Nicaragua-Sustainable-Rural-Water

Document of The World Bank FOR OFFICIAL USE ONLY

Public Disclosure Authorized Report No: ICR00004854

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA H9120 and IDA-53770) ON A GRANT IN THE AMOUNT OF SDR 10.2 MILLION (US$15.7 MILLION EQUIVALENT)

Public Disclosure Authorized AND A CREDIT IN THE AMOUNT OF US$ 14.3 MILLION TO THE REPUBLIC OF NICARAGUA FOR A SUSTAINABLE RURAL WATER SUPPLY AND SANITATION SECTOR PROJECT

Public Disclosure Authorized April 3, 2020

Water Global Practice Latin America and the Caribbean Region

Public Disclosure Authorized

CURRENCY EQUIVALENTS

(Exchange Rate Effective September 30, 2019)

Currency Unit = Nicaraguan Córdoba (NIO) NIO 33.55 = US$1.00 US$1.00 = NIO 0.03

Currency Unit = Special Drawing Rights (SDR) SDR 0.73 = US$1.00 US$1.00 = SDR 1.36

FISCAL YEAR July 1 - June 30

Regional Vice President: J. Humberto Lopez (Acting) Country Director: Yaye Seynabou Sakho Regional Director: Anna Wellenstein Practice Manager: Rita E. Cestti Task Team Leaders: Martin Benedikt Albrecht and Juan David Casanova Anoll ICR Main Contributor: Maria Eliette Gonzalez Perez

ABBREVIATIONS AND ACRONYMS

ARAS Regional Water and Sanitation Adviser (Asesor Regional de Agua y Saneamiento) AVAR Outcome-Based Learning Methodology (Aprendizaje Vinculado a Resultados) CABEI Central American Bank for Economic Integration CAPS Water and Sanitation Water Committee (Comité de Agua Potable y Saneamiento) CDD Community-driven delivery modality CDS Sustainability Chain (Cadena de Sostenibilidad) CERC Contingency Emergency Response Component CPF Country Partnership Framework CPS Country Partnership Strategy ENACAL Nicaragua Water Supply and Sewerage Utility (Empresa Nicaragüense de Acueductos y Alcantarillados Sanitarios) ESMF Environmental and Social Management Framework FCSA Healthy Families and Communities (Familias y Comunidades Saludables) FISE Emergency Social Investment Fund (Fondo de Inversión Social de Emergencia) FM Financial Management GoN Government of Nicaragua GRM Grievance Redress Mechanism IAPPF Indigenous and Afro-Nicaraguan Peoples Planning and Framework ICR Implementation Completion and Results Report IDA International Development Association IE Impact Evaluation IEG Independent Evaluation Group IFR Interim Unaudited Financial Reports INIDE National Institute of Information Development of Nicaragua (Instituto Nacional de Información de Desarrollo) IRI Intermediate Results Indicator IRM CC Immediate Response Mechanism Contingent Component ISR Implementation Status and Results Report JMP Joint Monitoring Programme of UNICEF/WHO M&E Monitoring and Evaluation MAPAS Monitoring Country Progress in Rural Water and Sanitation (Monitoreo de los Avances de País en Agua y Saneamiento) MDG Millennium Development Goals MEPAS Execution Manual for WSS Projects (Manual de Ejecución de Proyectos de Agua y Saneamiento) MHCP Ministry of Finance and Public Credit (Ministerio de Hacienda y Crédito Público MTR Mid-Term Review NPV Net Present Value O&M Operation and Maintenance PACCAS Adaptation of Nicaragua’s Water Supplies to Climate Change Project (Proyecto de Adaptación al Cambio Climático en Agua y Saneamiento) PAD Project Appraisal Document PDO Project Development Objective PGC Community-Driven Development Project (Proyecto Guiado por la Comunidad) PISASH National Water and Sanitation Sector Strategy Plan (Programa Integral Sectorial de Agua y Saneamiento Humano de Nicaragua) PMACC Municipal Climate Change Adaptation Strategies (Planes Municipales de Adaptación al Cambio Climático) PNDH National Human Development Plan (Plan Nacional de Desarrollo Humano) PRASNICA Nicaragua Rural Water Supply and Sanitation Project (Proyecto de Abastecimiento de Agua en las Zonas Rurales) PROSASR Sustainable Rural Water Supply and Sanitation Sector Project (Proyecto de Sostenibilidad del Sector de Agua y Saneamiento Rural) RACCN Northern Caribbean Coast Autonomous Region (Región Autónoma de la Costa Caribe Norte) RACCS Southern Caribbean Coast Autonomous Region (Región Autónoma de la Costa Caribe Sur) RF Results Framework RPF Resettlement Policy Framework SDG Sustainable Development Goals SDR Special Drawing Rights SEPA Procurement Plan Management System (Sistema de Ejecución de Planes de Adquisiciones) SIASAR Rural Water and Sanitation Information System (Sistema de Información de Agua y Saneamiento Rural) SICPRO FISE’s system for Monitoring of Subprojects (Sistema de Control de Proyectos) SIEF Strategic Impact Evaluation Fund SINAPRED National System for Disaster Prevention, Mitigation and Assistance (Sistema Nacional para la Prevención, Mitigación y Atención a Desastres) STEP Systematic Tracking of Exchanges in Procurement TAP Technical Assistance Provider TOC Theory of Change TTL Task Team Leader UGA Environmental Management Unit (Unidad de Gestión Ambiental) UMAS Municipal Water and Sanitation Unit (Unidad Municipal de Agua y Saneamiento - includes regional variants of UMAS such as UMASH for RACCN and RACCS and UTASH for Alto Wangki y Bokay) UNICEF United Nations Children's Fund VIP Ventilated Improved Latrine WBG World Bank Group WHO World Health Organization WSP Water and Sanitation Program WSS Water Supply and Sanitation ZREAWB Alto Wangki y Bokay Special Development Regime Zone (Zona de Régimen Especial de Desarrollo Alto Wangki y Bokay)

TABLE OF CONTENTS

DATA SHEET ...... I I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ...... 1 A. CONTEXT AT APPRAISAL ...... 1 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION ...... 5 II. OUTCOME ...... 6 A. RELEVANCE OF PDOs ...... 6 B. ACHIEVEMENT OF PDOs (EFFICACY) ...... 6 C. EFFICIENCY ...... 11 D. JUSTIFICATION OF OVERALL OUTCOME RATING - Rating: Satisfactory ...... 13 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ...... 14 A. KEY FACTORS DURING PREPARATION ...... 14 B. KEY FACTORS DURING IMPLEMENTATION ...... 14 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 15 A. QUALITY OF MONITORING AND EVALUATION (M&E) ...... 15 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ...... 16 C. BANK PERFORMANCE ...... 17 D. RISK TO DEVELOPMENT OUTCOME ...... 18 V. LESSONS AND RECOMMENDATIONS ...... 18 ANNEX 1. RESULTS FRAMEWORK, KEY OUTPUTS AND SPLIT EVALUATION ...... 20 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ...... 35 ANNEX 3. PROJECT COST BY COMPONENT ...... 37 ANNEX 4. EFFICIENCY ANALYSIS ...... 38 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 41 ANNEX 6. SUPPORTING DOCUMENTS ...... 43 ANNEX 7. RESULTS OF SUSTAINABILITY CLASSIFATION MATRICES FOR CAPS, UMAS AND SYSTEMS ...... 45 ANNEX 8. SUMMARY OF RECIPIENT ICR ...... 60 ANNEX 9. SUMMARY OF THE IMPACT EVALUATION ...... 62 ANNEX 10. ADDITIONAL INFORMATION ON PROJECT OUTCOMES AND ACHIEVEMENTS ...... 68

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

DATA SHEET

BASIC INFORMATION

Product Information Project ID Project Name

NI Sustainable Rural Water Supply and Sanitation Sector P147006 Project

Country Financing Instrument

Nicaragua Investment Project Financing

Original EA Category Revised EA Category

Partial Assessment (B) Partial Assessment (B)

Organizations

Borrower Implementing Agency

Republic of Nicaragua Emergency Social Investment Fund (FISE)

Project Development Objective (PDO)

Original PDO The Project Development Objectives (PDOs) are: (a) to increase the access to sustainable WSS services in selected poor rural areas of Nicaragua through the consolidation of rural WSS sector institutions and the provision of adequate infrastructure; and (b) to improve Nicaragua’s capacity to respond promptly and effectively to an eligible emergency.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

FINANCING

Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing

14,300,000 14,300,000 14,023,690 IDA-53770

15,700,000 15,700,000 14,304,448 IDA-H9120 Total 30,000,000 30,000,000 28,328,138

Non-World Bank Financing 0 0 0 Borrower/Recipient 2,000,000 2,000,000 2,139,082 Total 2,000,000 2,000,000 2,139,082 Total Project Cost 32,000,000 32,000,000 30,467,220

KEY DATES

Approval Effectiveness MTR Review Original Closing Actual Closing

18-Mar-2014 31-Jul-2014 23-Jan-2017 31-Jul-2019 30-Sep-2019

RESTRUCTURING AND/OR ADDITIONAL FINANCING

Date(s) Amount Disbursed (US$M) Key Revisions 01-May-2018 9.87 Change in Results Framework Change in Components and Cost Reallocation between Disbursement Categories Change in Implementation Schedule 24-May-2019 22.91 Change in Loan Closing Date(s) Reallocation between Disbursement Categories

KEY RATINGS

Outcome Bank Performance M&E Quality Satisfactory Satisfactory Substantial

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

RATINGS OF PROJECT PERFORMANCE IN ISRs

Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 20-Jun-2014 Satisfactory Satisfactory 0

02 05-Dec-2014 Satisfactory Satisfactory 1.00

03 13-May-2015 Satisfactory Satisfactory 1.00

04 22-Jun-2015 Satisfactory Satisfactory 1.00

05 16-Dec-2015 Moderately Satisfactory Moderately Satisfactory 2.33

06 20-May-2016 Moderately Satisfactory Moderately Satisfactory 2.98 Moderately 07 23-Nov-2016 Moderately Unsatisfactory 3.45 Unsatisfactory Moderately 08 06-Jun-2017 Moderately Unsatisfactory 4.33 Unsatisfactory Moderately 09 19-Dec-2017 Moderately Unsatisfactory 6.44 Unsatisfactory 10 08-Jun-2018 Moderately Satisfactory Moderately Satisfactory 10.84

11 06-Dec-2018 Moderately Satisfactory Moderately Satisfactory 16.14

12 06-Jun-2019 Moderately Satisfactory Moderately Satisfactory 23.11

SECTORS AND THEMES

Sectors Major Sector/Sector (%)

Public Administration 3 Sub-National Government 3

Water, Sanitation and Waste Management 97 Sanitation 44 Water Supply 44 Public Administration - Water, Sanitation and Waste 9 Management

iii

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Finance 10

Finance for Development 10

Agriculture Finance 10

Urban and Rural Development 91

Rural Development 91

Rural Markets 10

Rural Infrastructure and service delivery 81

Environment and Natural Resource Management 8

Climate change 8

Adaptation 8

ADM STAFF

Role At Approval At ICR Regional Vice President: Hasan A. Tuluy J. Humberto Lopez

Country Director: Carlos Felipe Jaramillo Yaye Seynabou Sakho Director: Ede Jorge Ijjasz-Vasquez Anna Wellenstein

Practice Manager: Wambui G. Gichuri Rita E. Cestti Martin Benedikt Albrecht, Juan Task Team Leader(s): Lilian Pena Pereira Weiss David Casanova Anoll ICR Contributing Author: Maria Eliette Gonzalez Perez

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Context 1. At the time of Project approval in 2014, Nicaragua had experienced important improvements in both poverty levels and equality with extreme poverty halving and overall poverty significantly decreasing between 2005 and 2014. Nonetheless, many Nicaraguans still lacked access to basic services - according to estimates in 2014,1 30 percent of the population were poor, and about 80 percent were poor or vulnerable to becoming poor. Most of the poor, including indigenous populations, lived in rural and remote communities where they did not benefit from economic growth in part due to their very limited access to basic infrastructure services. Rural populations, indigenous peoples2 and Afro-Nicaraguan ethnic communities had historically experienced economic deprivation and social exclusion. 2. In 2011, access to improved water supply at the national level was 85 percent and access to improved sanitation 52 percent, up from 80 percent and 48 percent respectively in 2000.3 At that time, it was considered likely that Nicaragua would achieve the 2015 Millennium Development Goal (MDG) targets for water (87 percent), but not for sanitation (72 percent). However, there was a large disparity between access in urban and rural areas, both for water (98 percent urban compared to 68 percent rural) and for sanitation (63 percent urban but only 37 percent rural). Among the country’s different regions, the Northern Caribbean Coast Autonomous Region (RACCN), the Southern Caribbean Coast Autonomous Region (RACCS), and Alto Wangki y Bokay had the lowest coverage levels. Further, significant disparities existed in access to water supply and sanitation (WSS) services disaggregated by household income level. 3. In addition to gaps in access, the rural WSS sector also struggled with the medium- and long-term sustainability of rural WSS systems. Several factors affected the sustainability of WSS services at different levels. At the national level, a lack of clear sector strategies and limited institutional capacity to manage the sector inhibited sector development, as well as insufficient financing mechanisms for sector investments; at the municipal level, lack of institutional capacity in the municipal water and sanitation units (UMAS) to support the community water and sanitation committees (CAPS) and high rotation of municipal staff; at the community level, poor tariff revenues, limited management and technical capacities of the CAPS, as well as precarious technical and social post-construction support provided from municipal and national levels was observed as main challenges inhibiting progress. 4. Despite progress in previous years, the Government of Nicaragua (GoN) recognized the need for more systematic sector organization to overcome these challenges by: (i) developing the sector policy and building capacity at national level to implement the policy, and (ii) strengthening the CAPS’ support structure at municipal, regional and national levels. This institutional structure was denominated as Sustainability Chain (CDS) and was adopted as the underlying concept for the whole rural WSS sector. In view of these challenges, the GoN declared sustainable WSS service provision a national priority and developed a national strategic program (PISASH) to lay out a path forward for the sector with the Emergency Social Investment Fund (FISE) as the leading institution in charge at national level.4 In order to fulfill that role, FISE required support to develop the capacity to implement the PISASH’s rural component. From 2014 to 2017, the Bank supported this through a series of technical assistance activities,5 including support to develop sector governance instruments. 5. Through the various lending operations and technical assistance activities, the World Bank became the GoN’s leading partner in rural WSS. In June 2008, the Bank financed the first Rural Water Supply and Sanitation Project

1 The FY18-FY22 World Bank Group’s Country Partnership Framework (CPF) for the Republic of Nicaragua. Report No. 123026-NI. Estimates based on 2005 and 2014 Living Standards Measurement Studies Surveys. 2 While there is no recent census or household survey that reflects the indigenous population, the latest census from 2005 indicates that Nicaragua’s self‐identifying indigenous population represented six percent of the overall population. 3 UNICEF/WHO (2013), United Nations Joint Monitoring Program, 2013 Update. 4 PISASH is a 20-year strategic sector plan implemented by national water utility to guide WSS investments, including rural WSS. 5 Water and Sanitation Program (WSP) “Strengthening Rural WSS Sector Institutional Policy and Planning Capacity in Nicaragua (P132171)”.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

(PRASNICA)6, which contributed to expanding WSS access in rural areas. In November 2012, the Bank through the Global Environment Facility financed the Adaptation of Nicaragua's Water Supply and Sanitation Sector to Climate Change Project (PACCAS)7 to pilot the mainstreaming of climate change adaptation into water resources management and water supply in rural areas. The Bank coordinated efforts with other donors to align implementation approaches, specifically with the Central American Bank for Economic Integration (CABEI).8 Other donors in the rural WSS sector, active in a much smaller scale, were UNICEF and the Swiss Agency for Development and Cooperation. 6. As a response to the need to enhance the sustainability of the rural WSS systems and to focus on improving the sanitation sub-sector, the Sustainable Rural Water Supply and Sanitation Sector Project (PROSASR) was designed.

Theory of Change (Results Chain) 7. Figure 1 illustrates the Theory of Change (TOC) that explains the causal pathways of how project activities would lead to the achievement of project objectives. The project envisaged to contribute to the sector’s long-term objectives of improving social welfare by improving access to quality basic services, and to increase institutional capacity to respond to persistent risks and natural hazards, through the two Project Development Objectives (PDOs): (i) to increase the access to sustainable water supply and sanitation services in selected poor rural areas of the recipient through the consolidation of rural water supply and sanitation sector institutions and the provision of adequate infrastructure; and (ii) to improve the Recipient´s capacity to respond promptly and effectively to an eligible emergency. 8. While the first part of the PDO formally indicated that increasing access to sustainable water supply and sanitation services in selected poor rural areas of Nicaragua was to be achieved through two intermediate outcomes – (i) the consolidation of rural WSS sector institutions, and (ii) the provision of adequate WSS infrastructure, a third intermediate outcome – (iii) implementation of water, sanitation, and hygiene approaches was added in the TOC by inferring it from the description of project components. 9. The second part of the PDO of improving Nicaragua’s capacity to respond promptly and effectively to respond to an eligible emergency was to be measured through the development of an instrument that would allow the GoN to respond quickly to an eligible emergency. The implementation of this objective was to be defined in the Immediate Response Mechanism (IRM) operations manual, which determined the types of eligible expenditures that could be financed in case of an eligible emergency. The availability of the IRM would enable the Government to address persistent natural hazards. Capacity building activities for municipalities to ensure continuity of water supply and sanitation services to rural communities and adapt to climate change, would also contribute to improving the Recipient’s capacity to respond to emergencies and climate hazards. 10. The results chain was constructed using the following assumptions: (i) central, municipal and community institutions would be committed to project activities and ensured counterpart financing; (ii) water resources would comply with quantity and quality requirements; (iii) available contractors would have the required competencies to design, build and supervise water and sanitation works; (iv) strengthening of FISE, UMAS and CAPS would improve management, operation and maintenance of WSS systems; (v) people reached with WSS training and hygiene awareness campaigns would be willing to adopt hygiene practices; and (vi) effective approaches developed and strengthened under the Project would be maintained and scaled up through the provision of adequate financial, technical and human resources.

