Mexico: Environmental Recovery of the Apatlaco River Basin 45071 Public Disclosure Authorized

EXECUTIVE SUMMARY OF THE DRAFT ENVIRONMENTAL AND SOCIAL ASSESSMENT

Comisidn Estatal del Agua y Medio Ambiente (CEAMA) - , Mexico

Public Disclosure Authorized August 8,2008 Public Disclosure Authorized Public Disclosure Authorized Mexico: Environmental Recovery of the Apatlaco River Basin

ABBREVIATIONS AND ACRONYMS

BANOBRAS Banco Nacional de Obras y Servicios Pziblicos (National Works and Public Services Bank) CEAMA Comisidn Estatal del Agua y Medio Ambiente (State Water and Environment Commission), Morelos, Mexico CONAGUA Comisidn Nacional del Agua (National Commission on Water) Ciudad Industrial del Valle de (Industrial city of the Cuernavaca Valley) CMZ Cuernavaca Metropolitan Zone EA Environmental Assessment ESMF Environmental and Social Management Framework IPMF Indigenous Peoples Management Framework IPP Indigenous Peoples Plan

~ RAP Resettlement Action Plan RF Resettlement Framework SEMARNAT Secretaria del Medio Am biente y Recursos Naturales (Secretariat of Environment and Natural Resources) SEA Strategic Environmental Assessment WWTP Wastewater Treatment Plants Mexico: Environmental Recovery of the Apatlaco River Basin

EXECUTIVE SUMMARY OF THE DRAFT ENVIRONMENTAL AND SOCIAL ASSESSMENT

Table of Contents

I. Introduction

11. Background

111. Project Description

IV. Application of Safeguard Procedures o Environmental Assessment (OP 4.01) o Natural Habitats (OP 4.04) o Indigenous Peoples (OP 4.10) o Physical Cultural Resources (OP 4.11) o Involuntary Resettlement (OP 4.12) o Forests (OP 4.36)

V. Findings of the Environmental Assessment o Main Environmental Issues o Positive Impacts o Negative Impacts o Public Consultations

VI. Environmental and Social Management Framework o First Year Subprojects o Methodology for Undefined Subprojects o Prior Approval o Complementary Assessments Required by the World Bank o Public Consultation Procedure o Disclosure Procedure

Annex 1: Project Area Maps

Annex 2: Draft Screening Checklist

Mexico: EnvironmentalRecovery of the Apatlaco River Basin

I. Introduction

1. This report summarizes the Environmental Assessment (EA), including the Environmental and Social Management Framework (ESMF), prepared for the proposed Mexico Environmental Recovery of the Apatlaco River Basin Project (the Project). As described below, most of the specific project-supported investments are not known at this time, and will not be known by project appraisal, so a conventional EIA is not feasible. Rather, the proposed ESMF comprises technical guidelines describing procedures and institutional responsibilities for assessing and managing the potential environmental and social risks and impacts associated with the Project. The ESMF pursues three specific objectives, as related to the Project: (i)to ensure the socio-environmental sustainability of the sub-projects; (ii)to comply with national and state environmental legislation; and (iii) to comply with the Work Bank’s environmental and social safeguard policies.

2. The ESMF is composed of: (a) a Screening Checklist to facilitate rapid environmental assessments of likely project works (see Annex 2 of this document), in order to classify them according the their risk level and the sensitivity of the proposed site for the project; (b) a list of proposed environmental and social actions to be taken for each possible classification; and (c) a model Environmental Manual for Construction Works, that contains best practices in avoiding and mitigating environmental and social impacts for each of the proposed activity types. This Manual was designed for the Mexican State of Guanajuato in the context of the Decentralized Infrastructure Reform and Development Loan, but it is being updated for the State ofMorelos.

3. For social safeguards issues the ESMF also contains a Resettlement Framework (RF) and an Indigenous Peoples Management Framework (IPMF), as both OP 4.10 and OP 4.12 are triggered by the Project), as well as specific guidance on public consultation and disclosure procedures.

4. The ESMF is intended for use and application by the agencies charged with the execution of the investment sub-projects under each component. These agencies are the Morelos State Water and Environment Commission (CEAMA) and, in specific cases, each of the 10 municipalities contained in the Apatlaco River Basin.

5. The ESMF reviews the institutional and legal context of the water and sanitation sector in Mexico from an environmental and social perspective as well as the existing national requirements for environmental licensing (including Environmental Impact Assessment). It also identifies environmental and social safeguards issues related to the proposed investments which would be financed by the Project Mexico: Environmental Recovery of the Apatlaco River Basin

6. Specific procedures included in the ESMF include: (a) environmental and social screening of activities, and the use of an Environmental Manual for Construction Works; (b) public consultation and disclosure aspects; (c) mitigation measures required during design, construction and operation of works; and (d) project monitoring. The ESMF is being developed in a participatory manner, including input from multiple agencies and other stakeholders. The EA and ESMF are currently being finalized to reflect final decisions on project design. It will be updated to reflect any related changes, as well as additional input received during upcoming public consultations.

11. Background

7. The Environmental Recovery of the Apatlaco River Basin Project (the Project) seeks to enhance the environmental quality of the Apatlaco River Basin, located in the state of Morelos, in south-central Mexico. The project will support investments in infrastructure and institutional strengthening, improving urban environmental services and restoring the Apatlaco River. The project will be implemented by the State Commission for Water and Environment (CEAMA) of Morelos, with financing from the World Bank as well as federal, state and municipal governments.

8. Mexico is divided administratively into 13 river basin zones. The Balsas River Basin, one of the largest in Mexico, extends approximately 118 , 100 km2, consists of 12 sub-basins, and includes parts of eight states, including the entire state of Morelos. The 765 km2Apatlaco River sub-basin has been identified by state and federal authorities as one of the principal environmental concerns within the Balsas Basin. A map of the project area is included in Annex 1.

9. The Apatlaco River has its headwaters in the mountains of the basin, a forested area with high precipitation and a semi-cold climate. This high area is one of the most relevant precipitation catchment areas for both Morelos and Mexico City. As it descends from 3,000 m. above sea level to under 300 m., the Apatlaco River Basin becomes increasingly arid and warmer. These low areas are where limited agricultural activities take place in the basin.

10. The Apatalco River Basin lies almost entirely within the State of Morelos, and over 50% of Morelos’ 1.6 million people live within its boundaries. Out of the 33 municipalities in Morelos, 10 are located within the limits of the Apatlaco River Basin: , Cuernavaca, Emiliano Zapata, Jiutepec, , , Tlaltizaph, Zacatepec, and . These municipalities vary greatly in terms of size, population, economic activity and income. Cuernavaca, the state capital, has the largest population, with 349,102 people. Most Basin residents (79%) live in the Cuernavaca Metropolitan Zone (CMZ), comprising the municipalities of Cuernavaca, Jiutepec, Progreso, Temixco, Emiliano Zapata, Tres de Mayo and Xochitepec. Only about 1.5% of the total Basin population is considered rural. Mexico: Environmental Recovery of the Apatlaco River Basin

11. The Cuernavaca metropolitan area has experienced, and will continue to experience, very high levels of population growth. It is estimated that population in the ten basin municipalities will grow by approximately 8,000- 10,000 people per year through 2030, adding 200,000 more people. This population growth has to-date been chaotic and environmentally damaging. Public services have not been expanded to satisfy the demands of the growing population and cities have grown haphazardly in the absence of any planning. In this context, the expected population expansion can only continue to deteriorate the already poor environmental quality ofthe Basin.

12. Most employment in the Basin is in the productive sectors, primarily including industry and tourism. About 37% (337,000) of the Basin’s residents are economically active, the vast majority of whom work in the secondary and tertiary sectors. Thus, many residents who could work are unemployed, either by choice or lack of alternatives.

13. Poverty is disproportionately high in irregular settlements along many of the Apatlaco’s tributaries. Populations living in these areas report that they suffer the effects of the River’s poor water quality including foul odors and water-borne illnesses,

Table 1 -

MORELOS 4,941 .OO 1,612,899 Huitzilac 190.2 146.4 77.00 Yo 14,815 13,275 89.61 Cuernavaca 207.8 181.8 87.50 % 349,102 349,102 100.00 1,680 1,895 Emiliano Zapata 65.0 27.0 41.60 % 69,064 64,923 94.00 1,063 2,092 Jiutepec 49.2 35.2 71.40 % 181,317 171,787 94.74 3,685 3,151 Temixco 87.7 79.7 90.90 % 98,560 94,644 96.03 1,123 1,176 Xochitepec 89.1 89.1 100.00 % 53,368 49,025 91.86 599 542 Zacatepec 28.5 28.5 100.00 % 33,527 33,241 99.15 1,176 1,182 Jojutla 142.6 10.8 7.60 % 51,604 28,504 55.24 362 2,768 Tlatizapan 236.7 18.9 8.00 Yo 44,773 16,558 36.98 189 875 Puente de ixtla ,299. 2 ,38.9 13.00 Yo 56,410 ,20,200 ,35.81 189 475 Total I 1,396.0 1656.5 47.03 952,540 1841,259 188.32 682 1,171 Source: IN& 31. II Conteo de Poblacidn y Vivienda 2005.

14. Water use in Morelos varies slightly from the national trend. Out ofthe 988,000,000 m3 ofwater used in the state every year, 82% is used for agriculture, 15% for urban supply and 3% for industrial use. It should be noted however, that these figures can be misleading when it comes to the Apatlaco River Basin, where there is a very small rural population (only 1.5%) and most ofthe economic Mexico: EnvironmentalRecovery of the Apatlaco River Basin

activity is concentrated in and around the Cuernavaca Metropolitan Area (which also includes Temixco, Jiutepec and Emiliano Zapata), for urban and industrial uses. The ten municipalities of the Apatlaco River Basin receive a total water concession of 659,373,498 m3/year, which is equivalent to 56% ofthe total for the state of Morelos. These ten municipalities also support 75% ofthe state’s industrial activity, along with the aforementioned 88% ofthe state’s population.

