PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Report No.: AB492
Project Name
WATER QUALITY PROTECT GEF
Region
EUROPE AND CENTRAL ASIA
Sector
General water, sanitation and flood protection sector (80%);Sanitation (20%)
Public Disclosure Authorized
Project ID
P085112
GEF Focal Area
I-International waters
Borrower(s)
GOV'T. OF BIH
Implementing Agency

Environment Category
[ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
Safeguard Classification
[ ] S1 [ ] S2 [ ] S3 [ ] SF [ ] TBD (to be determined)
Date PID Prepared
November 20, 2003
Estimated Date of Appraisal
March 8, 2004
Authorization
Estimated Date of Board
August 1, 2004
Approval


1. Key development issues and rationale for Bank involvement
Public Disclosure Authorized

The project would address the environmental degradation of the Neretva and Bosnia Rivers and to
coordinate regional priorities and develop a WasteWater Improvement Management Plan for Bosnia and
Herzegovina (BiH). The Wastewater Improvement Plan would clarify the institutional framework for
Wastewater Management; formalize the cooperation with institutions in Croatia and Montenegro; build a
network of public and private institutions needed for effective wastewater treatment; and prepare the
groundwork for innovative low cost wastewater treatment methods.

The Government is fully aware of the need for high levels of investment, extensive planning and
preparation and has emphasized the necessity of developing a Wastewater Improvement Management
Plan first, before gradually moving to phased investments.

A. GOVERNMENT REFORM PROGRAM FIT
Public Disclosure Authorized
BiH has stressed the importance of addressing the environmental degradation of the pollution of
transboundary rivers and has been asking for Bank assistance since 1998. It has repeatedly sought
assistance to eliminate identified regionally prioritized hot spots by improving wastewater discharge
systems and capabilities.

BiH seeks to promote cooperation with its neighbors in managing transboundary water resources. On
July 11, 1996, BiH and Croatia signed an agreement to establish a framework for water management.
Since that ratification, three sub-agreements on specific projects have been negotiated and are pending
signature. In addition, both countries support the Barcelona Mediterranean Convention of 1976 for the
prevention of pollution of the Mediterranean, and have signed and ratified all its protocols.

Currently, the United Nations Environmental Program (UNEP) is developing the Strategic Action
Program to address pollution from land-based activities in the Mediterranean Region (SAP MED),
Public Disclosure Authorized
including BiH wastewater discharges. The proposed project would complement SAP MED. It would
advance the regional program for conservation of wetland and coastal ecosystems in the Mediterranean
Region, and assist the BiH Government in meeting its international obligations under the Barcelona
Mediterranean Convention.

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B. COUNTRY ASSISTANCE STRATEGY FIT

The second Country Assistance Strategy (CAS) was presented to the Board in May 2000. The most
recent CAS-related discussion took place on October 15, 2002, on the CAS Progress Report (Doc. No.
24978-BiH). The CAS stresses the important environmental issues existing at the local level and the
Poverty Reduction Strategy Paper (PRSP), to be completed in November 2003, places highest priority to
the need to address the rapid environmental degradation. The proposed Global Environmental Fund
(GEF) grant would cover the benefits related to international waters and protection of aquatic ecosystems
through wetlands, lagoons and related low cost wastewater options.

C. WORLD BANK'S CONTRIBUTION

The project would be integrated as part of the World Bank Mostar Water Supply and Sanitation Project
(US$12 million) that was made effective in December 2000 and includes a sanitation component. The
proposed project would further develop the Bank's contribution through the Mostar Water Supply and
Sanitation Project and the ongoing water supply and sanitation policy and sector work that all fit within
the Government's priority on environmental infrastructure. Without the Bank's support, the improvement
and reform in the water and sanitation sector of BiH would progress far more slowly. The already poor
water quality would continue to deteriorate, and related public health and environmental concerns would
continue to increase. The GEF grant funds would help to target ways to reverse environmental
degradation of the Neretva River and the Bosnia River.

Because the Neretva and Bosnia Rivers run both through BiH and Croatia, cooperation between both
countries is needed in various sensitive areas. The Bank's primary advantage is that it could serve as an
honest broker in supporting the dialogue on pollution control issues. The Bank could further improve
ongoing communication between the countries, which would need to reach agreement on origination of
water polluters and monitoring and evaluation of water quality and expand this cooperation to other
neighboring countries.