6 The Rural Water and Sanitation Project - PRASNICA (P106283) consisted of US$20 million IDA grant and credit. It was approved by the Board on June 12, 2008, received Additional Financing of US$6 million in 2012 and closed on March 31, 2015. 7 Adaptation of Nicaragua’s Water Supplies to Climate Change Project - PACCAS (P127088) consisted of US$6 million grant. It was approved on November 13, 2012 and closed on June 30, 2018. 8 Since 2014, CABEI finances a parallel operation of US$30 million targeting municipalities where PROSASR Project did not build infrastructure.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Figure 1. Diagram showing the Theory of Change of the Project at levels of activities, intermediate outcomes, PDO level outcomes and long-term outcomes. The black arrows correspond to the first PDO, the blue arrows to the second PDO.

Project Development Objectives (PDOs) 11. The PDOs were to: (i) increase access to sustainable water supply and sanitation services in selected poor rural areas of the Recipient through the consolidation of rural water supply and sanitation sector institutions and the provision of adequate infrastructure; and (ii) improve the Recipient´s capacity to respond promptly and effectively to an eligible emergency. Key Expected Outcomes and Outcome Indicators 12. The key expected outcomes of the Project were the following: • PDO part 1 to increase the access to sustainable water supply and sanitation services in selected poor rural areas of the Recipient. According to the PAD, this objective was to be measured by the following outcome indicators: (i) percentage increase nation-wide in improved water supply coverage; (ii) percentage increase nation-wide in improved sanitation coverage; (iii) number of additional beneficiaries with sustainable access9 to water supply in project supported rural communities; (iv) number of additional beneficiaries with sustainable access to sanitation in project supported rural communities; and (v) percentage of community WSS boards nation-wide that are operating in a sustainable manner.

9 The PAD (page 28) defines “sustainable access” as Water and Sanitation Water Committee (CAPS) ranked with an A or B according to SIASAR Service Provider Matrix.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

• PDO part 2 to improve the Recipient´s capacity to respond promptly and effectively to an eligible emergency. This objective was to be measured by the time taken to disburse funds requested by the Government in case of an eligible emergency. It should be noted that at the time of project approval, the Government of Nicaragua had agreed to introduce the new IDA IRM into selected projects in the portfolio to provide fast disbursing funds and to mitigate the persistent risk and exposure of Nicaragua to natural hazards. Consistent with World Bank operational guidelines, the IRM was required to be referenced in the PDO to reflect the possibility of providing emergency financing when needed.

Components 13. Component 1: Strengthening the Rural Water Supply and Sanitation Sector. (Appraisal estimate cost: US$7 million; Actual cost: US$7.56 million). This component aimed at strengthening governance instruments and consolidating sector institutions through the provision of training, capacity building and coordination activities at the different governance levels. The component adopted the CDS process, which aimed at strengthening an integrated structure for the sustainability of rural WSS services. CDS activities included training, workshops, provision of equipment among others to support FISE, CAPS and UMAS as well as technical assistance for the strengthening of the Water and Sanitation Information System (SIASAR). It also financed project management, monitoring and evaluation (M&E), project audits, and implementation of environmental and social safeguards instruments. 14. Component 2: Increase Sustainable Water Supply and Sanitation Coverage in Rural Areas Sector. (Appraisal estimate cost: US$23 million; Actual cost: US$24.92 million). Based on the municipal WSS plans developed under Component 1, this component financed specific subprojects that were carried out in selected beneficiary poor rural areas in the Pacific, Center and North regions; and in the Caribbean Coast Regions and Alto Wangki y Bokay area. The subprojects aimed at increasing the coverage of sustainable WSS services and included works and tools for their operation and maintenance, construction or rehabilitation of WSS systems, water quality improvements, and sanitation solutions. The component financed the entire subproject cycle, including formulation, execution, supervision, post-works accompaniment.10 Regarding sanitation, the Project supported the development of a menu of basic sanitation solutions and aspirational options, provided demand-driven infrastructure, supported household visits and hygiene awareness campaigns. At appraisal, the Project also included the design and development of a strategy to support the implementation of FISE’s sanitation marketing program and intended to engage activities with financial markets/private companies to provide financial access to households to acquire sanitary equipment and to improve sanitary facilities in selected municipalities that fell outside the pro-poor criteria. 15. Component 3: Innovations in Rural Water, Sanitation and Hygiene. (Appraisal estimate cost: US$2.00 million; Actual cost: US$1.16 million). This component financed the design, implementation, monitoring, evaluation and documentation of innovative water, sanitation, and hygiene approaches for the Nicaraguan context. During implementation, the Project piloted three approaches: (i) technical solutions from the sanitation menu; (ii) chlorine supply chain; and (iii) fecal sludge management. This component also supported the expansion and improvement of the water supply system in the municipality of Corn Island. 16. Component 4: Contingent Emergency Response (IRM CC). (US$0.0 million). This component aimed at supporting Nicaragua’s capacity to improve its capacity to respond promptly and effectively to emergencies by providing immediate response to an eligible emergency, as needed. The IRM CC was a contingent mechanism conditioned to the occurrence of an eligible emergency and the decision by the Government to activate it, hence it had zero allocation of funds.

10 Post-works accompaniment is an institutionalized sub-project phase, in which a social facilitator supports local communities for a period of three months to strengthen project ownership and sustainability through the provision of technical assistance for the management, operation and maintenance of rural WSS systems. MEPAS (Page 41 – 42).

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

B. SIGNIFICANT CHANGES DURING IMPLEMENTATION

17. The Project underwent two Level II restructurings: • First Project restructuring (May 2018). It included changes in the outcome indicators, results framework, components and costs, disbursement estimates, risk rating and implementation schedule as well as reallocation between disbursement categories. At that time, the Project had disbursed 31.1 percent (US$9.04 million) of the IDA funds. In the Implementation Status and Results Report (ISR), the implementation progress and development objective were rated moderately unsatisfactory due to slow implementation pace. • Second Project restructuring (May 2019). It included reallocation between disbursement categories and extension of the Project’s closing date from July 31, 2019 to September 30, 2019. At this time, the Project had disbursed 80 percent (US$22.91 million); the ISR’s ratings on implementation progress and development objective were both moderately satisfactory. Revised PDOs and Outcome Targets 18. The PDO formulation was not changed during project implementation. Key performance indicators and their targets were revised as described below. 19. During the first restructuring, the PDO level indicators were amended to better reflect the project’s scope, focusing on selected poor areas rather than having nation-wide coverage. Outcome indicators related to increase in water supply and sanitation coverage at the national level were dropped because of the difficulty to measure the project’s attribution. The actual target beneficiary figures were also amended based on the approved investments portfolio under Component 2 and shifts in priorities. The specific changes included: (i) sanitation beneficiaries target was reduced from 21,916 to 13,968; and (ii) target for CAPS sustainability was increased from 61 percent nation-wide to 80 percent of only selected poor rural areas Revised Components 20. During the first restructuring, the Bank cancelled subcomponent 2.3 Alliances for Sanitation, as FISE decided to follow a different sanitation marketing approach by promoting the sanitation basic solutions menu and aspirational options to the subprojects’ social support scheme. The second restructuring in May 2019 addressed the reallocation of funds between components and categories to ensure the implementation of institutional strengthening activities and provision of WSS infrastructure, particularly for the Caribbean region. Other Changes 21. The Results Framework (RF) was modified to reflect the Project’s change in scope and to facilitate M&E activities. The number of intermediate results indicators (IRI) was reduced from 31 to 23 given the complexity in the measurement of some targets. Among dropped IRIs was the indicator “Rural PISASH validated by the Planning Council”. Disbursement estimates and implementation schedule were also adjusted given the delays in the execution of the infrastructure works. Rationale for Changes and their Implication on the Original Theory of Change 22. The changes were made to: (i) make the outcome indicators more consistent with the objective statement by removing the reference to nation-wide coverage but instead focusing on the selected poor rural areas covered under the project; (ii) better reflect the evolving funding needs of project beneficiaries; (iii) streamline and accelerate project implementation; and (iv) improve monitoring progress towards the achievement of PDO. Reallocation of resources was required because the costs of subprojects located in the Caribbean regions and Alto Wangki y Bokay were higher than originally estimated, given the level of difficulty of working in those regions due to access constraints and limited experience with the development of WSS investments in these regions. The Project also experienced funding gaps in components financed by the IDA Grant due to changes in the exchange rate between the SDR and US$ at the time of approval, requiring reallocation of project funds between components.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

23. The Project experienced slow initial implementation related to institutional and sector capacity which required revisions to the disbursement estimates and implementation schedule. In the second restructuring, the closing date of the Financing Agreement was extended by two months from July 31, 2019 to September 30, 2019 to allow for completion of all ongoing civil works and implementation of post-construction support activities.

II. OUTCOME A. RELEVANCE OF PDOs Assessment of Relevance of PDOs - Rating: High 24. PDO part 1 “to increase access to sustainable WSS services in selected poor rural areas of Nicaragua” remained highly relevant to the country’s development priorities throughout project implementation. Project objectives and activities were considered key contributions to Nicaragua’s Policy and Strategic Program for Water and Sanitation objectives established in the Nicaragua’s 2012-2016 National Human Development Plan (PNDH) and its subsequent updated version, in which the GoN confirms the priority to increase universal and equitable access to water and sanitation services, improve water quality and promote shared responsibility in the construction, use and sustainability of WSS systems. 25. At project closing, the relevance of PDO part 1 to the CPF FY18-FY22, approved by the Board on March 15, 2018, remained High. The CPF highlights low access to water and sanitation, especially at the lower end of the income distribution. In this regard, PDO part 1 contributed to the achievement of the CPF’s objective 2: Improved Health and Early Childhood Development under Pillar 1: Investing in human capital particularly for disadvantaged groups. The Project supported strengthening Nicaragua's rural WSS sector structure at different levels and increased the coverage of WSS services in a sustainable way among municipalities and communities with the lowest WSS coverage and highest poverty rates. In addition, the Project supported the promotion of shared prosperity of the country’s poorest 40 percent who benefit from having improved service quality and from the strengthened and better organized rural WSS institutions. Project support for the provision of sustainable sanitation and hygiene awareness campaigns at house-hold levels contributed to a decrease levels of open defecation and waterborne diseases; therefore, contributing to the reduction of economic burden of ill health. 26. In relation to PDO part 2 “improve Nicaragua’s capacity to respond promptly and effectively to an eligible emergency,” the objective is aligned with GoN’s efforts to strengthen the capacities across different levels to respond to and manage emergency situations in an effective manner through the National System for Disaster Prevention, Mitigation and Response. Likewise, PDO part 2 is relevant for Objective 5 of the CPF: Improved Resilience to Macroeconomic Volatility under Pillar 3. B. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome 27. The PDO consists of two parts: “to: (a) increase access to sustainable water supply and sanitation services in selected poor areas of the Recipient through the consolidation of rural water supply and sanitation sector institutions and the provision of adequate infrastructure; and (b) improve the Recipient´s capacity to respond promptly and effectively to an eligible emergency.” Considering the changes made to the PDO indicators (see Table 1), a split evaluation has been conducted (see Annex 1, Section C). Achievement of each objective is presented below. 28. PDO part 1: Increase the access to sustainable WSS services in selected poor rural areas of Nicaragua through the consolidation of rural WSS institutions and the provision of adequate infrastructure

Table 1. Achievement of indicators contributing to increase sustainable WSS services. Note: Indicator 1 and 2 in this table were dropped at the first restructuring, and the wording of indicator 5 was revised. The values marked with N/A are not applicable because they were dropped (indicators 1 and 2) or wording changed at restructuring (indicators 5).

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Original PDO Indicators Revised PDO Indicators (Restructured in May 2018) Achieved Indicator Achievement Achievement value Original Revised against original against target target target revised target 1. Percentage-point increase nation-wide in 1.8212 1.6 113 percent N/A N/A improved water supply coverage11 2. Percentage-point increase nation-wide in 0.8813 0.35 251 percent N/A N/A improved sanitation coverage 3. Number of additional beneficiaries with sustainable access to water supply in Project 44,514 20,264 220 percent 20,264 220 percent supported rural communities 4. Number of additional beneficiaries with sustainable access to sanitation in Project 19,582 21,916 89 percent 13,968 140 percent supported rural communities 5. Percentage of community WSS boards nation- wide that are operating in a sustainable manner 33 (wording of original indicator) 61 54 percent 8014 116 percent Percentage of community WSS boards under the Project that are operating in a sustainable manner 93 (revised wording at restructuring) 5. Direct Project beneficiaries 72,390 52,725 137 percent 42,453 170 percent

29. Dropped outcome indicators. Indicators measuring percentage increase nation-wide in improved water supply and sanitation coverage (indicators 1 and 2) were dropped. After being dropped during restructuring, these indicators were not measured by FISE. Also, no other data sources for national coverage at time of project closing. The latest available data of the Joint Monitoring Programme (JMP) were of 2017. Nonetheless, as shown in Table 1, accounting only for the beneficiaries of the communities that gained access through water supply and sanitation systems constructed under the Project (48,774 for water supply and 23,616 for sanitation) and comparing them to the total rural population of Nicaragua (2,681,765)15, the improved water supply coverage is 1.82 percent and improved sanitation is 0.88 percent. Although these numbers only represent the coverage increase in 75 project supported communities and not nation-wide, they already meet the original targets of 1.6 percent-points increase in coverage for improved water supply and 0.35 percent-point increase in coverage in improved sanitation nation-wide, as set out in the Project Appraisal Document (PAD).16 30. Consolidation of institutions. To achieve PDO part 1, the Project focused on the strengthening at different governance levels namely FISE, UMAS and CAPS through training, workshops and provision of equipment, improved management, operation and maintenance of WSS systems. 31. At the central level, the Project supported the consolidation of FISE’s role to lead the sector through the enhanced coordination mechanisms between FISE and different stakeholders. Further, the Project strengthened the articulation of

11 According to the PAD, the unit of measure is percentage-point the numerator of this indicator would be “number of rural inhabitants with access to improved water supply, using data from SIASAR and INIDE, and as per the WHO/UNICEF Joint Monitoring Programme definition”, and the denominator would be “rural population of Nicaragua in the year of measurement”. The same definition applies for the sanitation indicator. 12 This number does not represent the nation-wide coverage, but the number of direct beneficiaries for water supply (48,774) as percentage of the total rural population of Nicaragua of 2,681,765 inhabitants (World Bank Data, 2018). Assuming there are more persons who have gained access in the more than 5000 non-project communities across the country, this number is presented as the percentage of nation-wide increase in coverage, attributable to the project; it is an underestimation since this approximation only counts persons in the 75 project communities. Please see also para. 29. 13 Idem; approximate calculation for 23,616 sanitation beneficiaries. 14 The target was increased from 61 percent nation-wide to 80 percent of CAPS supported through the Project. 15 World Bank Data for the year 2018. 16 Estimated calculation of the increase in coverage in the project communities alone, not considering the rest of the rural areas. This calculation further does not consider population growth.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

the rural WSS structural framework and instruments to improve sector planning. Instruments like the Project Execution Manual (MEPAS), the community-driven delivery modality (CDD), outcome-based training (AVAR) and WSS municipal plans provided technical best practices and methodologies to improve WSS sector management following an articulated and standardized approach. The Project also contributed to the development of the strategic plan “Rural PISASH,” which aimed to improve the sector’s coordination and planning to guide the sector development in the next 20 years. Unfortunately, the Rural PISASH was still undergoing revisions at the time of writing this report; it is expected that it will be validated by the Planning Council during the first semester of 2020. Finally, the Project supported the update of SIASAR nation-wide and rolled out a strategic plan to increase the ownership of UMAS to keep the information system up to date. This tool enabled FISE and municipalities to systematically track progress of 7,139 communities, 6,069 water systems and 3,113 CAPS and to promptly identify municipalities and/or communities in need of investments or support. 32. At the municipal level, the Project supported the strengthening of the CDS established under PRASNICA through the implementation of capacity building workshops using AVAR training and regional WSS advisers (ARAS). As result of the AVAR, 148 municipalities successfully completed the training and 110 UMAS were upgraded to a superior performance category. In the 52 municipalities supported by PROSASR, 50 UMAS were ranked as A (15) or B (35), exceeding the target of 85 percent (See Table 7.3 in Annex 7 for detailed evaluation results). To measure sustainability, the UMAs were systematically evaluated in categories of availability of data, visits to communities in the last twelve months, support to communities in water quality monitoring activities, human resources, transport capacity, equipment to perform daily tasks and budget. 33. At community level, the Project provided extensive support to poor rural communities during the complete subproject cycle through the well-established social support scheme. This included several meetings and capacity building activities led by UMAS and FISE’s social facilitators, to organize and legalize the CAPS into the national registry of community water boards; select, review and approve the preferred WSS infrastructure; elaborate indigenous and Afro-Nicaraguan peoples plans; calculate water tariffs, collect monetary contributions and supervise civil works during project implementation. 34. Provision of adequate infrastructure. In combination with the support to the CDS, the Project provided 8,388 new piped household water connections and 18 improved water community water points, thus benefitting a total of 48,774 Nicaraguans with access to improved water sources. The Project also defined a sustainability classification matrix to rank water systems in a scale from A (best) to D (lowest) in the categories of water flow to meet demand, condition of the catchment, condition of the conduction and distribution networks, storage capacity, status of the micro-watershed, and measurement of residual chlorine. As result, 50 water systems were ranked as A, and 21 were rated as B from the 74 evaluated systems (see Table 7.2 in Annex 7 for detailed results). Moreover, the Project constructed 4,961 household sanitary units, benefiting a total of 23,616 persons with access to improved sanitation. Total direct project beneficiaries therefore amount to 72,390. PROSASR provided WSS interventions in 36 communities in the Pacific, Centre and North Regions; 34 communities in the Caribbean Regions and five communities in Alto Wangky y Bokay, for a total of 75 WSS subprojects, including municipality of Corn Island. All project supported communities used WSS technical solutions that responded to the beneficiaries’ financial and technical needs and level of services, following a demand-responsive approach. 35. Innovative approaches. In order to advance the sanitation agenda and enhance sustainability of rural WSS systems, the Project piloted two sanitation approaches and one related to water quality. These innovative pilots resulted in specific recommendations and proposals for the improvement of national regulations, FISE’s technical manuals and institutional instruments and procedures. More details on these achievements can be found in Annex 10. 36. Outcome indicator 1: Sustainable access to water supply in Project supported rural communities. Through the development of WSS subprojects in 75 poor rural communities of Nicaragua, the Project provided sustainable access to water supply to 44,514 additional beneficiaries, significantly surpassing the target of 20,264 more than twice. Based on the experience from PRASNICA, the Project defined access as sustainable when the CAPS achieved a rating of A or B in the sustainability classification matrix. The sustainability classification of the CAPS also determined the number of additional

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

beneficiaries, to only those persons, who obtained access to water supply and sanitation services in poor rural areas where the CAPS were ranked as ´sustainable´. The direct beneficiaries, on the contrary, comprise of the broader project impact, including those who benefit from improved planning of WSS interventions within a community, from more qualified attention of municipal/territorial WSS units, indigenous and Afro-Nicaraguan communities benefiting from a culturally sensitive project cycle in their communities and authorities and technical staff benefitting from technical support, training and modern decision-making tools. 37. Outcome indicator 2: Sustainable access to sanitation in Project supported rural communities. The Project defined access to sustainable sanitation as the CAPS that achieved a classification of A or B. As such, the Project provided sustainable access to sanitation to 19,582 additional beneficiaries, falling short of the original target of 29,916 by 11 percent but exceeding the revised target of 13,968 at 140 percent. All sanitation solutions were demand-driven; hence beneficiaries selected their preferred solution from the sanitation menu -including “aspirational” solutions, in which beneficiaries could improve their level of service. Their selections were made based on technological, financial and social viabilities. Additionally, all sanitation solutions financed by the Project provided hand-washing facilities with water and soap. 38. As part of social activities included in the subprojects’ cycle, volunteer community promoters, social facilitators and social specialists carried out household visits and hygiene trainings applying FISE well-established methodology “Healthy Families and Communities (FCSA).” These trainings are key elements for the sustainability of sanitation and hygiene practices, as they ensure that families (i) apply correct handwashing, (ii) have an adequate infrastructure for (hand)washing activities, (iii) handle storage water properly, (iv) improve solid waste management, (v) maintain clean households and communities, and (v) prevents open defecation by using provided improved sanitation solutions. By the end of the Project, 10,934 families were trained, representing 46,885 beneficiaries of which 50 percent were women from all 75 subprojects. 39. A rigorous, experimental Impact Evaluation (IE) of PROSASR corroborated that the Project’s hygiene awareness activities had a statistically significant impact on access to improved sanitation. The largest household-level effect is for sanitation indicators, where project supported households experienced increases in access to improved, unshared sanitation, and decreases in levels of open-defecation. 40. Outcome indicator 3: Sustainable community WSS boards. According to SIASAR, 33 percent of the CAPS nation- wide were classified as ‘sustainable,’ falling short of the original target of 80 percent. The failure to validate Rural-PISASH on time as national strategy contributed to the short-coming. On the other hand, 93 percent of the CAPS receiving project support were classified as ‘sustainable,’ exceeding the target of 80 percent. From a performance levels scale from A (best) to D (lowest), the matrix evaluated the management of the CAPS, application and collection of tariffs, financial robustness, operation and maintenance (O&M) and protection of the water source(s).17 As a result of the technical assistance provided by FISE and UMAS, 32 CAPS were ranked as A and 37 CAPS were classified as B for a total of 69 sustainable CAPS, out of 74 supported by the Project.18 In addition, important alliances with various government institutions were established to strengthen the capacities of CAPS. They include not only the legalization of all 74 CAPS directly supported by the Project, but also the streamlining of the legalization processes; knowledge exchange among CAPS from different regions in workshops; and the provision of accredited basic training in plumbing and electromechanics/ maintenance of electrical pumps and book-keeping by the National Technological Institute (INATEC). 41. Support to poor rural areas of Nicaragua. All capacity building activities and infrastructure solutions provided through the Project followed a systematic planning and selection process based on poverty-related indicators to establish eligibility criteria for participation. In addition to the funds allocated by the national Government, the MEPAS19 established that counterpart funding would be required from each community and their corresponding municipality; the amount of required counterpart funding was based on the level of technical complexity of the water system and the income level of

17 See Table 7.1 in Annex 7 for more detail on how final sustainability scores were calculated. 18 The Project supported 75 communities in poor rural areas of Nicaragua and 74 CAPS. Subproject and municipality of Corn Island received technical support for the municipal water utility, and it is not counted as CAPS. 19 Financial policy. MEPAS (Pages 23 – 27).

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

each community. For low-income communities, counterpart funding could be contributed in in-kind. Table 3.1 in Annex 3 provides more details about total Project costs per source of funding. 42. The IE was able to test how the activities under the Project’s institutional strengthening component resulted in improvements in the administrative capacity of local water service providers. Because of the experimental design, all community and household improvements documented by the IE can be causally linked to the trainings and institutional assistance administered as part of Component 1 of PROSASR. The IE sampled poor and medium-poor municipalities in the country. More information on the IE can be found in Annex 9.20 PDO part 2: Improve Nicaragua’s capacity to respond promptly and effectively to an eligible emergency 43. PDO part 2 was to be measured through the Outcome Indicator “Time (days) taken to disburse funds requested by Government for an eligible emergency”. Considering that no eligible emergency was declared and the IRM CC was not triggered during Project implementation, the PDO part 2 outcome indicator and intermediate indicator related to the establishment of the IRM CC were not measured as part of this evaluation. The achievement of PDO part 2 has however been assessed by evaluating whether Nicaragua has improved its capacity to respond to an emergency if it were to occur, based on the preparation and readiness of the IRM Operations Manual and the Environmental and Social Screening and Assessment Framework (ESSAF)21 for the Immediate Response Mechanism/Contingent Emergency Response Component. Both instruments were under the responsibility of the Ministry of Finance and Public Credit (MHCP) with the support of the Executive Secretariat of the National System for Disaster Prevention, Mitigation and Assistance (SINAPRED) and FISE as the implementing agency of PROSASR. This IRM Operations Manual, as required through a legal covenant in the Financing Agreement, was adopted by the Government in 2014. The Operations Manual established the roles and responsibilities of the implementing agencies, and defined environmental and social management, eligible expenditures, and mechanisms for expedited financing to respond promptly and effectively to an eligible emergency. Through the preparation and adoption of this Operations Manual, it is assessed that the Government has strengthened its capacity to respond to emergencies more promptly and effectively. 44. In the efforts of supporting Nicaragua to increase its capacity, the Project also contributed to enhancing the institutional coordination and planning at community level, which are essential for organizing people and programs according to emerging needs and contingency plans. The training provided by FISE was offered to all the UMAS in the country, and continuous support was provided by water and sanitation regional advisors and other regional staff from FISE. The standardized institutional and management training was provided to UMAS on how to improve the capacity of CAPSs to improve environmental, sanitary and hygiene conditions in rural communities. UMAS oversaw the development, implementation and updating of actions plans for improving the social and economic conditions locally. This has helped to improve the overall management practices of the municipalities as well as their preparedness to ensure continuity of services and mitigate risks from droughts and floods. 45. Additionally, the PACCAS project contributed to strengthening the capacity for climate change adaptation through the training offered to CAPS in the Project areas. PROSASR and PACCAS jointly supported the development of the Municipal Climate Change Adaptation Strategies (PMACC) which were included in the broader multi-annual municipal development plans and programs.

20 Out of the 75 municipalities sampled for the original impact evaluation, 30 were poor and 45 were medium poor. Medium poor municipality is defined as having less than 42 percent of its population living in extreme poverty. 21 Disclosed on World Bank’s InfoShop on September 4, 2014.

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Table 2. Achievement of indicators contributing to PDO part 2: “Improve Nicaragua’s capacity to respond promptly and effectively to an eligible emergency”. The values marked with N/M are Not Measured as no eligible emergency was declared and the IRM component was not triggered. 22 Original PDO Indicators Revised PDO Indicators (Restructured in May 2018) Achieved Indicator Achievement Achievement value Original Revised against original against target target target revised target Time taken to disburse funds requested by N/M 4 N/M 4 N/M Government for an eligible emergency (days) IRM established and ready to provide access to financial resources to Nicaragua in case of an N/M Yes N/M Yes N/M eligible emergency Number of municipalities with WSS action plans 62 70 89 percent 62 100 percent developed Number of municipalities in the country with 4 5 80 percent 4 100 percent PMACC developed

Justification of Overall Efficacy – Rating: Modest against the original outcome indicators, and High against the revised outcome indicators restructured in 2018 46. Based on the evidence provided above, achievement of PDO part 1 is rated Modest when evaluated against the original outcome indicators, as the targets were not reached for “the number of additional beneficiaries with sustainable access to sanitation in Project supported rural communities”, and “Percentage of community WSS boards nation-wide that are operating in a sustainable manner (wording of original indicator)” while the four other outcomes were achieved. Achievement of PDO part 1 is rated High against the revised outcome indicators, set at restructuring because the targets of all of the revised project indicators were exceeded. For the indicators related to “the number of additional beneficiaries with sustainable access to water supply in Project supported rural communities” and “direct project beneficiaries”, the project significantly exceeded the targets. Achievement of PDO part 2, of improving Nicaragua’s capacity to respond promptly and effectively to an eligible emergency is rated Substantial against the original and revised outcome targets.

C. EFFICIENCY Assessment of Efficiency – Rating: Substantial 47. The total IDA financing approved for the Project was US$30 million split into a Grant in the amount of SDR 10.2 million (US$15.7 million equivalent) and a credit in the amount of US$14.3 million. The Project was extended by two months, which did not affect the efficiency of the Project. 48. To measure the impact of the rural water institutional building component of the PROSASR, a quasi-panel, cluster randomized controlled trial experiment was performed.23 Findings of this experiment suggest that the random assignment of PROSASR resulted in an increase in the institutional capacity of CAPS, across indicators of institutional management, financial robustness, attention to operation and maintenance of water systems, and attention to water source. At household level, however, the results do not show improvements in access to water, but do show increases in access to improved sanitation, improved unshared sanitation, and decreases in open defecation.

22 Since no eligible emergency was declared, and as a result the PDO indicators are not applicable, intermediate outcome indicators were used to assess the achievement of the objective. 23 The findings draw from surveys administered to UMAS, CAPS, water systems and households, as well as data from the SIASAR, which were applied to 300 communities (150 with intervention, 150 without intervention) across 76 municipalities.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

49. The estimates obtained in this experiment are mostly at the intermediate outcome level. The effects of the program, especially at the household-level, should therefore be interpreted with a degree of caution with regards to long-term outcomes.24 Updated information from the SIASAR in 2020/21, as well as a follow-up household survey will allow time for the project results to further materialize, and help more accurately detect the longer-term impacts of the intervention. 50. The overall efficiency is rated as Substantial. Results of the IE experiment point to an overall increase in institutional capacity of local water service providers. At the household level, results are more conservative, but it may be because of the recent conclusion of the institutional strengthening component. 51. The results from the economic analysis25 using data from FISE, SIASAR and the impact evaluation study show that the rate of return of the project was economically viable. The assumptions made at appraisal were based on parameters different to those of project locations. The analysis at appraisal used PRASNICA’s locations to estimate the costs and benefits from multiple sanitation options. For the completion report, the analysis included entry and exit parameters related to the impacts from (i) training programs from AVAR (585 communities) and ARAS (830 CAPS) of the Project in 70 municipalities and, and (ii) small infrastructure rehabilitation works for rural water systems. The costs were estimated based on the actual FISE’s cost tables from the Project’s investment and recurrent costs per subcomponent.26 The benefits were estimated based on how the enhancement of CAPS capacities resulted on better practices for sustainable services, better management and ultimately cost-reductions for households and increased access to services. Table 3: Results from the Economic Valuation (in ‘000 US$) Components/Assumptions Cost Benefits Net Present Value ERR PROSASR Assumptions Entry: Components 1 and 2 16,264 19,246 2,981 15.40% Exit: Components 1 and 2 19,322 25,431 6,109 18.60% PRASNICA assumptions Water and Sanitation (PAD 48,000 57,306 9,306 22.40% estimates)

52. The Net Present Values (NPVs) at 10 percent discount rate at entry using the impact evaluation, SIASAR and FISE’s PROSASR implementation data showed that the training programs were economically more effective compared to the infrastructure component. The NPV for the components 1 and 2 at entry was US$2.9 million with an Economic Rate of Return (ERR) of 15.4 percent. At exit, the NPV with the parameters from the impact evaluation study yield to a total of US$6.1 million with an ERR of 18.6 percent. The efficiency is corroborated by the impacts found on CAPS from component 1, which resulted more effective than component 2. CAPS in treatment communities have a 15 percent higher aggregate sustainability score than those in control communities. 53. In terms of the administrative efficiency of the Project, this was substantial as it completed all tasks and achieved all outcome indicators. It is worth mentioning that despite the delays experienced during the first years of implementation, the Government with support from the task team managed to bring implementation back on track to close the Project with only two months extension, thus not affecting the overall efficiency of the Project. At closing, the Project had utilized almost all funds with 94.43 percent of disbursements.

24 This is especially true given that the institutional strengthening component of PROSASR did not conclude until recently. 25 To update the analysis for this ICR, the economic analysis utilized the parameters from the PROSASR project (actual fixed and recurrent costs; and benefits estimated from the impact evaluation study). The results of the economic analysis at appraisal overestimated the impact of the project, because the structure of the costs and benefits were considered not from the PROSASR project but rather with PRASNICA parameters. 26 The economic analysis at appraisal estimated the costs and benefits based on water interventions and sanitation interventions. For this ICR, the criteria were to estimate the costs and benefits based on project’s components 1 and 2, following World Bank’s guideline on Economic Analysis.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

D. JUSTIFICATION OF OVERALL OUTCOME RATING - Rating: Satisfactory 54. A split rating was carried out considering the changes to PDO level indicators and associated targets that were adjusted during the 2018 restructuring. Results are presented in Annex 1, Section C. The outcome rating under the original PDO indicators and targets is rated Moderately Unsatisfactory based on the Project’s High relevance, Modest efficacy, and Substantial efficiency. The outcome under the revised PDO indicators and targets is rated Highly Satisfactory based on the Project’s High relevance, High efficacy, and Substantial efficiency.27 Based on the weighted ratings presented in Annex 1, Section C, the overall outcome is considered Satisfactory. E. OTHER OUTCOMES AND IMPACTS Gender 55. Under PROSASR, FISE improved its capacity to institutionalize gender strategies at all governance levels and actively promoted women participation in the water sector, the CAPS and in the community. FISE’s social specialists, social facilitators and the ARAS ensured the dissemination and implementation of the gender instruments throughout the subprojects cycle. Specifically, the Project achieved the target of “percentage of CAPS with at least 30 percent of women on the board” in all project communities. These positions were preferred to be at relevant decision-making levels of CAPS. In 74 CAPS under the Project, 15 women were president and 48 were treasurers. The Project also promoted women participation in hygiene behavior/sanitation trainings; as result 23,297 women benefited from these campaigns, exceeding the target by 192 percent. During PROSASR training and community activities, 52 percent of women and 48 percent of men participated, as a result of the project’s efforts. Indigenous people and Afro-Nicaraguan communities 56. Indigenous people and Afro-Nicaraguan communities were prioritized with a differentiated social approach. The Project supported a total of 22 water, sanitation and hygiene projects in these communities, each with Indigenous and Afro-Nicaraguan Peoples Plans (IAPPs). These plans aimed to achieve sustainability under cultural appropriateness and included: (i) free prior and informed consultations carried out throughout the project cycle; (b) linguistic adequacy from social facilitators (miskitu, mayagna, garifuna, creole english); (c) social and technical activities, training, and hygiene campaign using adapted learning material and carried out by local experts with appropriate understanding of local cultures and languages; and (e) activities for protecting the water source (fencing, reforestation). The application of the OP/BP 4.10 exponentially increased FISE’s capacity to include safeguards in their projects, irrespective of the funding source. 57. The IE included a Qualitative Study in Indigenous Areas28 to evaluate the results derived from the implementation of PROSASR and IAPPs in four RACCN communities. The study included focal groups, interviews and life-history methodologies and concluded that the IAPPs improved the quality of life of indigenous people resulting in reduced time to fetch water, decreased cases of waterborne diseases, and increased water availability for daily activities. Moreover, the study highlights adequate articulation efforts between FISE and local governments, as well as adoption of participatory processes with community involvement. The study also revealed the need for more inclusive approaches, especially for traditionally excluded groups (women, young people); and to improve the operation and maintenance activities. Climate change adaptation 58. The PACCAS Project supported the implementation of pilot subprojects to mainstream climate change adaptation into water resources management and water supply in rural poor areas. Based on the PACCAS outcomes, the Project developed a comprehensive set of climate change adaptation measures of environmental, infrastructural and social nature to be incorporated in new WSS subprojects. To ensure the sustainability of WSS systems, PROSASR prioritized the identification of subprojects with high vulnerability to climate variability and implemented activities for protecting the water sources (quality and quantity). Such activities included forest conservation, solid waste management, and small

27 A disconnect is noted between the rating of achievements towards the PDO in the last filled ISR (June 2019) of Moderately Satisfactory and the outcome rating post restructuring of Highly Satisfactory because achievements on all indicators were reported in December 2020. In retrospective, an ISR should have been filled at closure to report on the likelihood of fully achieving the PDO indicators within the ICR preparation period. 28 Additional information with regards to the results of the impact evaluation can be found in Annex 9.

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farming management plans to control the use of pesticides and livestock near water sources. As a result of the new climate change and resilience approach supported under PROSASR, FISE improved its own operation manuals and Environmental Social Management Framework (ESMF), and incorporated the climate change mitigation, adaptation; and environmental protection activities in their M&E system.

III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME

A. KEY FACTORS DURING PREPARATION 59. Realistic objectives and design. The project objectives were clear and well-focused to address the sector challenges in the country. The lessons learned from the previous operation (PRASNICA) contributed to streamlining the interventions and strengthening PROSASR’s structure by aligning the components with the objectives. Targets were based on the success of PRASNICA and a realistic expectation of this Project’s performance. In this context, the overachievement of the outcome indicators of this Project are not a consequence of a lack of ambition in the design but rather speak for the success of the Government’s commitment to this Project. 60. Results framework (RF). The RF included a systematic and methodological breakdown of the underlying Theory of Change, however, the PDO-level indicators which referred to nation-wide coverage were not fully consistent with the objective statement which only focused on the selected poor rural areas of Nicaragua. The RF included several IRIs disaggregated by component, which sought to measure key aspects contributing to the outcome indicator. During project implementation, it became clear that the number of indicators in the RF posed a burden on the resources and capacity of the implementing agency FISE. The RF was therefore restructured. 61. Project monitoring and evaluation. The Project had the unique opportunity to include a comprehensive Impact Evaluation financed by an external trust fund, with a baseline at the beginning of the Project and an endline at Project closure. In addition, the national WSS information system SIASAR provided a basis not only for a systematic review of sector performance, but also a framework for the definition of sustainability, a key attribute included in the PDO. Moreover, the Project relied on FISE’s robust and up-to-date system for monitoring of subprojects (SICPRO). B. KEY FACTORS DURING IMPLEMENTATION Under Government control 62. Coordination and engagement/commitment and leadership. The Project experienced significant delays during the first years of implementation which can be attributed to various causes. During the first year, the implementing agency faced capacity constraints due to an overlap in executing responsibilities for another operation still under implementation (PRASNICA). This led to substantial delays in the preparation of the portfolio of sub-projects for infrastructure investments, delaying implementation by approximately 12 to 18 months. During this time, as well as reaching into year two and three of implementation, the implementing agency further experienced high turn-over and rotation in their senior management, causing further delays. Following the mid-term review, FISE managed to speed up processing the project cycle through internal reorganization, bringing implementation back on track. Especially the Government’s commitment to FISE’s leadership and the hiring of technical manager to oversee daily operations of the Project significantly contributed to accelerate and maintain an effective project implementation pace. 63. Environmental safeguards. Initially, the application of ESMF on subprojects demonstrated to be complex leading FISE and the Bank to agree to initiate a review process to simplify the evaluation of subprojects during design phase and to fine-tune the environmental and occupational safety requirements applicable to the civil works. As result of the ESMF update May 2017, compliance with environmental specifications gradually improved as institutional capacities grew stronger through the provision of training and the development of monitoring and supervision instruments. FISE adequately reported and addressed issues regarding work safety, waste management from construction activities and environmental monitoring. These improvements had spillover effects to FISE, UMAS, CAPS and consulting firms, thus strengthening the environmental management capacities among stakeholders. In terms of sustainability, the capacities

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acquired by the CAPS and UMAS are crucial sin the operation stage of the WSS systems in poor rural areas of Nicaragua. 64. Social development scheme including safeguards. The capacity of FISE to implement social safeguards and include stakeholder participation had already improved under parent project PRASNICA. Under PROSASR, FISE mastered the social management and citizen engagement aimed at sustainability, throughout the project cycle and post-works. The social and environmental activities were systematically intertwined with technical processes. Socio-technical check lists were reviewed by the task team and were used to monitor project implementation. All the social processes were institutionalized and used for all FISE operations, irrespective of the funding source. Under Bank control 65. Flexibility in delivery modalities. Given the impact of the political situation on the economy as described in the following paragraph, local construction firms had difficulties bidding on work contracts financed by the Project. To avoid delays in project implementation under these circumstances, the Bank team worked with the PIU to expand the existing CDD modality of selecting skilled community members for different parts of the civil works on a case by case basis to subprojects of larger size and complexity. Risks of insufficient local capacity were mitigated through close monitoring of each subproject. Overall, subprojects following this CDD modality were delivered in a timely and quality fashion and more cost-efficient than other comparable subprojects implemented through centralized contracting. An additional added value was the increased community ownership for subprojects constructed through the CDD modality as they were more closely involved in each step of the way. Outside of Government / Bank control 66. Political situation. The political situation in the country during the first half of 2018 had significant consequences on Project implementation. The roadblocks resulted in delays in contract execution due to inaccessibility of roads, shortage of supply and labor. Economic consequences put constraints on contractors with regards to liquidity or to provide bank guarantees. FISE responded by shifting more to CDD implementation model through community members that had previously proven to be successful. Nonetheless, the delays led to a project extension of two months to accommodate the consequences of the delay and still achieve the PDO.

IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME

A. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 67. The project design included an elaborate list of indicators, which were eventually adjusted to better reflect project objectives and scope. 68. The Project also included a full Impact Evaluation into its design, as well as a qualitative study of the project’s impact on indigenous people, which highlighted the efforts made to incorporate sound M&E methodology into the project. Between the outcome and intermediate indicators that were measured throughout preparation and the results of the Impact Evaluation, project interventions were properly assessed. 69. As a lesson learned from PRASNICA, the Project design incorporated SIASAR as a robust resource for Project monitoring and evaluation. SIASAR is a tool monitoring progress in the rural WSS sector nationwide and was utilized to identify coverage and performance with regards to the sustainability of the institutional support structure. M&E Implementation 70. The application of the SIASAR allowed the Project to be solidly based into the national WSS sector clearly defining the specific contributions and progress made compared to other efforts being made in the sector. Developing a sound M&E design also allowed the Project to utilize data obtained during implementation to provide real-time feedback to the approaches taken for infrastructure investments.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

71. The use of the SIASAR system for M&E required a periodic update of the SIASAR system nationwide to provide accurate information. This proved to be a time-consuming and financially costly exercise exceeding the available resources of the Project Implementing Agency. It was therefore decided to be conducted on a tri-annual basis instead of biannually. During project time, SIASAR was updated twice, once in 2011-2015 and once in 2017-2018. M&E Utilization 72. The results of the different M&E tools such as SIASAR and the IE have been used to inform project management in adjusting their delivery methodology. A good example are participatory community-based models for the construction of WSS systems, which enable a more efficient execution and higher absorption of ownership of the systems by communities when compared to results from consultancy firms contracted by the central Government. Justification of Overall Rating of Quality of M&E Rating: Substantial 73. M&E system was adequately designed and was satisfactorily implemented after project restructuring. The M&E had two robust information systems (SIASAR and SICPRO) that tracked project implementation effectively and recorded the progress of results against PDO achievement. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE Environmental 74. The Project was classified as Category B – partial assessment. The Project triggered four environmental safeguard policies including Environmental Assessment (OP/BP 4.01), Natural Habitats (OP/BP 4.04), Forests (OP/BP 4.36) and Physical Cultural Resources (OP/BP 4.11). Overall, environmental compliance of the Project was rated Satisfactory. Social 75. The Project triggered two social safeguards policies: OP/BP 4.10 Indigenous Peoples and OP/BP 4.12 Involuntary Resettlement. During project preparation, FISE drafted the Indigenous and Afro-Nicaraguan Peoples Planning and Framework (IAPPF) and the Resettlement Policy Framework (RPF), using the experience and lessons learned from PRASNICA and other projects. Overall, implementation of social safeguards was Satisfactory. 76. The application of OP/BP4.12 increased the capacity of FISE and of the municipalities to systematically acquire small pieces of land and easement rights for civil works (i.e. water tanks, wells, water sources, public taps, etc.) for all 75 subprojects. Land acquisition was done through donations, rights transfers, purchases, etc. All land acquisitions were registered under the community name and a detailed account on land acquisition was submitted to the Bank at project closing. There were no cases of resettlement of social units or economic activities. 77. The Grievance and Redress Mechanism (GRM) was improved to capture and register complaints, monitor responses and convey solutions to complainants. Following initial challenges regarding the application of customary methods of registering complaints verbally, the Project improved its application to more diligent record keeping of managing complaints. 78. For OP.410, the Project indicator for number of Indigenous Peoples Plans implemented was complied with in 96 percent29, as 22 IAPPs were successfully implemented in 22 indigenous and Afro-Nicaraguan communities to support the water/sanitation systems built. The social management and citizen engagement framework used from beginning to end of the project cycle and post-works was the bastion of the project. The latter was institutionalized by FISE and is being used for all operations irrespective of source of funds. Procurement 79. Project procurement performance was mostly rated as Moderately Satisfactory in ISRs throughout implementation. The procurement processes generally complied with the Bank’s guidelines and procedures although the Project experienced some shortcomings associated to the elaboration of bidding documents, diligence of procurement

29 See comment referred to the achievement of IRI 2.3 in Annex 1

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processes, contract management and one case of ineligible expenditures. The procurement capacity of FISE substantially improved towards the end of Project. The Bank delivered specific training to the implementing agency as the Project transitioned from the 2011 Procurement Guidelines to the new 2016 Procurement Framework; as well as with the Procurement Plan Management System (SEPA) to STEP (Systematic Tracking of Exchanges in Procurement). Financial Management 80. Throughout project implementation, the Financial Management (FM) performance was rated mostly Moderately Satisfactory. In the early stage of implementation, delays in contracting and procurement processes, frequent staff turnover and low technical capacity slowed down implementation; throughout project implementation main FM weaknesses were related to delays in documenting funds transferred to municipalities for the execution of CDD subprojects and contract management. The Interim Unaudited Financial Reports (IFR) required bi-annually were continuously submitted with minor delays but deemed acceptable. Through the first part of implementation, annual audit reports were submitted delays, but all audit reports included unmodified (clean) opinions. Some internal control weaknesses were observed as a result of the external audit. C. BANK PERFORMANCE Quality at Entry 81. Project design incorporated relevant lessons from PRASNICA and ensured that the project objectives were fully aligned with the issues highlighted in strategic documents like the World Bank’s CPS 2013-1730, the PNDH 2012-17 and the national sector plan PISASH. The Project also benefited from the technical assistance led by the Water and Sanitation Program (WSP), which contributed to assess the WSS sector, PRASNICA performance and thereby, to inform PROSASR. 82. Special consideration was given to the indigenous and Afro-Nicaraguan communities as part of project design, considering specific linguistic needs, access requirements to those predominantly remote areas, as well as the specific socio-cultural specificities of those communities (e.g. the adaptation of community counterpart co-funding to customary traditions). The World Bank ensured that a team of specialists was mobilized to address all relevant project aspects, including technical, social and environmental safeguards, and M&E. Additional funding through the SIEF Trust Fund was obtained to design and mobilize an impact evaluation. Quality of Supervision 83. The Bank provided timely and effective advice to counterparts, who ensured satisfactory implementation of the Project by quickly addressing issues as they arose. The Bank team undertook a Mid-Term Review in January 2017, but also remained proactive beyond the course of the Project in addressing the Project’s needs through restructuring, resource reallocation, and enhanced support. Advice from the Bank team focused on the quality of the design of water systems through requesting the client for each design to comply with pre-approved check-lists to be reviewed by the Task Team. Further, advice focused on overcoming delays, inconsistencies, and expediting administrative steps to keep up with the implementation schedule. The high quality of Bank support is evidenced in the progression of implementation performance over time. Until three months before project closure, the Bank team had rated the project implementation progress and development outcome as Moderately Satisfactory in their implementation status and results reports, as the project beneficiary number and results of the impact evaluation (both of which indicated highly satisfactory results) were not available until after project closure. Over the course of the project cycle, the Project had three Task Team Leaders (TTL) with adequate transition arrangements between the TTLs. 84. The World Bank provided ongoing support on fiduciary and safeguard issues during implementation. It provided advice to counterparts on satisfactory implementation of the IAPP and compliance with World Bank policies on procurement and financial management. The Bank’s team conducted regular supervision missions with frequent field visits to construction sites and other project areas to ensure that effective mechanisms for quality control and compliance with World Bank requirements were in place. The aide memoires described the issues encountered in detail and included

30 The World Bank Group’s Country Partnership Strategy for the Republic of Nicaragua (FY13-FY17). Report no. 69231-NI.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

recommendations agreed with the implementing agencies. Urgent issues were promptly brought to management’s attention. Implementation Status and Results Reports (ISR) were filed frequently and the team has been candid about implementation progress and challenges, but as mentioned above, the Moderately Satisfactory rating given three months prior to project closure was due to the unavailability of the beneficiary numbers and the impact evaluation results until after project closure. Once the data from the project communities were collected, it became apparent that the project exceeded all of the revised targets set at project restructuring. Justification of Overall Rating of Bank Performance – Rating: Satisfactory 85. Based on the quality of World Bank performance at entry and at supervision, the overall rating of World Bank performance is Satisfactory. D. RISK TO DEVELOPMENT OUTCOME 86. Despite the Project´s successful focus on the sustainability of the investments, a residual risk to the development outcome of the Project remains with regards to the long-term sustainability of the management capacity within CAPS and communities. Success of CAPS continues to rely on the leadership of selected individuals to maintain sound financial management and bringing together the rest of the community on issues of tariff setting and paying for the water and sanitation services. This also depends on the capacity of, and support provided by, the UMAS as well as through institutions at the national level to raise awareness for the necessity of the tariffs and provide proper arguments in convincing the communities. 87. Before 2018, Nicaragua had showed significant economic growth and poverty reduction. The socio-political events that started in April 2018 had an impact on the country’s macroeconomics and fiscal situation, thus contracting the economy growth to 3.8 percent. Despite the efforts of the GoN to maintain economic and financial stability, the rural water sector faces the complex challenge of availability of resources to provide the sector agencies with the necessary budget and resources. Nonetheless, Nicaragua is committed to universal access to WSS services by 2030. 88. From the institutional perspective, the rural WSS sector still lacks high-level policies and strategic instruments that set clear roles and responsibilities across the sector and provide the roadmap to achieve the targets set for 2030. In this regard, the update and approval of the Rural PISASH is a pending task for the GoN.

V. LESSONS AND RECOMMENDATIONS 89. Community-based implementation is an agile and cost-efficient option for non-complex works. During project implementation, execution of works through the more agile CDD modality resulted in quality and timely delivered works, utilizing less resources compared to works carried out through other modalities such as centrally contracted construction firms. Despite initial concerns about a lack of capacity at community level, the Project resorted to the CDD modality after local construction firms faced constraints following the economic hardship in the last years of project implementation. To mitigate risks related to the lack of capacity at community level, the Project applied a systematic selection process to identify community members with the skills to carry out the required works. Capacity at local level therefore proved to be of sufficient quality to meet the Project’s quality standards, as long as a technical and organizational support structure exists to provide necessary guidance. In rural settings, civil works with a limited degree of complexity, CDD modality is a potentially effective and efficient delivery modality that can increase community ownership of the Project. 90. Strengthening institutional capacity at all levels of Government is crucial to sustain WSS services. When establishing water supply or sanitation services at community level, a support structure at all levels of Government is required to sustain these services over time. When creating a WSS system in a community, challenges and roadblocks exist along all stages of a project with varying degrees of complexity. It is crucial to establish a decentralized organizational structure where each level has the capacity to address issues corresponding to their level of influence, enabling them to solve issues at their respective levels and escalate others that require a deeper level of support to the next higher level. Strengthening the institutional capacity of each level corresponding to the degree of technical depth required, combined

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

with clearly defined roles, responsibilities and procedures is a crucial element for creating sustainable WSS services. 91. Sustainability of WSS infrastructure largely depends on sound technical assessments, particularly related to water resources management. A recurrent challenge during the design phase of the WSS interventions was the poor quality of studies related to water availability, water demand, and quality of water sources. Poor technical designs of WSS systems led to inefficient use of resources and ultimately hindered the timely provision of sustainable WSS services to the beneficiaries. The next generation of rural WSS interventions could benefit from mainstreaming watershed management and planning approaches, piloted under PACCAS. In addition, SIASAR represents an important information tool that could be modernized to address the new subsector demands. Comprehensive approaches to provide water and sanitation services, sustainable water resources management, and resilience building require close collaboration and coordination among sector institutions. 92. Technical sanitation solutions need to carefully consider O&M needs and local and cultural context. Standardized sanitation solutions provided by FISE were found to have shortcomings with regards to their durability, warranting to reconsider the viability of existing technical standards with regards to their appropriateness in the Nicaraguan rural circumstances. Prior to designing subprojects, it is necessary to examine the local circumstances in the communities to determine what maintenance a given technical solution will require, how much it costs, whether sufficient water is available and if they are acceptable to the preferences of the communities. The Project included research on “innovations in water, sanitation and hygiene services in rural areas”, which generated valuable data to improve the existing standardized technical solutions. It is now necessary to expand the research to further develop appropriate solutions that are technically sound, affordable and acceptable to the community to reach universal access to safe sanitation by 2030. 93. To fully capture the efficiency and efficacy of water and sanitation programs, selected World Bank operations should be accompanied by rigorous impact evaluation studies. The qualitative and quantitative evaluation studies carried out alongside this Project offered concrete evidence of the pinpointed impacts of the Project. The qualitative study showed that the IAPPs improved the quality of life of indigenous groups in helping reduce the time it takes them to fetch water, decreasing cases of waterborne diseases, and increasing the availability of water. Moreover, among other effects, the impact evaluation offered causal, statistically significant, evidence of the impact of the institutional strengthening component of PROSASR on increasing CAPS management of the service provider, strengthening their financial capacity, improving their attention to O&M of the water systems, and helping them better protect the water source. It is recommended that future World Bank operations be accompanied by impact evaluations, as these allow for statistically rigorous, causal, estimates of the impact of water and sanitation programs on project beneficiaries.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

ANNEX 1. RESULTS FRAMEWORK, KEY OUTPUTS AND SPLIT EVALUATION RESULTS INDICATORS A. RESULTS INDICATORS

A.1 PDO Indicators

Objective/Outcome: Increase the access to sustainable WSS services in selected poor rural areas Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion A. Number of additional Number 0.00 20264.00 44514.00 beneficiaries with sustainable access to water supply in 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019 Project supported rural communities

Comments (achievements against targets): Achievement rate is 220 percent. The headcount of beneficiaries with sustainable access to water supply is made based on CAPS that were ranked with an A or B according to SIASAR service provider matrix. Achievements made are based on the assessment of 69 CAPS. All 74 CAPS under the Project have been evaluated.

Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion B. Number of additional Number 0.00 21916.00 13968.00 19582.00 beneficiaries with sustainable access to sanitation in Project 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019 supported rural communities

Comments (achievements against targets):

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Achievement rate is 140 percent. This indicator was reduced after restructuring due to cancellation of subcomponent 2.3 related to sanitation and due to a shift in priorities of municipalities in the Caribbean Regions (RACCN/RACCS) towards water supply instead of sanitation. By end of Project, number of beneficiaries increased as some subprojects were able to reach more beneficiaries than originally estimated at design phase. The headcount of beneficiaries with sustainable access to sanitation is made based on CAPS that were ranked with an A or B according to SIASAR service provider matrix. By end of Project, achievements are made based on the assessment of 69 CAPS and all 74 CAPS under the Project have been evaluated..

Objective/Outcome: Consolidation of rural WSS sector institutions Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion C. Percentage of community Percentage 40.00 61.00 80.00 93.00 WSS boards under the Project that are operating in 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019 a sustainable manner

Comments (achievements against targets): Achievement rate is 117 percent. Achievements made are based on the assessment of 69 CAPS with an A or B ranking according to SIASAR service provider matrix. All 74 CAPS under the Project have been evaluated under the categories of management of the CAPS, application and collection of tariffs, financial robustness, operation and maintenance (O&M) and protection of the water source(s).

The target of this indicator was increased from 61 percent nation-wide to 80 percent of only selected poor rural areas of the Recipient (Nicaragua). A change of focus to only poor rural areas of the Recipient (Nicaragua), required the number of beneficiaries to also be adjusted.

Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion E. Direct project beneficiaries Number 0.00 52725.00 42453.00 72390.00

30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019

E.1. Female beneficiaries Percentage 0.00 25308.00 20377.00 35956.00

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

18-May-2018

Comments (achievements against targets): Achievement rate is 171 percent. The indicator surpassed its target as a result from the implementation of 75 WSS subprojects. The total number of project beneficiaries are: (i) 48,774 people provided with access to improved water sources and; (ii) 23,616 people provided with access to improved sanitation services.

During the first restructuring, the target was revised and adjusted based on the more accurate figures that the subprojects’ design phase yielded, which led to a reduction of targets in indicators 2.1 (water supply beneficiaries) and 2.2 (sanitation beneficiaries). As the project portfolio moved into the implementation phase, 44 percent of the subprojects (33) followed the CDD implementation modality which helped to reduce costs. Additional available funds were re-invested to add new beneficiaries.

Objective/Outcome: Improve Nicaragua’s capacity to respond promptly and effectively to an eligible emergency. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion D. Time taken to disburse Days 0.00 0.00 0.00 0.00 funds requested by Government for an eligible 30-Jun-2014 30-Jun-2019 30-Sep-2019 22-Nov-2019 emergency.

Comments (achievements against targets): No eligible emergency was declared and the IRM CC was not triggered during Project implementation; therefore, the value was not available.

A.2 Intermediate Results Indicators

Component: Component 1: Strengthening the Rural Water Supply and Sanitation Sector

Indicator Name Unit of Measure Baseline Original Target Formally Revised Actual Achieved at

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Target Completion 1.1A Number of FISE staff Number 15.00 60.00 62.00 specialized in water and sanitation 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019

Comments (achievements against targets): Achievement rate is 103 percent. The Bank, FISE and Swiss Cooperation (COSUDE) put together a program of technical assistance that complemented the Project's activities in support of the sectorial institutional strengthening. These courses included: Base line (15); refresher course on climate change adaptation, with specialization on water resources (PACCAS-WB, 7); integrated management of rural WSS (COSUDE, 12); design and evaluation of WSS projects (PROSASR-WB, 28).

Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 1.1B Number of institutions Number 0.00 10.00 14.00 working in WSS not financed by FISE that adopt the 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019 MEPAS

Comments (achievements against targets): Achievement rate is 140. 14 institutions adopted MEPAS as the planning instrument within their rural WSS operations. These institutions include NGOs (Water Aid, Water for People, ONGAWA); municipalities (San José de Bocay, El Cuá, Santa María de Pantasma, Jinotega, Tuma - La Dalia, San Ramón y Mulukuku) and development partners (CABEI, German Development Bank (KFW), German Cooperation Agency (GiZ) and COSUDE).

Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 1.2A Number of Number 0.00 70.00 62.00 62.00

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municipalities for which 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019 municipal WSS action plans developed (including needs diagnostic, investment plan, budget and timeline)

Comments (achievements against targets): 100 percent target achieved. 62 municipalities elaborated WSS municipal plans, which include technical diagnostics of WSS sector in the territory's communities, prioritization of investment needs, financial planning and implementation schedule.

Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 1.2B Number of Number 137.00 140.00 133.00 151.00 municipalities with SIASAR 100% updated every other 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019 year

Comments (achievements against targets): Achievement rate is 114 percent. FISE developed a national plan for the update of SIASAR, thus achieving to update 151 municipalities in relation to the revised target of 133 municipalities. Municipalities consolidated their capacities to ensure continuous update of the information system which is essential for sector planning and decision-making. To carry out the SIASAR update task, FISE established a close interinstitutional coordination with the Nicaraguan Institute of Municipal Promotion (Instituto Nicaragüense de Fomento Municipal – INIFOM) to strengthen the capacities of 535 individuals so the municipalities were able to collect data for the update of SIASAR. The update task was carried out with funds from the municipalities

Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 1.2C Percent of UMAS Percentage 27.00 60.00 85.00 96.00

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providers under the Project 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019 with an A or B ranking in the SIASAR’s TAP classification matrix

Comments (achievements against targets): Achievement rate is 113 percent. The target of this indicator was increased from 60 percent nation-wide UMAS to 85 percent of UMAS within only selected poor rural areas of the Recipient (Nicaragua). As an element to strengthen capacities across the sustainability chain, the implementation of the AVAR methodology facilitated that 52 UMAS out 50 were ranked as A (15) or B (35) according to SIASAR Technical Assistance Provider matrix. This sustainability matrix evaluated the categories of availability of data, visits to communities in the last twelve (12) months, support to communities in water quality monitoring, human resources, transport capacity, equipment to perform daily tasks and budget.

Component: Component 2: Increase Sustainable Water Supply and Sanitation Coverage in Rural Areas

Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 2.1 Number of people in Number 0.00 25330.00 25330.00 48774.00 rural areas provided with access to Improved Water 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019 Sources under the project

Comments (achievements against targets): Achievement rate is 193. percent. These beneficiaries correspond to the people who benefited from the implementation of 75 WSS subprojects.

Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion People provided with access Number 0.00 27395.00 17123.00 23616.00

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to "improved sanitation 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019 facilities” under the proj.

Comments (achievements against targets): Achievement rate is 138 percent. This indicator was reduced due to a shift in priorities of municipalities in the RACCN/RACCS regions towards water supply instead of sanitation. These beneficiaries correspond to the people who benefited with sanitation systems namely, improved pit latrines, eco-toilets and "aspirational sanitation solutions" (toilet + anaerobic reactor + leach field/wetland). The latter are related to the implementation of innovative sanitation technologies.

Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 2.3 Number of indigenous Number 0.00 26.00 23.00 22.00 and Afro Nicaraguan communities benefiting from 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019 investments from Component 2.

Comments (achievements against targets): Achievement rate is 95 percent. From the 23 indigenous and Afro Nicaraguan communities to be benefitted under the Project, only one was removed from the Project portfolio due to non-technical feasibility (Community La Barra, Desembocadura de Rio Grande, RACCS).

Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 2.4 Percentage of CAPS with Percentage 0.00 100.00 100.00 at least 30% of women on the Board, in Project 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019 communities.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Comments (achievements against targets): The social management scheme mainstreamed during Project implementation promoted women to be elected for relevant decision-making positions within CAPS, namely President and Treasurer. By end of Project, from 74 CAPS under the Project, 15 women were President and 48 were Treasurers.

Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 2.5 Number of other water Number 0.00 120.00 115.00 115.00 service providers that the project is supporting 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019

Comments (achievements against targets): Achievement of target at 100 percent. 115 additional CAPS that were not under the subprojects’ portfolio received training and technical assistance by the Project through the regional ARAS and training courses provided by INATEC.

Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 2.6 New piped household Number 0.00 2956.00 8388.00 water connections that are resulting from the project 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019 intervention

Comments (achievements against targets): Achievement rate is 284. percent. These beneficiaries correspond to the people who benefited from the 75 WSS subprojects.

Indicator Name Unit of Measure Baseline Original Target Formally Revised Actual Achieved at

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Target Completion 2.7 Improved community Number 0.00 60.00 16.00 18.00 water points constructed or rehabilitated under the 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019 project

Comments (achievements against targets): Achievement rate of 113. The Project did not include rehabilitation of WSS infrastructure. In addition, beneficiary municipalities prioritized interventions to increase the level of rural water supply services and therefore, the number of constructions of water points was reduced

Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 2.8 People trained to Number 0.00 53000.00 25330.00 46885.00 improve hygiene behavior/sanitation practices 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019 under the project

2.8A People trained to Number 0.00 26000.00 12158.00 23297.00 improve hygiene behavior/sanitation 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019 practices - female

Comments (achievements against targets): Achievement rate at 185 percent. The social support scheme carried out extensive interventions to promote community-wide hygiene behavior changes. A total of 10,934 families received trained about personal hygiene, adequate storage and use of water, solid waste management and latrine use.

Component: Component 3: Innovations in Rural Water, Sanitation and Hygiene

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 3.1 Number of investigation Number 0.00 3.00 3.00 3.00 documented, evaluated and disseminated 30-Jun-2014 01-Dec-2017 30-Sep-2019 29-Nov-2019

Comments (achievements against targets): Target achieved at 100 percent. These innovative subprojects were designed to test or systematize new approaches to enhance the sustainability of rural WSS investments. These studies were delivered, reviewed and widely disseminated by FISE. The topics included: (i) improved sanitation solutions; (ii) chlorine supply chain in rural water supply systems under operation and; (iii) wastewater treatment and fecal sludge management in rural sanitation systems. They provided relevant technical diagnostics on existing technologies in the rural sector and had informed the sector’s and FISE’s own technical guidelines and manuals in order to update and improve the development of the rural WSS sector.

Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 3.2 Number of municipalities Number 0.00 5.00 4.00 4.00 in the country with PMACCs developed 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019

Comments (achievements against targets): Achievement of target at 100. These plans were elaborated in close collaboration with the Adaptation of Nicaragua's Water Supply and Sanitation Sector to Climate Change Project (P127088).

rit Component: Component 4: Contingent Emergency Response Componentc

Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

4 IRM established and ready Yes/No N N N N to provide access to financial resources to Nicaragua in 30-Jun-2014 01-Dec-2017 30-Sep-2019 22-Nov-2019 case of an eligible emergency

Comments (achievements against targets): No eligible emergency was declared and the IRM CC was not triggered during Project implementation; therefore, the value was not available.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

B. KEY OUTPUTS BY COMPONENT

Objective/Outcome 1: increase access to sustainable water supply and sanitation services of the Recipient. 1. Number of additional beneficiaries with sustainable access to water supply in Project supported rural communities 2. Number of additional beneficiaries with sustainable access to sanitation in Project supported Outcome Indicator 1 rural communities 3. Percentage of community WSS boards under the Project that are operating in a sustainable manner Component 1 – Consolidation of WSS insitutions 1. . Number of FISE staff specilaized in water and saniation: 2. . Number of institutions working in WSS not financed by FISE that adopt the MEPAS 3. . Number of municipalities for which municipal WSS action plans developed (including needs diagnostic, investment plan, budget and timeline) 4. . Number of municipalities with SIASAR 100 percent updated every other year 5. . Percent of UMAS providers under the Project with an A or B ranking in the SIASAR’s TAP classification matrix Component 2 – Provision of adequate WSS infrastructure 6. . Number of people in rural areas provided with access to Improved Water Sources under the project Intermediate Results Indicators 7. . People provided with access to "improved sanitation facilities” under the project 8. . Number of indigenous and Afro-Nicaraguan communities benefiting from investments from Component 2 9. . Percentage of CAPS with at least 30 percent of women on the Board, in Project communities 10. Number of other water service providers that the project is supporting 11. New piped household water connections that are resulting from the project intervention 12. Improved community water points constructed or rehabilitated under the project 13. People trained to improve hygiene behavior/sanitation practices under the project 14. People trained to improve hygiene behavior/sanitation practices – female

Component 3 – Innovation and pilot subprojects

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

15. Number of investigation documented, evaluated and disseminated 16. Number of municipalities in the country with PMACCs developed Component 1 – Consolidation of WSS insitutions 1. . Number of FISE staff specilaized in water and saniation: 62 (original target: 60) 2. . Number of institutions working in WSS not financed by FISE that adopt the MEPAS: 14 (original target: 10) 3. . Number of municipalities for which municipal WSS action plans developed (including needs diagnostic, investment plan, budget and timeline): 62, (original target: 62) 4. . Number of municipalities with SIASAR 100 percent updated every other year: 151 (original target: 133) 5. . Percent of UMAS providers under the Project with an A or B ranking in the SIASAR’s TAP classification matrix: 96 percent (original target: 85) Component 2 – Provision of adequate WSS infrastructure 6. . Number of people in rural areas provided with access to Improved Water Sources under the project: 48,774 (original target: 25,330) 7. . People provided with access to "improved sanitation facilities” under the project: 23,616 Key Outputs by Component (original target: 17,213) (linked to the achievement of the 8. . Number of indigenous and Afro-Nicaraguan communities benefiting from investments from Objective/Outcome 1) Component 2: 22 (original target: 23) 9. . Percentage of CAPS with at least 30 percent of women on the Board, in Project communities: 100 (original target: 100) 10. Number of other water service providers that the project is supporting: 115 (original target: 115) 11. New piped household water connections that are resulting from the project intervention: 8,388 (original target: 2,956) 12. Improved community water points constructed or rehabilitated under the project: 18 (original target: 16) 13. People trained to improve hygiene behavior/sanitation practices under the project: 46,885 (original target: 25,330) 14. People trained to improve hygiene behavior/sanitation practices – female: 23,297 (original target: 12,158) Component 3 – Innovation and pilot subprojects

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

1. Number of investigation documented, evaluated and disseminated: 3 (original target: 3) 2. Number of municipalities in the country with PMACCs developed: 4 (original target: 4)

Objective/Outcome 2 Improve Nicaragua’s capacity to respond promptly and effectively to an eligible emergency

Outcome Indicators 1. Time taken to disburse funds requested by Government for an eligible emergency 1. IRM established and ready to provide access to financial resources to Nicaragua in case of an Intermediate Results Indicators eligible emergency 1. IRM Operations manual Key Outputs by Component 2. Environmental and Social Screening and Assessment Framework (ESSAF) for the Immediate (linked to the achievement of the Response Mechanism / Contingent Emergency Response Component Objective/Outcome 2) 3. Number of municipalities in the country with PMACCs developed

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

C. SPLIT ASSESSMENT OF OUTCOMES The table below shows the project outcome when the split rating formula described in the ICR Guidelines Appendix I is applied.

Before Restructuring After Restructuring RELEVANCE High

EFFICACY Modest High

PDO part 1 Modest High PDO part 2 Substantial High EFFICIENCY Substantial Outcome ratings Moderately Unsatisfactory Highly Satisfactory Numerical value 3 6 Disbursement (US$ 9.87 18.46 million) Share of Disbursement 35 percent (0.35) 65 percent (0.65) Weighted value of 3*0.35 = 1.05 6*0.65 = 3.9 outcome rating Rounding 5 Final Outcome Rating Satisfactory

Note: Outcome rating for the original PDO was rated as Modest due to shortcomings in achieving some of the original PDO targets (prior to 2018 restructuring). See Table 1 for further explanation.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION

A. TASK TEAM MEMBERS

Name Role Preparation Lilian Pena Pereira Weiss Task Team Leader(s)

Andres Eduardo Mac Gaul Procurement Specialist(s)

Enrique Antonio Roman Financial Management Specialist

Ximena B. Traa-Valarezo Social Specialist

Marcelo Hector Acerbi Social Specialist

Alejandro Neira Zavala Team Member

Supervision/ICR Martin Benedikt Albrecht, Juan David Casanova Anoll Task Team Leader(s) Carlos Lago Bouza, Monica Lehnhoff Procurement Specialist(s) Enrique Antonio Roman Financial Management Specialist Luis Barajas Gonzalez Financial Management Specialist Ximena B. Traa-Valarezo Social Specialist Jacqueline Beatriz Veloz Lockward Counsel Maryerly Rueda Gomez Team Member Maria Eliette Gonzalez Perez Team Member Diacono Raul Vera Hernandez Environmental Specialist Norman Russle Howard Taylor Social Specialist

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

B. STAFF TIME AND COST

Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY14 11.739 103,983.74

Total 11.74 103,983.74

Supervision/ICR FY14 3.575 14,345.67 FY15 26.357 100,412.50 FY16 39.936 161,179.74 FY17 15.045 135,011.47 FY18 33.808 175,233.11 FY19 33.521 186,166.65 FY20 24.080 87,516.22 Total 176.32 859,865.36

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

ANNEX 3. PROJECT COST BY COMPONENT

Amount at Actual at Project Percentage of Components Approval Closing (US$M) Approval (US$M) (US$M) Component 1: Strengthening the Rural 7.00 7.56 108.07 Water Supply and Sanitation Sector Component 2: Increase Sustainable Water Supply and Sanitation Coverage in Rural 21.00 19.60 93.33 Areas Component 3: Innovations in Rural Water, 2.00 1.16 58.23 Sanitation and Hygiene Component 4: Contingent Emergency 0.00 0.00 0.00 Response Component Total 30.00 28.32 94.40 Note: this table does not include non-World Bank financing.

Table 3.1. Summary of total funding sources of the Project. Counterpart funding by municipalities and beneficiary contributions. The latter includes in-kind contributions for community labor (excavations, backfilling and compaction), land acquisition, as well as the payments for water meters. Municipal counterpart funding and beneficiaries’ contribution were officially registered in the subsidiary agreements (CADFM) signed between FISE and recipient municipalities and were accounted as part of Component 2.

Description 2014 2015 2016 2017 2018 2019 Total (US$) (Source) The World Bank 1,000,0000 1,335,567 1,289,622 2,903,321 11,123,684 1,0675,943 28,328,137 (US$) Counterpart funding 92,959 350,629 695,494 2,139,082 (US$) Beneficiaries Contribution (US$ - 261,875 451,640 2,467,466 3,180,981 in kind contribution) Subtotal (US$) 1,000,000 1,335,567 1,289,622 3,258,155 1,1925,953 1,4838,903 33,648,200

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

ANNEX 4. EFFICIENCY ANALYSIS Value added from the Bank 1. The Bank's value added has been especially relevant in its role as a knowledge institution capable of convening expertise and deliver a strong training and capacity building intervention in order to improve coordination and governance of the rural WSS sector and improve effectiveness of future hardware interventions. Important achievements have resulted from this engagement, but there is still ample room for improving the sector in areas where the World Bank has extensive experience for developing sustainable options for WSS and improve the technical and management capacities of CAPS and municipalities in the country. Impact Evaluation 2. The Nicaragua Sustainable Rural Water Supply and Sanitation Sector Project (PROSASR) presents a valuable data to assess the causal impact of municipal and CAPS strengthening activities undertaken by the project and test the effectiveness at scale and to estimate the efficiency of strengthening activities to reach the PDO. The impact evaluation randomly assigned communities into treatment and control groups to assess the institutional water-strengthening PROSASR. The data covered the entire period of project’s implementation (2015 – 2019) and the main results show an increase in the institutional capacity of local water service providers, across indicators of institutional management, financial solidity, attention to operation and maintenance of water systems, and attention to water source. Economic Analysis 3. A cost benefit analysis was used to measure net benefits generated by the PROSASR project. The economic analysis at completion of the project was based on two main project’s components. First, the institutional capacity building component that aimed at strengthening FISE's capacity to lead the Rural WSS sub-sector, and by improving the efficiency of the institutional support structure in order to guarantee sustainable services through CAPS and municipalities. The second component dealt with the rural infrastructure upgrading of sustainable water supply systems. The training program resulted in increased capacity for managing and administering the demand of rural water systems and improving the sustainability of services. The impact of the training programs under the project (AVAR and ARAS) was evaluated with a randomized controlled trial at the community level where 150 CAPS were randomly assigned to treatment group and 150 to the control group. The baseline study of this evaluation was published in the Working Paper Series of the World Bank (WPS8283) and with the endline survey completed in the last quarter of 2019. The impact evaluation baseline study showed proper implementation of the randomized assignment of the interventions. The endline survey helped assess the overall efficiency of the project. 4. In addition, the project replicated the economic analysis of appraisal considering the restructuring of the project and updated parameters. The project at appraisal used economic parameters, based on the previous operation (PRASNICA), to estimate the costs and benefits of the project. The economic analysis of efficiency at completion of the project is based on economic parameters generated by FISE’s expenditure plans 2014-2018 and complemented with information collected through the impact evaluation, at baseline (2015) and endline (2019). The economic costs and benefits were estimated based on the project’s components 1 and 2 as they represent 93 percent of total project’s investments. The same discount rate (10 percent) and project’s return period (20 years) were considered with a Standard Conversion Factor of 0.95 and an updated exchange rate of 34.15 NIO/US$. 5. The results from the economic analysis31 were estimated based on the same template utilized at appraisal with updated data from FISE, SIASAR and the impact evaluation study. These show that the rate of return of the project was

31 The PAD of the PROSASR project consider parameters for the economic analysis based on the PRASNICA project costs and benefits. To update the analysis for the Completion Report, the economic analysis utilized the parameters from the PROSASR project (actual fixed and recurrent costs; and benefits estimated from the Impact Evaluation study)

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

economically viable. The assumptions made at appraisal were based on parameters different to those of project’s locations from a previous World Bank operation in the country (PRASNICA). The analysis at appraisal used PRASNICA’s locations to estimate the costs and benefits from multiple sanitation options. For the completion report, the analysis included entry and exit parameters related to the impacts from (i) the AVAR training programs32 (585 communities) and ARAS (830 CAPS) of the project in 70 municipalities and, and (ii) small infrastructure rehabilitation works for rural water systems. The costs were estimated based on the actual FISE’s cost tables from the project’s investment and recurrent costs per subcomponent33. The benefits were estimated based on how the enhancement of CAPS’s capacities resulted on better practices for sustainable services, better management and ultimately cost-reductions for households and increased access to services. 6. The NPVs at entry used the impact evaluation, SIASAR and FISE’s PROSASR implementation data showing that the training programs were economically more effective compared to the infrastructure component of the project. NPV for the component 1 at entry was US$ 2.9 million with an ERR of 15.4 percent. At exit the NPV with the parameters from the impact evaluation study yield to a total of US$ 6.1 million with an ERR of 18.6 percent. The efficiency is corroborated by the impacts found on CAPS from Component 1 which resulted more effective than Component 2. CAPS in treatment communities showed a 15 percent higher aggregate sustainability score than those in control communities. Table 4.1: Overview of cost-benefit analysis results

PRESENT VALUES (US$ 000) Cost and Benefits Estimated COSTS BENEFITS NET VALUE ERR PROSASR assumptions Entry Components 1 and 2 16,264 19,246 2,981 15.4% Exit Components 1 and 2 19,322 25,431 6,109 18.6% PRASNICA assumptions Water and Sanitation (PAD estimates) 48,000 57,306 9,306 22.4%

Other spillover effects from innovations in sanitation 7. AVAR had positive causal effects on sanitation because workshops emphasized safe environment and hygiene as a third component to improve. The first component focused on UMAS and addressed administrative and operational characteristics. The second focused on CAPS and addressed administrative, financial, and operational characteristics but also whether and how water sources were protected. Improvements in these two components can have an indirect effect on sanitation to the extent that better equipped and managed CAPS, bolstered by better support from UMAS, solve community sanitation problems. For the third component, workshop participants analyzed community aspects, diagnosed problems, planned activities, and evaluated progress on six topics: use of open defecation, trash presence, puddle presence, hand-washing behavior, adequate latrine use, and responsible water use. Behavioral changes on two of these aspects can have a direct effect on sanitation. AVAR activities caused a sanitation coverage of 3.7 percentage points, equivalent to an 8 percent increase over the control group. AVAR caused a large decrease on the practice of

32 The AVAR, FISE’s outcome-based training methodology) has also been launched in both the Pacific and Caribbean coasts, which represents an important step in strengthening the rural WSS sector. It is crucial that FISE increases its implementation effort to speed up the implementation pace and ensure that the first works can be carried out before the end of this calendar year. 33 The economic analysis at appraisal estimated the costs and benefits based on water interventions and sanitation interventions. For the Completion Report the criteria was to estimate the costs and benefits based on project’s components.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

open defecation of 1.8 percentage points equivalent to 37 percent decrease of the control group. Most of these improvements should be attributed to activities on the third component. 8. Finally, the impact evaluation data does point to significant increases in sanitation indicators: access to improved sanitation increases by 6.8 percentage points over the 44.3 percent reported in the control group between 2015 and 2019. This marks a percentage difference of 15.4 percent. Open-defecation is reduced by 1.5 percent compared to a mean of 4.7 percent in the control group. This marks a decrease of 32 percent. Access to a non-shared sanitation facility increases 3.5 percent compared to the average access of 77.6 percent in the control group. This marks a percentage difference of 4.5 percent compared to households in the control group. These changes in coverage can lead to significant changes in the health indicators under the economic analysis of the project. Furthermore, the impact evaluation study reported changes in self-reported diarrhea (among any household members) and was a reduction to 2.2 percent in the treatment group, compared to the 14.2 percent in the control group.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

ANNEX 6. SUPPORTING DOCUMENTS

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

o PROSASR Project documentation (PAD, ISRs, Aide Memoires, Restructuring Papers, Financing Agreement), available in WBDocs.

o NI TF Sustainable Rural Water Supply and Sanitation Sector Project Impact Assessment (P150059). Summary of Results 2015 – 2019. World Bank. December 2019.

o NI TF Sustainable Rural Water Supply and Sanitation Sector Project Impact Assessment (P150059). Qualitative Study in Indigenous Areas. World Bank. December 2019.

o PROSASR: Systematization report of the Social Management Scheme in WSS Projects. September 2019. FISE.

o World Bank, Nicaragua Country Partnership Strategy, 2013-2017. o World Bank, Nicaragua Country Partnership Framework, 2018-2022 o Implementation Completion Report and Results of NI Rural Water Supply and Sanitation Project (P106283).

o IEG ICRR of NI Rural Water Supply and Sanitation Project (P106283). o Implementation Completion Report and Results of Nicaragua's Water Supply and Sanitation Sector to Climate Change Project (P127088).

o FISE Project Completion Report (September 2019). o IRM Operations Manual. Componente Contingente de Respuesta a Emergencias (CERC) Y Mecanismo de Respuesta Inmediata (IRM): Ministerio de Hacienda y Crédito Público. República Nicaragua. Junio 2014.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

ANNEX 7. RESULTS OF SUSTAINABILITY CLASSIFATION MATRICES FOR CAPS, UMAS AND SYSTEMS

Table 7.1. Sustainability indicators for CAPS supported by PROSASR. Source: SIASAR Attention Service Operation & Financial to Municipality Código Subproject CAPS Community provider Tariff maintenance Average Rating robustness (water) management attention source Boaco Agua y Saneamiento 1 Boaco 19865 CAPS Tierra Azul Tierra Azul 3 4 4 4 4 3.80 A Comunidad Tierra Azul Agua y Saneamiento CAPS Villa 2 Camoapa 19829 Comunidad La La Calamidad 4 4 4 4 4 4.00 A Revolución Calamidad Agua y Saneamiento Cerro Alegre San José de los CAPS Cerro Alegre 3 19802 comunidad Cerro de 4 4 4 4 4 4.00 A Remates Malacatoya Alegre de Malacatoya Malacatoya Agua y Saneamiento CAPS Bendición de 4 Santa Lucía 19863 El Riego 3 4 4 4 4 3.80 A comunidad El Riego Dios Agua y Saneamiento CAPS Bendición de 5 Teustepe 20039 Coyusne 4 4 4 4 4 4.00 A Comunidad Coyusnes Dios Chinandega Agua y Saneamiento Comunidades CAPS Aserradores - 6 El Viejo 19894 Aserradores 4 4 4 4 2 3.60 A Aserradores y Cerro el Cerro El Gallo Gallo Agua y Saneamiento 7 Puerto Morazán 20061 Comunidad CAPS Tecomatepe Tecomatepe 3 1 2 2 4 2.40 C Tecomatepe San Francisco del Construcción Sistema CAPS Nancital N°1 El 8 19011 Nancital N°1 4 4 4 4 4 4.00 A Norte Agua El Nancital 1 Porvenir Agua y Saneamiento San Pedro del CAPS Fuente Loma de 9 20058 Comunidad Loma de 4 4 4 4 4 4.00 A Norte Cristalina Piedra Piedra

Agua y Saneamiento CAPS Fe y Esperanza Santo Tomás del 10 19808 Comunidad Paso de Las Liras de Paso Paso Hondo 4 4 2 4 4 3.60 A Norte Hondo Hondo

Agua y Saneamiento CAPS - Rodeo Rodeo 11 Somotillo 19891 Comunidad Rodeo 4 4 4 4 3 3.80 A Grande Grande Grande

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Agua y Saneamiento 12 Villanueva 19798 Comunidad La CAPS La Pimienta La Pimienta 4 3 4 2 4 3.40 B Pimienta Chontales Agua y Saneamiento 13 Comalapa 19843 CAPS El Naranjo El Naranjo 4 4 4 4 4 4.00 A Comunidad El Naranjo Agua y Saneamiento 14 La Libertad 19860 en la Comunidad de CAPS Betulia Betulia 4 4 4 4 4 4.00 A Betulia San Francisco de Agua y Saneamiento 15 19837 CAPS El Pintor El Pintor 4 4 4 4 4 4.00 A Cuapa Comunidad El Pintor Agua y Saneamiento 16 Santo Domingo 19862 en la comunidad El CAPS - La Rotonda El Mono 4 4 4 4 4 4.00 A Mono Estelí Agua y Saneamiento 17 San Juan de Limay 19801 CAPS Mateares Mateares 3 2 2 2 4 2.60 B Comunidad Mateares León Agua y Saneamiento CAPS La Hermandad 18 Achuapa 19714 Sector El Cacao, Los Los Caraos 4 4 4 4 4 4.00 A por el Agua Caraos, La Perla Madriz CAPS-José del San José de Agua y Saneamiento 19 19819 Carmen Suazo-El El Roble 4 2 2 2 4 2.80 B Cusmapa Comunidad El Roble Roble Agua y Saneamiento San Juan del Río CAPS-Manantial de 20 19824 Comunidad Samarkanda 4 4 4 4 4 4.00 A Coco Vida Samarcanda Agua y Saneamiento CAPS - Fuente de 21 San Lucas 19872 La Playa 4 3 4 2 4 3.40 B Comunidad La Playa Bendición Agua y Saneamiento CAPS - Manantial 22 Telpaneca 19826 Quibuto 2 1 1 1 4 1.80 C Comunidad El Quibuto Zeledon Agua y Saneamiento Comunidad Verapaz, CAPS - Verapaz Verapaz 23 Totogalpa 19833 3 3 4 2 4 3.20 B La pita, Wascasoni y centro Centro Agua Dulce Matagalpa Agua y Saneamiento CAPS San Sebastián 24 Esquipulas 19670 El Jícaro 3 4 2 4 4 3.40 B en comunidad El Jicaro El Jícaro

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Agua y Saneamiento 25 Muy Muy 19936 comunidad Santa CAPS Santa Lucía Santa Lucia 3 3 4 4 4 3.60 A Lucia Agua y Saneamiento 26 San Dionisio 19815 Comunidad El CAPS El Junquillo El Junquillo 4 3 3 4 4 3.60 A Junquillo Agua y Saneamiento 27 Terrabona 19726 en comunidad El CAPS El Bálsamo El Bálsamo 3 3 3 2 4 3.00 B Bálsamo Nueva

Segovia Agua y Saneamiento CAPS San José del San José del 28 Ciudad Antigua 19810 Comunidad San José 3 4 2 2 4 3.00 B Guineo Guineo del Guineo Agua y Saneamiento CAPS Roca de Agua 29 El Jícaro 19908 El Jobo 3 3 2 2 4 2.80 B Comunidad El Jobo Viva El Jobo Agua y Saneamiento CAPS Milagro de 30 El Jícaro 20044 Muyuca 4 2 2 4 4 3.20 B Comunidad Muyuca Dios Agua y Saneamiento 31 Macuelizo 19841 Comunidad: CAPS- Amatillo Amatillo 4 3 4 4 4 3.80 A Amatillo,Las Mesitas Agua y Saneamiento 32 Murra 20050 CAPS San Gregorio San Gregorio 3 1 4 4 4 3.20 B San Gregorio Agua y Saneamiento La 33 Quilalí 19666 Comunidad La CAPS La Providencia 3 2 4 4 4 3.40 B Providencia Providencia Agua y Saneamiento 34 Santa María 19821 CAPS - Las Palmas Las Palmas 3 3 1 2 4 2.60 B Comunidad Las Palmas RACCN Agua y Saneamiento CAPS Walpa Tanhta 35 Prinzapolka 19828 Comunidad Layasiksa Layasiksa 2 4 4 4 4 4 4.00 A Laya II Agua y Saneamiento CAPS Tawankiri Li 36 Prinzapolka 19845 Comunidad Dos Dos Amigo 4 2 3 4 1 2.80 B Klin Brisna Amigos Agua y Saneamiento CAPS Isnawas Laya 37 Prinzapolka 19895 Isnawas 4 2 4 2 1 2.60 B Comunidad Isnawas Klin Agua y Saneamiento 38 Prinzapolka 19830 CAPS Agua Cristalina Silibila 4 2 3 4 2 3.00 B Comunidad Silibila Agua y Saneamiento 39 Puerto Cabezas 19839 CAPS Walpa Laya Sukatpin 4 2 4 4 3 3.40 B Comunidad Sukatpin

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Agua y Saneamiento CAPS Lapan Tawanka 40 Puerto Cabezas 19840 Lapan 4 3 3 4 4 3.60 A comunidad Lapan Laya Agua y Saneamiento Banacruz 41 Rosita 19838 CAPS Fuente de Vida 4 3 4 4 4 3.80 A comunidad Banacruz Central Agua y Saneamiento 42 Rosita 19836 Comunidad Fruta de CAPS Fruta de Pan Fruta de pan 4 2 3 4 1 2.80 B Pan Sistema agua potable 43 Rosita 19220 CAPS El Empalme El Empalme 4 3 3 4 4 3.60 A El Empalme Agua y Saneamiento 44 Waspam 19827 CAPS Li Kauhla Kisalaya 4 2 4 4 3 3.40 B Comunidad Kisa Laya Agua y Saneamiento 45 Waspam 19811 Comunidad San Pedro CAPS Agua de Vida San Pedro 3 2 4 4 4 3.40 B /Santa Isabel RACCS Agua y Saneamiento 46 Bluefields 19797 CAPS La Aurora La Aurora 3 3 4 2 4 3.20 B Comunidad La Aurora CONSTRUCCION SISTEMA AGUA 47 Bluefields 19176 CAPS Aguas Gatas Aguas Gatas 4 4 3 4 4 3.80 A POTABLE " AGUAS GATAS" Mejoramiento y ampliación del sistema 48 Corn Island 20016 de Agua Potable del N/A N/A N/A N/A N/A N/A N/A N/A N/A Municipio de Corn Island Desembocadura Agua y Saneamiento 49 19812 CAPS Twi Laya Karawala 4 3 4 2 4 3.40 B del Río Grande Comunidad Karawala Sistema de Agua y 50 El Ayote 19864 Saneamiento Comarca CAPS Pilan Pilan 4 4 4 4 4 4.00 A Pilán Agua y Saneamiento 51 El Rama 19799 CAPS Calderón Calderón 3 3 4 2 4 3.20 B Comunidad Calderon Agua y Saneamiento CAPS Manantial de 52 El Tortuguero 19835 Comunidad Kasmitingni 4 3 4 2 3 3.20 B Vida KASMITINGNE Agua y Saneamiento CAPS Fuente de Vida 53 El Tortuguero 19822 Waspado 4 4 4 4 4 4.00 A Comunidad Waspado - Waspado Agua y Saneamiento CAPS Fuente De 54 El Tortuguero 19712 El Cedro 4 4 4 2 3 3.40 B Comunidad El Cedro Agua Viva

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Agua Y Saneamiento CAPS Fuente de Asentamiento 55 Kukra Hill 19834 Comunidad Flor de 3 3 4 2 3 3.00 B Jacob Samuel law Pino -Samuel Law Agua y Saneamiento 56 Kukra Hill 19831 CAPS El Sacrificio La Unión 3 3 3 2 2 2.60 B Comunidad La Union Agua y Saneamiento La Cruz de Río Comunidad El CAPS Nueva 57 19851 El Cañal 4 3 4 2 3 3.20 B Grande Cañal/Poblado el Esperanza Cañalito Agua y Saneamiento La Cruz de Río Comunidad Nuevo CAPS Fuente de Nuevo 58 19852 4 3 4 2 3 3.20 B Grande Amanecer/Poblado El Agua Pura Amancecer Capirote Agua y Saneamiento 59 Laguna de Perlas 19809 CAPS Martin Joseph Kahkabila 4 3 4 2 4 3.40 B Comunidad Kahkabila Agua y Saneamiento Muelle de los 60 19673 Comunidad El CAPS El Guarumo El Guarumo 4 3 1 2 3 2.60 B Bueyes Guarumo CAPS Nueva Agua y Saneamiento 61 Nueva Guinea 19847 Esperanza - Jerusalén 4 4 3 4 4 3.80 A Comunidad Jerusalen Jerusalen Agua y Saneamiento CAPS Manantial de 62 Nueva Guinea 20085 Talolinga 4 4 4 4 4 4.00 A Comunidad Talolinga Vida, Talolinga Agua y Saneamiento CAPS Manantial de Puerto 63 Nueva Guinea 20086 Comunidad Puerto 3 3 2 4 3 3.00 B Vida, Puerto Principe Príncipe Príncipe Agua y Saneamiento CAPS Manantial de 64 Nueva Guinea 20084 Comunidad Los Aguas Claras, Los Los Laureles 4 4 4 4 4 4.00 A Laureles Laureles Agua y Saneamiento CAPS Loma Fresca - 65 Nueva Guinea 19805 San Antonio 4 4 3 4 4 3.80 A San Antonio San Antonio Agua y Saneamiento CAPS Fuente Claras - 66 Nueva Guinea 19844 San Juan 4 4 3 4 4 3.80 A Comunidad San Juan San Juan Construcción Sistema de Agua y CAPS Rios de Agua 67 Paiwas 19200 El Achote 4 2 2 2 3 2.60 B Saneamiento El Viva Achiote Agua y Saneamiento San Pedro Del 68 Paiwas 19848 Comunidad San Pedro CAPS Maná 4 2 4 4 3 3.40 B Norte del Norte Río San Juan

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Agua y Saneamiento 69 El Almendro 20067 CAPS Caracito Caracito 4 3 2 4 3 3.20 B Comunidad Caracito Agua y Saneamiento El 70 El Castillo 19853 N/A N/A N/A N/A N/A N/A N/A N/A N/A Castillo Agua y Saneamiento CAPS Bendición de 71 Morrito 19800 Sincoyal 3 4 3 4 4 3.60 A Comunidad Sincoyal Dios ZONA ESPECIAL: ALTO WANGKY BOCAY Agua y saneamiento Kipla Sait Yahbra 72 19247 comunidad Yahabra CAPS Rayaka Laya 4 3 3 4 2 3.20 B Tasbaika Tangni Tangny Agua y Saneamiento Mayangna Sauni CAPS/GTI - Peñas Peñas Blancas 73 19260 comunidad Peñas 3 2 3 4 1 2.60 B Bu Blancas Río Bocay Blancas Mayangna Sauni Agua y Saneamiento CAPS/GTI - Kudahawas 74 19258 2 2 3 4 1 2.40 C Bu comunidad Kudahwas Kuluwasni Río Bocay

Miskito Indian Agua y Saneamiento CAPS/GTI - Pankawas de 75 19583 2 2 1 2 1 1.60 C Tasbaika Kum comunidad Pankawas Pamkawas Hilka Laya Río Coco

Agua y saneamiento Miskito Indian CAPS/GTI - Li Karma San Andrés 76 19252 comunidad San 2 2 1 2 1 1.60 C Tasbaika Kum San Andres de Bocay Andrès de Bocay Note: Items with N/A were not evaluated as they were dropped from the Project portfolio due to technical or financial feasibility constraints.

Average [3.50 - 4.00] Average [2.50 - 3.49] Average [1.50 - 2.49] Average [0.00 - 1.49]

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Table 7.2. Sustainability indicator for systems supported by PROSASR. Source: SIASAR Conduction Distribution Storage Micro- Residual Municipality Code Subproject Flow Catchment Storage Sum Rating network network capacity watershed Chlorine Boaco Agua y Saneamiento San José de los comunidad Cerro 1 19802 4 4.00 4.00 4.00 4.00 1 4 3 28.00 A Remates Alegre de Malacatoya Agua y Saneamiento 2 Teustepe 20039 4 4.00 4.00 4.00 4.00 1 4 3 28.00 A Comunidad Coyusnes Agua y Saneamiento 3 Boaco 19865 Comunidad Tierra 4 4.00 4.00 0.00 0.00 1 4 1 18.00 B Azul Agua y Saneamiento 4 Santa Lucía 19863 4 4.00 3.00 3.00 3.00 1 4 1 23.00 B comunidad El Riego Agua y Saneamiento 5 Camoapa 19829 Comunidad La 4 4.00 4.00 4.00 4.00 1 4 3 28.00 A Calamidad Chinandega Agua y Saneamiento 6 Puerto Morazán 20061 Comunidad 1 4.00 4.00 4.00 4.00 1 1 1 20.00 B Tecomatepe Agua y Saneamiento Comunidades 7 El Viejo 19894 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Aserradores y Cerro el Gallo Agua y Saneamiento 8 Villanueva 19798 Comunidad La 4 4.00 4.00 4.00 0.00 1 4 4 25.00 A Pimienta San Francisco Construcción Sistema 9 19011 4 4.00 4.00 4.00 4.00 4 4 1 29.00 A del Norte Agua El Nancital 1 Agua y Saneamiento 10 Somotillo 19891 Comunidad Rodeo 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Grande Agua y Saneamiento San Pedro del 11 20058 Comunidad Loma de 4 4.00 4.00 4.00 4.00 3 4 1 28.00 A Norte Piedra Agua y Saneamiento Santo Tomás 12 19808 Comunidad Paso 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A del Norte Hondo Chontales

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Agua y Saneamiento 13 La Libertad 19860 en la Comunidad de 4 4.00 4.00 4.00 4.00 1 4 3 28.00 A Betulia Agua y Saneamiento 14 Comalapa 19843 Comunidad El 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Naranjo San Francisco Agua y Saneamiento 15 19837 4 4.00 4.00 4.00 4.00 1 4 3 28.00 A de Cuapa Comunidad El Pintor Agua y Saneamiento 16 Santo Domingo 19862 en la comunidad El 1 4.00 4.00 4.00 4.00 1 4 3 25.00 A Mono Estelí Agua y Saneamiento San Juan de 17 19801 Comunidad 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Limay Mateares León Agua y Saneamiento 18 Achuapa 19714 Sector El Cacao, Los 4 4.00 4.00 4.00 4.00 1 4 3 28.00 A Caraos, La Perla Madriz Agua y Saneamiento 19 Telpaneca 19826 Comunidad El 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Quibuto Agua y Saneamiento Comunidad Verapaz, 20 Totogalpa 19833 4 4.00 4.00 4.00 4.00 3 4 1 28.00 A La pita, Wascasoni y Agua Dulce Agua y Saneamiento San Juan del Río 21 19824 Comunidad 4 4.00 4.00 4.00 4.00 1 4 4 29.00 A Coco Samarcanda San José de Agua y Saneamiento 22 19819 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Cusmapa Comunidad El Roble Agua y Saneamiento 23 San Lucas 19872 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Comunidad La Playa Matagalpa Agua y Saneamiento 24 San Dionisio 19815 Comunidad El 1 4.00 4.00 4.00 4.00 1 4 1 23.00 B Junquillo Agua y Saneamiento 25 Esquipulas 19670 en comunidad El 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Jicaro

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Agua y Saneamiento 26 Muy Muy 19936 comunidad Santa 4 4.00 4.00 4.00 4.00 1 4 3 28.00 A Lucia Agua y Saneamiento 27 Terrabona 19726 en comunidad El 1 4.00 4.00 4.00 4.00 1 4 1 23.00 B Bálsamo Nueva

Segovia Agua y Saneamiento 28 Santa María 19821 Comunidad Las 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Palmas Agua y Saneamiento 29 Murra 20050 1 4.00 4.00 0.00 4.00 1 1 1 16.00 C San Gregorio Agua y Saneamiento 30 Quilalí 19666 Comunidad La 1 4.00 4.00 4.00 4.00 1 4 1 23.00 B Providencia Agua y Saneamiento 31 Ciudad Antigua 19810 Comunidad San José 4 4.00 4.00 4.00 4.00 1 4 4 29.00 A del Guineo Agua y Saneamiento 32 Macuelizo 19841 Comunidad: 4 4.00 4.00 4.00 4.00 3 1 1 25.00 A Amatillo,Las Mesitas Agua y Saneamiento 33 El Jícaro 19908 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Comunidad El Jobo Agua y Saneamiento 34 El Jícaro 20044 4 4.00 4.00 4.00 4.00 1 4 3 28.00 A Comunidad Muyuca RACCN Agua y Saneamiento 35 Waspam 19811 Comunidad San 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Pedro /Santa Isabel Agua y Saneamiento 36 Waspam 19827 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Comunidad Kisa Laya Agua y Saneamiento 37 Rosita 19836 Comunidad Fruta de 1 4.00 4.00 4.00 4.00 4 4 1 26.00 A Pan Agua y Saneamiento 38 Rosita 19838 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A comunidad Banacruz Sistema agua potable 39 Rosita 19220 4 4.00 3.00 4.00 3.00 1 1 1 21.00 B El Empalme Agua y Saneamiento 40 Prinzapolka 19830 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Comunidad Silibila

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Agua y Saneamiento 41 Prinzapolka 19845 Comunidad Dos 4 4.00 4.00 0.00 0.00 1 1 1 15.00 C Amigos Agua y Saneamiento 42 Prinzapolka 19895 4 4.00 4.00 0.00 0.00 1 1 1 15.00 C Comunidad Isnawas Agua y Saneamiento 43 Prinzapolka 19828 Comunidad Layasiksa 1 4.00 4.00 4.00 4.00 1 4 1 23.00 B II Agua y Saneamiento 44 Puerto Cabezas 19839 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Comunidad Sukatpin Agua y Saneamiento 45 Puerto Cabezas 19840 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A comunidad Lapan RACCS Agua y Saneamiento 46 Bluefields 19797 Comunidad La 4 4.00 4.00 4.00 4.00 1 4 3 28.00 A Aurora CONSTRUCCION SISTEMA AGUA 47 Bluefields 19176 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A POTABLE " AGUAS GATAS" Agua y Saneamiento Laguna de 48 19809 Comunidad 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Perlas Kahkabila Agua y Saneamiento 49 El Tortuguero 19822 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Comunidad Waspado Agua y Saneamiento 50 El Tortuguero 19712 1 4.00 4.00 4.00 4.00 1 4 1 23.00 B Comunidad El Cedro Agua y Saneamiento 51 El Tortuguero 19835 Comunidad 1 4.00 4.00 4.00 4.00 1 1 1 20.00 B KASMITINGNE Mejoramiento y ampliación del sistema de Agua 52 Corn Island 20016 N/A- N/A- N/A- N/A- N/A- N/A- N/A- N/A- N/A- N/A- Potable del Municipio de Corn Island Agua y Saneamiento La Cruz de Río Comunidad El 53 19851 4 4.00 4.00 4.00 4.00 1 1 1 23.00 B Grande Cañal/Poblado el Cañalito

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Agua y Saneamiento La Cruz de Río Comunidad Nuevo 54 19852 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Grande Amanecer/Poblado El Capirote Agua y Saneamiento Muelle de los 55 19673 Comunidad El 4 4.00 4.00 4.00 4.00 4 4 1 29.00 A Bueyes Guarumo Agua y Saneamiento 56 El Rama 19799 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Comunidad Calderon Agua Y Saneamiento 57 Kukra Hill 19834 Comunidad Flor de 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Pino -Samuel Law Agua y Saneamiento 58 Kukra Hill 19831 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Comunidad La Union Agua y Saneamiento 59 Paiwas 19848 Comunidad San 1 4.00 4.00 4.00 4.00 1 1 1 20.00 B Pedro del Norte Construcción Sistema de Agua y 60 Paiwas 19200 1 2.00 4.00 4.00 4.00 1 4 1 21.00 B Saneamiento El Achiote Sistema de Agua y 61 El Ayote 19864 Saneamiento 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Comarca Pilán Agua y Saneamiento 62 Nueva Guinea 20084 Comunidad Los 1 4.00 4.00 4.00 4.00 1 4 1 23.00 B Laureles Agua y Saneamiento 63 Nueva Guinea 20086 Comunidad Puerto 4 4.00 4.00 4.00 4.00 1 4 3 28.00 A Príncipe Agua y Saneamiento 64 Nueva Guinea 19805 4 1.00 4.00 4.00 4.00 1 1 3 22.00 B San Antonio Agua y Saneamiento 65 Nueva Guinea 19847 4 4.00 4.00 4.00 4.00 1 4 3 28.00 A Comunidad Jerusalen Agua y Saneamiento 66 Nueva Guinea 19844 1 4.00 4.00 4.00 4.00 1 4 1 23.00 B Comunidad San Juan Agua y Saneamiento 67 Nueva Guinea 20085 4 2.00 2.00 2.00 2.00 1 4 3 20.00 B Comunidad Talolinga Desembocadura Agua y Saneamiento 68 19812 1 4.00 4.00 4.00 4.00 1 4 1 23.00 B del Río Grande Comunidad Karawala Río San Juan

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Agua y Saneamiento 69 Morrito 19800 2 4.00 4.00 4.00 4.00 1 1 1 21.00 B Comunidad Sincoyal Agua y Saneamiento 70 El Almendro 20067 3 4.00 4.00 4.00 4.00 1 4 1 25.00 A Comunidad Caracito Agua y Saneamiento 71 El Castillo 19853 N/A- N/A- N/A- N/A- N/A- N/A- N/A- N/A- N/A- N/A- El Castillo ZONA ESPECIAL: ALTO WANGKY BOCAY Agua y Saneamiento Miskito Indian 72 19583 comunidad 1 4.00 4.00 4.00 4.00 3 1 1 22.00 B Tasbaika Kum Pankawas Agua y saneamiento Miskito Indian 73 19252 comunidad San 1 4.00 4.00 4.00 4.00 1 4 1 23.00 B Tasbaika Kum Andrès de Bocay Agua y saneamiento Kipla Sait 74 19247 comunidad Yahabra 4 4.00 4.00 4.00 4.00 1 4 1 26.00 A Tasbaika Tangny Agua y Saneamiento Mayangna 75 19260 comunidad Peñas 4 4.00 4.00 4.00 3.67 3 4 1 27.67 A Sauni Bu Blancas Agua y Saneamiento Mayangna 76 19258 comunidad 4 4.00 4.00 4.00 4.00 4 4 1 29.00 A Sauni Bu Kudahwas Note: Items with N/A were not evaluated as they were dropped from the Project portfolio due to technical or financial feasibility constraints.

Sum [25 - 32] Sum [17 - 24] Sum [9 - 16] Sum [0 - 8]

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

Table 7.3. Sustainability indicators for UMAS supported by PROSASR. Source: SIASAR. Support to Visits to Status of communities Availability of communities Human Transport equipment Municipality in water Budget Sum Average TAP Rating data in last 12 resources Capacity and quality months materials monitoring Boaco 1 Boaco 4 1 1 2 4 3 4 19 2.71 B 2 Camoapa 4 1 4 3 4 3 4 23 3.29 B San José de los 3 4 4 4 4 3 4 4 27 3.86 A Remates 4 Santa Lucía 4 2 4 4 4 2 3 23 3.29 B 5 Teustepe 4 4 3 2 4 4 4 25 3.57 A Chinandega 6 El Viejo 3 2 3 1 4 3 4 20 2.86 B 7 Puerto Morazán 3 4 1 4 4 4 4 24 3.43 A San Francisco del 8 3 3 1 4 3 4 4 22 3.14 B Norte 9 San Pedro del Norte 3 2 3 4 1 3 3 19 2.71 B Santo Tomás del 10 3 4 3 4 4 3 4 25 3.57 A Norte 11 Somotillo 4 4 3 4 4 2 4 25 3.57 A 12 Villanueva 3 4 4 3 1 2 4 21 3.00 B Chontales 13 Comalapa 4 3 4 4 4 4 4 27 3.86 A 14 La Libertad 4 4 4 4 4 4 4 28 4.00 A San Francisco de 14 4 4 3 4 4 4 3 26 3.71 A Cuapa 15 Santo Domingo 4 4 1 4 4 4 4 25 3.57 A Estelí 16 San Juan de Limay 4 4 2 4 4 4 4 26 3.71 A León 17 Achuapa 3 4 3 4 4 2 4 24 3.43 B Madriz

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18 San José de Cusmapa 3 1 1 4 3 2 4 18 2.57 B 19 San Juan del Río Coco 3 3 4 4 3 4 3 24 3.43 B 20 San Lucas 3 4 4 4 4 1 3 23 3.29 B 21 Telpaneca 3 1 1 4 4 2 4 19 2.71 B 22 Totogalpa 3 4 4 4 4 1 1 21 3.00 B Matagalpa 23 Esquipulas 4 1 2 4 4 4 3 22 3.14 B 24 Muy Muy 4 3 4 4 3 4 4 26 3.71 A 24 San Dionisio 4 2 4 4 4 3 4 25 3.57 A 25 Terrabona 4 1 4 4 4 3 4 24 3.43 B Nueva Segovia 26 Ciudad Antigua 4 3 1 4 4 3 4 23 3.29 B 27 El Jícaro 3 4 4 2 4 1 4 22 3.14 B 28 Macuelizo 4 2 1 4 4 4 4 23 3.29 B 29 Murra 3 4 3 2 4 1 4 21 3.00 B 30 Quilalí 3 4 4 4 4 1 3 23 3.29 B 31 Santa María 4 1 1 4 4 2 4 20 2.86 B RACCN 32 Prinzapolka 3 1 1 3 4 3 4 19 2.71 B 33 Puerto Cabezas 3 1 1 4 3 3 3 18 2.57 B 33 Rosita 3 1 1 1 4 4 4 18 2.57 B 34 Waspam 3 1 1 3 3 4 3 18 2.57 B RACCS 35 Bluefields 3 4 4 4 4 4 4 27 3.86 A 36 Corn Island 3 4 1 4 3 4 4 23 3.29 B Desembocadura del 37 3 1 1 4 4 4 3 20 2.86 B Río Grande 38 El Ayote 3 2 1 4 4 4 3 21 3.00 B 39 El Rama 3 1 1 1 4 4 4 18 2.57 B 40 El Tortuguero 3 1 1 4 4 4 4 21 3.00 B

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

41 Kukra Hill 3 1 1 4 4 3 4 20 2.86 B 42 La Cruz de Río Grande 3 2 4 4 4 4 4 25 3.57 A 43 Laguna de Perlas 3 1 1 3 1 4 2 15 2.14 C 44 Muelle de los Bueyes 3 1 1 4 4 4 4 21 3.00 B 45 Nueva Guinea 3 4 4 4 3 4 4 26 3.71 A 46 Paiwas 3 1 1 4 4 4 4 21 3.00 B Río San Juan 47 El Almendro 3 1 1 4 1 3 4 17 2.43 C 48 El Castillo 4 2 1 4 4 3 4 22 3.14 B 49 Morrito 4 1 1 4 4 4 2 20 2.86 B ZONA ESPECIAL: ALTO WANGKY BOCAY 50 Kipla Sait Tasbaika 51 Mayangna Sauni Bu Miskito Indian 52 Tasbaika Kum

Average [3.50 - 4.00] Average [2.50 - 3.49] Average [1.50 - 2.49] Average [0.00 - 1.49]

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

ANNEX 8. SUMMARY OF RECIPIENT ICR

Based on the Recipient’s Completion Report, the main accomplishments, conclusions and recommendations can be summarized as follows:

1. Achievement of targets. The implementation of PROSASR is rated as satisfactory, considering the information of the completed project datasheets registered in the SICPRO and the updated data of the SIASAR as of September 2019. Targets of the five PDO indicators have been achieved and all targets of the 16 IRIs were achieved or exceeded. With the Project's actions as of September 30, 2019, a total of 72,390 direct beneficiaries were achieved as a result of 75 subprojects completed in 52 municipalities across the country, thereby exceeding the goal by 71 percent, according to the SICPRO report.

2. Main results: • Institutional strengthening. The Project supported the consolidation of FISE’s institutional structure and its sector leader role. The Project also supported the consolidation the social development models that were established under PRASNICA, managing to institutionalize social management methodologies and processes. In addition, the Project supported FISE establishing strong alliances with other stakeholders within the public and private sector and development arena. • Institutional arrangements. PROSASR supported FISE with strengthening of arrangement between CAPS and UMAS through robust capacity building activities like AVAR training, WSS courses, CAPS legalization processes, technical and management support for CAPS. All these activities supported that UMAS and CAPS in climbing up the sustainability ladder. • Safeguards compliance. The Project supported FISE with the strengthening of environmental and social management, through the development and satisfactory implementation of environmental and safeguards instruments, environmental and social training to CAPS, UMAS, subproject contractors, and FISE staff. • Adoption of PACCAS results into PROSASR operation. FISE’s UGA developed a summary of climate change adaptation for WSS sector. PROSASR implement 24 plans for watershed management, water source protection and 18 subprojects carried out infrastructure works to increase resilience and reduce climate change vulnerability. 3. As part of the final assessment of PROSASR, the Borrower identified the following areas to continue working on: • Institutional strengthening of sector’s sustainability chain. This includes: (i) consolidate FISE’s and municipalities roles with new stakeholders; (ii) define sector planning instruments as Rural PISASH; (iii) promote UMAS employee retention; (iii) ensure adequate allocation of resources at central and municipal levels. • Information. This includes: (i) consolidate SIASASR as the sector’s information tools for decision-making and planning; (ii) establish institutional protocols for information exchange to strengthen SISASAR data base, i.e., water quality, water resources, hydrometeorological data; (iii) consolidate municipal ownership of SIASASR. • Innovation. This includes: (i) institutionalize and make operatorial the recommendation originated from the innovation subprojects; (ii) deep dive in the identification of sanitation-based technologies and involve academia • Project formulation. This includes: (i) proactiveness to design WSS subproject portfolio; (ii) adjust terms of reference and bidding documents based on PROSASR procurement experience; (iii) simplify and streamline processes during project cycle; (iv) update data base of water resources (quantity and quality); (v) identify, assess and classify the level of technical support required by municipalities according to technical and fiduciary capacities.

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• Investments. This includes: (i) promote CDD modality for subproject implementation where adequate; (ii) promote CAPS effective management, including developing a vision for commercial management. • Social development model. This includes: (i) articulate better between different stakeholder UMAS, ARAS, social facilitators and CAPS; and (ii) improve FCSA learning • Environmental management. This includes: (i) strengthen UGA department to ensure environmental compliance of WSS interventions. • Gender. This includes: (i) mainstream gender policies and approaches at all levels of the sustainability chain. 4. Lessons learned: • Sustainability can be achieved by promoting CDD approaches. FISE through PROSASR contributed to streamline the social development model into the subproject cycle. • Prior to the subprojects design it is required to review the technical solutions (especially for sanitation). This review includes the definition of the required O&M activities and costs, water availability, institutional or national regulatory adjustments, and cultural appropriateness.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

ANNEX 9. SUMMARY OF THE IMPACT EVALUATION

Purpose of the Impact Evaluation 1. The objective of the impact evaluation of PROSASR is to expand on the evidence on the factors which affect rural water sustainability. Through an impact evaluation with a robust methodology design, it is possible to estimate the causal attribution between PROSASR training interventions and results on UMAS, CAPS and households. Methodology 2. The impact evaluation relies on an experimental-design to analyze the effect, predominantly, of the rural water institutional-strengthening component of PROSASR among local entities in charge of operation and management of rural water systems in in Nicaragua. The approach was based on randomly assigning clusters of municipalities for the interventions that aimed at improving and strengthening the institutional variables related to the sustainability of service provision under the responsibility of CAPS. The randomization, when done effectively, allows comparing intervened (treatment) versus non-intervened (control) UMAS and CAPS to assess the causal changes in the institutional variables induced by the project. A baseline survey data was collected in 2015 (4,800 households) and an endline survey was collected in 2019 to assess the impact of the PROSASR, using a sample of 4,500 with enough statistical power to infer significance and causal attribution of changes in impact variables over time.

3. The evaluation consisted on a group of 150 communities in the control group and 150 in the treatment group. Out of these 300 communities, that were part of the impact evaluation study, there was only a 10 percent (30 communities) contamination of comparison groups (control group receiving treatment). Such contamination did not alter the results statistically and in magnitude. The characteristics of participant communities at baseline were balanced, and a paper was published in the Policy Paper Series of the World Bank34 which showed the equal characteristics of comparison groups at baseline. The impact evaluation information was complemented with the data of the Rural Water Monitoring System (SIASAR) of the country (which has national coverage of 6,500 communities), updated in 2015 and 2019. The combined data of the impact evaluation survey and SIASAR allowed the expansion of several variables and characteristics of UMAS, CAPS and water systems to corroborate the robustness of results.

Key findings. 4. At the municipal level, the results suggest that, within the SIASAR scoring system, the majority of municipalities involved in the study experienced improvements across several aspects of governance, monitoring and maintenance of rural water systems. The results of the impact evaluation presented here suggest that Component I of PROSASR was successful in increasing the institutional capacity of CAPS to better the sustainability and functionality or rural water systems. In comparison to those in the control group, CAPS in treatment groups experienced an increase across all project indicators; on average, compared to controls, CAPS in treatment communities experienced a 15.7 percent increase in their institutional sustainability score, as measured by the project indicators gathered through SIASAR.

5. CAPS experienced a statistically significant increase, in terms of standard deviation (relative change of results in relation to the mean average of the control group35) along the following indicators. There was an overall increase in score of 0.42 standard deviations, out of the five elements, four improved:

• CAPS management of service providers increased by 0.41 standard deviations;

34 See http://documents.worldbank.org/curated/en/291431513690985209/Increasing-the-sustainability-of-rural-water-service-findings-from- the-impact-evaluation-baseline-survey-in-Nicaragua 35 A standard deviation varies between -1 and +1; a positive value of the treatment group indicates that results are higher than the control group.

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• CAPS financial solidity increased by 0.39 standard deviations; • CAPS attention to O&M of the water systems increased by 0.33 standard deviations; • CAPS adequate protection of the water source increased by 0.24 standard deviations.

6. The only CAPS-level indicator that did not improve with the PROSASR interventions was the establishment of adequate water tariffs. There can be two explanations for this: first, given that water tariffs are usually subject to political and technical policies, no formal delineations for the establishment of rural water tariffs took place with proper agreement between UMAS, CAPS and households. Second, there exists no water pricing and valuation mechanisms in place to facilitate the distribution of water through systems administered by the CAPS. In terms of household impacts in access to improved, or safely managed water, this increased with the program, but only during dry-season. The institutional water-strengthening programs had a small, but statistically significant, impact in access to improved sanitation at the household level. Access to improved sanitation increased by 3.7 percent compared to a level of access of 46.5 percent in the control group (percentage increase of 8 percent). This could be linked to the information offered by AVAR and ARAS relating to the sustainable management of water systems. Moreover, many communities expressed a special interest in the subject of sanitation, given that many of the options in the communities are precarious, and don’t have a system for properly dealing with feces. List and breakdown findings 7. The metrics used to determine whether a CAPS is upgraded to a higher category, and the key-elements guiding the AVAR trainings and the assistance from the ARAS, as gathered bi-annually through the SIASAR, are: the institutional strength of the service providers, the existence, and efficacy, of a water-tariff system, the financial solidity of the CAPS, and whether there is sufficient attention being paid to the operation and maintenance of the water basin and the source of water. Given that the intervention finished recently and endline data was collected just few months after the completion date of the project in 2019, it is unlikely that the impact at the household level has fully sunk-in. Household estimates suggest mostly non-significant estimates in access to water indicators, and in assistance of household members to meetings organized by CAPS.

8. Access to a non-shared sanitation facility increases 3.5 percent compared to the average access of 77.6 percent in the control group. This marks a percentage difference of 4.5 percent compared to households in the control group. Diarrhea (among any household members) is reduced by 2.2 percent in the treatment group, compared to the 14.2 percent in the control group. This marks a 16 percent difference between treatment and control groups.36 Table 9.1. Mean Difference Change in UMAS score as used to determine whether UMAS are upgraded to a superior category

BASELINE ENDLINE Difference 2013-2015 2018-2019 Points % Std.Devs p-value UMAS SCORE 2.00 3.00 1.00 50% 1.32 0.000 1. Share of communities visited during 1.51 2.30 0.79 52% 0.66 0.000 the last 12 months 2. Share of communities supported for 1.18 1.91 0.74 63% 0.70 0.000 water quality monitoring 3. Human resources: Ratio of 3.23 3.25 0.02 1% 0.02 0.935 communities to technicians 4. Transportation capacity: Ratio of 2.05 3.25 1.19 58% 0.87 0.000 vehicles to technicians

36 The impact evaluation study and the qualitative study are available in the World Bank portal ACS (P150059).

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5. Equipment: a. Water quality monitoring 1.75 3.28 1.53 87% 1.44 0.000 b. Computer c. Informative printed material 6. Has: a. Assigned annual budget 1.44 3.68 2.25 156% 1.72 0.000 b. Funds for travel expenses and fuel c. Internet service Note: Only 57 of the 76 municipalities in the evaluation sample have both data on SIASAR 2018-19 and also their information was added after the end of the third workshop.

Figure 9.1. Change in Standard Deviations –– SIASAR Impact Evaluation Results by CAPS component. The figure includes results for the full sample as well as results excluding the 38 contaminated control communities.

9. The IE showed causal, statistically significant improvements in strengthening of the institutional capacity of CAPS across an array of program indicators. In terms of overall CAPS score, which is an aggregate of the five indicators outlined in Figure 9.1, at end-line, the average score of the CAPS increased 0.38 points vis a vis the 2.54 score in the control group. In other words, on average, CAPS in treatment communities had a 15.2 percentage higher aggregate CAPS score than those in control communities. Moreover, compared to CAPS in control communities, treatment CAPS experienced: a 0.55 standard deviation increase in management of the service provider, a 0.45 standard deviation increase in financial solidity, a 0.53 standard deviation increase in the attention to operation and maintenance of the water basin increased by, and a 0.22 standard deviation increase in the adequate protection of the adequate water source. This means that the Project was impactful because those indicators increased substantially and with statistical significance between baseline and endline. In those CAPS where the Project intervention took place these indicators changed compared to the same indicators in CAPS without the project intervention. 10. Although not causal, the results from the IE provide positive, statistically significant evidence of before and after improvements in an array of UMAS-level indicators37. Between the beginning and ending of the project, overall UMAS performance, as measured by the aggregate of indicators38, had a statistically significant increase of 50 percentage points. Moreover, the share of communities the UMAS visited during the last twelve-months increased by 52 percent, the number of UMAS with an assigned annual budget, funds for travel expenses and fuel, and internet services increased by 156 percent, the share of communities supported for water quality monitoring increased by 63 percent,

37 UMAS level indicators are provided for 57 municipalities included in the impact evaluation. 38 The more fleshed-out metrics for upgrading the UMAS to a higher category and used to build the indicators described in Table 9.1.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

and the availability of water quality monitoring, computer and informative printed material increased by 87 percent. Changes in human resources were not significant.

Qualitative Study 11. To complement the impact evaluation study, a qualitative assessment was conducted in indigenous areas where the PROSASR project implemented interventions. The qualitative study collected valuable information to assess the project’s effectiveness on implementing the social framework of the project in indigenous areas. Communities were selected based on the identification of fully implemented social framework and with the validation of the methodology by the social specialist of the project. The main areas of information of the qualitative study design are as follows:

12. The methodology consisted in collecting information using three different qualitative tools: focus groups, semi structured interviews, and life stories from implementation stakeholders and beneficiaries of the project in indigenous areas. The core elements of gender issues, discrimination/inclusion and knowledge levels of water and sanitation improvements in the communities showed the following conclusions:

Living conditions • Immediate visible changes of quality of life depend much on the type of water taps, shared latrines and individual versus community facilities. The installation of basic water and sanitation services has changed the daily routine for accessing water, it has as well increased the safety and hygiene practices required for food consumption. There is an improvement in the living conditions, mainly in the decrease of infectious diseases, which is a factor that communities considered as key for making them feel inclusive on rural development processes. • Historical memory of the community's link with water as a fundamental part of life is reflected in the social framework of the project. The roles that women have as household’s water fetchers and administrators to their communities is meaningful; and they carry out their diverse and daily activities to ensure water availability. • There has been a women empowerment through the social framework of the project due to their involvement in fundamental at the local water committees. For example, women have taken important roles such as treasurer or representative within the CAPS or as social promoters in the community, after receiving proper training and information. Water quality and safety are highlighted in the face of childhood experiences and the strong contamination of their water sources.

Governance

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

• Key actors that lead the implementation of projects in indigenous areas agree on the improvements induced by the realization of the different trainings, informative assemblies, and extraordinary meetings that were implemented by the project. • Home visits based on the Framework for Community and Social Accountability (FCSA) methodology “Family and Healthy Communities” by the Municipal Water and Sanitation and Hygiene Unit (UMASH), allowed knowledge transfer of new forms and practices for the realization of daily activities carried out inside people`s home. • In the coordination with governmental authorities the respect for traditional and social institutions is fundamental to properly implement the project indigenous areas. • The respect for these indigenous norms and institutions allowed the adaptation of the drinking water and sanitation project within the framework of indigenous organizational structures. • Within the consultation processes, a series of assemblies with community members and authorities were developed. These also involved several feedback mechanisms that allowed the community to decide upon alternatives of rural water systems management. There is a recognition for more technical training on the operation of the water systems to solve specific problems that may occur at certain times of the year. For example, how to deal with the high levels of sedimentation that water presents in rainy seasons. • Government respects the process for presenting the project, as well as the objectives and the different project alternatives to be executed. Also, it is reported that communities´ way life, mother tongue, social organization and, especially taking into account the community leaders is recognized. Communities have decided internally and through a democratic process the most appropriate decision for them and to meet their needs.

Autonomy and empowerment of indigenous communities • The new challenges that hinder communities’ empowerment are based on the dependence on the use of money as a form of access to vital resources such as water currently in a process of unsustainable exploitation. Water is being depleted at fast pace. • Properly managed water and sanitation systems show that the communities worked together with indigenous leaders and reaffirms the importance of these community structures. • The social framework is not perfect, but it enabled a series of collective actions and mobilizations that strengthen the collective identity of communities and at the same time encouraged the participation of the indigenous peoples in making decisions regarding their social demands and requests.

Empowerment for water management • The relationship between the community and water resources goes beyond perceiving it as a mere mean to survive. Water is considered a natural gift, with assignments of roles and activities that determine and generate voice in making water management decisions. • Women are considered in the decision process only with limited roles for managing water systems, even though it is women who have the greatest contact. Previously, when they didn´t have access to drinking water, it was also women´s role, along with the children, to carry the water, or the well closest to the communities. • Indigenous organizational forms allowed the operational and self-determination of water and sanitation management, providing the possibility of deciding on the means used to ensure the forms of access and improving water systems. • Access to drinking water and the existence of the water systems are managed with traditional approaches, which reaffirms the importance of these community social capital.

Conclusions of the Study • The implementation of water supply and sanitation projects in indigenous communities helped improve the social cohesion and inclusion, mainly through a common objective of decreasing infectious diseases through the

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

melioration of hygiene conditions, and improving water systems’ management; • The coordination of different governmental institutions with indigenous authorities has been fundamental for an adequate implementation of the projects and the framework; • Community structures have been respected and considered for the different Project’s alternatives; • Women have a key role in the structure and decisions of the water committees while their traditional role as suppliers and administrators is respected and recognized.

The World Bank NI Sustainable Rural Water Supply and Sanitation Sector Project (P147006)

ANNEX 10. ADDITIONAL INFORMATION ON PROJECT OUTCOMES AND ACHIEVEMENTS

Table 10.1. Summary of main results obtained from the development of innovative approaches for the rural WSS.

Supply chain of chlorine in Wastewater treatment and fecal Improved sanitation solutions operating rural water supply sludge management systems - systemization of the implementation - identified the different rural on-site - technical diagnostic and assessment of four pilot subprojects that used sanitation solutions; of existing chlorine supply chains; wet-based solutions - assessed its treatment efficacy and - assessment of stakeholder - recommendations to enhance the efficiency; (beneficiaries, UMAS, CAPS, FISE concept design of the improved technical staff and other government - studied the alternatives for an sanitation solutions; sector institutions); adequate treatment, disposal and - improved the bidding documents; reuse of treated effluents and - assessment of chlorine supply chain stabilized sludge. provided by Ministry of Health; - analyzed the implementation costs of improved sanitation solutions; - as an opportunity to develop the - technical description of chlorine sanitation market in Nicaragua, this supply chain designs according to - drafted O&M plans. study provided technical and types of water supply systems; and institutional recommendations to technical, economic and social improve waste management in the conditions of rural communities rural sector All studies included specific recommendations and proposals for the improvement of national regulations, FISE’s technical manuals and institutional instruments and procedures.