INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized I. Basic Information Date prepared/updated: 02/23/2011 INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE Report No.: AC Basic Project Data Country: Indonesia Project ID: P Project Name: Third National Program for Community Empowerment in Urban Areas III - Disaster Management Support Task Team Leader: George Soraya Estimated Appraisal Date: Estimated Board Date: January 24, 2011 Managing Unit: EASIS Lending Instrument: Specific Investment Loan Sector: Other social services (26%);Roads and highways (26%);Sanitation (25%);Subnational government administration (14%);Public administration- Other social services (9%) Theme: Participation and civic engagement (39%);Other social protection and risk management (38%);Other urban development (11%);Municipal governance and institution building (9%);Other public sector governance (3%) SPF Amount (US$m): 0.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: Borrower 0.00 Trust Funds 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) [] No [ ] 2. Project Objectives The overall objective of PNPM III is to assist GOI to ensure that the urban poor benefit from improved socio-economic and local governance conditions. PNPM III is developed based on the experiences from the previous PNPM projects, i.e. PNPM Urban I and PNPM Urban I AF. This objective will continuously be achieved through: (a) the formation and institutionalization of elected representative organizations that are accountable to communities; (b) provision of grants to communities directly and transparently to finance poverty alleviation activities, especially infrastructure services; (c) enhancing the capacity of central and local governments to partner with community organizations in service provision; (d) increasing awareness of disaster risk mitigation and mainstreaming of measures for resilience; and (e) increasing consolidation of CDD programs for effectiveness. The Government of Indonesia (GOI) has requested additional financing for PNPM Urban III (hereinafter also referred to as #the Additional Financing# or AF) to provide

2 immediate support for reconstruction and rehabilitation through community priority investments, particularly small scale infrastructure in villages affected by the recent eruptions of Mount Merapi. This volcano erupted on 26 October 2010 and again in early November The initial eruption was followed by seven large eruptions spewing hot gas into nearby villages, lava accompanied by hot gas along several rivers, and ash rain to cities up to 500 km from the volcano. As part of the PNPM Urban III, the AF will contribute to the achievement of the PNPM Urban III project objective. 3. Project Description Background In 2006, the Government of Indonesia launched a national program for poverty reduction. A pillar of this program is the National Community Empowerment Program or PNPM, which is the Government of Indonesia#s (GOI) operational umbrella for all poverty programs which use a community empowerment approach. The program was built primarily upon the successful experience with the Bank funded KDPs and UPPs. Since then, there have been two windows of the PNPM program implemented by the GOI, i.e. PNPM rural and PNPM urban. Today PNPM has nationwide coverage in all rural villages (about 60,000) and urban wards nearly 13,000 #kelurahans#) in Indonesia. The ongoing PNPM Urban I, PNPM Urban I AF, and PNPM Urban III cover a total of 11,126 kelurahans nationwide. The AF#s components, implementation arrangements, and approaches will be the same as those of PNPM Urban III. The AF will specifically allocate its financing for activities in villages affected by Merapi, which mostly have been covered by the ongoing PNPM Urban III. It provides additional funding for the ongoing PNPM Urban III activities to respond to the impacts of the Merapi eruption. Project Components The proposed AF#s activities will support two of the four components of the original PNPM Urban III components, i.e. Community and Local Government Capacity Building and Kelurahan Grants. As part of the ongoing PNPM III, the AF will therefore strengthen the contribution of these two components in achieving PNPM III#s objective, particularly for kelurahans affected by the Merapi eruption. Component 1: Community and Local Government Capacity Building ($28 million + $3 million GFDRR co-financing + $0.4 AF). The AF will finance the strengthening of the capacity of the BKMs and the local governments to enable them to carry out rehabilitation and reconstruction activities. The ongoing PNPM Urban III shows that the locally elected BKMs have been successful in carrying out their role of assisting and guiding community members with (i) project awareness building; (ii) developing Community Development Plans (CDPs #PJM Pronangkis); and (iii) channeling kelurahan grant funds for local infrastructure investments, training, and micro-financed income generating activities. This component will primarily carry out two activities: (i) finance the cost of facilitators to carry out social intermediation activities and community training

