SUMMARY ENVIRONMENTAL IMPACT ASSESSMENT

COASTAL COMMUNITY DEVELOPMENT AND FISHERIES RESOURCES MANAGEMENT PROJECT IN THE REPUBLIC OF INDONESIA

June 1997

CURRENCY EQUIVALENTS (as of June 1997)

Currency Unit Rp1.00 = $1.00 =

Rupiah (Rp) $0.00041 Rp2,426

The exhange rate of the rupiah is determined by Bank Indonesia under a system of managed float.

ABBREVIATIONS DGF EIA GRT IEE MCS MPA PCO PIU REA SEA T Directorate General of Fisheries Environmental Impact Assessment Gross Tons Initial Environmental Examination Monitoring, Control and Surveillance Marine Protected Area Project Coordinating Office Project Implementation Units Resource and Ecological Assessment Socioeconomic Assessment Tons

NOTES In this Report, the symbol $ refers to the US dollar.

CONTENTS

Page

Map A. B. C. Introduction Description of the Project Description of the Environment 1. 2. 3. 4. 5. 6. Prigi, East Java Muncar Lombok, Nusa Tenggara Barat Tegal Sari, Tegal, Central Java Bengkalis Island, Riau Socioeconomic Profile of Coastal Communities at the Project Site

ii 1 1 4 4 5 5 5 6 7 8 9 11 14 15 16 16 16 17 18

D.

Anticipated Environmental Impacts and Mitigation Measures 1. 2. Beneficial Impacts Potential Adverse Impacts and Mitigation Measures

E. F. G.

Alternatives Cost-Benefit Analysis Institutional Requirements and Environmental Monitoring Plan 1. 2. Institutional Requirements Monitoring Program

H. I.

Public Involvement Conclusions

A.

Introduction

1. This Report summarizes the environmental impact assessment (EIA) of the Coastal Community Development and Fisheries Resources Management Project in Indonesia. The EIA and this summary EIA were prepared as part of the Projects feasibility study by Pacific Rim Innovation and Management Exponents, Inc. (PRIMEX) in cooperation with the Directorate-General of Fisheries (DGF), the Dinas Perikanan at the Project sites, and the Pusat Pengembangan Agribisnis (PPA), Jakarta. 2. The Project was initially categorized by the Asian Development Bank as an environmental category B project requiring an initial environmental examination (IEE), which was undertaken during the early stages of the feasibility study. Subsequently, the Bank required that a full EIA be done based on the IEE findings, which indicated the potential for major significant environmental impacts associated with construction of two breakwaters and dredging at two harbors. B. Description of the Project

3. The Project arises from the need to address key issues confronting the Indonesian fisheries and coastal resource sector, and respond to Governments request for assistance in meeting objectives, strategies, and targets for the sector as embodied in the Sixth Five-Year Plan (REPELITA VI). The two most critical issues are depletion of coastal resources and the pervasive poverty and social disadvantages of coastal communities. These two issues are closely interlinked in a vicious cycle whereby poverty drives the coastal communities to increase fishing pressure that, in turn, leads to depletion of coastal fisheries resources. Continuous deterioration of coastal resources results in reduced fish catch and income of fishers, thus contributing to increased poverty in the coastal communities and perpetuation of the cycle. To break the cycle requires introducing and institutionalizing coastal resource conservation and management measures to ensure resource sustainability over the long term, and the introduction of supplementary and alternative livelihood initiatives to raise income levels and improve the living conditions of coastal dwellers. 4. The primary objectives of the Project include (i) promoting conservation and sustainable management of coastal fisheries resources; and (ii) reducing poverty in coastal areas by providing opportunities for increasing incomes and living standards of coastal communities. The Project scope includes activities intended to (i) control fishing efforts within environmental limits through the establishment of a coastal fisheries licensing system and the adoption of community-based coastal resources management measures; (ii) increase incomes of coastal fishers and facilitate their access to alternative livelihood or income-augmenting opportunities; (iii) improve the living conditions of selected coastal communities through the provision of necessary social infrastructure; (iv) rehabilitate facilities at selected fish landing centers to improve environmental and sanitary conditions as well as product quality; and (v) strengthen the capabilities of coastal communities and National Government agencies and local government agencies concerned with fisheries resource management and conservation. 5. The Project will cover four sites, namely (i) Prigi and Muncar in East Java, a deep ocean area; (ii) Lombok in Nusa Tenggara Barat, a coral reef island; (iii) Tegal Sari in Central Java, a densely populated and heavily fished, shallow coastal area; and (iv) Bengkalis Island in Riau, an island with significant mangrove forests. It will comprise four components: (i) coastal fisheries resource management; (ii) community development and poverty reduction; (iii)

2 environmental improvement of small-scale fish landing centers; and (iv) institutional strengthening and support services. 6. The coastal fisheries resource management component aims to rationalize and regulate the use of coastal fisheries resources, and conserve fish habitats at selected Project areas with the active participation of coastal communities. It will also address the fisheries management needs of the country through the enhancement of fisheries information, licensing and regulation, and community-based law enforcement, referred to as coastal monitoring, control, and surveillance (MCS). The major activities to be carried out under the Component are: (i) conduct of participatory resource and ecological assessment (REA) and socioeconomic assessment (SEA) at the identified Project sites to collect essential benchmark information on the sites which will provide the basis for the preparation of Coastal Resource Management (CRM) plans; establishment of a computerized resource and ecological data base at the Project sites, consisting of data collected through the resource and ecological assessments and the socioeconomic assessments at the Project bays as well as fisheries statistical data collected at fish landing sites, and establishing of linkages between these data bases and the DGF's central data base (SIMKANNAS); design, development, and conduct of an intensive public information and education program to create or enhance public awareness of the value and benefits of coastal and fisheries resource management; drafting and finalization of CRM plans for the priority Project sites using data gathered through (ii) above, and with the active involvement of the various stakeholders; and implementation of CRM interventions, including resource management measures such as mangrove reforestation, establishment of marine/fish sanctuaries and artificial reefs, and erosion control; community-based coastal fisheries monitoring, control, and surveillance; and fishing effort diversification and creditsupported alternative livelihood activities undertaken as part of the Project's Community Development and Poverty Reduction Component.

