Donors Committee For consideration On or after 14 February 2014

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1 Donors Committee For consideration On or after 14 February 2014 MIF/AT January 2014 Original: English Public Document To: From: Subject: The MIF Representatives The Secretary Guatemala. Nonreimbursable technical-cooperation funding for the project Strengthening the Waste Management System in the Lake Atitlan Watershed Basic Information: Inquiries to: Executing agency... Sociedad de Cooperación para el Desarrollo Internacional (SOCODEVI) Amount... up to US$1,146,220 or its equivalent in other convertible currencies Source... Multilateral Investment Fund Svante Persson (telephone Country Office in Panama ) or David Bloomgarden (extension 8224) Reference: PR-3477(11/09)

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3 PUBLIC DOCUMENT OF THE INTER-AMERICAN DEVELOPMENT BANK MULTILATERAL INVESTMENT FUND GUATEMALA STRENGTHENING THE WASTE MANAGEMENT SYSTEM IN THE LAKE ATITLAN WATERSHED (GU-M1047) DONORS MEMORANDUM This document was prepared by the project team comprised of: Svante Persson (MIF/ABG), design team leader, Nicole Rossell (MIF/CGU) supervision team leader, David Bloomgarden (MIF/ABG), Celia Bedoya (MIF/ABG), Ana Grigera (MIF/MIF); Estrella Peinado (MIF/AMC), Dora Moscoso (MIF/DEU), Ana Castillo (MIF/KSC), Isabel Auge (MIF/ABG), George Rogers (LEG/NSG). Under the Access to Information Policy this document is subject to public disclosure

4 TABLE OF CONTENTS PROJECT SUMMARY 1. BACKGROUND AND JUSTIFICATION PROJECT DESCRIPTION MONITORING AND EVALUATION COST AND FINANCING EXECUTING AGENCY PROJECT RISKS ENVIRONMENTAL AND SOCIAL EFFECTS COMPLIANCE WITH MILESTONES AND SPECIAL FIDUCIARY ARRANGEMENTS INFORMATION DISCLOSURE AND INTELLECTUAL PROPERTY... 14

5 STRENGTHENING THE WASTE MANAGEMENT SYSTEM IN THE LAKE ATITLAN WATERSHED (GU-M1047) The contamination created by waste dumped directly into Lake Atitlan has impacted the health and wellbeing of its predominantly Mayan indigenous population. This project will increase access to wastewater and solid waste treatment to a population of more than 160,000 people, reducing the amount of wastewater and trash flowing into the basin. The reduction in contamination will also decrease water-borne diseases, resulting in less economic loss from healthcare costs and missed workdays. In addition, new economic opportunities in waste management will be created for the local population. In the medium-term, recuperating the Lake is expected to result in increased tourism-related activities. While there has been significant investment in infrastructure for sewage and garbage management as well as a number of local initiatives to provide waste services in the Lake Atitlan watershed area, there is little coordination or a comprehensive system for operations and maintenance. This project aims to strengthen these incipient efforts in order to catalyze an integrated and sustainable system for water and waste management for four communities around the Lake. Specifically, it will help establish waste management entities under the supervision of the municipalities, with responsibility for operations and maintenance, implementing tariff systems for long-term sustainability, increasing environmental awareness of the communities, and creating alliances to enhance and expand the value chain of recycled material and compost. To ensure participation and support from the communities, the project will combine teachings of Mayan natural traditions and communications technology to establish community waste management entities. MIF participation in this project brings experience, through the knowledge transfer from similar projects such as in the Southern Atlantic Region of Nicaragua (NI-M1030) and lessons learned from the Regional Initiative for Inclusive Recycling (RG-M1179), and complements the water and sewage infrastructure investment financed by the IDB (GU-L1039) by providing a sustainable system for operations and maintenance of waste water plants through municipally supervised community waste management entities. This project has the potential to be transformative for the Lake Atitlan watershed, as it creates a model possible to replicate in the remaining 11 communities surrounding the Lake, thereby considerably reducing the contamination and risks to the livelihoods of the people living around the Lake.

