|1. Project Data:
ICR Review Date Posted:
|Brasilia Environmentally Sustainable Project
Project Costs(US $M)
Loan/Credit (US $M)
Cofinancing (US $M)
Board Approval Date
|General water sanitation and flood protection sector (70%), Sub-national government administration (25%), Central government administration (5%)|
|Environmental policies and institutions (29% - P)
Pollution management and environmental health (29% - P)
Municipal governance and institution building (14% - S)
Other urban development (14% - S)
Other social development (14% - S)|
||ICR Review Coordinator:
|Richard C. Worden
|2. Project Objectives and Components:|
a. Objectives:The project’s objective, as stated in the Loan Agreement (7326-BR), was: “to ensure the supply of quality water resources to meet the demands of the Borrower’s metropolitan area by improving environmental planning and management activities. These activities will be further enhanced by the carrying out of poverty reduction strategies in certain urban areas and the rehabilitation of the environment around key river basins” (Schedule 2, p. 17). This statement of the project’s objective will be used to assess the project.
The Project Appraisal Document (p. 4) stated that the Project Development Objective was slightly different substantively, by adding the statement to meet the growing needs of the Federal District and the Brasilia Metropolitan Region “to reduce regional inequalities.” This aspect of the PDO was not included in the Loan Agreement, and will not be used as part of this project assessment.
The project’s description and some indicators were “redefined” on December 17, 2010 (4˝ years into the project) when the project was formally restructured and the third original PDO Outcome Indicator (strengthened technical and institutional capacity) was dropped from the Results Framework. Other changes were made to scale back activities, such as the waste water treatment facilities in Aguas Lindas intended to improve the water quality of the receiving water bodies of the Descoberto River and closing the existing Jocquei Clube dump site and replacing it with a new sanitary landfill. In addition, changes in the allocation of resources among various different project components, extension of the project, and modification of some of the outcome targets in the area of water resources and solid waste management during the final year of project implementation were included as part of this restructuring. However, the project development objective was not changed.
b. Were the project objectives/key associated outcome targets revised during implementation?
If yes, did the Board approve the revised objectives/key associated outcome targets?
Date of Board Approval: 12/24/2010
1: Policy and Institutional Development (estimated: US$5.0 million; actual: US$7.3 million). This component supported institutional strengthening and technical assistance to enhance the technical and institutional capabilities of the Government to undertake informed decision-making with respect to metropolitan issues, especially in promoting a more sustainable urban and environmental development. It had three sub-components:
1.1. Territory Development and Land Management. This encompassed four main thematic areas related to territory, urban, housing and land use policies and institutional enhancement.
1.2. Environmental and Water Resources Management. This addressed six thematic areas related environmental and water resources management.
1.3. Environmental Sanitation Management. This addressed four thematic issues related to environmental sanitation services.
2: Social Inclusion and Poverty Reduction (estimated: US$31.2 million; actual: US$70.3 million). This component was comprised of activities to reduce poverty and promote social inclusion of localities with critical social conditions, coupled with actions to abate water resource pollution loads into key river systems. It had two sub-components:
2.1. Integrated Development Project for Vila Estrutural. This consisted of two activities: (i) planning, technical designs and community participation; and (ii) civil works and public participation activities.
2.2. Support to the Joquei Clube Solid Waste Landfill waste pickers (scavengers).
3: Water Resources Protection (estimated: US$71.5 million; actual: US$33.2 million). This component included activities to abate water resource pollution loads and improve the quality of life in the communities of Aguas Lindas and Vicente Pires, as well as protect the Brasilia National Park from improper solid waste disposal activities. It consisted of six sub-components:
3.1. Improving sanitation services in Aguas Lindas
3.2. Improve Water and Sanitation Services in Vicente Pires
3.3. Closure of the Joquei Clube Solid Waste Sanitary landfill
3.4. Construction of a solid waste sanitary landfill
3.5. Rehabilitating environmentally degraded areas
3.6. Waste water sludge treatment
4: Project Management, Monitoring and Evaluation (estimated: US$2.9 million; actual: US$5.1 million). This component supported the creation of the necessary technical, administrative and financial management conditions and capabilities to implement the project.
Component 1 was altered substantially to include the following changes to the structure and activities of its subcomponents:
1.1 New capacity-building activities were included for the Water, Energy and Sanitation Regulatory Agency of the Federal District (ADASA) while other activities related to the improvement of the Borrower’s territory development and land management policies were removed.
1.2 The development of new management tools for the Secretariat of Urban Development and Environment (SEDUMA) was included, and the National Environmental Institute (IBAMA) was replaced by the Borrower’s Environmental Institute (Instituto Brasília Ambiental or IBRAM) as part of the Government’s decentralization of environmental roles and responsibilities.
1.3 SEDUMA and ADASA were included as beneficiaries of technical assistance activities.
1.4 The sanitation company for the areas adjacent to the Federal District was removed from the project and two new activities were included; (i) technical assistance to improve the management and protection of water sources; and, (ii) environmental impacts caused by the construction of sewerage systems in the Federal District were to be identified and remediated.
Component 3 was also significantly changed in the following ways:
3.1 and 3.5 were removed.
3.3 Revised to include the closure and environmental recuperation of only one-third of the Joquei Clube solid waste landfill, rather than its complete closure as initially planned.
3.4 Revised to include the launch of the procurement process to construct the new landfill, instead of the original target of completing the construction and operation of a new sanitary landfill.
d. Comments on Project Cost, Financing, Borrower Contribution, and DatesProject Cost: Total project cost was estimated at US$115.3 million at appraisal. Actual costs were slightly higher at US$117.2 million.
Financing: The World Bank was expected to provide half of the estimated total project financing of US$57.64 million, but it financed only 78 percent of this estimate, or US$44.74 million mainly due to implementation delays. The actual loan disbursements for Component 2 (Social Inclusion and Poverty Reduction) were more than double estimated amounts (225 percent) and 146 percent of estimates for Component 4 (Project Management and M&E (see Section 2.a above). Financing for Component 1 (Policy and Institutional Development) of US$7.36 million was nearly equal to its estimate of US$7.6 million while Component 3 (Water Resources Protection) reached only 46 percent of its estimated requirement.
Borrower Contribution: The Borrower (the Government of the Federal District) was expected to contribute the same amount as the Bank’s financing (US$57.64 million) but provided just 51 percent of that, or US$29.61 million. However, as part of the second project restructuring agreement with the Bank to extend the project for nine months, the Borrower agreed to assume the financial responsibility for financing the remaining activities not completed by the new closing date. This amount covered the remaining US$42.85 million.
The project was appraised by the Bank on March 7, 2005 and became effective on May 16, 2006. Early project implementation was slowed considerably during 2006 because of local elections in the Federal District. As a result of these elections, a major institutional reshuffling was carried out by the new District Government, which requested an amendment to the loan agreement to make the project implementation arrangement consistent with its institutional reorganization. The amended loan agreement was signed on May 21, 2007 and a new effectiveness letter was signed on July 27, 2007 (ICR, p. 9). The project was restructured on December 17, 2010 with over 82 percent of project funds disbursed (US$36.42 million out of US$44.88 million) to redefine its scope and targets, but not its objectives. A request by the Borrower for a second restructuring in March 2011 was agreed to by the Bank’s Country Director to extend the closing date by nine months from March 31, 2011 until December 31, 2011 to complete several unfinished activities at their own cost.
|3. Relevance of Objectives & Design:|
a. Relevance of Objectives:Relevance of Objectives Rating: Substantial
The relevance of the project’s objectives was consistent with the conditions existing in the country and with the Bank’s Country Partnership Strategy with Brazil in effect at the time of project implementation and closure. At the time of the BES Project’s closing at the end of 2011, it was relevant with respect to the second (Improving the provision of public services for low income households) and fourth strategic objectives (Improving sustainable natural resource management and climate resilience) of the current Country Partnership Strategy between the Bank and the Government of Brazil (for fiscal years 2012-2015). In particular, integrated urban water resources management, improved access to water supply, sanitation and health services, greater recreational opportunities, and slum upgrading remain important development issues in Brazil today. At the time of the project design and appraisal, the BES Project’s objective was consistent with the Country Assistance Strategy (CAS) of FY2004-2007, namely the development of “A More (Environmentally) Sustainable Brazil.” This CAS was followed by a Country Partnership Strategy for fiscal years 2008-2011 in which “Environmental Sustainability” continued to be one of the thematic pillars, including the goal of “improving the environmental and social quality of infrastructure lending” among its eight elements.
b. Relevance of Design:Relevance of Design Rating: Modest.
The original design of the BES Project was developed in response to a request from the Borrower to the Bank for financial and technical assistance in formulating and implementing a sustainable development strategy for the greater metropolitan area of the capital of Brazil – Brasília, and its rapidly-growing, but unplanned surrounding communities (‘entorno’) in the Federal District and adjoining State of Goias. A comprehensive regional assessment carried out during project preparation was used to select the most cost effective interventions from an urban environmental perspective, the aim was water resource management within a holistic watershed approach. The BES Project was designed to be part of a much broader regional development program, encompassing an Inter-American Development Bank (IDB) sanitation project and a proposed Global Environment Facility grant-funded project to preserve the sustainable productive landscape and biodiversity of the Cerrado. However, the latter project “did not occur because of a preference to focus on other areas in Brazil” (ICR, footnote 1, p. 2). The design of the Results Framework was sound and logically linked to the objectives and the three thematic components and activities of the project with its objectives. The comprehensive nature of the design for the BES Project had been based in part upon ‘lessons learned’ from similar urban upgrading projects in other Brazilian municipalities.
However, the project’s design was unrealistically optimistic and made it highly unlikely that the project’s objectives would be achieved within the project’s time and resource parameters. The comprehensive, ambitious scope of the BES Project suffered from thematic overreach (by including both solid waste and water resource management activities and goals) and it required unmanageable levels of inter-agency coordination and cross-jurisdictional collaboration to successfully achieve its stated goals.
Partly as a result of the design problems, the project was restructured in December 2010 and several activities and targets were scaled back to simplify implementation and complete work already undertaken. For example, solid waste management activities were simplified by: (i) eliminating public sanitation works in one of the two targeted communities (Aguas Lindas), (ii) dropping water quality condition improvements in one of the two targeted river watersheds (the Descoberto River), and (iii) providing more technical assistance to implementing agencies. This revised design made it more likely that the project could realistically achieve its overall objective. However, 82.5 percent of disbursements had already been made by this time, with only one year remaining to implement these activities.
|4. Achievement of Objectives (Efficacy) :|
The objective of the BES Project was: “to ensure the supply of quality water resources to meet the demands of the Borrower’s metropolitan area by improving environmental planning and management activities. These activities will be further enhanced by the carrying out of poverty reduction strategies in certain urban areas and the rehabilitation of the environment around key river basins.” For evaluation purposes, it will be assessed in terms of: (i) quality of water resources of the metropolitan area by improving environmental planning and management; (ii) poverty reduction strategies carried out in certain urban areas; and (iii) the rehabilitation of the environment around two key river basins.
a) Ensure the quality of water resources of the metropolitan area by improving environmental planning and management. Rated: Modest.
Substantial progress was made on building the wastewater collection system in Villa Estrutural, by far the largest and most critical settlement in the surrounding metropolitan area of Brasilia in both social and environmental terms. Residential hook-ups to collection trunk lines leading to the wastewater treatment plant increased from only 9.2% of households in 2004 with access to sewerage services compared to 92.2% of households by mid-2012.Thus, these civil engineering works were substantially completed, although a very small percentage (<1%) of residential connections are still pending completion.
The second primary investment to abate water resource pollution loads, namely the construction of the sewage system in Vicente Pires, was not finished when the project was closed, and is still pending completion before it becomes fully operational. Thus, while no improvement in water quality of the Vicente Pires River can be demonstrated through water quality sampling tests, substantial progress has been made toward “ensuring the quality of water resources in the metropolitan area.” This is largely attributable to the investments made by the BES Project, and as a result of continued work and funding by the Federal District Government since the project’s closing. (Water quality improvements to the Descoberto River were no longer possible since this was linked to sewerage works in Aguas Lindas, which were dropped from the project in December 2010.)
Finally, the third major source of pollution run-off into the Vicente Pires River was anticipated from the closing of the Joquei Clube sanitary landfill and its environmental recuperation. This activity was significantly scaled back at restructuring to only include closing and cleaning up one-third of the landfill, rather than its complete closure and clean-up as initially planned. This activity was abandoned after multiple attempts to concession the new landfill under a new Public-Private Partnership model of public construction and private management failed. In addition, the ICR noted (p.21) that there were an increasing number of invasions near the Jocquei Clube landfill that continued to put the quality of water resources at risk. The revised Sub-component 3.4 to build a new sanitary landfill was scaled back to just launching the procurement processes for this work, but despite repeated attempts to tender bids for its construction, this was never brought to fruition during the project’s implementation.
b) Poverty Reduction Strategies carried out in certain urban areas. Rating: Modest.
The focus of the majority of poverty reduction interventions was directed at a slum or ‘favela’ located just outside the Federal District called Vila Estrutural with 6,500 families (an estimated 25,000 inhabitants).The expected results to achieve this objective were measured by the following three indicators: “(i) improved water quality of the Vicente Pires and Descoberto Rivers; (ii) improved living conditions in targeted settlements by providing integrated urban environmental services; and (iii) strengthened technical and institutional capacity contributing to the sustainable development of the Brasilia metropolitan region (ICR, p.15).
The water quality of the Vicente Pires and Descoberto Rivers has not improved, although that should happen once the wastewater system is fully operational (expected in early 2014). However, risks to water quality of those rivers continue to persist due to the failure to close and clean-up the Joquei Clube landfill’s leachate run-off and continued squatter invasions of the area. The project’s activities in Vila Estrutural resulted in an “overall marked improvement of the quality of life” for many inhabitants between 2004 and 2011 in terms of access to basic infrastructure and community services, such as water, sewerage, and solid waste collection, as well as housing. These improved environmental conditions, basic infrastructure, and community services had previously impeded progress to reduce poverty levels for residents. While attribution is not clear, the project probably had a significant role to play in those improved conditions.
Finally, progress toward strengthening the technical and institutional capacity contributing to the poverty reduction strategies of the region was not demonstrated. Inter-institutional cooperation and coordination was difficult to achieve, and political rivalries between different governmental bodies and complaints from local communities impeded project implementation to the point whereby many project activities and plans had be cancelled or significantly scaled back.
c) Rehabilitating the environment around two key river basins. Rating: Negligible.
The results of the BES Project’s six-year intervention in terms of environmental rehabilitation was to be measured by one of the three project outcome indicators: improvement of the water quality of the Vicente Pires and Descoberto Rivers achieving the class 2 water quality index (IQA) standard, allowing human consumption after conventional treatment. This outcome indicator was later revised to include just maintaining or improving the water quality of the Vicente Pires River after difficulties arose with the land acquisition for the counterpart-funded construction of pumping stations and sludge treatment plant works in Aguas Lindas. However, it should be noted again that revision of this outcome indicator occurred with only one year left to implement the project.
The only information on water quality parameters for either the Vicente Pires or Descoberto rivers was provided in supplemental information subsequently provided by the project team to IEG. The last water quality sampling report available showed only a marginal improvement in water quality for Lake Paranoa, which is the receiving water body for the Vicente Pires River, based on samples taken from July to December of 2011 by ADASA (the Regulatory Water and Sanitation Authority for the Federal District). No definitive information was provided on the “new” estimated or actual completion date for that facility. Since the sewage treatment systems have not been completed yet, the contamination of two very important water bodies (both in terms of their recreational value for the over 200,000 residents of nearby favelas and their role as sources of water supply) in the metro Brasilia area – the Paranoá and Descoberto lakes, has continued unabated. In addition, whatever synergies or co-benefits had been expected to accrue to the BES Project from the GEF-funded Cerrado biodiversity conservation project did not materialize since that project was never approved or implemented by the GEF.
The ex-post economic internal rate of return (EIRR) was reported to be “much lower” (ICR, p. 17) than projected due to the fact that “Water Source Preservation” was the primary driver of net benefits, although how much lower than the estimated ex-ante EIRR of 21.3 was not specified. These economic benefits were anticipated to come primarily from the removal of sewerage discharges from Vila Estrutural and Vicente Pires (partially completed); drainage run-off from Vila Estrutural (partially completed); export and secondary treatment of sewerage from Aguas Lindas (cancelled); and the deactivation and environmental recuperation of the Joquei Clube sanitary landfill (cancelled). None of these expected benefits were fully achieved, and half of the outputs intended to achieve the objective of ensuring the quality and future integrity of water resources were cancelled.
In addition, a financial analysis was conducted with the objective of assessing project investments in terms of their viability and to determine the need for subsidies for those components with less than full cost recovery as required for operation and maintenance (O&M) over the project horizon of 20 years. On all counts, none of the estimated ex-post values were achieved: revenues dropped from US$188.9M to US$59.5M, net revenues (that is, revenues minus capital and O&M costs) dropped from US$180.8M to US$65.4M, and cost recovery percentages dropped from 63.4% to 47.1% while actual costs were three times higher than expected (ICR, pp. 16-18).
Operational efficiency was negligible due to multiple cancellations and delayed construction of major infrastructure works (e.g., the sewage treatment plants and pumping stations, and the Jocquei Clube landfill) and the sudden and unexpected changes in the lead implementing agency by the Borrower without consulting the Bank, which led to the suspension of Bank financial disbursements for over a year. Therefore, overall Efficiency for the project is rated as negligible.
a. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return at appraisal and the re-estimated value at evaluation:
* Refers to percent of total project cost for which ERR/FRR was calculated