(ii)

(iii)

(iv)

(v)

7. The community development and poverty reduction component will promote nonfishing income generating activities and improve the existing social infrastructure at the Project sites. It aims to wean coastal fishers away from fishing activities, and consequently reduce dependence and pressure on the coastal fish resources. Initially, community organizing and social preparation activities will organize coastal fisheries in the target communities into selfreliant cooperatives and associations to prepare them for subsequent training on various Project themes, including (i) capacity building, cooperation, and value formation; (ii) credit access, management, and utilization; (iii) microenterprise and livelihood development and management; and (iii) savings mobilization and capital formation. Social preparation activities will include (i) poverty mapping, perception, and problem analysis; (ii) technical service and advice, and skills training; (iii) linking organized fishers with formal sources of credit and providing savings mobilization; and (iv) introducing and implementing microenterprise and

3 income diversification projects in the coastal communities. Social preparation will be a continuous process undertaken during and following Project implementation. 8. After the initial social preparation, local government agencies in collaboration with local community organizations, agricultural extension services centers, and extension agents will (i) assist organized cooperatives and associations in identifying, developing, and implementing microenterprises and alternative livelihood projects; (ii) provide fishers with extensive technical support services; (iii) promote group savings mobilization; (iv) link potential fisher-borrowers to existing formal microcredit schemes; and (v) provide marketing assistance. The Project will also provide selected fishing villages with better access to social facilities and services through (i) improvement of about five kilometers of village-to-market roads at each site; (ii) installation of clean water supply facilities; (iii) construction of drainage systems, public toilets, waste disposal systems, and meeting halls; (iv) preparation and linkage of communities for effective participation in existing housing credit schemes; and (v) provision of mobile health units. 9. The environmental improvement of small-scale fish landing centers component will upgrade and rehabilitate facilities at selected fish landing sites to (i) improve sanitary and environmental conditions; (ii) enhance the quality and value of fish production; and (iii) reduce physical and quality losses. The scope of improvement work at each site will vary depending on the actual conditions and requirements at each fish landing center. 10. At Prigi, clean water supplies for the fish landing will be installed, navigational equipment for the harbor fitted, MCS facilities provided. A two-arm breakwater is to be constructed, and a short wharf and auction hall access will be built. About 120,000 cubic meters of soil will be dredged to attain sufficient water depth at the harbor basin and access channel. The existing jetty will be fully renovated. Fish handling and small-scale processing facilities (clean water supply, paved floor, sanitary containers, and chilled storage) will be provided at Muncar. These facilities will reduce fish production losses from spoilage and minimize environmental pollution. 11. At Tegal Sari, the entire harbor area requires proper drainage and a waste disposal system. Tanks, filters, and pumps will be installed to provide ample clean water. The fish drying areas will be paved, clean water supplied, and hygienic rocks or permanent solar driers provided to improve sanitary and environmental conditions. The existing auction hall will be rehabilitated and provided with the necessary equipment to reduce fish losses. The harbor basin will be reshaped, dredged, and deepened, and a new deeper entrance will be cut through the beach into the sea. A breakwater will be installed. The fish landing wharf and landing place area require restructuring to provide a level access from pier to market, and berthage alongside the wharf. At Bengkalis, existing clean water supplies will be expanded and additional supply systems installed. Sanitary containers, a small-scale ice plant and cold storage, and a clean processing area will be provided. A wooden jetty will be constructed. 12. The institutional strengthening and support services component will equip the executing, implementing, and participating agencies, as well as the participating community organizations, with the skills required for Project activities and the attitudes necessary to implement new concepts and programs. The main interventions will include training of concerned personnel in these various agencies and provision of technical assistance and logistical support to DGF, Dinas Perikanan, and local community organizations in the following areas, among others: (i) preparation and implementation of CRM plans; (ii) streamlining or

4 improvement of the fisheries statistics/data collection and management system at the provincial/district level; and (iii) stricter enforcement of fisheries regulations. The Project will provide consulting services to assist the Executing Agency and implementing agencies to establish an effective project management system and to strengthen overall institutional capability and efficiency. 13. The Project will be implemented over six years (1998-2003) at a cost of approximately $75 million equivalent, and will consist of two phases. The first phase, covering a period of one to two years, will include resource assessment activities, detailed socioeconomic surveys, market analysis, community organizing and social preparation, cooperative development, information and education campaigns, preparation of site-specific CRM plans, preparation and development of specific alternative livelihood and microenterprise projects, detailed engineering design, and initial institutional strengthening activities. The second phase will include the implementation of site-specific CRM plans, livelihood and income-generating programs, social and fisheries infrastructure improvement activities, and institutional strengthening. DGF will be the Executing Agency. C. Description of the Environment 1. Prigi, East Java

14. Prigi Bay faces the Indian Ocean along the south coast of Java. Five fishing villages are located along the bay. The coast is a narrow flat area surrounded by hills and dominated by fertile and productive rice fields. The most common perennial vegetation is coconut. Bird species common to Indonesia comprise most of the observed fauna. Groundwater along the coast is fresh, and there is no reported saltwater intrusion. Water for the existing fish port is presently obtained from groundwater. Two rivers flow into Prigi Bay, Cengkrang River, which discharges into the west of the bay, and Bendo River, which discharges into the east of the bay. Neither river is particularly large, but Cengkrang River has a much larger drainage area (80 km2) compared to Bendo River (7.5 km2). The mouth of Bendo River, located near the fish port, serves as a boat shelter. 15. Coastal currents in the bay are not very strong. The longshore current goes back and forth along the coast, with velocities of 0.30 to 0.50 meters per second. Overall, the coastline is stable because of the supply of sand from the rivers and because longshore sediment transport moves back and forth along the coast, creating a pocket beach. Water quality in the bay is generally within the standards set by the Government. 16. There are no outstanding biological resources in the area. Mangroves are not found around Prigi Bay. No coral reefs or sea grass beds are known to occur, though accounts from local fishermen indicate the possible presence of a dead reef near the mouth of Prigi Bay. Prigis coastal fisheries is typical of Southeast Java. Exploitation of small pelagic fish has increased steadily during the past 20 years with the introduction of purse seiners, and there are indications that the purse seine fishery is approaching maximum capacity. Conversely, some species, such as tuna, are underexploited. Catches have dropped steadily from 8,040 tons (t) in 1993 to 4,483 t in 1995, and the total number of fishers dropped from 6,040 in 1994 to 5,925 in 1995. Fishing is a part-time, seasonal activity for most, with only 1,185 full-time fishers in 1995. At present, less than 20 percent of the catch is sold fresh, with the remainder sold as fishmeal, boiled (pindang), or sun-dried. The value of the fish catch could rise by 10-50 percent through improved handling procedures and improved sanitary conditions at the fish landing areas.

5 2. Muncar

17. Muncar is a large fishing village located in Pangpang Bay (in the sub-district of Muncar) at the southern end of Bali Strait. The bay is naturally protected from strong waves and currents. It is shallow and has several dead coral reefs at its mouth. The coastline is 13 km long, of which some 5.5 km are occupied by the fish landing area. With over 10,000 fishermen registered in 1994 and a total population of 115,630, Muncar is the largest fishing community on the east coast of Java. Muncar has grown rapidly during the past 20 years into a fish processing center. 18. The main fish resource is the Bali Strait Indian oil sardine (Sardinella lemuru), which is caught by purse seiners. This is the only single-species fishery in Indonesia and is seasonal, with peak catches occurring from September to March. The major problem faced by the Muncar purse seine fleet is the quality of the fish landed, over 75 percent of which is unsuitable for canning due to poor handling and storage on the vessels. Fish landing and support facilities are also inadequate. 3. Lombok, Nusa Tenggara Barat

19. The coastline of East Lombok is 220 km long, of which some 126 km belong to the Keruak sub-district. About 60 km (30 percent) of the coastline is cliff and the rest is sloping land. Keruak has excellent potential for brackishwater fisheries, and covers an area of 605 ha. It also contains a 44-ha protected area. 20. The bed of the Bay is sloping, with an average depth of 10 m. There is an abundance of reefs in the water around the site, with potential for fish, shrimp, and seaweed culture. Fishers in the area have switched successfully from fish capture to seaweed culture. The coastal waters cover an area of 4,400 km2, of which 32 km2 is reef area. Of the nearshore waters, 800 ha are used for seaweed culture, 90 ha for pearl culture, and 40 ha for sea cucumber culture. Fish production in 1994 was 12,333 t, consisting of five major species. 21. The number of fishers in Keruak has grown from 4,564 in 1991 to 10,234 in 1995, while marine fish landings have dropped from 14,944 t in 1991 to only 7,363 t in 1995. The provincial government is formulating an integrated area development plan for the East Lombok district. The plan will encourage more private sector investment in the area, particularly in fish processing and marketing, as well as in the tourism business. 4. Tegal Sari, Tegal, Central Java

22. Tegal Sari is a riverside landing adjacent to the present commercial port at Tegal, and serves small fishers operating along the northern coast of Java. Major land uses in the area include settlements and brackishwater shrimp ponds (tambak) with no remnant of natural mangrove forest. Mangrove trees have been planted along the riverbanks and dikes of the shrimp ponds through a regreening program. The coastal vegetation is predominantly grass, remnant mangrove, and coconut. Floral and faunal resources along the Tegal Sari coast are not considered to be of special conservation value. 23. The shoreline is affected by west to east currents during the wet season (November to February) and east to west currents during the dry season (April to August).

6 Longshore sand transport is blocked by the breakwater at the Tegal commercial port, resulting in accumulation of sand deposits at the commercial port entrance. 24. The main drainage in the area is the Sibelis River. Its downstream segment is being used as a port basin for the Tegal Sari fish port. The mouth of the river serves as entrance to the fish port, and is located just beside the west arm of the breakwater of the Tegal commercial port. The water in the river along the shoreside of the Tegal Sari fish port is heavily polluted by wastes coming from the fish port itself and from households located along the riverbank upstream of the fish port. Flushing of the harbor basin is impeded by the flat river gradient and the narrowing of the channel outlet due to sand and silt deposition. Siltation of the river has reduced its flow, which contributes to twice-annual flooding on aveerage of the banks and surrounding settlements. The municipality of Tegal does not have an abundant supply of freshwater, and relies on supplies from the neighboring district of Brebes. Groundwater in the area is saline, and the extent of saline intrusion is believed to extend up to 1.5 km inland. 25. There are approximately 8,000 fishers in Tegal. The fishing communities in the Tegal area have experienced dramatic changes in the patterns of resource use over the past 20 years. The introduction of the purse seine in the mid-1970s catalyzed increased effort and efficiency. Purse seiners from Tegal have been making longer trips to Kalimantan and Sulawesi as pelagic resources close to Java have become depleted. Landings of small pelagics at the Tegal Sari site have dropped dramatically from 4,898 t in 1992 to 1,788 t in 1995 due to declining facilities. Only boats of less than 15 gross tons (grt) land at the Tegal Sari fish port. The fish landing area is congested and the facilities are very poor. The landing and service wharf, water supply, and other support facilities are inadequate. The basin is no longer able to accommodate the present 353 mechanized fishing boats of up to 15 grt. Nonetheless, the local government and Dinas Perikanan plan to develop Tegal Sari as the base for all local fishing vessels under 30 grt. This would leave the main commercial harbor free for development as a container cargo port, with only the larger purse seiners still unloading fish there. 5. Bengkalis Island, Riau