15. Access to water supply and sanitation services is highly variable among municipalities. Tlaltizapan, Jiutepec, Emiliano Zapata, Cuernavaca and Temixco all have water supply coverage over 94%, while Huitzilac only has 68% coverage. When it comes to the percentage of households connected to a public sewerage system, the situation is quite severe, with a basin-wide average of 55%. In Huitzilac, only 9.1% ofhouseholds are connected to a public sewerage network and in Cuernavaca, home to nearly 22% of the state’s population, only 60% households are connected. For the Basin as a whole, over 40% ofwastewater goes uncollected, with most if it flowing, uncollected and untreated, directly into the

:2 - Sewage network Connections to the public network I Huitzilac 195 9.1% Cuernavaca 48,122 60.3% Jiutepec 27,750 74.9% Emiliano Zapata 6,888 6 1.4% Temixco 12,481 68.2% Xochitepec 1,747 22.2% Tlaltizaph 3,830 46.1% Puente de Ixtla 6,082 65.3% Zacatepec 5,594 74.0% Joiutla 7.83 1 69.3% Total 145,156 60.0%

16. Of the wastewater that is collected in the public sewerage system, only a very small amount is treated. Just 19% of the wastewater generated in the Apatlaco River Basin receives some kind of treatment. This is the main source of pollution and the main environmental problem in the Apatlaco River Basin.

17. This situation is a consequence of a combination of geographic and institutional factors. Geographic factors include a mountain region with many creeks, ravines and a generally rugged terrain which does not facilitate the expansion of water and sewerage networks. Among the contributing institutional factors, as described below the Basin’s water utilities chronically lack financial and human resources, which is compounded by perverse or absent incentives in the legal and institutional context. Mexico: Environmental Recovery of the Apatlaco River Basin

111. Project Description

18. The total project cost is approximately USDm$200, out of which the World Bank is tentatively programmed to finance USDm$5O. The project is divided into four components: 1) Wastewater Treatment, 2) Municipal Water Supply and Drainage, 3) Solid Waste Management, and 4) Institutional Development and Strategic Basin Management.

19. Component 1 will finance the construction and/or rehabilitation of wastewater treatment plants (WWTP). Known investments to be supported during the first two years of project implementation include 14 wastewater treatment plants (WWTP) with a total capacity of 1,669 l/s (140,000 m3/d). The largest WWTP are in the municipalities of Cuenavaca (600 Us), Jiutepec (240 Us) and Temixco (170 l/s and 130 Us). The objective of this component is to increase the wastewater treatment rate in the Apatlaco from 19% to 75% by 2012.

City Capacity City Capacity (US) (Us) 1. Cuernavaca -Acapantzingo 600 10. Xochitepec - Alpuyeca 30 (rehabilitation and expansion) (new construction) 2. Jiutepec - La Gachupina 240 9. Zacatepec (new 80 (rehabilitation and expansion) construction) 3. Temixco-El Ray0 170 10. Xochitepec - Chiconcuac 40 (rehabilitation and expansion) (rehabilitation and expansion) 4. Temixco-Panocheras (new 130 11. Tlaltizapan - Santa Rosa 50 construction) (new construction) 5. Emiliano Zapata 120 12. Cuernavaca --Lazar0 24 (rehabilitation and expansion) Cardenas (new construction) 6. Jojutla (new construction) 100 13. Tezoyuca (new 65 I I I construction) I I 7. Puente de Ixtla -- Xoxocotla 50 14. Tepetzingo - Tetecalita 20 (new construction) (new construction)

20. Component 2 will improve existing water supply distribution and drainage collection networks for the ten municipalities in the Apatlaco River Basin. The emphasis will be on reducing physical losses, improving metering and billing, completing the drainage collection network and ensuring drainage network connections. The component also includes the construction of conveyors and associated pump stations to transfer wastewater from municipal drainage systems to the WWTPs. Technical assistance to improve water utility organizations will also be included in this component.

21. Component 3 will focus on solid waste. The State of Morelos, working with municipal governments and federal agencies, is in the initial stages of planning for the construction of regional landfills within the next five to ten years. In the Mexico: Environmental Recovery of the Apatlaco River Basin

short- to medium-term (e.g next five years), the State of Morelos and municipalities will upgrade their transfer stations, will close up to ten open dumps, many of which are located in or near Apatlaco tributaries. Discussions are currently underway to determine if Bank financing may support some of these nearer-term activities. Bank-financed activities will definitely include ensuring adequate related municipal services including collection, transfer and conveyance of solid waste to the regional landfills. Technical assistance to improve solid waste management organizations at the municipal level and CEAMA at the state level will also be provided under this component.

22. Component 4 will support the following activities: i) project management technical assistance for CEAMA; ii)Apatlaco riverbank clean-up and restoration; iii)improving the Basin’s water quality monitoring network; and iv) a Strategic Environmental Assessment and action plan (SEA) for the Apatlaco Basin. Based upon the results of the SEA, there will be an unallocated loan amount programmed to finance high-priority activities possibly including reforestation, protection of groundwater recharge sites and other priority environmental sites, creation of linear parks, as well as institutional strengthening activities.