D. REGIONAL SIGNIFICANCE OF THE PROJECT

The Neretva and Bosnia Rivers are the focus of the proposed project. The Neretva River Basin drains the
second largest area in BiH and is the only one of the four that discharges from BiH into the Adriatic Sea.
The other three are tributaries of the Sava River, which forms the northern boundary of BiH with Croatia
and is part of the Danube system. The Neretva River, which originates in BiH and flows through Croatia
for 20 km before entering the Bay of Mali Ston and the Adriatic is of great economic importance to both
countries. For BiH, it is a source of hydropower, drinking water and water for irrigation. For Croatia, the
Bay of Mali Ston at its mouth is an important area for the production of oysters for local consumption and
export. The Neretva Delta is a Mediterranean wetland of international importance as evidenced by its
designation as a Ramsar Wetlands site. It is also a source of pollutants for the Adriatic and
Mediterranean.

The Bosnia River Basin covers the largest and the most developed area of the Federation part of BiH.
The Bosnia River flow begins in the territory of BiH and is around 193 km long, including the area from
Vrelo Bosne (source of the scenic Bosnia River) to the inter-entity boundary line at the mouth of the
Usora River. The Bosnia River Basin is the most populated region of BiH. The most developed regions
in the country, in industrial terms, are found along this river. Wastewater from communities and
industrial facilities - the concentrated polluters - discharges directly into the river, most of it without any
treatment. The Bosnia River, is a source of pollutants for the Danube where it eventually drains.

E.
Value Added of World Bank's Support

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The value added of Bank support would lie in assisting BiH in pollution reduction in the domestic area
and in furthering international cooperation in international waters. The Bank would provide the least-cost
and most sustainable options for wastewater treatment from the land-based municipal sources. In
addition, the Bank would ensure avoidance of the kinds of previous investments that in the past, required
unnecessarily large infrastructure schemes that generated high operating costs and overall were too costly
to maintain. The Bank would also serve as a catalyst for securing other donor financing for well-
coordinated, high-priority and economically and financially justified investments.


2. Proposed
objective(s)

The overall objective of the proposed project is reduction of ground-based pollution from municipal
sources into the Neretva and Bosnia Rivers. The sub-objectives are: (a) development of a Wastewater
Improvement Management Plan; (b) establishment of a Joint BiH/Croatian Commission, with
coordination from Montenegro to implement the plan; and (c) development and implementation of high-
priority, low-cost water capital investments.


3. Preliminary
description

The proposed project would have the following five components:

Component 1: Wastewater Improvement Management Plan Preparation.

· An Ecological Analysis and Protective Plan for the targeted areas;
· A Review and Analysis of Existing Institutional Arrangements;
· Preparation of a Proposal for Institutional Improvements;
· Evaluation of Measures for Improving and Sustaining Basin Water Quality;
· Identification and Evaluation of Alternative Scenarios for Improvement of Water Quality;
· Design of a Long-Term Wastewater Quality Monitoring Program;
· Analysis of the Economic Benefits of Clean Water;
· Development of a Nutrient Reduction Plan;
· Development of a Financing Plan; and
· Development and Implementation of a Public Awareness Plan.

Component 2: Startup of the Wastewater Improvement Management Plan, including operating costs for
24 months.

Component 3: Implementation of a High-Priority, Low-Cost Capital Investment, as recommended by
the Wastewater Improvement Management Plan.

Component 4: Project Management and Monitoring.

This component would be conducted by existing personnel of the Public Water Management Enterprise,
Vodoprivredas, with offices in Mostar and Sarajevo in coordination with relevant water utilities. The
Enterprise would work in close cooperation with the Croatia Public Water Management Enterprise,
Hrvatska Vode, which would represent Croatia. The work would also be done in cooperation with
relevant authorities in Montenegro for the Neretva River Basin.

Component 5: Institutional Support and Replication.

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This component would provide financing for the dissemination of the project results within BiH and in
other countries of the region. Details for this activity would be agreed upon before project appraisal.


4. Safeguard policies that might apply:

International Waters.


5. Tentative
financing:
Source:
($m.)
BORROWER/RECEPIENT 1.5
GLOBAL ENVIRONMENT FACILITY
8.5

Total 10.00

6. Contact
point
Contact: Seema Manghee
Title: Sr Financial Analyst
Tel: (202) 473-5702
Fax: (202)614-0902
Email: Smanghee@worldbank.org

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