INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE

I. Basic Information Date prepared/updated: 02/08/2011 Report No.: AC5850 Public Disclosure Authorized 1. Basic Project Data Country: Project ID: P107617 Project Name: Water Users Association Development Support Project Task Team Leader: Sari K. Soderstrom Estimated Appraisal Date: February 15, Estimated Board Date: April 19, 2011 2011 Managing Unit: ECSSD Lending Instrument: Specific Investment Loan Sector: Irrigation and drainage (60%);Central government administration (30%);Sub- national government administration (10%) Theme: Water resource management (29%);Rural services and infrastructure (29%);Rural policies and institutions (14%);Decentralization (14%);Administrative and Public Disclosure Authorized civil service reform (14%) IBRD Amount (US$m.): 4.00 IDA Amount (US$m.): 76.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: BORROWER/RECIPIENT 34.30 34.30 Environmental Category: B - Partial Assessment Repeater [] Is this project processed under OP 8.50 (Emergency Recovery) Yes [ ] No [X] Public Disclosure Authorized or OP 8.00 (Rapid Response to Crises and Emergencies)

2. Project Objectives The project’s development objective is to improve the effectiveness and financial viability of on-farm irrigation water distribution and management in the project areas.

3. Project Description The project objective will be achieved through capacity building and support to water users associations (WUAs), WUA support units, and the Azerbaijan Irrigation Amelioration Open Joint Stock Company (AIOJSC), and through rehabilitation of on- farm irrigation and drainage (I&D) infrastructure.

The project has three components: (1) Institutional Strengthening and Capacity Building

Public Disclosure Authorized including capacity building of WUAs ; provision of operations and maintenance equipment and management facilities to WUAs; establishment of a state supervisory body for monitoring and evaluation of WUA performance; and preparation of selected studies, research and demonstration pilots in irrigation and drainage and integrated water resource management; and institutional and capacity building for AIOJSC; (2) On-farm Irrigation and Drainage Rehabilitation, which will finance rehabilitation of on-farm irrigation and drainage systems for about 34 WUAs in 15 core raions which have been selected based on irrigated area and agricultural production potential; and (3) Project Management, and Monitoring and Evaluation, which will finance project management and implementation activities, and monitoring and evaluation by AIOJSC.

4. Project Location and salient physical characteristics relevant to the safeguard analysis With a project envelope of about US$ 114.3 million, the project will support about 34 WUAs on 85,000 ha with rehabilitation, and about 379 WUAs and 760,000 farmers in 27 raions (districts) with targeted capacity building measures like equipment and training. Component 2 will target nine core raions which were also included in the previous Bank financed irrigation project (Irrigation Distribution System and Management Improvement Project (IDSMIP): , , , Saatli, , , Aghjabedi, , , and six new core raions: Gusar, Ismaili, Gabala, Balakan, Zagatala, Gakh). Component 1 will target core raions and twelve additional WUA focus raions: Samukh, , Hadjigabul, Salyan, Neftchala, , Aghsu, , Ucar, Bilasuvar, Barda, Samaxi.

The project sites are all irrigated agricultural lands with already existing irrigation infrastructure, much of which requires rehabilitation. The bulk of the project areas are located in the Kura-Araz basin; the remaining areas are in the mountainous northern raions. The project sites draw irrigation water from international waterways under established international agreements and discharge into these waterways and eventually the Caspian Sea. In some cases, project sites are near protected natural areas. These include protected wetlands in the Kura-Araz basin and national parks, forests and natural areas in the mountainous raions.

5. Environmental and Social Safeguards Specialists Mr I. U. B. Reddy (SASDS) Mr Ximing Zhang (EASCS) Ms Gulana Enar Hajiyeva (ECSS3)

6. Safeguard Policies Triggered Yes No Environmental Assessment (OP/BP 4.01) X Natural Habitats (OP/BP 4.04) X Forests (OP/BP 4.36) X Pest Management (OP 4.09) X Physical Cultural Resources (OP/BP 4.11) X Indigenous Peoples (OP/BP 4.10) X Involuntary Resettlement (OP/BP 4.12) X Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: Environmental Assessment Safeguard Policy: Component 2 (irrigation and drainage rehabilitation) will involve environmental and social impacts triggering OP4.01. Because the anticipated adverse impacts are neither significant nor irreversible, and can be prevented or reduced through appropriate preventive actions or mitigation measures, the project has been classified as environmental Category B, requiring partial environmental assessment.

The exact number and location of the specific rehabilitation sub-projects to be undertaken under the project have yet to be determined. Therefore, the EA identifies generic impacts, both positive and negative, for infrastructure rehabilitation in the project areas and specifies generic prevention and mitigation measures for these impacts. Positive impacts include increased agricultural productivity, improved management of water resources, increased irrigation system efficiency, enhanced soil fertility, and reduced exposure to water-borne disease vectors. Many of these are also adaptation measures for the impacts of climate change. Potential negative impacts are construction- related, such as limited access, cutting of trees, improper waste management, and improper disposal of sediments excavated from canals and drains. There are also potential impacts on water quality from drainage discharge, on the quantity and quality of downstream river flows, on biodiversity and natural habitats in the project areas, and increasing use of pesticides. These potential adverse impacts will require attention, preventive action, and appropriate mitigation measures in the planning, design, construction, operation, and maintenance phases of the on-farm infrastructure rehabilitation component of the project. Specific impacts and preventive and mitigation measures will be identified during project implementation through environmental screening and review of sub-projects.

Pest Management Safeguard Policy: More generally, the recovery of the agricultural sector that is currently taking place in Azerbaijan is likely to increase pesticide use. Furthermore, with access to improved irrigation and drainage, it is likely that project beneficiaries will increase their use of pesticides. The Bank#s Agricultural Development and Credit Project (ADCP), with its training courses and national information campaigns on pesticide application, provides awareness raising and training on pesticide management and integrated pest management (IPM) for water users. In addition, the project will develop its own training program on pesticide management and IPM under Component 1.

Involuntary Resettlement Safeguard Policy: It is unlikely that the project (Component 2) will involve land acquisition since all irrigation infrastructure rehabilitation is planned on Government owned lands. However, there could be some temporary or permanent impacts in the form of loss of economically viable trees along irrigation canals and drainage collectors, which may affect the income of people deriving benefit from the trees. It is also proposed to construct four regional support centers and about 200 WUA offices, which might require some land. Therefore, OP 4.12 is triggered. It is estimated that about 9,000 m2 (0.90 ha) of land will be needed for construction of four (4) regional support centers and about 200 WUA offices. Most of these sites could be on Government lands.

Safety of Dams Safeguard Policy: The project triggers OP4.37 because the project will divert water from reservoirs formed by a number of existing upstream dams, and project areas will depend on the storage and operation of these existing dams for their supply of water and could not function if the dam failed. Furthermore, there are also a number of upstream dams which provide flood control protection to the project areas, and the Bank funded irrigation system will rely on the performance of these dams # failure of which could cause extensive damage to or failure of the irrigation systems. A total of 5 dams trigger OP4.37, Ashig Bayramli and Yeka-khana Dams in Ismailli District, Nohurgishlag Dam in Gabala District, Safikurd Dam in and Mingechevir Dam in District. Based on official documents provided by the Borrower, these 5 dams are deemed to be operationally safe.

International Waterways Safeguard Policy: The Samur, Kura, and Araz Rivers, which supply most of the water to the irrigation systems to be rehabilitated under the project, as well as the Caspian Sea into which these rivers flow, are all international waterways that trigger OP7.50. By design, the proposed project, however, is not expected to have any significant impacts on the quantity or quality of water flowing through these rivers or into the Caspian Sea. The project design is limited to the rehabilitation of existing irrigation schemes. There is no construction of new irrigation schemes, nor any extension of existing schemes. Moreover, the rehabilitation activities are expected to have minimal or no impact on the quantity or quality of water in (upstream or) downstream water bodies. The irrigation infrastructure improvements will not result in significant increases in either withdrawals from or discharges to the international waterways. Based on water quality monitoring conducted during the IDSMIP, which indicated no significant impacts from irrigation drainage in receiving water bodies, the project is not anticipated to result in significant impacts on the quality of water in these waterways. The project will include water quality monitoring at sites in the new raions. As the project is not expected to have any adverse impacts on the rights of the other riparian states on the international waterways, the Bank has issued a waiver pursuant to paragraph 7(a) of OP 7.50 for this safeguard policy.

2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: The most significant potential long-term impacts in the project areas are likely to be from climate change. The Environmental Impact Assessment (EIA) identifies and discusses a number of potential climate change related impacts, borrowing from Azerbaijan’s Initial (1998) and Second (2010) National Communications on Climate Change, which addresses potential impacts to water resources, agriculture, forests, and the Caspian Sea. By design, the project incorporates a range of #good practice# water management/ irrigation engineering measures that effectively serve as climate change adaptation measures as well. These include good practices for improved water resources management, engineering features to increase irrigation system efficiency, rehabilitation of drainage systems to reduce water logging in irrigated areas, and melioration of salinized soils in order to restore soil fertility. The project will also finance a study on climate change adaptation in the water sector.

3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. The EA considered a range of technological alternatives (e.g. lined canals and piped irrigation systems) to the basic irrigation system design employed by the proposed project. The EA ended up rejecting these alternatives for the following reasons. First, the EA concluded that the gains in reducing water losses achieved by lining canals would be modest (because of the nature of the soils in the bulk of the project areas) in comparison with the gains achieved by the project in addressing existing operational inefficiencies. Second, the EA concluded that piped irrigation systems are already in place in project areas where the topography allows gravity systems (i.e. the mountainous raions), but the project sites in the flat Kura-Araz River basin, where the bulk of the project areas are located, would have to depend on pumping and power-driven systems, which remain inefficient and unreliable at this point in Azerbaijan. As far as possible, the Government lands will be identified for construction of Regional Support and WUA offices to avoid impacts to private lands. Only if suitable Government lands are not available, private lands will be acquired.

4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. The Borrower, through AIOJSC has prepared an EIA and an Environmental Management and Monitoring Plan (EMMP) for the project in order to ensure: (i) that appropriate preventive actions and mitigation measures will be taken during project implementation; and (ii) that environmental monitoring will be performed during implementation in order to detect and address any adverse project impacts. The EIA prescribes a range of measures to address the potential adverse impacts identified, including environmental management guidelines for project construction contractors, good practices to prevent water pollution, and awareness raising/training in integrated pest management to reduce risks from any increased use of pesticides. The EIA also continues the ecological monitoring programme of IDSMIP, including ground and surface water quality monitoring at project sites, as well as sediment and soil sampling and analysis.

The AIOJSC demonstrated its capacity to ensure compliance with the Bank environmental safeguard policies during implementation of IDSMIP. The project will continue to employ a full-time environmental specialist who will oversee and monitor implementation of the EMMP, including compliance with the pest management safeguard policy, during the life of the project. During implementation of the IDSMIP, the environmental specialist maintained careful records of the environmental activities that took place at each project site (e.g. specific preventive actions and/or mitigation measures recommended; site inspections performed before, during, and after construction, etc.) and reported on the results of the ecological monitoring performed at project rehabilitation sites and at the sensitive lakes and wetlands in the project area (e.g. water quantity and quality, plant and wildlife surveys, etc.). These site records and monitoring reports, which were examined during preparation of this project, will be incorporated into the project’s overall monitoring and evaluation programme. It is the Task Team#s assessment that AIOJSC is able to continue ensuring compliance with the Bank’s environmental safeguard policies, as well as handle any questions or grievances that arise during implementation of the EMMP.

In terms of possible land acquisition - since the location of any potential new construction of WUA offices are not known, the Borrower has prepared a Resettlement Policy Framework (RPF) which describes the principles and mitigation measures for potential land acquisition related issues. The RPF describes the process for identification of impacts and describes the entitlements for different types of anticipated impacts and grievance redress mechanisms. Based on the RPF, social screening will be undertaken and appropriate mitigation measures will be proposed if required in the abbrevieated Resettlement Action Plans (ARAPs)prior to invitation of bids for the corresponding civil works and the ARAPs will be implemented to ensure that any affected people receive required compensation and assistance prior to commencement of the corresponding civil works.

During the preparation of the project, it was agreed that the borrower will hire one or more independent Dam Safety Experts to: (i) inspect and evaluate the safety status of the existing dams, their appurtenances and performance history; (ii) review and evaluate the owner’s operation and maintenance procedures; and (iii) provide written reports of findings and recommendations for any remedial work or safety-related measures necessary to upgrade the existing dams to an acceptable standard of safety. During project implementation, the Task Team will, together with the independent Dam Safety Experts, monitor the safety status, operation and maintenance procedures and emergency preparedness of these dams, and supervise the remedial works if any, to ensure the project implementation is in line with the Bank’s Safeguard Policy on Safety of Dams (OP4.37).

5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. The key stakeholders at the local level include the farmers in the project areas, the members of the participating WUAs, and the water and irrigation management officials in the local offices of AIOJSC. At the national level beneficiaries consist of the water and irrigation officials at AIOJSC, relevant officials at the Ministry of Agriculture (MOA), Ministry of Environment and Natural Resources (MENR), and Ministry of Health (MOF). The Borrower disclosed the draft EIA and EMMP in early August 2010 and held public consultations in and Zardab on August 20 and 23, 2010, respectively. The consultations were widely attended by WUA members from a large number of project raions, representatives from NGO, and government officials including representatives from the AIOJSC, MOA, MENR, and MOH. As part of social screening and preparation for any land acquisition, necessary consultations will be held with concerned stakeholders.

B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other: Was the document disclosed prior to appraisal? Yes Date of receipt by the Bank 12/16/2010 Date of "in-country" disclosure 08/20/2010 Date of submission to InfoShop 01/28/2011 For category A projects, date of distributing the Executive

Summary of the EA to the Executive Directors Resettlement Action Plan/Framework/Policy Process: Was the document disclosed prior to appraisal? Yes Date of receipt by the Bank 12/24/2010 Date of "in-country" disclosure 12/29/2010 Date of submission to InfoShop 01/26/2011 Indigenous Peoples Plan/Planning Framework: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Pest Management Plan: Was the document disclosed prior to appraisal? N/A Date of receipt by the Bank N/A Date of "in-country" disclosure N/A Date of submission to InfoShop N/A * If the project triggers the Pest Management and/or Physical Cultural Resources, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why:

C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting)

OP/BP/GP 4.01 - Environment Assessment Does the project require a stand-alone EA (including EMP) report? Yes If yes, then did the Regional Environment Unit or Sector Manager (SM) Yes review and approve the EA report? Are the cost and the accountabilities for the EMP incorporated in the Yes credit/loan? OP 4.09 - Pest Management Does the EA adequately address the pest management issues? Yes Is a separate PMP required? No If yes, has the PMP been reviewed and approved by a safeguards specialist or N/A SM? Are PMP requirements included in project design? If yes, does the project team include a Pest Management Specialist? OP/BP 4.12 - Involuntary Resettlement Has a resettlement plan/abbreviated plan/policy framework/process Yes framework (as appropriate) been prepared? If yes, then did the Regional unit responsible for safeguards or Sector Yes Manager review the plan? OP/BP 4.37 - Safety of Dams Have dam safety plans been prepared? N/A Have the TORs as well as composition for the independent Panel of Experts No (POE) been reviewed and approved by the Bank? Has an Emergency Preparedness Plan (EPP) been prepared and arrangements Yes been made for public awareness and training? OP 7.50 - Projects on International Waterways Have the other riparians been notified of the project? No If the project falls under one of the exceptions to the notification Yes requirement, has this been cleared with the Legal Department, and the memo to the RVP prepared and sent? Has the RVP approved such an exception? Yes The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the World Bank’s Yes Infoshop? Have relevant documents been disclosed in-country in a public place in a Yes form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities Yes been prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included in the project Yes cost? Does the Monitoring and Evaluation system of the project include the Yes monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed with the Yes borrower and the same been adequately reflected in the project legal documents? D. Approvals

Signed and submitted by: Name Date Task Team Leader: Ms Sari K. Soderstrom 02/08/2011 Environmental Specialist: Ms Gulana Enar Hajiyeva 01/28/2011 Social Development Specialist Mr I. U. B. Reddy 01/28/2011 Additional Environmental and/or Social Development Specialist(s): Approved by: Sector Manager: Ms Dina Umali-Deininger 02/08/2011 Comments: