Project Concept Paper

Project Number: 52303-001 April 2019

Proposed Grant : Managing Solid Waste in Secondary Cities

CURRENCY EQUIVALENTS (as of 27 March 2019)

Currency unit – togrog (MNT) MNT1.00 = $0.000380 $1.00 = MNT2,629

ABBREVIATIONS

ADB – Asian Development Bank JFPR – Japan Fund for Poverty Reduction MCUD – Ministry of Construction and Urban Development O&M – Operations and Maintenance

NOTE

In this report, "$" refers to US dollars

Vice-President Diwakar Gupta, Private Sector and Cofinancing Operations and Officer-in-Charge, Operations 2 Director General Amy S. P. Leung, East Asia Department (EARD) Country Director Yolanda Fernandez Lommen, Mongolia Resident Mission (MNRM), EARD

Team leader Tuul Badarch, Senior Project Officer (Infrastructure), MNRM, EARD Team members Uchralt Adiyakhuu, Operations Assistant, MNRM, EARD Tsolmon Begzsuren, Senior Social Development Officer (Gender), MNRM, EARD Uyanga Enkhsaikhan, Associate Project Analyst, MNRM, EARD Ostiane Goh-Livorness, Council, OGC Arnaud Heckmann, Principal Urban Development Specialist, EARD Battsengel Jadambaa, Senior Procurement Officer, MNRM, EARD Ongonsar Purev, Senior Environmental Officer, MNRM, EARD Mailene Radstake, Principal Social Development Specialist (Safeguards), EARD Gohar Tadevosyan, Social Development Specialist (Safeguards), EARD

Peer reviewer Anupma Jain, Senior Urban Development Specialist, PARD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page

PROJECT AT A GLANCE PROBLEM TREE I. THE PROJECT 1 A. Rationale 1 B. Proposed Solutions 2 C. Proposed Financing Plans and Modality 4 D. Implementation Arrangements 4 II. PROJECT PREPARATION AND READINESS 4 A. Risk Categorization 5 B. Project Procurement Classification 5 C. Scope of Due Diligence 6 D. Processing Schedule and Sector Group’s Participation 6 E. Key Processing Issues and Mitigation Measures 6

APPENDIXES 1. Preliminary Design and Monitoring Framework 7 2. Project Procurement Classification 10 3. Initial Poverty and Social Analysis 11

PROBLEM TREE

Public health and safety for residents in secondary cities is Pollution of air, land, Economic livelihood worsening, including increased and rivers is increasing opportunities for waste burden of care for women recycling not used because of ill health

Ineffective and inefficient waste management and recycling in secondary cities

Insufficient knowledge Existing facilities and Insufficient institutional and funding support current practices for capacity for waste for participatory waste waste management and management management and recycling unable to cope recycling with increasing amount opportunities and types of waste

Insufficient Inadequate waste Waste management is awareness on waste collection and disposal not integrated with management and system urban planning recycling at the household and community levels Limited capacity and Inadequate policy inappropriate design of framework to implement efficient waste Insufficient existing facilities collection, segregation, understanding of the and disposal scale and type of Inadequate collection waste generation and and segregation system appropriate to support recycling No existing methodologies and opportunities mechanisms to technologies for maximize economic participatory waste opportunities in waste management and management and recycling options recycling

Insufficient knowledge on the economic opportunities in waste recycling

I. THE PROJECT A. Rationale

1. The Government of Mongolia requested the Asian Development Bank’s (ADB) support to promote effective and innovative municipal solid waste management in secondary cities to preserve the ecological balance of the country. The project will generate employment opportunities and improved livelihoods for the urban poor, and by reducing contamination it will improve public health reducing the burden of care for women because of ill health. The proposed project is included in the country operations business plan for Mongolia, 2019-2021.1

2. Background. Besides several other factors, rapid population growth and urbanization explains the sharp increase in waste generation worldwide. Managing municipal solid waste effectively is essential to environmental sustainability and public health in urban areas. However, this challenge creates environmental degradation in developing countries, where most of the waste is disposed in uncontrolled dumpsites or openly burned with pernicious health, safety, and environmental consequences. This largely affects the urban poor and particularly women, whose livelihood opportunities are hampered by the increased burden of caring for the sick.

3. Changing urban consumption patterns and lifestyle have resulted in rapidly increasing waste in Mongolia. The municipal solid waste generated in urban Mongolia has significantly increased from 0.3 million tons per year in 2008 to over 2.4 million tons per year in 2017,2 driven by (i) increased gross domestic product growth, (ii) improved recording and monitoring of solid waste disposal at dump sites, and (iii) increased local production of packaged food items. In secondary cities (provincial capital cities), the local government-owned service companies collect and transport waste from households, public institutions, factories, and business to disposal sites with no waste segregation at source or collection points. Hence, even though more than half of the waste are recyclables—plastic, paper, cardboard, glass, and metal—only 1% is reused or exported. Moreover, scavengers in larger secondary cites informally segregate and recycle waste at disposal sites in an unsafe and uncontrolled environment with pernicious health effects.

4. Recent government initiatives. The government is committed to improve municipal solid waste management. As reflected in the Government Action Plan, 2016-2020,3 goals have been set to implement green growth policies to introduce advanced and effective environmentally- friendly technologies, save resources and ensure their reuse and recycle, to reduce air, water and soil pollution, and upgrade waste management in urban areas. The National Program on Waste, 2014–20224 focuses on the restoration of environmental damage from waste contamination by (i) educating the public about green consumption; (ii) developing social responsibility awareness; and (iii) establishing an effective municipal solid waste management system. Government targets include commitments to recycle 30% of the country’s solid waste by 2025 and 40% by 2030.5 These commitments were further strengthened in June 2017 with the amendment of the Law on Waste Management6 to (i) introduce waste reduction at the source, including waste separation; (ii) upgrade waste recycling requirements; (iii) clarify producer’s responsibilities; (iv) improve

1 ADB. 2018. Country Operations Business Plan: Mongolia, 2019–2021. Manila. 2 Source: http://eic.mn/waste/ 3 Government of Mongolia. 2016. Government Action Plan, 2016-2020. . 4 Adopted by Government Resolution No. 298, issued on 14 September 2014. Details available at https://www.legalinfo.mn/law/details/10628 5 These targets were ratified by Government of Mongolia on 5 February 2016 as part of the Sustainable Development Vision of Mongolia 2030. Government of Mongolia. 2016. Sustainable Development Vision of Mongolia 2030. Ulaanbaatar. 6 Government of Mongolia. 2017. Law on Waste Management. Ulaanbaatar.

2 hazardous waste management; (v) introduce liabilities and penalties; and (vi) foster waste management awareness and education.

5. Current challenges. Solid waste management in Mongolia is challenged by (i) poor technologies, infrastructure and equipment for waste collection, segregation, recycling, reuse, treatment and disposal; (ii) rapidly increasing waste; (iii) irregular waste collection and illegal dumping; (iv) absence of educational campaigns to strengthen social responsibility; and (v) lack of strategic planning for sustainable waste management. At present, only Ulaanbaatar and one provincial capital (Zamyn-Uud) have municipal solid waste management schemes in place.

B. Proposed Solutions

6. Successfully addressing the challenges will lead to sustainable and inclusive solutions for municipal solid waste management7 in secondary cities in Mongolia. In addition, the involvement of local communities in garbage collection, including sorting and recycling, can be organized as a community business activity and become an income generating activity. This will maximize potential environmental benefits and economic opportunities from solid waste management while reducing adverse impacts on health and safety of the communities residing near or in the dumpsites. The proposed project builds on the successful experiences under the ADB funded Southeast Gobi Urban and Border Towns Development Project.8

7. The project outputs will result in the proposed outcome: effective municipal solid waste management and recycling in secondary cities introduced.9 The project will be aligned with the following impact: safer and better environmental conditions for the residents living in secondary cities achieved (National Program for Reducing Air and Environment Pollution 2017–2025).10 Through the three outputs below, the project will support poverty alleviation through generation of new low-skilled jobs in waste collection, segregation and sorting streams.

8. Output 1: Municipal solid waste management infrastructure in secondary cities developed. The project will pilot the introduction of municipal solid waste management systems in the capital cities of Darkhan-Uul, Gobi-Altai, Sukhbaatar and Uvurkhangai provinces. 11 Activities include the supply of dump trucks, the construction of in-city transfer stations, a waste compressing facility, an in-door conveyor tape for sorting of recyclables at transfer station, and construction of new controlled landfills.12 Capacity building will be provided as needed to ensure the functionality of the waste management system and sustainable operations and maintenance (O&M). The project will deal only with the municipal solid waste. The proposed JFPR grant Ulaanbaatar Community Food Waste Management and Recycling (MON: 51102-001) will pilot participatory food waste collection and recycling in Ulaanbaatar. In line with the provisions of

7 Defined as waste generated from households and domestic use. 8 ADB. 2010. Report and Recommendation of the President to the Board of Directors: Proposed Grant to the Government of Mongolia for the Southeast Gobi Urban and Border Town Development Project. Manila. Under this project integrated solid waste management scheme was successfully introduced in Zamyn-Uud. The project showed that after processing and compression, the waste volume is reduced by eight times reducing operational costs and the scope of the landfills. The project created jobs for the poor at the transfer station and for the dump truck drivers. 9 The preliminary design and monitoring framework is in Appendix 1. 10 Government of Mongolia. 2017. National Program for Reducing Air and Environment Pollution 2017–2025. Ulaanbaatar. 11 The respective capital cities are Darkhan (second largest city in the country), Altai, Baruun-Urt, and . 12 The provincial governments have assured ADB that they will provide 4 hectares of free land in each city for the planning and development of new landfills under the proposed project. The Ministry of Construction and Urban Development is committed to seek funding for the closure and restoration of existing dump sites and will approach development partners, including ADB, for this support.

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Article 20.1 of the Law of Mongolia on Waste,13 disposal of industrial waste at new landfill sites will not be allowed.

9. Output 2: Inclusive municipal solid waste recycling approaches adopted. The project will pilot community practices for waste reuse and recycling. Employment opportunities will be developed to improve the livelihood of the municipal solid waste informal sector (scavengers and waste-pickers) and the poor communities around transfer stations and landfills. Initiatives will be implemented to ensure increased female workers participation. The project will pilot procedures for recognition of public and private sector entities—restaurants, markets, offices, kindergartens— which cooperate with waste sector community practices by providing access to recyclable waste for reprocessing. Capacity building will be provided to develop the skills needed to maximize employment opportunities.

10. Output 3: Waste management public information and educational campaigns launched and policy framework supported. The information, education, and communication campaigns will increase awareness of the importance of effective municipal solid waste management and its socioeconomic benefits to improve public health, environment and urban livability, with at least 50% participation of women members of households It will use different communications channels—community meetings and events, social media, radio and television programs, signboards and posters—to raise the understanding of common issues and solutions in solid waste management. The project will provide capacity building initiatives for provincial governments in policy making, planning, O&M, management of landfills and development of human resources for administration and financial management. The project will support provincial governments in developing a policy framework to stimulate efficient waste collection, segregation, recycling and disposal. As part of this, the project will develop a public scheme for municipal solid waste management and explore options for private sector participation. During grant processing, ADB will consider piloting a solid waste management plan for one city.

11. Linkage to country partnership strategy. The proposed project is closely aligned with the country partnership strategy 2017–2020 for Mongolia14 and will contribute to ADB’s strategic objective of improving quality of life of the urban poor and strengthening environmental sustainability in the country. The proposed project is also aligned with Strategy 2030’s operational priorities of (i) addressing remaining poverty and reducing inequalities; (ii) enhancing environmental sustainability; (iii) accelerating progress in gender equality; and (iv) making cities more livable.15

12. The proposed grant will mark an important innovation for Mongolia as it will be the first to comprehensively improve the waste management sector in provincial cities. It will be implemented in all steps of the solid waste management—prevention, reuse, recycling and disposal, except recovery.16 The proposed grant will open opportunities for more jobs, particularly for the poor and women, in the reuse and recycling streams. It will implement a stand-alone component on community education and awareness to raise the understanding of common issues and solutions in solid waste management. The project will support the provincial governments in developing the sector policy framework and build capacity in solid waste management planning.

13 https://www.legalinfo.mn/law/details/12652?lawid=12652 14 ADB. 2017. Country Partnership Strategy: Mongolia, 2017–2020—Sustaining Inclusive Growth in a Period of Economic Difficulty. Manila. 15 ADB. 2018. Strategy 2030. Achieving a Prosperous, Resilient, Inclusive and Sustainable Asia and the Pacific. Manila. 16 Recovery includes waste-to-energy processes which are not deemed viable in provincial towns as the volume of waste generated is not sufficient for sustainable plant operation.

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C. Proposed Financing Plans and Modality

13. The project is estimated to cost $2.2 million. A $2.0 million grant will be provided by the Japan Fund for Poverty Reduction (JFPR)17 while the government will provide counterpart funding of $0.2 million (Table 1). The grant covers equipment, civil works, project management consulting services, and public awareness activities and training. Taxes and duties are included in the base cost and will be financed by the government along with in-kind counterpart support (input, salaries and travel costs of counterpart staff).

Table 1: Indicative Financing Plan Amount Share of Total Source ($ million) (%) Asian Development Bank Japan Fund for Poverty Reduction (JFPR) (grant)a 2.00 90.0 Government of Mongolia 0.20 10.0 Total 2.20 100.0 a JFPR is a possible funding source subject to the approval of the Government of Japan. Source: Asian Development Bank estimates.

D. Implementation Arrangements

14. The proposed project duration will be 3.3 years, with an implementation period from November 2019 to December 2022. The Ministry of Construction and Urban Development (MCUD) will be the executing agency for the proposed grant and the governments of Darkhan- Uul, Gobi-Altai, Sukhbaatar and Uvurkhangai provinces will be the implementing agencies (Table 2).

15. A project steering committee, established by the MCUD will approve annual budgets and plans for the project, and guide and support project implementation. Technical working groups with the provincial governments will guide project implementation and ensure optimal coordination between parties. The MCUD will set up a project management unit in Ulaanbaatar supported by project coordinators in each province. Upon completion of the commissioning of project facilities the local government will be required to provide O&M resources for sustainable operations.

Table 2: Indicative Implementation Arrangements Aspects Arrangements Indicative implementation period November 2019–December 2022 Indicative completion date 30 December 2022 Management (i) Executing agency Ministry of Construction and Urban Development (ii) Implementing agencies Provincial governments of Darkhan-Uul, Gobi-Altai, Sukhbaatar and Uvurkhangai Source: Asian Development Bank.

16. Procurement (including consulting services) to be financed by ADB administered trust funds will follow ADB’s Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time). Advance contracting is not anticipated. Grant proceeds will be disbursed in line with ADB's Loan Disbursement Handbook (2017, as amended from time to time).

17 JFPR is a possible funding source subject to the approval of the Government of Japan.

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II. PROJECT PREPARATION AND READINESS

17. Six consultants will be engaged to conduct the project processing due diligence. Grant preparation funds of $50,000 will be requested to engage six consultants. These include (i) project formulation and governance specialist (international, two person-months); (ii) financial expert (national, two person-months); (iii) poverty, social and gender expert (national, two person- months); and (iv) environment specialists (international and national, two person-months each). In addition, a municipal solid waste management and recycling expert (national, three person- months) will be engaged as a staff consultant to conduct technical due diligence.

III. DELIBERATIVE AND DECISION-MAKING ITEMS

A. Risk Categorization

18. The project is considered ‘low-risk’. Involuntary resettlement, and indigenous people’s safeguards are category C and environment category is B. The grant will have no involuntary resettlement impacts since the location of the small construction activities will be on vacant public or state land while adverse social impacts on scavengers and waste pickers caused by closure of existing dump sites will be addressed under Output 2. However, it will likely have minor environmental impacts including health issues. The project will provide small-scale infrastructure, (i.e., a solid waste transfer station and a controlled landfill). A waste-recycling pilot will be designed during project implementation. Collecting, sorting, and recycling waste has possible community or occupational health risks, which will get full attention during grant processing and implementation. An Initial Environmental Examination will be prepared. The MCUD has long- standing experience in implementing ADB and other development partners’ projects. To address potential capacity gaps, staff new to ADB projects will be trained in project administration, procurement, and loan disbursement procedures. The project is rated medium for climate risk and will count towards ADB’s climate finance targets and create opportunities for more climate financing.

B. Project Procurement Classification

19. The recommended project procurement classification is category B (Appendix 2) and project procurement is deemed ‘low risk’ because no special or particularly large contract packages are expected.

20. The grant is proposed as ‘effective gender mainstreaming’. The envisaged activities will provide employment opportunities to women, in particular among the urban poor, and reduce their burden of care for ill health.

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C. Scope of Due Diligence

Due Diligence Outputs To be undertaken by Technical feasibility studies ADB, consultants Development coordination ADB, consultants Financial due diligence a ADB, consultants Procurement capacity assessment ADB, consultants Gender analysis, collection of baseline data, and gender action plan ADB, consultants Initial poverty and social analysis ADB, consultants Grant administration manual ADB, consultants Risk assessment and management plan ADB, consultants Sector assessment ADB, consultants Summary poverty reduction and social strategy ADB, consultants a Includes Financial Management capacity and sustainability assessment of executing and implementing agencies, preparation of cost estimates and financing plan incremental recurrent cost analysis, design of funds flow, accounting, auditing, and financial reporting arrangements, etc. For more information: https://www.adb.org/projects/operations/financial-management-resources. ADB = Asian Development Bank. Source: Asian Development Bank estimates.

D. Processing Schedule and Sector Group’s Participation

Table 3: Processing Schedule by Milestone Milestones Expected Completion Date Submission of draft ITD to OCO 4 January 2019 Concept paper approval 12 April 2019 Grant fact-finding mission 20-25 May 2019 Staff review meeting 18 June 2019 Approval by donor government 1 August 2019 Grant negotiations 10 August 2019 Grant approval 10 September 2019 Grant effectiveness November 2019

Source: Asian Development Bank estimates.

E. Key Processing Issues and Mitigation Measures

Table 4: Issues, Approaches, and Mitigation Measures Key Processing Issues Proposed Approaches and/or Mitigation Measures 1. Community and Collecting, sorting, and recycling waste has possible community or occupational occupational health risks health risks. An initial environmental examination will be prepared during grant design (included in the PAM) to ensure safe handling of waste. 2. Coordination among MCUD and provincial governments will have a key role to organize and coordinate agencies among government and provincial agencies to ensure full support. 3. Financial sustainability To ensure financial sustainability of the project (i) local governments will be required risks to provide O&M resources, and (ii) financial due diligence and assessment of solid waste management entities will be conducted during the grant processing and implementation. MCUD = Ministry of Construction and Urban Development; PAM = project administration manual; O&M=operations and maintenance Source: Asian Development Bank estimates.

Appendix 1 7

PRELIMINARY DESIGN AND MONITORING FRAMEWORK

Impact the Project is Aligned with: Safer and better environmental conditions for residents living in secondary cities achieved (National Program for Reducing Air and Environment Pollution 2017–2025)a Results Chain Performance Indicators with Targets and Data Sources and Risks Baselines Reporting Outcome By 2023: Effective a. An additional xx tons of municipal solid a. Project technical and Support from local municipal solid waste sorted and recycled in four progress reports governments is not waste secondary cities (2019 baseline: xx) sustained due to management and b. Project technical and shifting priorities recycling in b. xx tons of segregated municipal solid progress reports secondary cities waste safely disposed at four new introduced landfill sites (2019 baseline: xx) c. Other available bulletin c. xx families, including xx women led and assessment households, increased their livelihood reports through safe waste sorting and recycling (2019 baseline: xx)

Outputs By 2022: 1a. Project technical and 1. Municipal solid 1a. Controlled landfills and municipal solid progress reports waste waste transfer stations built in the each of management four cities (2019 baseline: None) infrastructure in 1b. Annual reports from High expectations of secondary cities 1b. xx tons of segregated municipal solid project and aimags communities developed waste compacted at transfer station and (provinces) transported to new landfill sites (2019 baseline: None) 1c. Project technical and 1c. xx solid waste trucks and machinery progress reports supplied to four cities (2019 baseline: None)

By 2021: 2. Inclusive 2a. Pilot implemented for waste sorting 2a. Project technical and Interest in and municipal solid and recycling, with at least 30% women progress reports participation by local waste recycling participation (2019 baseline: none) communities is not approaches sustained adopted 2b. xxx local residents including at least 2b. Annual reports from 30% women educated on waste recycling project and aimags and reuse job opportunities (2019 baseline: none)

2c. New jobs generated under (or in 2c. Media information and connection with) the waste recycling pilot, news releases with at least 50% for women (2019 baseline: none)

3. Waste 3a. Assessment of participatory waste 3a. Project technical and High turnover of management collection, sorting, and recycling, including progress reports trained staff or public information participation of women and gender related engaged consultants and education risks conducted (2019 baseline: none) campaigns

8 Appendix 1

launched and 3b. Information on participatory waste 3b. Media information and policy framework collection and recycling published in at news releases supported least x number of newspapers and website articles (2019 baseline: none)

3c. A campaign to raise awareness of 3c. Project progress reports waste segregation and recycling reaches 90% of households in each project city, with at least 30% participation of women members of households (2019 baseline: none)

3d. xx local residents, including at least 3d. Project progress reports 50% women, engaged in public awareness events (2019 baseline: none) 3e. Project progress reports 3e. xx local government staff, including at least 30% women, are trained in policy making, planning, O&M, management of landfills and development of human resources for administration and financial management (2019 baseline: none).

3f. Solid waste management plan 3f. developed and piloted in one project city (2019 baseline: none) Key Activities with Milestones

1. Municipal solid waste infrastructure in secondary cities developed 1.1 Recruit and mobilize project management unit staff and consultants (Q4 2019) 1.2 Award first civil works contract (Q2 2020) 1.3 Award all civil works contracts (Q4 2020) 1.4 Procure all equipment (Q2 2021) 1.5 Complete all construction (Q4 2021) 1.6. Capacity building provided to ensure functionality of the system (Q4 2021)

2. Inclusive municipal solid waste recycling approaches adopted 2.1 Pilot design approved (Q2 2020) 2.2 Start implementing first pilot (Q3 2020) 2.3 Capacity building to develop the skills needed to maximize employment opportunities (Q3 2020) 2.4 Assess the pilot and review the pilot or start implementing at the remaining three sites (Q4 2020) 2.5 Conduct media and public relations program (from Q4 2019 to Q4 2022).

3. Waste management public information and education campaigns launched 3.1 Design campaign (Q1 2020) 3.2 Conduct campaign (Q2 2020-Q4 2022) Inputs JFPR $2.00 million Government $0.20 million Assumptions for Partner Financing Not Applicable JFPR = Japan Fund for Poverty Reduction, O&M = operations and maintenance, Q = quarter a Government of Mongolia. 2017. National Program for Reducing Air and Environment Pollution 2017–2025. Ulaanbaatar. b JFPR is a possible funding source subject to the approval of the Government of Japan. Source: Asian Development Bank estimates.

Appendix 2 9

PROJECT PROCUREMENT CLASSIFICATION Assessor’s rating: ‘Yes’ or ‘No’ with brief Characteristic comments, if ‘Yes’ Is the procurement environment risk for this project assessed as “High” based on the country and sector/agency risk assessments? No Are multiple (typically more than three) and/or diverse executing (EAs) and/or No implementing agencies (IAs) envisaged during project implementation? Do EAs/IAs lack prior experience in ADB project implementation? Are multiple contract packages and/or complex and high value contracts No expected (compare to recent donor projects in DMC)? Does the project plan to use innovative contracts (PPP, performance-based, No design and build, O&M, etc.)? Are contracts distributed in more than three geographical locations? Yes, the project will be implemented in four provincial cities. Are there significant ongoing contractual and/or procurement issues under Yes, misprocurement was declared in the ADB (or other donor) funded projects? Has misprocurement been declared in country, but not in urban sector projects. the DMC? Does the DMC have prolonged procurement lead times, experience No implementation delays, or otherwise consistently fail to meet procurement timeframes? Do EAs/IAs lack capacity to manage new and ongoing procurement? Have No EAs/IAs requested ADB for procurement support under previous projects? OVERALL PROJECT CATEGORIZATION RECOMMENDED Category B

Overall recommendation of the concerned project officer [T. Badarch, Senior Project Officer, MNRM] The project will consist of a standard number of contract packages.

The project procurement will be conducted by the Ministry of Construction and Urban Development, the executing agency, which has implemented several ADB-funded projects since 1997 and has sufficient experience with ADB procedures. Procurement capacity of the executing and implementing agencies will be further assessed during grant preparation. If needed, procurement support will be included in the grant design, and additional training will be provided during grant preparation and implementation.

It is proposed to classify the project as category B as no innovative procurement arrangements are needed.

Recommendation of PPFD’s procurement specialist [Michael Walsh, Procurement Specialist, PFP2]

Project Procurement Classification is Category B.

ADB = Asian Development Bank, DMC = developing member country, TA = technical assistance.

Appendix 3 10

INITIAL POVERTY AND SOCIAL ANALYSIS

Country: Mongolia Project Title: Managing Solid Waste in Secondary Cities

Lending/Financing Project Grant Department/ EARD/MNRM Modality: Division:

I. POVERTY IMPACT AND SOCIAL DIMENSIONS A. Links to the national Poverty Reduction Strategy and Country Partnership Strategy The Government of Mongolia requested the Asian Development Bank’s (ADB) support to promote effective and innovative solid waste management in secondary cities with a focus on waste minimizing, sorting, and recycling. In addition to the expected positive environmental impact, the project will generate employment opportunities and improved livelihoods for the urban poor with emphasis on women. The project outputs will result in the proposed outcome: effective solid waste management and recycling in secondary cities introduced. The project will be aligned with the following impact: safer and better environmental conditions for the residents living in secondary cities achieved (National Program for Reducing Air and Environment Pollution 2017–2025).a It will support poverty alleviation through generation of new low-skilled jobs in waste collection, segregation and sorting streams.

The proposed project is closely aligned with the country partnership strategy 2017–2020 for Mongoliab and will contribute to ADB’s strategic objective of improving quality of life of the urban poor and strengthening environmental sustainability in the country. The grant is included in the country operations business plan for Mongolia, 2019-2021c and is aligned with the operational priority of Strategy 2030 of (i) addressing remaining poverty and reducing inequalities; (ii) enhancing environmental sustainability; (iii) accelerating progress in gender equality; and (iv) making cities more livable.d B. Poverty Targeting: General Intervention Individual or Household (TI-H) Geographic (TI-G) SDGs (Goals 1, 11 & 12) Poverty and beneficiary data will be collected, and the targeting will be confirmed during the grant preparation. C. Poverty and Social Analysis 1. Key Issues and potential beneficiaries. Rapid population growth and urbanization explains the sharp increase in waste generation worldwide. Managing solid waste effectively is the key to environmental sustainability and public health in urban areas. However, this challenge creates a disproportioned burden to developing countries, including Mongolia, where most of the waste is disposed in uncontrolled landfills or openly burned with pernicious health, safety, and environmental consequences. This largely affects the urban poor and women, whose livelihood opportunities are hampered by the increased burden of care to the sick.

Solid waste management in Mongolia is challenged by (i) poor technologies, infrastructure and equipment for waste collection, segregation, recycling, reuse, treatment and disposal; (ii) rapidly increasing waste; (iii) irregular waste collection and illegal dumping; (iv) absence of educational campaigns to strengthen awareness and social responsibility; and (v) lack of strategic planning for sustainable waste management.

2. Impact channels and expected systemic changes. Successfully addressing these challenges will lead to sustainable and inclusive solutions for solid waste management in secondary cities in Mongolia. In addition, the involvement of local communities, including the poor and women in waste collection, sorting and recycling, can be organized as a community business activity and become an important income generating activity. This will maximize potential social and environmental benefits and economic opportunities from solid waste management while reducing adverse impacts on health and safety of the communities residing near or in the landfills.

The proposed project is a $2.0 million grant and will introduce effective solid waste management in provincial capital of Mongolia through (i) scaling up on integrated solid waste management scheme which was successfully piloted in Zamyn-Uud () under the Southeast Gobi Urban and Border Towns Development Project;e (ii) adopting inclusive solid waste recycling approaches; and (iii) launching waste management public information and educational campaigns.

The impact channels will include (i) reduced environmental pollution and improved urban livability; (ii) improved public health including reduced burden of care for women due to illness; and (iii) improved economic and livelihood opportunities. Further information will be collected during the grant preparation. 3. Focus of (and resources allocated in) the TRTA or due diligence. There is no TRTA associated with this project, but seed money is available to assess current practices and needs of the communities in terms of livelihoods and project’s impact. A social, gender, and community development expert

Appendix 3 11 will form the due diligence team. The assessment will focus also on the solid waste informal sector (scavengers and waste pickers) and due to proposed closure of existing landfills, employment opportunities to improve their livelihood will be developed for all those affected as part of the grant. II. GENDER AND DEVELOPMENT 1. What are the key gender issues in the sector/subsector that are likely to be relevant to this project or program? Mongolia has a comparatively strong history of striving towards gender equality, including promulgation of the gender equality law in 2011. The key issue relevant to this grant are (i) the under-representation of women in decision making processes; (ii) increased burden of care for women due to poor public health arising from poor solid waste management; and (iii) under representation of women in business and livelihood activities related to waste collection and recycling. These issues will be further assessed during grant processing. 2. Does the proposed project or program have the potential to contribute to the promotion of gender equity and/or empowerment of women by providing women’s access to and use of opportunities, services, resources, assets, and participation in decision making? Yes No Please explain.

The grant will strive to improve the current situation towards more empowerment of women through training to achieve diversification of businesses and livelihoods related to solid waste reuse and recycling and improve their participation in the project and in decision making processes, such as designing, monitoring and evaluation of waste recycling pilot. The project will design gender elements to ensure women are properly represented during consultation processes, public awareness events, and business as well as livelihood opportunities. 3. Could the proposed project have an adverse impact on women and/or girls or widen gender inequality? Yes No Please explain

The project will not increase inequality between genders and it will work to reduce existing inequalities as relevant and achievable under the project. 4. Indicate the intended gender mainstreaming category: GEN (gender equity theme) EGM (effective gender mainstreaming) SGE (some gender elements) NGE (no gender elements)

III. PARTICIPATION AND EMPOWERMENT 1. Who are the main stakeholders of the project, including beneficiaries and negatively affected people? Identify how they will participate in the project design. The main stakeholders are the Ministry of Construction and Urban Development, local governments, civil society organizations, and local communities. Stakeholders have shared initial inputs into the project design, and together with local communities, will be consulted further during project design on their requirements and contributions. 2. How can the project contribute (in a systemic way) to engaging and empowering stakeholders and beneficiaries, particularly, the poor, vulnerable and excluded groups? What issues in the project design require participation of the poor and excluded? The grant’s design focuses on improving the lives of poor and vulnerable groups. The design of the grant activities, mostly recycling activities, offers good opportunities to strengthening the livelihood of these groups. 3. What are the key, active, and relevant civil society organizations in the project area? What is the level of civil society organization participation in the project design? Information generation and sharing (M) Consultation (M) Collaboration (N/A) Partnership N/A There are a number of civil society organizations dealing with solid waste collection and recycling in Mongolia. These will be consulted during the grant design, and possible collaboration will be explored. 4. Are there issues during project design for which participation of the poor and excluded is important? What are they and how shall they be addressed? Yes No Local authorities and communities will be directly involved in project design and implementation. IV. SOCIAL SAFEGUARDS A. Involuntary Resettlement Category A B C FI 1. Does the project have the potential to involve involuntary land acquisition resulting in physical and economic displacement? Yes No The grant will have no involuntary resettlement impacts since the location of the small construction activities will be on vacant public or state land while adverse social impacts on scavengers and waste pickers caused by closure of

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existing dump sites will be addressed under Output 2. What action plan is required to address involuntary resettlement as part of the TRTA or due diligence process? Resettlement plan Resettlement framework Social impact matrix Environmental and social management system arrangement None B. Indigenous Peoples Category A B C FI 1. Does the proposed project have the potential to directly or indirectly affect the dignity, human rights, livelihood systems, or culture of indigenous peoples? Yes No

No ethnic minority communities are expected to be present and/or impacted in the project area that would trigger ADB’s Safeguard Policy Statement (2009) requirements on indigenous peoples. 2. Does it affect the territories or natural and cultural resources indigenous peoples own, use, occupy, or claim, as their ancestral domain? Yes No 3. Will the project require broad community support of affected indigenous communities? Yes No The project activities will not trigger the need for broad community support. 4. What action plan is required to address risks to indigenous peoples as part of the PPTA or due diligence process? Indigenous peoples plan Indigenous peoples planning framework Social Impact matrix Environmental and social management system arrangement None V. OTHER SOCIAL ISSUES AND RISKS 1. What other social issues and risks should be considered in the project design?

Creating decent jobs and employment Adhering to core labor standards Labor retrenchment Spread of communicable diseases, including HIV/AIDS Increase in human trafficking Affordability Increase in unplanned migration Increase in vulnerability to natural disasters Creating political instability Creating internal social conflicts Others, please specify ______2. How are these additional social issues and risks going to be addressed in the project design? The grant will create new low-skill jobs ensuring that core labor standards are adopted by relevant enterprises supported by the grant. VI. TRTA OR DUE DILIGENCE RESOURCE REQUIREMENT 1. Do the terms of reference for the TRTA (or other due diligence) contain key information needed to be gathered during PPTA or due diligence process to better analyze (i) poverty and social impact; (ii) gender impact, (iii) participation dimensions; (iv) social safeguards; and (v) other social risks. Are the relevant specialists identified? Yes No 2. What resources (e.g., consultants, survey budget, and workshop) are allocated for conducting poverty, social and/or gender analysis, and participation plan during the TRTA or due diligence.

A social, gender, and community development national consultant expert (national consultant) will be engaged to conduct the poverty, social and gender due diligence. a Government of Mongolia. 2017. National Program for Reducing Air and Environment Pollution 2017–2025 Ulaanbaatar. b ADB. 2017. Country Partnership Strategy: Mongolia, 2017–2020—Sustaining Inclusive Growth in a Period of Economic Difficulty. Manila. c ADB. 2018. Country Operations Business Plan: Mongolia, 2019–2021. Manila. d ADB. 2018. Strategy 2030. Achieving a Prosperous, Resilient, Inclusive and Sustainable Asia and the Pacific. Manila. e ADB. 2010. Report and Recommendation of the President to the Board of Directors: Proposed Grant to the Government of Mongolia for the Southeast Gobi Urban and Border Town Development Project. Manila. Source: Asian Development Bank.