6 ANNEXES ANNEX I ANNEX II ANNEX III Logical Framework Budget Summary Quality for Effectiveness in Development (QED) APPENDIXES Draft Resolution INFORMATION AVAILABLE IN THE TECHNICAL DOCUMENTS SECTION OF MIF PROJECT INFORMATION SYSTEM ANNEX IV ANNEX V ANNEX VI ANNEX VII ANNEX VIII ANNEX IX ANNEX X ANNEX XI Detailed Budget Preliminary List of Milestones Diagnostic of Needs of the Executing Agency (DNA) Project Status Reports (PSR), Compliance with Milestones, Fiduciary Arrangements and Integrity Due Diligence Procurement and Contracting Plan Project Activities Schedule Operating Regulations Terms of Reference of the Project Coordinator

7 ACRONYMS AND ABBREVIATIONS ADENISA AMSCLAE ANACAFE AOP CECI DNA EA ENCOVI FEDEPMA IADB MAGA MIF OR PCU PET PROSOL QED SOCODEVI TOR WHO Association for Solid Waste in San Pedro Laguna, Sololá Autoridad para el Manejo Sustentable de la Cuenca del Lago Atitlan y su Entorno National Association for Coffee Producers Annual Operating Plan Centre for International Studies and Cooperation Diagnostic of Executing Agency Needs Executing Agency National Survey for Living Conditions National Federation for Mayan People Inter-American Development Bank Guatemala Ministry of Agriculture Multilateral Investment Fund Operating Regulations Project Coordination Unit Strategic Planning for the Territories Project for Rural Economic Development In the Department of Sololá Quality for Effectiveness in Development Sociedad de Cooperación para el Desarrollo Internacional Terms of Reference World Health Organization

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9 - 1 - PROJECT INFORMATION STRENGTHENING THE WASTE MANAGEMENT SYSTEM IN THE LAKE ATITLAN Country and Geographic Location: Executing Agency: WATERSHED (GU-M1047) Guatemala: Lake Atitlán watershed, Department of Sololá. SOCODEVI (Sociedad de Cooperación para el Desarrollo Internacional) Access Area: Access to Basic Services and Green Growth Agenda: Basic Services for the Poor Coordination with IDB Water and Sanitation (GU-L1039) Other Donors/Bank Operations: Direct Beneficiaries: 161,500 individuals in four targeted municipalities (Sololá, Panajachel, Santiago, and San Pedro) Indirect Beneficiaries: 321,500 people living in the Lake Basin that will benefit from improved environmental and socio economic conditions due to more effective solid and water waste management around the Lake. Financing: Technical Cooperation: US$ 1,146, % Execution and Disbursement Period: Special Contractual Conditions: Environmental and Social Impact Review: Unit with Disbursement Responsibility: Investment: - - Loan: - - TOTAL MIF FUNDING: US$ 1,146,220 70% Counterpart: US$ 479,270 30% Co-financing (if available): - - TOTAL PROJECT BUDGET: US$ 1,625, % 36 months of execution and 42 months of disbursement. Conditions prior to first disbursement will be: (i) hire project coordinator; and (ii) approve annual operational plan. This operation was screened and classified as required by the IDB s safeguard policy (OP-703). Given the limited impacts and risks, the proposed category for the project is C. COF/CGU

10 BACKGROUND AND JUSTIFICATION A. Diagnosis of the Problem to be addressed by the Project 1.1 Lake Atitlan in Guatemala has an estimated four years 1 remaining before becoming a degraded lake due to the number of contaminants flowing into the watershed, threatening extinction of its plant and animal life. The predominantly Mayan indigenous population of the watershed is especially vulnerable to health issues related to untreated waste (garbage and sewage) in and around the Lake. While there has been significant investment in infrastructure for solid and liquid waste management as well as a number of local initiatives underway to provide waste services, there is no coordination among them nor is there an effective system for operations and maintenance (O&M). 1.2 For the effective and sustainable functioning of the infrastructure investments made, and to comply with laws and regulations regarding waste it is important to complement these with technical, financial and institutional capacity. Therefore, this project will assist the four targeted communities, and while respecting the traditional indigenous cultures around the Lake, facilitate the creation of new community waste management entities. These entities will be supervised by the municipal governments and will be responsible for coordinating the services and sustainably operating and maintaining the waste systems in place. 1.3 The principal problem that this project will address is that waste is not being managed properly in the communities surrounding Lake Atitlan. Currently, 95% of domestic wastewater is untreated and more than 7 million m 3 flows into the Lake. Twenty percent of this untreated wastewater enters directly into the Lake while the rest enters through pollution of rivers, soil, and groundwater. An estimated 935 m 3 of solid waste is produced per day, of which 70% is organic, 19% recyclable materials and 11% is non-recyclable waste. Some of the targeted municipalities have basic sewage infrastructure while others use septic systems. Similarly, some municipalities have targeted municipal trash collection while others resort to clandestine dumps and volunteer efforts. Of the 10 completed wastewater treatment plants, seven are functional and only three operate effectively due to the lack of an effective and sustainable O&M system. An IDB loan (GU-L1039) for water and sewerage in Guatemala has helped fund a newly inaugurated waste water treatment plant in Panajachel, and this proposed MIF project will complement that investment by facilitating the creation of waste management entities responsible for O&M of the plant. These will be created by each municipality after grassroots consultations and an assessment of the waste situation and current system in place. The IDB loan) is also currently financing a general plan for sewage treatment that will define necessary future investments in the Atitlan watershed. 1.4 The contamination of Lake Atitlan has a direct impact on the health and wellbeing of 321,500 people living in the lake basin. An AMSCLAE 2 study from 2011found diseases affecting families who do not have systems for wastewater treatment. The prevalence of these diseases; diarrhea (97%), fevers (90%), influenza (85%), skin spots (89%), 1 Dr. Eliska Rejmankova, University of California, Davis Autoridad para el Manejo Sustentable de la Cuenca del lago Atitlan y su Entorno (AMSCLAE), the public institution responsible for conservation and protection of the Lake Atitlan watershed.

11 - 3 - conjunctivitis (92%) and fungi (100%), is consistent with waste pollution. In the four selected communities, there were 55,000 documented cases of illness related to contamination including parasites, amoebas and skin infections in Women and children without access to household water that depend on the Lake for water used for cooking, cleaning and drinking are especially affected by its poor water quality. Searching for other sources of water especially during the dry season is time consuming for women. 1.5 According to recent studies by AMSCLAE (2012), it is clear that the cost of poor environmental management is increased healthcare costs and reduced income opportunities in tourism. Economic valuation studies 4 estimate that between 2009 and 2011 the population of the Lake Atitlan basin lost almost 200 million quetzals (roughly $26 million USD) due to water contamination including cost of water-borne illnesses and job losses due to a decrease in tourism. 1.6 The entity with regulatory oversight of the Lake Atitlan watershed charged with enforcing municipal environmental regulations and investing public funds in waste management infrastructure is AMSCLAE. AMSCLAE works in close coordination with local municipalities, who have the obligation to provide water and wastewater services directly, or through the creation of municipal utilities. Given capacity and funding constraints, the four municipalities have been limited in their efforts to create waste management utilities and serve this function. The main causes of the problem are: (i) There is no entity technically capable and institutionally responsible for the sustainable management of operations and maintenance of the waste system in the four municipalities; (ii) Inadequate planning and coordination of the investments and services provided to meet the needs of the watershed s population; (iii) Low levels of environmental awareness and a lack of understanding of the effects of contamination on health and the environment as well as opportunities for employment opportunities (tourism) among the local population; and (iv) Insufficient coordination among the different stakeholders in the local market for recyclables and compost. B. Project Beneficiaries 1.7 The direct beneficiaries are the inhabitants of four municipalities, with an estimated population of 161,500 inhabitants, of which 83% are indigenous. These include three of the largest municipalities in the Lake Atitlan watershed; Sololá, Panajachel, Santiago and a smaller town, San Pedro, with outlying rural population. Of the total participating population, 20% are illiterate, 77% live under the national poverty line (the average for the entire country is 53%) 5 of which 28% live in extreme poverty with incomes less than $1/day 6. There are limited opportunities for formal employment around the Lake and therefore most income is derived from agriculture and handicrafts. However, even these economic activities are threatened by the environmental degradation of the Lake. The project will therefore analyze and take into account elements of indigenous natural conservation traditions, economic governance, and traditional social organization and ownership issues during the planning and implementation of the project. 3 Ministerio de Salud Pública y de Asistencia Social 4 AMSCLAE Instituto Nacional de Estadística, INE. Encuesta Nacional de Condiciones de Vida, ENCOVI SEGEPLAN 2011

12 Given the primary role of women in procuring water for household cooking, drinking and cleaning, gender issues are central to the Project s design and implementation. The executing agency and its partners will involve women stakeholders from the outset to provide input on the design and operation of their local systems. The strategy is intended to ensure that benefits of the improved systems contribute to gender equity especially in those communities that involve the creation of new employment opportunities. Community outreach will focus on involving women s indigenous groups as key spokespeople so the environmental message can be shared person-to-person and peer-topeer, incorporating traditional Mayan knowledge and languages. C. Contribution to MIF Mandate, Access Framework and IDB Strategy 1.9 This project contributes to the MIF Basic Services for the Poor agenda by improving access to improved waste management services and by creating and testing a community model for integrated and sustainable waste management in a watershed area. In addition, it dovetails with IDB s Water & Sanitation Initiative to improve water and sanitation services especially given its focus on the creation of efficient and transparent utilities The Lake Atitlan project also aims to increase family incomes in the target communities through the creation of new jobs related to waste management as well as the selling of recycling and organic compost from trash Collaboration with the Bank Group. The Project is complementary to the IDB loan and technical assistance project (GU-L1039) to upgrade and expand water and sanitation services and management in Guatemala. This operation financed the expansion of the sanitation system in the Santiago municipality through construction of a waste water treatment plant in Panajachel and provided related community development and municipal strengthening. The MIF operation will expand this community engagement to three additional municipalities in Atitlan and provide technical assistance for operation and maintenance of existing water and waste treatment facilities as well as the new Panajachel plant. A. Objectives 2 PROJECT DESCRIPTION 2.1 The objective at the impact level is to improve the livelihoods of poor communities living in Lake Atitlan s watershed. The objective at the results level is to increase the number of individuals with access to improved water and sanitation services in the municipalities of Sololá, Panajachel, Santiago, and San Pedro. B. Description of the model

13 The model will follow three steps: i) Facilitate a dialogue between the municipality, grassroots organizations and other stakeholders in the communities for deciding on which organizational structure is best suited for the community waste management entity to be created in each municipality; ii) Based on this consultation, create a community waste management entity in each municipality with the responsibility to sustainably operate and maintain the waste management system, including drafting operational plans for each municipality to ensure the cost recovery of operation and maintenance through a differentiated tariff system7; iii) Enhance and expand the local market for recycling and compost and support the production and sale of compost within the waste entities to augment their financial sustainability The municipality has by law the responsibility for waste management and will supervise the community waste management entities. These law permits different structures for these entities such as a cooperative, association, utility or concession to a private company. The specific organization will be chosen in consensus after the consultative process. The waste entity will be responsible for all waste services: operating and maintaining waste water plants, collection, transportation and separation of solid waste, and finally recycling and compost production and commercialization. C. Components 2.4 Component I: Environmental awareness campaign (MIF: US$236,103; Counterpart: US$123,000). The objective of this component is to raise awareness and support from the communities to facilitate the dialogue about environmental and health consequences of untreated liquid and solid waste as well as for the need to alter behaviors such as sorting and dumping household trash. The primary purpose of the awareness campaign is to engage communities in determining the role and structure of the waste management entities: what are the value drivers in terms of incentives and health risks, as well as economic benefits for the beneficiaries. The dialogue will adopt appropriate participatory methodologies that incorporate Mayan traditions and engage community members (youth, women, elderly and families) in appropriate local languages to foster environmental awareness, treat and separate household waste, validate the organizational structure of the waste management entities, and ensure buy-in of the system 9.A public private committee will be established to build community support. In addition, the communication campaign and the committee will focus on gaining grassroots support for paying tariffs, by using innovative approaches to raise awareness and change attitudes toward environmental issues and the new model, i.e. influencing children s curricula in school, social media outlets, local spiritual leaders, etc. The project will integrate local grassroots groups and other civic organizations to promote cultural and behavioral change with regards to waste. 7 The tariff system will be developed after doing a diagnostic of each community, discussions with the stakeholders and developing business plans. Businesses and residents will be charged differently and the rates will depend on the amounts of trash that needs to be collected. 8 The neighboring communities of Cerro de Oro in Santiago Atitlan and San Jorge la Laguna in Sololá have already started to treat wastewater, produce organic compost, and separate recyclable materials. They produce organic compost as well as commercialization of PET and other recyclables such as glass, paper and cardboard, car batteries, and tires. They use tariffs but need subsidies to fully cover costs. 9 In the Department of Sololá, under a public/private cooperation model, an environmental manual designed with support of Amigos del Lago and AMSCLAE, has been fully incorporated in the curriculum of local primary and secondary schools.

14 Activities and outputs: (i) Establishment of transparent criteria for the selection and monitoring of community waste management enterprises; (ii) creation and implementation of a communication system and campaign that ensures dialogue and transparency; (iii) study on indigenous traditions regarding waste and the environment, including the role of Mayan women in environmental stewardship; (iv) establishment of a Public-private committee for community consultation and information; (v) Participatory community dialogues in each community conducted; (vi) Awareness events/exchanges in each of the four communities organized to promote improved attitudes toward waste treatment and separation of waste at household level. 2.6 Component II: Create new waste management entities. (MIF: US$331,487; counterpart: US$178,000). The objective of this component is to ensure efficient and sustainable operations and maintenance system of waste services. There will be at least four (one for each municipality, with in some cases separate departments for liquid and solid waste) community waste management entities (cooperatives, association, utility or concession) created to operate the waste management system (two established each year during the first two years of project). Each waste management entity will have a business plan to ensure financial sustainability to cover operational and maintenance costs with the help of municipal subsidies to the poorest, differentiated tariff system and revenue from sales of compost and recyclable materials to be developed in component III. 2.7 The activities and outputs of this component are the following: (i) An organizational and administrative structure created and approved by the municipality; (ii) Business plans developed for the waste management entities; (iii) Analysis of the current waste services system as well as its impact on stakeholders and beneficiaries; (iv) Technical assistance to create the differentiated tariff system; (v) A system for performance monitoring of the community waste management entities created; (vi) At least 80 employees of waste entities trained in waste management and business administration. 2.8 Component III: Support to recycling and the production of compost. (MIF: US$173,230; Counterpart: US$28,462). The objective of this component is to expand the local market for recycling and organic compost to generate income for the community waste management entities and to reduce waste. 2.9 The project builds upon the Public Private Partnership that PROSOL (Project for Rural Economic Development in the Department of Sololá, funded by Canada) and AMSCLAE created with a local NGO (Empresarios por el Medio Ambiente) to establish commercial links with enterprises outside of the Atitlan watershed whose production facilities use recyclable materials. There is already a large company purchasing PET and glass 10 from two of the communities (Panajachel and Santiago) in the Lake Atitlan basin. Demand for other materials such as cardboard, metals, batteries 11, plastics and others exists, and the project will work to expand recycling activities to the other communities around the Lake. 10 CBC, the local bottling company of PepsiCo in Guatemala through its regional program Reciclar para mejorar 11 Hazardous waste will eventually be turned over to companies with special incinerators.

15 The market for organic compost is in the process of being established and demand is increasing. In the past two years, PROSOL has supported two organizations in the production of compost of organic waste and coffee pulp with vermiculture; preparing, packaging and marketing it to vegetable and coffee producers in the department The activities and outputs of this component are the following: (i) Analysis of local and regional markets and current and future volume of recyclable material 12 ; (ii) Training of at least 10 workers in each waste entity for certification 13, registration, branding and packaging of organic fertilizer; (iii) Establishment of a network and negotiation of formal agreements for commercialization of recycled material with local and national private actors; (iv) Organization of a round table on recycling with private actors, community waste management entities and municipalities; (v) Organization of commercial events (tours and fairs) for sub products of recycled material; and (vi) Training of workers in waste entities for production processes and marketing Component IV: Knowledge Management and Strategic Communication (MIF US$91,910; Counterpart US$39,500). The project will help inform which organizational structures are most effective for community based waste management, especially in a watershed area inhabited by mostly indigenous, poor populations. The objective of this component is to document and disseminate the knowledge generated in this project, including the following strategic audiences: (i) Municipalities, with interest in replicating the model; (ii) National government officials, concerned with environmental issues and the well-being of the population living in the surrounding areas of Lake Atitlan and other contaminated areas; (iii) Public agencies, such as INFOM, and the donors communities, with potential interest in funding the model or complementing investment needs; and (iv) Academia In order to meet these audiences knowledge needs, the following knowledge products will be developed within the framework of the Project: (i) How to Guide in order to facilitate the replication process. This guide will combine lessons from this project with other similar projects on integrated waste management and community based enterprises in indigenous communities; (ii) Infographic explaining the model and its key results (health and environmental benefits); and (iii) Final event, to be organized by the partners of the Project, to showcase the results and lessons learnt during the execution primarily with regard to municipalities and other public sector authorities and the revitalization of Mayan traditional knowledge. On an annual basis, a Project Fact Sheet explaining the challenge, strategy, objectives and key results of the project will be updated. In addition, Harvard Kennedy School of Government s (Institute for International Urban Development) graduate students have expressed an interest to provide technical assistance in creating case studies on the project to contribute to the knowledge management necessary for scaling and replication. D. Project Governance and Execution Mechanism 12 There is already demand for organic compost in the area. Also, during the interventions of AMSCLAE in 2012, there are already seven municipal facilities producing organic compost. SOCODEVI, through the PROSOL project is also supporting cooperatives in the production and marketing of compost for coffee and vegetable production. 13 The Ministry of Agriculture (MAGA) and National Association of Coffee Producers (ANACAFE) certify organic compost.

16 The project builds on the existing legal and regulatory relationships, and brings a participatory approach for community involvement. AMSCLAE, as the regulator, will ensure municipalities are complying with environmental management guidelines in the establishment of the community waste management entities. The four municipalities will be responsible for approving the community waste management entities and supervising their waste collection activities. These municipal governments are responsible by law for: updating and approving municipal regulations in regards to basic services; creating environmental management offices and/or municipal utilities; facilitating management of land acquisition; issuing municipal agreements favoring project implementation; providing municipal machinery and equipment; designating municipal staff to strengthen the project, and; adopting a system of charging for the provision of basic services. The community waste management entities will report to the municipalities and perform the waste management activities. The Institute for International Development of the Centre for International Studies and Cooperation will provide pro-bono consulting, drawing upon experience in South America and Africa in the design of systems to increase access to basic services The project will have a technical committee, consisting of the major stakeholders of the project and potential allies, that convenes every six months or as often as they deem appropriate to ensure efficiency and transparency in the project implementation. The committee will be representative of the different stakeholders and beneficiaries of the project. A similar technical committee already exists in the PROSOL project executed by SOCODEVI in the watershed. E. Sustainability 2.16 AMSCLAE, as the watershed environmental watchdog, has the legal authority to enforce municipal compliance with the laws regulating waste management and ensure efficient and transparent delivery of waste services after project funding ends. However, funding from municipal budgets has been insufficient to provide adequate service. This model seeks to preserve the existing subsidies in place for the poorest populations while creating a tariff structure that can sustainably provide operations and maintenance of the waste system. Long term financial sustainability largely depends on securing the community buy-in which in turn will increase willingness to pay for the services and thus break the low demand-supply equilibrium. Thus, the financing of the community waste management entities marginal costs for operations and maintenance (O&M) will consist of: i) A subsidy provided by the municipality for the lowest income clients which will be phased out in the longer term; ii) Tariffs will be collected through a differentiated structure defined by the amount of waste to be collected and treated; iii) Revenues from sales of organic compost; and iv) Revenues from the sale of recyclable materials and other marketable products made from recycled material. F. Experience and Lessons Learned from MIF or other Institutions 2.17 The MIF has recent relevant experience, notably in designing and planning for a comparable integrated waste management project in the Autonomous Southern Atlantic (RAAS) region of Nicaragua. The circumstances in those municipalities are very similar to those of Lake Atitlan, including lack of technical expertise and operational systems,

17 - 9 - lack of environmental awareness and willingness to pay among local population 14. Furthermore, the MIF has extensive experience in the recycling market improving waste pickers standard of living and working conditions and strengthening their associations through the Regional Initiative for Inclusive Recycling (RG-M1179). With this Regional Initiative, the MIF, in conjunction with The Coca-Cola Company, Fundación Avina and the IDB s Water and Sanitation Division, aims to improve the waste pickers organizations access to the recyclable materials market in LAC. This Initiative, which is part of the Access to Market (AMC) s Linking Small Firms to Value Chains agenda, is based on six projects (Argentina (AR-M1053), Brazil (BR-M1057), Colombia (CO- M1052), Bolivia (BO-M1040), Chile (CH-M1055) and Perú (PE-M1052) from which lessons concerning the need for organization and access to markets will be applied. In addition, the IDB has extensive experience in local sanitation projects and waste management investments SOCODEVI has experience in strengthening local institutions, establishing structures for operations and maintenance, and creating access to markets. In the current PROSOL project, aimed at rural economic development for the region of Sololá with the support of the Canadian International Development Agency, SOCODEVI has been organizing new cooperatives (in honey production and industrial fabrication of jeans for example), and supporting the production and marketing of compost made with organic waste and coffee pulp, and assisting municipalities in their process of preparing their municipal development plan Lessons learned from prior experiences include the following: (i) Public investment in infrastructure alone without resources allocated for operations and maintenance and building local capacity is insufficient to ensure solving problems with waste management; (ii) Separation of organic and inorganic waste at the household level requires an operational system in place at the municipal level 15 ; (iii) Public education, incentives, training and inclusion of informal recyclers and connecting with the local market is necessary for effective recycling and compost production; (iv) Infrastructure needs to be in place for the environmental education campaigns to be successful; (v) Incentives should be created in the regulations and local bylaws for people to connect to basic services, recognizing that if they do not comply, they will be subject to sanctions and fines 16 ; (vi) Communication materials need to be designed in a way that allows the illiterate part of the population, as well as all languages used, to grasp the message; and (vii) Participatory processes with all relevant stakeholders is necessary for efficient project execution and long term sustainability The nearby communities of San Juan la Laguna and San Jorge la Laguna have had success that can be used as additional lessons learned with regard to the establishment of systems for operations and maintenance and broad-based community support and 14 There are also two experiences in the Bank that may be of interest: Programa de Apoyo a los Pueblos Indígenas y Negros in Honduras (PAPIN) and Fondo de Inversion Social de Emergencia fase III in Ecuador. Both projects incorporate an ethnocentric methodology that is used when establishing infrastructures in local communities. 15 In the past, environmental campaigns geared toward separation of garbage created a lot of enthusiasm and households did comply, but the fact that the garbage trucks were loaded without regard to the separation was a disincentive to families to continue separating. 16 The lesson here is that the social contract needs to be established at the local level with broad-based participation so that people recognize their rights and obligations: rights to a cleaner and healthier environment and obligation to pay a fee for the provision of municipal services.

18 participation. Both communities solid waste treatment facilities create organic compost which is used in municipal and community tree nurseries supporting reforestation efforts, another critical component of improving the water quality of Lake Atitlan by reducing run-off of chemical fertilizers which also feed the algal bloom 17. San Jorge la Laguna, has built two treatment plants, one for solid waste and one for liquid waste, and has after public consultations created a waste cooperative, supervised by the municipality for operations and maintenance, which is operating effectively and sustainably. G. MIF Additionality 2.21 Non-Financial Additionality. MIF participation in this project brings critical technical expertise, especially through the application of lessons learned in the planning of a similar integrated waste management project. In addition, MIF s involvement provides strong leverage to attract additional funds and partners in the recycling and compost markets. Furthermore, the MIF s credibility strengthens AMSCLAE s authority to manage the Lake Atitlán and enforce the legal framework to reduce contamination Financial Additionality. As discussed above, prior investment in municipal services has focused on the construction of infrastructure, which has been underutilized due to lack of investment in operations and maintenance. Yet, funding for this critical part is difficult to secure. Therefore, the financial support from the MIF is crucial to creating a system to allow for the efficient functionality of liquid and solid waste treatment facilities. The MIF financial contribution will strengthen local initiatives and foster coordination between central government and local municipalities, the latter being responsible by law for the provision of basic services. H. Project Results and Impacts 2.23 The Project results will be: (i) An increase so that 90 % of the population has access to waste management services; (ii) Four new community-based waste management entities established and operating sustainably; a(iii) 40 individuals linked to the waste recycling value chain; (iv) Reduce by 50% the untreated solid and liquid waste from households and businesses entering the Lake; and (v) 80% increase of sales of recycled materials and organic waste compost/fertilizers from the four municipalities The Project impact indicators are: (i) A 20 % decrease of the incidence of water-borne diseases in the targeted communities; (ii) Create 80 new jobs in community waste entities; (iii) Increase the incomes of workers in community waste management entities with 50%. I. Systemic Impact 2.25 The systemic impact will be achieved by testing and proving a sustainable community based waste management model for a watershed area with a largely poor, indigenous population. There is potential for adoption and expansion of this project to the remaining 11 municipalities in the Lake Atitlan watershed. Dissemination of the Project experience 17 San Jorge now has an operational solid and liquid waste facility coordinated by people who are elected and/or appointed by the community. 450 families are connected to the system and pay the monthly tariff and San Jorge is currently selling fertilizer from the organic waste.

19 and results and creation of linkages with national authorities can make it a model promoted at a national level. The model is also replicable in other lake and watershed areas with poor and low-income communities throughout Central America. In addition, there is interest from the business community in Guatemala to be involved in the protection or rescue of the Lake through their corporate social responsibility programs that could for example be involved in reforestation efforts. 3 MONITORING AND EVALUATION 3.1 In order to determine baseline data, AMSCLAE is undertaking a waste audit research project to quantify the amount of garbage produced by each municipality in the watershed, as well as the flow of wastewater disposal per community. The project will use information from the National Survey of Housing Conditions (ENCOVI) among other tools in addition to administering surveys to develop the baseline data for the following indicators: family size, family income, and type of employment, health problems, number of families connected to sewage systems and participating in municipal trash collection. 3.2 A project specific monitoring and evaluation system, which includes the baseline, will be used in order to report adequately on achievement of indicators and results. The EA will work with each created municipal waste management enterprise to create a tracking system to measure number of households with access to basic services and volume of solid waste collected and amount of recyclable materials and compost sold, and volume of wastewater treated and tariffs collected. AMSCLAE will be responsible for measuring the percentage change in garbage strewn in clandestine dumps and entering the watershed as well as for determining percentage change in fecal content in select strategic sites in Lake Atitlan. The project will coordinate with the municipal Health Centers and other health care providers to track health outcomes. 3.3 In addition to a midterm evaluation, a final evaluation will be done which will focus on the improved family incomes, jobs created and access to waste services and the reduction of the trash and wastewater contamination as well as how well the integrated management system functions including the tariff structure. The project also will be evaluated on the basis of how well the results meet the specific waste-related indicators outlined in the Strategic Planning of the Territories (PET). Case studies and other specific studies will be conducted throughout the duration of the project that will be nourishing this process. For example, AMSCLAE has a baseline survey of the population s perception on waste issues, which will be re-administered to track changes in understanding of relevant environmental issues. Some of the evaluation questions will be: i) To what extent has the model ensured sustainable incomes for families participating in the supply chain? Are the community enterprises created financially sustainable?; ii) Have the communities changed attitude and behavior with regard to waste and environment?; iii) Have people s health situation improved?; iv) Are the targeted communities satisfied with the services provided, and the model? 3.4 Closing Workshop. The executing agency will organize a closing workshop at the appropriate time to assess along with other key stakeholders the outcomes achieved,

20 identify additional tasks to guarantee sustainability and identify and disseminate lessons learned and best practices for replication and scale up. 3.5 One year before the project ends, a sustainability workshop will be held with all key stakeholders to identify specific actions needed to ensure the continuity of the project s activities act the project funding has been expended. 4 COST AND FINANCING 4.1 The project has a total cost of US$1,625,490, of which US$1,146,220 (70%) will be provided by the MIF, and US$479,270 (30%) by the counterpart. Components MIF (US$) Counterpart (US$) Total (US$) Component 1. Environmental awareness campaign 236, , ,103 Component 2. Create waste management entities 331, , ,487 Component 3. Support to recycling efforts and compost production 173,230 28, ,692 Component 4. Knowledge Management and Strategic communication 91,910 39, ,410 Project Administration 185, , ,461 7,231 7,000 14,231 Midterm evaluation 10,000-10,000 Final evaluation 20,000-20,000 Ex post reviews 15,000-15,000 Contingency 12,000-12,000 Sub-total 1,081, ,270 1,561,384 Impact Evaluation Account 54,106-54,105 Agenda Account 10,000-10,000 Grand Total 1,146, ,270 1,625,490 % of Financing 70% 30% 100% A. Executing Agency 5 EXECUTING AGENCY 5.1 The Société de Coopération pour le Développement International (SOCODEVI) is a private non-profit organization founded in 1985 and incorporated in Canada and registered as a local NGO in Guatemala more than 25 years ago. SOCODEVI is a network of Canadian cooperatives and organizations that support vulnerable populations by focusing on collective and cooperative approaches that promote autonomy and capacity building in order to reduce poverty. SOCODEVI s General Assembly and Board of Directors are made of representatives of the cooperatives in Canada and its annual revenue exceeds 16 million Canadian dollars. Throughout its work, SOCODEVI integrates its Gender and Development policy to encourage the participation of women as well as its Environmental policy to guide its actions. SOCODEVI manages the PROSOL

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