of wastewater discharges, which are responsible for the poor quality of rivers and groundwater. In a few areas, industrial effluents are reported to be the dominant source of pollution.
As in many other countries, SMEs in Argentina are typically more polluting and are falling behind in the adoption of environmentally sound production. They generally use obsolete technologies and lack knowledge about newer cleaner technologies. Improper use of chemicals, inadequate treatment or disposal of waste, uncontrolled emissions, and production techniques that make intensive use of nonrenewable resources further add to potential environmental impacts. Data from Argentina#s largest industrial hotspot, the Matanza-Riachuelo Basin, which includes SMEs, reveal high contaminant loads attributed to these sectors. For example, tanneries contribute about 26 million kg of BOD per year or 61 percent of the total discharge to the basin, while meat-processing and dairy industries together contribute about 10.3 million kg annually, or 17 percent of the total. Toxic effluents are also high, particularly for tanneries with a discharge to the basin of 34 tons/year of chromium VI (100 percent of total discharge to the basin) as well as sulfates with 20,000 tons/year (100 percent of the total discharge to the basin). The metallurgy industry is also high, including chromium, zinc and cyanide.
5. Environmental and Social Safeguards Specialists
Mr Ricardo Schusterman (LCSUW)
Mr Marcelo Hector Acerbi (LCSEN)
Mr Robert H. Montgomery (LCSEN)
6. Safeguard Policies Triggered / Yes / No /Environmental Assessment (OP/BP 4.01) / X
Natural Habitats (OP/BP 4.04) / X
Forests (OP/BP 4.36) / X
Pest Management (OP 4.09) / X
Physical Cultural Resources (OP/BP 4.11) / X
Indigenous Peoples (OP/BP 4.10) / X
Involuntary Resettlement (OP/BP 4.12) / X
Safety of Dams (OP/BP 4.37) / X
Projects on International Waterways (OP/BP 7.50) / X
Projects in Disputed Areas (OP/BP 7.60) / X
II. Key Safeguard Policy Issues and Their Management
A. Summary of Key Safeguard Issues
1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts:
The project involves investments in cleaner production schemes for SMEs in order to achieve more environmentally friendly operations. The investments are restricted to SMEs operating in the dairy, electroplating, meat processing and tannery industries. The investments are not likely to have significant adverse environmental impacts that are sensitive, diverse, or unprecedented. Among others, targeted improvements will include: optimization in the use of natural resources, reduction in the pollution load in discharge, reduction of noise, gaseous and odor emissions, better solid waste management, workplace safety, optimization of land use, community outreach, and other measures. The scope of impacts can be summarized as follows:
a. The matching grants will not have significant adverse environmental impacts that are sensitive, diverse, or unprecedented.
b. These impacts are not likely to affect an area broader than the sites or facilities subject to the improvement of physical works or processes in the SMEs.
c. Areas where improvement would take place would be in the SMEs, and are not likely to involve public areas or other private lands.
d. No regional and indirect impacts of the envisioned improvements are expected since the SMEs already exist and have only a direct influence. In fact, the expected indirect regional or potential effect will be positive. The impacts are likely to be site specific.
e. Impacts are not expected to be irreversible.
f. Mitigation measures for industrial reconversion are well known and can be readily designed.
g. Participating SMEs will develop contingency plans to face unexpected problems.
h. Environmental liabilities and/or other environmental, health or safety issues in company will be considered
The project#s main potential adverse impacts include both construction and operation impacts. The short-term small construction activities have potential direct impacts but will likely be localized, relatively small, and easily mitigated by proper design and the implementation of an environmental management plan that each SME would develop and implement associated with it receiving financing. The potential operational related impacts and risks are sector specific, because they involve differentiated production of waste and emissions in terms of quality and quantity. Tanneries, dairy production, electroplating, and meat processing can be considered to involve medium to high levels of environmental impact/risk.
# Tanneries. A highly polluting industry because it involves the production of wastewater with high organic content, as well as discharges of heavy metals such as chromium, ammonia, sulfides, and residues of pesticides used for hide preservation. Decaying organic material produces strong odors. Volatile organic compound (VOC) emissions from finishing processes are also common.