26. Bengkalis Island is a flat plain separated from Sumatra by Bengkalis Strait. About 95 percent of the Bengkalis is covered in tropical lowland forest and swamps. Many small rivers empty into the coastal waters. The Bangkalis subdistrict is included in Subregion I, which is devoted to the production of export quality agricultural commodities, horticulture, food crops, animal husbandry, and shrimp culture. Although extensive mangrove forests remain on the island, the reduction in mangrove forest cover has been severe. Over 50 percent of the Class 1 mangrove area has been lost since 1975, and there is a need to reforest some 3,000 ha of former mangrove land. Part of the coastal area is used for brackishwater shrimp ponds. Coastal deforestation for fuelwood and other uses has destabilized shorelines on Bengkalis and neighboring islands, and increased erosion on exposed coasts. In some areas, seawalls need to be constructed to stop shoreline loss of more than one meter per year. 27. Fishers operate mostly in the coastal zone, using gill nets and stationary gear, indicative of the low socioeconomic status of the area. Fishing in cooperation with an agent or intermediary is common practice. The operating cost for each fishing trip is shared equally, but two-thirds of the proceeds from fish sales go to the middleman. Fish catch in offshore waters is limited because of the lack of capital and equipment. In the nearshore waters, there is evidence that the catch per unit effort has declined from an average of 10 kg/fisher/day in 1991 to half

7 that amount in 1995. Because of overfishing, there has also been a shift in catch composition from economically important species to less valuable ones. 6. Socioeconomic Profile of Coastal Communities at the Project Sites

28. Households in the coastal areas have a relatively large family size, with 66 percent of the socioeconomic survey respondents reporting from 5-8 members. The average household size for all sites was six. The male-to-female ratio in the households is 47:53 for all sites. By age, 47 percent of the population belongs to the working age group, ranging from 2064 years old. 29. For all sites, 44 percent of the fishing households could be categorized as poor, earning a total income equal to or lower than the poverty threshold income of about Rp384,000/capita/yr. By site, the largest proportion (70 percent) of poor respondents was reported in Lombok, while the least number of households in the same category was reported in Prigi. 30. More than 90 percent of the population at the Project sites have had formal education. The level of education, however, is relatively low, with more women (20 percent) having reached secondary education levels than men (nine percent). For all sites, the respondents had an average of six years of formal education. 31. Of the respondents, 56 percent reported fishing as their primary source of income; 26 percent are fish processors while 12 percent are fish traders. Other primary occupations are fishpond operation, and seaweed farming and processing. Except for Lombok, fishing is the primary occupation for most of the respondents in the selected sites. For Lombok, 35 percent reported seaweed farming followed by fish processing. The majority, or 72 percent, of the women respondents reported fish processing as their main source of income, followed by 24 percent who are fish traders. To augment income from their primary occupation, some family members are engaged in other income-generating activities, including handicrafts, tailoring, crop farming, employment in government agencies or in real estate marketing, and working as hired laborers. 32. Fishing households spend a total of about 18 person-hours in economic activities and 4.5 hours in domestic activities daily. Among the fish traders, daily economic and domestic activities require a total of 16 hours and 8.5 hours from husband and wife, respectively. The fish processing households spend the longest time in economic activities, amounting to an average of 21 hours, with the husband, wife, and son involved in the activity. The domestic activities, therefore, necessitate the involvement of the sons and daughters, amounting to a total of almost 7 hours. In general, household heads spend longer hours engaged in economic activities than their wives. On the other hand, women spend a longer time in domestic activities than men, except for fish processing, which actively involves the women. 33. Based on these figures, fishing households would have at least 10 slack hours each day for additional economic activities. While male fish traders and processors spend about 12-14 hours per day in carrying out business-related activities, there is considerable potential for women to engage in microenterprise activities, especially those which may be undertaken within the household premises (e.g., seaweed candy making, terasi and kerupuk making).

8 34. At all the sites, 79 percent of the fishers have boats of their own; 14 percent reported owning two boats, while 11 percent had no boat. Except for Bengkalis, the most common fishing gear used at all sites is the purse seine. In Bengkalis, the longline is the most commonly used gear. 35. On average, fishers at the four sites go fishing for a total of 10.6 months a year. The peak fishing season lasts 5.3 months, the lean season 2.7 months, and the transition period 2.6 months. In Lombok, fishers fish only during the peak season, which lasts for seven months. Fishers in the three other sites fish almost the whole year round. Almost all (99 percent) of the fish caught by fishers is sold, with one percent going to the crew member and a negligible amount consumed at home. 36. Of the respondents, 38 percent reported having availed of credit during the last 12 months. Among those who availed of credit, 60 percent obtained it from formal sources, and the rest accessed loans from informal sources. D. Anticipated Environmental Impacts and Mitigation Measures

37. Overall, the Project is expected to yield significant environmental benefits in terms of resource conservation, pollution abatement, and improvement of public health. Of the four Project components, the coastal fisheries resource management component and the institutional strengthening and support service component are expected to generate only beneficial impacts. The community development and poverty reduction component will generate mostly beneficial impacts, and the potential adverse impacts from microenterprises and alternative livelihood projects are expected to be minor. The environmental improvement of small-scale fish landing centers component also will mostly generate beneficial impacts. The exception will be the construction of breakwaters and dredging of harbors, which are expected to have moderate and, in the case of dredging, short-term impacts. The discussion below summarizes both the expected beneficial and adverse impacts related to Project design, location, and implementation. 1. Beneficial Impacts a. Impacts of CRM Activities

38. The adoption of CRM interventions, such as mangrove reforestation, marine/fish sanctuaries, artificial reef establishment, and erosion control are expected to result in fish stock rejuvenation and the rehabilitation of coastal habitats. This in turn is expected to promote increased fish availability and consequently increased fish catches and higher incomes to fisherfolk. The implementation of regulatory and control measures, such as the strict enforcement of a licensing system for small-scale fisheries, is also likely to result, over time, in increased fish stock and catches. 39. Two areas in East Lombok are proposed as marine protected areas (MPAs) to reduce fishing effort in critical habitats and promote investments in ecotourism. Both areas have good coral reefs that are being threatened by blast fishing and drift gill-netting. The Project will provide assistance in the development of MPA management plans, the identification and support of sustainable livelihood alternatives associated with MPAs, and the installation of moorings for dive boats to avoid anchor damage on the coral reefs. The establishment of MPAs will protect healthy habitats to sustain their productivity, replenish fish stocks in the vicinity, and

9 increase biodiversity. Fish production in the MPAs is expected to increase from the present average yield of 5 t/km2 in Year 1 to 11 t/km2 in Year 6, reaching a maximum of 20 t/km2 in year 13. Incremental fish production is calculated at 2.595 t in Year 6 and 6.366 t in year 20. 40. A total of 3,156 ha of land formerly under mangrove forest is targeted for replanting over the six-year implementation period. Allowing for a 75 percent reforestation efficiency rate, approximately 2,367 ha are projected to be effectively reforested with a total value of about Rp272 million at full development. Incremental benefits derived from mangrove reforestation and management are estimated at 1,483 ha of mangrove area saved from destruction as a result of the Project, with substantial but unquantified beneficial impacts on coastal fauna productivity due to improved coastal habitat. 41. Artificial reefs will be established in Lombok. Artificial reefs have proven effective elsewhere in creating new habitat for marine life where none existed before, or where the natural habitat has been destroyed. Through the artificial reefs, regeneration of fish populations is expected to occur over a targeted area of 8 hectares. Fish production is expected to increase in the target area from the present average yield of 5 t/km2 to 11 t/km2 in year 7. Maximum fish production (at 20 t/km2) that can be sustained with proper management is expected to be attained in year 13. Incremental fish production is calculated at 0.725 t in year 6, increasing to 1.566 t by year 20. b. Impacts of Livelihood Enterprise Development

42. The Project will provide the coastal communities with better access to social facilities, including (i) improvement of five km of village roads in each site or a total of 20 km for the four sites; (ii) provision of a mobile health clinic in each site; (iii) provision of freshwater supply; (iv) kampong improvement, including the construction of 9.5 km of drainage system, 120 units of public toilets, and 120 units of waste disposal systems at all the target sites; and (v) provision of other community facilities, such as community meeting halls. These activities will improve sanitation and hygiene, resulting in better overall environmental conditions in the villages. Improvement of training facilities will lead to upgrading of skills and avoidance of undesirable fishing practices. c. Impacts of Institutional Strengthening Activities

43. The establishment of the Project Implementation Units and of inter-agency cooperative mechanisms is expected to enhance the capability of local governments to address the complexity of fisheries management issues through a standardized implementation mechanism and strategy, the principles of which can be replicated elsewhere. The institutional capability of fisherfolk associations and cooperatives is expected to be strengthened through short-term training and hands-on experience in a wide variety of areas, including fisheries planning and management, data collection and analysis, financial planning, accounting, monitoring, and evaluation. 44. The organization of fisherfolk/fishfarmers into associations or cooperatives will empower them by ensuring their representation and participation in sustainable fisheries development, and transform them into responsible resource managers and users. It will also improve their access to credit for alternative livelihood or supplemental income-generating activities, enable them to increase their incomes, and equip them with skills in project

10 management and entrepreneurship in non-fishing occupations, thus widening their financial options and weaning them from capture fisheries. 45. A strategy adopted by the Project for the microenterprise development subcomponent targets women as major investors in alternative livelihood/microenterprise projects. Because women generally manage and control household funds, including the portion set aside for investment in microenterprises, the Project will train women in financial and credit management to improve their capacity and capability to manage household and business funds. Women will also be assisted in gaining access to existing Government-executed microenterprise credit schemes or provided with direct assistance for livelihood activities through the Project's inputs assistance program. The Project will also enable the upgrading of social infrastructure facilities and services, such as housing improvement and the provision of clean domestic water supply, waste disposal, and sewage systems, which will mean improved working conditions for women who usually engage in productive economic activities in the confines of their homes. Overall, the Project has significant gender-and-development objectives of empowering women through organization, training, credit, and livelihood support. As women are considered important stakeholders, the Project interventions were designed to enable the women to become full participants in, and beneficiaries of, the Project. d. Impacts of Physical Infrastructure Improvement

46. Physical infrastructure improvements will initially benefit boat owners and fish merchants, and eventually trickle down for the betterment of all fishery. Consumers are expected to benefit from greatly reduced incidences of food poisoning and higher protein value of fish products. In addition, with the installation of adequate water supply and sanitary facilities, the proposed improvements at the Tegal Sari and Prigi fish ports are expected to result in improved handling, improved product quality, and reduced waste, with substantial benefits to be realized in terms of increased economic returns, improved public health, and reduced pressure on coastal fisheries resources. 47. Fish port improvements are expected to benefit the local economy and enable smaller fishermen to exploit the Exclusive Economic Zone, with the result that the fish catch, which now depends heavily on nearshore resources, would eventually be stabilized. However, the Project itself will not support credit programs for the purchase of larger vessels. The MCS component of the Project is meant as a safeguard to ensure that fisheries development activities, including fish port infrastructure, do not lead to an unwarranted increase in fishing pressure. 48. Pollutants associated with port operations at both sites originate from vessel bilge water, oil, and grease coming mostly from vessels afloat in the harbor, domestic wastewater, and market area washwater. These sources of pollution are not being properly handled. The Project is not expected to appreciably add to the pollution load. Rather, it will provide support for pollution treatment and abatement. This will include proper handling of bilge water through portside collection and treatment and enforcement of restrictions against dumping bilge waste in the harbor. Structural and operational measures will also be implemented to control the discharge and disposal of oil and grease. Wastewater treatment systems will be provided at both Tegal Sari and Prigi fish ports. By providing waste management systems, the Project will significantly improve the present condition in the two fish ports, especially at Tegal Sari where the harbor basin is heavily polluted.

11 2. Potential Adverse Impacts and Mitigation Measures a. Impacts of Breakwater Construction on Sediment Transport and Beaches

49. Breakwaters generally trap sand on the updrift side of the shoreline, causing that side of the beach to prograde and the downdrift side to erode. At Tegal Sari, the predominant direction of the longshore drift is from east to west. The existing breakwater of the Tegal commercial port has already caused sand to build-up on the east side of the coast. Sand accumulation behind the east face of the existing breakwater has necessitated the lengthening of the arms to avoid choking off the commercial port accessway entrance. No recreational beaches or other beneficial human use activities that could be affected by beach erosion are located on the downdrift (west) side of the commercial port breakwater, nor are there any valuable ecological resources, so the erosion of the beach on that side has not caused adverse impacts. The proposed breakwater for the fish port at Tegal Sari will be located west of the present commercial port breakwater on the downdrift side of the present breakwater, and so is not expected to create additional beach erosion or siltation of the Tegal Sari harbor entrance. 50. For the Prigi fish port, improper design and construction of the proposed breakwater would significantly affect longshore sediment transport along the coast, adversely affecting recreational beaches located on the right side of the port. Feasibility-level design of the breakwater has adopted an orientation that is not perpendicular to the shore, but rather incorporates a curved alignment, thereby allowing sand to be transported past the structure and minimizing blockage of sediment transport. 51. During the detailed design of both breakwater structures, the longshore currents, wave conditions, and sediment transport patterns will be further studied as part of a follow-on environmental assessment focused on breakwater construction. The results will be used to refine the designs so as to ensure that significant environmental impacts are avoided. b. Impacts of Dredging on Water Quality and Beneficial Uses

52. At Tegal Sari, dredging activities will involve cutting into the Sibelis riverbed, portions of existing prawn farms, and the nearshore seabed (for the access channel). Dredged spoils typically will contain a combination of sand and gravel, suspended solids from clay and silt materials, and organic detritus dredged from the silted river. Since the Sibelis River does not drain an area of high industrial activity, the dredged materials are not expected to contain significant levels of industrial pollutants. 53. Impacts on water quality associated with the proposed dredging could affect fish and other marine organisms as well as shrimp ponds. To minimize these potential impacts, dredging activities will be carried out during the eastern monsoon season when coastal waters are calm and the direction of sediment transport is away from human use areas, thereby confining impacts to the immediate dredging area. Additionally, the water in the port area is already quite turbid, and dredging is not expected to cause significant additional deterioration in water quality. Silt curtains will be provided around sites that are used to pump seawater to prawn ponds. Spoils will be deposited in a low lying area surrounded by a dike. Rip-rap embankments, serving as sediment traps, will be provided around the reclamation sites prior to filling to contain the dredged-up material and prevent their escape to the surrounding water.

12 54. Some of the dredging spoils will be used to reclaim a five ha area west of the proposed breakwater, part of which is currently used for prawn farming. Use rights to the affected prawn farms are held by five farmers. Compensation will be provided by the local government, and funds for this purpose have been included in the Project budget. The overall impact of dredging operations at Tegal Sari, therefore, is expected to be moderate, short-term, and confined. 55. Associated with the dredging operations at Tegal Sari, a diversion is proposed which would shorten the distance of Sibelis River effluent discharging to the sea. This will alleviate flooding problems now experienced at the fish port and help to decrease the current accumulation of pollutants by diluting the river discharge. The diversion channel will occupy 4.7 ha of leased land. Compensation will be provided by the local government, and funds for this purpose have been included in the Project budget. The spoils will be used to increase the elevation of land surrounding the fish landing site to help alleviate past flooding problems. The spoils also may be used to strengthen and heighten dikes along the adjacent shrimp ponds. 56. At Prigi, dredging operations for the harbor basin will involve cutting into the shallow seabed. Based on geotechnical findings, the dredged material is expected to contain mostly sand and silt. The substrate has a relatively low silt clay content, and so sediment dispersal will be minimized. To minimize potential water turbidity impacts at the recreational beaches, dredging will be coordinated with construction of the breakwater so that the latter acts as a protective embankment to contain the turbidity. Other mitigation measures to be taken at Prigi are similar to those described above for Tegal Sari. 57. The excavation and dredging during construction of the seawall in Bengkalis will also cause short-term, localized, and minor impacts on water quality. Similar environmental precautions and mitigation measures will be taken at Bengkalis. 58. None of the dredging operations will affect coral reefs or other environmentally sensitive areas. c. Freshwater Supply

59. The improvement of the port facilities will create greater demands for water. At Tegal Sari, the present municipal water system is limited in capacity and cannot guarantee water requirements of the fish port. Because of the limited water supply, water for cleaning the fish port auction floor is currently taken from the nearby polluted river. It may not be feasible in the short term to expand the municipal water system or tap groundwater to provide for the water needs of the fish port. Therefore, during the detailed engineering design of the fish port improvements the Project will examine the use of seawater for the ports washwater requirements. This will involve pumping of seawater from an offshore intake point. The cost of providing clean water supply systems is included in the budget for the rehabilitation of fish landing facilities. 60. At Prigi, groundwater is pumped to a storage tank, for use as washwater. The used washwater is discharged into a nearby swamp, which serves as a stabilization pond. There is a danger that with greater demand for more groundwater to service the Prigi market area, the discharged wastewater could more easily percolate into the aquifer and contaminate the groundwater. At Prigi, groundwater may need to be supplemented by the development of suitable surface water sources. Detailed hydrological studies will be carried out to identify

13 appropriate alternative water sources during the detailed engineering design of the fish port improvements. d. Impacts on Biological Resources

61. The use of artificial reefs as fish habitat could be abused and cause overexploitation of already depleted fish stocks. To prevent this, the deployment of artificial reefs will be made on a site-by-site basis, and they will only be deployed in such situations where it is unlikely that they would be used as fish attractors, rather than for habitat enhancement. Where it is determined that artificial reefs will be beneficial, they will be established at some distance from existing healthy coral reefs in the area so as not to draw fish away from these ecosystems. 62. The Project strategy to shift effort away from overexploited small pelagics to the underutilized resources through fishing effort diversification could lead to further overexploitation of already overfished species. To prevent this unintended negative effect, the following steps will be taken: (i) local fishers will first be required to comply with restrictions against replacement of converted purse seine vessels; (ii) a licensing system will be established to regulate the number of vessels operating in coastal waters; and (iii) monitoring and enhancement efforts will be stepped up in coastal fishing grounds. Specifically, at each site where shifts in fishing effort are proposed, local fishers must agree to restrictions to additional vessels to replace converted seiners. In addition, the DGF and the Dinas Perikanan will establish a fleet management system that will prevent licenses being issued for new vessels to replace converted boats. The Project Implementation Unit will be responsible for monitoring the fleet situation in cooperation with the Dinas Perikanan. e. Potential Impacts from Microenterprises

63. Microenterprises involving processing of fish may increase the demand for fuelwood and thereby increase pressure on nearby forests. To prevent this from taking place, an information, education, and communication campaign will be conducted among the local communities to regulate the cutting of fuelwood for use in various fish processing activities. Communities using fuelwood will be required to replant mangrove and bamboo trees to replenish the stock, and the indiscriminate cutting of trees will be monitored and controlled. 64. Microenterprises, by their very nature, will be small scale and produce minor if any significant impacts. Nonetheless, the cumulative impacts of many small enterprises is of concern, and so environmental acceptability has been included in the selection criteria for proposed microenterprises. Initial environmental examinations will be done for each proposed microenterprise during the design stage. f. Social Impacts

65. The establishment of seabass cages in the river or strait at Bengkalis could lead to conflicts in resource use if not properly regulated. To prevent this, a local zonal development plan will first be prepared prior to the establishment of fish cages in the river or strait, which will allocate specific sites for mariculture. The communities will then be informed about the details and requirements of the zonal development plan. The operations will be monitored to ensure that these small-scale operations do not contribute to local increases in organic pollutants demand due to improper feeding and sanitation techniques.

14 66. Harbor improvements could attract fishermen from outside the area, thus increasing competition. With the capacity to accommodate bigger vessels, it will be important for the Project to ensure that the rights of the small fishermen are protected, e.g., by zoning the harbor, in the face of increased competition from larger operators. At Tegal Sari, it is not expected that fish port improvements there will lead to the deployment or arrival of larger vessels. The Central Java provincial fisheries office has adopted a policy to the effect that only small boats (<30 grt) will be allowed to use the fish port at Tegal Sari. Similar actions will be taken at Prigi under the coastal fisheries resource management and institutional strengthening and support services components if monitoring indicates a potential problem. E. Project Alternatives

67. With and without Project scenarios were investigated during the feasibility study, primarily regarding biological conditions in the coastal zone. Without the Project, coral reefs are expected to further decline, with good/excellent reef area decreasing from 62 km2 to 16 km2 and the fair reef area declining from 125 km2 to 75 km2 over a 20-year period, a decrease of 46 km2 and 50 km2, respectively. As a consequence of continued degradation of these reefs, poor reefs are projected to increase from 134 km2 to 230 km2 over the same period. In the with Project scenario, the good/excellent and fair reefs are projected to decrease to 41 km2 and 96 km2, respectively, over 20 years. Based on these estimates, incremental benefits in terms of total area saved from further degradation would be about 46 sq km2. 68. The incremental benefits derived from coral reef conservation and management under the Project are expected to further slow the destruction of the fish habitat. By the end of the Project implementation period, incremental fish production is estimated at 62 t and is expected to increase to 480 t in Year 20, with corresponding values of RP227 million and Rp1.4 billion, respectively. 69. As mentioned in Section D, artificial reef establishment is expected to increase the total volume of fish at the artificial reef sites by 1.6 t compared to the without Project scenario of 0.034 t by year 20, producing an incremental fish production value of Rp4.4 million. Similarly, establishment of marine protected areas is expected to increase the total volume of fish by 6.4 t by Year 20 at an incremental value of Rp17.9 million. 70. The amount of land in mangrove forest under the with Project scenario will be 47,000 ha by Year 20, compared to about 46,000 ha under the without Project scenario. This equates to a value of Rp1 billion of saved mangrove forest by Year 20. F. Cost-Benefit Analysis

71. The total Project cost is estimated at $75 million equivalent, comprising a foreign exchange component of $30 million and a local cost component of $45 million equivalent. Cost estimates, in $ million, are summarized below.

15

Project Component A. Base Cost 1. Coastal Fisheries Resource Management 2. Community Development and Poverty Reduction 3. Environmental Improvement of Fish Landing Centers 4. Institutional Strengthening and Project Management Subtotal (A) B. Contingencies 1. Physical 2. Price Subtotal (B) C. Interest and Service Charges 1. Interest During Construction 2. Commitment Charges Subtotal (C) Total Cost

Foreign Exchange 5.10 2.90 7.45 4.60 20.05 1.97 1.48 3.45 5.84 0.66 6.50 30.00

Local Currency 10.50 10.00 9.05 4.40 33.95 3.25 7.80 11.05 0.00 0.00 0.00 45.00

Total Cost 15.60 12.90 16.50 9.00 54.00 5.12 9.28 14.50 5.84 0.66 6.50 75.00

72. The Projects economic benefits are based on expected improvements in fish stocks and other aquatic resources as a result of improved coastal management and reduction of destructive fishing through effective MCS activities. The magnitude and timing of the benefits have been conservatively estimated. The Project is expected to yield an economic rate of return of 19 percent. 73. Environmental costs, including costs associated with mitigation measures and environmental monitoring have been included as an integral part of the Project budget. These include, for example, approximately $250,000 for the waste disposal systems to be provided at the fish landing facilities and $800,000 for clean water supply and drainage system. Regular monitoring activities, which will include monitoring of environmental impacts, have been provided a budget of $990,000 over six years. Information and training, which will include environmental awareness building, has a budget of $5 million. G. Institutional Requirements and Environmental Monitoring Plan 1. Institutional Requirements

74. DGF, as the Project Executing Agency, will have overall responsibility for environmental monitoring of the Project, through the Project Coordinating Office (PCO) to be set up within the Directorate of Programs, and in coordination with site-based Project Implementing Units (PIUs) to be established at the Dinas Perikanan TK II offices at the four sites. The PIUs will be headed by Site Managers and staffed by personnel from Dinas Perikanan TK II and other district government agencies, and assisted by Project Consultants. The PCO and PIUs will have adequate and qualified technical staff and will be provided with necessary equipment and vehicles. The PCO will be responsible for preparing consolidated environmental monitoring reports as part of the regular Project monitoring, with inputs from the PIUs. 75. Under the supervision of the PCO, the PIUs will carry out the day-to-day environmental monitoring work for all the Project components within their areas of coverage,

