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The Metro Manila area is a typical example; it has a concentration of population of 12 million people, and practically all the sewage is discharged without treatment. The Manila Bay, Pasig River, and the Laguna Lake represent three key water bodies of socio-economic importance to the country, all exhibiting varying degrees of environmental degradation. These water bodies reflect the general state of Philippine waters, which are seriously confronted with untreated domestic sewage contamination problems.

  • The Manila Bay forms Manila’s western seaboard, a large shallow coastal water body with significant marine transport to Manila port. It is the ultimate recipient of domestic and industrial waste, agricultural run-off, and oil spills in its watershed draining 26 catchment areas. About 21% of the organic pollution load comes from the Pasig River Basin. Nearly 82% of the total sewage generated in Manila City is discharged without any treatment through an outfall into Manila Bay.

  • The Laguna Lake south of MM is a large water body and a crucial water source for the southern region. Within its catchment, about 60% of households discharge sewage and solid wastes directly into the lake or into its tributary rivers. Residential pollution accounts for about 70% of the organic load currently discharged into the lake.

  • The Pasig River the region’s largest river, is hydraulically important because it provides a two-way connection between Manila Bay and Laguna Lake, and due to ocean tide variations, it transfers pollution between the two. It receives as high as 70% of its organic load from residential sewage with the remaining 30% coming from industry. The Pasig River, the only outlet of Laguna Lake, empties directly into Manila Bay.

The Manila three water bodiesBay represents a vital national asset, providing a source of food, livelihood, employment, and recreation to an estimated 23 million Filipinos living within its 17,000 km2 watershed area, and a major source of economic benefit to the country. Along with its surrounding provinces, the Bay region contributes an estimated 55% of the country’s GDP, and accounts for almost one third of the country’s agriculture, fisheries, and forestry production.

Baseline Scenario

Within the trends identified above, iIncreased urbanization in the Philippines is inevitably resulting in severe water pollution problems. Under the worst-case scenario, i.e., no Bank-supported projects in MM, the se trends described above will continue, and the sheer amount and types of domestic and industrial discharges would overwhelm Manila Bay. Under the base-line scenario, i.e., with Bank-supported projects but without GEF co-financing, the impact on the reduction of water pollution in MM in general will be significantly less. The key benefits of MTSP’s cost-effective technological innovations are achieved only when scaled to apply to the entire MM area. GEF funds will ensure that MTSP and the Private Sector Support to MWSS Financial Rehabilitation achieve this scalability.

Without GEF co-financing, the opportunity to link the different programs, policy and legal instruments of the DENR, PRRC and the LLDA, as an integrated watershed and coastal management regime may not be realized. This would hamper the overall effectiveness of interventions to prevent and mitigate land-based pollution and overcome barriers to increased investments. The partnership also accords harnessing the comparative advantage of the linkage with the PEMSEA Regional Programme, to provide advisory support, institutional links with regional initiatives for the Seas of East Asia and as an organization with significant exposure on public-private partnership and revolving fund mechanisms.

The baseline MTSP project has three components:

Component 1: Sewage Management would pilot-test the construction of small-scale sewage treatment plants, upgrade communal facilities, and rehabilitate collection networks. It is expected to have an impact on about 1.1 million people.

Component 2: Septage Management would expand current services through provision of fecal tankers, two septage treatment plants, and safe land-disposal of treated septage. It is expected to have an impact on about 3.3 million people.

Component 3: Technical Assistance would support the above physical investment activities and assist MWCI in preparing its follow-up programs for wastewater and sanitation improvements.
GEF Alternative Scenario

GEF funds would support a significant enhancement of the MTSP and the Private Sector Support to MWSS Financial Rehabilitation through a program of support to the implementation of the Manila Bay Coastal Strategy. With GEF support, water pollution control institutions in Manila would review overlaps in their responsibilities, develop suitable and controllable water quality and sewage treatment standards, coordinate and integrate water pollution control existing master plans and investment programs, and implement MTSP-tested innovations within these plans.

Without GEF, such development in standards, integration, and innovations these reviews, coordination, and innovations would not be implemented within the three waterbodies, and the potential for replication on a full Manila Bay and region-wide scale would not be available on a full Manila Bay region-wide scale. TheseSuch indispensable institutional and technological efforts are not funded under the baseline project because they are sensitive, even when recognized by those involved as necessary. Typically they would not be carried out by any sector agency in the Philippines.

Following is a summary of the proposed additional three GEF components. For the purposes of this project, the definition of watershed area consists of the Laguna Bay and Pasig River drainage basins, as well as the respective coastal waters under the administrative jurisdiction of cities and municipalities within MM (hereinafter watershed area or watershed).:

GEF Component 1: Integrated management system for Manila Bay, Pasig River and Laguna Lake watershed area.s.

Presently, as a result of historical development, a number of agencies have are active in the Manila Bay watershed managementregulatory authority and operational responsibility within the watershedthree waterbodies area:. The Manila Waterworks and Sewerage Systems (MWSS) collects and treats sewage; the Department of Works and Highways (DPWH) provides drainage and flood control; the Pasig River Rehabilitation Commission (PRRC) rehabilitates the Pasig River through a package of policy reform agenda and investment projects; the Laguna Lake Development Authority (LLDA) regulates water quality in the lake; the Metropolitan Manila Development Authority (MMDA) coordinates all metro-wide services including water pollution control; and the Department of Environment and Natural Resources (DENR) enforces environmental regulations and water pollution control. In addition, the Local Government Units (cities, municipalities-LGUs) approve any sector activity within their jurisdiction. Each authority has its own strategy, action plans, administrattionive mechanism, management responsibilities, and priorities for sustainable development and environmental management. In the current practice, coordination and convergence among the players are found, if at all, onin a case-by-case activity-based basis.arrangements.

The proposed component is aimed at formalizing an institutional and operational linkage within the watershed area among all the players mentioned above. within the watershed area2involved in the management of the three key water bodies. It will establish a partnership mechanism that will ensure coordinated implementation of integrated approaches to the management of the interconnected watersheds. It will unify current fragmentation and overlaps in jurisdictional boundaries, plans, policies and investment programs. Specifically, convergence mechanisms will be forged along the following strategic areas: (i) policy, regulatory and investments programming; (ii) development and implementation of water quality strategies including the establishment of allowable discharge loads to contributing rivers, consistent with the DENR and ASEAN freshwater and marine water quality standards; (iii) attainment of water quality improvement and environmental sustainability; (iv) institutionalization of mechanisms for increased private sector and stakeholder co-management; and (v) capacity-building and knowledge sharing.

GEF Component 2: Water quality standards and investment program for Manila Bay, Pasig River and Laguna Lake watershed areas.

At present all MM water bodies are heavily polluted and any pollution control imposing strict effluent quality standards would be unreasonable. The proposed component is aimed at defining required effluent and water quality within a time frame of several years, recognizing the current conditions and proposing gradual improvements to a status acceptable from an environmental, health and economic point of view. The component will establish a basin-wide assessment of medium and long-term allowable pollution loads that each body can assimilate without causing violation of the desired water quality conditions, and ultimately, bring the watershed area three water bodies into compliance with the national Clean Water Act standards. Within and across the water bodies, Mmethods will be identified to assess the interconnectivity among the three water bodies and the resulting impact on current quality conditions, including hotspots, and priority sectors and , and conflicting uses. (eg. Laguna Lake as source of water supply and recipient of sewage), and establish tTheAppropriate functional uses and water quality standards, taking into consideration ecological and socio-economic factors, will be project will establishedhe the most appropriate functional uses and water quality standards within major sub-basins of the three waterbodies within the watershed area3, taking into consideration all ecological and, socio-economic factors. Proposed allowable pollution loads will be reviewed and agreed with implementing agencies and the local authorities.

The agreed standards would provide the basis for the development of a coordinated and integrated pollution control investment program in the watershed. The program will define strategies and investments to be carried out by each involved agency in the watershed to achieve the most cost-effective and environmentally acceptable impact on pollution control. Appropriate options and, approaches and measures will be considered during modification of the various existing master plans, to ensure everything is integrated into one watershed investment program. Proposed modifications of respective master plans and tThe final integrated investment program will be reviewed and agreed with implementing agencies and the local authorities.
The methodology developed and applied in the Manila Bay, Pasig River and Laguna Lake watershed will be packaged and shared as a ‘good practice in integrated watershed management’, for replication in the six major watersheds of Manila Bay, as well as elsewhere in the Philippines and the region. A replication strategy for integrated watershed management, including an investment program for the Manila Bay region, will be developed as an output of the project.

GEF Component 3: Public and private sector investments in priority sewerage and sanitation projects.

This component will address the following: ia) the pollution problems of the Pasig River, Manila Bay and the Laguna Lake and the operationalization of the Manila Bay Coastal Strategy to mitigate the and manage direct and indirect discharges of contaminants to river and coastal waters; ii b) meeting water quality objectives of the three water bodies, which may not necessarily fall within the current scope of the MTSP; iiic) the MTSP and its planned sewerage expansion to consider the hydrological and ecological linkages among the three water bodies, as well as identified “hotspots” and non-attainment areas for sewage and septage; and ivd) the Clean Water Act and related effluent standards for the three water bodies and the implications to MWSS operations.

This component will leverage public-private sector investments, which will initially be carried out within the identified hotspots in the east concession area of the Manila Water Company, Inc. (as delineated under the MTSP), but will subsequently cover the entire ecosystem of the three water bodies. Areas of investments include MTSP priorities such asincluding: (1) the construction of sewage pipelines and treatment plants (STPs); (2) upgrading of the existing primary treatments; and (3) design and construction of plants for the joint treatment of sewage and septage; and (4) specific to Pasig River, the use of phytotechnology/ constructed wetlands along the river.
The MM legislation mandates that each house be provided with a septic tank to remove solids. The septage is trucked by the concessionaires and independent providers to specialized treatment plants for treatment and later disposal. Since the core of the MTSP’s master plan is this provision of a number of small-scale sewage treatment plants (STP) instead of one central facility, an innovative extension would be to use the STPs for treatment of septage as well. This would ia) reduce long-distance transport of septage to the specialized treatment plant; iib) reduce the number of septage tankers per district; iiic) increase the overall volume of septage treated in MM; and div) create incentives for independent private providers to properly dispose septage through STPs located.
Treatment of septage by STPs has been tried before but not in MM. The design of STPs must discuss the exact amount of septage to be treated in the plant, which in turn will determine the parameters of the treatment process. Also, while separate pretreatment of septage may not be required if a limited amount of it is discharged to an interceptor upstream of the plant, some pre-treatment facilities will be necessary to accept greater septage loads from septic tankers. Adaptation of designs from elsewhere is difficult since the septage characteristics vary widely between countries for reasons such as climate, user habits, septic tank size and type, and servicing frequency. The design for MM must be based on actual pilot tests and practical experimentation. Once proved successful, it is relatively easily replicable in each STP within MM, including the MWSI service area.
This component also includes: i(a) review and identification of independent providers of septage removal and transportation, and determination ofe likely sources of financing for upgrading the trucks to a minimal acceptable standard in order to obtain renewal of permission; ii(b) provision of technical assistance to private small-scale septage operators and training to improve current practices in hauling septage; iii(c) provision of assistance to the MWSS-Regulatory Office in expanding the current scope of the Public Assessment on Water Services (PAWS) already institutionalized to cover sewerage and sanitation services to, among others, permit performance assessment and evaluation of obligations specified in the Concession Agreement of MWSS with the MWCI and MWSI; and iv(d) organization of knowledge dissemination workshops for watershed agencies on results of the experiment.

  1. Sustainability (including financial sustainability)

The MWCI is strongly committed to the targets for sewerage and sanitation stipulated in its concession agreement. The project would help to achieve those targets. Since the start of the concession in 1997 MWCI maintains good and steadily improving standards of service and complies with service coverage targets. MWSS has been fully supportive in planning the project implementation, having even succeeded in obtaining concurrence from involved community leaders and heads of local governments. MWCI is in good financial health, and financial projections indicate that that status will be maintained in the future after implementation of the proposed project. Also, the partnership agreements among the watershed institutions that will be established under the GEF project will utilize existing governance structures within the identified basins. These agencies will continue to implement activities within their mandates, but with some enhancement of the processes expected to take place in the course of project implementation. Sustainability and mechanisms for replication will be mainstreamed within these structures as well as through their existing programs. Financial self-reliance will also be ensured given that project additionalities are still within their respective spheres of influence.

  1. Replicability

The proposed GEF-supported activities in MM have significant scope, opportunities and avenues potential for replication in the Philippines and throughout East Asiaon two levels: i) the institutional mechanism, and ii) the joint septage-sewage treatment technology.

. Replication of a process that streamlines institutional formation in a sector and integrates investment planning in that sector, though not as obvious as the replication of a technology, has potential in the six other major watershed areas of the Manila Bay region, as well as elsewhere in the Philippines and elsewhere in Asia. The Manila Bay is already institutionalized as one of PEMSEA’sthe regional demonstration sites and is linked with the GEF SCS. The Laguna Lake, through its apex institution the LLDA, has become partner to an international network of institutions and organizations sharing common concerns. The Pasig River is recipient of significant donor support, notably from ADB, and DANIDA, and is an important indicator of success of pollution initiatives. The unique institutional partnership to be forged by the project represents an area that has the potential to provide working models of a partnership, with projects implemented on the ground that will benefit other basins in the country, region and the world.

However, it should be noted that the situation in MM, particularly the set up with the concessionaries, is special and not replicable as is in other place.

The replication of joint septage-sewage treatment technology , on the other hand, has tremendous prospects. potential within the Manila Bay region, the Philippines, and throughout all of Asia. On average, based on the 2000 census, an estimated 83 percent of the households in MM were reported to have septic tanks. The percent coverage translates to roughly 1.4 million of the 1.7 million households with access to septic tanks which would require desludging every six years. With the currently limited capacity of the MWCI and MWSI as well as private contractors to collect and treat septage, there is huge market potential for a small-scale and joint sewage and septage treatment facilities.

includequality and quantity

With regards to replication in general, pProject workshops will specifically provide for the sharing of knowledge, skills, and best practices in ecosystem-based management approaches, with partners and communities within and outside the watershed. Representatives from PEMSEA will be invited to attend and help disseminate the experience and workshop documents. Conversely MTSP representatives will participate in conferences sponsored by GEF and PEMSEA, such as the biannual GEF International Waters Conferencegress and the PEMSEA’s triannual East Asian Seas Congress.

In addition to the project-funded replication activities described above, the overall Program will also include separately funded-activities to disseminate and promote the adoption of various technologies and pilot projects financed under the Program.

The scope, opportunities and avenues for replication is broad and will actively be pursued within the country, at the regional and global levels. The Manila Bay is already institutionalized as one of the regional demonstration sites and is linked with the GEF SCS. The Laguna Lake, through its apex institution the LLDA, has become partner to an international network of institutions and organizations sharing common concerns, as one of the largest lakes in Southeast Asia, one of the most vital inland bodies of water in the Philippines and as the 18th member of the International Living Lakes Network. The Pasig River is recipient of significant donor support notably from ADB, and DANIDA and is an important indicator of success of pollution initiatives. The unique institutional partnership to be forged by the project also represents one area that has the potential to provide working models of a partnership, with projects implemented on the ground that will benefit other basins in the country, region and the world.

  1. Stakeholder Involvement/Intended Beneficiaries

There are multiple beneficiaries for the GEF activities. First, the population within the watershed and coastal ecosystem would benefit from improved quality of water, reduced health risks from contaminated water, and a better environment overall. Second, Local Government Units, which, as mandated under the CWA, are required to prioritize the establishment of sanitation facilities and provide counterpart support (land, O and M) in the construction, upgrading and rehabilitation of required facilities. Third, are the private sector, which will be accorded increased exposure. to the sector. And finally, government agencies and authorities within the three primary bodies of water, including development aid agencies.

During the preparation of the proposed project, there will be consultations with all the key stakeholder groups mentioned above. and a stakeholder engagement plan will be developed during the project preparation stage (PDF grant). The results of the consultations will be recorded and analyzed, and a stakeholder engagement plan will be produced as a specific block-B activity.

D -– Financing

Total Estimated Project Cost: US$185 million

1. Counterpart Funding: US$35 million

2. World Bank: US$145 million

3. GEF: US$5 million

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