Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized. Report No.

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Project Name Region Sector Project ID Borrower Implementing Agency Report No. PID7972 Dominican Republic-Wastewater Disposal in Tourism Centers Learning and Innovation Loan (LIL) Latin America and the Caribbean Region Water Supply and Sanitation DOPE59510 The Dominican Republic Date PID Update March 6, 2002 Appraisal August 23, 1999 Board Date April 19, Country and Sector Background: The water and sewerage services in the Dominican Republic are characterized by: (i) low coverage rates (41. of urban population has connections to a potable water distribution network, and only 11 to a sewage collection network); (ii) institutional weakness of the existing water and sewerage utilities; (iii) low investment in the sector and long construction delays due to lack of funds; (iv) inadequate operation and low maintenance of water and sewerage systems; (v) minimal cost recovery; (vi) high levels of unaccounted water; (vii) pollution of surface water, groundwater, and the coastal environment caused by inadequate discharge of untreated wastewater; (vii) pollution of surface and groundwater caused by inadequate dumping of solid waste; (ix) sea water to groundwater in some coastal areas; and (x) potential water scarcity in certain parts of country. Technical Secretariat of the of the Presidency Av. Mexico, Esq. Dr. Delgado Santo Domingo, Republica Dominicana Tel: (809) Fax: (809) Water and sewerage services in Dominican Republic are provided by three public companies, CAASD (Compania de Acueducto y Alcantarillado de Santo

2 Domingo) in Santo Domingo, CORAASAN (corporaci6n de Acueductos y Alcatarillados de Santiago) in Santiago, CORAPP in the Puerto Plata province and INAPA (Instituto Nacional de Agua Potable y Alcantarillado) in the rest of the country. These companies suffer from inadequate funding, low cost-recovery, inefficient operation and maintenance. The tourism industry is one of the most important economic activities of the country. It completely depends on the quality of the coastal environment. The number of hotel rooms in the nine most important tourism centers is projected to increase from the current level of 28,000 to about 43,000 in 2000, and 109,000 in However, the tourism industry is threatened by the deficiency of the water sewerage services, and the environmental pollution caused by inadequate management and disposal of sewage and solid waste. In some cases, untreated wastewater is discharged to creeks and beaches; in others, the existing wastewater treatment systems are inadequate or inoperative, and the effluent is either discharged close to the seashore or used for irrigation of park and green areas within hotel resorts, while the effluent quality is inadequate for such disposal methods. The current wastewater disposal practices pose health risks, especially to foreign tourists which are not accustomed to contact with pathogenic organisms carried in the wastewater or effluent. This year, the number of tourists from the U.K. has dropped significantly due to a report in the British press on beach pollution and health risks in the Dominican Republic. 2. Objectives: The project development objectives of this Learning and Innovation Loan (LIL) are to: (i) apply and test an innovative technology for environmentally sound disposal of treated wastewater of small and mediumsize coastal towns through smalldiameter cost-effective submarine outfalls; and (ii) prepare and -2-

3 implement, for the first time in the Dominican Republic, and innovative model for incorporating the private sector in the provision of water supply and sewerage services in a tourism center. Both the wastewater disposal technology and the institutional model could consequently be used, with the incorporation of lessons learned during the LIL, to prepare and implement a water supply and sanitation project in tourism centers of the Dominican Republic, which could be supported by a future Sector Investment Loan (SIL). 3. Description: The project will finance the following components: (i) Construction of the wastewater conveyance system, treatment installations and submarine outfall for Sosua; (ii) Preparation and implementation of the PSP model for the provision of water supply, sewerage services in the Puerto Plata/Sosua/Cabarete region; (iii) Monitoring of the coastal environment before and after the construction of the outfalls; (iv) Training and dissemination of the technology of small-diameter outfalls for wastewater disposal; and (v) Project management. 4. Financing: The total project cost is estimated to be US$7.55 million, of which US5.0 million will be financed by IBRD. The counterpart contribution of US$2.55 million will be provided by the Government. 5. Implementation: The Project Implementation Unit (PIU) in the Technical Secretariat of the Presidency would be responsible for project coordination. The implementation of project components 1 and 2 would be managed by CORAPP. For the preparation of the Private Sector Participation model, the PIU has hired international consultants to prepare technical analyses and specifications, bidding documents, and draft contract. An Advisory Committee, with representatives from the Technical Secretariat of the Presidency, CORAPP, ASONAHORES (the hotel and restaurant -3-

4 owners association), and the LMD (Liga Municipal Dominicana) has been set up to review draft documents prepared by the PSP team, to approve the final version to be used for the bidding process, and to participate in the evaluation of proposals and selection of the winning bidder. 6. Sustainability: The sustainability of project benefits would be achieved trough: (i) use of innovative technology that is appropriate for the local conditions and protective of the coastal environment; (ii) Government's continued commitment to private sector participation; and (iii) involvement of a private sector operator of water, sewerage, and solid waste services with specific targets, tariff structure, and payment options in the contract. The lessons learned during project design and implementation would be incorporated in the preparation of the following SIL operation, thereby enhancing the sustainability of the larger initiative at the national level. 7. Lesson learned from past operations in the country/sector: The project design reflects lessons that have been learned from the execution of a variety of Bank-supported projects in the water and sanitation sector and projects in the Dominican Republic, as well as preliminary lessons from LIL projects. The lessons on LIL project design include: (i) the preparation and result of the piloting LIL effort should be synchronized with the rest of the subsequent APL project; (ii) the investments included in the LIL should be small, discrete and able to be implemented in a short period of time; (iii) supervision in a LIL project needs to be intense; (iv) dissemination of results and broad participation should be a key consideration of LIL projects. Lessons learned in the Dominican Republic indicate that successful implementation is closely associated -4-

5 with: (i) obtaining strong government commitment; (ii) designing simple projects with focused and modest objectives; (iii) close and periodic evaluation of the project to allow adjustments to be made to the project design and its implementation arrangements; (iv) because of usual time delays in getting approval from Congress, it is important to have ownerships and commitment from different stakeholders in the Government, the hotel sector, and the communities; (v) maintaining an open and productive dialogue with the Borrower to ensure close collaboration with the project executing agency, to facilitate finding solutions to problems that emerge during project; and (vi) maintaining intensive technical, procurement, and managerial Bank's supervision during project implementation. 8. Poverty Category: N/A 9. Environmental Aspects: The proposed project is expected to have significant beneficial environmental and health impacts in Sosua and its surroundings as it will extend and improve the sewage collection network and will provide a safe wastewater treatment and disposal method that will protect important coastal ecosystems in the area. Nonetheless, the construction of the main sewage conveyance system, wastewater treatment and other ancillary facilities, an well as disposal of treated wastewater through a marine outfall has the potential to cause negative environmental impacts if proper mitigation steps are not taken. For this reason, the project has been classified as EA Category A. A full EA was commissioned under terms of reference agreed with the Bank. Formal Bank review of the final reports was carried out before appraisal and they were found to conform fully to Bank policy guidelines regarding environmental and social issues. The environmental assessment process

6 was based on a analysis of alternatives for wastewater treatment and disposal and assessment of current and dispersion parameters in the disposal site. The water depth at the selected outfall site and the added pretreatment facilities to an existing wastewater treatment plan, ensure minimum environment risks, The above mentioned reports have been made available in the Public Information Center of the World Bank in Washington. 10. Program Objectives Categories: Poverty Alleviation and Environmentally Sustainable Development. 11. Contact Points: Oscar E. Alvarado Task Manager (202) The InfoShop The World Bank 1818 H. Street, N.W. Washington, D.C Telephone(202) Fax:(202) Note: This information is on an evolving project. Certain components may not necessarily be included in the final project. This PID was processed by the InfoShop during the week ending March 22,