16 and will prepare monitoring and assessment reports for submission to the PCO. Various directorates under DGF will provide assistance in the monitoring of specific activities or impacts of the Project: (i) the Directorate of Resources, for fisheries resource utilization as part of MCS activities; (ii) the Directorate of Infrastructure, for activities and impacts associated with the rehabilitation of the fish ports and social infrastructure; (iii) the Directorate of Enterprises, for microenterprise development activities; and (iv) the Directorate of Production, for seabass farming and other livelihood development activities. 76. The cost of the environmental monitoring will be covered under the Project budget for the coastal fisheries resource management component. The total investment for regular monitoring activities is $990,000 while the total recurrent cost for MCS over five years is $468,000. 2. Monitoring Program

77. The monitoring program will be a continuing program of data gathering and analysis to ensure the effectiveness of the mitigation measures for potentially adverse environmental impacts arising from construction and operation of Project facilities. For the harbor facilities, the following will be monitored: (i) possible changes in coastal features of Prigi and Tegal Sari, such as erosion and deposition resulting from disruption of natural longshore sediment transport due to construction of breakwaters; (ii) water quality during construction, particularly turbidity caused by dredging activities, and its effects on nearby bathing beaches; (iii) noise levels from construction activities, particularly for Tegal Sari which is densely populated in view of possible nuisance effects; (iv) wastewater discharges during port operation, particularly the fish auction hall washwater, sanitary water from toilets, and bilge water from boats; (v) water quality in the harbor basin and surrounding coastal water during harbor operation, particularly for key parameters including suspended solids, biological oxygen demand (BOD), dissolved oxygen (DO), coliform, oil and grease, and surfactants; (vi) usage of the harbor, particularly among various boat sizes to ensure that small boat operators are not deprived of space by larger vessels; and (vii) water requirements and water supply, particularly in Tegal Sari. 78. For the CRM activities, the following will be monitored: (i) the fishing activity and catch data in the areas where artificial reefs are to be established to prevent misuse of the reef areas (i.e., avoid negative effects of the artificial reefs becoming mere fish attractors rather than protected habitat); and (ii) the short-term effects of constructing the proposed sea wall in Bengkalis, particularly the potential impacts on water turbidity caused by dredging and possible changes in longshore current speed and wave energy. 79. For the community development and poverty reduction activities, the following will be monitored: (i) the expansion of seabass farming microenterprise activities, particularly the siting of the cages, compliance with capacity limits and zonation plans, and in-migration to the area induced by seabass farming opportunities; (ii) fuelwood consumption to support fish processing micro-enterprises, particularly for boiled fish processing (pindang) which could lead to the increased cutting of mangroves or bamboo for fuel; (iii) diversification of fishing gear, particularly in compliance with restrictions against replacement of converted purse seine vessels, and enforcement of the proposed licensing system to regulate the number of vessels operating in coastal waters; (iv) construction impacts of the proposed social infrastructure (access roads, water supply, sanitary facilities, housing improvements, etc.) particularly land

17 disturbance and vegetation clearing; and (v) socioeconomic indicators, such as income of fishermen, fish processors, fish traders, and women. H. Public Participation

80. The Project has a very strong beneficiary orientation and provides various measures meant to elicit the active involvement of the target groups, including women, in Project implementation. It was designed using the participatory process approach involving extensive local-level consultations with key stakeholders at the four Project sites as well as a national workshop to validate the acceptability of the proposed planning framework and the Project components. Throughout the study period, considerable time and effort were spent in informing the public at the Project sites of the proposed establishment of the Project, in seeking their views and listening to their concerns, and in making them aware of the importance of community participation in the attainment of Project goals and objectives. 81. Rapid social assessment surveys of selected coastal communities were conducted in October-November 1996 in identified villages in the four selected Project sites. These surveys were aimed at (i) generating baseline information on the current socioeconomic conditions of the target beneficiary groups; (ii) establishing socioeconomic profiles of target beneficiaries; (iii) assessing income levels and perceptions on employment opportunities in the selected sites; (iv) assessing the availability of social facilities and services as well as villagers access to services provided by local organizations; and (v) determining community problems and capabilities, and the requirements to address these problems. 82. To augment and confirm the data generated through the rapid social assessment surveys, one national and eight local-level consultations and focus group discussions were conducted from 1-18 November 1996 at selected villages within the four Project sites. These workshops were attended by various stakeholder groups and facilitated by the TA team's facilitators for goal-oriented project planning. The local-level consultative workshops focused on problems and needs of the intended target groups and sought their ideas for solutions based on an assessment of existing potentials. The participatory situation analysis afforded the different target groups the opportunity to influence the planning and design of the Project based on an analysis of alternative solutions and specific measures that should be taken to solve problems. 83. In summary, the Project was designed with full consideration given to the needs and wants of the beneficiaries', on one hand, and their possible contributions toward the attainment of Project objectives on the other. Moreover, the approach to Project implementation is participatory, with community organization and social preparation as key tasks that will continue throughout the duration of the Project. The Project's social preparation approach will work through the village councils which consist of village officials and representatives from different social and religious groups operating in the villages, including youth groups. A public information and education program will be implemented on a nationwide scale but with a strong focus on the coastal communities at the selected Project sites. I. Conclusions

84. Environmental and social considerations have been included in site selection and the design of the Project components and activities. The IEE undertaken as part of the feasibility study was supplemented by additional field investigations and data analysis carried

18 out in cooperation with DGF and the Dinas Perikanan at the four Project sites, and presented in the EIA report. 85. An evaluation of the potential impacts of Project components and activities on the environment showed that the Project is expected to have a preponderance of significant environmental benefits in terms of resource conservation, pollution abatement, and improvement of public health. Potential adverse environmental impacts identified during the IEE, including those which gave rise to the preparation of a full EIA, were found to be mitigable and of minor or moderate significance.