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Public Disclosure Authorized ENVIRONMENTAL AND SOCIAL MANAGEMENT FRAMEWORK Public Disclosure Authorized Third Regional Development Project Public Disclosure Authorized Public Disclosure Authorized February 19, 2015 1. Preface The present Environmental and Social Management Framework (ESMF) is an integral part of the Operations Manual of the Municipal Development Fund of Georgia (MDF) prepared for the purposes of implementing the World Bank-supported Third Regional Development Project (RDP III). The ESMF identifies a range of required environmental and social management measures that need to be taken during the planning, design, and construction and operation phases of RDP III, in order to ensure compliance with the national legislation and the World Bank’s safeguard policies. This ESMF provides general policies, guidelines, codes of practice and procedures to be integrated into the implementation of the Project. It lays out steps-by-step instructions for environmental screening, classifying, appraising, approving and monitoring individual subprojects under RDP III. The ESMF also overviews environmental and social policies and legal framework of Georgia and safeguard policies of the World Bank; includes institutional and capacity assessment related to environmental and social risk management; and describes the principles, objectives and approach to be followed while designing site-specific environmental mitigation measures. 2. Project Context Following four years (2008-2012) of rapid growth, backed by far-reaching reforms and strong financial investment inflows, Georgia experienced a sharp economic downturn resulting from the August 2008 conflict and the global financial crisis. The authorities responded to the downturn with a countercyclical fiscal stimulus coupled with a marked reallocation of public expenditures toward social and infrastructure investments. As economic recovery takes hold, driven by higher exports and private investment, the authorities are winding down the stimulus and implementing fiscal adjustment to safeguard sustainability. As part of its economic recovery efforts, the Government has launched several initiatives to attract private investors in selected regions (Tbilisi, Adjara, Imereti, Kakheti). Tourism has been identified as a source of growth, and Georgia has not yet fully tapped its potential to promote sustainable tourism in promising regions, such as Mtskheta-Mtianeti and Samtskhe-Javakheti, or transform the economy through investment in tourism and agriculture supply chains for both export and import substitution. There is also a need for skills development in order to provide the skilled labor needed for a growing economy and increased productivity. The Government of Georgia has asked the World Bank to support regional development by applying a vertical programmatic approach. The proposed program of interventions will emphasize tourism and agro-processing as two key pillars and drivers of economic growth. Two similar projects are currently being led by the MDF in Imereti and Kakheti regions. 2 3. Development Objective, Expected Results, and Design of the Regional Development Project III A. Proposed Development Objective The Project Development Objective is to improve infrastructure services and institutional capacity to support the development of tourism-based economy and cultural heritage circuits in the Samtskhe-Javakheti and Mtskheta-Mtianeti regions. Result indicators include: Infrastructure Services: Increased hours per day of piped water delivery in project areas Improved access roads to selected tourism attraction sites. Tourism Economy: Increased volume of private sector investments in targeted areas. Increased hotel beds in circuit areas Institutional Capacity: Increased tourism points of sales (tourism related enterprises, e.g., total number of museums, sites improved, hotels, family and guest houses, restaurants, site ticket offices, etc.) Establishment of two regional destination management offices for sustainability The proposed sites/subprojects considered for financing under the Project can be grouped into two categories: Urban regeneration in the cities of Dusheti, Kazbegi and Abastumani as well as small- scale incremental investments in in Mtskheta, Gudauri, Bakuriani, Borjomi and Akhalsekhi. Additional investments in Akhalkalaki, Ninosminda and Khevsureti may also be financed. Improved site management and construction of tourism facilities and access roads for nine cultural heritage sites: Saphara Monastery, Saro Church and Darbazi houses, Zarzma Monastery, Vani Caves, Khertvisi Fortress, Akhalkalaki Castle, Ananuri Fortress, Gergeti Trinity Church and Shatili. B. Project Design RDP III comprises of two components: Component 1: Infrastructure Investment (US$55 million, IBM) Component 1.1: Urban Regeneration and Circuit Development (US$45 million). This component will finance: urban regeneration, including old towns and villages (under screening and selection), restoration of building facades, public spaces, museums, roads and water, and enhancement of cultural and natural heritage sites, including access and presentation. Based on product development and marketing potential, infrastructure needs, and employment levels, the Project will focus on sites along the circuit connecting the selected heritage, nature and ski sites. Component 1.2: Provision of Public Infrastructure to Attract Private Investments (US$10 million). To encourage private sector investments in the region, this component is to support a selected number of private sector entities in project areas which show interest and capacity to 3 invest in tourism or agribusiness, seeking complementary public infrastructure necessary to make their investments viable (e.g., public facilities within vicinity of the investments, road/sidewalk, water/sanitation, communications, connection to main circuit route etc.). Component 2: Institutional Development (US$5 million, IBRD) Institutional capacity and performance of the Georgia National Tourism Administration (GNTA), Agency for Culture Heritage Preservation of Georgia (ACHP), National Museum, MDF and other local and regional entities to carry out the following activities: destination management and promotion, including local outreach campaign; marketing and promotion; skilled workforce development and capacity building; feasibility studies, design, construction supervision and sustainable site management of cultural heritage; and performance monitoring & evaluation activities. Total Project Cost The Government of Georgia has requested the financing of $60 million from the World Bank for implementing RDP III. The total Project cost is $ 75 million and includes $15 million funding from the Government of Georgia. The Project will be implemented by the MDF. 4. Institutional and Legal Framework 4.1 Institutional Framework This section outlines the implementation arrangements of RDP III. Section provides guiding principles for implementers and partners. Municipal Development Fund of Georgia The MDF is the Implementing Agency for the Project and will be responsible for all aspects of its day-to-day management, including its adherence to the present ESMF. Environmental and social governance under RDP III will be exercised by the MDF through its Environment and Resettlement Safeguards Unit. The Environmental and Resettlement Safeguards Unit comprises the following staff units: Head of the Unit, three (3) Environmental Specialists, two (2) Resettlement Specialists, one (1) Social&Gender Specialist and one (1) Safety Specialist. The responsibilities of the Head of Safeguards Unit are the following: Lead the implementation of environmental policies and practices; Ensure compliance with IFIs’ environmental policies and the national environmental legislation; Control quality and adequacy of environmental and social screening reports to ensure that no subproject is accepted for further processing if it falls under environmental category A and/or if it may adversely change the quality or quantity of water in the international waterways, or be affected by the other riparians’ possible water use; Participate in the screening of public-private investment proposals to ensure that selected ones fully meet environmental and social eligibility criteria; Review and ensure quality of Subproject Appraisal Reports (SARs), Environmental and Social Review (ESR) reports, Environmental Management Plans (EMPs), and Resettlement Action Plans (RAPs) produced by the MDF staff; 4 Ensure due involvement of the Safeguards Unit staff into all operations of MDF that require inputs related to safeguard policy application; Evaluate environmental performance under the MDF-implemented activities and ensuring quality of reporting on the application of safeguard policies to internal and external clients and regulatory bodies; Alert the MDF management on significant issues revealed through monitoring of safeguards performance of contractors and recommending remedial action; Ensure disclosure of safeguards documents according to the guiding principles set forth in ESMF and Resettlement Policy Framework (RPF); coordinate consultation with stakeholders on ESRs, EMPs, RAPs, and any environmental and social aspects of the MDF’s activities that affected people may be interested in; and take decision on the incorporation of public feedback into safeguards documents. One environmental specialist is fully involved in the process of preparation, implementation and monitoring of all subprojects under RDP III