23. This project has been classified as Category “A” by the World Bank in accordance with its Operational Policy 4.01.

IV. Application of Safeguard Procedures

24. In accordance with World Bank policies, the following safeguards apply:

0 Environmental Assessment (OP 4.01) 0 Natural Habitats (OP 4.04) 0 Indigenous Peoples (OP 4.10) 0 Physical Cultural Resources (OP 4.1 1) 0 Involuntary Resettlement (OP 4.12) 0 Forests (OP 4.36)

25. In order to ensure the environmental and social sustainability of the proposed subprojects, the Government of Mexico and the Government of the State of Morelos, through the institutions responsible for the execution of the subprojects, has committed to adopt the guidelines specified in IBRD Safeguard Policies.

26. OP 4.01 - Environmental Assessment - In accordance with its Category “A” status, an Environmental Assessment (EA) has been conducted for the project and is currently being finalized. This EA provides a general economic, geographical and environmental context for the project. It also provides analyses of the legal and institutional frameworks under which it will be carried out. Finally, the EA has identified the project’s potential impacts and proposes an Environmental and Social Management Framework for the management of sub-projects. For those subprojects that are known (including all first-year investments), the ESMF has Mexico: Environmental Recovery of the Apatlaco River Basin

been applied and all necessary environmental is almost completed (and will be completed by appraisal).

27. OP 4.04 - Natural Habitats - By improving basin waste management and water quality in the Apatlaco River, this project is expected to improve the conditions of natural habitats. Infrastructure investments are not currently planned for critical areas of high biodiversity or natural value but the ESMF will nevertheless provide guidance as to how to carry out such subprojects to Bank standards, should they exist.

28. OP 4.10 - Indigenous Peoples - The indigenous population in the project area is relatively small, largely comprising several Nahuat indigenous communities in the municipalities ofPuente de Ixtla and Jojutla, and no significant adverse effects for it are currently foreseen. Nevertheless a Social Assessment is underway, as well as an IPDF that will be implemented in that case that any subprojects be planned in areas where indigenous peoples will be affected, either positively or negatively. In such a case, the IPDF calls for a mandatory consultation process among the affected population.

29. OP 4.1 1 - Physical Cultural Resources - This safeguard is triggered by the possibility that subproject construction could have unanticipated negative impacts on historical artifacts or sites in the case that they were discovered during works implementation. As a country with a rich archeological history, Mexico has strict and well-established legislation on this issue that matches and, in some cases, exceeds, World Bank requirements. The National History and Anthropology Institute has offices in all the states, and these state delegations have procedures that contractors need to follow when excavations run into potentially important sites. This project will ensure that the ESMF includes such procedures, and that all specific works contracts make reference to these procedures.

30. OP 4.12 - Involuntarv Resettlement - None of the known works (including all those currently planned for year one of project implementation) require involuntary resettlement. Nevertheless, as the majority of subprojects are not known at this point and resettlement could be necessary for some of those works, a Resettlement Action Plan is currently being prepared to provide guidance as to how those subprojects would be implemented in accordance with OP 4.12.

3 1. OP 4.36 - Forests - Reforestation activities being considered for Component 4 of the Project trigger this policy. Accordingly, the EA includes an analysis of the current legal and institutional framework under which forests are managed in the state of Morelos. The ESMF includes mandatory procedures for any forestry subproject, which must be conducted in accordance with technical guidelines and best practices.

V. Findings of the Environmental Assessment Mexico: Environmental Recovery of the Apatlaco River Basin

32. Main Environmental Issues - The Apatlaco River and its surrounding Basin are highly contaminated due to the direct discharge of municipal and industrial wastewater as well as agricultural runoff. The Basin also suffers from inadequate solid waste infrastructure and collection, as solid waste is often deposited directly into the river and other basin tributaries. These problems are particularly severe in and around the Cuernavaca Metropolitan Zone, the largest population center in both the Basin and state. Deforestation coupled with poor agricultural and livestock practices have caused significant erosion and sedimentation in the Basin, resulting in a serious loss of topsoil. Rapid and disorganized urban expansion has also had an effect on Basin environmental and water quality. Combined, these factors jeopardize the Basin’s sustainable development and magnify the health problems and poverty in marginalized areas, both rural and peri-urban.

33. The environmental conditions of the river vary according to geography. Land degradation and deforestation are a primary concern in the upper reaches of the Basin, whereas the bulk of the river’s pollutants come from municipal and industrial wastewater which enters the river in its middle and lower sections. These environmental conditions pose a serious threat for public health and represent an important obstacle for economic development in the state, including its two main sources of income: agriculture and tourism. The impact on agricultural activity can be felt in the selection of crops that can be irrigated, which is limited by water quality. High-value crops for human consumption, for example, cannot be grown with the water that reaches producers in the lower parts of the basin. Impact to tourism is more difficult to measure, but not less important. The area of the Apatlaco River Basin has historically been a recipient of high levels of weekend tourism from Mexico City, but this tourism has slowly been eroded by deteriorating environmental conditions.

34. Upper Zone - In this area of the river, water quality is principally affected by deforestation and forest fragmentation from illegal logging. This land use change has caused erosion and runoff and increased the frequency of forest fires, which further contaminate the waterway. Extreme poverty is relatively high in this area, and water coverage as well as sanitation and solid waste service is poor to nonexistent.

35. Middle Zone - As the population increases towards the middle reaches of the Apatlaco, the waters see increased direct discharges of wastewater. Similarly, there is little official or sanitary option for solid waste disposal, much of which ends up on the banks and in the tributaries of the Apatlaco. Disorderly urban growth in this zone has provoked an increase in the demand for water and had a general negative effect on the quality of natural resources in the area due to lack of planning. These conditions are particularly pronounced in marginalized peri- urban areas. Mexico: Environmental Recovery of the Apatlaco River Basin

36. Lower Zone - It is in the lower zone of the river where water quality declines drastically, due to the high contaminant loads from municipal wastewater discharges as well as the accumulated burden from the upper and middle zones. At this point, water quality is often compromised to the point where it is unsuitable for certain agricultural or touristic activities and poses a direct and severe health risk to the residents, particularly those marginalized populations living at the river’s edge and depending on it for water. This area of the river sees particularly high levels of fecal coliform, heavy metals, arsenic, total nitrogen, organic compounds and in measures like chemical and biological oxygen demand (COD and BOD).

37. As discussed above, the main source of this pollution is untreated wastewater discharges in the Cuernavaca metropolitan area. Industrial discharges are a lesser problem, as most of the industrial activity takes place in an industrial park called CIVAC, which has an operating treatment plant.

38. This problem is further aggravated by the lack of proper solid waste management practices in the basin, where there are currently ten open-air dumps and no properly constructed sanitary landfills. Over 2,000 tons of solid waste is generated in Morelos every day, out of which only 1,200 tons (57%) are collected and deposited in one of 26 open-air dumps in the state. It is estimated that in the ten municipalities of the Apatlaco basin, only 705 tons of solid waste are collected per day while 533 tons accumulate in streams, gullies, streets and avenues.

39. As discussed, that solid waste which is collected is deposited in open-air dumps, where chemicals and toxins leach into the groundwater and accumulate in the soil and water. For over thirty years, the municipalities of Cuernavaca, Xochitepec, Juitepec, Zacatepec and Temixco have deposited their solid waste in such open- air dumps. Such inadequate management of solid waste has produced enormous negative effects on the residents and on the environment. The open-air dumps concentrate pollutants and produce unpleasant odors, alter the landscape, deteriorate soil, contaminate both surface and underground waters, facilitate the spread of pests, and can cause major fires that spread to nearby settlements.

40. Positive Impacts - The proposed project is expected to have a highly positive impact on environmental quality in the Apatlaco River Basin. Increasing the coverage of sewerage services, and sustainably improving the percentage of treated wastewater, will necessarily improve the quality of the water that is returned to the river and available for other uses, including agriculture and tourism. Additionally, the project area is home to several small indigenous communities, triggering requirements for the Indigenous Peoples Policy.

4 1. Investments in solid waste management, including closing of open-air dumps, will significantly improve environmental quality around the landfill sites, as well as prevent further leakage of solid waste residues into underground and surface Mexico: Environmental Recovery of the Apatlaco River Basin

water supplies. Improvements in solid waste collection will also lead to improvements in the ambient environmental quality ofthe Basin through reducing improperly disposed refuse, thereby improving the quality of life for Basin residents who will benefit from improved visual, economic and public health conditions.

42. The institutional strengthening component of the project will help state and municipal authorities acquire the human and financial resources they need for better environmental management. Additionally, the project will help formulate and promulgate norms to regulate solid waste management, land use planning and water quality.

43. Improvements in management of the watershed, through riverbank restoration and promulgation of improved forest management practices, are also expected to lead to improvements in quality of life and water for Basin residents.

44. Negative Impacts - Construction and operation of infrastructure almost inevitably results in some negative environmental impacts, many of which can be minimized through proper siting. In the case of wastewater treatment plants, typical impacts associated with construction include include noise, air quality and debris. Possible impacts during the operations phase include odor problems, truck-related impacts (noise and accidents), and impacts to soil, water and air quality linked with inadequate sludge disposal.

45. Construction of water supply collection and sewerage distribution networks can lead to short-term negative impacts, including noise, air quality and traffic complications. During operation, collected wastewater should be appropriately treated so as to avoid other water quality problems and related health issues.

46. Construction and operation of solid waste collection and disposal facilities can result in noise, air quality, health and water quality impacts, as well as odor problems for those living nearby. Closing of open dumps may result in impacts to wastepickers who are economically dependent on their operation.

47. Social safeguards impacts include those associated with involuntary resettlement, in the case that residents are affected by works, either through direct acquisition of their land for project investments, or through some related economic impacts.

48. The ESMF sets forth the procedures to address these impacts. For the most environmentally and socially risky subprojects, the ESMF calls for EIA (scoped based on the results of site screening) as well as Resettlement Plans and/or Indigenous Peoples Plans, where necessary. Many of the more standard short- term impacts will be addressed through the implementation of improved construction management standards (which will be compiled in an Environmental Manual for Construction Work). Use of this Manual and other relevant guidelines Mexico: Environmental Recovery of the Apatlaco River Basin

to minimize environmental impacts will be incorporated into the technical specifications of construction contracts.

49. Public Consultations - The overall project has been subject to a wide consultation effort, led largely by the Mexican Institute for Water Technologies (IMTA). They convoked 15 events, in which the Comision de Cuenca de Rio Apatlaco (a broad consultative group involving representatives of government, academia and civil society) and all ten municipalities participated, to make a comprehensive diagnosis ofthe Basin’s environmental situation, and to set forth priority activities to address the issues identified through the diagnosis.

50. The EA itself has also been consulted in accordance with OP 4.01. The TORs for the EA were the subject of the first consultation, held on December 14, 2007 in Cuernavaca. The event was attended by 22 participants, including representatives from municipal governments and local universities. The results of these consultations were used to improve said TORs.

51. A second consultation will be held on August 12, 2008, where a wider participation is expected, including non-governmental local stakeholders. The draft EA, including the ESMF, will be presented. The results of this workshop will be included in the final draft the EA/ESMF.

VI. Environmental and Social Management Framework

52. The objective of the ESMF is to provide a management instrument which provides technical guidance on applicable legal and regulatory requirements, institutional responsibilities, methodologies, instruments and procedures so as to ensure adequate analysis, mitigation and management of socio-environmental risks and impacts throughout the project cycle.

53. As only a small number of the activities that will be carried out under the project are known at this time, an Environmental and Social Management Framework has been proposed. This ESMF describes the appropriate steps to be followed for subprojects when they are identified. The ESMF has been applied to all specific subprojects that are known at appraisal, and the required environmental and social work has been done for all such high-risk subprojects (see below).

54. The ESMF includes the following:

55. Legal and Institutional Assessment: A diagnosis of the standards, laws, institutions and regulations relevant to the socio-environmental management of the project. Results of this assessment show that, depending on the scope of subprojects, any of the three levels of government may be involved. For example, subprojects affecting natural protected areas, hazardous materials and/or waste management, fall under the jurisdiction of SEMARNAT (the federal Ministry of Environment), as do all projects financed with federal funds. Similarly, Mexico: Environmental Recovery of the Apatlaco River Basin

subprojects involvin? construction or rehabilitation, which will lead to environmental impact are the responsibility of the state environmental authority (CEAMA in the case of Morelos). Additionally, changes in land use require municipal authorizations. Environmental procedures for the project set forth the specific authorizations and licenses required to comply with the applicable Mexican framework.

56. Another shortcoming of the legal framework has to do with public information. While Mexican legislation requires that information is made public, and allows interested parties to request public information meetings, the authorities do not have to agree to such requests. This differs from the Bank’s requirement that all high-risk projects disclose relevant information prior to project implementation and that consultation meetings are held for all such high-risk projects.

57. Subproject Typology: The ESMF sets forth a typology to categorize subprojects according to the generic level of socio-environmental risk. The typology includes three categories of works. Category Iactivities are those with minimal potential environmental and social risks. Category I1 activities are those where potential environmental and social safeguards risks are site-specific, few if any of them are irreversible; and in most cases mitigatory measures can be designed more readily than for Category I11 activities. Category I11 activities are those that may have significant adverse environmental impacts that are sensitive or diverse, or that may affect an area beyond the immediate site of subject to physical works.

58. The following table sets forth the proposed typology for project activities:

1’ roject Act ivitics Environmental Classification*

Rehabilitation and modernization of Wastewater Treatment Plants (WWTP) I1 Construction of new WWTP I11 Municipal drainage connections I1 Sludge disposal: studies, treatment, productive use and disposal Studies I Disposal I1or

Component 2 - Solid Waste Management Construction of transfer stations I I1 Closure of ooen dumm I I1

I Component 3 -Strengthening of Municipal Services Sewerage and Drainage Expansion and rehabilitation of drainage network I I1

1 At the state level, projects may require an EIA (manifestacion de impact0 ambiental), a risk assessment (Evaluacion de Riesgo) and/or a permit to operate (permiso de operacion) depending on the anticipated environmental impact during construction and/or operation. Mexico: Environmental Recovery of the Apatlaco River Basin

1 I’rojcct Activities Environmental I Classification” [ Strengthening activities for water utilities I I Solid Waste I I 1 Institutional streng;thening master dans I1 I I Improvement to collection activities (equipment, route improvement, I I

I Cleaninn of watenvavs (trash removal) I I1 I

Studies: I 0 Strategic Environmental Assessment Water quality monitoring Institutional strengthening for CEAMA (IS0 14000) Project management I Design and implementation of pilot projects to improve Basin 1-11 environmental quality (possibly including reforestation, protection of aquifer recharge areas, linear parks, restoration, etc.) Public awareness campaign I

59. Environmental and Social Management Procedures: Building upon the results of the typology, the ESMF sets forth management procedures to ensure that subprojects are subject to the appropriate scope of environmental and social work to manage potential impacts. These procedures include measures to comply with national and state environmental legislation, as well as with the Bank Safeguard Policies. They will also include the measures to ensure such procedures are implemented, including clear institutional responsibilities, timelines and required budget.

60. Annual Review and Classification: All subprojects will be classified by CEAMA (the Project Management Unit) in accordance with the typology. A report outlining the results ofthis screening will be submitted to the Bank along with the project’s annual work plan (PAC).

61. Project Screening: All Type I11 subprojects as well as any other projects with potential issues concerning resettlement or indigenous people will be screened (through a site visit) to determine specific risk level. Subprojects will be screened by the environmental and social specialists included in the project management unit. Screening will be done through a site visit, and an evaluation against screening criteria formatted as a checklist. Screening will identify sites with sensitive issues, and classify those projects as Type 111-A. Projects on non- sensitive sites will be classified as Type 111-B, I1or I.Each screening exercise shall be summarized in aJicha ambiental, and a summary report shall present the results of all screening activities. These reports shall be sent to the World Bank and BANOBRAS immediately upon completion. Mexico: Environmental Recovery of the Apatlaco River Basin

62. Determination of Required Environmental and Social Work: Once an activity is classified according to its risk level, and the sensitivity ofthe site is assessed, the required environmental and social work will be determined for each subproject. Table 2 outlines the type of environmental and social work that will be required for each type of subproject.

Table 5 - Required environmental and social work Environmental and Social Work Site Screening Environmental Impact Assessment (including Bank requirements) Resettlement and Indigenous Peoples Plans, if necessary At least two public consultation meetings prior to works commencing (one on EIA TORSand one on draft EIA) 111-A Application of Environmental Manual for Construction Activities Incorporation of standard mitigation measures into design (from Manual) Incorporation ofEnvironmental Clauses in works contracts Supervision of Environmental Requirements During Construction

0 At least one public consultation meeting prior to works commencing. 0 Application ofEnvironmental Manual for Construction Activities 0 Incorporation of standard mitigation measures into design (from 11, 111-B Manual) 0 Incorporation of Environmental Clauses in works contracts 0 Supervision ofEnvironmental Requirements During Construction

0 Application of Environmental Manual for Construction Activities 0 Incorporation of standard mitigation measures into design (from I Manual) 0 Incorporation ofEnvironmental Clauses in works contracts 0 Supervision ofEnvironmental Requirements During Construction

63. All required environmental and social work must be carried out during the assessment process of a subproject and under no circumstance whatsoever may the execution ofworks begin until the assessments have been completed.

64. Prior Approval by World BanMBANOBRAS - Type 111-A - All type 111-A subprojects will require prior authorization by the World Bank and BANOBRAS before commencement of works. Requests for such authorization should include all relevant documentation, including screening reports, terms of reference, resettlement plans and environmental impact assessments. Mexico: Environmental Recovery of the Apatlaco River Basin

65. Type 111-ByI1 and I- No prior review by the Bank on environmental or social grounds is required to advance contracting. Supervision activities will include ex- post revision of key subproject documents, as well as spot checks of subprojects under implementation.

66. Complementary Assessments for Involuntary Resettlement and Indigenous Peoples - In the event that Bank Safeguard Policies for Involuntary Resettlement or Indigenous Peoples are triggered through a specific subproject, CEAMA will prepare a Resettlement Action Plan (RAP) or an Indigenous Peoples Plan (IPP) in accordance with the frameworks currently being finalized.

67. Public Consultation and Disclosure - So as to enhance subproject benefits and minimize the potential for problems during subproject construction and operations, the ESMF calls for mandatory consultation for all Type I1 and I11 subprojects.

68. Type 11 and 111-B subprojects: Such consultation should target local stakeholders, particularly the community directly affected by subproject activities, during the design and evaluation stage, to provide information as to the subproject objectives, and obtain inputs on perceived potential impacts.

69. Type 111-A subprojects: Consultations should be held no less than twice. An initial public consultation should be held to discuss the TORS for the EIA, so as to ensure that the resulting study addresses all perceived potential impacts. A second consultation should be held to discuss the results of the draft EIA, and provide detailed information on the subproject design and objectives. Results of this second consultation should be used to improve the EIA, as necessary.

70. Resettlement and Indigenous Peoples: Both the Resettlement Framework and Indigenous Peoples Framework, currently being finalized, require mandatory consultation in the preparation of action plans.

71. Disclosure: CEAMA, through the Project Management Unit, must designate a focal person and make sure that subproject information, including environmental and social work, is available electronically and in hard copy, and that any request for access/clarification of such information is duly responded to.

72. Type I1 and I11 subprojects will have a strategy for the disclosure of information to the public that allows citizens in general, as well as the stakeholders directly benefited by the subproject, to be informed on its objective and potential impacts.

73. The disclosure of information will be made through CEAMA’s webpage and using the local media to reach the benefited population. In general the information to be published must contain: i) basic project information; ii) timeline of bid preparatory activities; iii)level of socio-environmental risk; iv) terms of reference of the environmental assessments; v) list of companies participating in the bid; vi) Mexico: Environmental Recovery of the Apatlaco River Basin

summary of the results of the dialogue with the community; vii) the socio- environmental assessments performed; viii) the resettlement plan or the abbreviated resettlement plan, if applicable; the development plan for indigenous peoples and the cultural and physical heritage protection plan; if applicable; ix) any other important assessment performed on the project; x) announcement of the adjudicated company; xi) contracts with environmental and social commitments to be executed during the implementation; and xii) annual progress reports.

74. The following will also be announced and published in adequate local media: i) the venue, date and guests to the consultation; ii)the draft of the environmental impact assessment; and iii) the draft resettlement plan to help participant local stakeholders be adequately informed in advance so that they may participate in the dialogue with this information in mind. CEAMA’s focal person will be available for consultations during the whole execution of the project to make sure both that the environmental authorities are regularly informed ofprogress and that civil society has access to public information as required.

75. First Year Subprojects - Although the needs addressed by this project are very well identified, the specific subprojects to be financed have not been finalized, except for the works to be done in the first year of the project. These first year works could include the construction of up to nine new Wastewater Treatment Plants and the rehabilitation of five already existing ones, including the expansion of an important WWTP in the state capital of Cuernavaca. Environmental Impact Assessments have been completed for all of the nine new WWTP and are being disclosed as part ofthe EA. No further environmental analysis is contemplated for the modernization of existing WWTPs, as no significant impacts are expected. However, construction activities will be conducted in accordance with the project’s Environmental Manual, and supervised by the project management unit, who are also responsible for supervision of overall compliance with mitigation measures included in the EINMIA. cr 0

Mexico: Environmental Recovery of the Apatlaco River Basin

Annex 2 - Draft Screening Checklist MEXICO ENVIRONMENTAL RECOVERY OF THE APATLACO RIVER BASIN ENVIRONMENTAL AND SOCIAL SCREENING CHECKLIST

Subproject Name: Implementing Institution: Evaluating Institution: Evaluator’s Name: Evaluation Date:

Location 12000 Census I2005 Census Update I Clunicipalities: 1 Current Service Characteristics I Drinking Water Coverage % % Locality: Sewerage Coverage % % Main Water Source: Surf - Underg. - % [NEGI Key: Water Treatment Coverage: % % I Senice Provider. Gcncral Subproject Objective I Geographical Location: Initial Latitude: - O ’ ” Final Longitude: - ’ ’ ” Latitude: - 0 , ,, Longitude: - O ’ ”

Type of Work: il Kchabilitation 3 Expansiott c3 NcwSystem

Infrastructure Works:

0 A -Wastewater Treatment Plant 0 B -Wastewater Collectors 0 C.-Sewerage or Rainwater Networks 0 D - Rainwater Collectors 0 E.-Treated Water Lines 0 F -Dry Latrines

Type 111 Subproject

Type I1 Subproject Classification Low Moderate High Type ISubproject i Level I Level I Level I1 ii Level I Level I1 Level I1 a) Environmental : iii I Level11 I Level 111 I Level 111 J b) Social : Mexico: Environmental Recovery of the Apatlaco River Basin

2haraetsrrisdb iw dubgraJec

Inside a state or federal Natural Inside Natural Protected Areas with no level of protection Area buffer zone I Existence of native or Existence of species of NOM -059- SEMARh'AT- 2001 endemic species moderate/low ecological importance Within a moderately Within highly perturbed natural Within an intact natural habitat I impacted natural habitat habitats Water bodies in a 0 25 meter Water bodies in a 25 50 - - Water bodies in a >50 meter radius radius meter radius High risk of environmental Moderate risk of Low risk of environmental degradation (deforestation, environmental degradation degradation poaching, etc.) Areas that are vulnerable to natural Areas that are sporadically flooding phenomena, or water flooded No-flood areas births Areas ofhigh seismic risk, with Areas of moderate seismic landslides risk Presence of geological fractures or Presence of geological Areas with no presence of faults fractures or faults in geological fractures or faults surrounding area Mountain area (>35% slope) Undulated terrains (15 to 35% slope) High number of potentially Moderate number of Little or no vegetation affected plant species potentially affected plant species Land use change required Mixed land use

I Wildlife species affcctcd Potential wildlife species displacement High archeological and Moderate archeological and anthropologic interest areas I anthropologic interest areas Total landscape modification Partial / moderate landscape modification Subproject will generate high risk Potentially dangerous activities substances will be used or generated Only a sales contract exists Property deed exists

Areas with low levels of social conflict High presence of indigenous Medium or low presence of Prouus I indigenous groups High level of resettlement needs Moderate level of No resettlement required (more than 200 people) resettlement needs (less than 200 people) Other ImDortant AsDects L Mexico: Environmental Recovery of the Apatlaco River Basin

Location Sensitivity Level:

LOW: One or more effects under “Low” and up to two under “moderate” MODERATE: Three or more effects under “moderate”, but none under “high” HIGH: One or more effects under “high”

Subproject requires an Environmental Impact Assessment Si: __ No:

A what level: Federal: State: Municipal:

Type of EIA:

Recommendations for design, construction, EA and Environmental Management Plan

Mitigation Activity

Inform community transport) Contact authorities, as per Cultural heritage found Mexican legislation Impacts for local population Social information program - Operation and rnamtenance Transitory WWTP operation Electricity services installation Access roads exuansion Mexico: Environmental Recovery of the Apatlaco River Basin

Process

Public consultations Construction supervision Environmental impact supervision during

7.- Critical points in comtructiog areas I

8.- Cotiirnents I I

NOTE: Annex photographs and location maps

Signatures:

CEAMA