3 and in supporting BKMs; and (ii) finance training and capacity building of local government (lurah and Bappeda) to strengthen their support to PNPM. In total, the project has received financing of US$ 5 million grants (see also Component 3 below) from the Global Facility for Disaster Reduction and Recovery (GFDRR) to the Ministry of Public Works to support activities for community awareness for disaster risk reduction and mainstreaming resilience into investments financed under the project. This program includes: (i) development and delivery of an in-depth training module for facilitators on mainstreaming DRM into CDPs; (ii) recruitment and financing of engineers to oversee project preparation and implementation to ensure appropriate standards; (iii) public awareness-raising campaigns; and (iv) training activities for local government (lurah and Bappeda) in cooperation with BPBD (Disaster Management Authority at local level). Component 2: Kelurahan Grants ($115 million + $1 million AF). This component supports block grants to kelurahans, the value of which depends on the size of the population and disbursements. On average each kelurahan would get about US$ 30,000. The AF financing of US$ 1 million will support block grants to community priority investments related to infrastructure rehabilitation and reconstruction for the kelurahans affected by the Merapi eruption. As in the PNPM Urban III, the typical activities for this component to be financed by the AF fall into three categories: (a) priority investments pre-identified by the community in the CDPs; (b) revolving loan funds provided to the poor for income generating activities and who typically do not have access to other lending sources; and (c) provision of social assistance, including training, to the poorest and most vulnerable in the community. Component 3: Implementation and Technical Assistance ($7 million + $2 million GFDRR financing). Under the ongoing PNPM Urban III, this component is financing the following activities: 3A Project Management and Technical Assistance. The PMU will hire consultants and facilitators to assist in project implementation. This arrangement has been evaluated and expanded to deal with the scaling up and new features of the PNPM-Urban I AF. In addition, the GFDRR grant will finance hiring of consultants who will support the PMU and facilitators in implementing and providing oversight on DRR capacity building efforts at the community level. 3B M&E Capacity Building. A comprehensive M&E sub-component will be designed under the project to ensure careful monitoring of ongoing implementation, as well as process evaluation to assess implementation issues in a timely manner with feedback mechanisms to the project team. 3C Evaluation. A comprehensive evaluation would aim to understand how the CDD approach addresses the needs of the urban poor, the PNPM urban program in the context of other urban poverty programs in Indonesia, institutional issues, implementation issues, the role of local government, approaches to capacity building, and other relevant issues

4 that would provide input to future project design. The study would attempt to identify strengths and weaknesses of the program, document good practice, and distill lessons learned. The evaluation would draw on the rich monitoring data that exists through the MIS, as well as new qualitative data which would be designed specifically and collected for the purposes of the study. In carrying out this evaluation, the World Bank would take the lead, providing oversight and ensuring objectivity. Further details on the design of the study will be developed before project effectiveness. 3D: New measures for accountability and transparency. In order to institute greater transparency in community decision-making and accountability with regard to the flow of funds, the following measures have been implemented since PNPM urban was introduced in 2008: (i) randomized audits; (ii) severe penalties for misuse of funds; and (iii) rewards for well performing BKMs and KSMs; establishment of an accountability matrix for all operations, and launch of a publicly accessible website with information gathered from the MIS management system. Component 4: Contingency for Disaster Risk Response ($0). This component was identified during the preparation of the PNPM Urban III. Due to the high risk of catastrophic events in Indonesia, a provisional zero dollar component will be added under this project that will allow for rapid reallocation of the loan during an emergency, under streamlined procurement and disbursement procedures. Supplemental Poverty Alleviation Programs. In addition to the core PNPM urbanprojects, the overall PNPM program of the Government includes various supplemental programs in urban areas that evolved based on the platform of the UPP process with the intention of strengthening the positive impact of poverty alleviation intervention efforts under the PNPM Framework. These supplemental programs include the following: (a) PAPG. The Poverty Alleviation Partnership Grant fund (PAPG) encourages partnerships between local governments and communities and attempts to institutionalize a consultative process between the two for future activities undertaken by local governments using their own funds. It finances poverty alleviation activities that are too big to be financed by the kelurahan grants, or that require local government involvement (e.g. networked infrastructure); and that cover more than one kelurahan. About 100 Local Governments have been selected to participate in the PAPG. Selected cities will be eligible to receive amounts ranging from a total of US$450,000 to 750,000 over three years. PAPG implementation begins in the project#s third year in order to give cities a chance to familiarize themselves with the BKMs and to develop the RPAS (Regional Poverty Alleviation Strategy). Financing of PAPG comes from UPP2, UPP3, Local Government, and community contributions. (b) Neighborhood Upgrading Schemes (NUS). The NUS were initiated on a pilot basis in UPP3 and in the Java Reconstruction Fund housing project to improve the living conditions in the poorest communities within the framework of the CDPs. NUS differ from traditional community investments (that are more dispersed) in its focus on a geographic area of the ward, in which a combination of improvements was undertaken in a manner similar to block redevelopment. NUS starts with the preparation a detailed Community Settlement Plan (CSP) and is followed by implementation of priority

