INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE Report No.: AC2170

Public Disclosure Authorized Date ISDS Prepared/Updated: 02/16/2006

I. BASIC INFORMATION

A. Basic Project Data

Country: China Project ID: P099992 Project Name: China-Liaoning Medium Cities Infrastructure Project Task Team Leader: Shomik Raj Mehndiratta Estimated Appraisal Date: March 21, 2006 Estimated Board Date: June 27, 2006 Managing Unit: EASTR Lending Instrument: Specific Investment Loan

Public Disclosure Authorized Sector: General transportation sector (100%) Theme: Other urban development (P) IBRD Amount (US$m.): 200.00 IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: BORROWER 200.00 200.00

B. Project Objectives [from section 2 of PCN] Public Disclosure Authorized The overall development objective of the proposed Liaoning Medium Cities Urban Infrastructure Project (LMC) is to contribute to the economic revitalization of medium-sized cities in Liaoning through the provision of infrastructure and improved urban management.

The objectives of the urban transport part of the project are to relieve existing transportation bottlenecks, improve the quality of the overall urban transport network and to build capacity for urban transport planning and implementation in a fiscally, socially and environmentally sustainable manner. The objectives of the urban environment part of the project are to improve the service levels in water supply, wastewater, and solid waste in existing urban areas through the provision of infrastructure and enhancement of utility performance. The project will also aim to improve to overall urban management, with a special emphasis on municipal financial management and utility regulation.

Public Disclosure Authorized C. Project Description [from section 3 of PCN] Part 1: Urban Environment: At present the estimated costs for the urban environment component are approximately US$350 million, with around US$190 in IBRD financing. Sector issues related to urban environment part are presented in Annex 1. Components include: A. Water Pollution Control Infrastructure (US$168 million): Construction of wastewater collection systems, treatment plants, and water reuse facilities in the following cities: Fushun, Tieling, Yingkou, and Panjin.

B. Water Supply Infrastructure (US$98 million): Rehabilitation of water distribution systems and upgrading of water treatment plants in the following cities: Fushun, Liaoyang, Anshan, Haicheng, Xincheng, and Tieling.

C. Solid Waste Management Infrastructure (US$65 million): Development of solid waste collection, transfer, and landfill facilities in the following cities: Fushun, Liaoyang, Xincheng, Yingkou, Huludao, and Panjin. The component also includes closures of existing landfills that pose environmental risks.

D. Urban Environment Capacity-Building (US$12.5 million): Technical assistance will be provided for the following activities: a) design review and advisory Services; b) Fushun water supply master plan; iii) pilot pollution control projects and d) small city environmental planning and feasibility study preparation.

The World Bank is working with Liaoning Province to prepare a US$5.0 million GEF grant to support the urban environment component of LMC under the GEF-World Bank Partnership Investment Fund for Pollution Reduction in the Large Marine Ecosystems of East Asia.

Part 2: Urban Transport: At present the estimated costs for the urban transport component are approximately US$335 million, with about US$145 million in IBRD financing. Sector issues related to urban transport part are presented in Annex 2. Project cities include Fushun, Liaoyang, Panjin, and Jinzhou with the following components:

A. Road infrastructure investment (US$270 million): targets arterial road improvements that relieve existing bottlenecks and in a few selected cases support strategic urban expansions.

B. Secondary road improvement and maintenance (US$40 million): targets improvements in the secondary road networks of the project cities to (i) relieve the pressure of local traffic off the major road network, and to (ii) enhance "last mile" access for pedestrians and bicyclists.

C. Traffic management and safety ($17 million) focuses on supporting the implementation of the road safety law with enhanced traffic management monitoring and control systems and investments in traffic management equipment (traffic signals etc.) and intersection improvements (junction channelization etc.) to improvement traffic flow and safety.

D. Public transport (US$5 million) that includes provision of bus priority facilities and improvements in public transport planning and operations; and

E. Transportation Capacity Building (US$5 million) transport planning practices, safety monitoring and policy, traffic management practices, road maintenance planning and implementation practices, and public transport planning and reform to promote provision of bus services by the non-government sector.

Part 3: Municipal and Utility Institutional Development:

A. Municipal Financial Management Capacity Building (US$5 million) to support improvements in analysis of expenditures and revenue structures, capital planning, financial forecasting, financing options, etc. The activities will target the LMC cities in partnership with provincial government.

B. Utility Capacity Building and Regulation (US$5 million) to improve the management capacities of water, wastewater, and solid waste utilities, and develop the provincial level price and service regulatory oversight system and capabilities. The activities will target the LMC cities in partnership with provincial government.

D. Project location (if known) Liaoning was one of the first provinces in China to industrialize, first in the early 20th century, and then even more in the 1950s and 1960s. The city of Anshan, for example, is home to one of the largest iron and steel complexes in China. In recent years this early focus on heavy industry has become a liability, as many of the large state-run enterprises have experienced economic difficulties. Recognizing the special difficulties faced by Liaoning and other provinces in Northeast China because of their heritage of heavy industry, the Chinese central government recently launched a "Revitalize the Northeast Campaign".

Main agricultural products of Liaoning include maize, Chinese sorghum, cotton, and soybeans. The region around Dalian produces 3/4 of China’s exported apples and peaches. Liaoning has the most iron, magnesite, diamond and boron deposits among all provinces in China. Liaoning is also an important source of petroleum and natural gas. Salt is produced along the coast. Liaoning is one of China’s most important industrial bases, covering a wide range of industries, such as machinery, electronics, metal refining, petroleum, chemical industries, construction materials, coal, and so on. In recent years, the city of Dalian has, in particular, been developed as a major port and the economic gateway to all of Northeast China. In 2003, Liaoning’s GDP was about 72.5 billion USD --ranking 8th in the PRC. The per capita income is 14,000 RMB, or US$1,700.

The main population centers of Liaoing are located in Liao River Basin or are located along the coast of the Bohai Sea. The Bohai Sea is the largest semi-enclosed sea in the People’s Republic of China and is surrounded by the provinces of Liaoning, Hebei, Shandong, and Tianjin Municipality, and is connected to the Yellow Sea Large Marine Ecosystem (LME). The Bohai Sea has a unique shallow marine eco-system and rich coastal wetlands which provide reproduction and nursery grounds for fish, shrimp, crab, and migratory birds. The Bohai Sea is also the most important center of shellfish aquaculture in China. It is, however, under severe stress due to land-based pollutants, over-fishing, and wetland degradation. Liaoning Province, with a population of 42 million people and an economy based primarily on heavy industry, is a major contributor to pollution and wetland loss in the Bohai Sea area. The Province, with the assistance of the European Union, completed the "Liao River Basin Plan" in 2002. The Plan establishes the waterpollution control priorities for the basin and pollution reduction into the Bohai Sea and forms the analytical framework for pollution control activities under the project.

The project cities under LMC and their populations are listed below. Information on the two largest cities, Shenyang and Dalian are also presented for reference. Over the last decade, the Bank has been actively supporting infrastructure development in Liaoning, with four urban infrastructure projects. About forty percent of the Bank financing has gone to support water supply and transport in Shenyang and wastewater in Dalian, and the balance has been to support urban transport, water supply, and wastewater subprojects in medium-sized cities. World Bank support in the urban transport field has focused on alleviating transportation bottlenecks through road construction, improving road maintenance, enhancing traffic management, and increasing the efficiency and effectiveness of public transport. Bank interventions in the urban environment sector originally concentrated on water supply provision, and then later on wastewater management. Water pollution control efforts have been set in the context of improving environmental conditions in the Liao River Basin and reducing pollution into the Bohai Sea.

E. Borrower’s Institutional Capacity for Safeguard Policies [from PCN] Several Bank projects have been implemented in Liaoning Province and have been managed by the World Bank Project Office (LUCRPO) located in Provincial Construction Department. The experiences and knowledge accumulated will continue to support preparation of this project. However, at municipality level, there are a few municipalities who are relatively new to the Bank project, such as Tieling, Huludao, Liaoyang, and Xingcheng. With regard to EA preparation, Liaoning Academy of Environmental Sciences (LAES) has been contracted to prepare the EA and EMP for both urban environment and urban transport components. LAES is a Class A EA certificate holding institute based in Shenyang. This institute has been involved in EA preparation for several Bank funded projects, and are familiar with Bank’s safeguards policies. In addition to domestic consultants, an international consulting firm, Sogreah, funded by the French Government, are engaged to assist Liaoning to prepare the project, including EA documents. As needed, Liaoning has also stated its intention to hire an international consultant experienced with Bank EA requirements to help prepare the EA documents for the urban transport component.

F. Environmental and Social Safeguards Specialists

II. SAFEGUARD POLICIES THAT MIGHT APPLY Safeguard Policies Triggered Yes No TBD Environmental Assessment (OP/BP 4.01) X General: The LMC is a Category A project involving wastewater, water supply, solid waste, and urban transport subprojects. Standard environmental assessment and management methodologies will be followed for each subproject. A separate EIA will be prepared for each subproject, and consolidated reports will be prepared for the urban environment part and urban transport part.

Wastewater Projects: Water pollution control subprojects will be guided by the Liao River Basin Plan which was prepared in 2002 by the Liaoning Environment Bureau with assistance from the European Union and in coordination with the World Bank. The Basin Plan prioritized Safeguard Policies Triggered Yes No TBD water pollution control investments and formed the basis of the 10th and 11th Five Year Plans, as well as the on-going World Bank-financed Liao River Basin Project (LRBP) and the proposed LMC project. The three highest priority municipal wastewater programs identified in the Basin Plan are Shenyang, Yingkou, and Panjin. LRBP financed Phase 1 of the Yingkou and Panjin programs, and the LMC will finance Phase 2 programs in both cities. The project will also follow-up with improvements to wastewater collection systems in Liaoyang and Fushun, which received financing for the wastewater treatment plant and collection mains under the 1st Liaoning Urban Environment Project (1995-2001).

Water Supply: Liaoning is a water short province, and the Liao River Basin Plan highlighted the need to reduce water loses. LMC will focus on water conservation through improved metering and distribution system rehabilitation in Anshan, Haicheng, Fushun, Xincheng, Tieling and Liaoyang. Water reuse schemes are include in Tieling, Yingkou, and Panjin.

Solid Waste: Solid waste management in the medium-sized cities in Liaoning is still as rudimentary level, with incomplete collection and unsanitary disposal of waster. Under LMC, most cities will adopt a "system-wide approach" in planning for municipal waste which involves improvements to waste collection, transportation, disposal, and remediation/closure of existing unsanitary dumps. The technically most complex activity will be the closure of existing dumps.

Urban transport: The urban transport component includes proposals for new roads and upgrading existing roads. A full alternatives analysis will be an essential element of all major investment programs. Many elements of the project including traffic management and secondary road enhancement (both of which will improve conditions for bicyclists) are expected to have a marginally positive impact on urban air quality. Natural Habitats (OP/BP 4.04) X No natural habitats impacted by the project have been identified yet, and since the project is focused on urban environment the potential appears to be minimal. This issue will be investigated further during the environmental assessment process. Landfill sites are the only facilities located outside of the urban area and will be screened for their impact on natural habitats. Forests (OP/BP 4.36) X Pest Management (OP 4.09) X Cultural Property (OPN 11.03) X It is not expected project activities will affect any above-ground artifacts with archeological, paleontological, historical, religious, or unique natural values as defined under OPN 11.03, but this will be confirmed during the environmental assessment. However, most of the construction activity will involve excavation work and thus all contracts will include standard clauses which follow Chinese law and regulations regarding chance finds during construction. Indigenous Peoples (OP/BP 4.10) X Under the on-going Liao River Basin Project (LRBP), some minority ethnic households as defined by the government, including Manchurian, Koreans, and Mongolians were impacted by resettlement activities. A survey conducted under LRBP indicated that all affected persons were urban residents, scattered throughout the project area, and the project would not have specific Safeguard Policies Triggered Yes No TBD impact on ethnic minority communities. A similar survey will be conducted under LMC to determine the number ethnic minority households impacted by LMC and the nature of the impact. Involuntary Resettlement (OP/BP 4.12) X There will be resettlement associated with the transportation subprojects, and moderate amounts of temporary and permanent land acquisition connected to the urban environment subprojects. A RAP which complies with Bank policies will be prepared for each subproject, and a summary RAP prepared for all of LMC. Since some works may not be fully identified at the time of appraisal, a Resettlement Policy Framework will also be prepared. Safety of Dams (OP/BP 4.37) X Fushun receives its water supply directly from Dahuofang Reservoir which is located directly upstream of Fushun City. Dahuofang reservoir has a storage capacity of 2.2 billion m3, and serves as multi-purpose reservoir for municipal and industrial water supply, irrigation, and flood control for the cities of Fushun and Shenyang. The safety status of the Dahuofang dam will be investigated during project preparation, and the dam safety management program discussed with the Liaoning Water Resources Bureau. Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X

Environmental Category: A - Full Assessment

III. SAFEGUARD PREPARATION PLAN

A. Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS would be prepared: 01/31/2006

B. For simple projects that will not require a QER, the target date for preparing the PAD-stage ISDS: N/A

C. Time frame for launching and completing the safeguard-related studies that may be needed. The specific studies and their timing1 should be specified in the PAD-stage ISDS. The specific studies and their timing should be specified in the PAD-stage ISDS. Timetable for EA Preparation: There are approximately 22 infrastructure subprojects, and a separate EIA will be prepared for each subproject. Some project EIAs are more advanced than others, and the drafting of the he consolidated EIA reports for urban environment and transport will depend on subproject EIA preparation. The estimated schedule is as follows:

First Draft of Subproject EIAs, Consolidated Reports, and Consultations: --December 2005 Draft Final Subproject EIAs, Consolidated Reports, and Consultations:

1 Reminder: The Bank’s Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected persons. --March 2006 Final Subproject EIAs and Consolidated Reports: --June 2006

IV. APPROVALS

Signed and submitted by: Task Team Leader: Mr Shomik Raj Mehndiratta 09/29/2005 Approved by: Regional Safeguards Coordinator: Mr Lars C. Lund 09/29/2005 Comments: Acting for Glenn Morgan Sector Manager: Mr Hiroaki Suzuki 10/11/2005 Comments: Acting for Keshav Varma