Brazil - São Luís Enhancing Municipal Governance

BRAZIL - SÃO LUÍS ENHANCING MUNICIPAL GOVERNANCE AND QUALITY OF LIFE PROJECT E1693 P094315 V1 REGIONAL ENVIRONMENTAL ASSESSMENT - EXECUTIVE SUMMARY

Selected Acronyms ABNT Brazilian Association of Technical Standards CAEMA State of Maranhão Water and Sewerage Company PMSL Municipal Government of Sao Luis ETE Sewage Treatment Plant

1 Background The objective of the São Luís Enhancing Municipal Governance and Quality of Life Project is to improve public service in the Bacanga Basin of São Luís Municipality, and enhance the capacity of the city government in promoting local economic development and municipal management.

The municipality of São Luís, the capital of the state of Maranhão, is located on the Island of São Luís in the extreme north of the Brazilian Northeast. This ‘island’ is, in reality, an archipelago of 62 islands comprising 720 km2 of land and an additional 150 km2 of mangrove swamps. This archipelago is noted for its ecological diversity, containing mangroves, riparian forests and patches of Amazonian forest which, combined with over 30 km of beaches, display substantial potential for eco-tourism. The archipelago also contains the metropolitan region of São Luís, which is divided into four municipalities with a total population of over 1 million inhabitants of which more than 900,000 live in the São Luís municipality. The metropolitan region contains a substantial industrial sector with potential for expansion and its Itaqui seaport is a key force for development given its strategic location, depth and modern facilities. The city is of historical significance and its colonial center has been declared a UNESCO World Heritage Site.

Despite its potential, the municipality of São Luís is located in one of the poorest and least developed states of Brazil. In 2002, Maranhão was ranked as Brazil's poorest state and near the bottom of the list in terms of per capita household income, health indicators and access to services. Studies and surveys that have been conducted on the island demonstrate that the local water bodies - particularly the Anil and Bacanga Rivers and the ocean shore - are grossly affected by different sources of pollution caused by irregular land use and human occupancy. The main sources of pollution have been identified as: (i) the disposal of domestic sewage in open-air ditches; (ii) untreated sewage flowing directly into the water courses; (iii) the precarious standards of individual sewage disposal, mainly involving the use of pits; (iv) the inexistence of systemic and overarching methods for collecting and treating wastewaters generated in the area. The Bacanga River Basin, the focus of the proposed Project, is the largest raw water catchment area lying fully within the island, occupying 130km2 and containing over 230,000 of the municipality's residents. Despite the pressure of informal urban expansion, the basin is still 80% covered by vegetation. The Bacanga Basin is an important area in terms of economic activity as well as possessing natural and human resources. The basin area contains the city’s historical center and main industrial 1

July 2007 region, as well as the Bacanga State Park (with a reservoir that produces 10% of São Luís' potable water), together with a large proportion of the municipality's low-income, peri-urban population. To counter the effects of the large tidal variations within the basin and to allow the consolidation of upstream urban infrastructure, the State government constructed a dam and floodgate at the mouth of the Bacanga in the 1970s. This dam led to the formation of an artificial lake with a drainage area of 86 km2, which currently contains a population of around 200,000 inhabitants.

July 2007 Figure 1: Area covered by the Project

July 2007 If the floodgate system were operated properly and with the correct equipment, the dam would be capable of controlling water levels through the influx and outflow of water in the lake, allowing flood control up to a height of 4 meters. The deteriorated conditions of the floodgate system and its inadequate operation over the years have led to uncontrolled urban occupancy in the lake drainage areas at water levels lower than those initially planned (4 meters). The majority of the occupied area is located between water levels of 1.5 and 4 meters. Parts of the area suffer frequent flooding owing to the combined effects of intense rainfall in the basin and the poor operational state of the floodgates. The defective floodgate system results in a lack of water exchange in the lake-estuary system and significantly undermines the capacity of the lake to assimilate organic material, thereby aggravating the already deteriorated quality of the water arising from pollution caused by domestic and industrial wastewaters. Two situations have arisen in the course of the urbanization of the areas bordering on the Bacanga Lake: (i) the right side of the lake from the center up to the Rio das Bicas River is the site of consolidated urban areas where occupancy density has almost reached saturation point. Although density tends to decrease nearer to the Sacavém, human occupancy there still continues at a rapid pace; and (ii) the less densely occupied areas on the left bank, except for the more consolidated Anjo da Guarda neighborhood. The majority of these settlements live under the constant threat of flooding caused by the defective operation of the lake floodgates and heavy rainfall or because of the blockages in the drainage systems (occurring primarily around the Rio das Bicas River) which cause frequent flooding of public streets and the informal urban areas.

Photo 1: Flooded area and unhygienic living conditions.

July 2007 The Bacanga State Park (Parque Estadual do Bacanga) is of great importance for the Island of São Luís since it constitutes one of the last preserved fragments of the pre- Amazonian forest and serves to maintain a large green area which is extremely useful for preserving the island´s headwaters. Although the park contributes to the environmental quality of São Luis it is nevertheless the victim of a considerable number of irregular activities which have led to its partial degradation.

Parque do Bacanga – two aspects of conservation:

Photo 2: Water body inside the Bacanga State Park (riparian vegetation preserved).

July 2007 Photo 3: Grossly devastated area within the Bacanga State Park.

The aim of the Bacanga Basin project is to address and change the current situation through investments in urban infrastructure, upgrading environmental management and providing support for local economic development. The Bacanga Basin project is built around a number of urbanistic, socio-economic, environmental and institutional action lines, on the basis of which a group of multidisciplinary and integrated actions will be executed to provide optimum benefits and positive impacts for its main target - the population of the basin and, by extension, the resident population of the municipal area of São Luis as a whole. It is hoped to achieve this overarching objective through the following:  The recovery of the structures of the Bacanga Dam and its floodgate system and the implementation of new operating rules;  The establishment of infrastructure in poor areas through the provision of proper sanitation (sewerage facilities, water supply and urban cleaning), urban drainage, flood control, local access streets, surfacing and other complementary urban civil works;  The removal of people living at present in flood risk areas, involving the resettlement of households potentially affected by flood hazards, developing appropriate resettlement alternatives and finding a socially useful purpose for the previously occupied areas in order to avoid further " invasions";  The promotion of land tenure regularization to benefit the households remaining in the intervention areas;  To increase the capacity of the local municipal government in land use supervision and supervision/inspection in order to avoid new invasions and further illegal parceling of urban land;

July 2007  To provide training for local people at present working in the informal job market with a view to their joining the formal market, and to help them to qualify for alternative employment and income generating activities;  Improvement of the competitive capacity of the local municipal government through actions targeted at institutional strengthening. The project was classified as Category “A” by the World Bank in accordance with its safeguard policies (OP 4.01). In this respect, a Regional Environmental Assessment Report (RAR) was prepared in order to identify the potential environmental impacts of the project, to propose mitigating and compensatory measures for any negative impacts that might occur, as well as to seek to maximize the positive impacts, and to develop an Environmental Management Plan comprising all the mitigating and strengthening measures planned as part of the overall project. This document summarizes the outcomes of the Regional Environmental Assessment Report.

2 DESCRIPTION AND MAIN FEATURES OF THE PROJECT 2.1 Components 2.1.1. Component 1: Municipal Management Strengthening and Local Economic Development

This component will support the development of a Local Economic Development (LED) and Competitiveness Strategy, capacity building for job and income generation, technical assistance for financial and budget enhancement and technical assistance for project implementation.

The formulation of a Local Economic Development and Competitiveness Strategy will include a LED plan targeted at providing strategic directions for economic development; a competitive upgrading strategy for the critical clusters (Arranjos Produtivos Locais) such as tourism and cultural heritage preservation, and a resource- based cluster centered around the two major enterprises in the city; simplification of business processes (Doing Business) and the Municipal Balance ScoreCard; and other actions that are recommended from the cluster enhancement process.

Capacity building for Job and income generation support will be provided by financing activities such as training and facilitating access to existing microfinance projects, and by providing technical assistance support to the Deputy Secretariat of Employment and Income Generation (Secretaria Adjunta de Geração de Emprego, Trabalho e Renda).

Financial and Budget Management Enhancement will support the review of institutional structures and legislation related to budget and financial areas and strengthening of systems for planning, budget, financial administration, accounting and internal control; technical assistance in budget formulation; human resource management in budget and financial areas; training in budget and financial management; technical assistance in budget formulation and execution; fiscal information disclosure; and strengthening of the municipal procurement system, including assistance to the Permanent Procurement Center’s (CPL) Central Bidding Committee.

Finally, project implementation support will be provided to strengthen the Project Management Unit (UGP), support project management, project monitoring and evaluation, public service satisfaction survey, and conduct community outreach, communication and dissemination activities for the project.

July 2007 2.1.2 Component 2 – Sanitation and Water Improvements This component aims to improve the storm water drainage, sewerage and water supply systems as well as develop and pilot solid waste management measures in the targeted areas of the Bacanga Basin.

Photo 4: Homes without basic sanitation

A. Water Supply System The proposed solution was based on the conclusions of a technical diagnosis which showed that the flow currently available for the Bacanga Basin would exceed demand (i.e. it would more than cover 100% of the population over the lifetime of the Plan) if actions to reduce distribution losses and to ensure the effective production of current existing systems were taken.

In these circumstances there would be no need to expand the water production system. On the contrary, the only actions required would be to improve the production system consisting of the Batatã Dam and the Sacavém water treatment plant (ETA) and to extend the water distribution system.

Interventions of the State of Maranhão Water and Sewerage Company - CAEMA

According to the terms of a draft agreement between the Municipal Government and CAEMA, CAEMA will undertake the improvement works for the production and treatment systems in the basin, including: raising the height of the dam; the rehabilitation of Bacanga ETE facilities and of the Batatã Dam; works on the 8

July 2007 transmission pipes on the right side; and system sectorization in order to enhance the pressure zones. These measures will allow an increased system capacity from 260 L/s to 500 L/s, enough to universalize coverage within the project area, with good quality water and in the amount required by current legislation. The existing reservoirs will be utilized with no need to increase the volume of stored water.

Project interventions

The proposed interventions of the project include: a reduction in the number of deep tubular wells in the area, from 69 to 6; expansion of the water distribution system toward the non-serviced areas – especially on the left bank of the basin; an increase in the number of metered connections – an estimated need exists for 71,000 meters; acquisition of equipment to control unaccounted-for water (macro-meters) and for system automation and optimization; and rehabilitation of the concrete structure and the metallic bridge that support the 900 mm distribution pipes of the Bacanga Dam.

The project will also support a Loss Control Pilot Project for the Bacanga Basin, to be implemented by CAEMA. Project activities include: (i) improvements in the physical structures of the water supply system; (ii) purchase of equipment; and (iii) restructuring of the management units in charge of the system, including the introduction of adequate routines for operation and maintenance, aimed at ensuring the operational sustainability of the Project´s sanitation initiatives.

B. Sewerage System Improvements Sewerage interventions under the component will constitute the first phase of the sewage collection, treatment and disposal strategy for the entire Bacanga Basin. The sewerage system proposed for the Bacanga Basin addresses two separate situations: (i) interventions on the right bank where sewerage networks are already in place and a Sewerage Treatment Plant (the Bacanga ETE) is working at below capacity due to the lack of interceptor pipelines; the interventions on the right bank already benefit from engineering designs and will benefit from CAEMA investments; (ii) on the left bank, a conceptual study was developed to analyze the alternatives available for providing the best solution to the wastewater problem. a) Sewerage system on the right bank (CAEMA investment) The existing system consists of 106.21 km of sewerage collection pipelines, 5 lifting stations and 21,689 building connections. The collected sewage is treated in the Bacanga ETE (built in 2002) which has a nominal capacity of 300 L/s and which is operating at only 10% of its capacity due to the lack of adequate interconnection of the network to the ETE. The basin’s sewerage treatment strategy calls for the construction of sewerage collection pipelines and pumping stations that feed into the existing Bacanga Sewerage Treatment Plant (ETE). Additional funding has been sought by CAEMA from the Federal Government, through the Ministry of Cities under the Projeto de Aceleração e Crescimento (PAC), for construction of wastewater collection systems (including pumping stations and pipelines) for the neighborhoods located along the basin’s right bank. The following are the interventions proposed for the Coroadinho and Pindorama neighborhoods on the right bank:  Construction of 11.6 kms of collection pipelines;  Construction of 1 lifting station and pressure pipeline for the new area to be 9

July 2007 seweraged(sub-basin CC);  Construction of 2 pressure pipelines interlinking already seweraged areas to the CAEMA system;  Provision of 600 sanitation kits;  Installation of 2,040 connections. b) Sewerage system on the left bank The population targeted by the project that will benefit from the proposed system for the left bank amounts to around 99,000 inhabitants in 2005, and over the lifetime of the Plan is likely to rise to 149,000 (by 2030). The wastewater collection system foresees the installation of 199,427 meters of condominial branches, a 85,469 meter long conventional public network, a total of 12,370 m of trunk collectors and interceptor pipelines, and 12 lifting stations (EEE). The overall conception of the treatment and final disposal system involved analyzing 6 alternatives, as follows:  Alternative A - a secondary ETE located downstream from the dam near to the river mouth, with disposal into the estuary;  Alternative B - an ETE with preliminary treatment located downstream from the dam near to the river mouth, and a sub-aquatic outlet channel;  Alternative C - a secondary ETE located immediately downstream from the dam and with disposal into the estuary;  Alternative D - a secondary ETE located upstream from the dam and with disposal into Bacanga Lake;  Alternative E - transporting the sewage to the existing Bacanga ETE (right bank) with the expansion of its capacity and the effluents being disposed of in the estuary. Alternative E above was chosen mainly from the point of view of the costs involved in investment, operation and maintenance up to 2030. All the sewage collected on the left bank will therefore be directed for treatment in the Bacanga ETE, together with the wastewaters collected on the right bank. This will involve increasing the capacity of this ETE. The Bacanga ETE consists of an Upflow Anaerobic Sludge Blanket Reactor (UASB) followed by disinfection by ozonization. This treatment process involves low installation and operational costs, operating simplicity and pollution-removal compatible with the receptor bodies. C. Storm Drainage System Improvements The proposed stormwater drainage system aims to minimize the risks of flooding to which the population is subjected by reducing the damage caused by such floods and at the same time to promote urban development in a harmonious, coherent and sustainable manner. The micro and macro-drainage works will be concentrated on the Canal do Coroado and Rio das Bicas, and will seek to render more efficient the micro and macro-drainage systems already in place along the right bank of the Bacanga Basin. Interventions include the rehabilitation of urban storm drains and the construction of drainage networks to divert the flow of water from areas that currently experience flooding (such

July 2007 as streets) to the storm drains or detention basins, before the water reaches the Bacanga Lake.

Photo 5: Precarious drainage conditions

The proposed interventions consist of the following actions: (i) construction and rehabilitation of storm drain networks on the right bank of the project area – including the paving of affected areas along the canals – channeling the drained stormwater to the existing canals or to the Bacanga Lake; (ii) improvement of the operation of the urban drainage canals where operational deficiencies have limited proper functioning, by cleaning up the canals, improving operation and maintenance, and removing structural obstacles in the canals; (iii) the works will allow for a risk reduction in flood- prone areas to a storm Recurring Time (RT) of 25 years in the areas where works are undertaken for systems rehabilitation; (iv) rehabilitation of areas of environmental value in order to improve the quality of the waters that flow to Bacanga Lake and to reduce the decayed areas along the right bank of the lake.

2.1.3 Component 3 – Urban and Environmental Improvements

A. Informal area upgrading and resettlement A hydraulic and operational modeling study of the Bacanga Lake was undertaken in order to identify the risk-prone urban areas.

The study examined several scenarios of precipitation on the basin (RT of 2, 10 and 25 years), tidal conditions, the operational conditions of the floodgate systems, and the effects of those scenarios on flooding of consolidated urban areas in the drainage basin, including the need for the resettlement of populations living in critical areas.

July 2007 The analysis of the scenarios resulted in the suggested alternative for lake operation, with a maximum water level of 2 meters in the dry season and the maintenance of a system of daily and seasonal operation of the floodgates, so as to maintain the lake’s volume during times of intense precipitation and preventing floods on areas around the lake above the water level of 2 meters. The chosen alternative would result in better water conditions in the lake through the daily exchange in the lake-estuary system, as long as the systems of sewage collection were improved in the basin. This alternative also reduces significantly the need for resettling households in terms of the operating scenarios of up to the 3 meter water level.

Based on this operational definition of the lake, there will be a need for the resettlement of approximately 289 families living directly in the flood-prone areas and the environmental protection strip (APP) of 30 meters from the lake. Additional resettlement will be needed for some families living in wet areas and on the banks of the Rio das Bicas canal. Other operational alternatives would require a much larger resettlement operation. The outcomes of the hydraulic modeling study, dam operation and water quality in the lake have guided the conception of the other studies - especially the study on sewerage systems, urban development and macro-drainage.

July 2007 Photos 6 and 7: Consolidated and expanding urban areas Urban upgrading will focus on improving public spaces in the project communities, through selective provision of urban infrastructure and sanitation and the resettlement of families living in high-risk areas prone to flooding and environmental hazards. The main urban development interventions to be carried out in the project area include:

. Establishment of the legal limits of urban occupancy in the basin, as a means to preserve and allow for the return of the original vegetation in environmentally relevant areas, identify risk-prone households to be resettled and prevent future occupancy of the areas; . Resettlement of families living in risk-prone areas, such as the areas prone to flooding at the edge of the Bacanga Lake and families living in the maintenance zones of the storm drains. The initial estimate of the total number of families to be resettled is 750. The identification of areas and families for resettlement is still ongoing, as the key topographical studies needed to define the area subject to relocation have not been concluded yet; . Urban Leisure Equipment and Recovery of Permanent Preservation Areas - in the areas that will be unaffected by the irregular constructions in flood prone and preservation areas around the Bacanga Lake (a minimum 30 meter non aedificandi strip) leisure equipments will be installed wherever appropriate and/or the original vegetation of the APP replaced; . Opening up of local roads to improve access by public services in the area; . Construction of public spaces and community facilities in the resettlement area, such as plazas, squares, community centers, etc.; . Land tenure regularization for part of the population; . Other urban improvements in the areas designed to enhance accessibility and living conditions.

July 2007 B. Rehabilitation of the Bacanga dam A safety assessment study was conducted in accordance with the criteria and procedures of OP 4.37, due to: (i) the relevance of the operation on the lake and the present and future conditions of land use and occupancy on the basin, and the quality of its waters; (ii) its use as an important part of the street system connecting the city to the harbor; and (iii) the visibly poor conditions of the dam and floodgate system. The assessment pointed to the following main conclusions: (a) deterioration of the floodgate system; (b) deterioration of the supporting structure of floodgates and the spillover structure; (c) sub-aquatic erosion near to the supporting structure of the floodgates. This study also examined three alternatives for rehabilitating the dams:  Alternative 1: Rehabilitation of the structure of the dam and the supporting structure of the floodgate system by installing three new hydraulically operated “segmented” floodgates;  Alternative 2: Rehabilitation of the structure of the dam and the supporting structure of the floodgate system by installing six new flat hydraulically operated floodgates;  Alternative 3: Installation of a new floodgate structure at another location within the body of the dam. The three alternatives maintain the same daily automatic operational capacity, as foreseen in the study, aimed at reducing flooding and improving water quality. Alternative 2 was selected as involving the lowest installation costs. In addition, the alternative of not rehabilitating the floodgate system (and the possibility of the floodgates breaking down) was analyzed. This alternative would result in the possibility of the water reaching a level of between 4 and 4.5 meters in the Bacanga Lake basin, producing serious risks of flooding in currently existing urban areas. According to this study, around 9,450 households could be affected, in addition to a large number of commercial and service establishments and small industries.

July 2007 Photos 8 and 9: Views of the dam

C. Municipal Environmental Management Support

July 2007 Managed by the State Government, the Bacanga State Park covers a large part of the Bacanga basin. The depletion of the forest mangrove swamps, considered areas of permanent preservation, and of the areas of secondary growth (capoeira alta), was one of the major causes of disfigurement of the park's landscape. This was brought about primarily by tree-felling (for use as firewood and building materials for houses) and by the removal of the vegetation cover to facilitate access to the clay and stone that was dug and marketed locally. Another cause of destruction was uncontrolled agricultural use. All these activities, apart from undermining the quality of life for the local population, run contrary to the main objective of this park, which is the preservation of the natural resources (flora, fauna and water resources) vital for preserving the headwaters on the Island of São Luis. With the aim of upgrading the management of this area, the project will allocate resources to support the effective management of the Bacanga State Park by (i) updating the existing management plan; and (ii) ensuring effective liaison at an institutional level so that the respective Management Plan (Plano de Manejo) can be regulated and implemented, thereby adding considerable value to the environmental quality of the basin. A Terms of Reference was included in the Environmental Management Plan (PGA) to ensure the contracting of certain services to put the above- mentioned proposals into practice.

3 ENVIRONMENTAL ASSESSMENT 3.1 Compliance with World Bank operational and safeguard policies The legal and institutional guidelines utilized for the environmental assessment of the project components include, in addition to the environmental legislation currently in force, the operational and safeguards policies of the World Bank. The safeguards relevant to the present project are the following: 4.01 - Environmental Assessment; 4.04 - Natural Habitats; 4.11 - Physical Cultural Resources; 4.12 - Involuntary Resettlement; and 4.37 - Safety of Dams. Table 1

World Bank OP Project Actions OP 4.01 -Environmental Assessment Preparation of the AAR/PGA Undertaking public consultations OP 4.04 -Natural Habitats Clearing the permanent preservation areas bordering on the Bacanga Lake; putting the Bacanga State Park Management Plan into operation OP 4.11 - Physical Cultural Resources Salvage operations to proceed under the Environmental Supervision of Civil Works Project in the event of chance finds related to archaeological heritage. OP 4.12 - Involuntary Resettlement Involuntary Resettlement Policy Conceptual Framework; local economic development actions OP 4.37 - Safety of Dams Independent dam safety panel; rehabilitation of the structure of the Bacanga Dam; new operating rules

Environmental Assessment (4.01) – a Regional Environmental Assessment was undertaken in conformity with World Bank guidelines covering category “A” projects. This assessment covers interventions related to (i) urban and environmental upgrading of the Bacanga Basin over an area equivalent to 10,000 ha., and (ii) social and institutional development actions. The mitigating measures related to possible negative impacts were included in an Environmental Management Plan which contained the 16

July 2007 relevant costs, the implementation schedules and an indication of those responsible for its implementation. The project and its various components also benefited from a process of dissemination, discussion and public consultation. In order to reach as wide a public as possible, the municipal government of São Luis (PMSL) organized a number of meetings during the preparatory stage of the project with the local community leaders of the areas affected, especially the following:  Areinha (União dos Moradores da Areinha/Areinha Residents Union);  Coroadinho (Unidade Integrada Rubens Almeida/the Rubens Almeida Integrated Unit);  Sacavém -The Darcy Ribeiro Integrated Unit (IU Darcy Ribeiro);  Bom Jesus -The Parish of Divino Espírito Santo Alto do Parque Timbira;  Redenção - União dos Moradores da Redenção/ Redenção Residents Union;  Fátima neighborhood - The Nossa Senhora de Fátima Church;  Vila dos Frades -The Convent of Nossa Senhora dos Capuchinhos. To complete the process of dissemination and consultation, the PMSL disseminated the Executive Summary and the preliminary Regional Environmental Assessment Report (AAR) on its website and through correspondence with the main federal, state, and municipal bodies concerned, as well as with non-governmental and community organizations, the Public Ministry, etc. The final consultative hearing took place on July 6, 2007 with the participation of community-based bodies such as the Committee for the Defense of the Bacanga and Rio das Bicas Rivers, the District Health Committee, the Regional Engineering and Architecture Council and members of the general public. Questions arose referring to the expected number of people to be resettled, the proper operation of the dam to prevent flooding, and demands for fuller participation by the Rivers Defense Committee in the management of the project. The UGP Coordination unit adopted the latter demand as one of the management-related requirements of the project. In view of the fact that the infrastructure interventions were prepared at the conceptual level (with some of them at the technical, environmental and economic viability level) a series of additional engineering designs will be prepared during project execution. Once the basic designs are concluded, updating of the Regional Environmental Assessment Report will be conducted. This will be submitted to the World Bank for analysis and approval. Furthermore, specific environmental studies will be prepared in advance of the State of Maranhão environmental licensing process, in accordance with current State legislation. These studies will also be sent to the Bank for analysis and approval.

Natural Habitats (4.04) – Project interventions will promote the adequate use and occupancy of the region, with the maintenance of the maximum water level in the lake and the sectorization of a permanent preservation strip of 30 meters (APP). Plans will be prepared for use of these areas (vegetation, urban parks, leisure areas, etc) in order to promote their utilization by the population and prevent re-settlement.

The project will also include proposals for providing management instruments to deal with the Bacanga State Park (a Maranhão State responsibility).

July 2007 Physical Cultural Resources (OP 4.11) – The project will not affect the areas of historical and cultural heritage of the city of São Luís. Project targeted areas are outside the Central Historic District. Since the project will entail construction and excavation to expand and replace infrastructure, the EA will include screening for any known cultural property in the project area and will incorporate chance finding procedures in the event of culturally significant resources being discovered. Furthermore, Brazil has a well-developed legislative and normative framework in this respect, overseen by the National Institute for the Protection of Historic and Archeological Sites (IPHAN).

Involuntary Resettlement (4.12) – In addition to undertaking various civil works related to drainage, sewerage and upgrading of the street system in the Bacanga Basin, the upgrading of the risk areas will involve a need to resettle people currently living in areas at risk from flooding and hydromorphic soils. Planning for the resettlement of these households and businesses has sought to minimize the number of necessary removals, to keep intact the networks of social, cultural and economic contact existing in the residents´ places of origin and to provide the services that are essential to maintaining peoples´ quality of urban life in the relocation areas. In order to ensure that these requirements are met, a Resettlement Policy Conceptual Framework was prepared to guide the executive resettlement project that will be developed during project execution for the approximately 750 households that will be resettled.

The information currently available indicates the approximate number of families to be resettled, but specific households have yet to be defined. The identification of areas and families for resettlement is still ongoing, as the key topographical studies needed to define the area subject to relocation have not been concluded yet. The Resettlement Action Plan will be developed following additional public consultation and the elaboration of engineering designs of the area, as well as technical and topographical studies.

Safety of Dams (4.37) –The Bacanga Dam, operated by the State of Maranhão, was studied by an independent panel of experts. This panel drew attention to the serious risk of collapse of the single segmented floodgate in operation at the dam.

As a result of this assessment, rehabilitation work of the dam will be included in the project. The work will comprise rehabilitation of the structure and the electro- mechanical equipment of the Bacanga Dam in order to remove the risk of rupture and allow for proper daily operation.

The project will also undertake the preparation and implementation of new operational rules related to the floodgate system with a view to achieving the goal of controlling floods and improving the water quality of the lake.

3.2 Legal and institutional framework

The Municipal Environmental Control Institute (IMCA) was created in 1998 with a mandate to plan, supervise and execute the environmental policy of São Luis in a sustainable and participative manner. The activities of the institute relevant to the Bacanga Basin project include: (i) licensing the localization, installation, operation and extent of the civil works, developments and activities that are considered to be effectively or potentially liable to pollute or despoil the environment or that in any way could cause impacts on the environment; (ii) undertaking technical studies related to environmental zoning; (iii) setting environmental guidelines for the preparation of 18

July 2007 projects concerned with the parceling of urban land and for overseeing the various activities and developments related to the collection, recycling, handling and disposal of waste. In December 2006 an important series of environmental laws was approved and ratified by the São Luis Municipal Government. These established the authorities and basic rules required to run the municipal environmental system of which the executive body is the Municipal Environmental Control Institute (IMCA). The Municipal Council (COMUMA) serves as a consultative and deliberative organ and the Fund is intended to be responsible for managing the resources generated in the System. This scheme is in accordance with the model recommended by the national system - SISNAMA - under which the municipalities are entitled to take action on environmental matters concurrently with State and Federal bodies within their areas of competence. The Institute can assume immediately its function as a licensing entity, although a need exists for institutional strengthening and capacity-building in order for it to comply fully with its mandate. It is clear that a number of gaps require filling within its institutional structure, such as the need to create a specific environmental licensing unit and an independent supervision and monitoring structure - both of which would be of significant benefit to the project. The Institute could avail itself of a specific strengthening plan to address questions related to environmental licensing and the management of conservation areas, both of which could receive support and funding under the Bacanga Project. This proposal is contained in the Environmental Management Plan of the AAR.

4 SUMMARY OF THE ENVIRONMENTAL QUALITY OF THE PROJECT

In formulating basic sanitation and drainage alternatives through sectoral studies, a number of recommendations pursuant to environmental improvements were considered. These include:  To respect the UC’s, APP’s and environmentally fragile areas by minimizing the effects of the civil works undertaken in such areas;  To respect the restrictions defined in the environmental and urban macro- zoning rules established by the local municipal government;  To avoid interference with the areas declared by IPHAN as important to the national heritage;  To minimize the qualitative and quantitative alterations to the surface and underground water resources;  To respect the conditions established by CONAMA regarding the disposal of liquid waste in the water bodies;  To adopt solutions to minimize the potential negative environmental impacts arising from the civil works undertaken during project execution (earth moving; erosion, run-off of solids and silting-up of the water bodies; dust and noise; inconvenience to vehicles and pedestrians, etc);  To adopt solutions to minimize the potential negative environmental impacts of the operational phase of the project (to reduce to a minimum the generation of liquid, solid and gaseous waste; risks of overflows; energy consumption, etc.);  To adopt solutions that can contribute to the recovery and preservation of environmental protection areas and other areas of environmental interest;  To obey the restrictions arising from the operational conditions of the Bacanga 19

July 2007 Dam;  To reduce to a minimum the need to relocate residents on account of the disruption caused by the civil works. The new systems based upon these recommendations concerning (i) the proposal to rehabilitate the dam and to introduce new operating rules, (ii) the effective management of the Bacanga State Park, and (iii) the proposals for local economic development, will guarantee the prospect of better a quality of life for the population living in the basin. Damming the Bacanga River made it possible to expand the urban occupancy of the basin on the lower flood levels as well as to construct infrastructure such as public streets, drainage and wastewater systems. A considerable part of the urban area of the Bacanga Basin is currently located beneath the 4.0m flood level and is liable to be affected by the flood tides. In order to avoid significant flooding in the lower areas of the basin it is therefore vital that the reservoir be maintained at low flood levels during the rainy period. The alternative (non-availability of the dam or the dam being ruptured) means that the flood tide is likely to raise the water level to between 4 and 4.5 meters in the upstream areas. The impact of this rise in water level on the areas that are currently occupied for urban use is very substantial and could affect 9,450 homes and around 400 commercial and service establishments, as well as industrial premises. These properties would be directly affected and would require significant intervention by the public authorities to relocate the affected households. It is worth also considering that the Forestry Code (Código Florestal) governs the protection of permanent preservation areas around the lakes, lagoons and natural or artificial reservoirs (as is the case of the Bacanga Dam), which rules out simple flooding of these areas. It has to be remembered also that the dam was constructed in the 1970s and that important ecosystems were created by the existence of the lake both from the point of view of environmental protection as well as social and economic aspects. Given the above, the expected impacts of the project can be considered from the following two viewpoints: - Projects such as the Bacanga Basin project involving the establishment and/or recuperation of urban infrastructure (mainly sanitation and drainage) can produce positive beneficial environmental and social impacts. - The majority of the negative environmental impacts expected primarily concern the civil construction phase and can be adequately controlled by applying the safeguard measures contained in the Environmental Management Plan. The main positive environmental impacts identified are:  Reduced risks of flooding;  Improvements in the quality of life in the lower-income settlements;  Improved accessibility in a significant part of the urban area of the basin;  Improved water supply, sewerage facilities and solid waste disposal resulting from the new infrastructure;  Recovery of key environmental conservation areas - the Bacanga State Park and the Permanent Preservation Areas of the Bacanga Lake;  Support for jobs and income generation;

July 2007  Increased institutional capacities (urban and environmental management) and improved environmental licensing. The main negative environmental impacts identified are:  Involuntary resettlement of families and businesses;  Disruption to the urban infrastructure - streets, water, electricity and drainage networks;  Need for disposal of excess building and other rubble;  Risks of accidents on the construction sites - workers and members of the local population;  Temporary disruption to economic activities. The precarious situation in the Bacanga Basin is clearly shown in a number of different ways such as in the deterioration of natural conditions associated with irregular urban occupancy, which constitutes a risk to - and a negative impact on - the natural environment. In this type of scenario problems tend to form a continuous cycle, with one problem leading to another: for example, abuse of the drainage facilities, undermined by irregular and disorderly human occupancy, generates flooding and pollution from liquid and solid waste and affects a population that already lives precariously in flood prone areas. The people who pollute are the same who live precariously from the remaining natural resources such as subsistence fishing and who lack the infrastructure equipment (water, sewerage, regular waste collection, etc.) needed to improve their housing conditions. The picture of a fragile natural environment is completed by a population which (i) is also vulnerable, (ii) lacks the knowledge of how to behave in ways that would be less harmful to the built environment, and (iii) lacks the wherewithal to generate income and benefit from environmental and health education, etc.

Activities centered on health and environmental education are a fundamental requirement. These actions need to be developed in support of the sanitation and drainage civil works in order to avoid the deterioration of the structures and to counter the problems arising from inappropriate disposal of waste, irregular occupancy of areas of land unaffected by the project and other predatory actions caused by the population being unaware of the kind of benefits that the project could bring to the quality of life in the region. These actions need to be accompanied by robust PMSL inspection/supervision in order to ensure the integrity of the new and healthier urban fabric and of the new sanitation and drainage infrastructure.

The proposed mitigating measures were set out in detail in the Environmental Management Plan annexed to the AAR and summarized at the end of the present Executive Summary. The chart below illustrates the expected impacts and the mitigating and/or compensatory measures covered by the PGA. Table 2 COMPONENTS OF SOCIO-ENVIRONMENTAL MITIGATING-COMPENSATORY THE PROJECT IMPACT MEASURES Compulsory resettlement of an To implement the Family Resettlement estimated 750 households Project foreshadowed by the Policy Urban Development Impacts on wildlife Adequate measures planned in the PCAO and the Environment Impacts on aquatic fauna Fishing community to be alerted regarding the dangers of cadmium contamination

July 2007 Park management to be put into Protection of the Bacanga State operation, with the proposed supervisory Park support supplied by the local municipal government Disruption caused by the operation Controlled technical operation of the EEE; of the basic sanitation system Does not apply to the ETE units Flooding in the region of the To implement the interventions planned in Bacanga Lake the Macrodrainage Project Temporary problems caused to To plan and implement traffic re-routing in traffic in the public streets and the affected streets places Adequate construction procedures Generation of dust and noise planned in the Civil Works Environmental Supervision Project (PCAO) To design and implement efficient measures to ensure the safety of Risks of accidents in the worksites pedestrians and cyclists and to ensure that workmen use protective equipment (PCAO) Preparation and execution of drainage Ground impermeabilty works To implement the Family Resettlement Demand for public services Project foreshadowed in the Policy and to increase the competitiveness of the PMSL Improvements in Adequate construction procedures Basic Sanitation Earthmoving civil works planned in the Civil Works Environmental Supervision Project Adequate construction procedures Services infrastructure affected planned in the Civil Works Environmental Supervision Project Adequate construction procedures Water quality undermined during planned in the Civil Works Environmental the civil works phase Supervision Project Improved public health in the Implementation of the Wastewater region of the Bacanga Lake Collection and Treatment System Increased competitiveness of the Not applicable municipal government Institutional Improved management of the Strengthening and Deputy Secretariat for Not applicable Local Economic Employment and Income Development Generation Institutional strengthening in the Proposal for strengthening the IMCA environment area

5 ENVIRONMENTAL MANAGEMENT PLAN - PGA

The PGA consists of the following activities:

Socio-environmental management of the project - Management of the project will be undertaken by the Project Management Unit (UGP). This unit will be responsible for the administration of the project and will serve as a link between the São Luis municipal government (PMSL), the World Bank (IBRD) and the public or private organizations participating in project execution. The UGP will be responsible for supervising the environmental licensing aspects of the project, coordinating the implementation of all the projects contained in the Environmental Management Plan and for ensuring compliance with the norms and guidelines contained in the Environmental Supervision of Civil Works Program. Supervision will be undertaken by the UGP environmental 22

July 2007 expert (who will possess the qualifications and training as already agreed with the UGP) and also by a professional specialist in the environmental supervision of civil works. The UGP will also be responsible for updating the Regional Environmental Assessment Report (AAR) once the basic engineering designs for the interventions are completed.

Dissemination and Social Communication Plan (PCS) - This activities under this plan are designed to establish a link between the Project Management Unit (UGP) and the general public. The plan incorporates actions targeted on those residents to be resettled as well as for the benefit of the people of São Luis in general. The main purpose is to ensure that the residents directly affected by the sanitation, street and drainage infrastructure works are kept informed of the progress of these works. The major objectives of the PCS are therefore: to build a positive image of the project with the public in general, to seek to establish a common link between those responsible for developing the project and the local community, to encourage effective participation by the communities directly and indirectly affected at all stages of the enterprise and to establish direct channels of communication between members of civil society and the developers to ensure that the region´s population is fully aware of the impacts of the civil works. The plan will carry out actions targeted at the public in general, at members of the community directly affected by the works in the areas where they live and at the population involved in the involuntary resettlement activities. Civil Works Environmental Supervision Plan (PCAO) - Preventive measures can represent savings at the end of the civil works in terms of restoring the disrupted environment. These measures already form part of the new working methods. The PCAO defines a series of environmentally appropriate construction procedures and techniques related to the different stages of the work, aimed at:  preserving as much as possible and upgrading the landscape of the areas in the vicinity of the development, at all stages of the work;  notifying the construction firms of all the environmental criteria and conditions that must be respected at the different stages of construction;  advising workers of the regulations and norms in order to ensure environmentally correct conduct during the works phase. The PCAO is divided into 4 sub-activities: 1) hygiene, safety and workers´ medical services – HSM; 2) sanitation in the worksites – SCO; 3) workers´ environmental education – EAT; 4) environmental supervision and recovery of borrow pits, worksites and dumping – PRB; and finally 5) "chance finding" procedures related to cultural heritage. Environmental Education Project - This activity, aimed at the population directly affected and at the neighborhoods located in the basin, aims predominantly to transform environmental concerns into practice, reflecting the issues faced by the population in their day-to-day lives. The Environmental Education Project is structured on the basis of the following interdependent and complementary actions which will be coordinated by a technical team (from within the PMSL or contracted by the UGP) which will assemble a Management Group (Grupo Gestor), linked to the UGP. The actions will consist of: (i) Action Line 1 - Local Environmental Education, to be targeted at the population directly affected in the Bacanga Basin; (ii) Action Line 2 - development of a Health and Environmental Education Project for the Resettlement Areas; (iii) a specific environmental education project on sanitation; and (iv) a specific PEA for CAEMA. This management group will be responsible for coordinating all the actions proposed in 23

July 2007 the project and will coordinate activities with those specifically responsible for follow-up and support in each area of activity. Execution of the PEA will be undertaken by the UGP through the proposed Grupo Gestor and a temporary consultancy. Institutional Strengthening Project for the Environment - The aim of this project is to increase the capacities of the Municipal Environmental Control Institute (IMCA), so that it can fully carry out its functions as an integrated environmental body within SISNAMA. The new approach to environmental activities inherent in a project of this size for the city requires the bodies that are most directly concerned with project impacts to be strengthened so that it can meet the new demands placed upon them, (as is the case of IMCA). Another aim of the institutional strengthening project is to extend and qualify human resources that comprise IMCA team at the management, technical and operational levels so that this can deal with the increased responsibilities arising in the different areas covered by the IMCA. The planned activities consist of the following:  Human Resources Training – designed to formulate a short project to update a series of legal documents, etc (CONAMA resolutions, the Agreement on State and Municipal Competences, etc.), rapid procedures for licensing potentially low impact developments, etc.  Institutional Conformity Agenda – actions aimed at establishing uniform licensing and supervision/inspection procedures. In this respect, a model Licensing Environmental Manual is annexed to this PGA, which can be used integrally or partially for formulating the specific procedures to be utilized by the IMCA.  Increased Material Resources – the idea of this is to identify, on the basis of specific demands, the priority equipment needed, given that the licensing, supervision and monitoring of the civil works and actions to be developed under the Bacanga Basin project will involve the Institute in an increased number of activities. The costs of this project are budgeted at US$ 270,000 for training and capacity skills upgrading. The funds for buying the necessary equipment will be budgeted for in due course given that is not possible at present to quantify the demand for this equipment. Plan to Investigate Sources of Cadmium and to Control Effluents - the aim of this plan is to identify and describe the sources responsible for the discharge of effluents that contaminate the estuary environment with cadmium, particularly the Bacanga Lake. Identification of these sources will make it possible to evaluate the levels of contamination by cadmium and also to provide relevant data needed for progressing efforts to recover and preserve this particular urban environment - which is of major social and economic importance for São Luis. The plan will carry out the following activities:  to investigate economic activities located in the Bacanga Basin that use cadmium in their manufacturing processes with a view to locating and identifying the particular areas where these effluents are discharged into the domestic sewerage collection network and the Bacanga Basin stormwater drainage network;  to collect samples for qualitative and quantitative analysis of this polluting agent at the point of discharge;  to identify environmental control measures;  to specifically monitor the water in the reservoir and the fish population with a

July 2007 view to detecting the presence of cadmium. The total estimated value for undertaking the proposed tasks is US$ 250,000 which will be financed with the resources of the Bacanga Basin project and executed under the aegis of the UGP. In order to monitor contamination of the reservoir water and fish population, an agreement (covenant) will be arranged with a local university for this purpose. Municipality of São Luis Solid Waste Management Plan - This plan involves assisting the municipal government to develop the urban cleaning system by appraising current conditions and establishing guidelines and targets for sustainable development, institutional and management strengthening, technological modernization and socio- economic inclusion. Monitoring of the Water Quality of the Bacanga Lake and Estuary - This project aims to track the evolution of water quality with a view to presenting the results in the overall Project Outcome Assessment. Proposal for institutional liaison and the introduction of the management plan for the Bacanga State Park - The aim of this project is to identify the services to be undertaken by a consultancy firm for (i) aligning the Bacanga State Park Management Plan with the new land use and occupancy conditions applying to the protected area and bringing the proposal to up-to-date; and (ii) conducting a legal and economic feasibility study of the aforementioned Plan and establishing an environmental management model for this Conservation Unit. The macro-activities to be developed consist of projects to deal with (i) Knowledge, (ii) Control and Sustainable Uses, (iii) Recovery of Degraded Areas, (iv) Social Communication and Environmental Education; (v) Urban Development and Infrastructure; and (vi) Management of the Park. The preliminary budget to be made available from the resources of the Bacanga Basin project amounts to US$ 400,000, for which the UGP is responsible, with the participation of SEMA and the IMCA. Conceptual Framework for Involuntary Resettlement - The proposal to resettle 750 households was prepared in accordance with Safeguard OP 4.12. The main target of the resettlement proposal is to ensure restoration of the quality of life for the families affected by the enterprise both from the physical point of view (e.g. loss of old home) and from the viewpoint of other aspects such as possible breakdowns in the social and neighborhood support network. A number of specific baseline assumptions were therefore employed during the preparation of this proposal, as follows:  To minimize the number of properties to be expropriated;  To ensure that a variety of choices was available;  To ensure that housing conditions were either maintained or improved;  To ensure the possibility of maintaining incomes. The families who had their productive activities disrupted or reduced on account of the alteration of the status quo existing before commencement of the civil works should be compensated for these losses in order to enable them to rebuild their lives in as short a time as possible;  To ensure access to social services such as education, health, public transport, etc;  To seek on an ongoing basis to reduce the social and/or environmental impacts on the resident population to an absolute minimum.

Table 3: SUMMARY OF ENVIRONMENTAL MANAGEMENT PLAN – PGA 25

July 2007 Costs No. Activities Responsible parties (US$) Socio-environmental Costs incorporated in management 1 management of the project 300,000 2 Social communication (included in subcomponent 1.4: UGP and consultancy project implementation support) 250,000 (included in subcomponent 3.3: 3 Environmental education UGP and consultancy Municipal Environmental Management Support) Environmental control of Costs included in civil works 4 UGP and consultancy civil works contracts 270,000 Institutional strengthening (included in subcomponent 3.3: IMCA and 5 Municipal Environmental consultancy Management Support) 750,000 Solid Waste Management (included in subcomponent 2.2: 6 UGP and consultancy Plan Storm drainage system improvements) 250,000 Investigation of sources of 6 (included in subcomponent 3.2: UGP cadmium Rehabilitation of the Bacanga dam) 150,000 Monitoring of water quality 7 (included in subcomponent 3.2: UGP –Lake and Estuary Rehabilitation of the Bacanga Dam) 400,000 Management of the (included in subcomponent 3.3: 8 SEMA/UGP/IMCA Bacanga State Park Municipal Environmental Management Support) 7,672,000 Resettlement of (included in subcomponent 3.1: 9 UGP and consultancy households Informal area upgrading and resettlement) Total 10,042,000

6 RESETTLEMENT POLICY FRAMEWORK

Introduction. This section presents the executive summary of the Resettlement Policy Framework (RPF) for the São Luis Enhancing Municipal Governance & Quality of Life Project. The objective of the RPF is to guide the involuntary resettlement process for project-affected families located in the Bacanga Basin. The Resettlement Policy Framework (RPF) has been prepared in accordance with World Bank guidelines and safeguards (OP 4.12).

The information currently available indicates the approximate number of families to be resettled, but specific households have yet to be defined. The identification of areas and families for resettlement is still ongoing, as the key topographical studies needed to define the area subject to relocation have not been concluded yet. The Resettlement Action Plan will be developed following additional public consultation and the elaboration of engineering designs of the area, as well as technical and topographical studies.

Description of resettlement within the project. The project will require the resettlement of approximately 750 families, both as a result of water and sanitation improvement 26

July 2007 works performed under Component 2 and of the urban and environmental improvement activities under Component 3. All resettlement-related activities will be financed under Component 3 of the project1. The sub-component dedicated to informal area upgrading and resettlement under Component 3 will include: financing studies for the establishment of the legal limits of urban occupancy in the Basin; financing the cost of resettlement for families living in risk-prone areas; construction of local roads that will allow for improved supply of public services in the area; construction of public spaces and community facilities in resettlement areas; technical assistance for land tenure regularization for part of the population; and other urban improvements in the areas to enhance accessibility and living conditions.

Estimated population displacement. The project would involve resettling approximately 750 families that currently live in high risk areas. At present, these families face serious risk of flooding, exposure to water-borne diseases and to open air sewage, precarious water supply, and lack of trash collection service. The majority of these families live in the communities of Sá Viana (on the lake’s left bank, and at risk of flooding due to rainstorms and/or inadequate operation of the dam) and Coroadinho (along the Rio das Bicas canal, at risk of flooding due to faulty drainage networks). The following chart shows the initial estimate of the numbers of households and the localities liable to resettlement.

Table 4 Location No. Families

Banks of the Rio das Bicas River Canal 60

Water levels under 2m from Bacanga lake and the permanent 289 preservation area (APP)

Wet areas (hydromorphic soils) between 2 and 3m water levels 303

Subtotal 652

Safety percentage (10%) 65 Expanded Households (5%) 33

Grand total 750

Principles and objectives governing resettlement preparation and implementation. The main objective of the resettlement policy is to guarantee an equal or improved quality of life for the resettled families. Seven main principles guide this project’s resettlement policy: 1) minimize resettlement by identifying homes that can be improved through minimal investments in services (e.g. improvements in infrastructure); 2) offer various resettlement options, as families are not homogenous and have differing sets of needs; 3) provide decent housing conditions for resettled families, in terms of construction materials, etc.; 4) guarantee the opportunity for affected households to maintain their level of income, in cases in which resettlement directly affects income generation activities; 5) guarantee fair payment of indemnities; 6) ensure social service provision

1 This applies only to Bank financing. PMSL will provide counterpart funding, discussed in the final section of this summary. 27

July 2007 in resettlement areas, e.g. education, health, public transport; 7) maintain efforts to minimize social and/or environmental impacts on the population.

Socio-economic profile of project area, specifically of areas that contain families to be resettled. Research is being conducted by the project team to attain socio-economic data specific to the project area. The data presented below are linked to census tracts and do not necessarily coincide with the division of basins and sub-basis – one of the main criteria for defining the project area. Nevertheless, these data paint a picture close to the reality of the project area, and specifically of the communities to be resettled, as the census tracts used here include the two communities in question.

Table 5 Project Areas Indicator VILA VILA SÁ VIANA COROADINHO

Level of schooling Primary Primary Private permanent Private permanent households and households and Type of households in community informal and/or informal and/or structurally- structurally- incomplete homes incomplete homes 0-3 minimum Monthly income 1-3 minimum salaries salaries Form of water supply in permanent Main network Main network households Sewerage system type in permanent Cesspool Cesspool households Destination of solid waste for permanent Collected / disposed Collected / disposed households of on vacant land of on vacant land

Description of mechanisms for consultations with and participation of displaced persons. The principal objective of the consultation process is to maintain a permanent channel of communication among the many actors in the process. Throughout the project the municipality will adopt a set of mechanisms to encourage participation among the resettlement-affected population. The mechanisms for community participation will include: 1) an office staffed with technical experts trained to provide information about the resettlement process and hear grievances of the population; 2) meetings at the start of each new stage in the resettlement process, and whenever necessary or requested by the community; 3) consultations with the population, during meetings, on the resettlement options as presented; 4) development of a socio-economic cadastre through visits to affected households; 5) dissemination of the cadastre of the families to be resettled in locations easily accessible by the population; 6) ensuring that the most vulnerable groups (elderly, female and/or very young household heads, widows) are heard and their rights respected. The municipality will use, at a minimum, 4 mechanisms to consult with the population: i) socio-economic and real estate cadastre; ii) meeting to discuss criteria for selection of resettlement area; iii) meeting to define models for land parceling and residence type; iv) meeting to discuss the Assistance Policy and criteria for eligibility. The meetings will be held in the project area and will be documented with photos, and its acts registered and signed by those present. 28

July 2007 Grievance redress mechanism. During preparation and implementation an Ombudsman will be designated by the municipality to exclusively to address grievances or juridical processes as they arise as related to the Resettlement Action Plan. This Ombudsman will be composed of technical experts such as sociologists, social workers, engineers, etc. The Ombudsman will be prepared not only to receive grievances, but also to direct grievances to the specific sectors in which they can best be addressed. The main objective in addressing grievances is to provide concise, clear, and sound responses.

During the project preparation phase a series of public forums was held to disseminate and discuss the project and its components, in 7 locations: Areinha, Coroadinho, Sacavém, Bom Jesus, Redenção, Bairro de Fátima, and Vila dos Frades. To further information-sharing activities the PMSL disseminated the Executive Summary of the Preliminary Environmental Assessment on its website and through communications with NGOs community groups, and government agencies. The major consultation process took place on July 6 with participants from (i) community groups such as the Committee to Defend the Bacanga and Rio das Bicas rivers, the District Health Committee, residents associations; (ii) Federal University of Maranhão, Regional Board of Engineering and Architecture, and the general population. Among other topics, questions on resettlement were addressed during the consultation process. Compensation and Assistance Policies. The Compensation and Assistance Policies are based on, at a minimum, maintaining, or ideally, improving the quality of life of the affected families. The first step in designing the Compensation Policy is the identification of potential losses that could be incurred with the resettlement process. The identification of losses, material or otherwise (such as loosening of social ties), is a pillar of the Policy. For losses not easily measured, the resettlement team within the PMSL will establish compensatory procedures. The PMSL will adopt two forms of compensation: resettlement and indemnities. Options within resettlement include a) resettlement into a housing complex; b) self-resettlement (find own home; the indemnity would include an additional “social compensation” component); c) “cross- resettlement,” whereby a family to be resettled negotiates with a family not to be resettled, and the two parties exchange housing options. Indemnities will be offered in 2 forms: a) amount evaluated and paid according to the Brazilian Association of Technical Standards (ABNT) methodology; and b) monitored indemnities/indemnities with compensation or self-resettlement (see self-resettlement description).

Eligibility criteria for defining various categories of displaced people. Criteria include whether the household is used only for residential purposes or for mixed, commercial, or industrial use; and whether the residents are owners or renters of the property. The cut-off date for resettlement eligibility would be the date on which the cadastre is closed.

Legal framework and Bank policy requirements. The proposed resettlement framework is backed by Federal Law 10.257 of July 10, 2001. The project in Sao Luis is in conformity with current federal, state, and municipal legislation and meets requirements of Bank Safeguard Policy 4.12 – Involuntary Resettlement.

Identification of land for resettlement and housing alternatives. In its search for land on which families will be resettled the PMSL applied 5 criteria: 1) that it be located close to where the affected families currently live; 2) in an area of urban expansion; 3) has the possibility for introduction of urban infrastructure; 4) has adequate topography for the introduction of residential parcels; and 5) meets current urban legislation requirements. The site chosen is called Sitio Embratel and is located approximately 1 Km from where affected families of the left bank currently reside, and has capacity to hold 29

July 2007 approximately 600 residences. Although exact housing type is still to be determined, the PMSL has declared that it will offer 2 standalone, single story housing alternatives, of two to three bedrooms each, and of at least 36 m2.

Procedures for the preparation of the Resettlement Action Plan. The preparation phase for the plan will be divided into 3 stages. Stage 1 will consist of data collection, stage 2 of Planning and Elaboration of the Assistance Policy, and stage 3, the Action Plan. The combination of these 3 stages will result in the formulation of the Resettlement Action Plan. It is important to acknowledge that the involvement of the community will be encouraged throughout the elaboration of the Plan. The Plan will be sent to the IBRD by PMSL for Bank approval.

Arrangements for monitoring by the implementing agency. As part of the Resettlement Action Plan, monitoring will be executed with the following objectives: 1) Verify that the proposed actions are being implemented as planned; 2) Identify, during implementation, any difficulties and impediments to the process and introduce subsequent adaptations to improve the process; 3) Measure the effects of the project on the beneficiary population, considering the situations before, during and after the resettlement process; 4) Create a data base with the information obtained during implementation and the evaluations that take place to ensure that relevant lessons are fed into the design of other projects of this type. Monitoring will be executed at 3 points in time: first, after the execution of the cadastre; second, after the negotiation process during which new homes are delivered or beneficiaries paid indemnities; and third, during a 6-18 month period following resettlement. A sample of families will be selected to be monitored at these three stages.

Description of arrangements for funding and executing resettlement activities. The resettlement housing and communication activities, including land acquisition, production of approximately 600 homes, indemnities for 15% of households, cadastre, judicial processes, and office and maintenance costs, would be financed with a combination of resources from the municipal government (US$ 4.1M) and the Bank (US$14.7M). The UPP, under the Municipal Planning Secretariat, will be charged with executing resettlement activities, including the elaboration of the Resettlement Action Plan. The UPP will not take any resettlement related actions (such as removal of population) until the Plan has been approved.

July 2007