5 investments (which requires funding from the city government) to upgrade the living conditions of the area. The program initially started with 18 pilots, and the Government is now keen on expanding the NUS to 200 additional kelurahans that demonstrate good performance under the PNPM Program. Financing for the additional NUS projects is expected to come from savings from various on-going PNPM programs (including the on-going World Bank financed PNPM-Urban project), ADB projects and government financing. (c) Housing projects. For areas affected by a natural disaster, a supplemental settlement recovery program has been added. Although it is based on the UPP design, it has a specific purpose and objective. So far the program has operated in Aceh, Yogyakarta and Central Java, and now West Sumatra. In most cases the supports are aimed at the poorest victims. 4. Project Location and salient physical characteristics relevant to the safeguard analysis The PNPM-Urban III covers nearly 4,140 urban wards in 137 urban local governments in 19 provinces, which includes those under PNPM-Urban I, and PNPM- Urban I AF, as well as this AF for the Merapi affected areas. The urban villages affected by the Merapi eruption are geographically distributed in vast areas in Districts of Magelang, Klaten, Boyolali of Central Java province and Sleman of Yogyakarta province. Villages affected by the Merapi eruption are suffering from the damages of housing as well as basic and economic infrastructure including access roads, water, sanitation, irrigation, and drainage, caused by volcanic eruption materials. Water resources are affected by eruption materials resulting in poor quality and quantity. Most houses are heavily destroyed, covered by ash, sand, and gravel. Economic loss is high and households have suffered from loss of sources of income due to the damage of the agricultural land, livestock, shops, home industries, and workshops. Until now, it is not known whether there are physical cultural resources in the project area that are affected by the eruption. Some settlement areas are no longer habitable, difficult to recover, or would take a very long time to recover from the eruption materials. Some agricultural land may not be recovered in the near future due to acidic conditions. Cleaning up and rehabilitation in some sites will improve the social, economic and environmental living conditions but may take lot of efforts and costly. Salient physical characteristics relevant to safeguard analysis are activities financed under Component 2, i.e. Kelurahan Block Grants. Typical activities for this component under ongoing PNPM Urban III and also AF fall into three categories: (a) priority investment pre-identified by the community; (b) BKM managed revolving loan funds provided to the poor for income generating activities and who typically do not have access to other lending sources; and (c) provision of social assistance, including training, to the poorest and most vulnerable in the community. There are no indigenous people (IP) communities in the villages affected by the Merapi eruption which would be supported by the AF. Under the wider PNPM Urban III program, however, there could be IP affected by the project due to its coverage that includes Kalimantan and Papua. PNPM Urban III therefore triggers the IP policy.

6 5. Environmental and Social Safeguards Specialists Ms Indira Dharmapatni (EASIS) Mr Andrew Daniel Sembel (EASIS) Mr Virza S. Sasmitawidjaja (EASIS) 6. Safeguard Policies Triggered No Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60) 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 activities to be funded by the AF are similar to those financed by the PNPM Urban III. Priority investments pre-identified by the community would be small scale and involve rehabilitation and reconstruction of basic infrastructure and services and other possible priority investments for recovery. Similar to the ongoing PNPM Urban III, activities financed by the AF will lead to the improvement of environmental quality and socio-economic living conditions of the beneficiaries. The expected environmental impacts of activities funded by the AF mainly consist of debris and dust during the cleaning up and during construction, and temporary deterioration of water quality, sanitation and drainage facilities due to eruption materials. These impacts would be sitespecific and can be locally managed or mitigated through the community-based self-help clean up and continuous environmental awareness training with the assistance of local governments, as necessary. Disposal of the debris and eruption materials would be an issue. Disposal sites for putting the construction debris and cleaned-up materials will be defined by the community groups at the location where the environmental condition is not vulnerable. Merapi#s eruption materials have long been known to be useful for construction, so that eruption sand and gravel can be utilized for the rehabilitation and reconstruction of priority infrastructure. Therefore, no environmental degradation due to quarrying of construction material is expected to occur. As to social impacts, the AF adheres to the principle of minimizing involuntary resettlement through the adoption of a community-based approach developed through UPP and KDP which has been implemented through all PNPM projects, including PNPM Urban III. Communities that would be supported by the AF would, in all likelihood, prefer to rebuild their houses and priority investments in the current locations.

7 Identification of boundaries of house plots and agricultural land plots is important as some have been covered by eruption materials. Most families prefer to rebuild houses and start their living in their original sites. In the case that settlements are no longer habitable, or agricultural land is difficult to be used in the near future, or future risks are deemed too high, families may choose to relocate to other sites voluntarily or with the advice of local governments. New road alignment, basic services facilities and networks may have to be rebuilt in new sites. Land in the new sites may be obtained by the beneficiaries themselves or by local governments and private entities. As in the case of the ongoing PNPM Urban III, in terms of land acquisition and resettlement, limited land acquisition is foreseen for investments in community infrastructure under the AF. Similar to the previous UPP and PNPM programs including PNPM Urban III, most of the land needed to build small-scale infrastructure is likely to come as a contribution from beneficiaries. Local governments may obtain land through direct negotiations in line with willing-seller willing-buyer principles, by which land owners have the option to refuse to sell their land. In the case land is obtained by the local governments through the eminent domain principle, OP/BP 4.12 will apply as specified in PNPM Urban III#s environmental and social safeguards frameworks and guidelines. Where land is obtained by voluntary contribution, the process and supporting documents must be well-documented. As investment activities financed by the AF are similar to those under the ongoing parent project in terms of the type and scale of activities, the potential environmental impacts would likely be similar to those under the ongoing parent project, which tend to be insignificant, localized, reversible, and manageable through community-based approaches with good engineering design and construction practices. There would be no scale-up operations financed by the AF. With the addition of the AF, The PNPM Urban III that includes AF will remain a Category B project for environmental assessment, and the same safeguards policies will be triggered, i.e. Environmental Assessment (OP/BP 4.01), Indigenous Peoples (OP/BP 4.10), and Involuntary resettlement (OP/BP 4.12). The AF will use the existing PNPM Urban III#s environmental and social safeguards frameworks and guidelines, including the updated environmental guidelines and project manual that reflect the Government#s most recent regulations and the need to address the handling of eruption materials. The AF for Merapi affected areas is an urban Community Driven Development (CDD) program and similar to PNPM Urban I, PNPM Urban I AF, and PNPM Urban III. The AF will finance small-scale community infrastructure sub-projects such as tertiary roads, minor road/bridge repairs, footpaths, tertiary drainage, community water supply, and sanitation/public toilets. It will likely have similar characteristics of environmental impacts and land needed for sub-projects with those under the UPP and PNPM programs including PNPM Urban III. These types of sub-projects are not likely to have any large scale, significant or irreversible environmental impacts, but may require special designs and construction methods tailored to the situation at each site. Potential impacts are likely to be site specific, not significant and manageable by good engineering design and construction practices. Observations in some projects under previous UPPs and ongoing PNPM programs including PNPM Urban III suggest that environment related-issues

8 mainly occur due to inadequate guidance, monitoring and supervision by the facilitators and OCs (Oversight Consultants) during the planning and implementation stages. The proper mitigation and prevention methods proposed are proper training (on specific technical environmental impact mitigation measures) and monitoring of the supervising field engineers, especially on site selection for water and sanitation projects, use of tested water quality from wells, and maintenance of the facilities. As the project will continue to finance small scale infrastructure sub-projects (mostly tertiary level infrastructure such as tertiary roads, minor road/bridge repairs, footpaths, tertiary drainage, community water supply, and sanitation/public toilets) it is very unlikely that significant amounts of land will be needed. Although size varies, experiences from the UPP and PNPM programs including PNPM Urban III show that the area of land needed for each sub-project is generally very small. Field observations suggest that for a public toilet for instance, the average land size is 30 m2. In the case of AF, land might be needed for new alignments of priority infrastructure and basic services or other facilities related to recovery as the current locations are no longer habitable or suitable for development. Similar to the previous UPP and PNPM Urban programs including PNPM Urban III, most of the land needed by sub-projects would likely be a contribution from beneficiaries. Decisions on land contributions have been made based on active consultation among the members of the community groups during the preparation of the sub-project proposals. Documentation of the consultation process and supporting information will be included in the sub-project proposals, and consolidated at the regional and national levels. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: Overall and in the long-term, the project is expected to have a positive impact on the environment and on the beneficiaries# quality of life. With the recovery of access to basic services and community infrastructure provided by the AF, health conditions of the beneficiaries are expected to improve. At the same time, expenditures for access to basic services now located far away are expected to come down and communities are expected to have better access to economic and social facilities. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. The Borrower is familiar with the environmental guidelines, the land acquisition and resettlement frameworks as well as the IP framework, and has managed safeguards instruments as part of the implementation of the UPP and PNPM programs including PNPM Urban III over the last 10 years. The National Consultant Team (NMC) which is currently assisting the PMU of the Executing Agency will have experts who have sufficient experience in environmental management, social issues including land acquisition and gender, and in handling IP issues. The AF will adopt the Environmental

9 Guidelines, Land Acquisition and Resettlement Framework, IP Policy Framework of the ongoing PNPM Urban III project. These frameworks serve as umbrella environmental and social safeguard guidelines for the UPPs and PNPM-Urban series. The operationalization of these frameworks is included in the project operation manual/technical guidelines. The project operation manual/technical guidelines will be continuously updated based on lessons learned, implementation experiences on environmental and social safeguards, and to accommodate the needs in rehabilitation and reconstruction activities. The PNPM Urban III will train project management staff, consultants and facilitators in addressing disaster risk-related activities particularly for rehabilitation and reconstruction. The PNPM Urban III (that includes AF) will continue strengthening the capacity of project management staff, consultants and facilitators in environmental and social safeguards. As is the case under the ongoing PNPM Urban III project, the AF will not finance subprojects that use items set out in the negative list, or such activities as would have potential negative impacts on physical cultural resources or entail the potential for largescale land acquisition or resettlement. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. The main key stakeholders are the community members of the group who are beneficiaries of the PNPM Urban III including the AF. Participatory consultations are taking place as part of the formation of the community board of trustees (BKMs), the formation of community groups (KSMs), the preparation of the sub-project proposals and the implementation of sub-projects. The role of the facilitators and volunteers is important in this consultation process. Environmental screening and mitigation measures are identified and agreed among the beneficiaries during the preparation of the subproject proposals. Similarly, the need and mechanisms for obtaining land are identified and agreed among the beneficiaries through participatory consultations during the preparation of sub-project proposals. Facilitation and verification of the process and documentation included in the sub-project proposals are done by the BKM and facilitators. The Environmental Guidelines, Land Acquisition and Resettlement Framework as well as the IP Framework and the project operation manual/technical guidelines are uploaded on the project website ( The project operation manual and technical guidelines have been distributed to all project management staff, consultants, facilitators, and the BKMs. B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other: Was the document disclosed prior to appraisal?

10 Date of receipt by the Bank 01/23/2010 Date of "in-country" disclosure 01/29/2010 Date of submission to InfoShop 02/19/2010 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors Resettlement Action Plan/Framework/Policy Process: Was the document disclosed prior to appraisal? Date of receipt by the Bank 01/23/2010 Date of "in-country" disclosure 01/29/2010 Date of submission to InfoShop 02/19/2010 Indigenous Peoples Plan/Planning Framework: Was the document disclosed prior to appraisal? Date of receipt by the Bank 01/23/2010 Date of "in-country" disclosure 01/29/2010 Date of submission to InfoShop 02/19/2010 Pest Management Plan: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop * If the project triggers the Pest Management and/or Physical Cultural Resources, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) OP/BP/GP Environment Assessment Does the project require a stand-alone EA (including EMP) report? If yes, then did the Regional Environment Unit or Sector Manager (SM) review and approve the EA report? Are the cost and the accountabilities for the EMP incorporated in the credit/loan? OP/BP Indigenous Peoples Has a separate Indigenous Peoples Plan/Planning Framework (as appropriate) been prepared in consultation with affected Indigenous Peoples? If yes, then did the Regional unit responsible for safeguards or Sector Manager review the plan? If the whole project is designed to benefit IP, has the design been reviewed and approved by the Regional Social Development Unit or Sector Manager? OP/BP Involuntary Resettlement Has a resettlement plan/abbreviated plan/policy framework/process No

11 framework (as appropriate) been prepared? If yes, then did the Regional unit responsible for safeguards or Sector Manager review the plan? The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the World Bank s Infoshop? Have relevant documents been disclosed in-country in a public place in a form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities been prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included in the project cost? Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately reflected in the project legal documents? D. Approvals Signed and submitted by: Name Date Task Team Leader: Mr George Soraya 01/31/2011 Environmental Specialist: Mr Virza S. Sasmitawidjaja 01/31/2011 Social Development Specialist Ms Indira Dharmapatni 01/31/2011 Additional Environmental and/or Social Development Specialist(s): Approved by: Sector Manager: Mr Franz R. Drees-Gross 02/01/2011 Comments: