Initial Environment and Social Examination

Project Number: 50164-001 October 2018

China Water Environment Group Investment Limited and Xinkai Water Environment Investment Limited Integrated Wastewater Management Project (People’s Republic of China)

Prepared by China Water Environment Group Limited

This Initial Environment and Social Examination is a document of the Borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. Your attention is directed to the “Terms of Use” section of this website.

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Dali Erhai Basin Wastewater Interception Project

Initial Environmental and Social Examination

October 2018

China Water Environment Group Limited Table of Content

EXECUTIVE SUMMARY ...... I

A. Introduction ...... i B. The Project ...... i C. Baseline Environment and Social Conditions ...... ii D. Impacts and Mitigation Measures ...... iii E. Public Consultation and Grievance Redress Mechanism ...... iii F. Environmental and Social Management Plan ...... iv G. Conclusion ...... iv

I. INTRODUCTION ...... 1

II. POLICY, LEGAL AND ADMINISTRATIVE FRAMEWORK ...... 2

A. Policy Framework ...... 2 B. Legislative Framework for Environmental and Social Impact Assessment in PRC...... 2 C. International Agreements ...... 5 D. Applicable PRC and ADB Policies and Assessment Categories ...... 5 E. Assessment Standards ...... 6

III. DESCRIPTION OF PROJECT ...... 10

A. Overview ...... 10 B. Subproject 1: Wase and Shuanglang Area Lake Basin Wastewater Interception ...... 12 C. Subproject 2: Shangguan Area Lake Basin Wastewater Interception ...... 15 D. Subproject 3: Xizhou Area Lake Basin Wastewater Interception ...... 17 E. Subproject 4: Yinqiao and Wanqiao Area Lake Basin Wastewater Interception ...... 18 F. Subproject 5: Dali Town Area Lake Basin Wastewater Interception ...... 20 G. Subproject 6: Xiaguan North Area Lake Basin Wastewater Interception ...... 21 H. Project Schedule ...... 22 I. Manpower Requirement...... 23 J. Implementation Arrangement ...... 23

IV. ANALYSIS OF ALTERNATIVES ...... 25

A. Design Options for Wastewater Treatment Plant Layout ...... 25 B. Design Options for Wastewater Treatment Process ...... 26 C. Design Options for the Interception Pipeline Construction Method ...... 27 D. Design Options for Subproject 1: Wase and Shuanglang Area Lake Basin Wastewater Interception ...... 28 E. Design Options for Subproject 2: Shangguan Area Lake Basin Wastewater Interception ...... 30 F. Design Options for Subproject 3: Xizhou Area Lake Basin Wastewater Interception ...... 31 G. Design Options for Subproject 4: Yinqiao and Wanqiao Area Lake Basin Wastewater Interception ...... 31 H. Design Options for Subproject 5: Dali Town Area Lake Basin Wastewater Interception ...... 32 I. Design Options for Subproject 6: Xiaguan North Area Lake Basin Wastewater Interception ...... 34

V. DESCRIPTION OF ENVIRONMENT AND SOCIAL CONDITIONS ...... 35

A. Environmental Setting ...... 35 B. Physical Environment of the Project Site ...... 38 C. Ecological Resources ...... 41 D. Protected Areas and Physical Cultural Resources ...... 41 E. Socio-Economic Conditions ...... 43 F. Existing and Predicted Climate Change ...... 45 G. Associated Infrastructure Projects and Facilities ...... 46 VI. ANTICIPATED ENVIRONMENTAL AND SOCIAL IMPACTS AND MITIGATION MEASURES ...... 49

A. Design and Planning Phase and Avoided Impacts ...... 49 B. Pre-Construction Phase ...... 50 C. Construction Phase ...... 53 D. Operational Phase ...... 63 E. Indirect, Induced, and Cumulative Impacts ...... 68 F. Climate Change ...... 69

VII. PUBLIC CONSULTATION, PARTICIPATION AND INFORMATION DISCLOSURE 71

A. Legislative Framework for Public Consultation and Information Disclosure ...... 71 B. Information Disclosure ...... 71 C. Public Consultation ...... 72 D. Future Information Disclosure and Public Consultation Program ...... 74

VIII. GRIEVANCE REDRESS MECHANISM ...... 75

IX. ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN...... 77

X. CONCLUSIONS ...... 78

ATTACHMENT 1: ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN

ATTACHMENT 2: ENVIORNMENTAL AUDIT REPORT

ATTACHMENT 3: SOCIAL AUDIT REPORT

ATTACHMENT 4: LIST OF IUCN STATUS OF PROTECTED ANIMAL SPECIES FROM THE PROJECT AREA

List of Tables

Table III-1 Applicable Environmental Laws Table III-2 National and Local Administrative Regulations on Environmental Issues Table III-3 Relevant Laws and Regulations on Social Issues Table III-4 Applicable Environmental Guidelines Table III-5 Applicable Environmental Standards Table III-6 List of Subprojects under the Project Table III-7 Environmental Quality Classes in the Project Area Table III-8 Comparison of PRC and WBG Ambient Air Quality Standards Table III-9 Environmental Quality Standards for Noise (equivalent sound level LAeq: dB) Table III-10 Surface Water Quality Standard (Unit: mg/L, pH is dimensionless.) Table III-11 Groundwater Quality Standard for Category III (Unit: mg/L, pH is dimensionless, Chromaticity: degree) Table III-12 Air Pollutant Limits Table III-13 Integrated Wastewater Discharge Standards (GB 8978-1996) Table III-14 Construction Site Noise Limits. Unit: Leq [dB (A)] Table IV-1 Approximate Geographical Coordinates of Subprojects under Dali Basin Wastewater Interception Project Table IV-2 Components of Subproject 1 Table IV-3 Components of Subproject 2 Table IV-4 Components of Subproject 3 Table IV-5 Components of Subproject 4 Table IV-6 Components of Subproject 5 Table IV-7 Components of Subproject 6 Table IV-8 Overall Project Schedule Table IV-9 List of Main Construction Contractors for each Subproject Table V-1 Baseline Surface Water Quality of Erhai Lake Basin and Major Rivers Table V-2 Land and Population (2015) of Table V-3 Economic Performance in Dali City Table V-4 Project Affected Townships and Villages Table V-5 Land Distribution in Dali City Table V-6 Income Level of Dali City Table V-7 Income Source of Residents in Dali City (2015) Table VI-1 Job Opportunities During Construction Stage Table VI-2 Sensitive Receptors and Project Area of Influence Table VI-3 Summary of Soil Excavation, Reuse and Disposal Table VI-4 Noise from PME at different distance Table VI-5 Existing and Proposed Wastewater Treatment Capacities for the Dali Erhai Lake Basin Wastewater Interception Project Table VI-6 Solid Waste Generation for the Dali Erhai Lake Basin Wastewater Interception Project Table VI-7 Development of Tourism in Dali City Table VII-1 Comparison of Different Wastewater Treatment Plant Layouts Table VII-2 Comparison of Different Wastewater Treatment Processes Table VII-3 Comparison of Different Interception Pipeline Construction Methods Table VII-4 Comparison of the Alternative Routes for the Wase Area Wastewater Interception System Table VII-5 Comparison of the Alternative Routes for the Shuanglang Area Wastewater Interception System Table VII-6 Comparison of the Alternative Locations for the Xizhou WWTP Table VII-7 Alternative Comparison of Dali Town Area Wastewater Interception System Table VII-8 Comparison of Different Pipe Materials Table ESMP-1 Potential Impacts and Mitigation Measures during Construction and Operation Phases of the Project Table ESMP-2 Environmental & Social Mitigation Measures Implementation Cost Estimates Table ESMP-3 Environment Monitoring Plan – Wastewater Treatment Plant Table ESMP-4 Environment Monitoring Plan – Wastewater Interception System Table ESMP-5 Proposed Project "Three-Simultaneity” Environmental Protection Inspection Checklist

List of Figures

Figure IV-1 Map of Erhai Lake Figure IV-2 Location of the subprojects under Dali Erhai Lake Basin Wastewater Interception Project Figure IV-3 Location of Project Components in the Wase Area Figure IV-4 Location of Project Components in the Shuanglang Area Figure IV-5 Wastewater Treatment Process Flow Diagram of Wase WWTP and Shuanglang WTTP (CAST Process) Figure IV-6 Location of Project Components in the Shangguan Area Figure IV-7 Location of Project Components in the Xizhou Area Figure IV-8 Location of Project Components in the Yinqiao/ Wanqiao Area Figure IV-9 Location of Project Components in the Dali Town Area Figure IV-10 Location of Project Components in the Xiaguan North Area Figure V-1 Topographic Map of Erhai Basin Figure V-2 Shangguan District and Nearby Waterbodies Figure V-3 Yinqiao & Wanqiao Districts and Nearby Waterbodies Figure V-4 Dali Town and Nearby Waterbodies Figure V-5 Monitoring Points and Subproject Locations Figure V-6 Location of Cang Mountain Protection Area in Relation to the Project Figure V-7 Mean Annual Rainfall and Temperature for Dali City (1991 – 2015) Figure V-8 Temperature and Precipitation Variation in Northwest Figure V-9 Other Climate Factors Variation in Northwest Yunnan7 Figure V-10 Dali Integrated Pipe Network Project and Xiaguan North Area Lake Basin Wastewater Interception Project Figure V-11 Location of Dafengba Landfill Figure VII-1 Alternative routes for the Wase Area Wastewater Interception System Figure VII-2 Alternative routes for the Shuanglang Area Wastewater Interception System Figure VII-3 Alternative locations for the Shuanglang Wastewater Treatment Plant Figure VII-4 Alternative locations for the Xizhou Wastewater Treatment Plant Figure VII-5 Alternative locations for the Xizhou Wastewater Treatment Plant Figure VII-6 Alternative routes for the Dali Town Area Wastewater Interception System

ABBREVIATIONS

A2/O Anaerobic/Anoxic/Oxic AC Affected Community ADB Asian Development Bank AP Affected Persons AQG Air Quality Guideline CESM Corporate Environmental and Social Manager CESMT Corporate Environmental and Social Management Team CSC Construction Supervision Company CWE China Water Environment Group Limited DEIA Domestic Environmental Impact Assessment DEPB Dali Environmental Protection Bureau DMS Detailed Measurement Survey DI Design Institute EHS Environmental, Health and Safety EIA Environment Impact Assessment ESMP Environmental and Social Management Plan EPB Environmental Protection Bureau ESMS Environmental and Social Management System FSR Feasibility Study Report GDP Gross Domestic Product GHG Greenhouse Gas GRM Grievance Redress Mechanism IESE Initial Environmental and Social Examination IP Indigenous Peoples IPP Indigenous Peoples Plan LAR Land Acquisition and Involuntary Resettlement MEP Ministry of Environment Protection MSW Municipal Solid Waste NDN Nitrification/Denitrification NDRC National Development and Reform Commission PESM Project Environmental and Social Manager PESMT Project Environmental and Social Management Team PRC People’s Republic of China RESM Regional Environmental and Social Manager RESMT Regional Environmental and Social Management Team RP Resettlement Plan SPS ADB’s Safeguard Policy Statement WHO World Health Organization WWTP Wastewater Treatment Plan

WEIGHTS AND MEASURES km kilometer m2 square meter mu Chinese land measuring unit (1 hectare = 15 mu) 1 mu = 666.7 m2

EXECUTIVE SUMMARY

A. Introduction

1. China Water Environment Group Limited (CWE) has requested the Asian Development Bank (ADB) to provide investment support for the Dali Erhai Lake Basin Wastewater Interception Project (the Project). The project consists of a series of subprojects with the aim of improving the water quality as well as the protection of species and other natural resources in Dali Erhai Lake. 2. This Initial Environmental and Social Examination (IESE) has been prepared in accordance with domestic regulatory requirements and ADB’s Safeguard Policy Statement (SPS, 2009). It is based on: (i) information in the domestic environmental impact assessment (DEIA); (ii) feasibility study report (FSR); (iii) preliminary design report prepared by national institutes for the project, (iv) land acquisition and compensation agreements, (v) result of detailed measurement survey (DMS), (vi) consultation records, (vii) receipts of compensation. In addition, site visits and interviews were conducted to assess the environmental performance, labour and working conditions, land acquisition and involuntary resettlement (LAR), indigenous peoples, and gender and development aspects of the project. The IESE includes an Environmental and Social Management Plan (ESMP) (Attachment 1), which will be the guiding document for environmental and social-related issues in the construction and operational phases of the Project. B. The Project

3. The proposed Dali Erhai Lake Basin Wastewater Interception Project is located in Dali City of Yunnan Province and designed to improve water quality of Erhai Lake to Class II of PRC Environmental Water Quality Standard (GB3838-2002). The Project consists of 6 subprojects, including components such as wastewater treatment facilities, wastewater interception pipelines and booster pumping stations, and are summarized as follows. Subproject 1: Wase and Shuanglang Area Lake Basin Wastewater Interception is located at the north-eastern side of the Erhai Lake. It involves 2 wastewater treatment plants, 8 booster pumping stations, wastewater interception pipelines, effluent discharge pipelines and wastewater connection pipelines. The Subproject components related to Shuanglang Wastewater Treatment Plant has mostly completed its construction and commenced trial operation in January 2018, while the Subproject components related to Wase Wastewater Treatment Plan is expected to complete construction in January 2018 and commence trial and commercial operation in February 2018 and July 2018 respectively.

Subproject 2: Shangguan Area Lake Basin Wastewater Interception is located in the Shangguan town of Dali City, at the northern side of the Erhai Lake. It involves 1 wastewater treatment plant, 2 booster pumping stations, 3 wastewater sump tanks, wastewater interception pipelines and effluent discharge pipelines. The Subproject is expected to complete construction in January 2018 and commence trial and commercial operation in February 2018 and July 2018 respectively.

Subproject 3: Xizhou Area Lake Basin Wastewater Interception is located in the Xizhou town of Dali City, at the north-western side of the Erhai Lake. It involves 1 wastewater treatment plant, 1 booster pumping station, 2 wastewater sump tanks, wastewater interception pipelines and effluent discharge pipelines. The Subproject is expected to complete construction in January 2018 and commence trial and commercial operation in February 2018 and July 2018 respectively.

Subproject 4: Yinqiao and Wanqiao Area Lake Basin Wastewater Interception is located in the Yinqiao and Wanqiao town of Dali City, at the western side of the Erhai Lake. It involves 1 wastewater treatment plant, 3 booster pumping stations, 4 wastewater sump tanks, wastewater interception pipelines and effluent discharge pipelines. The Subproject is expected to complete construction in April 2018 and commence trial and commercial operation in May 2018 and October 2018 respectively.

Subproject 5: Dali Town Area Lake Basin Wastewater Interception is located in the Dali ancient town of Dali City, at the western side of the Erhai Lake. It involves 1 wastewater

i treatment plant, 1 booster pumping station, wastewater sump tanks, wastewater interception pipelines and effluent discharge pipelines. The Subproject is expected to complete construction in April 2018 and commence trial and commercial operation in May 2018 and October 2018 respectively.

Subproject 6: Xiaguan North Area Lake Basin Wastewater Interception is located in the Xiaguan North Town of Dali City, at the southern side of the Erhai Lake. It involves wastewater interception channels and interception pipelines. The Subproject is expected to complete construction in April 2018 and commence trial and commercial operation in May 2018 and October 2018 respectively.

4. Overall, the Project design elements will contribute to decreasing level of pollution to air and water, remediation of improper waste disposal and wastewater discharge sites and contaminated ground water as well as the protection of species and other natural resources. The expected impact of the Project will improve water environment, management of surface water resources and quality of life in Dali City. C. Baseline Environment and Social Conditions

5. Overview. Erhai Lake is the second largest fault lake in Yunnan Province, China. Erhai Lake is situated at 1,972 metres above sea level, covers a drainage area of approximately 2565 km2, and has a lake area of approximately 249.8 km2. With the multiple functions in regulating climate and providing water for industrial and agricultural use, Erhai Lake is the main water source for Dali City and the surrounding area. It receives water from the Luoshi River, Miju River and Yongan River in the north, Yulong River and Boluo River in the east, and smaller streams from the Cang Mountain in the west. Xier River, to the south, is the lake’s outlet and eventually flows into the Mekong River. Erhai Lake has an average annual inflow and outflow of 825 million m3 and 863 million m3 respectively. 6. Physical Environment. Surface quality in Erhai Lake and surrounding rivers often exceed the Class II requirements of GB3838-2002. The non-conformities are mainly caused by insufficient wastewater collection system and treatment facilities in Dali City. The lack of controls of the agricultural pollution sources also leads to the release of chemical fertilizers to the waterbodies, accelerating the eutrophication of Erhai Lake. As there are no major industrial developments or other emission sources within or close to the sampling locations in the Project Area, the air quality/noise environment of the Project Area appears to be relatively less polluted. Air and noise monitoring indicate that the Project Area is in compliance with Class II standards for ambient air quality (GB 3095-2012) and environmental quality standard for noise (GB 3096-2008) respectively.

7. Ecology. Ecological values in the project sites are considered to be relatively low. No species of conservation significance or trees of high amenity value were recorded from the Project Area. For the wildlife recorded in the Project Area, 8 species are first class national protected animals while 43 species are second class national protected animals.

8. Socio-economic status. Dali City, the capital city of Dali Bai , is located in the north-western part of the Yunnan Province. It has a registered population of 0.67 million in 2016. The population of ethnic minority is 0.44 million, accounting for 66% of the total population. In 2016, Dali has a GDP of CNY 35.507 billion (approximately US$5.64 billion), an 8.5 percent increase from the previous year. The disposable income of urban and rural residents in 2016 is CNY 31,205 and 13,329, with an 8.8% and 9.7% increase respectively from the previous year. The Dali Prefecture’s poverty incidence in 2017 is estimated to be 6.7%, showing a significant decrease in the poverty rate when compared to 9.2% poverty incidence in 2015. 9. Climate Change. Observed results suggested that in Yunnan Province, overall temperature is rising, but precipitation and moisture level are decreasing. Yunnan has also experienced continuous and intensifying drought conditions. It is recommended to increase the conservation efforts related to native vegetation and develop water-conserving agricultural techniques as adaptive strategies to climate change.

ii D. Impacts and Mitigation Measures

10. Avoided Impacts. Integrated design and safeguard project planning approach was adopted to avoid potential environmental and social impacts. Prior to the construction of new facilities, community health and safety buffer zones for the project sites were established as per requirements in the DEIA approval. In addition, two potential options for the project site, including new treatment plant locations and pipeline routes, were proposed, in which parameters such as environmental and social impacts, land availability, service area coverage, and construction complexity were analysed. Different wastewater treatment systems and ancillary system designs were also assessed during the design phase to avoid potential environmental and social impacts. 11. Construction Phase. Key risks and mitigation measures were as follows. (i) Clearance of scrub lands and trees, as well as habitat loss due to excavation and earth works – All disturbed areas will be restored after completion of construction works and the affected habitats will also be compensated as far as possible. (ii) Impacts to water quality of the waterbodies nearby the construction sites – Surface runoff, groundwater seepage and construction wastewater collected at the construction sites will be treated via sedimentation before being reused for construction, while sewage from construction workers will be collected at the pit latrines before being provided to local farmers as fertilizer if necessary.. (iii) Air pollution and noise impacts from construction activities – Dust removal equipment and measures, screen sheds and noise barriers will be provided around the construction sites. Transport activities and the use of high noise and high vibration equipment will be away from residential areas. (iv) Generation of construction, hazardous, and domestic waste in the construction sites – The waste will be cleared and removed regularly. Construction and domestic waste will be disposed of at designated landfills while hazardous waste will be handled by qualified collection company. (v) Health and safety – Signage will be provided around the construction sites to raise awareness of safety issues. Construction workers will be trained on general health and safety matters, and specific hazards of their works. Inspections will also be conducted by construction supervisor to keep track of the water quality, air quality and noise levels during the construction periods.

12. Operation Phase. Potential indirect impacts to the hydrology and ecology of the Erhai Lake, as a consequence of the Project, are considered minor. This is due to the project design, which includes control of wastewater quantity and quality discharge from the subprojects. Induced impacts could occur in the event of malfunctioning of wastewater management systems or accidents. This impact is likely to be of limited concern due as the effluent will be discharged to designated reservoirs for treated wastewater instead of the Erhai Lake. Additionally, the subproject companies have online water quality monitoring systems and environmental risk contingency plans in place, which could detect abnormalities in a timely manner and minimize the impacts resulted from unexpected conditions.

13. Climate Change. The Project is fundamentally designed toward improving resilience to climate change by ensuring a good perpetuation of the natural water cycle. Greenhouse gases can be emitted to the atmosphere during wastewater treatment processes, and adaptation measures have been included in the project designs to mitigate the impacts on climate change. E. Public Consultation and Grievance Redress Mechanism

Public Consultation 14. According to Dali EPB’s website, one round of information dissemination was conducted for the Project. Grievance Redress Mechanism 15. A Grievance Redress Mechanism was developed in order to receive and facilitate resolution of affected persons (AP) and/or affected communities’ (AC) concerns, complaints, and grievances about environmental performance, physical and economic displacement and affect Indigenous Peoples (IPs) communities, as a result of the development of CWE’s subprojects, through a transparent and understandable consultative process. 16. The steps of the Grievance Redress Mechanism are summarized as follows:

iii Stage 1. Recording and Registering Grievances

The Project Environmental and Social Management Team (PESMT) shall act as the central point of contact for the GRM in project and subproject level. On receipt of a complaint concerning any aspect of the project or subproject, in forms mentioned above or others as appropriate, the complaint shall be recorded in a grievance log and registered in a central data system for further action and internal tracking.

Stage 2. Screening and Assessing the Grievances

The PESM shall determine the eligibility of the grievance / complaint received with reference to the following criteria: (i) If the complaint pertains to the aspect of the project or subproject; (ii) If the complainant has a direct relationship with the project or subproject; and (iii) If the issues raised in the complaint fall within the safeguard scopes that the GRM is authorized to address. If the complainant is not eligible to be established, the complainant shall be informed of the decision and the reasons for the rejection. If the initial screening establishes the eligibility of the received grievance, the PESMT shall then conduct an assessment to investigate and verify the details and nature of the grievance.

Stage 3. Formulating Response and Redress Approach and Implementation

An initial response shall be formulated by the designated complaint-resolution personnel responsible for the assessment of the grievance / complaint. Depending upon its seriousness, relevant departmental managers, and/or the PESM/PESMT may need to participate in the feedback process at different levels. In the event of disagreement or any disputes between the APs and the Project Company, the case shall be escalated to higher authority, e.g. the RESM/RESMT, CESM/CESMT, or judicial authority if necessary, for resolution. Any outcome shall be communicated to the AP via written notice.

Stage 4. Settling, Tracking, Monitoring, Documentation and Evaluation of the Outcome

An evaluation system shall be established to assess the overall effectiveness and the impact of the GRM. PESM shall summarize and report all complaints / grievances received and the corrective actions taken correspondingly to the CESM/CESMT either on an annual or bi-annual basis. The results shall be used to contribute to continuous improvement of the GRM and provide valuable feedback to CWE management.

F. Environmental and Social Management Plan

17. An Environmental and Social Management Plan was developed that describes the requirements for impact mitigation, roles and responsibilities, monitoring, and reporting for environmental and social safeguards. The ESMP includes the GRM and an environmental monitoring program, to monitor and report on the environmental performance of construction and operations. The program forms part of a comprehensive set of environmental management documents. The ESMP includes institutional responsibilities, training needs, reporting schedules and implementation costs. It will include the program for future public consultation. G. Conclusion

18. It can be concluded that full and effective implementation of the Project ESMP, together with the training and Project assurances, will minimize the environmental risks of the Project and achieve compliance with the policy and regulatory standards applied in this IESE.

iv I. INTRODUCTION

1. Dali City is a provincial city of Dali Bai Autonomous Prefecture, located in the southwest of China and the north-western side of the Yunnan Province. The total land area of Dali is 1,468 square kilometres, accounting for 5.0% of the area of Dali Bai Autonomous Prefecture. Dali City has direct jurisdiction over 12 townships: Xiaguan Town, Dali Town, Fengyi Town, Xizhou Town, Haidong Town, Wase Town, Wanqiao Town, Yinqiao Town, Shuanglang Town, Shangguan Town, Qiliqiao Town and Taiyi Yi Ethnic Township. According to the Dali City Statistical Handbook 2012, the city has a population of around 610,000. 2. The Erhai Lake is the second largest highland lake of China. It is approximately 40 km long and 7-8 km wide, with an average depth of 11m and the total capacity of 2.5 billion cubic metres. It receives water from Miju and Mici Rivers in the north, Bolou River in the east, as well as streams from Cang Mountains in the west. The outlet of Erhai Lake is Yangbi River located in the south, which will eventually flow into Mekong River. 3. Erhai has been supporting the development of Dali City by preventing floods, supplying , regulating the climate and supporting tourism and fishery development. Due to rapid urban expansion and city development, the water quality of Erhai Lake has been deteriorating throughout the years, dropping down to Class III of PRC Environmental Water Quality Standard (GB 3838-2002). 4. Supported by the local Government, China Water Environment Group Limited (CWE) is developing the Dali Erhai Lake Basin Wastewater Interception Project (the Project), which aims to improve the water quality of Erhai Lake to Class II of PRC Environmental Water Quality Standard (GB3838-2002). The Project consists of 6 subprojects, including components such as wastewater treatment facilities, wastewater interception pipelines, booster pumping stations and reservoir for treated wastewater. The list of subprojects are listed in the table below:

No. Subprojects Project Status as of February 2018 1 Wase and Shuanglang Area Lake Basin Wase Wastewater Interception Undergoing testing and commissioning procedures Shuanglang Undergoing trial operation 2 Shangguan Area Lake Basin Wastewater Undergoing testing and commissioning Interception procedures 3 Xizhou Area Lake Basin Wastewater Interception Undergoing testing and commissioning procedures 4 Yinqiao and Wanqiao Area Lake Basin Wastewater Under construction Interception 5 Dali Town Area Lake Basin Wastewater Under construction Interception 6 Xiaguan North Area Lake Basin Wasterwater Under construction Interception

5. The Project’s safeguard requirements are based on the Category in accordance with ADB’s Safeguard Policy Statement (SPS, 2009). The potential environmental impacts of the Project are site-specific and mitigatable. Therefore, the environmental category of the Project is classified as “Category B” for environment, requiring the preparation of an Initial Environmental and Social Examination (IESE) and Environmental and Social Management Plan (ESMP). The project is classified as ”Category B” for Involuntary Resettlement (IR) and ”Category C” for Indigenous Peoples (IP) by ADB. The IESE is based on information in the feasibility reports (FSR), and preliminary design reports (PDR) for each subproject, domestic environmental impact assessment (DEIA) reports for the Project and for each subproject, the Consultant’s site visit, and key changes made by CWE when transforming the preliminary design into detailed design for each subproject. The data presented in tables and figures in this IESE are extracted from the PDR, FSR and DEIAs unless otherwise stated.

1 II. POLICY, LEGAL AND ADMINISTRATIVE FRAMEWORK

A. Policy Framework

6. Yunnan Province requires both mitigation and adaptation strategies to address climate change, incorporating technological innovation and structural adjustment, whilst also setting goals controlling greenhouse gas emissions. In addition, mitigation measures to address land acquisition and involuntary resettlement, indigenous peoples/ethic minority issues, labour and working conditions, and stakeholder engagement are also required. 7. Policies and actions for mitigation of climate change impacts include: (i) promote the optimization of industrial structure through economic structural adjustment; (ii) improve energy efficiency; (iii) development of renewable energy; (iv) reduce greenhouse gas emissions by the development of a circular economy; (v) reduce greenhouse gas emissions caused by agriculture production; (vi) strengthen carbon sequestration promoting tree planting; and (vii) enhance the scientific response to climate change by increasing research efforts. 8. Policies and actions for mitigation of social impacts include: (i) promote and provide means for adequate engagement with affected stakeholders through the project cycle on issues that could potentially affect them; (ii) disclose and disseminate all the relevant social information; (iii) compensate/offset for risks and impacts to workers and affected stakeholders; and (iv) ensure that grievances from affected stakeholders are responded to and managed appropriately. 9. Adoption of climate change policies and mitigation actions has been implemented in Yunnan Province in agriculture, forestry, water resources including , Yunlong Reservoir, Yangzong Sea, , Niulanjiang River and other vulnerable areas. Positive results have been achieved, including: (i) efforts to establish and improve the adaption of policies and regulations to climate change; (ii) the protection of forests and other natural ecosystems; (iii) strengthening of policies and regulations in water conservation and water planning, especially in regards to: flood control and disaster mitigation; the rational allocation of water resources; and water resources protection; (iv) improved monitoring and early warning systems for extreme weather and climate events; and (v) research on human health issues caused by climate change. B. Legislative Framework for Environmental and Social Impact Assessment in PRC

10. The EIA management procedure has been established in the PRC since early 1990s. The DEIA upon which this IESE is based were prepared under the provisions of the PRC’s EIA law of 2016 and the Classified Administration Catalogue of EIAs for Construction Projects (2015). The Preparation Requirements of EIA Report1 for Construction Projects (MEP Order No. [2012] 51), which requires that the summary of the DEIA reports should be disclosed on local EPB’s website a significant development that provides for opportunities to involve the public in the EIA process. The primary national laws and regulations that governed the EIA studies of the proposed project are provided in Table II-1 and Table II-2 respectively. 11. With regard to managing the social dimensions of the proposed project, the relevant national laws, regulations and guidelines related to social impact assessment, land acquisition, ethnic minorities, and consultation and participation are provided in Table II-3.

Table II-1 Applicable Environmental Laws

No. Title of the Law Year Issued 1 Environmental Protection Law 2014 2 Environmental Impact Assessment Law 2016 3 Water Law 2016 4 Water Pollution Prevention and Control Law 2008 5 Air Pollution Prevention and Control Law 2015 6 Noise Pollution Control Law 1996 7 Forestry Law 2016 8 Wild Fauna Protection Law 2016

1 A simplified EIA Report for smaller scale projects defined under the Classified Administration Catalogue of EIAs for Construction Projects (2015).

2 No. Title of the Law Year Issued 9 Solid Waste Pollution Prevention and Control Law 2015 10 Water and Soil Conservation Law 2010 11 Promoting Clean Production Law 2012 12 Urban and Rural Planning Law 2015 13 Land Administration Law 2004 14 Circular Economy Promotion Law 2009 15 Energy Conservation Law 2007 16 Work Safety Law 2014 17 Prevention and Control of Occupational Diseases Law 2016 18 Environmental Protection Tax Law 2016

Table II-2 National and Local Administrative Regulations on Environmental Issues

No. Title of the Regulations Year Issued National 1. Regulation on EIA Preparation for Infrastructure Planning Projects 2009 2. Regulations on the Administration of Construction Project Environmental 2017 Protection 3. Guiding Rules for Identifying Solid Wastes (on trial) 2017 4. Regulation on Protection of Wild Flora 1997 5. Classified Administration Catalogue of EIAs for Construction Projects 2016 6. Regulation on Cultural Heritage Protection 2016 7. Regulation on River Course Management 1998 8. Regulation on Basic Farmland Protection 1999 9. Regulation on Staged Evaluation and Approval of Construction Project EIA 2009 Documents (MEP) 10. National Strategy and Action Plan (2011-2030) 2010 11. Requirement for Social Risk Assessment of Large Investment Projects 2012 12. Regulation on Information Disclosure 2007 13. Information Disclosure Mechanisms for Construction Projects EIA 2015 14. The National Catalogue of Hazardous Wastes 2016 15. The Decision of the State Council on Several Issues Relating to Environmental 1996 Protection 16. The Administrative Measures on Environmental Acceptance of Completed 2001 Construction Projects 17. The Administrative Regulations for Supervision, Monitoring and Completion 2009 Environmental Acceptance of “Three-Simultaneous” Construction Projects (On Trial) 18. The Measures for the Prevention and Control of Environmental Pollution by 2005 Discarded Dangerous Chemicals 19. Measures on Public Participation in Environmental Protection 2015 20. Information Disclosure Guidelines for Construction Projects EIA (On Trial) 2013 21. The Measures for Enterprise Environmental Information Disclosure 2014 22. Regulations on Labor Protection in Workplaces where Toxic Substances are 2002 Used 23. Regulation on Construction Waste Management in Urban Area 2005 Local 24. Yunnan Province’s Regulation on Environmental Protection 2016 25. Yunnan Province’s Regulation on Protection 2014 26. Yunnan Province’s Regulation on Fuxian Lake Protection 2017 27. Yunnan Province’s Regulation on Yunlong Reservoir Protection 2014 28. Yunnan Province’s Regulation on Yangzong Sea Protection 2014 29. Yunnan Province’s Regulation on Dian Lake Protection 2014 30. Yunnan Province’s Regulation on Niulanjiang River Protection 2014

Table II-3 Relevant Laws and Regulations on Social Issues

No. Title of the Laws & Regulations Year Issued National 1. Notice of Application Reports of Projects issued by NDRC 2007 2. Land Administration Law 1999 3. Law of the People’s Republic of China on Administration of the Urban Real 1994 Estate

3 No. Title of the Laws & Regulations Year Issued 4. The document 28: State Council’s Decision to Deepen Reform and Strictly 2004 Enforce Land Administration 5. Regulations on the Protection of Basic Cultivated land 1998 6. The Land Administration Law 2004 7. The Implementation Rules for The Land Administration Law 1999 8. Decision of the State Council on Deepening the Reform and Rigidly Enforcing 2004 Land Administration 9. Guidelines on Improving the System of Land Compensation and Resettlement 2004 10. Real Property Rights Law 2007 11. The Administrative Measures for the Pre-view of Land Use for Construction 2009 Projects of the local government 12. Regulations on the Expropriation of Houses on State-owned Land and 2011 Compensation 13. Regulations on Appraisal of the Houses on State-owned Land 2011 14. Ethnic Minority Autonomous Religion Law 1984 15. Notice of State Council on the Establishment of Ethnic Minority Villages 1983 16. Regulation on the Work of Administrative Urban Ethnic Minority 1993 17. Labor Law 1995 18. Law of the People’s Republic of China on the Protection of Rights and Interests 1992 of Women 19. Interim Measures for Social Stability Risk Assessment of Major Fixed Assets 2012 Investment Project Local 20. Yunan Provincial Land Administrative Regulation 1999 21. Compensation Rates for Land Acquisition in 15 Prefectures (cities) of Yunnan 2014 Province 22. Implementation Measures of Land Acquisition and House Demolition for Dali 2016 Erhai Lake Basin Wastewater Interception Project

12. The PRC has established a comprehensive regulatory framework for environment safeguards, composed of laws and administrative legislation promulgated by the State Council; departmental regulations issued by the Ministry of Environment Protection (MEP); and provincial legislation and regulations, environmental standards; and international agreements. The amended Environmental Protection Law of the PRC (2014) and the Measures on Public Participation in Environmental Protection (2015) further strengthen the requirement of public participation and information disclosure. The suit of laws, regulations, guidelines and standards that governed the EIA studies of the proposed project are provided in Table II-4 to Table II-5 respectively.

Table II-4 Applicable Environmental Guidelines

No. Title of the Guideline Year Issued 1. Guideline on Jurisdictional Division of Review and Approval of EIAs for 2009 Construction Projects 2. Guideline on EIA Categories of Construction Projects 2008 3. Technical Guideline on EIA Outline (HJ2.1-2016) 2016 4. Technical Guideline on EIA Regarding Surface Water (HJ/T 2.3-1993) 1993 5. Technical Guideline on EIA Regarding Atmospheric Environment (HJ 2.2- 2008 2008) 6. Technical Guideline on EIA Regarding Acoustic Environment (HJ 2.4-2009) 2009 7. Technical Guideline on EIA Regarding Ecological Impact (HJ 19-2011) 2011 8. Technical Guideline on Underground Water Environment (HJ610-2016) 2016 9. Technical Specification on Water and Soil Conservation Plan (GB50433-2008) 2008 10. Technical Guideline on Environmental Risk Assessment for Construction 2004 Project (HJ/T 169-2004) 11. Industrial Restructuring Directory 2013

Table II-5 Applicable Environmental Standards

No. Title of the Standards Year Issued 1. Surface Water Quality Standards (GB 3838-2002) 2002 2. Ambient Air Quality Standards (GB 3095-2012) 2012 3. Urban Ambient Acoustic Quality Standards (GB 3096-2008) 2008 4. Integrated Emission Standards of Air Pollutants (GB 16297-1996) 1996

4 No. Title of the Standards Year Issued 5. Municipal Wastewater Treatment Plant Pollutant Discharge Standards (GB 2002 18918-2002) 6. Integrated Wastewater Discharge Standards (GB 8978-2002) 2002 7. Drinking Water Quality Standards (GB 5749-2006) 2006 8. Groundwater Quality Standards (GB/T 14848-93) 1993 9. Emission Standards of Environment Noise for Boundary of Site (GB 12523- 2011 2011) 10. Noise Limit of Industrial Enterprises (GB 12348-2008) 2008 11. Standards for Pollution Control on Hazardous Waste Storage (GB 18597-2001) 2001 12. Emission Standards for Odor Pollutants (GB 18599-2001) 2001

C. International Agreements

13. The PRC is a signatory to international agreements on environmental protection. Those relevant to the Project, along with the date of signing by the PRC, include: - Kyoto Protocol to the United Nationals Framework Convention on Climate Change, 23 February 2005. To reduce greenhouse gas emissions by enhancing the national programs of developed countries aimed at this goal and by establishing percentage reduction targets for the developed countries;

- Montreal Protocol on Substances that Deplete the Ozone Layer, 1 January 1989. To protect the ozone layer by controlling emissions of substances that depletes it; and,

- United Nations Framework Convention on Climate Change, 21 March 1994. To stabilize greenhouse gas concentrations in the atmosphere at a low enough level to prevent dangerous anthropogenic interference with the climate system.

D. Applicable PRC and ADB Policies and Assessment Categories

14. ADB’s Safeguard Policy Statement (SPS 2009) provides the basis for this Project IESE. All projects funded by ADB must comply with the SPS. The purpose of the SPS is to establish an environmental review process to ensure that projects undertaken as part of programs funded under ADB loans are environmentally sound, are designed to operate in line with applicable regulatory requirements, and are not likely to cause significant environment, health, or safety hazards. 15. This Project is classified as “Category B” for Environment, ”Category B” for IR and ”Category C” for IP under ADB SPS 2009, requiring an initial environmental and social examination (IESE), as the project environmental impacts are site-specific and mitigatable. 16. Domestically, the project is classified as “Insignificant Impact” in accordance with the Classified Administration Catalogue of EIAs for Construction Projects issued by the PRC’s Ministry of Environmental Protection (MEP) in 2016, requiring the DEIA reports to be prepared in the Simplified EIA format. The DEIA reports were reviewed and approved by Dali Environmental Protection Bureau (EPB). Components of “Dali Erhai Lake Basin Wastewater Interception Project”, and approval date of the DEIAs are listed in Table II-6 below.

5 Table II-6 List of Subprojects under the Project

Project Components Date of EIA Approval Wase and Shuanglang Area Lake Basin Wastewater Interception Shangguan Area Lake Basin Wastewater Interception Xizhou Area Lake Basin Waste Water Interception 3 November 2016 Yinqiao and Wanqiao Area Lake Basin Wastewater Interception Dali Town Area Lake Basin Wastewater Interception Xiaguan North Area Lake Basin Wastewater Interception

E. Assessment Standards

17. The environmental standard system that supports the implementation of the environmental protection laws and regulations in the PRC can be classified by i) ambient environmental quality, and ii) pollution emission and/or discharge standards. ADB’s SPS requires projects to apply pollution prevention and control technologies and practices consistent with international good practices such as the World Bank Group’s Environmental, Health and Safety (EHS) Guidelines2. For this assessment, where EHS standards exist for parameters and are relevant, they are used in parallel with PRC standards in this assessment. 1. Evaluation against Ambient Standards

18. Dali EPB has designated the environmental quality classes that apply to each component of the proposed Project, which is summarized in Table II-7 below.

Table II-7 Environmental Quality Classes in the Project Area

Function Area Function Classes for the Project Air quality Class II of GB3095-2012 Acoustic environment Class II of GB3096-2008 Surface water quality Class III of GB3838-2002 Groundwater quality Class III of GB/T14848-93

19. Air Quality Standards. The PRC ranks air quality into three classes according to “Ambient Air Quality Standard” (GB 3095-1996). Class I is the best air quality and Class III is the worst. A new set of standards was issued in 2012 (GB 3095-2012), replacing GB 3095-1996, and is effective in all municipal level city on 1 January 2016 nationwide. The new standards combine Class II and Class III and introduce PM2.5 standards, and make NO2 standards more stringent. 20. The World Health Organization (WHO) has set up air quality guideline (AQG) standards for various air quality parameters for the protection of public health. Recognizing that progressive actions are needed to achieve these standards and the financial and technological limitations of some countries or localities especially in developing countries, the WHO also established interim targets as intermediate milestones towards achieving the AQG (Table II-8). Table II-8 Comparison of PRC and WBG Ambient Air Quality Standards

Parameter Averaging PRC National PRC National World Bank Group period Standards Class I Standards Class II EHS Guidelines3 (μg/m3) (μg/m3) (μg/m3) GB3095- GB3095- GB3095- GB3095- Interim AQG 1996 2012 1996 2012 target SO2 1-year 20 20 60 60 n/a n/a 24-hour 50 50 150 150 50-125 20 1-hour 150 150 500 500 n/a n/a NO2 1-year 40 40 80 40 n/a 40 24-hour 80 80 120 80 n/a n/a 1-hour 120 120 240 200 n/a 200

2 World Bank Group. 2007. Environmental, Health and Safety Guidelines General EHS Guidelines. Washington: World Bank. 3 World Bank Group. 2007. Environmental, Health and Safety Guidelines General EHS Guidelines. Washington: World Bank.

6 Parameter Averaging PRC National PRC National World Bank Group period Standards Class I Standards Class II EHS Guidelines3 (μg/m3) (μg/m3) (μg/m3) GB3095- GB3095- GB3095- GB3095- Interim AQG 1996 2012 1996 2012 target CO 24-hour 4,000 4,000 4,000 4,000 n/a n/a 1-hour 10,000 10,000 10,000 10,000 n/a n/a TSP 1-year 80 80 200 200 n/a n/a 24-hour 120 120 300 300 n/a n/a PM10 1-year 40 40 100 70 30-70 20 24-hour 50 50 150 150 75-150 50 PM2.5 1-year - 15 n/a 35 15-35 10 24-hour - 35 150 75 37.5-75 25 * n/a = not applicable

21. Ambient Acoustics Quality Standards. Noise environment for the project’s settings will be evaluated against Class II standards of the Ambient Acoustic Quality Standards (GB3096-2008), which categorizes five functional areas based on their tolerance to noise pollution: from Category 0 to Category 4. Category 0 is for areas with convalescent facilities that are the least tolerant to noisy environment, and therefore, has the most stringent day and night time noise standards. Category 1 is for areas predominated by residential areas, hospitals and clinics, educational institutions and research centers. Category 2 is for areas with mixed residential and commercial functions. Category 3 is for areas with industrial production and storage and logistics functions. Category 4 is for regions adjacent to traffic noise sources such as major roads and highways, and is subdivided into 4a and 4b with the former applicable to major road and marine traffic noise and the latter applicable to rail noise. 22. Standards for various functional area categories are compared with the WBG’s EHS guidelines presented in Table II-9 below, showing that the EHS guidelines have lower noise limits for residential, commercial and industrial mixed areas but higher noise limits for industrial areas. The EHS guidelines do not have separate noise limits for trunk roads but apply the same noise limits based on whether the areas are for residential or industrial uses.

Table II-9 Environmental Quality Standards for Noise (equivalent sound level LAeq: dB)

Functional Applicable Area Daytime Nighttime Area PRC National Standards Class II 06:00 - 22:00 22:00 - 06:00 0 Areas needing extreme quiet, such as convalescence 50 40 areas 1 Areas mainly for residence, hospitals, cultural and 55 45 educational institutions, administration offices 2 Residential, commercial and industrial mixed areas 60 50 3 Industrial areas, warehouses and logistic parks 65 55 4a Area within 35 m from both sides of expressway, and 70 55 Class 1 and Class 2 roads 4b Areas nearby railway operation 70 60 WBG EHS Guidelines4 07:00 - 22:00 22:00 - 07:00 - Residential; institutional; educational 55 45 - Industrial; commercial 70 70

23. Surface Water Quality Standards. For water quality assessment, the determining standards will be Surface Water Quality Standards (GB3838-2002). It defines five water quality categories for different environmental functions. Class I is the best, suitable for head waters and National Nature Reserves. Class II is suitable for drinking water sources in Class I protection areas, habitats for rare aquatic organisms, breeding grounds for fish and crustaceans, and feeding grounds for fish fries. Class III is suitable for drinking water sources in Class II protection areas, wintering grounds for fish and crustaceans, migration routes, water bodies for aquaculture and capture fishery, and swimming activities. Class IV is suitable for general industrial use and non- contact recreational activities. Class V is the worst which is only suitable for agricultural and

4 World Bank Group 2007, lbid

7 scenic water uses. The surface water quality standards for each categories are shown in Table II-10. There are no EHS guidelines or targets for water quality in this context. Table II-10 Surface Water Quality Standard (Unit: mg/L, pH is dimensionless.)

Parameter pH DO COD BOD5 NH3-N TP TN Class I Standard 6-9 ≥7.5 ≤15 ≤3 ≤0.15 ≤0.02 ≤0.2 Class II Standard 6-9 ≥6 ≤15 ≤3 ≤0.5 ≤0.1 ≤0.5 Class III Standard 6-9 ≥5 ≤20 ≤4 ≤1.0 ≤0.2 ≤1.0 Class IV Standard 6-9 ≥3 ≤30 ≤6 ≤1.5 ≤0.3 ≤1.5 Class V Standard 6-9 ≥2 ≤40 ≤10 ≤2.0 ≤0.4 ≤2.0 Source: Surface Water Quality Standard (GB3838-2002).

24. Groundwater Quality. The determining standards for groundwater quality will be Groundwater Quality Standards (GB/T 14848-1993). There are no equivalent EHS targets. 25. The standard defines five water quality categories for different environmental functions. Category I is the best, with the lowest background level of natural chemical composition. Class II has a higher natural chemical composition than Category I. Both Category I and II are suitable for any kind of water use. Category III is with reference to the Human Health Index, which is suitable for industrial, agricultural and household drinking purposes. Category IV is mainly used as industrial and agricultural use and requires treatment for household usage purpose. Category V is the worst and are not suitable for any kind of water use. 26. The project region satisfies the Category III of Groundwater Quality Standards shown in Table II-11 below.

Table II-11 Groundwater Quality Standard for Category III (Unit: mg/L, pH is dimensionless, Chromaticity: degree)

Parameter Standard Parameter Standard pH 6.5-8.5 Cyanide ≤0.05 CODMn ≤3.0 Arsenic ≤0.05 Total Hardness ≤450 Selenium ≤0.01 TDS ≤1000 Cadmium ≤0.01 NH3-N ≤0.2 Chromium-6 ≤0.05 NO3-N ≤20 Copper ≤1.0 Sulfate ≤250 Zinc ≤1.0 Chloride ≤250 Iron ≤0.3 NO2-N ≤0.02 Manganese ≤0.1 Mercury ≤0.001 LAS ≤0.3 Lead ≤0.05 Fluoride ≤1.0 Total Coliform Volatile Phenol ≤0.002 (MPN/L) ≤3.0 Source: Groundwater Quality Standard (GB/T 14848-93)

2. Emission Standards for Construction and Operation Activities

27. Air Quality. Fugitive emission of particulate matter (such as dust from construction sites) is regulated under PRC‘s Air Pollutant Integrated Emission Standard (GB 16297-1996) and Ambient Air Quality Standards (GB 3095-2012). Class II of GB 16297-1996 applies to this project, which sets 120 mg/m3 as the maximum allowable emission concentration and ≤1.0 mg/m3 as the concentration limit at the boundary of construction sites, with no specification on the particle diameter. Odor from the temporary storage and treatment of sediment spoil from dredging should follow the Malodorous Pollutant Emission Standard (GB 14554-93). The maximum allowable concentration at the boundary of the sties for odor is 20 (dimensionless). During the operation stage, air pollutants discharged should comply with Class II standard in Air Pollutant Comprehensive Emission Standard (GB 16297-1996) ( 28. Table II-12).

8 Table II-12 Air Pollutant Limits

Parameter Maximum Allowable Limit Concentration for Fugitive Standard Concentration Emission Monitoring PM 120mg/m3 Maximum concentration at the GB 16297-1996 boundary 1.0mg/m3 Odor 20 (dimensionless) - GB 14554-93

29. Sediment and Sewage Discharge. Discharge of sediment generated from coagulation and flocculation during the water treatment process and discharge of sewage (or municipal wastewater) generated from the site office during operation into city sewage pipelines is regulated under Class I and Class III of PRC‘s Integrated Wastewater Discharge Standards (GB 8978-1996) respectively. Class I standards apply to discharges into Category III water bodies under GB 3838-2002. Class II standards apply to discharges into Categories IV and V water bodies. Class III standards apply to discharges into municipal sewers going to municipal wastewater treatment plants (WWTPs) with secondary treatment. Table II-13 below summarizes some of the key parameters established for each Class in GB 8978-1996.

Table II-13 Integrated Wastewater Discharge Standards (GB 8978-1996)

Class I Class II Class III For discharge into For discharge into For discharge Parameter Category III water Category IV and V into municipal body water bodies sewer pH 6–9 6-9 6-9 Chromaticity 50 80 - SS mg/L 70 150 400 BOD5 mg/L 20 30 300 COD mg/L 100 150 500 TPH mg/L 5 10 20 Volatile phenol mg/L 0.5 0.5 2.0 NH3-N mg/L 15 25 - 2- PO4 (as P) mg/L 0.5 1.0 - LAS (= anionic surfactant) mg/L 5.0 10 20 Fecal coliform 500 1,000 5,000

30. Noise. Construction noise will be assessed against the PRC Emission Standards of Ambient Noise for Boundary of Site Noise (GB 12523-2011), while operation noise will be evaluated against Class II of Emission Standard for Industrial Enterprises Noise at Boundary (GB 12348- 2008). Respective standards are shown in Table II-14 below.

Table II-14 Construction Site Noise Limits. Unit: Leq [dB (A)]

Noise Limit Period Major Noise Source Day Night Construction (GB 12523- Bulldozer, excavators and loader; pile driving machines; 70 55 2011) concrete mixer, vibrator and electric saw; hoist and lifter Operation (Class II of GB Pumps 60 50 12348-2008)

31. Solid Waste. Sludge and municipal solid waste (MSW) disposal to landfill shall comply with the Standard for Pollution Control on the Landfill Site of MSW (GB 16889-2008). Particularly, this standard requires the moisture content of sludge disposed of not to exceed 60%. 32. Storage of chemical waste from the laboratory and chemical dosing rooms shall comply with Standard for Pollution Control on Hazardous Waste Storage (GB 18597-2001).

9 III. DESCRIPTION OF PROJECT

A. Overview

33. Dali City is a provincial city of Dali Bai Autonomous Prefecture, located in the southwest of China and the north-western side of the Yunnan Province. The total land area of Dali is 1,468 square kilometres, accounting for 5.0% of the area of Dali Bai Autonomous Prefecture. Dali City has direct jurisdiction over 12 townships: Xiaguan Town, Dali Town, Fengyi Town, Xizhou Town, Haidong Town, Wase Town, Wanqiao Town, Yinqiao Town, Shuanglang Town, Shangguan Town, Qiliqiao Town and Taiyi Yi Ethnic Township. According to the Dali City Statistical Handbook 2012, the city has a population of around 610,000. 34. The Erhai Lake in Dali is the second largest plateau lagoon in China and an important freshwater lake in the country. It is approximately 40 km long and 7-8 km wide, with an average depth of 11m and the total capacity of 2.5 billion cubic metres. It receives water from Miju and Mici Rivers in the north, Bolou River in the east, as well as streams from Cang Mountains in the west. The outlet of Erhai Lake is Yangbi River located in the south, which will eventually flow into Mekong River. The map of Erhai Lake is shown in Figure III-1. Figure III-1 Map of Erhai Lake

Source: EIA Report for Wase and Shuanglang Subproject, 2016

10 35. Erhai has been supporting the development of Dali City by preventing floods, supplying fresh water, regulating the climate and supporting tourism and fishery development. Due to rapid urban expansion and city development, the water quality of Erhai Lake has been deteriorating throughout the years, dropping down to Class III of PRC Environmental Water Quality Standard (GB 3838-2002). 36. The inability to maintain a steady level of water purity has been blamed on rapid economic development in the lake's catchment area. This has been especially noticeable near the lakeshore where, in some places such as Shuanglang, once-bucolic sites have been completely transformed into overbuilt tourist attractions. The tourism boom has also highlighted the irrational layout of villages and townships along the coastline, including Shuanglang and Haidong, as well as the flaws in the underdeveloped infrastructure. The wastewater pipelines in the region were designed to serve only permanent local residents. The old systems can barely handle the heavy flow of sewage today and household waste volume far exceeds the intended capacity. The dense construction of inns and rapid increase in tourist flow have led to a steep rise in discharge, some of which is dumped directly into the lake or seeps up from the ground due to the narrow, aging pipes. 37. Supported by the local Government, China Water Environment Group Limited (CWE) is developing Dali Erhai Lake Basin Wastewater Interception Project (the Project), which aims to improve the water quality of Erhai Lake to Class II of PRC Environmental Water Quality Standard (GB3838-2002). 38. The scope of this IESE will be the subprojects under Dali Erhai Lake Basin Wastewater Interception Project, which includes 6 subprojects: 1. Wase and Shuanglang Area Lake Basin Wastewater Interception; 2. Shangguan Area Lake Basin Wastewater Interception; 3. Xizhou Area Lake Basin Wastewater Interception; 4. Yinqiao and Wanqiao Area Lake Basin Wastewater Interception; 5. Dali Town Area Lake Basin Wastewater Interception; and 6. Xiaguan North Area Lake Basin Wastewater Interception.

Table III-1 Approximate Geographical Coordinates of Subprojects under Dali Erhai Lake Basin Wastewater Interception Project

Subprojects under Dali Erhai Lake Basin Wastewater Interception Project Wase and Shuanglang Area Lake Basin Wastewater Interception

39. The location of the subprojects is shown in Figure III-2.

11 Figure III-2 Location of the subprojects under Dali Erhai Lake Basin Wastewater Interception Project

Source: www.tianditu.com

B. Subproject 1: Wase and Shuanglang Area Lake Basin Wastewater Interception

40. The Subproject is located at the north-eastern side of the Erhai Lake. The components of the subproject are listed in Table III-2. 41. The service area of the components in Wase is bounded by Kanglang Village in the north, Wenbi Village in the south, Dacheng Village in the east and Erhai Lake in the west, serving an area of 6.4km2 and a population of about 54,700. The service area of the components in Shuanglang is bounded by Hongshanmiao area in the north, Qinshan village in the south and Erhai Lake in the west, serving an area of 3.03km3 and a population of about 40,000. Location map of project components in the Wase and Shuanglang area are shown in Figure III-3 and Figure III-4 respectively.

12 Table III-2 Components of Subproject 1

Location Component Description 1 Wase Wastewater One sunken WWTP with a designed capacity of Treatment Plant 4,000 m3/d by 2020 and 8,000 m3/d by 2050. 2 Influent Booster Five influent booster pumping stations (#1,2,3,4 Pumping Stations stations and Wenbi station) with a total designed pumping capacity of 4,151 m3/d during dry season and 817.5 m3/h or 19,620 m3/d during wet season. 3 Lake Basin 15.46km of wastewater interception pipelines Wastewater along the north-eastern coast of Erhai Lake, Interception connecting Wase Village and Haiyin Village. Wase Area Pipelines 4 Village Wastewater 3.1km of village wastewater connection pipelines Connection Pipelines linking the wastewater produced by villages located in the east of Huanhai Road with the lake basin wastewater interception pipelines. 5 Effluent Booster Two effluent booster pumping stations pumping Pumping Stations effluent to Dacheng Reservoir. 6 Effluent Discharge 4.70 km of effluent discharge pipelines Pipelines discharging treated wastewater to the existing Qiyi Reservoir and will be provided for farmers’ irrigation use. 7 Shuanglang One sunken WWTP with a designed capacity of Wastewater 5,000 m3/d by 2020 and 10,000 m3/d by 2050. Treatment Plant 8 Lake Basin 6.44km of wastewater interception pipelines Wastewater along the north-eastern coast of Erhai Lake, Interception connecting Wase Village and Haiyin Village. Pipelines 9 Riverside 8.68km of wastewater interception pipelines Wastewater along the rivers in the Shuanglang WWTP Area. Interception Pipelines 10 Influent Booster Two influent booster pumping stations (Qinshan Pumping Stations and Changyu stations) with a total designed Shuanglang pumping capacity of 2,800 m3/d during dry Area season and 1,560 m3/h or 78,880 m3/d during wet season. In the long run, the capacity during dry season could be increased to 6,000 m3/d. 11 Effluent Booster One effluent booster pumping station pumping Pumping Station effluent to Shuanglang Reservoir. 12 Effluent Discharge 6.18km of effluent discharge pipelines Pipelines discharging treated wastewater to the Shuanglang Reservoir for Treated Wastewater and will be provided for farmers’ irrigation use. 13 Shuanglang A reservoir with capacity of 90,000 m3 and a Reservoir for Treated storage reservoir with a capacity of 600,000 m3. Wastewater The treated wastewater stored in the reservoir will be used in irrigation use by farmers located nearby the reservoir.

13 Figure III-3 Location of Project Components in the Wase Area

Source: Preliminary Design Report of Wase and Shuanglang Subproject, 2016

Figure III-4 Location of Project Components in the Shuanglang Area

Source: Preliminary Design Report of Wase and Shuanglang Subproject, 2016

14 42. Both WWTP in Wase and Shuanglang implement the use of the Cyclic Activated Sludge Technology (CAST) wastewater treatment process as illustrated in Figure III-5. All sludge generated at Wase WWTP and Shuanglang WWTP will be dewatered in its sludge dewatering room to moisture content not exceeding 60%. Wase WWTP and Shuanglang WWTP are also equipped with an odour removal system that treats the extracted air from the screening area and sludge dewatering plant room before being discharged into the atmosphere. Odour is treated by the use of activated charcoal deodorization system.

Figure III-5 Wastewater Treatment Process Flow Diagram of Wase WWTP and Shuanglang WTTP (CAST Process)

43. The existing wastewater pipelines coverage in the villages of Wase and Shuanglang area is 30% and 70% respectively. The implementation of the Dali Erhai Lake Basin Wastewater Interception project will increase the coverage to approximately 95% and wastewater collection rate of over 90%. 44. The Subproject components related to Shuanglang Wastewater Treatment Plant has mostly completed its construction and commenced trial operation in January 2018, while the Subproject components related to Wase Wastewater Treatment Plan is expected to complete construction in January 2018 and commence trial and commercial operation in February 2018 and July 2018 respectively. It is estimated that there will be approximately 43 staff in total when in full operation. C. Subproject 2: Shangguan Area Lake Basin Wastewater Interception

45. The Subproject is located in the Shangguan town of Dali City, at the northern side of the Erhai Lake. 46. The service area of the Subproject includes the Pingba Area of Shangguan Township and Shangguan Village, serving an area of 5.58km2 and a population of 44,200. It is projected that the service area and population of Shangguan Subproject will reach 7.5km2 and 82,600 respectively in 2050. The components of the subproject area listed in Table III-3 and the location map of project components in the Shangguan area are shown in Figure III-6.

Table III-3 Components of Subproject 2

Location Component Description 1 Shangguan One sunken WWTP with a designed capacity of Wastewater 5,000 m3/d by 2020 and 15,000 m3/d by 2050. Treatment Plant Shangguan 2 Lake Basin 17.10 km of wastewater interception pipelines Area Wastewater along the north coast of Erhai Lake, connecting Interception Shangguan Village and Haichao River Village. Pipelines

15 Location Component Description 3 Riverside 26.93 km of wastewater interception pipelines Wastewater along the rivers in the Shangguan Subproject Interception Area. Pipelines 4 Influent Booster Two influent booster pumping stations (Xizha and Pumping Stations Miju) with a total designed capacity of 3,964 m3/d by 2020 and 9,313 m3/d by 2050 during dry season. The capacity during wet season is 1,418 m3/h (34,032 m3/d) by 2020. 5 Wastewater Sump Three wastewater sump tanks with two of them Tanks located at the Xizha and Miju influent booster pumping station, and one at the Shangguan WWTP. Their designed capacities are 1,200 m3/d, 1,000 m3/d and 2,500 m3/d respectively. 6 Effluent Discharge 5.04 km of effluent discharge pipelines Pipelines discharging treated wastewater to the existing constructed , the Jiangwei Wetland and Xiaojia Wetland.

Figure III-6 Location of Project Components in the Shangguan Area

Source: Preliminary Design Report of Shangguan Subproject, 2016

47. Shangguan WWTP implements the use of the Cyclic Activated Sludge Technology (CAST) wastewater treatment process. All sludge generated will be dewatered in its sludge dewatering room to moisture content not exceeding 80%. Shangguan WWTP is also equipped with an odour removal system that treats the extracted air from the screening area and sludge dewatering plant room before being discharged into the atmosphere. Odour is treated by the use of activated charcoal deodorization system. Both Xizha River and Miju River Influent Booster Pumping Station

16 are equipped with an odour removal system that treats the extracted air from the wastewater sump tank before being discharged into the atmosphere. Odour is removed by the use of activated carbon filters. 48. The Subproject is expected to complete construction in January 2018 and commence trial and commercial operation in February 2018 and July 2018 respectively. It is estimated that there will be approximately 38 staff in total when in full operation. D. Subproject 3: Xizhou Area Lake Basin Wastewater Interception

49. The Subproject is located in the Xizhou town of Dali City, at the north-western side of the Erhai Lake. 50. The service area of the Subproject is bounded by Taoyuan Village and Renhe Village on the north, Xizhou Township on the south, Erhai Lake on the east and Cangshan Village on the west, serving an area of approximately 9.94 km2 and a population of about 141,600. The components of the subproject are listed in Table III-4. The location map of project components in the Xizhou area are shown in Figure III-7.

Table III-4 Components of Subproject 3

Location Component Description 1 Xizhou Wastewater One sunken WWTP with a designed capacity of Treatment Plant 10,000 m3/d by 2020 and 25,000 m3/d by 2050. 2 Lake Basin 11.99km of wastewater interception pipelines Wastewater along the north-western coast of Erhai Lake, Interception Pipelines connecting Taoyuan Village and Jiangshang Village. 3 Riverside Wastewater 4.79km of wastewater interception pipelines Interception Pipelines along the rivers in the Xizhou area. 4 Influent Booster One influent booster pumping station (Renliyi) Xizhou Pumping Station with a designed capacity of 3,800 m3/d by 2020 Area and 7,600 m3/d by 2050 during dry season. The capacity during wet season is 1,230 m3/h (29,500 m3/d) in the short run. 5 Wastewater Sump Two wastewater sump tanks located at the Tanks Renliyi Influent Booster Pumping Station and Xizhou WWTP. Their designed capacities are 2,000 m3/d and 4,500 m3/d respectively. 6 Effluent Discharge 6.35 km of effluent discharge pipelines Pipelines discharging treated wastewater to the existing Zuoyi Reservoir for farmers’ irrigation use.

17 Figure III-7 Location of Project Components in the Xizhou Area

Source: Preliminary Design Report of Xizhou Subproject, 2016 51. This Subproject implements the use of the Cyclic Activated Sludge Technology (CAST) wastewater treatment process in Xizhou WWTP, and all sludge generated will be dewatered to moisture content not exceeding 80%. Xizhou WWTP is also equipped with an odour removal system that treats the extracted air from the primary treatment, secondary treatment and sludge dewatering areas before being discharged into the atmosphere. Odour is removed by the use of biological deodorization. The coverage of wastewater interception pipelines at the riverside and in the villages of Xizhou will reach over 90% with the implementation of this Subproject. 52. The Subproject is expected to complete construction in January 2018 and commence trial and commercial operation in February 2018 and July 2018 respectively. It is estimated that there will be approximately 31 staff in total when in full operation. E. Subproject 4: Yinqiao and Wanqiao Area Lake Basin Wastewater Interception

53. The Subproject is located in the Yinqiao and Wanqiao town of Dali City, at the western side of the Erhai Lake. 54. The service area of the Subproject is bounded by Heyi River in the north, Mei Reservoir in the south, Erhai Lake in the east and Cangshanjiao Village in the west, serving an area of 12.74km2 and a population of about 11,500. The components of the subproject are listed in Table III-5. The location map of project components in the Yinqiao and Wanqiao area are shown in Figure III-8. Table III-5 Components of Subproject 4

Location Component Description 1 Wanqiao Wastewater One sunken WWTP with a designed capacity of Treatment Plant 10,000 m3/d by 2020 and 20,000 m3/d by 2050. 2 Riverside 17.8km of wastewater interception pipelines Yinqiao/ Wastewater along the western coast of Erhai Lake, Wanqiao Interception connecting Heyi River and Mei Creek. Area Pipelines 3 Riverside 30.3 km of wastewater interception pipelines Wastewater along Yang, Jin, Lingquan, Baishi, Shuangyang,

18 Interception Yinxian and Mei Creeks in the Yinqiao and Pipelines Wanqiao Subproject Area. 4 Influent Booster Three influent booster pumping stations with a Pumping Stations designed capacity of 8,000 m3/d by 2020 and 16,000 m3/d by 2050 during dry season. The capacity during wet season is 2,480 m3/h (59,600 m3/d). 5 Wastewater Sump Four wastewater sump tanks where one of each Tanks being constructed at the three pumping stations and the WWTP. Their designed capacities are 1,200 m3/d (both Gusheng Village and Fumeiyi), 1,300 m3/d (Panxi Village), and 2,500 m3/d (WWTP). 6 Effluent Discharge 6.81km of effluent discharge pipelines for Pipelines discharging effluents of the Wanqiao WWTP.

Figure III-8 Location of Project Components in the Yinqiao/ Wanqiao Area

Source: Preliminary Design Report of Yinqiao/ Wanqiao Subproject, 2016 55. This Subproject implements the use of the Cyclic Activated Sludge Technology (CAST) wastewater treatment process for Wanqiao WWTP, and all sludge generated will be dewatered to moisture content not exceeding 60%. Wanqiao WWTP is also equipped with an odour removal system that treats the extracted air from the primary treatment, secondary treatment and sludge dewatering areas before being discharged into the atmosphere. Odour is removed by the use of biological deodorization. The coverage of wastewater interception pipelines at the riverside and in the villages of Yinqiao and Wanqiao will reach over 95% with the implementation of this Subproject. 56. The Subproject is expected to complete construction in April 2018 and commence trial and commercial operation in May 2018 and October 2018 respectively. It is estimated that there will be approximately 30 staff in total when in full operation.

19 F. Subproject 5: Dali Town Area Lake Basin Wastewater Interception

57. The Subproject is located in the Dali ancient town of Dali City, at the western side of the Erhai Lake. 58. The service area of the Subproject covers most of Dali ancient town planning area, serving an area of over 15km2 and a population of about 172,900. The components of the subproject are listed in Table III-6. The location map of project components in the Dali Town area are shown in Figure III-9. Table III-6 Components of Subproject 5

Location Component Description 1 Dali Town One sunken WWTP with a designed capacity of Wastewater 20,000 m3/d by 2020 and long term total capacity Treatment Plant of 40,000 m3/d by 2050. 2 Roadside 10.68km of wastewater interception pipelines Wastewater along the south-eastern coast of Erhai Lake, Interception starting from the southern bank of Mei Creek to Pipelines the southern bank of Mocan creek. 3 Riverside Wastewater interception pipelines of 21.76km at Wastewater villages of Dali Town area that have not installed Interception any wastewater interception pipelines. Pipelines 4 Effluent Discharge 5.94km of effluent discharge pipelines for Dali Town Pipelines discharging treated wastewater from WWTP to Area South Reservoir. 5 Wastewater Sump Two wastewater sump tanks where one of the Tanks tanks was constructed at the Caicun Influent Booster Pumping Station, while the other one was situated inside the Dali Town WWTP. Their designed capacities are 3,800 m3/d and 8,100 m3/d respectively. 6 WWTP Emergency Emergency discharge pipelines of 415m. Discharge Pipelines 7 Influent Booster One influent booster pumping station with a Pumping Station designed capacity of 1,311 m3/d by 2020 and 2,494 m3/d by 2030 during dry season; 383 m3/h (9,200 m3/d) during wet season.

20 Figure III-9 Location of Project Components in the Dali Town Area

Source: Preliminary Design Report of Dali Town Subproject, 2016 59. This Subproject implements the use of the Cyclic Activated Sludge Technology (CAST) wastewater treatment process for Dali Town WWTP, and all sludge generated will be dewatered to moisture content not exceeding 60%. Dali Town WWTP is also equipped with an odour removal system that treats the extracted air from the primary treatment, secondary treatment and sludge dewatering areas before being discharged into the atmosphere. Odour is removed by the use of biological deodorization. The coverage of wastewater interception pipelines in the region will reach over 95% with the implementation of this Subproject. 60. The Subproject is expected to complete construction in April 2018 and commence trial and commercial operation in May 2018 and October 2018 respectively. It is estimated that there will be approximately 39 staff in total when in full operation. G. Subproject 6: Xiaguan North Area Lake Basin Wastewater Interception

61. The Subproject is located in the Xiaguan North Town of Dali City, at the southern side of the Erhai Lake. 62. The service area of the Subproject is bounded by Yangnan River in the north and Mocan River in the south, serving an area of 11.9km2 and a population of about 140,400. The components of the subproject are listed in Table III-7. The location map of project components in the Xiaguan North area is shown in Figure III-10. Table III-7 Components of Subproject 6

Location Component Description Xiaguan 1 Roadside Wastewater 2.6km of wastewater interception channels North Area Interception Channels connecting the south side of Nanyang River and

21 the existing wastewater interception channel at northern Xingsheng Bridge. 2 Roadside Wastewater 5.9km of wastewater interception pipelines Interception Pipelines connecting the south side of Dali Town WWTP and the south side of Nanyang Reservoir. 3 Riverside Wastewater 5.7km of wastewater interception pipelines at Interception Pipelines the riverside of Xiaguan North area.

Figure III-10 Location of Project Components in the Xiaguan North Area

Source: Preliminary Design Report of Xiaguan North Subproject, 2016 63. The existing wastewater pipelines coverage in the villages of Xiaguan North area is approximately 80%. The implementation of the Dali Erhai Lake Basin Wastewater Interception project will increase the coverage to over 98% and wastewater treatment rate of over 88%. 64. The Subproject is expected to complete construction in April 2018 and commence trial and commercial operation in May 2018 and October 2018 respectively. It is estimated that there will be approximately 12 staff in total when in full operation. H. Project Schedule

65. The overall project schedule for the Dali Erhai Lake Basin Wastewater Interception Project is summarized in Table III-18. Table III-8 Overall Project Schedule

No. Subprojects Construction Construction Trial Commercial Commencement Completion Operation Operation 1 Wase and Shuanglang Shuanglang: 31 January January 2018 Area Lake Basin October 2015 1 July 2018 Wastewater Interception 2018 Wase: February 2018

22 No. Subprojects Construction Construction Trial Commercial Commencement Completion Operation Operation 2 Shangguan Area Lake 31 January Basin Wastewater October 2015 February 2018 1 July 2018 2018 Interception 3 Xizhou Area Lake Basin 31 January October 2015 February 2018 1 July 2018 Wastewater Interception 2018 4 Yinqiao and Wanqiao 31 March Area Lake Basin October 2015 February 2018 1 July 2018 2018 Wastewater Interception 5 Dali Town Area Lake 1 October Basin Wastewater October 2015 30 April 2018 May 2018 2018 Interception 6 Xiaguan North Area Lake 1 October Basin Wastewater October 2015 30 April 2018 May 2018 2018 Interception

I. Manpower Requirement

66. The Dali Erhai Lake Basin Wastewater Interception Project has employed a total of 1,719 workers during construction phase and is estimated to have 234 staff in total when in full operation. Details of the manpower for construction of each subproject are presented in Table VI-1, Section VI of this IESE. J. Implementation Arrangement

67. The main construction contractors for the Dali Erhai Lake Basin Wastewater Interception Project are listed in Table III-9 below. During the construction phase, CWE employs a third party contractor, Yunnan Xindi Construction Consultation Supervision Limited Company (雲新迪 建 设咨詢有限司), which is responsible for construction supervision, IEE/EMP implementation, and safety inspection. The third party contractor monitors the construction progress and ensures that the mitigation measures specified in the EIA reports are implemented. A monthly construction monitoring report is also prepared by the third party contractor to document the project’s status of compliance with relevant health and safety requirements and standards.

Table III-9 List of Main Construction Contractors for each Subproject

No. Subprojects Main Construction Contractors 1 Wase and Shuanglang Area Lake China Railway No. 5 Engineering Group Co., Ltd. Basin Wastewater Interception 中铁五局集团有限司 2 Shangguan Area Lake Basin China Construction No. 5 Engineering Group Co., Ltd. Wastewater Interception 中建五局集团有限司 3 Xizhou Area Lake Basin China Construction No. 4 Engineering Group Co., Ltd. Wastewater Interception 中建四局集团有限司 4 Yinqiao and Wanqiao Area Lake Zhongnan Construction Group Co., Ltd. Basin Wastewater Interception 中南建设有限司 5 Dali Town Area Lake Basin China Railway No. 8 Engineering Group Co., Ltd. Wastewater Interception 中铁局集团有限司 6 Xiaguan North Area Lake Basin Yunnan Chengtou Zhonghe Construction Co., Ltd. Wastewater Interception 云南城投众和建设集团有限司

68. During the operation phase, CWE will conduct regular environmental monitoring. There will be continuous online monitoring and regular sampling of the treated wastewater to ensure the effluent complied with GB18918-2002 Class 1A discharge standard. Government’s representatives will also be given access to the effluent monitoring station for inspection. In addition, a third party contractor will be hired to conduct a quarterly environmental monitoring of air, odour and noise levels at the WWTPs.

23 69. Details of the environmental monitoring plan are presented in Attachment 1 of this IESE. In addition, regular trainings will also be provided to site staff to ensure compliance with the E&S safeguard requirements.

24 IV. ANALYSIS OF ALTERNATIVES

70. During project preparation, alternative designs for the wastewater treatment plant layout, treatment process, and construction methods for the interception pipelines were assessed in consideration of potential environmental and social impacts, as well as technical, economical, and energy efficiency. Each subproject had also carried out analysis of different locations for the wastewater treatment plants or routes for the interception channels. A. Design Options for Wastewater Treatment Plant Layout

71. Wastewater treatment plant typically can be categorized into two types: ground-based, sunken and underground. Ground-based plant is a common design for wastewater treatment plant, however, this type of plants often generate new point source pollutions, such as odour and noise during the wastewater treatment processes. With the increasing level of urbanization and demand of a better environment, sunken or underground plant designs are more suited with the surrounding environment by having an enclosed system to prevent the generation of secondary pollutants. Table IV-1 provides a comparison of different wastewater treatment plant layouts. Table IV-1 Comparison of Different Wastewater Treatment Plant Layouts

Parameter Ground-based Plant Sunken Plant Underground Plant Characteristics Most of the facilities are Most of the facilities are All of the facilities are built built above ground. built underground, but underground with about expose about 4-6m above 1m of soil cover above. ground-level, utilizing some upper space for operations. Structure Requirements for the The structural element in The structural element in wall reinforcement are contact with the soil is contact with the soil is much less than the subjected to earth subjected to earth other designs. pressure, but the resulting pressure, leading to a shear force and bending larger shear force and moment are less than the bending moment than the underground design. other designs. Either Thicker or reinforced walls increasing the wall are required. thickness or installing additional reinforcement is required. Upper Space The upper space is The upper space can be With a much greater space Utilization already utilized by the modified into a small available, the upper space wastewater treatment playground or planting can be modified into a plant. trees or other vegetation. recreation facility or landscape garden. Impact to Ground-based design As most of the facilities are As all of the facilities are Surroundings has greater odor and covered, odor and noise covered, odor and noise noise impacts to the impacts to the nearby impacts to the nearby nearby communities. communities are minimal. communities are minimal. Ventilation There is no special Other than mechanical Underground plant System ventilation ventilation, natural requires a much higher requirement. ventilation can also be standard for its ventilation used for sunken plant, system. A dedicated thus less requirements on ventilation room is the ventilation system than required. an underground plant. Fire Service Comply with the Comply with the general Underground plant has Requirements general fire service fire service requirements. more fire service requirements. requirement than the other designs. Specialized fire service installations are required.

25 Parameter Ground-based Plant Sunken Plant Underground Plant Construction As the construction Due to deep excavation, Require a much higher works are above the needs of safety during standards of safety in ground, much more construction is higher, and construction, as well as a convenient and safe thus a higher construction higher construction cost. than the other designs. cost. Landscape Moderate Good Good Effect

72. By comparing the different layout options, both sunken and underground plants have less impacts to the surrounding environment and better landscape effect. Even though there are more safety and fire service requirements for sunken plant comparing to ground-based plant, sunken plant has greater advantages as it integrates better with the surrounding environment and also has a smaller footprint. In addition, sunken plant utilizes the upper space more efficient than underground plant. As parts of the sunken plant is above ground, the plant is easily connected to the surrounding roads, personnel access and transportation are more efficient. Sunken plant can also utilizes natural ventilation in some area, and thus more energy-efficient than underground plant. 73. Other than the aforesaid benefits, sunken plant design is more in line with the future development of Dali City. Therefore, it is chosen as the wastewater treatment plant layout for this Project. B. Design Options for Wastewater Treatment Process

74. Different wastewater treatment processes are assessed for this Project, including the Oxidation Ditch Process, Modified Sequencing Batch Reactor (MSBR), and Cyclic Activated Sludge Treatment (CAST). Description of each process option is as follows:  Oxidation Ditch Process: A modified activated sludge biological treatment process utilizes long solids retention times to remove biodegradable organics. Oxidation ditches are typically complete mix systems, with some modified into a plug flow design.  Modified Sequencing Batch Reactor: MSBR is usually consists of an A2/O zone, sludge recycling process, and sequential batch rector. It has the advantages of both SBR and conventional activated sludge processes, allowing continuous operations while the biological nutrient removal is enhanced. It is ideal for large scale project (> 15,000 m3/day).  Cyclic Activated Sludge Treatment: CAST reactor is composed of a biological selector and variable volume process reactor. The CAST process utilizes a repeated time-based sequence to accomplish biological treatment and solids-liquid separation in a single reactor basin. Furthermore, by operating at a repeated sequence of aeration and non-aeration, it provides aerobic, anoxic and anaerobic conditions, which favor nitrification, denitrification and biological phosphorus removal.

75. Comparison of the different wastewater treatment processes is shown in Table IV-2. Table IV-2 Comparison of Different Wastewater Treatment Processes

Assessment Modified Sequencing Cyclic Activated Sludge Oxidation Ditch Process Criteria Batch Reactor Treatment The oxidation ditch process The MSBR process has The repeated sequence of Nitrogen & is ideal for nitrogen good performance in the aeration and non-aeration Phosphorus removal, not so much for removal of nitrogen and creates ideal conditions for Removal phosphorus removal. phosphorus, removal of nitrogen & Performance phosphorus. Its long solid retention time The process is capable of The process has a relatively is capable to within a handling high peak of long solid retention time, and Flexibility when sudden surge of influent influent flow during storm thus capable of handling handling sudden quantity, but the system has events. sudden surge in influent surge in influent poor operation flexibility. quantity. Based on the influent quality and quality, the processing quantity sequence can also be adjusted to optimize performance. Operation The process operation and The MSBR process Flexible processes to adapt to Requirement control system are relatively utilizes weir gate to the changes in influent quality.

26 Assessment Modified Sequencing Cyclic Activated Sludge Oxidation Ditch Process Criteria Batch Reactor Treatment simple, and thus the achieve a more accurate However, CAST has a more professional requirements flow control. The MSBR complex control system and are not high. However, the process has a moderate large numbers of equipment, process has poor to high level professional thus requiring more adjustability. requirements for its experienced operators. process operation and control system. The biological process and The MSBR system has a The biological process and solids-liquid separation are small footprint, but high solids-liquid separation are separated, thereby number of equipment in integrated into one system, requiring a larger footprint. general, and therefore it thus CAST system has a small Project However, the overall has a relatively high footprint, but more complicated Investment number of equipment is less capital cost. system with large no. of than the other two treatment equipment, and thus the overall systems, and thus has a capital costs are high. lower capital cost. The oxidation process is Electricity consumption is Electricity consumption is low, energy-intensive, and thus low, and therefore and therefore relatively low Operating Costs contributing to high relatively low operating operating costs. operating costs. costs.

76. Even though the CAST system has a high capital costs, it has a high adaptability to handle peaks of influent quantity as well as different influent quality, and thus it is ideal for handling the large volume of stormwater-mixed sewage collected in Dali City during the wet season. In addition, treatment system with a smaller footprint is preferred as majority of the land around Erhai are farmlands, which requires a more complicated land acquisition process. Therefore, the CAST system is chosen over the other two treatment systems for this Project. C. Design Options for the Interception Pipeline Construction Method

77. The structural design for the interception pipeline is mainly based on the “Structural Design Code for Pipelines of Water Supply and Wastewater Engineering (GB50332-2002)”. Some of the common pipeline construction methods, including the trench method, pipe jacking method, and pipe pulling method, were analysed to determine a suitable construction method for the interception pipelines for this Project. 78. Description of each construction method, as well as their advantages and disadvantages are summarized in Table IV-3.

Table IV-3 Comparison of Different Interception Pipeline Construction Methods

Trench Method Pipe Jacking Method Pipe Pulling Method Open-cut trench excavation A trenchless construction Similar to the pipe jacking creates a trench for installing method involves installation method, pipe is installed underground infrastructure. After of prefabricated pipe through underground by pulling the installation, the excavated the ground by moving the without disturbing the Description area is backfilled with soil and pipe forward into the ground ground. It is suitable for restored with surface vegetation. by hydraulic jack. Meanwhile, installing pipe at a deeper excavation and spoil are level and also pipe with removed and transported diameter less than through the jacking pipe. 600mm.  Less expensive than  Only require to excavate  Trenchless method trenchless methods trenches at the open and requiring less  Short construction period exit pits, and thus less excavation works and  Wide range of application excavation works and disruption to traffic  Convenient construction minimal impact to the local Advantage traffic  When the pipe is required to be installed at a deeper level, pipe jacking method is much more economical than trench method

27 Trench Method Pipe Jacking Method Pipe Pulling Method  More excavation works are  Construction cost is  Not as commonly used required when compared to relatively high as the other trenchless methods  Longer construction time construction methods Disadvantage  May require remove of street and sidewalk pavement which increases expense of the repair

79. By comparing the advantages and disadvantages of each method, as well as the traffic conditions and geology of Dali City, the following constructions methods are proposed for this Project:  Trench method will be used for installing pipe that is less than 3m underground; and  Pipe jacking method will be used for installing pipe that has a dimeter greater than 800mm, as well as installing in areas that are not suitable to carry out open-cut trench excavation. D. Design Options for Subproject 1: Wase and Shuanglang Area Lake Basin Wastewater Interception

80. This subproject involves the construction of interception pipelines along Erhai in the Wase Area. Three options were analysed as shown in Table IV-4. Both Options 1 and 2 follow the same route. However, for Option 1, 500mm to 800mm diameter pipelines network will be installed by open-cut trench method, and an influent booster pumping station will be installed halfway of the pipeline. Meanwhile, Option 2 will use pipe jacking method to install 1000mm diameter pipelines underground, and thus pumping station will not be needed in this case. For Option 3, 500mm to 800mm diameter pipelines will be installed along the east of Wase Town and 300mm to 500mm diameter pipelines will be installed along Erhai, replacing the existing wastewater pipelines in the villages. The existing wastewater treatment stations along Erhai will also be modified into influent booster pumping stations to deliver the collected wastewater to the Wase WWTP. Comparison of the alternative routes are summarized in Table IV-4.

Figure IV-1 Alternative routes for the Wase Area Wastewater Interception System

Source: Preliminary Design Report of Wase and Shuanglang Subproject, 2016

28 Table IV-4 Comparison of the Alternative Routes for the Wase Area Wastewater Interception System

Parameter Option 1 Option 2 Option 3 Route Pipes to be installed along Pipes to be installed along Pipes to be installed along Erhai by open-cut trench Erhai by pipe jacking the east of Wase Town and method. One influent method. also Erhai. Four existing booster pumping station wastewater treatment will be installed. stations will be modified into influent booster pumping stations. Length of Pipelines 4,107 4,080 5,336 (m) Pipe Diameter (mm) 600 – 800 1000 300 – 800 Construction Pipelines to be installed Pipelines to be installed Pipes with smaller Difficulty around 6m underground. nearly 14m underground, diameter will be used along However, there are stone requiring high levels of Erhai and will be installed layers about 4-7m below engineering works and within 2m underground, the ground surface, which longer construction time. thus easier to construct will greatly affect the comparing to the other excavation works. options. Construction Costs 55,980 75,269 45,121 (thousands CNY)

81. Based on the geological survey conducted during project design phase, it is preferable to install smaller diameter pipe at a shallow depth. Even though the total length of pipelines to be constructed for Option 3 is much longer than the other options, the construction difficulty is less than the others. In addition, the existing wastewater treatment stations can also be utilized and modified into influent booster pumping stations for the interception system, thereby reducing the total construction costs. Therefore, Option 3 is chosen as the Wase Area Wastewater Interception System. 82. For the Shuanglang Area Wastewater Interception System, two alternatives were analysed. As shown in Table IV-5. Option 1 adopts a centralized approach, where four influent booster pumping stations will be constructed for delivering the wastewater to the Shuanglang WWTP. Meanwhile, Option 2 uses a decentralized approach, involving three new WWTPs and two new influent booster pumping stations for the Shuanglang District. Summary of the two design options are shown in Table IV-5.

Figure IV-2 Alternative routes for the Shuanglang Area Wastewater Interception System

Source: Preliminary Design Report of Wase and Shuanglang Subproject, 2016

29 Table IV-5 Comparison of the Alternative Routes for the Shuanglang Area Wastewater Interception System

Parameter Option 1 (Centralized Approach) Option 2 (Decentralized Approach) Description  Shuanglang WWTP (10,000 m3/day)  Shuanglang WWTP (6,000 m3/day)  4 nos. of influent booster pumping  Zhangyu WWTP (1,800 m3/day) stations  Qingshang WWTP (2,200 m3/day)  15km long interception pipeline  2 nos. of influent booster pumping stations  12km long interception pipeline Construction Costs 2,470,907 2,391,146 (thousands CNY) Operating Costs 255 365 (thousands CNY/year) Operations Centralized system requires less Requires more management staff as the management staff, and is also easier to facilities are separated, which is more monitor the effluent quality. difficult to monitor the effluent quality.

83. Even though the construction costs for Option 2 is less than that of Option 1, adopting the centralized system offers greater advantages in terms of management efficiency and operation expenses. Therefore, Option 1 is chosen as the Shuanglang Area Wastewater Interception System. E. Design Options for Subproject 2: Shangguan Area Lake Basin Wastewater Interception

84. For this subproject, two options were reviewed for the wastewater treatment plant location. The proposed locations are shown in Table IV-6. For Option 1, the new WWTP is to be located at the north side of Shangguan District beside the existing WWTP. For Option 2, the new WWTP will be located near the existing wetland and also closer to Erhai. Both options acquire about the same amount of land (~2,460ha), and also similar traffic conditions as there are already existing roads around the sites.

Figure IV-3 Alternative locations for the Shangguan Wastewater Treatment Plant

Source: Preliminary Design Report of Shangguan Subproject, 2016 85. Even though Option 2 is further away from residential area when comparing to Option 1, the area is planning to be developed into a farmland protection zone, and thus not in line with the City’s land-use planning. Option 2 is also much closer to Erhai, causing greater impacts to the lake basin during construction phase. As the sunken wastewater treatment plant design is adopted for this Project, it will help mitigating the environmental impacts to the surrounding communities during operation phase, and therefore Option 1 is chosen for this subproject.

30 F. Design Options for Subproject 3: Xizhou Area Lake Basin Wastewater Interception

86. For the Xizhou Area Lake Basin Wastewater Interception System, two possible locations for the new Xizhou WWTP are reviewed. As shown in Figure IV-4. Option 1 suggested constructing the new wastewater treatment plant at the north side of the existing Xizhou WWTP while Option 2 proposed to install the plant at the east of Chengbei Village. Summary of the comparison between the two options are shown in Table IV-6.

Figure IV-4 Alternative locations for the Xizhou Wastewater Treatment Plant

Source: Preliminary Design Report of Xizhou Subproject, 2016

Table IV-6 Comparison of the Alternative Locations for the Xizhou WWTP

Parameter Option 1 Option 2 Area (mu) 48.7 48.2 Greater impacts as it is closer to Less impacts comparing to Impacts to Surroundings the Chengbai Village Option 1 Cannot fulfill the 100m buffer About 160m 370m away from Buffer Zone Distance – zone distance the residential areas Can utilize the existing roads at Has to construct about 450m long Traffic Conditions the village road surface or pavement Influent Pipeline 1.1 km long 350 m long Construction Costs 47,785 39,602 (thousands CNY)

87. Both Options 1 and 2 have similar amount of land area. Even though Option 1 has a better integration with the existing WWTP and can also utilize the existing roads at Chengbei Village, it is too close to the sensitive receptors, thereby having greater environmental and social impacts to the nearby communities. Therefore, Option 2 is chosen as the location for the new Xizhou WWTP.

G. Design Options for Subproject 4: Yinqiao and Wanqiao Area Lake Basin Wastewater Interception

31 88. For this subproject, two options were reviewed for the wastewater treatment plant location. The proposed locations are shown in Figure IV-5. For Option 1, the new WWTP is to be located at the north side of Wanqiao Secondary School. For Option 2, the new WWTP will be located at the west side of Huanhaixi Road. Both options acquire about the same amount of land (~44mu). Additional road surface construction is not required for both options as Options 1 and 2 are beside mains roads such as Li Road and Huanhaixi Road respectively. However, Option 1 cannot fulfil the 100m buffer zone distance requirement as it is too close to Wanqiao Secondary School. Due to its location, an additional effluent booster pumping station is required for Option 1, which increase the overall operating costs. For Option 2, it is located about 290m to 490m away from the residential areas, thereby having considerably less impacts when compared to Option 1. Therefore, Option 2 is chosen as the location for the Wanqiao WWTP.

Figure IV-5 Alternative locations for the Wanqiao Wastewater Treatment Plant

Source: Preliminary Design Report of Yinqiao/ Wanqiao Subproject, 2016 H. Design Options for Subproject 5: Dali Town Area Lake Basin Wastewater Interception

89. For the Dali Town Area Wastewater Interception System, two options were analysed. As shown in Figure IV-6, the pipeline route for Option 1 goes along the west side of Cai Village, Wa Village, Longfeng Village and Xiaoyi Village while Option 2 passes through these villages along Erhai. In addition, based on the geological conditions, Option 2 requires two influent booster pumping stations while Option 1 only requires one. The advantages and disadvantages of the two alternatives are summarized in Table IV-7 below.

32 Figure IV-6 Alternative routes for the Dali Town Area Wastewater Interception System

Source: Preliminary Design Report of Dali Town Subproject, 2016

Table IV-7 Alternative Comparison of Dali Town Area Wastewater Interception System

Routes Advantages Disadvantages Option 1:  Require less land acquisition  Require addition wastewater Pipeline will be installed  Smaller impacts on the interception system at Cai Village, along the west side of the surrounding villages Wa Village, Longfeng Village and villages, and will require one  Caicun pumping station Xiaoyi Village influent booster pumping located at the outskirt of the  Less service area coverage station village, thus less impacts to comparing to Option 2 the surrounding communities Option 2:  Collect all the wastewater  Due to its location, greater impacts Pipeline will be installed from Cai Village, Wa Village, to Erhai and the surrounding along the villages, closer to Longfeng Village and Xiaoyi villages Erhai, and will require two Village  Require an additional influent influent booster pumping booster pumping station comparing stations to Option 1

90. Even though Option 2 has a higher service area coverage than Option 1, it causes greater disturbance to Erhai and the nearby villages during construction phase as the pipeline goes through the villages along Erhai. Therefore, Option 1 is chosen as the interception pipeline route for the Dali Town Area.

33 I. Design Options for Subproject 6: Xiaguan North Area Lake Basin Wastewater Interception

91. Various alternative design elements for the Xiaguan North Area Wastewater Interception System were reviewed, including the overall section plan and pipe material. With the development of Dali City, population and demand on wastewater infrastructures will increase considerably. These options are as follows. 92. Section plan alternatives. Section plan for the interception system can be circular or rectangular. Circular sections have a stronger structural integrity, and can be constructed quickly by pipe jacking method. Meanwhile, rectangular sections are required to be cast-in-place, but have a much better internal space utilization. Therefore, even though rectangular sections require a longer construction time as well as higher construction costs than circular section, the more space efficient rectangular sections would be adopted for this subproject.

93. Pipe materials. There are several commonly used drainage pipes such as reinforced concrete pipe (RCP), steel pipe, and steel-reinforced High Density Polyurethane (HDPE) pipe. Characteristics of each material are summarized in Table IV-8 below.

Table IV-8 Comparison of Different Pipe Materials

Reinforced Concrete Steel-reinforced HDPE Characteristics Steel Pipe Pipe Pipe Relatively long service Service Life Relatively long service life life; poor corrosion Long service life resistance Impermeability Relatively strong Strong Relatively strong Relatively weak, Corrosion Strong additional protective Strong Resistance coating is required Capable of handling high Capable of handling high external pressure; external pressure; Relatively high pressure Pressure Capacity suitable for installing at a suitable for installing at a capacity deeper level deeper level Spigot and socket butt ends to connect the pipes Connect by thermal or arc Pipe Connection Connect by welding together with gasket / welding rubber-ring joints Weight Relatively heavy Relatively heavy Relatively light Price, DN1000m 588 1,300 680 (CNY/m) Foundation High Low Low Requirement

94. Comparing with other municipal wastewater infrastructure projects in China, RCP and steel- reinforced HDPE pipe are commonly used. By considering the economic factors, transportation and handling requirements, steel-reinforced HDPE pipe is lighter and easier to transport than RCP, especially for large diameter pipe, which can effectively save the transportation and handling costs to compensate for the higher unit price. In addition, reinforced HDPE pipe has strong corrosion resistance and long service life; its smooth inner surface minimizes the change of fouling, and thus the maintenance requirement is low. Therefore, this subproject will adopt the steel-reinforced HDPE pipe.

34 V. DESCRIPTION OF ENVIRONMENT AND SOCIAL CONDITIONS

A. Environmental Setting

95. Hydrology and Water Resources. Erhai Lake (99°32’ to 100°27’E, 25°25’N to 26°10’N), the second largest fault lake in Yunnan province, China, is part of the Lancangjiang and Mekonghe River System. Erhai Lake is situated at 1,972 metres above sea level, covers a drainage area of approximately 2565 km2, and has a lake area of approximately 249.8 km2. With the multiple functions in regulating climate and providing water for industrial and agricultural use, Erhai Lake is the main water source for Dali City and the surrounding area. It is also known for its attractive scenery, and is often referred to as the “Pearl on the Plateau”. A topographic map of Erhai is shown in Figure V-1 below. Figure V-1 Topographic Map of Erhai Basin5

96. The water sources for Erhai Lake are mainly from precipitation and snowmelt. The lake also receives water from the Luoshi River, Miju River and Yongan River in the north, Yulong River and Boluo River in the east, and smaller streams from the Cang Mountain in the west. Xier River, to the south, is the lake’s outlet and eventually flows into the Mekong River. Erhai Lake has an average annual inflow and outflow of 825 million m3 and 863 million m3 respectively. 97. Erhai Lake plays a significant role in the local socio-development, including drinking water sources, irrigation, fisheries, and tourism. However, the lake has undergone a transformation from mesotrophic to eutrophic conditions due to the application of large amounts of artificial fertilizers and destruction of wetland vegetation to support the rapid agricultural development around the basin in the last few years. Rapid urbanization has also leads to water pollution and shortage of water resources in Dali City.

98. Project Area. Dali City is the county-level city of the Dali Bai Autonomous Prefecture in the north- western region of Yunnan Province. It is located approximately 250 km northwest of the provincial capital, . Surrounded by the Cang Mountain and Erhai Lake, Dali City is a famous

5 Wang S, Zhang L, Ni L, et al. (2015). Ecological degeneration of the Erhai Lake and prevention measures. Environmental Earth Sciences. 2015(74):3839-3847.

35 historical and cultural city. Working towards the goal of sustainable urban development and conservation of Erhai, the Project mainly involves the following administrative regions in Dali City: Wase District, Shuanglang District, Shangguan District, Xizhou District, Yinqiao District, Wanqiao District, Dali Town, and Xiaguan District. 99. Wase and Shuanglang Districts are located at the east side of Erhai, and are predominantly agricultural towns with some areas developing into popular tourist destinations. However, the lack of controls of the agricultural pollution sources, unstable performance of the existing wastewater treatment facilities, and insufficient wastewater collection system in the districts greatly affect the water quality of Erhai.

100. Shangguan District is located in the upper reaches of Erhai. As shown in Figure V-2, the Luoshi River, Xizha River, Miju River and Yongan River within the Shangguan District are the major water inlets for Erhai, and thus they are crucial to the water quality of Erhai. These rivers in the Shangguan District are also connected with the agricultural irrigation ditches in the area, which are used for channelling water to the farmlands during dry season. Due to the lack of interception channels along the rivers, stormwater runoff flows into the irrigation ditches during the rainy season, and eventually enters the rivers and Erhai, thereby affecting the water quality of Erhai and nearby rivers. Furthermore, in some villages, sewage is still discharged into the farmland through the village ditches, and pollutes the rivers in Shangguan District.

Figure V-2 Shangguan District and Nearby Waterbodies

Source: EIA Report of Shangguan Subproject, 2016 101. Xizhou District is located on a plateau with Erhai to the east and the Cang Mountain to the west. It is known for its high concentration of preserved and restored traditional Bai architecture and protected heritage sites. Even though the villages along Erhai in the Xizhou District are equipped with wastewater treatment facilities and the existing wastewater collection pipe network has covered most of the villages, the treatment capacities of these facilities are limited and severe

36 blockage issues are also noted in the wastewater collection pipes. During rainy season, the rainwater-mixed sewage is easily overflowed and discharges into Erhai, which causes significant pollution to the water quality of Erhai. 102. Yinqiao and Wanqiao Districts are located beside the Xizhou District as shown in Figure V-3 below. Similar to Xizhou District, the limited collection and treatment capacities of existing wastewater collection pipes and treatment facilities have caused water pollution in Erhai and nearby rivers. The existing collection pipe network in the villages of Yinqiao and Wanqiao Districts are also scattered around, and thus operation and management of the collection pipe network are inconvenient, which reduces the efficiencies of the wastewater collection system.

Figure V-3 Yinqiao & Wanqiao Districts and Nearby Waterbodies

Source: EIA Report of Yinqiao/Wanqiao Subproject, 2016 103. Dali Town, also commonly known as Dali Old Town, is located at the west bank of Erhai, and is also in between of Yinqiao District and Xiaguan District as shown in Figure V-4. Even though there are existing wastewater collection pipelines along Erhai as well as along the smaller streams coming from the Cang Mountain within the Dali Town, the collection pipe network is aging and does not have sufficient capacity to handle the large volume of rainwater-mixed sewage during wet season. In addition, without a proper wastewater collection and interception system, the high population density in Dali Town further increases the pollutant loads flowing into Erhai and nearby rivers.

37 Figure V-4 Dali Town and Nearby Waterbodies

Source: EIA Report of Dali Town Subproject, 2016 104. Xiaguan District, sometimes called Dali New Town, is located at the southern end of Erhai. Villages in Xiaguan District collect wastewater via the drainage ditches, which only have a limited service area coverage and collection capacity. Similar to the other districts discussed above, the existing wastewater collection system is incapable of handling the large volume of wastewater during the wet season. Furthermore, the existing wastewater treatment facilities in Xiaguan District can only treat less than half of the collected sewage, and therefore wastewater is discharged into Erhai and Xier River. B. Physical Environment of the Project Site

105. Surface water quality. Baseline water quality data for Erhai Lake Basin and the major rivers beside each subproject location were retrieved from the Monthly Erhai and Major Rivers Water Quality Reports, which are posted on the Dali EPB’s website. Erhai and each river are categorized according to the “Environmental Quality Standards for Surface Water [GB3838- 2002]”. The water quality data for 2014, 2015 and 2016 are summarized in Table V-1. 106. Locations of the subprojects and major rivers adjacent to Erhai are shown in Figure V-5. All monitoring locations for the rivers are at the inlet of Erhai. 107. Based on the results summarized in Table V-1, key findings of the water quality data include:  In some occasions, particularly during the dry season, Erhai, Wanhua River, Mangyong River and Lingquan River are able to comply with the Class II requirements of GB3838-2002. However, Erhai and all of the major rivers fail to comply with Class II requirements for the majority of the time.

 The non-conformities are caused by insufficient wastewater collection system and treatment facilities in Dali City. The existing wastewater pipe networks also handle both domestic sewage and stormwater. During the wet season, large volume of stormwater-mixed sewage overflows and the untreated wastewater discharges into Erhai and nearby rivers.

38  Major parameters exceeding the Class II requirements include COD, TN, TP, NH3-H and DO. In particular, Erhai and all of the major rivers exceed the required TN and TP levels. It is mainly due to the lack of controls of the agricultural pollution sources, leading to the release of chemical fertilizers to the waterbodies. The excessive richness of nutrients in the lake basin and adjacent rivers also accelerates the eutrophication of Erhai.

Table V-1 Baseline Surface Water Quality of Erhai Lake Basin and Major Rivers

Major Parameters Exceeding Water Quality Category No. Area Class II of GB3838-2002 2014 2015 2016 1 Erhai II ~ III II ~ III II ~ III COD, TN, TP, DO Wase Wastewater Treatment Plant & Shanglang Wastewater Treatment Plant 2 Fengwei River IV ~ V IV ~ V IV ~ V COD, TN, TP, DO Shangguan Wastewater Treatment Plant 3 Luoshi River III ~ V V V COD, TN, TP 4 Xizha River V V V TN, TP, DO 5 Miju River IV IV IV ~ V TN, TP 6 Yongan River > V > V IV ~ V TN, TP, DO Xizhou Wastewater Treatment Plant 7 Wanhua River III III ~ IV II ~ III TN, TP, fecal coliforms Wanqiao Wastewater Treatment Plant 8 Shangyang River V IV ~ V III ~ IV COD, TN, TP, DO 9 Mangyong River IV ~ V IV ~ V II ~ IV TN, TP 10 Jin River IV ~ V IV ~ V III ~ IV COD, TN, TP 11 Lingquan River III ~ V II ~ III II ~ III COD, TN, TP Dali Town Wastewater Treatment Plant 12 Heilong River > V > V > V COD, NH3-H, TN, TP, DO 13 Qingbi River > V > V > V COD, TN, TP, DO 14 Mocan River > V > V > V COD, NH3-H, TN, TP, DO

39 Figure V-5 Monitoring Points and Subproject Locations

Source: EIA Report of Wase/Shuanglang Subproject, 2016

40 108. Groundwater quality. In accordance with the project classification in Appendix A of Technical guidelines for environmental impact assessment – groundwater environment (HJ610-2016), all of the subprojects are classified as Class IV Project, in which environmental impact assessment of the groundwater environment is not required. Although baseline monitoring of the groundwater quality is not required, the Project follows Class II requirements of GB14848-93.

109. Air quality. The baseline air quality is based on the Yearly Dali Bai Autonomous Prefecture Environmental Bulletin, which is posted on the Dali EPB’s website. According to the 2014, 2015 and 2016 Dali Bai Autonomous Prefecture Environmental Bulletins, the annual average concentration of SO2, NO2, PM10, PM2.5 and O3 in Dali City all comply with Class II requirements of GB3095-2012, Ambient Air Quality Standards. In addition, there are no significant industrial developments or other emission sources within the project areas. 110. Noise. The 2015 and 2016 noise levels reported in the Dali Bai Autonomous Prefecture Environmental Bulletin are used as the baseline noise quality. The average noise level for Dali City in 2015 and 2016 were 52.6 dB(A) and 55.9 dB(A) respectively, which complied with the Class II requirements for GB3096-2008, Environmental Quality Standard for Noise. C. Ecological Resources

111. Habitats and vegetation. Located in the Yunnan Plateau, Dali Prefecture has a complex terrain and diversified climate, which provide a good environmental conditions for all kinds of plant growth, thereby contributing to the rich and diverse plant resources in the Prefecture. In general, Dali Prefecture has over 3,000 species (including variants) of vascular plants, which belonged to 926 families and 182 genera. As the Project is located within the urban areas of Dali, the project area is mainly consists of farmland, hay and willow trees according to the DEIAs, and no species of conservation significance or trees of high amenity value is recorded from the project area.

112. Terrestrial and aquatic wildlife. Terrestrial wildlife within the Project Area includes 14 species of amphibian, 15 species of reptiles, 18 species of mammals, and 131 species of birds. Among them, 9 species are second class national protected animals. The IUCN status of each protected animal species is presented in Attachment 4. 113. According to the EIA Report for the Project, Erhai provides a habitat for 34 species of fish, 22 species of mollusks, 2 species of arthropods, 108 species of zooplankton, and 9 species of zoobenthos. Among them, 5 species of fish are national and provincial level protected species, namely Schizothorax taliensis (Class II national protected), barbatus (provincial protected), Cyprinus daliensis (provincial protected), Cyprinus longipectoralis (provincial protected) and Cyprinus megalophthalmus (provincial protected). Further on-site inspection and scientific research indicate that the Project Area and its surrounding waterbodies (i.e. within 200m of the wastewater treatment plants, pump stations, interception channels, treated wastewater reservoirs, etc.) have 16 species of fish inhabited in these areas. These 16 species are not listed as national nor provincial level protected animal species. 114. Erhai used to have a healthy and balanced aquatic ecosystem with an oligotrophic type of algal community dominated by cryptophyta and diatom in the early 1990s. However, rapid urbanization and uncontrolled release of agricultural pollutants to the lake basin have changed the aquatic ecosystem to a eutrophic community dominated by cyanobacteria, causing destruction of the biodiversity at Erhai. D. Protected Areas and Physical Cultural Resources

115. As one of the most popular tourist destinations in Yunnan, Dali City is known for its natural scenery, historical and cultural heritage. There are five major historical and cultural sites protected at the national level in Dali City, including the Taihe City Ruins, Xizhou Bai Architecture, Kublai Khan’s Yunnan Monument, Fotu Pagoda, and the Three Pagodas of the Chongsheng Temple. Dali City also has 10 historical and cultural sites protected at the provincial level and 56 sites protected at the city level.

116. Cang Mountain Eco-Cultural Protection Area. Located at the west of Dali City, Cang Mountain stretches for over 50km and has 19 peaks, with the tallest being Malong at 4,122m and the other peaks are over 3,500m in elevation. As one of the National in China, the mountain

41 range is noted for its rich and diverse flora. Figure V-6 below shows the location of Cang Mountain Protection Area in relation to each subproject location.

Figure V-6 Location of Cang Mountain Protection Area in Relation to the Project

Source: EIA Report of Wase and Shuanglang Subproject, 2016

42 E. Socio-Economic Conditions

117. Dali City, the capital of Dali Bai Autonomous Prefecture, is located in the north-western part of the Yunnan Province. The city has an area of 1,468 km2. It has a registered population of 0.67 million in 2016. The population of ethnic minority is 0.44 million accounting for 66% of the total population. 118. The entire Dali City consists of Innovation Industrial Zone and 11 townships. The townships are.Xiaguan, Dali, Fengyi, Xizhou, Haidong, Wase, Wanqiao, Yinqiao, Shuanglang, Shangguan and Taiyi. Table V-2 below shows a summary of the total land and demographic profile of Dali City.

Table V-2 Land and Population (2015) of Dali City

Population Township Area (km2) Total Rural Innovation Industrial Zone 116.1 48,306 21,950 Xiaguan 193 189,923 37,060 Dali 87 69,707 50,479 Fengyi 304 63,587 62,806 Xizhou 162 67,076 20,947 Haidong 128 25,679 17,802 Wase 112 22,921 21,403 Wanqiao 64 26,754 27,386 Yinqiao 70 31,968 14,266 Shuanglang 218 18,843 39,743 shangguan 129 43,797 9,199 Taiyi 106 9,177 2,737 Note Demographic data refer to registered population. Data Source: 2016 Dali City Statistical Yearbook

119. Economic Profile. In 2016, Dali has a GDP of CNY 35.507 billion (approximately US$5.64 billion), with an 8.5 percent increase from the previous year. The GDP composition ratio for the primary, secondary, and tertiary sectors were 7%, 45%, and 48% respectively. The GDP per capita in the same year was CNY 53,122, which is 5.82 percent higher than the previous year. Table V-3 summarizes the economic profile and performance from 2011 to 2016. Tourism is a key industry in Dali. Dali was one of the pioneering tourism destinations in China after the opening-up policy. Tourism development in the City started in the 1990s, which served as a tool to facilitate local development. Meanwhile, the other major industries in Dali City include mechanical manufacture, tobacco, food and beverage, and plateau characteristic agriculture.

Table V-3 Economic Performance in Dali City

Year GDP Primary Industry Secondary Industry Tertiary Industry GDP Per (CNY billion) (CNY billion) (CNY billion) (CNY billion) Capita (CNY) 2011 21.632 1.509 11.051 9.072 9,731 2012 25.517 1.946 12.83 10.741 14,060 2013 28.733 1.96 14.406 12.366 23,790 2014 31.665 2.119 15.256 14.29 47,688 2015 33.398 2.256 15.616 15.526 50,200 2016 35.507 2.485 15.978 17.043 53,122 Data Source: 2016 Dali City Statistical Yearbook and 2016 Dali City Statistical Communique for Economic and Social Development

120. Project Affected Townships and Villages. The Project directly affects 26 villages in 9 townships of Dali City, as presented in Table V-4.

43 Table V-4 Project Affected Townships and Villages

Number of Number of Affected Affected No Subproject Affected Affected Township Villages Township Villages . Dajianpang . Qinshan . Huoshan Wase and Shuanglang Area Shuanglang; . Haichaohe 1 Lake Basin Wastewater Wase; 3 . Shuanglang 9 Interception Haidong . Wase . Wenbi . Guangyi . Dacheng . Hewei Shangguan Area Lake Basin 2 Shangguan 1 . Daying 3 Wastewater Interception . Shaping Xizhou Area Lake Basin . Shacun 3 Xizhou 1 2 Waste Water Interception . Renliyi . Panxi Yinqiao and Wanqiao Area . Shilling Yinqiao; 4 Lake Basin Wastewater 2 . Yangbo 5 Wanqiao Interception . Xiangyangxi . Shuangyang . Dazhuang . Caicun Dali Town Area Lake Basin Xiaguan; 5 2 . Xiajiyi 5 Wastewater Interception Dali . Xiaocen . Dongmen Xiaguan North Area Lake . Daguanyi 6 Basin Wastewater Xiaguan 1 . Dazhuang 3 Interception . Erbin Total - 9 - 26 Data Source: social audit report

121. Land Use. By 2015, the total land area of Dali City is 181,500 ha. Cultivated land is 11,495 ha, accounting for 6% of the total land.

Table V-5 Land Distribution in Dali City

Cultivated land Cultivated land per capita Remark Township (ha) (ha) Innovation Industrial Zone 45 0.0140 Not affected Xiaguan 755 0.0596 Dali 1,597 0.3437 Fengyi 1,290 0.3043 Not affected Xizhou 1,762 0.3940 Haidong 738 0.4311 Wase 601 0.3933 Wanqiao 1,052 0.5898 Yinqiao 1,295 0.6076 Shuanglang 568 0.4522 shangguan 1,251 0.4285 Taiyi 378 0.6178 Not affected Total 11,495 0.5293 Data Source: 2016 Dali City Statistical Yearbook and 2016 Dali City Statistical Communique for Economic and Social Development

122. Livelihood and Income. The disposable income of urban and rural residents in 2016 is CNY 31,205 and 13,329, with a 8.8% and 9.7% respectively increase from the previous year, which is higher than the provincial level (CNY 28,611 and 9,020 for urban and rural residents respectively). The Engel's Coefficient is 17.53% for rural residents and 24.61% for urban residents.

44 Table V-6 Income Level of Dali City

Year Disposable income of Disposable income of Urban resident rural resident 2012 20,391 7,709 2013 23,531 9,058 2014 26,445 11,095 2015 28,693 12,150 2016 31,205 13,329 Data Source: 2016 Dali City Statistical Yearbook and 2016 Dali City Statistical Communique for Economic and Social Development

123. As presented in Table V-7, for rural residents in 2015, net income from operation is only 42.69 %, which includes the direct income from agricultural activities, small business and other income from operation, while the wage income account for 50.99%. Interviews with in the affected villagers verified that on average the agricultural income before land acquisition was less than 20% of the total income of the AHs. The young people prefer to go out to work in the coast provinces or Kunming City, and only the older people are farming on the land. Also, developed tourism industry in Dali generated a lot of opportunities.

Table V-7 Income Source of Residents in Dali City (2015)

No Item Rural Percentage Urban Percentage 1 Wage income 6,194.82 50.99% 20,772.26 72.39% 2 Net income from 5,187.31 42.69% 1,215.65 4.24% operation 3 Net property income 233.12 1.92% 2,192.34 7.64% 4 Transferred income 534.86 4.40% 4,512.82 15.73% Total 12,150.11 100.00% 28,693.07 100.00% Data Source: 2016 Dali City Statistical Yearbook

F. Existing and Predicted Climate Change

124. Existing Climate. With a mild subtropical highland climate, Dali has short, mild and dry winters and warm rainy summers. The average temperature ranges from 10.5°C in January to 21.7°C in July while the annual mean temperature is 17.0°C. Dali City has an annual rainfall of 1,025 mm, in which the wet season extends from May to October, and over 80% of the annual precipitation occurs during this time. The average monthly temperature and rainfall for Dali City are presented in Figure V-7.

Figure V-7 Mean Annual Rainfall and Temperature for Dali City (1991 – 2015)6

6 Climate Change Knowledge Portal, The World Bank Group

45 125. Observed Climate Change. Temperature in northwest Yunnan has increased by 1.6°C between 1995 and 2005, and is projected to further increase by 1-2.9°C in the first half of this century. As shown in Figure V-8 and Figure V-9, a tendency of climate warming was observed in Yunnan while other climate factors (i.e. average wind speed, total sunshine hours, and solar radiation) fluctuated over time without clear trends.

Figure V-8 Temperature and Precipitation Variation in Northwest Yunnan7

Figure V-9 Other Climate Factors Variation in Northwest Yunnan

126. For the past decade, Yunnan has experienced continuous and intensifying drought conditions. The moisture and precipitation deficiency in combination with increasing temperatures accounted for the drought condition. However, a number of studies have found that deficiencies during droughts were within the range of variations observed during historical climate drought events, and therefore the continuous droughts occurring in Yunnan could not be fully explained by climate reasons alone. G. Associated Infrastructure Projects and Facilities

127. Wastewater and solid waste management infrastructure servicing the project area that will interface with the Project are described in the following sections.

128. Wastewater Infrastructure. The Dali City Integrated Pipe Network Project was designed to construct a 4.2km long wastewater interception pipeline, collecting the domestic sewage and stormwater between Xingsheng Bridge and Tiansheng Bridge. With the construction works completed in the first half of 2017, the Integrated Pipe Network will be connected to the Xiaguan

7 Yang, H., Luo, P., Wang, J., Mou, C., Mo, L., et al. (2015). Ecosystem Evapotranspiration as a Resource to Climate and Vegetation Coverage Changes in Northwest Yunnan, China. PLoS One. 10(8):e0134795.

46 North Area Wastewater Interception Pipeline (Subproject 6) as shown in Figure V-10. The wastewater collected will then be treated at the existing Dali Diyi Wastewater Treatment Plant, and the treated wastewater will be discharged to Xier River.

Figure V-10 Dali Integrated Pipe Network Project and Xiaguan North Area Lake Basin Wastewater Interception Project

Source: EIA Report of Xiaguan North Subproject, 2016

129. Solid waste management. During operational phase, this Project is estimated to generate about 29 tonnes/day of sludge with 20% moisture content. Most of the sludge will be reused as activated sludge in the wastewater treatment process. The wastewater treatment plants are also equipped with a total of 64 tonnes of on-site storage capacity for dewatered sludge. The waste activated sludge and other solid waste (e.g. grits, sediments, general refuse) generated in this Project will be disposed of at the Dafengba Landfill. 130. The Dafengba Landfill has been built to dispose the domestic waste from Dali City. Located in the Xiaguan North Area of Dali City as shown in Figure V-11, the Dafengba Landfill began operation in 2003. It covers an area of 17.56 hectares with a total storage capacity of 5.2 million m3, and has a service duration of 23 years.

47 131. The current waste intake at Dafengba Landfill is approximately 300 tonnes/day. Based on the estimated waste generation rates in the DEIAs, the waste generated from this Project, including grit and sediments from wastewater treatment process and general refuse, are expected to be 23 tonnes/day, which contributes to about 7.6% increase of the daily waste disposal quantity at the landfill.

Figure V-11 Location of Dafengba Landfill

Source: tianditu.com

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VI. ANTICIPATED ENVIRONMENTAL AND SOCIAL IMPACTS AND MITIGATION MEASURES

A. Design and Planning Phase and Avoided Impacts

132. Integrated design and safeguard project planning approach was adopted to avoid potential environmental impacts. The following aspects were assessed during the design and planning phase.

133. Project Benefits. The Project will improve the quality of life in Dali and provide benefits to the existing and future populations as described below: (i) Water Quality Improvement: The construction and modification works of the Erhai Lake interception systems will reduce pollutant loads in stormwater runoff from the site; (ii) Enhanced Wastewater Management: New infrastructure will increase the wastewater treatment capacity and improve the wastewater collection system to avoid the release of untreated wastewater into the waterbodies; (iii) Enhanced hygiene and sanitation: Wastewater management facilities will enhance public hygiene and sanitation as well as reducing health and safety risks in the region.

134. Additional benefits will include provision of temporary employment for local workers during the construction phase. CWE encourages the civil works contractors to employ workers from the local community. During construction period, 1,719 job opportunities are generated and 42.93% are hired locally, while 16.17% are provide to women. In addition, permanent employment will be available during the operation phase. It is estimated that 234 new staff will be recruited, and 85% will be provided to local people.

Table VI-1 Job Opportunities During Construction Stage

No Project Total Jobs Local Female 1 Wase and Shuanglang Area Lake Basin Wastewater Interception 360 164 51 2 Shangguan Area Lake Basin Wastewater Interception 104 39 11 3 Xizhou Area Lake Basin Waste Water Interception 178 32 35 4 Yinqiao and Wanqiao Area Lake Basin Wastewater Interception 320 40 10 5 Dali Town Area Lake Basin Wastewater Interception 477 265 126 6 Xiaguan North Area Lake Basin Wastewater Interception 280 198 45 Total 1,719 738 278 Percentage 100 42.93 16.17 Source: CWE HR manager

135. Site selection. Prior to the construction of new facilities, community health and safety buffer zone was determined by following Technical methods for making local emission standards of air pollutants (GB/T 3840-91). The health protection distance was then used for the establishment of buffer zone for the Project site; 100m buffer zone distance is used for the Subproject WWTP. In addition, two potential options for the project site, including new treatment plant locations and pipeline routes, were analyzed to determine the optimal location for the project. In particular, parameters such as land availability, service area coverage, construction complexity, as well as potential environmental and social impacts to the local communities, were used for comparing the two options. Moreover, the following requirements are used for the selection of sites for wastewater treatment facilities: (i) The site should be located at a lower altitude, such that wastewater will flow into the facility by gravitational force, thereby reducing the amount of earthwork along the wastewater collection pipeline and minimizing the number of booster pumping stations required; (ii) The site should be located in the vicinity of waterbody, where the treated wastewater / tail water will be discharged to; (iii) The site should be located at the lower reaches of the town and residential areas (downstream of the dominant wind direction);

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(iv) Avoid locations that are vulnerable to flood and earthquake; (v) The site should acquire little or no account of farmland, and should be located in areas with better geological condition to reduce construction times and costs; and (vi) Site selection should be combined with the overall planning of the city, in particular the project site should also consider the possibility of expansion.

136. Further description of the assessment of site selection for each subproject are presented in Section VII of this IESE.

137. Land Acquisition and Economic Displacement. The site selection and design of the subproject has been optimized to minimize the LAR impacts. Completed land acquisition and resettlement were carried out by local government in conformity with government laws and regulations. The compensation for permanent land acquisition and house demolition was in compliance with the PRC’s Land Law, Implementation Regulations of Land Law, and applicable regulations of Yunnan Province and Dali City. 138. For land acquisition, cash compensation and pension insurance were provided to APs. A good practice of this Project is in order to provide more benefits to the APs, in addition to the compensation required by the provincial regulations, local government provided additional subsidy. For affected houses and other ground attachments, qualified agencies were engaged to conduct the appraisal firstly, then the final compensation were determined based on the consultation with the affected persons. 139. Many public participation activities were conducted to address the concerns of the affected households, such as the detailed measurement survey (DMS), the compensation rates, and disbursement of the compensation fees. Public hearing notices were sent to each affected village, and the officials of the village committee should sign to confirm that they have received the notice. After village meetings, all affected villages issued the confirmation letter that they did not request to organize the public hearing meeting.

140. Community Perception. Land acquisition during the planning phase and traffic impacts during the construction phase may cause a negative community perception. The Project maintains continuous dialogue with host communities. Complete appeal and grievance system was established to deal with the problems induced by land acquisition, so the APs could find relevant department for their appeal and grievance. The director of the subproject is responsible for addressing social and environmental concerns from community and other stakeholders. The nearby village leaders know the contact information of the director. The villagers can state his/her grievance and appeal to village leaders firstly or directly go to the company. 141. Indigenous Peoples. The population of ethnic minority is 0.44 million accounting for 66% of the total population. There are 24 ethnic minority groups in Dali. The main ethnic minority group is Bai, Yi and Hui. Specially, the ethnic Bai group account for the 60.4% of the total population. Although the Bai group has their own language, the Han language is also widely used since ancient times. They are living together with Han group and not distinct and vulnerable, social and cultural ethnic minority groups. They get married with Han and other groups. They are fully integrated with Han peoples. Thus, the Bai students cannot benefit from the favorable scoring policy in college entrance examinations. The ethnic minority people can benefit the same as Han people from environment improvement. ADB SPS SR 3 on Indigenous Peoples is not triggered. Among the 95 staff in CWE Dali Company, there are 44 ethnic minority Bai workers. B. Pre-Construction Phase

142. Prior to construction, it is suggested that the following measures shall be implemented: (i) Updating the ESMP. In the event of any changes in Project design, the ESMP will be updated as needed, including mitigation measures and monitoring. This will be the responsibilities by the Project Environmental and Social Manager / Management Team (PESM / PESMT). (ii) Training in environmental management. PESMT will provide training to its employees with respect to the environmental and social issues and impacts of their work activities,

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CWE’s Environmental and Social Management System (ESMS) and its policies, as well as measures stipulated in the ESMP. (iii) Grievance Redress Mechanism (GRM). The PESMT, in collaboration with the Operation and Production Department, Integrated Management Department and/or Human Resources Department of the Project company, will implement the Project GRM before the start of construction, to ensure that communities are well informed and have the opportunity to discuss any concerns (further to the public consultations described in Section VIII for this IESE). (iv) Contractor obligation. In their bids, contractors will respond to the environmental clauses for contractual terms and ESMP requirements.

143. Employment and Labour. CWE (here refers to the Dali Company) strictly follows the China Labour Law with particular attention paid to the well-being of all staff in China. The social benefits provided by CWE to staff members include pension insurance, medical insurance, maternity insurance, unemployment insurance, work injury insurance and a social housing fund.8 Regarding to the social housing fund, CWE pay 12% of the salary, which is the highest rate locally. By now, CWE reported that there is no non-compliance record for it on labour issue in the government. When the WWTPs commence operation, each plant will provide free dormitory and shuttle bus to the workers. 144. Maximum hours of work. Labourers shall work for no more than eight hours a day and no more than 44 hours a week on the average. Work arrangements are established which follow the China Labour Law. 145. Overtime. CWE pays labourers more wage remunerations than those for normal work according to the following standards in any one of the following cases: (i) Wage payments to laborers no less than 150 percent of their wages if the laborers are asked to work longer hours; (ii) Wage payments to laborers no less than 200 percent of their wages if no rest can be arranged afterwards for the laborers asked to work on days of rest; and (iii) Wage payments to laborers no less than 300 percent of their wages if the laborers are asked to work on legal holidays.

146. National identification cards are also required in all types of workers to ensure that the projects are not employing children during construction and operations phase. 147. The HR manager confirmed that the lowest wage (2,500 yuan/month) is higher than the minimum wage level of 1,400 yuan/month issued by the Dali Labour and Social Security Bureau. Also, free accommodation is provided. 148. According to Article 68 of Labor Law, the employer shall establish a system for professional training, extract and use funds for professional training according to State regulations, and provide laborers with professional training in a planned way and according to its specific conditions. Laborers to be engaged in technical work shall receive training before taking up their posts. CWE has updated the Employee Manual in February 2016 which clearly documented guidelines, procedures and standards for labour management, covering the following aspects: (i) trainee management; (ii) labour contract management; (iii) recruitment management; (iv) benefits management; (v) vacation management; (vi) remuneration management; (vii) regular training management; (viii) training for the new staff and (ix) office management. Every new staff will be given a job training and orientation by their immediate supervisor, including relevant laws, regulations and national standards, corporate culture, special seminars on energy saving and resource reduction, annual work plan arrangement, goal responsibility pledge and its evaluation, etc. Further training would also be given in the form of group discussion and learning activities. Each subproject company needs to prepare the annual training plan, which always covers the operation, environment protection, and occupational health. The director of the Operation

8 Urban residents must pay a portion of their income into Public Housing Fund to be eligible for low-interest loans, while their employers also contribute. Housing provident fund shall be used by workers and staffs for buying, building, overhauling and repairing houses for self-living and shall not be misused by any unit or individuals for other purposes.

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Department confirmed that 3 times of training for the new staff had been organized in CWE Dali company. 149. GRM for labour issues. When the employee has complaints on labour issues, he/she can contact the HR manager at the plant firstly. If the employee is not satisfied with the decision made at the plant level, he/she can appeal to the human resource department of the regional company. If the employee is not satisfied with the decision made at the regional company level, he/she can appeal to the human resource department of the Group. If the grievance cannot be settled within the group, the employee can appeal to the local Labour Bureau to get a final judgment. The HR manager confirmed that there’s no labour dispute by now.

150. Contractors. They must be able to provide proper skill set in order to have their operation and service license. Contractors are required to deposit guarantee fee (2% of the contract amount) in the special bank account of local labour bureau. CWE will also closely monitor their performance and deliverables. CWE encourages the civil works contractors to hire workers from the local community, and would select contractors who have good track records of compliance with the national labour laws (minimum wages, hours worked, benefits, prohibition of child labour and forced labour, etc.). The manager at the site will help and cooperate with inspectors from government bodies to conduct all survey, inspections and monitoring. When CWE receives the complaints from the workers at the site, it will be transferred to the contractor, and CWE will monitor the progress to addressing the complaint by interviewing or calling the worker. 151. The contractors always have the workers camps management rules. The manager of CWE at the site will help and cooperate with inspectors from government bodies to conduct all survey, inspections and monitoring on the following issues: (i) Compliance with the Fire Control Law, such as the gas and electricity should be used safely; (ii) Compliance with the Environment Protection Law, such as the solid waste and waste water should be collected and treated; and (iii) Compliance with the Labor Law, such as separate toilet and bathroom should be set for female workers.

Figure VI-1 Rest Area for Workers at Construction Site

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Figure VI-2 Separate toilet and bathroom for female workers

C. Construction Phase

1. Sensitive Receptors and Project Area of Influence

152. Sensitive receptors for the construction and operation phases of the Project were identified through field survey and satellite map. The planned Project works will be carried out in Dali City, specifically in the following districts and areas: Wase, Shuanglang, Shangguan, Xizhou, Yinqiao, Wanqiao, Dali Town and Xiaguan North. Table VI-2 below outlines the potential environmental impacts to the identified sensitive receptors within the Project area. Despite the wide range of activities to be conducted in the Project, construction works for most of the subprojects involve similar concerns for earthworks, water quality impacts, air quality impacts, noise control, ecological impacts, and community and occupational health and safety. The following sub- sections further describes the aforesaid concerns as well as the mitigation measures for each impact.

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Table VI-2 Sensitive Receptors and Project Area of Influence

Indicator Affected Area Distance and Location Potential Impact Construction Phase Air quality Wase and Changyu Village 500m from Wase and Shuanglang Construction of Wase and noise Shuanglang Subproject’s booster pumping stations and Shuanglang’s Area Wenbi Village 460m from Wase and Shuanglang booster pumping Subproject’s booster pumping stations stations

Kanglang Village 500m north of Shuanglang WWTP Construction of Shuanglang 85m south of Shuanglang WWTP Shuanglang WWTP Town Wase Town 100m east of Wase WWTP Construction of Wase WWTP Shangguan Shangguan, 30m west of Shangguan Subproject’s Construction of Area Baima Village wastewater interception pipelines Shangguan’s Xiaopai, Hewei 30m north of Shangguan Subproject’s wastewater interception Village wastewater interception pipelines pipelines Shapin, Xijiawei 50m west of Shangguan Subproject’s Village wastewater interception pipelines Daying Village 150m south of Shangguan Construction of Subproject’s booster pumping stations Shangguan’s booster pumping stations Chengbei Village 300m north of Shangguan WWTP Construction of Shachong Village 300m east of Shangguan WWTP Shangguan WWTP Xizhou Area Taoyuan Village 30m north of Xizhou Subproject’s Construction of Xizhou’s wastewater interception pipelines wastewater interception Zhoucheng 50m west of Xizhou Subproject’s pipelines Village wastewater interception pipelines Shenjiang Village 50m east of Xizhou Subproject’s wastewater interception pipelines Renliyi Village 150m north of Xizhou Subproject’s Construction of Xizhou’s booster pumping station booster pumping station Xingshengyi 150m south of Xizhou Subproject’s Village booster pumping station Chengbei Village 300m west of Xizhou WWTP Construction of Xizhou’s Shachong Village 500m north of Xizhou WWTP WWTP Yinqiao and Heyijiang Village 20m west of Yinqiao and Wanqiao Construction of Yinqiao Wanqiao Subproject’s wastewater interception and Wanqiao’s Area pipelines wastewater interception Xindeng, Hele 50m west of Yinqiao and Wanqiao pipelines Village Subproject’s wastewater interception pipelines Luoshideng 30m east of Yinqiao and Wanqiao Village Subproject’s wastewater interception pipelines Jiangxinzhuang 20m north of Yinqiao and Wanqiao Village Subproject’s wastewater interception pipelines Xiaoningyi 350m north of Yinqiao and Wanqiao Construction of Yinqiao Village WWTP and Wanqiao’s WWTP Zhonzhuang, 100m west of Yinqiao and Wanqiao’s Construction of Yinqiao Nanzhuang effluent discharge pipelines and Wanqiao’s effluent Village discharge pipelines Dali Town Xiajiyi, Shangjiyi 150m west of Dali Town Subproject’s Construction of Dali Area Village wastewater interception pipelines Town Subproject’s Xiaoyizhuang 130m east of Dali Town Subproject’s wastewater interception Village wastewater interception pipelines pipelines Cai, Wa Village 40m east of Dali Town Subproject’s Construction of Dali booster pumping station Town’s booster pumping station Dazhuang 200m north of Dali Town’s WWTP Construction of Dali’s Village WWTP Xiamo North 200m south of Dali Town’s WWTP Village

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Indicator Affected Area Distance and Location Potential Impact Xiaguan Xiamo North, 8m east of Xiaguan North Subproject’s Construction of Xiaguan North Area Xiamo South, wastewater interception pipelines North’s wastewater Xiaoguanyi interception pipelines Village Chongyi Village 211m west of Xiaguan North Subproject’s wastewater interception pipelines Surface All Project Erhai Lake 5-60m from all Subproject Sites Construction of all Water Sites Subprojects Wase and Luoshi River, Waterbody nearby the wastewater Construction of Wase Shuanglang Xizha River, Miji interception pipelines and Shuanglang’s Area River, Yongan wastewater interception River pipelines Xizhou Area Wanhua River Waterbody nearby the wastewater Construction of Xizhou’s interception pipelines wastewater interception pipelines Yinqiao and Shangyang Waterbody nearby the wastewater Construction of Yinqiao Wanqiao River, Mangyong interception pipelines and Wanqiao’s Area River, Jin River, wastewater interception Lingquan River pipelines

Dali Town Heilong River, Waterbody nearby the wastewater Construction of Dali Area Qingbi River, interception pipelines Town’s wastewater Mocan River interception pipelines

Ecology Xiaguan Dali Cangshan 20.9m east of Xiaguan North Construction of Xiaguan North Area National Subproject’s wastewater interception North’s wastewater Geological Park pipelines interception pipelines Community All Project Sites Communities nearby the WWTPs, Construction of WWTPs, pumping stations and pipelines pumping station, and interception pipelines Operation Phase Surface All Project Erhai Lake Waterbody nearby the wastewater Leaks or improper water Sites treatment plants discharge of wastewater during WWTP operation, and broken pipeline Wase and Luoshi River, Waterbody nearby the wastewater Leaks or improper Shuanglang Xizha River, Miji treatment plants discharge of wastewater Area River, Yongan during WWTP operation, River and broken pipeline Xizhou Area Wanhua River Waterbody nearby the wastewater Leaks or improper treatment plants discharge of wastewater during WWTP operation, and broken pipeline Yinqiao and Shangyang Waterbody nearby the wastewater Leaks or improper Wanqiao River, Mangyong treatment plants discharge of wastewater Area River, Jin River, during WWTP operation, Lingquan River and broken pipeline Dali Town Heilong River, Waterbody nearby the wastewater Leaks or improper Area Qingbi River, treatment plants discharge of wastewater Mocan River during WWTP operation, and broken pipeline Xiaguan Xier River Waterbody nearby the wastewater Broken pipeline North Area interception pipeline Ground- All Project Sites Groundwater sources within the Broken pipeline water Project Sites and along the interception pipelines Soil All Project Sites Within the Project Sites and along the Broken pipeline interception pipelines Ecology Xiaguan Dali Cangshan 20.9m east of Xiaguan North Broken pipeline North Area National Subproject’s wastewater interception Geological Park pipelines

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2. Soil and Earthworks

153. Excavation works and backfill volumes for each subproject were estimated in the DEIA. All soil required for the Project will re-use the excavated soil stored within the construction sites. Table VI-3 below summarizes the estimated quantity of soil excavation, reuse and disposal for projects involving earthworks. All unused stockpiled materials will be properly disposed of at landfill sites.

Table VI-3 Summary of Soil Excavation, Reuse and Disposal

Volume (m3) Project Components Excavation Backfill Import Disposal Wase and Shuanglang Area Lake Basin Wastewater 143,000 42,000 - 101,000 Interception Shangguan Area Lake Basin Wastewater Interception 130,000 20,000 - 110,000 Xizhou Area Lake Basin Waste Water Interception 140,000 20,000 - 120,000 Yinqiao and Wanqiao Area Lake Basin Wastewater 130,000 19,000 - 111,000 Interception Dali Town Area Lake Basin Wastewater Interception 170,000 11,000 - 159,000

154. Potential soil erosion could occur during construction of the sewage interceptor system, treatment facilities and ancillary system, and any instances involved removal of vegetation and soil. To prevent soil erosion, CWE will implement the following mitigation measures: (i) Identify exact locations for temporary stockpile sites for soil and sediment before any construction; (ii) Strip and stockpile topsoil prior to any construction works, and subsequently the stockpiled topsoil will be used for reinstatement of the vegetative cover after completion of the construction works; (iii) Construct berms and drainage channels around the stockpile sites to capture soil runoff; (iv) Stabilize all cut slopes, embankments, and other erosion-prone working areas; and (v) Properly slope or restore disturbed surfaces (e.g. pipeline trenches and cut banks).

155. All disturbed areas will be restored after completion of construction works and the affected habitats will also be compensated as far as possible. 3. Water Quality

156. Construction activities may cause short-term and localized impacts to water quality of the nearby waterbody due to runoff from construction site, release of construction process water, lubricant, oil and/or wastewater from construction activities if not managed properly, and sedimentation due to lake dredging. The mitigation measures for each impacts are addressed as follows.

157. Pipeline trenching. The excavated soil, placed along the trenches may get disturbed due to windblown, rainwash and the movement of workers, vehicles and pedestrians, and may lead to short-term increase of sediment runoff into nearby water bodies and affect water quality. To avoid potential water quality impacts from pipeline trenching, the following measures shall be implemented:

(i) The dredged sediment shall be delivered to a temporary stockpile area for dewatering, and shall subsequently be disposed of at designated landfill sites;

(ii) Sediment fences shall be installed where appropriate to minimize sediment runoff;

(iii) Temporary soil stockpiles shall be covered;

(iv) Active excavation areas shall be minimized during pipe laying;

(v) Open trenches shall be closed immediately after pipe laying; and

(vi) Re-compacted pipeline trenches shall be re-vegetated to minimize erosion.

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158. Runoff from construction site. Surface runoff, groundwater seepage and construction wastewater collected at the construction sites will be treated via sedimentation before being reused for construction, while sewage from construction workers will be collected at the pit latrines before being provided to local farmers as fertilizer if necessary. To avoid potential water quality impacts from site runoff, the following measures will be implemented: (i) Grit removal facilities (e.g. sand traps, silt traps, and sediment basins) will be installed to collect sand/sediment runoff from construction sites; (ii) Channel, earth bund or sand bag barriers will be provided to direct stormwater to grit removal facilities; (iii) Construction waste and municipal solid waste generated by onsite workers will be removed from the construction site regularly to prevent waste accumulation and chance of wash-off; and (iv) Exposed soil area and open stockpiles will be covered by tarpaulin during rainstorm.

159. Improper release of fuel, lubricants, solvents and/or wastewater. Wastewater will be produced from the mixing and curing of concrete, maintenance and cleaning of equipment and vehicles, dust suppression activities, discharge of domestic wastewater from construction sites, and used fuel, lubricants, solvents, etc. for construction activities that are stored on-site. The following measures will be implemented to control these potential issues: (i) All wastewater generated from the construction site will undergo treatment at the grit removal facilities for pH adjustment and removal of suspended solids; (ii) The treated wastewater will be reused for construction activities or discharged to public sewer interceptor if the wastewater discharged is in line with Class III requirement of national standards GB8978-1996; (iii) Construction site will not be set up within the Class II Water Source Protection Area to protect the drinking water quality; (iv) Chemicals and solvents used for construction activities will be stored in designated containers at designated safe location; and (v) Dry toilets will be provided for construction workers. Septic tanks will be used to collect and treat the domestic wastewater generated onsite, and will subsequently be discharged to the public sewer interceptor.

4. Air Quality

160. Potential air quality impacts during construction of the subprojects include: (i) Dust generated from excavation and material handling, construction of superstructure, installation of wastewater pipeline, booster pumping stations and treatment facilities; (ii) Pollutants from the exhaust of vehicles and powered mechanical equipment (PME), which include carbon monoxide and nitrogen oxides; and (iii) Odor nuisance from sludge drying sites during lake dredging works.

161. As shown in Table VI-4, the DEIA for each subproject predicted that area within 150m of the construction sites would be affected by dust pollution with a daily average total suspended particles (TSP) concentration exceeding the 0.3mg/m3 requirement for Class II Standard of the ‘Ambient Air Quality Standard’ (GB3095-2012).

Table VI-4 Predicted TSP Concentrations at the Construction Site

Downward wind distance from pollution source (m) Predicted Level 1 25 50 80 150 TSP, daily average (mg/m3) 3.744 1.630 0.785 0.496 0.246

162. Air pollutants generated from the construction and transportation vehicles (e.g. trucks, excavators, forklifts, bulldozers, etc.) were also predicted as shown in Table VI-5 below.

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Table VI-5 Predicted Air Pollutant Concentrations Generated from Construction Vehicles

Air Pollutants Hydrocarbons Particulate Matter Carbon Monoxide Nitrogen Oxides Gasoline Vehicle (g/km) 1.23 0.56 5.94 5.26 Diesel Vehicle (g/hr) 77.8 61.8 161 452

163. Air emission on site during construction stage will need to comply with Class II standards of GB3095-2012 and the emission levels stated in Table 2 of “Integrated Emission Standards of Air Pollutants” (GB16297-1996). To minimize the air pollution impacts on construction sites, the following mitigation measures will be adopted: (i) Spray water on construction site and roads especially where sites are located within 200m of residential areas; (ii) Provision of dust removal equipment and screen shed around construction sites; (iii) Side enclosure and covering of any aggregate or dusty material storage piles by tarpaulin to reduce emissions due to wind erosion, and regular removal of stockpiled materials for proper disposal; (iv) Construction activities likely to generate dust will be suspended during strong windy days; (v) Use of certified PME that satisfied the Class II Standard; (vi) Control dust emission generated from vehicles by:  Set up vehicle wheel and body washing facilities at the entrance and exit points of the construction site;  Trucks transporting excavated soil and rock will not be overloaded to minimize dust emission and avoid rocks dropping out onto open roads;  Tarpaulin covering of all dusty vehicle loads transported to, from and between site locations;  Imposition of speed controls for vehicles driving onsite and when passing the nearby sensitive receptors; (vii) Planning of transport routes and time to avoid busy traffic and densely populated areas when transporting dusty materials; and (viii) Cleanup of all muddy and dusty materials on public roads outside the exits of the work areas.

5. Noise

164. The use of powered mechanical equipment (PME) and vehicle movements during construction and transportation activities are the potential sources of noise impact during construction phase. In accordance with the Emission Standard of Environment Noise for Boundary of Construction Site (GB 12523-2011), the acceptable noise levels at the boundary of construction site are 70 dB(A) during daytime and 55 dB(A) during night-time. To predict the noise impact from the PME, the following formula is used for determining the sound levels at different distance from the point source as recommended in the Technical Guidelines for Noise Impact Assessment (HJ 2.4- 2009):

� � = � − 20�� ( ) − ∆� Where L2 and L1 are the noise level at r2 and r1 respectively,� dB(A); r2 and r1 are the distance from the point source, m, and ΔL is additional diffusion attenuation caused by barriers, vegetation, air and earth, dB(A).

165. By using the formula above, the sound levels from various PME at different distances are presented in Table VI-6. According to the DEIAs, the maximum noise levels would be 66 – 68 dB(A) at a distance of 50m from the construction sites, and 62 dB(A) at a distance of 100m. By

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using the predicted sound levels at different distances from the construction noise source, the construction noise levels at sensitive receptors nearby the construction sites are summarized in Table VI-7. Table VI-6 Noise from PME at different distance

Sound Predicted sound levels with different distance to the source (dB(A)) Machinery Level 10 m 20 m 40 m 60 m 80 m 100 m 200m (dB(A)) Dump Truck 97 77 71 65 62 59 57 51 Bulldozer 94 74 68 62 58 56 54 48 Excavator 96 76 69 63 59 57 55 49 Wheel Loader 98 78 72 66 63 60 58 52 Road Grader 92 72 66 60 56 54 52 46 Pipe Processing 98 78 72 66 62 60 58 52 Equipment Portable Air 102 82 76 70 67 64 62 56 Compressor Note Additional sound attenuation caused by barriers, vegetation, air and earth was not included in above calculation.

Table VI-7 Unmitigated Construction Noise Levels at Nearby Sensitive Receptors

Noise Standard Sensitive Receptor Distance (m) Construction Noise Day Night Wase and Shuanglang Area Lake Basin Wastewater Interception Project Shuanglang Town 85 54 – 64 70 55 Wase Town 100 52 – 62 70 55 Shangguan Area Lake Basin Wastewater Interception Project Shangguan, Baima, Xiaopai & 30 64 74 70 55 Hewei Village – Shapin & Xijiawei Village 50 58 – 68 70 55 Daying Village 150 49 – 59 70 55 Xizhou Area Lake Basin Wastewater Interception Project Taoyuan Village 30 64 – 74 70 55 Zhoucheng & Shenjiang Village 50 58 – 68 70 55 Renliyi & Xingshengyi Village 150 49 – 59 70 55 Yinqiao and Wanqiao Area Lake Basin Wastewater Interception Project Heyijiang & Jiangxinzhuang Village 20 66 – 76 70 55 Luoshideng Village 30 64 – 74 70 55 Xindeng & Heli Village 50 58 – 68 70 55 Zhonzhuang & Nanzhuang Village 100 52 – 62 70 55 Dali Town Area Lake Basin Wastewater Interception Project Cai & Wa Village 40 60 – 70 70 55 Xiaoyizhuang Village 130 50 – 60 70 55 Xiajiyi & Shanqiyi Village 150 49 – 59 70 55 Dazhuang & Xiaomo North Village 200 46 – 56 70 55 Xiaguan North Area Lake Basin Wastewater Interception Project Xiamo & Xiaoguanyi Village 8 74 – 84 70 55 Chongyi Village 200 46 – 56 70 55 Note Based on the DEIAs, all sensitive receptors were rated as Class 2 of GB3096-2008. 166. The following mitigation measures will be implemented to ensure compliance with the PRC construction site noise limits and to protect sensitive receivers: (i) Avoid construction during night-time (2200 to 0600). If it is necessary to work at night after 22:00, nighttime operation licenses from environmental protection authorities, must be obtained, and notices have to be released before construction commences. Bulldozer, loader, mixing operations have to be operated during daytime. Construction plans shall be formed in accordance with the "Emission Standard of Environment Noise for Boundary of Construction Site (GB12532-2011)”; (ii) Equipment with high noise and high vibration will not be used near village or township areas. Only low noise machinery or equipment with sound insulation will be employed;

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(iii) Implement good site practices and carry out proper operation and maintenance of the machinery to minimize construction noise;

(iv) Temporary noise barriers shall be set up along the site boundary or around noisy equipment; (v) Procure precast concrete as practical as possible to reduce concrete mixing activities on site; (vi) Noise shall be minimized during the moving of construction materials on site; (vii) Conduct regular noise monitoring at construction sites and sensitive areas; and

(viii) Work stations for woodwork shall be sealed completely to minimize the noise generated from material cutting. 167. In addition, vehicles used during construction and transportation (e.g. concrete mixer truck, dump truck, etc.) were estimated to generate a noise level of 80 – 100 dB(A). To mitigate the noise impact from vehicles, the transport route will be planned beforehand to avoid the sensitive receptors as much as possible. When passing through the sensitive receptors, the speed of vehicle will be below 20 km/hr to minimize the transportation noise. 6. Vibration

168. For this Project, there will be no construction techniques or equipment used (e.g. blasting) that will result in substantial generation of ground vibration. However, mechanical vibration generated from construction activities such as piling, lake excavation, soil compaction, pipeline trenching, and embankment construction may cause nuisance and stress among the workers and nearby communities. To mitigate these issues, damper/shock absorber will be used for high vibration equipment. Moreover, machines that may be in intermittent use will be shut down between work periods or will be throttled down to a minimum. All works will comply with the ‘Standard of Environmental Vibration in Urban Area (GB10070-88)’. 7. Solid Waste

169. Solid waste generated during construction will include construction and demolition material, hazardous waste from construction activities, and refuse generated by construction workers. If not properly disposed of, potential issues such as community health and sanitary problems and contamination of soil and water could arise. The mitigation measure for each type of waste will be addressed as follows.

170. Construction and demolition material. As described in Table VI-3, excavated materials will be cleared and removed regularly, and reused on-site for landscaping/fill or transported off-site for disposal at designated landfill. 171. Hazardous waste. Chemical waste that may arise during the construction works include spent solvents/solutions from equipment operation and cleaning activities, in which the lubricating oil and fuel used for maintaining and powering machinery are classified as HW-08 hazardous waste in accordance to the National Hazardous Waste Inventory (2016). To avoid potential health impact on workers (e.g. accidental ingestion) and fire hazard, this type of waste oil will be collected and stored in closed containers. The container for storing the hazardous wastes will be properly labelled and stored separately to prevent contamination to other waste or stockpiled materials. The waste will be cleared and removed regularly by qualified waste collection companies for proper disposal of the hazardous waste. 172. General refuse. General refuse refers to solid waste generated by construction workers during daily operation. Sufficient rubbish bins or collection area will be provided to maintain the hygiene and tidiness of the work site. The collected waste will be removed at regularly and will be disposed of at nearby landfills. 8. Ecological and Biodiversity

173. The potential ecological impacts arising from the construction works include:

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174. Habitat loss & removal of vegetation. Construction works will result in the permanent loss of habitats within the footprint of the Project sites, and temporary habitat loss for the establishment of work areas, storage sites and access roads. Excavation works will also cause vegetation clearance, resulting in nutrient loss at the top soil, which may reduce the soil fertility and inhibit the regrowth of vegetation. While these habitats are of limited ecological value (primarily grassland and agricultural land), they provide feeding and breeding habitats for some common and widespread species of birds and reptiles. 175. Disturbance to aquatic fauna. The construction of interception channels and pipelines will be carried out in areas near waters and wetlands. During the construction process, slag and construction waste could potentially accumulate along rivers and if construction sites are not properly managed. Construction wastewater and domestic sewage from construction workers could also become runoff and enter nearby waterbodies if not disposed of appropriately, causing disturbance to the habitats of aquatic fauna. 176. Disturbance to terrestrial fauna. Proposed works may cause direct injury/mortality of terrestrial fauna due to earth works, vegetation clearance, and unauthorized actions of construction staff (e.g. hunting). In addition, noise and vibration from construction machinery, vehicles and increased levels of human activity will also cause disturbance to fauna. Furthermore, the localized air quality impacts from exhaust emission and dust generation from construction plant and vehicles may cause potential ecological impacts through pollutant/particle deposition on plants and animals. 177. In order to address the aforesaid impacts, the following mitigation measures shall be implemented to minimize the ecological risks and disturbance impacts: (i) Construction works to be conducted at all sites shall be carefully controlled, and good site practice shall be carried out, which include:  Regular maintenance of all construction equipment and machineries to minimize air and noise pollution;  Implementation of dust suppression and site run-off control measures;  Strict controls for construction vehicles (e.g. speed control, regular vehicle maintenance, and prohibiting the use of horn on site); and  Adequate toilets and rubbish bins on construction sites; (ii) Channel, earth bund or sand bag barriers shall be provided to direct construction wastewater and stormwater to grit removal facilities (e.g. sand traps, silt traps, and sediment basins) on site; (iii) The collected wastewater shall be treated at the grit removal facilities and reused for construction activities or discharged to public sewer interceptor if the treated wastewater is in line with Class III requirement of GB8978-1996; (iv) Construction waste and municipal solid waste generated by onsite workers shall be removed from the construction site regularly to prevent waste accumulation and chances of wash-off; (v) Post-project restoration of habitats: Top soil shall be striped and stockpiles prior to the construction works, and shall be used for reinstatement of the vegetative covers; and (vi) Prior to commencement of any works, training and basic education on good site practice shall be provided to construction staff, which include no littering, hunting, fishing, no unauthorized damage to vegetation, and minimizing noise and disturbance to sensitive receptors.

9. Social Issues

178. The Project involved permanent land acquisition, temporary land occupation and house demolition. The Project acquired 393.3307 mu land, which included 15.6195 mu state-owned land and 377.7112 mu collective land. 3,443.58 m2 houses were demolished. Land acquisition affected 1,423 persons and 327 HHs from 18 villages of 9 townships, and house demolition affected 9 HHs and one enterprise from 7 villages of 3 townships. Totally, land acquisition and

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house demolition affected 26 villages of 9 townships. Land acquisition and resettlement activities of the Project have been completed by the local government. To ensure adequate social management practices are in place for all of the subprojects, CWE have co-ordinated with local governments in handling all resettlement issues, including participation in detailed measurement survey, discussion with the affected residents to clarify all resettlement related policies, and provision of adequate compensation and/or support. The social audit report (Attachment 3) verified that the compensation for permanent land acquisition was in compliance with the PRC’s Land Law, Implementation Regulations of Land Law, applicable regulations of Yunnan Province and Dali City. Local government agencies reported that they have not received any significant complaints.

179. Impacts on Land Use. Since all land has been acquired permanently before construction, during construction, there is no need to acquire more land. Under the national “offset cultivated land used for other purposes”, Dali City Government has confirmed that CNY 0.3599 million will be spent to upgrade the 15.9943 ha cultivated land in Wase Township to class-9 paddy land within 2 years after receiving the approval of transferring the farmland to construction land, so that the total area of paddy land in Dali City will not be reduced. 10. Community and Worker Health and Safety

180. To provide workers with safe and healthy working conditions and to minimize adverse impacts and risks to local communities, the civil works contractors will implement adequate precautions to protect the health and safety of the workers and community, which will include: (i) Provision of signage and road markings to raise awareness on safety issues and warn people of potential dangers such as moving vehicles and excavations; (ii) Provision of personal protection equipment for workers; (iii) Trainings to all construction workers on general health and safety matters, basic sanitation and health care issues, and specific hazards of their works; (iv) Establishment of emergency response plan with guidance and procedures on handling accidents and emergencies, including environmental and public health emergencies (e.g. fire, hazardous material spills, and surface water contamination); and (v) Inspections conducted by construction supervisor to keep track of the water quality, air quality and noise levels at the construction sites and sensitive receptors, and to ensure compliance to the Standards.

181. Workforce Impacts on Host Communities. The contractors always have the workers camps management rules. The manager of CWE at the site will help and cooperate with inspectors from government bodies to conduct all survey, inspections and monitoring on the following issues: (i) Compliance with the Fire Control Law, such as the gas and electricity should be used safely; (ii) Compliance with the Environment Protection Law, such as the solid waste and waste water should be collected and treated; and (iii) Compliance with the Labour Law, such as separate toilet and bathroom should be set for female workers.

182. Workers camps management rules, together with the relatively engaged local workforce will greatly reduce the social impacts on host communities from the presence of workers from outside the region.

183. Traffic Impacts. Construction traffic on access routes will mainly consist of heavy vehicles, such as trucks for delivering construction equipment and materials, and disposal of construction waste. These traffic movements are not expected to impact on the local road network since such movements will be confined to off-peak hours. 184. However, pipeline construction will be carried out on existing urban road, which inevitably will have an adverse impacts on the local traffic. In particular, earthworks, stockpiling of excavated materials, and the use of heavy equipment during construction of pipelines will temporary occupy

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vehicle roads and surrounding sidewalks. Therefore, the following measures will be implemented to reduce traffic disturbance during construction of pipelines: (i) Construction route and plan shall be approved by the local transport department beforehand; (ii) Traffic cones and warning lights will be set up on the prominent road sections near the construction site to guide the passage of vehicles; (iii) Personnel will be assigned to direct traffic when necessary; and (iv) Construction schedule will be carefully planned such that the construction of pipelines will be carried out section by section to minimize impacts to the vehicular road traffic, as well as reducing the amount of temporary stockpiles at the surrounding sidewalks.

11. Physical Cultural Resources

185. Dali Cangshan National Geological Park is located 20.9m east of Xiaguan North Subproject’s wastewater interception pipelines. According to the DEIA, impacts on the park are expected to be minor and negligible in scale, and will not decrease its current ecological value. 186. No other cultural heritage or archaeological sites were identified at the Project areas. However Construction activities have the potential to disturb unknown underground cultural relics. To address this issue, the emergency response plan will include mitigation measures, such as suspension of construction activities if any archaeological or other cultural relics are encountered, and notification to the state department for cultural administration and associated agencies. All actions taken will comply with the PRC Cultural Relics Protection Law, and construction will resume only after investigation and with the permission of the appropriate authority. The clause for protection of unknown underground cultural relics will be included in construction contracts. D. Operational Phase

1. Water Resources

187. Water quality and sewage infrastructure. The Project is expected to have a positive impact on wastewater management and river water quality during the operation phase. According to the wastewater volume forecast in the DEIAs, the design capacities of the proposed WWTPs have been reviewed to be sufficient to cater for the sewage flow generated from the new districts surrounding the Erhai. Table VI-8 below summarizes the existing and proposed wastewater treatment capacities for the Project. The design capacities of proposed WWTPs to accept the wastewater from the project area will be 58,000 m3/d in 2020 and ultimately 126,000 m3/d in 2050 to ensure sufficient treatment capacities for future developments in the new districts. In addition, the wastewater interception system constructed under this Project increases the service area coverage and separates stormwater from the domestic sewage, thereby creating an effective system for capturing stormwater run-off and preventing pollution to the receiving waterbodies.

Table VI-8 Existing and Proposed Wastewater Treatment Capacities for the Dali Erhai Lake Basin Wastewater Interception Project

Proposed Treatment Capacities Existing Treatment Capacities Project Area (m3/day) (m3/day) Recent (2020) Long Term (2050) Wase District 735 4,000 8,000 Shuanglang District 2,500 9,000 18,000 Shangguan District 1,000 5,000 15,000 Xizhou District 2,000 10,000 25,000 Yinqiao / Wanqiao District 4,200 10,000 20,000 Dali Town District 1,705 20,000 40,000 Total 12,140 58,000 126,000

188. Water quality impacts during normal operation. All wastewater from the project sites will be treated to satisfy Class 1A of “Discharge standard of pollutants for municipal wastewater” (GB18918-2002) before discharging into the designated reservoirs for treated wastewater. Instead of discharging the treated effluent to Erhai, the treated effluent will be stored in the

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reservoirs and reused for farmland and landscape irrigation, and therefore will not have any adverse impact to the water quality of Erhai. 189. Online monitoring systems will also be installed at the water intake point and discharge outlet of each WWTP for monitoring the quality of the water flow and pollutants including COD, BOD5, NH3-N, TP and SS, as well as ensuring investigations will be conducted in a timely fashion once abnormalities are found, which will reduce the risk of water quality impacts on other waterbodies. It is also recommended that the water intake and tail water should be regularly sampled and sent to the local environmental monitoring station for testing, to test the accuracy of the online monitoring device installed within the subprojects. 190. Major sources of wastewater generation during the operation phase include the daily water usage by management staff, cleaning of mechanical appliances, and sludge ponds. All wastewater will be collected and re-directed to the subprojects’ wastewater treatment plants which will not cause any adverse impacts on the surrounding environment. In addition, treated effluent from the WWTP will be used for cleaning of appliances and landscaping to minimize the use of fresh water during the operation phase. 191. Other potential water quality impacts. During the operation phase, incidents such as power outage, equipment failure, pipeline ruptures and sewage spills may occur and cause significant water quality impacts as they could increase pollution loading to Erhai and other receiving waterbodies. In particular, underground pipeline ruptures may impact the quality of both surface water and ground water. To prevent such conditions, backup power supply and standby equipment will be provided to ensure continuous operation of the wastewater treatment plants. Flow meters will also be installed along the pipeline for monitoring the flowrate and providing signals when an abnormal flowrate is detected (suggesting possible sewage leakage). Furthermore, regular inspection of pipelines and timely repair of ruptured areas will be conducted to minimize the impacts due to sewage leakage. The subproject companies will also work closely with the local municipalities to strictly prohibit the discharge of solid waste into the sewers, thereby reducing the possibility of sewage overflow due to pipeline blockage. 192. The subproject companies shall also develop effective environmental risk contingency plans, establish emergency alert systems and strengthen the maintenance and environmental monitoring of pipeline networks. When sewage leakage occurs, immediate measures are required to be taken, not only to inform personnel to repair, but also to notify nearby residents and stakeholders immediately, to take measures to prevent sewage flowing into the residential areas and water bodies. 2. Air Quality

193. The main operation phase air quality issue will be odour from wastewater pumping stations, grille sewage wells, aeration tanks, sludge dewatering rooms, and exhaust emission from operation machineries, with ammonia (NH3), hydrogen sulphide (H2S) and methanethiol (CH3SH) as major odour pollutants. Odour intensity could fluctuate due to seasonal and temperature changes, leading to strong odour in summer when temperature is high and a relatively weaker odour in winter when temperature is lower. Odour level at the wastewater treatment plant is predicted in accordance with the “Guidelines for Environmental Impact Assessment – Atmospheric Environment” (HJ2.2-2008). As shown in Table VI-9 below, both NH3 and H2S concentrations comply with Class 2 of “Discharge Standard of Pollutants for Municipal Wastewater Treatment Plant” (GB18918-2002). Based on the DEIAs, the identified sensitive receptors are around 85 to 500m away from the WWTPs, and therefore odour impacts to the nearby sensitive receptors will be minimal.

Table VI-9 Estimated Odour Levels at Wastewater Treatment Plant

3 3 Distance from Point Source (m) NH3 Concentration (mg/m ) H2S Concentration (mg/m ) 100 0.00725 0.0004833 200 0.00430 0.0002866 300 0.00264 0.0001763 400 0.00186 0.0001238 500 0.00139 0.0000928

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Class 2 of GB18918-2002 1.5 0.06

194. To further minimize air quality impacts from the odour and to ensure the air emissions comply with Class 2 of GB18918-2002 during operations, particularly during the summer season, treatment units and plant rooms will be enclosed and maintained at a negative pressure, allowing the odorous air to be extracted. The extracted air will then be directed to the biological deodorizing system, with a removal rate over 80%, for removing the odorous pollutants and dust particles before discharging to the atmosphere. Moreover, the subprojects’ booster pumping stations will install activated carbon deodorizing systems with over 80% of removal rate to ensure the exhaust air will achieve Class 2 standards of GB18918-2002 before it is emitted, thus the impacts on the surrounding environment will be minimal.

195. Furthermore, vehicles will also generate TSP, H2S and NH3 during operation. The subprojects should strengthen the management of driveways and parking facilities for reducing traffic congestion and vehicle speed to minimize the emission of air pollutants, as well as increasing greening at garage entrances and surrounding areas to minimize the dispersion of odour and dust to the nearby air sensitive receivers. With above measures implemented, there will not be significant air quality impacts. 3. Noise

196. During the operation phase, the major noise sources will come from the mechanical equipment in the wastewater treatment plants and booster pumping stations, including air compressors, fans, mixers and pumps, with noise level ranging from 80 to 110 dB(A). To mitigate the noise impacts during the operation phase, the following measures will be implemented: (i) High noise equipment will be equipped with shock absorbers and sound insulators to reduce vibrations and noise; (ii) Submersible pumps will be used for sewage and sludge pumping, which significantly reduces the noise level as the pumps are under water; (iii) Aspects including engineering design, equipment selection, pipeline design and sound insulation design will strictly follow the requirements of “Industrial Enterprise Noise Control Design Specifications” (GBJ87-85); (iv) Road humps will be installed within the driveways of subprojects and car horns will be prohibited, to reduce the speed of vehicles on site and minimize noise impacts; and (v) Greenery within the project sites will be strengthened, especially at locations near facilities to provide a natural noise barrier.

197. With the implementation of recommended mitigation measures, noise levels can be reduced as shown in Table VI-10 below. The DEIAs estimated the mitigated noise levels at point source to be between 60 to 75 dB(A). In addition, sunken plant design will be adopted for all wastewater treatment plant, which will further reduce the noise impacts to the nearby sensitive receptors. High noise areas such as booster pumping stations and blower rooms will also be fully enclosed, which typically attenuates levels by 30-40 dB(A).

Table VI-10 Predicted Noise Levels during Operations

Predicted Noise Level at Point Sensitive Receptor Noise Source Source dB(A) Unmitigated Mitigated Wase and Shuanglang Area Lake Basin Wastewater Interception Project Kanglang Village Shuanglang WWTP 80 – 100 60 – 75 Shuanglang Town Shuanglang WWTP 80 – 100 60 – 75 Wase Town Wase WWTP 80 – 100 60 – 75 Shangguan Area Lake Basin Wastewater Interception Project Daying Village Booster Pumping Station 110 75 Chengbei Village Shangguan WWTP 80 – 100 65 – 75 Shachong Village Shangguan WWTP 80 – 100 65 – 75 Xizhou Area Lake Basin Wastewater Interception Project Renliyi & Xingshengyi Village Booster Pumping Station 110 75

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Predicted Noise Level at Point Sensitive Receptor Noise Source Source dB(A) Unmitigated Mitigated Chengbei Village Xizhou WWTP 80 – 100 65 – 75 Yinqiao and Wanqiao Area Lake Basin Wastewater Interception Project Xiaoningyi Village Wanqiao WWTP 80 – 100 60 – 75 Dali Town Area Lake Basin Wastewater Interception Project Cai & Wa Village Booster Pumping Station 110 65 – 75 Dazhuang & Xiaomo North Village Dali Town WWTP 80 – 100 65 – 75

198. Noise levels of each subproject will be controlled to within 60 dB(A) during day time and 50 dB(A) during night time at a distance of 1m from the boundary of the facility with above measures implemented, to comply with the Class 2 of the “Emission Standard for Industrial Enterprise Noise as Boundary” (GB12348-2008). By adopting sunken plant design for the wastewater treatment plants and a fully-enclosed structure for the booster pumping stations, the noise impact could then be relatively insignificant to the noise sensitive receivers and the surrounding acoustic environment if mitigation measures are implemented properly. 4. Solid Waste

199. The solid waste generated during the operation of the subprojects are mainly sludge from wastewater treatment processes. In accordance with the requirements specified in “Discharge standard of pollutants for municipal wastewater” (GB18918-2002), the sludge will be processed by dewatering equipment to reduce its moisture content to below 80% before disposing to a designated landfill or delivering to a sludge utilization centre for further treatment. In addition, vehicles carrying the sludge is required to be fully sealed with waterproofing and leakage prevention measures during transportation to prevent any fly tipping and accidental spills. All vehicles will be cleaned and disinfected before leaving the project sites. 200. Other sources of solid waste during operation include grating slags, sediments from grit chambers and general refuse from workers on site. Table VI-11 below summarizes the waste generation rate for each subprojects during the operation phase. Recycling bins will be provided within the project sites and all collected waste will be sealed with large plastic garbage bags, before transporting to the local sanitation department for unified treatments, such as recycling and landfill. The waste collection points will also be disinfected to kill pests, in order to prevent the spreading of stench and the breeding of mosquitoes.

Table VI-11 Solid Waste Generation for the Dali Erhai Lake Basin Wastewater Interception Project

Type of Solid Waste Project Component Sludge1,2 Grating Slags Sediments General Refuse (tonne/day) (tonne/day) (tonne/day) (kg/day) Wase WWTP 6.5 0.23 43 Shuanglang WWTP Shangguan WWTP 2.5 0.11 0.68 4 Xizhou WWTP 5 0.19 1.13 31 Wanqiao WWTP 5 0.77 0.05 30 Dali Town WWTP 10 0.31 1.80 39 Total 29 5.27 147 Note: 1 The sludge generation rate is based on a sludge production rate of 1tonne of dewatered sludge per 10,000 m3 of wastewater according to CWE’s latest forecast. 2 The sludge quantity is based on 80% moisture content. 201. Additionally, small amount of hazardous waste, such as waste oil and waste lubricants, will be generated throughout the usage and maintenance of pumping stations and mechanical moving parts. The procedures of waste storage will strictly follow the requirements of the “Standard for Pollution Control on Hazardous Waste Storage” (GB18597-2001), and will be distributed to qualified hazardous waste treatment centres regularly for unified collection and treatments. 202. In summary, operational solid waste will not be generated in significant amount and will not cause substantial pollution to the surrounding environment if managed properly.

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5. Ecology and Biodiversity

203. The relatively low impact of habitat clearance by the subprojects is further reduced by constructing additional habitats and providing habitat management during the operation phase. Existing sources of wastewater in the Project Area are intensively managed, which improves the overall quality of the waterbodies in the area and enhances its ecological value. All project sites will also ensure a sufficient amount of greenery to be planted. 204. In addition, effluent will only be discharged to constructed wetlands and reservoirs, which mainly consists of submerged plants, plankton and aquatic animal of low ecological value. 205. Other operation phase ecological impacts (e.g. noise and visual disturbance) are expected to be minor or negligible in scale. 6. Community Health and Safety

206. Environmental impacts due to operation can be avoided by incorporating the necessary measures in the design and use of appropriate operational procedures. However, community health and safety of people living nearby the wastewater treatment plants can potentially be affected by failures or poor operation of the facilities. To avoid such situations, and when avoidance is not possible, to minimize the adverse impacts and risks to the health and safety of local communities, an emergency response plan shall be established to take actions on accidents and emergencies, including environmental and public health emergencies associated with nonconformity in the effluent quality and sewage spills. Operators at the facilities shall also be trained on emergency response procedure, as well as health and safety aspects of handling these situations. Furthermore, public shall also be kept away from the facilities by maintaining a 100m buffer zone distance. 7. Occupational Health and Safety

207. The subproject staff could possibly be injured by slips, trips and falls on wet floors; by falls into treatment ponds, pits, and clarifiers, and by splashes of hazardous liquids. They could also suffer cuts and pricks from sharp tools, as well as contusions. A corporate-level Occupational Health and Safety Manual is in place, and will be used as the framework of health and safety safeguards for the subprojects in Dali Erhai Lake Basin Wastewater Interception Project. In particular, the following measures will be implemented to safeguard the health and safety of workers on site:  Use safety shoes or boots with non-slip soles.

 Wear PPE and chemical resistant clothing to avoid exposure of skin or eyes to corrosive and/or polluted solids, liquids, gases or vapors.

 Post safety instructions in each workshop regarding the storage, transport, handling or pouring of chemicals.

 Check electrical equipment for safety before use; verify that all electric cables are properly insulated; take faulty or suspect electrical equipment to a qualified electricity technician for testing and repair.

 Wear safety goggles in all cases where the eyes may be exposed to dust, flying particles, or splashes of harmful liquids.

 Wear respiratory mask in the sludge dewatering workshops and when moving and transporting sludge.

 Obey all safety instructions concerning entry into confined spaces, e.g., check atmosphere for oxygen or for poisonous gases, use respiratory protection equipment if needed, have a co-worker stand guard in case of need for help.

 All workers will undergo periodic examinations by occupational physician to reveal early symptoms of possible chronic effects or allergies.

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 Health and safety will be incorporated into the regular staff training programs.

8. Workforce Impacts on Host Communities

208. During operation, it’s estimated that 234 new staff will be recruited, in which 85% and 30% will be provided to local people and women respectively. Especially, cleaners, canteen workers, and guards will be recruited from the nearby communities. 209. Tourism is a key industry in Dali. Erhai Lake is one of the most famous scenic spots in China. In 2016, the number of visitors to Dali City is 15.08 million, which is increased by 46.73% compared with 2015. More than 30,000 people directly engage in tourism industry, and more than 100,000 people engage in other related sectors. With better environment of Dali City and Erhai Lake, more visitors will be attracted to Dali, thus more job opportunities will be generated.

Table VI-12 Development of Tourism in Dali City

Indicator 2014 2015 2016 Number of visitors (10,000) 918.17 1,027.56 1,507.73 Overseas visitors (10,000) 56.88 62.57 68.08 Total general income from tourism industry (CNY billion) 13.501 16.303 24.671

9. Physical Cultural Resources

210. According to CWE, no cultural heritage or archaeological sites were found in the Project Area. E. Indirect, Induced, and Cumulative Impacts

211. Indirect impacts are adverse and/or beneficial environmental impacts which cannot be immediately traced to a project activity but can be causally linked. Induced impacts are adverse and/or beneficial impacts on areas and communities from unintended but predictable developments caused by a project which may occur later or at a different location. Cumulative impacts are the combination of multiple impacts that result from incremental changes caused by other past, present or reasonably foreseeable actions together with the project, thereby leading to significant adverse and/or beneficial impacts that would not be expected in case of a stand- alone project.

212. Indirect impacts. The hydrology and ecology of Erhai Lake might be affected as a consequence of the Project. The scale of these impacts is considered negligible for the following reasons: (i) Tail water from all subprojects will only be discharged into constructed wetlands and designated reservoirs after treatment, which will be reused for farmland and landscape irrigation. All effluent will be treated to Class 1A discharge standards of GB18918-2002, and will also comply with the “Standards for Irrigation Water Quality” (GB5084-2005). The reservoirs also incorporate an ecological water purification system, which enables self-purification of the waterbodies and further reduces the water contaminants, thereby minimizing impacts to the water quality of Erhai. The tail water quality will also be strictly monitor by a continuous monitoring system to ensure compliance with the discharge standards. Untreated water may be discharged into the nearby waterbodies unexpectedly when accidents occur, such as power outage and equipment failure at the wastewater treatment plants and booster pumping stations. Emergency prevention measures and contingency plans will be established for each subproject to prevent such situations. (ii) The construction of interceptor sewers for the Dali Erhai Lake Basin Wastewater Interception Project greatly increases the service area coverage of the wastewater collection system in Dali City, thereby providing an effective way to manage the storm water of Dali City, as well as ensuring no increase in the volume of run-off or peak discharge entering Erhai, controlling water quality impacts to the Lake and preventing floods. When there is an unexpected sudden peak in outflow, personnel will be informed immediately for repair and rectification; nearby residents and stakeholders will also be notified immediately to allow sufficient time for building a dam of sandbags or

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implementing other measures to prevent sewage flowing into the residential areas and other significant zones.

213. Induced Impacts. Potential induced impacts could arise if the wastewater management designs in the Project are not as effective as expected. As a consequence, the water discharged into the reservoirs for treated wastewater could be of less than the expected standard. Incidents such as pipeline ruptures and sewage spills may also occur and pollute the nearby waterbodies, groundwater sources and soil. 214. However, this impact is likely to be of limited concern on the overall quality of Erhai as the tail water from all of the subprojects will only be discharged to the reservoirs instead of directly discharging into the Lake. An online monitoring system will be installed at the effluent discharge point, and the WWTPs will stop the effluent discharge when exceedance of effluent quality is detected. In the event that the water quality standard at the discharge point does not meet the standards, a review of the treatment system management will be conducted to identify potential source that causes the discharge not complying with standards, and implement remedial measures. Additionally, the subproject companies will have online water quality monitoring systems and environmental risk contingency plans in place, which could detect abnormalities in a timely manner and minimize the impacts resulted from unexpected conditions. 215. Cumulative Impacts. The proposed Project is linked to the overall development plan of the Dali City. With the development of the city, the need of water for municipal use (i.e. street, cleaning, urban greening, firefighting, vehicle wash, and flushing of public toilets) and domestic water use will gradually increase. It is estimated that the water demand for Dali City will be about 159,800 m3/day by 2050. Therefore, successful delivery of the Project will improve water resource management and river water quality in Dali, and serve as a model for future water-sensitive urban developments in the wider Yunnan Province and other cities in China. F. Climate Change

216. Through improvements in collection and management of urban wastewater, wastewater is being collected and treated before discharging into the natural hydrological and ecological cycle. By mimicking natural chemical systems, they ensure the good perpetuation of the natural water cycle, therefore the Project components and outputs will have significant positive effects and contributions to the climate change resilience of the Project Area. 217. On the other hand, during wastewater treatment, greenhouse gases (GHGs) including carbon dioxide (CO2) from aerobic (oxidation processes), methane (CH4) from anaerobic processes (3– 19 % of global anthropogenic methane emissions) as well as leakage, and nitrous oxide (N2O) (3 % of N2O emissions from all sources) associated with nitrification/denitrification (NDN) processes, as an intermediate product, can be emitted to the atmosphere. 218. In order to mitigate the Project’s impacts on climate change, adaptation measures have been included in the Project design and are described below: (i) The materials selection for wastewater pipeline network and booster pumping stations considered potential leakage caused by ground subsidence; (ii) Reduction of deposition, slippage, overtopping risks was taken into consideration; (iii) Appropriate construction materials and protection measures was selected to avoid equipment aging and damage due to high temperatures and extreme weather conditions; (iv) Appropriate foundation protection and compaction was implemented to avoid pipeline network system damage due to flooding and ground subsidence; (v) During construction, risky assets would be protected, replaced or moved in emergency, such as electricity supply and acquisition; and (vi) The potential alteration of recurrence intervals for floods and flow rates due to the increasing intensity of storm events will be considered in the design of earth dikes, concrete walls and flood detention areas.

219. In addition to developing infrastructure to mitigate the impacts of droughts or other extreme weather conditions, such as irrigation system and reservoirs, it is recommended to increase the

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conservation efforts related to native vegetation and develop water-conserving agricultural techniques as adaptive strategies to climate change.

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VII. PUBLIC CONSULTATION, PARTICIPATION AND INFORMATION DISCLOSURE

A. Legislative Framework for Public Consultation and Information Disclosure

221. Meaningful participation and consultation for Project planning, feasibility study, environmental impact and mitigation, design and implementation are important safeguard requirements. The PRC Environmental Protection Law and the Regulations of the Administration of Construction Project Environmental Protection (Order No. 253 of the State Council) require that a DEIA solicits the opinions of organizations concerned and inhabitants within and near the project sites. 222. In August 2012, the PRC National Development and Reform Commission (NDRC) issued a requirement for “Social Risk Assessment of Large Investment Projects”, which emphasizes the importance of public consultation in an effective manner, and requires that the results of public consultation are clearly summarized in the DEIA report. ADB’s SPS (2009) also requires meaningful public participation, consultation and information disclosure. The consultation process for this Project followed both the PRC law and the SPS. Public consultations for the environmental assessments of the subprojects included information disclosure of project documents. During the information disclosure period, no complaints were received. 223. In order to align with ADB’s SPS, CWE is committed that its subproject companies will make relevant information regarding environmental and social safeguard issues readily available, highly accessible and easily understandable to affected people, stakeholders and the general public. Through these actions, these parties can provide meaningful inputs into the Project. B. Information Disclosure

224. The relevant information of Dali Erhai Basin Wastewater Interception Project, such as the DEIA, contact details of CWE and the EIA institute, was disclosed on the website of Dali Environmental Protection Bureau (Dali EPB) (http://www.daliepb.gov.cn/gongshi/hpgongshi/3131.html) on 18 May 2015 as a tender notice in order to inform the public about the potential impacts of the Project, as well as the public consultation results conducted during the DEIA preparation process. The public were given 10 working days to provide feedback for Dali EPB.

Figure VII.1 Information Disclosure Tender Notice of Dali Erhai Basin Wastewater Interception Project

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225. During implementation, great importance was paid to the public participation, and consultation meeting was organized. Detailed measurement surveys (DMS) were also conducted to assess the affected community. Details of the consultation meetings and results of the DMS for each subproject are presented in Attachment 3, Social Audit Report, of this IESE. C. Public Consultation

226. According to the Project EIA, public consultation events were conducted by the EIA institute. The public consultation was undertaken in the form of questionnaire survey, which was conducted during the first information disclosure. Questionnaires were distributed to individual and organizations located in eight villages and townships. The questionnaire focuses on the understanding of the Project, and the view on the potential impacts on the environment during construction and operation stage. The breakdown of individuals and organizations are presented in Table VII-1 and Table VII-2 respectively. Table VII-1 Breakdown of Organization Participants in the Public Consultation

No. Organization Name 1 Dali Xiaguan Township People’s Government 2 Dali Xiaguan Township Dazhuang Village Committee 3 Dali Xiaguan Township Erbin Village Committee 4 Dali Xiaguan Township Daguanyi Village Committee 5 Dali Xiaguan Township Taihe Village Committee 6 Dali Fengyi Township Land and Village Planning Centre 7 Dali Township Xiajiyi Village Committee 8 Dali Township Xiadui Village Committee 9 Dali Township People’s Government 10 Dali Township Cai Village Committee 11 Dali Shangguan Township Shaping Village Committee 12 Dali Shangguan Township Hewei Village Committee 13 Dali Shangguan Township Haichao River Village Committee 14 Dali Shangguan Township Dongshaping Village Committee 15 Dali Shangguan Township JiangweiVillage Committee 16 Dali Shangguan Township Malang Village Committee 17 Dali Shangguan Township Qingsu Village Committee 18 Dali Shangguan Township louyi Village Committee 19 Dali Shangguan Township Majiayi Village Committee 20 Dali Shangguan Township Zhaoyi Village Committee 21 Dali Shangguan Township Daying Village Committee 22 Dali Shangguan Township Dapai Village Committee 23 Dali Wase Township Haiyin Village Committee 24 Dali Wase Township Kanglang Village Committee 25 Dali Wase Township Wase Village Committee 26 Dali Haidong Township People’s Government 27 Dali Haidong Township Wenbi Village Committee 28 Dali Shuanglang Township People’s Government 29 Dali Shuanglang Township Changyu Village Committee 30 Dali Shuanglang Township Shuanglang Village Committee 31 Dali Shuanglang Township Dajianpang Village Committee 32 Dali Yinqiao Township Yangbo Village Committee 33 Dali Yinqiao Township Xinyi Village Committee 34 Dali Yinqiao Township People’s Government 35 Dali Yinqiao Township Majiuyi Village Committee 36 Dali Xizhou Township Shangguan Village Committee 37 Dali Xizhou Township Renliyi Village Committee 38 Dali Xizhou Township Jinhe Village Committee 39 Dali Xizhou Township Heyi River Village Committee 40 Dali Xizhou Township Sha Village Committee 41 Dali Xizhou Township Yongxing Village Committee

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No. Organization Name 42 Dali Xizhou Township Taoyuan Village Committee 43 Dali Xizhou Township Xizhou Village Committee Source: Project EIA

Table VII-2 Breakdown of Individual Participants in the Public Consultation

Participants Number Ratio (%) Male 251 83.39 Gender Female 50 16.61 <30 34 11.3 30～50 121 40.2 Age >50 128 42.52 Not Provided 19 6.31 Primary School or below 26 8.64 Junior High School 167 55.48 Education Senior High or Above 90 29.9 Not Provided 18 5.98 Farmer 245 81.4 Individuals 4 1.38 Occupation Government 35 11.63 Not Provided 17 5.65 Source: Project EIA

227. Most of the participants (94.68%) agree with the Project construction. The concerned problems on Erhai Lake were water pollution (88.37%), ecological degradation (53.16%), solid waste (37.54%), and traffic noise (15.28%). 228. The main concerns related to environmental impacts caused by the implementation of the Project were dust (67.44%), solid waste (54.49%), noise (42.55%), and ecological degradation (24.58%). On the question of the environmental impact where mitigation measures have been conducted, 58.47%, 38.54% and 2.99% indicated sufficient, acceptable, and insufficient respectively. No participant considered impacts to the lives of local residents to be unacceptable. Mitigation and management of these potential issues are addressed by the Project design and IEE, and will be enforced during Project construction through implementation of the Project EMP. In conclusion, the results show that most of the individual interviewees are certain that the Project will bring economic and social benefits to neighbouring areas and all of the organizational interviewees support the Project development. 229. Apart from the questionnaire, the participants also expressed opinion on the Project planning and mitigation measures. The main issues raised by the participants and reply from DEIA Institute are shown in Table VII-3. Table VII-3 Main Issues and Response

No. Issue Response 1 The pipeline shall be able to fulfill the The comments will be reflected to the wastewater discharge requirements and the construction unit wastewater treated by wastewater treatment facilities shall be able to reach water reuse standards 2 Proper technical guidance shall be provided to The comments will be reflected to the the construction of reservoirs to avoid water construction unit pollution caused by the runoff from the construction 3 Groundwater contamination shall be avoided The comments will be reflected to the construction unit 4 Noise and dust impacts shall be minimized and The comments will be reflected to the construction waste shall be disposed regularly, construction unit

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No. Issue Response 5 The construction shall be divided into phases The comments will be reflected to the to minimize the disturbance to the local construction unit villager’s livelihood 6 The Project shall not affect the stormwater The comments will be reflected to the drainage during wet season construction unit 7 If land acquisition is required, the The Project’s land acquisition and compensation shall be paid to the affected resettlement procedures strictly comply persons in a timely manner. with national and local standards 8 Construction mitigation measures shall be The comments will be reflected to the strictly enforced to safeguard drinking water construction unit sources for the public. 9 Ecological preservation shall be enhanced. The comments will be reflected to the construction unit 10 The wastewater pipeline in the affected The comments will be reflected to the villages shall be enhanced construction unit Source: Project EIA D. Future Information Disclosure and Public Consultation Program

230. Information disclosure and public consultation relating to environment safeguard will continue throughout the project implementation. The project’s environmental information will be disclosed by the local EPB and ADB as follows:  The project IESE will be disclosed on the project website of ADB (www.adb.org); and

 All annual environmental and social monitoring reports of CWE will be available on ADB’s website (www.adb.org).

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VIII. GRIEVANCE REDRESS MECHANISM

231. CWE will establish a grievance redress mechanism (GRM) on site for handling environmental and social complaints, including complaint recording, consultation, issue investigation, mitigation action, follow-up, general timeframe for resolution and delegation of responsibilities. 232. The GRM will address any possible concerns and dissatisfaction of affected groups regarding the social and environmental impact of its subprojects, and seek a proper solution. It should be able to promptly respond to the affected groups, be transparent and free of gender discrimination, and adapt to the cultural traditions of the affected groups and communities. Moreover, it should enable different affected groups to express their opinions, with no fear of reprisal. 233. The Regional Environmental and Social Managers (RESMs) of CWE’s regional offices will be responsible for (i) appeals, complaints, and disputes concerning the environmental and social impacts of subprojects which have not been resolved by the Project Environmental and Social Managers (PESMs) at companies in handling appeals, complaints, and disputes.

ADB’s GRM Requirements

234. The ADB’s SPS requires CWE to establish a GRM to receive and facilitate resolution of affected person’s concerns and complaints about the subproject’s environmental impact and performance during construction as well as operation phases. The GRM should be scaled to the risks and adverse impacts of the subproject; should address affected people’s concerns and complaints promptly, using an understandable and transparent process; should be readily accessible to all sections of the community at no cost and without retribution; and should not impede access to the PRC’s judicial or administrative remedies.

Current GRM Practices in the PRC

235. At the national level a framework to address grievance has been established. State Council Decree No. 431 “Regulations on Letters and Visits” (January 2005) codifies a complaint mechanism at all levels of government, and safeguards the complainants from any retaliation. MEP “Decree No. 34 Environmental Letters and Visits System” provides specific guidelines to establish a system and address environmental complaints. When APs are negatively affected by project activities, they may complain to the contractors and the project company by themselves or through their community organizations, or complain directly to local environmental protection bureaus (EPBs). If the issue is not resolved they may take legal action, though that is typically considered as a last option.

GRM Steps

236. The basic grievance procedures include the following steps. Stage 1. Recording and Registering Grievances

The Project Environmental and Social Management Team (PESMT) shall act as the central point of contact for the GRM in project and subproject level. On receipt of a complaint concerning any aspect of the project or subproject, in forms mentioned above or others as appropriate, the complaint shall be recorded in a grievance log and registered in a central data system for further action and internal tracking. Stage 2. Screening and Assessing the Grievances

The PESM shall determine the eligibility of the grievance / complaint received with reference to the following criteria: (i) If the complaint pertains to the aspect of the project or subproject; (ii) If the complainant has a direct relationship with the project or subproject; and (iii) If the issues raised in the complaint fall within the safeguard scopes that the GRM is authorized to address. If the complainant is not eligible to be established, the complainant shall be informed of the decision and the reasons for the rejection. If the initial screening establishes the eligibility of the received grievance, the PESMT shall then conduct an assessment to investigate and verify the details and nature of the grievance.

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Stage 3. Formulating Response and Redress Approach and Implementation

An initial response shall be formulated by the designated complaint-resolution personnel responsible for the assessment of the grievance / complaint. Depending upon its seriousness, relevant departmental managers, and/or the PESM/PESMT may need to participate in the feedback process at different levels. In the event of disagreement or any disputes between the APs and the Project Company, the case shall be escalated to higher authority, e.g. the RESM/RESMT, CESM/CESMT, or judicial authority if necessary, for resolution. Any outcome shall be communicated to the AP via written notice. Stage 4. Settling, Tracking, Monitoring, Documentation and Evaluation of the Outcome

An evaluation system shall be established to assess the overall effectiveness and the impact of the GRM. PESM shall summarize and report all complaints / grievances received and the corrective actions taken correspondingly to the CESM/CESMT either on an annual or bi-annual basis. The results shall be used to contribute to continuous improvement of the GRM and provide valuable feedback to CWE management.

237. The project company will inform the local community and the affected people of the grievance and appeal procedure through public information meetings, the resettlement information brochure and other media, so complaints submitted and actions implemented will be properly documented and be included in the grievance register.

238. Details of the GRM established for each subproject are presented in Attachment 3, Social Audit Report, of this IESE.

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IX. ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN

239. A Project Environmental and Social Management Plan (ESMP) has been prepared (Attachment 1), based on the DEIAs, discussion with the PEMSM, implementing agencies, and local communities. The ESMP defines mitigation measures for the anticipated environmental impacts, institutional responsibilities, and mechanism to monitor and ensure compliance with PRC’s environmental laws, standards and regulations, as well as ADB’s SPS.

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X. CONCLUSIONS

241. The Project will improve water resources management in the Erhai Lake Basin, helping maintain water quality to protect ecological resources, conserve the water resources, and manage other environmental risks in the city. Cumulatively, the Project will complement a range of domestically- funded programs, which together will help achieve the targets of the Dali City master plans for urban development, environmental management and tourism. 242. Key construction impacts could be arised from: (i) soil erosion due to excavation works, construction of the WWTPs, pumping stations and interception pipelines, and removal of vegetation during construction; (ii) runoff from construction sites, improper release of wastewater, which may cause contamination to the surface water quality; (iii) air pollution and noise impacts from various construction activities; (iv) community health and sanitary problems if the solid waste generated during construction are not properly disposed of; (v) minor ecological impacts due to habitat loss of areas adjacent to construction sites; (vi) interference with traffic and municipal services during various construction works, permanent and temporary acquisition of land, involuntary resettlement; and (vii) occupational and community health and safety. 243. Operational impacts considered were: (i) Odor from wastewater pumping stations, grille sewage wells, aeration tanks, sludge dewatering rooms, and exhaust emission from operation machineries; (ii) wastewater generation from daily water usage by on-site management staff and cleaning of mechanical appliances; (iii) incidents such as pipeline ruptures and sewage spills may increase pollution loading to receiving water bodies; (iv) air pollution from on-site vehicles; (v) mechanical noise from pumping stations and on-site vehicles; (vi) solid waste from grating slags, grit chambers and pumping stations; and (vii) occupational health and safety issues and injuries. 244. Measures to avoid, minimize, and mitigate these and other potential Project impacts have been developed within the Project ESMP (Attachment 1). Environmental audit of the project sites (Attachment 2) were conducted to evaluate the project’s status of compliance with the relevant laws and standards, as well as implementation of EHS measures on site. Land acquisition and resettlement, information disclosure and public consultation was conducted in accordance with PRC and ADB requirements (Attachment 3) and will continue throughout Project implementation. A Project GRM has been developed and will be implemented at the county and site levels. 245. Based on the information presented in this IESE, and assuming full and effective implementation of the Project ESMP, training, and loan assurances, potential adverse environmental impacts are expected to be minimized and/or mitigated to within the standards applied in this IESE.

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ATTACHMENT 1: ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN

ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN FOR DALI ERHAI LAKE BASIN WASTEWATER INTERCEPTION PROJECT

1. Objectives

An environmental and social management plan (ESMP) has been prepared for the Dali Erhai Lake Basin Wastewater Interception Project. It is an essential document to ensure the implementation of mitigation measures. The ESMP is based on the domestic Environmental Impact Assessment (DEIAs) for the Project, and defines appropriate mitigation measures for the anticipated environmental impacts, and describes the institutional responsibilities and mechanisms to monitor and ensure the compliance with PRC’s environmental laws, standards and regulations, and ADB’s Safeguard Policy Statement (SPS 2009).

ESMP supervision and monitoring results will be used to evaluate (i) the extent and severity of actual environmental impacts against the predicted impacts, (ii) the performance of the environmental protection measures or compliance with related rules and regulations, (iii) trends of impacts, and (iv) overall effectiveness of the mitigation measures.

2. Organizations and Their Responsibilities for ESMP Implementation

The Corporate Environmental & Social Manager (CESM) reports to CWE’s senior management. The CESM has oversight for environmental and social issues, ensures that resources are made available for environmental and social management, and should sign and submit the annual environmental and social performance report to ADB. S/he should ensure that ADB is notified if and when there is material environmental or social safeguards non-compliance. S/he should also ensure that ADB is notified if and when the responsible staff has been changed or replaced with new staff.

At the corporate office, the Corporate Environmental & Social Management Team (CESMT) will assist the CESM in effective safeguards planning and implementation. During subprojects preparation and implementation period, the safeguards team at the corporate office will be responsible for the environment and social issues, and will prepare IESE, IPP, and RP, supervise the effective implementation of the ESMP; coordinate periodic environmental and social impact monitoring according to the approved monitoring plan; coordinate the project level GRM; prepare annual environment progress reports and submit them to ADB; conduct public consultation and inspect implementation of mitigation measures. Implement the ESMS system at both the holding company and Project Company levels.

A Regional Environmental & Social Manager will ensure that the environmental and social safeguards are being adopted and implemented internally by all Project Companies, and assist the CESM/CESMT to verify the monitoring information and reports submitted by the PESM by undertaking inspections, including field visits, to verify their compliance with safeguard measures and their progress toward intended outcomes, as well as the veracity of their periodic reports.

A Project Environmental & Social Manager (PESM) of Project Company is appointed to implement the environment and social safeguards at Project Company and prepare and submit the annual environment and social impact monitoring report to the RESM Manager.

Construction contractors engaged by the Project Company will be responsible for implementing the mitigation measures during construction under supervision of the Project Company and Corporate office. In their bids, contractors will be required to respond to the environmental management requirements defined in the ESMP. Each contractor will be required to develop site specific ESMPs and will assign a person responsible for environment, construction site health and safety. After project completion, environmental management responsibilities will be handed over to the operator.

3. Summary of Potential Impacts and Mitigation Measures

The potential impacts and environment safeguard issues of the sub-components during pre- construction, construction and operation as identified by environmental impact assessments and set out in this IESE, as well as corresponding mitigation measures designated to minimize those impacts and address these issues are summarized in Table ESMP 1.

2 Table ESMP 1 Potential Impacts and Mitigation Measures during Construction and Operation Phases of the Project

Item Impact Factor Potential Mitigation Measures and/or Safeguards Implementing Supervising Impacts and Agency Agency Issues A. DESIGN AND PLANNING PHASE Detail Design Topography Project site  Confirm final designs and layout for project infrastructure, PESM, PESMT, CWE, EPB and Planning and soils and route including landscaping and any required compensatory DI Stage selection planting. In compliance with PRC’s Forestry Law, any compensatory planting must be the same as, or larger than, the area cleared.  Pipeline networks: select sites and routes in compliance with the City’s urban plan. Ambient air, Construction  Plan daily schedules to minimize impacts to agricultural PESM, PESMT, CWE, EPB noise and solid schedule activities. DI waste  Consult with local municipalities and residents on scheduling of noisy construction activities.  Coordinate excavation and spoil disposal to minimize duration of temporary stockpiles. Surface water Construction  Camps will not be built within the water source protection PESM, PESMT, CWE, EPB pollution and worker camp area. DI waste sites  Sewage (domestic sewage and washing sewage) will be management properly discharged to the public sewer interceptor. Sediment and Consolidation  To be located in low-lying area. PESM, PESMT, CWE, EPB dewatering ponds and  Identify location of spoil areas: (i) low-lying areas of DI sediment wasteland / dryland. Farmlands are forbidden to be used; (ii) management downwind and at least 200m from the residential areas. Surface water Construction  Supplementary sedimentation tank will be built in PESM, PESMT, CWE, EPB pollution phase permanently owned land (to avoid land acquisition). Utilize DI wastewater wastelands and dry lands as a priority. Farmlands are management forbidden to be used. Physical Temporary  Temporary construction roads will not be built near PESM, PESMT, CWE, EPB resources construction residential areas. DI road Environmental Risk control  Locate odor-generating and noise-producing facilities PESM, PESMT, CWE, EPB and social downwind from residential areas. DI safeguards

3 Item Impact Factor Potential Mitigation Measures and/or Safeguards Implementing Supervising Impacts and Agency Agency Issues Construction Environmental Updated  Update mitigation measures defined in this ESMP based on PESM, PESMT CWE, EPB Preparation and social ESMP final detailed design. safeguards  Submit the updated ESMP to ADB for review.  In case of major changes to the project, it is necessary to obtain EPB’s approval. Updated ESMP shall be submitted to EPB and ADB (after Project receiving ADB fund) for approval and disclosure. Bidding and  Incorporate mitigation measures in this ESMP to bidding CWE, PESM CWE, EPB contract documents. document  Bidding documents are sent to ADB for review.  Prepare environmental contract clauses for contractors. Construction  Prepare Site Environment Management and Supervision Contractors CWE, PESM site Plan (SEMSP), including health and safety plan. management  Assign site environmental health and safety officer. planning  PESM review and approve the SEMSP. ESMP training  Provide training on implementation of this ESMP to all PESM, PESMT CWE, EPB relevant agencies, especially contractors and suppliers. Establish GRM  PESM Environmental Officer(s) establish GRM. PESM, PESMT CWE, ADB,  All PESM personnel trained in GRM. EPB  Distribute contact details for GRM on EPB public websites and construction sites.  The GRM should also be applicable to subproject employees. Negative  Strict implementation of related laws, regulations and policies PESM, PESMT CWE, EPB, community  Continuous dialogue with host communities should be LRB perception maintained. caused by land  GRM, including contact information of the responsible acquisition person, should be maintained all the time to deal with problems induced by land acquisition. B. Construction Phase* Contractor Contractors Contractors  Contractors must possess proper skillset in order to have PESM, PESMT CWE, EPB, management capabilities selection their operation and service license. HRSSB

4 Item Impact Factor Potential Mitigation Measures and/or Safeguards Implementing Supervising Impacts and Agency Agency Issues  Contractors are required to deposit guarantee fee (2% of the contract amount) in the special bank account of local labour bureau.  Civil works contractors shall hire workers from the local community as far as possible.  CWE shall select contractors who have good track records of environmental, health and safety and social compliance with the national labour laws (minimum wages, hours worked, benefits, prohibition of child labour and forced labour, etc.).  Contractors shall always maintain workers camps management rules. Impact on Topography Earthwork and  Define spoil disposal sites and borrow pit locations in the Contractor, CWE, Project Physical and Soils soil erosion construction tender documents. CSC Company, Resources  Construct interception channels to prevent construction EPB runoff entering waterways.  Divert runoff from sites to sedimentation ponds or existing drainage.  Limit construction and material handling during periods of rains and high winds.  Stabilize cut slopes, embankments, and other erosion-prone areas during works.  Minimize open excavation areas and use compaction techniques for pipe trenches.  Rehabilitate all spoil disposal sites and construction sites.  Stabilize earthwork areas within 30 days after earthworks have ceased at the sites.  Preserve existing vegetation where no construction activity is planned. Ambient Air Dust  Spray water on construction areas and roads to reduce dust Contractor. CWE, Project generated by from earthwork excavation, transport, loading, and uploading CSC Company, construction and stacking. EPB activities  Speed limits are set in the construction site.  Strengthen the maintenance schedule of the vehicles, vehicles must be cleaned before leaving the construction site.

5 Item Impact Factor Potential Mitigation Measures and/or Safeguards Implementing Supervising Impacts and Agency Agency Issues  Cooperate with local transportation department, avoid traffic congestions caused by the construction activity.  Ensure ambient air quality is compliant with IFC EHS General Guidelines on ambient air Gaseous air  Ensure emissions from vehicle and machineries comply with Contractor, CWE, Project pollution from PRC standards of GB18352-2005, GB17691-2005, CSC Company, construction GB11340-2005, GB2847-2005, and GB18285-2005, and IFC EPB machinery EHS Guidelines.  Equipment and machinery are maintained to a high standard to ensure efficient running and fuel-burning. Noise Noise  Ensure construction machinery conform to PRC standard of Contractor. CWE, Project generated GB12523-2011 and IFC EHS Guidelines CSC Company, from  Properly maintain vehicles and PME to minimize noise. EPB construction  Prohibit construction activities between 22:00 and 8:00, activities unless otherwise approved by EPB.  Sound barriers will be built in construction sites where construction noise exceed the standard.  Height of sound barriers will be ≥ 2m.  Utilize metal or synthetic materials for construction of sound barriers. Detachable structures are recommended, for re-use in different sites.  Monitor noise at sensitive areas and consult residents at regular intervals (ESMP Monitoring Plan). If noise standards are exceeded, equipment and construction conditions shall be checked, and mitigation measures shall be implemented to rectify the situation.  Conduct interviews with residents adjacent to construction sites to identify and resolve issues, including adjustment of work hours of noise-generating machinery. Surface water Construction  Settling ponds and oil-water separator will be installed. Contractor. CWE, Project pollution wastewater  Collect wastewater from construction and reuse it after CSC Company, treatment. Recycled water will be used to spray for dust EPB control.  Residuals are removed from site and disposed of at municipal landfills.

6 Item Impact Factor Potential Mitigation Measures and/or Safeguards Implementing Supervising Impacts and Agency Agency Issues  All earthworks along waterways will be accompanied by measures to minimize runoff, including sediment traps.  Remove structures for construction after completion of pipeline laying.  Ensure compliance with IFC EHS Guidelines on effluent and ambient water quality levels Domestic  Portable toilets and on-site wastewater pre-treatment Contractor. CWE, Project wastewater systems will be installed at construction camps along with CSC Company, from proper maintenance protocols. EPB construction  No sewage discharge directly to the first and second class sites water source protection zone is allowed.  Ensure compliance with IFC EHS Guidelines on effluent and ambient water quality levels Handling of  Guidelines for handling and disposal, including spill Contractor. CWE, Project hazardous and responses, are prepared and included in the SEMSP. CSC Company, harmful  Construct storage facilities (including fuel and oil storage) EPB materials with clean-up equipment.  Fuel supplier is properly licensed and follows the proper protocol for transferring fuel, and complies with JT3145-1991 (Rules of transportation, loading and unloading of dangerous goods by automobile).  Vehicle, machinery, and equipment maintenance and refueling are carried out so that spilled materials do not seep into the soil or into waterbodies. Solid Waste Construction  Construction waste will be transported to the Dafengba Contractor. CWE, Project waste Landfill if cannot be reused. Construction waste is not CSC Company, management allowed to accumulate on site over long periods. EPB  The construction waste delivery vehicles must be covered by trap to prevent spillage. Domestic  Provide appropriate waste collection and storage containers waste from at locations away from surface water or sensitive receivers. construction  Provide sufficient garbage bins at strategic locations and sites ensure that they are protected from birds and vermin, and emptied regularly.  Burning of waste is strictly prohibited.

7 Item Impact Factor Potential Mitigation Measures and/or Safeguards Implementing Supervising Impacts and Agency Agency Issues Hazardous  Provide appropriate waste collection and storage containers. waste from  Ensure the container for storing hazardous wastes is properly construction labelled and stored separately from other waste or stockpiled sites materials.  The hazardous waste must be cleared and removed by qualified waste collection companies for proper disposal. Management  Temporary stockpile and storage site are proposed to be set Contractor. CWE, Project and within the boundary of permanently acquired land for the CSC Company, remediation of Project. EPB stockpile /  Water spray is required during dry days and temporary temporary intercepting ditch is constructed around the stockpile and storage site storage site to reduce soil erosion and landslide.  Top soil will be stored separately and backfilled in sequence, which is beneficial for the recovery of farmlands and plants. Impact on Ecology Damage to  Strict regulation on choosing location for construction site. Contractor. CWE, Project biological flora and fauna  Restoration of the habitat after construction, using local flora CSC Company, resources resources and fauna species. EPB  Strengthen construction workers’ awareness on ecology conservation with trainings on fire safety and species protection. Impact on Physical Damage to  Comply with PRC’s Cultural Relics Protection Law and Contractor CWE, Project socio- Cultural unearthed Cultural Relics Protection Law Implementation Regulations if Company, economic Resources cultural relics relics are discovered. In this case, construction should stop EPB resources immediately and notify relevant authorities, and adopt protection measures. Health and Occupational Prepare environmental, health and safety plan which complies Contractor CWE, Project safety health and with PRC State Administration of Worker Safety Laws and Company, safety Regulations, including: EPB  Supply sufficient clean fresh water for construction sites, camps, and offices.  Sufficient latrines and other sanitary arrangements at construction sites and work camps.  Provide sufficient garbage receptacles and regular emptying.

8 Item Impact Factor Potential Mitigation Measures and/or Safeguards Implementing Supervising Impacts and Agency Agency Issues  Provide protective equipment and clothing (goggles, gloves, respirators, dust masks, hard hats, steel-toed boots, safety belts, etc.) for construction workers and enforce their use.  Prepare emergency response plans for accidents. Establish emergency phone linked with township hospitals and maintain a first-aid base in each construction site.  Establish a record management system for occupational accidents, disease, and incidents. The records will be reviewed during compliance monitoring and audit.  Train all workers in basic sanitation, health and safety matters, and work hazards. Community  Residents and businesses will be informed in advance Contractor CWE, Project health and through media and information boards of the construction Company safety activities, dates, and duration of expected disruption.  Signs will be placed at construction sites informing people of the project GRM, potential dangers (e.g. moving vehicles, hazardous materials, and excavations) and safety issues.  Heavy machineries will not be used during night time.  All sites will be secured from unauthorized public access.  For residential areas next to construction site, ensure residents are aware of the duration and nature of works, as well as potential hazards. Provide basic safety equipment if required, such as acoustic screens.

C. Operation Phase Employment Impact on local Local  CWE shall ensure priorities are given to local communities Operators CWE, Project opportunities communities employment for employment opportunities. Company, rate EPB

9 Item Impact Factor Potential Mitigation Measures and/or Safeguards Implementing Supervising Impacts and Agency Agency Issues Impact on Impact on water Risk of  All wastewater generated on-site, including from sludge Operators CWE, Project physical quality accidental dewatering, will be collected and transported through the Company, resources discharge, wastewater pipelines within a closed process, and delivered EPB overload, directly to the subprojects’ wastewater treatment plants emergency which will not cause any adverse impacts on the surrounding preparedness environment. and response  Effluent and ambient water quality of receiving water will comply with IFC EHS Guidelines;  Regular inspection of pipelines and timely repair of ruptured areas will be conducted.  In case of accidental spilling into water bodies. Emergency response mechanisms are set, which halts the plant operation and prevents supplying polluted water to end users.  Water intake and tail water samples will be regularly sampled and sent to the local environmental monitoring station for testing, to ensure the accuracy of the online monitoring device installed within the subprojects.  Enhance management and education of staff at the water source protection zone, increase environmental protection awareness of water source protection zone, and place warning signs at water sources boundaries and all construction sites. Impact on air Odor from  Equip odor generating facilities with enclosures, ventilation Operators CWE, Project quality wastewater and deodorizing systems. Company, and sludge  Institute regular check, repair and maintenance of all EPB treatment facilities and equipment.  Odour levels have to comply with both statutory guidelines and international acceptable guidelines on odour, Emissions  Strengthen the management of driveways and parking Operators CWE, Project from vehicles facilities within project sites to reduce traffic congestion and Company, vehicle speed, minimizing air pollutants from vehicle. EPB

10 Item Impact Factor Potential Mitigation Measures and/or Safeguards Implementing Supervising Impacts and Agency Agency Issues Impact on Increase of  Shock absorbers and sound insulators will also be installed Operators CWE, Project acoustic noise level at locations with significant noise sources, such as draught Company, environment from fans and blower rooms, to reduce vibrations and noise. EPB equipment  Road humps will be installed within the driveways of subprojects and car horns are prohibited. Reduce speed of vehicles on site to minimize noise impacts.  Greenery within the project sites will be strengthened, especially at locations near facilities with significant noise impacts. Solid Waste Sludge  The sludge moisture content will be below 80% after Operators CWE, Project dehydration and the dewatered sludge will be sent to Company, Dafengba landfill on a regular basis. EPB Municipal Solid  Municipal solid waste generated will be sent to the local Waste sanitation department for unified treatment.  Recycling bins will be provided within the project sites and all collected domestic waste will be sealed with large plastic garbage bags. Hazardous  Hazardous Waste generated such as waste oils and waste Waste lubricants will be distributed to qualified hazardous waste treatment centres regularly for unified collection and treatments. Social Health and Health and  Compulsory use of safety equipment and clothing as Operators CWE, Project Safety safety of necessary (e.g. non-slip boots, chemical resistant clothing, Company, operating staff safety goggles, respiratory mask). EPB  Safety instructions for storage, transport, handling or pouring of chemicals.  Check electrical equipment for safety before use; verify that all electric cables are properly insulated; take faulty or suspect electrical equipment to a qualified electricity technician for testing and repair.  All workers will undergo periodic examinations by occupational physician to reveal early symptoms of possible chronic effects or allergies.  Health and safety will be incorporated into regular staff training programs.

11 Item Impact Factor Potential Mitigation Measures and/or Safeguards Implementing Supervising Impacts and Agency Agency Issues  All workers are required to obey all safety instructions concerning entry into confined spaces, e.g., check atmosphere for oxygen or for poisonous gases, use respiratory protection equipment if needed, have a co-worker stand guard in case of need for help. Emergency All areas Subproject  Prepare emergency preparedness and response plan for all Operators CWE, Project preparedness maintenance subprojects. The plan will include staff training, resources, Company, and response and health and responsibilities, communication, procedures, and other EPB safety of aspects required to respond effectively to emergencies. surrounding residents Unexpected All areas All areas  If unexpected environmental impacts occur during project Operators CWE, Project Impacts operations, inform the operators immediately; assess the Company, impacts; and update the ESMP. EPB ADB = Asian Development Bank, CSC = Construction Supervision Company; CWE = China Water Environment Group Limited; EPB = Environmental Protection Bureau; DI = design institute, LRB = Land Resource Bureau; HRSSB = Human Resource and Social Security Bureau; PESM = Project Environmental and Social Manager, PESMT = Project Environmental and Social Management Team. *: If construction of the subprojects are substantially completed as of the date of the report, IFC standards shall not be applicable for the subprojects’ construction stage.

12 The cost of building and maintaining the mitigation measures included in the infrastructure construction and operating costs, and therefore, are not being double-counted as part of the ESMP costs. The temporary measures, especially those listed in the construction phase, such as dust suppression measures, will need to be included in the tender documents, otherwise they are not budgeted by the contractor. The cost of the measures are included in the ESMP and are listed in the table below.

Table ESMP 2 Environmental & Social Mitigation Measures Implementation Cost Estimates

Item Aspects Source Mitigation Measures Cost Estimate (Unit 10,000 CNY) Soil Erosion Construction  Visual inspection at stockpile, Sites temporary storage area, and all construction sites, especially

roadsides and pipelines. ≥ 200 in total  Restore disturbed surfaces after construction completion Dust  Install fences not less than 2.5m Management around construction site boundary  Regular cleaning of vehicles and ≥ 10 in total dust in the construction site.  Water spraying on the road surface. Construction  Setting up sedimentation tanks for Wastewater collecting construction wastewater ≥ 10 in total  Reusing wastewater after sedimentation. Noise  Avoiding heavy works during night time.  Avoid processing construction ≥ 20 in total materials near sensitive areas.

Construction Phase  Use noise barriers or temporary hoarding to shield off noise sources Solid Waste  Provide sufficient garbage bins on site and have the solid waste collected regularly by local hygiene departments.  Provide sufficient hazardous waste containers, assign a designated ≥ 10 in total location for storing the hazardous waste (away from other waste or stockpiled materials), and have qualified hazardous waste collector to clear the waste regularly.

13 Item Aspects Source Mitigation Measures Cost Estimate (Unit 10,000 CNY) Contractors  Contractors must be able to provide selection proper skill set in order to have their operation and service license.  Contractors are required to deposit guarantee fee (2% of the contract amount) in the special bank account of local labour bureau.  Civil works contractors shall hire workers from the local community as Management time far as possible. of the Project  CWE shall select contractors who Company have good track records on environmental, health and safety and compliance with the national labour laws (minimum wages, hours worked, benefits, prohibition of child labour and forced labour, etc.).  Contractors and subcontractors shall always maintain workers camps management rules. Environmental  Carrying out environmental Acceptance acceptance monitoring and report ≥ 5 in total after construction completion. Wastewater WWTP  Regular sampling and testing of water intake and tail water. ≥ 50 in total per  Regular inspection and year maintenance of pipelines. Noise Production  Installation of noise insulation

equipment covers for high noise equipment

se  Installation of vibration reduction ≥ 20 in total measures in the equipment with moving parts. Air WWTP  Installation of deodorizing systems.  Implementation of traffic control ≥ 100 per WWTP measures to minimize the Operation Pha dispersion of dust. Waste WWTP  Disposal to sanitary landfill after ≥ 50 per year sludge dewatering. Local Entire project  CWE shall ensure priorities are Management time employment given to local communities for of the Project rate employment opportunities. Company ESMP Construction  Update / re-confirm ESMP, roles Implementation sites, and responsibilities, monitoring, WWTP, and supervision and reporting Management time Office procedures. of the Project  Training period: 2 x 0.5 days (once Company

prior to and once after one year of project implementation).  No. of Persons: 16. GRM  Roles and responsibilities, Training procedures, and review of experience (after 12 months). Management time  Training period: 2 x 0.5 days (once of the Project prior to and once after one year of Company project implementation).  No. of Persons: 16.

14 Item Aspects Source Mitigation Measures Cost Estimate (Unit 10,000 CNY) Environmental  Pollution control on construction Monitoring sites and WWTP (air, noise, Management time wastewater, solid waste). of the Project  Training period: 1 day (during Company project implementation).  No. of Persons: 20. Occupational  General health and safety matters, Health and basic sanitation and health care Management time Safety issues, and workplace hazards. of the Project  Training period: 1 day (once prior to Company project implementation).  No. of Persons: 16.

15 4. Environmental Inspection, Monitoring and Reporting An environmental impact monitoring program was specifically designed for this project, defining the requirements on the scope, location, parameter, duration and frequency of monitoring during operational stages.

During construction, the CSC (Construction Supervision Company) will be required to conduct (i) frequent internal noise and (ii) air quality monitoring around construction sites and (iii) to report monitoring results in the framework of their monthly progress reports to Project Company. During operation, daily monitoring of wastewater treatment performance will be conducted by the operator of the facilities in compliance with PRC regulation.

Periodic monitoring events will also be conducted by the local environmental authorities in the framework of their legal mandate to check compliance with applicable environmental regulations. They will be responsible for undertaking regular and random environmental monitoring and inspection activities before, during, and after construction as well as during emergency events. The project mainly involves two components: construction of wastewater treatment plant and wastewater interception system, which includes the pumping stations and interception pipelines. The environmental impact monitoring programs for these two components are listed in Table ESMP 3 and Table ESMP 4 respectively

Table ESMP 3 Environment Monitoring Plan – Wastewater Treatment Plant

Type Monitoring Monitoring Monitoring Items Monitoring Location Methodology Frequency During Construction Air At the Monitoring method TSP, NOx, SOx Quarterly during construction and standard shall construction boundary that comply with on downwind GB3095-2012, and direction IFC EHS Guidelines Noise Boundaries of Monitoring method Equivalent 2 (1 in daytime, 1 in all construction and standard shall continuous sound night time) samples sites comply with level dB(A) at each boundary; GB12523-2011 and once per year during IFC EHS construction period Guidelines Surface Miju River, Monitoring method SS, pH, COD, BOD, Quarterly during Water Yongan River, and standard shall NH3-N, TN, TP, fecal construction Mocan River comply with coliform, and all GB3838-2002, and parameters included IFC EHS in the IFC EHS Guidelines Guidelines requirement for wastewater Soil Construction Monitoring method Check the Quarterly during erosion site and standard shall implementation of construction comply with SL190- soil erosion 2007. protection measures defined in Table ESMP 1 Health and Construction n/a Record of safe Daily (contractor) Safety site and related manhours, Weekly unless there activities accidents/incident is an incident (CWE) reports During Operation Air Canteen Monitoring method Cooking Fume Once per year cooking fume and standard shall

16 Type Monitoring Monitoring Monitoring Items Monitoring Location Methodology Frequency Odor Control comply with H2S, NH3, Odor 4 times per year air-vent GB3095-2012 and Concentration Plant boundary GB18918-2012. H2S, NH3, Odor 4 times per year at Concentration the north, east, south and west sides of the site boundary Noise 1m outside of Monitoring method Equivalent 2 (1 in daytime, 1 in plant and standard shall continuous sound night time) samples comply with level dB(A) at the north, east, GB12348-2008. south and west sides of the site boundary, once per year Wastewater Inlet and outlet Monitoring method Water temperature, BOD, SS, Oil and and standard shall pH, BOD5, CODcr, Grease, Petroleum, comply with SS, TN, NH3-N, TP, LAS, TN, TP, GB18918-2012, fecal coliform, Chromaticity, Fecal and IFC EHS petroleum, oil and Coliform, Total Guidelines grease, Linear Mercury, Total Alklybenzene sulfate Cadmium, Total (LAS), TN, TP, Chromium, Chromaticity, total Chromium VI, Total mercury, total Arsenic, Total Lead, cadmium, total Methyl Mercury, chromium, Ethyl Mercury Once Chromium VI, Total per month Arsenic, total lead, Methyl Mercury, Ethyl Mercury. and all parameters included in the IFC EHS Guidelines requirement for wastewater Sludge N/A Monitoring method Heavy Metals (Zn, 2 times per year and standard shall Cd, Ni, As, Hg, Pb, comply with Cr, Cu, etc.). GB18918-2012. Health and Subprojects n/a Site hazards Daily Safety operational Record of safe Weekly facility manhours, accidents/incident reports

17 Table ESMP 4 Environment Monitoring Plan – Wastewater Interception System

Type Monitoring Monitoring Monitoring Items Monitoring Frequency Location Methodology During Construction Air At the Monitoring method TSP Quarterly during construction and standard shall construction boundary that on comply with GB3095- downwind 2012. direction, Noise Boundaries of all Monitoring method Equivalent continuous 2 (1 in daytime, 1 in construction sites and standard shall sound level dB(A) night time) samples at comply with each boundary; once GB12523-2011. per year during construction period Surface Miju River, Monitoring method SS, pH, COD, BOD, Quarterly during Water Yongan River, and standard shall NH3-N, TN, TP, fecal construction Mocan River comply with GB3838- coliform and ambient 2002. water quality parameters indicated in the IFC EHS Guidelines Soil erosion Construction site Monitoring method Check the Quarterly during and standard shall implementation of soil construction comply with SL190- erosion protection 2007. measures defined in Table ESMP 1 Health and Construction site n/a Record of safe Daily (contractor) Safety and related manhours, Weekly unless there is activities accidents/incident an incident (CWE) reports During Operation Air Pumping stations Monitoring method H2S, NH3, Odor 4 times per year at the and standard shall Concentration north, east, south and comply with GB3095- west sides of the site 2012 and GB18918- boundary 2012. Noise 1m outside of Monitoring method Equivalent continuous 2 (1 in daytime, 1 in pumping stations and standard shall sound level dB(A) night time) samples at comply with the north, east, south GB12348-2008. and west sides of the site boundary, 4 times per year Surface Along interception n/a Daily monitoring of the Daily Water channels and flow rates pipelines Health and Subprojects n/a Site hazards Daily Safety operational facility Record of safe Weekly manhours, accidents/incident reports

Environmental acceptance monitoring and reporting. Within three months after construction completion, or no later than 1 year with permission of the local EPB, environmental acceptance monitoring and audit report of completion of project shall be: (i) prepared by a licensed environmental monitoring institute in accordance with the PRC Regulation on Project Completion Environmental Audit (MEP, 2001), and (ii) reviewed for approval of the official commence of individual component operation by environmental authorities. The environmental acceptance reports will indicate the timing, extent, effectiveness of completed mitigation and of maintenance, and the needs for additional mitigation measures and monitoring during operations.

18 Table ESMP 5 Proposed Project "Three-Simultaneity” Environmental Protection Inspection Checklist

No Type Treatment Inspection Scope Requirements 1 Wastewater Wastewater treatment BOD5, CODcr , SS, Effluent shall comply with processes (e.g. sedimentation, TN, NH3-N, TP, Municipal Wastewater Treatment modified A2/O, disinfection) Fecal Coliform, Plant Pollutant Discharge Petroleum and Standards (GB 18918-2002) effluent parameters Class 1A standard and IFC EHS included in the IFC Guidelines – General, and Water EHS Guidelines; and Sanitation. 2 Noise Use of low noise equipment Equivalent Noise at boundary shall comply and various noise reduction continuous A sound with Emission Standard of practices. level Environment Noise for Boundary of Construction Site (GB12348- 2008) Class II standard.

3 Ambient Use of biological deodorizing NH3, H2S, CH4, Air emission on site shall comply Air system for treatment units and TSP, and odor with Class II standard of plant rooms; greening at concentration GB16297-1996, and emission at surrounding areas to minimize the boundary of the plant shall the dispersion of odor and dust comply with the maximum allowable exhaust emissions stated in Table 4 of GB18918- 2002. 4 Solid Waste collection classification, Domestic waste Removal rate shall be 100% Waste collection and transportation by environmental and health department Dewatered sludge (water Sludge residual content lower than 60%) are disposed to local sanitary landfill Handled by qualified chemical Hazardous waste collection company chemical waste 5 Others Leak control for wastewater Leak control project Meet design requirement, no process buildings leakage is allowed. Dust control, waterproof Sludge bank practice, floor hardening and leak control Plant shall have risk control Risk Control Plan Meet risk control plan supplies and personnel, Implementation requirements management rules and regulations shall be provided for actions on incidents. ESMP compliance reporting. CWE will report to ADB the environment compliance through annual environmental and social performance report, including the implementation of ESMP.

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ATTACHMENT 2: ENVIRONMENTAL AUDIT REPORT

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Environmental Audit of Subprojects under Dali Erhai Lake Basin Wastewater Interception Project A. Introduction

China Water Environment Group Ltd. (“CWE”) is a leading integrated services provider in the fields of comprehensive water environment management / renovation covering areas such as river rehabilitation, wastewater treatment, sludge treatment and water reclamation. As part of the disbursement process under the approved loan agreement between CWE and the Asian Development Bank (“ADB”) for implementing a series of river and lake basin rehabilitation projects in highly polluted areas, an Environmental Audit is required under ADB Safeguards Policy Statement (SPS) for existing facilities, or business activities that are under construction, to identify past or present concerns related to impacts on the environment. The objective of the compliance audit is to determine whether actions were taken in accordance with ADB’s safeguard principles and requirements and identify and plan appropriate measures to address outstanding non-compliance issues by preparing a corrective action plan. B. Methodology

The Environmental Audit aims to identify environmental areas of concern, and suggest appropriate mitigation measures to be included in the Corrective Action Plan (CAP). It was performed in accordance with ADB’s SPS 2009 and IFC’s General Environmental, Health and Safety Guidelines, as well as applicable national and local environmental, social, and occupational health and safety laws and regulations in the PRC.

Subproject audit was carried out in the form of site visit to six subprojects under the Dali Erhai Lake Basin Wastewater Interception Project located in Dali City of Yunnan Province, covering:

1. Wase and Shuanglang Area Lake Basin Wastewater Interception;

2. Shangguan Area Lake Basin Wastewater Interception;

3. Xizhou Area Lake Basin Wastewater Interception;

4. Yinqiao and Wanqiao Area Lake Basin Wastewater Interception;

5. Dali Town Area Lake Basin Wastewater Interception; and

6. Xiaguan North Area Lake Basin Wastewater Interception.

Documentary review and audit were carried out during and after the site visit with an aim to assess the environmental impact assessment and management systems, and labor and working conditions.

Interviews with CWE’s management and key technical staff onsite were conducted during each site visit. A desktop review covered a number of project documents including project applications, feasibility reports (FSR), preliminary design reports (PDR), domestic environmental impact assessment (DEIA) reports for the Project and for each Subproject was also conducted after the site inspection.

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C. Audit Findings

1. Subproject 1: Wase and Shuanglang Area Lake Basin Wastewater Interception

The Consultant conducted site visit to Wase and Shuanglang Area Lake Basin Wastewater Interception (“Wase and Shuanglang Subproject”) on 30 January 2018. The due diligence team interviewed with Mr. Yongjiang LIU, Manager of the Wase and Shuanglang Subproject. Site visit photo log can be found at the end of this section.

1.1. Location

The Wase and Shuanglang Subproject is the first subproject of the Dali Erhai Lake Basin Wastewater Interception Project (“Dali Erhai Project”). It is located north-eastern side of the Erhai Lake, Dali City, Yunnan Province. The Wase and Shuanglang Subproject is further divided into two major components: Wase Wastewater Treatment Plant (“Wase WWTP”) and Shuanglang Wastewater Treatment Plant (“Shuanglang WWTP”).

Wase WWTP’s service area is bounded by Kanglang Village in the north, Wenbi Village in the south, Dacheng Village in the east and Erhai Lake in the west, serving an area of 6.4km2 and a population of about 54,700. Location map of Wase WWTP’s components is shown in Figure 1.

Shuanglang WWTP’s service area is bounded by Hongshanmiao Area in the north, Qinshan Village in the south and Erhai Lake in the west, serving an area of 3.03km3 and a population of about 40,000. Location map of Shuanglang WWTP’s components is shown in Figure 2.

1.2. Subproject Description

The Wase and Shuanglang Subproject is comprised of the following components. Construction Permit for the piping network was obtained on 6 March 2017, while construction permit of the WWTP and booster pumping station was obtained on 12 June 2017. Majority of the components were substantially completed and undergoing testing and commissioning procedures during the site visit. It was anticipated that trial operation and commercial operation of the Wase Subproject would commence in February 2018 and July 2018 respectively.

Wase WWTP

Wastewater Treatment Plant

One sunken WWTP with a designed capacity of 4,000 m3/d. Depending on the population growth and wastewater being collected at Wase WWTP, in the long run, its designed capacity could be increased to 8,000 m3/d. The entire treatment process is being installed in a building enclosed with air ventilation and odour removal system.

Influent Booster Pumping Stations

Five influent booster pumping stations (#1,2,3,4 stations and Wenbi station) designed with 4,151 m3/d of total pumping capacity during dry season and 817.5 m3/h or 19,620 m3/d during wet season. Depending on the population growth and wastewater quantity flowing through the five Influent Booster Pumping Stations.

Lake Basin Wastewater Interception Pipelines

15.46 km of wastewater interception pipelines along the north-eastern coast of Erhai Lake, connecting Wase Village and Haiyin Village.

Effluent Booster Pumping Stations

Two effluent booster pumping stations pumping effluent to Dacheng Reservoir.

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Effluent Discharge Pipelines

4.70 km of effluent discharge pipelines discharging treated wastewater to the existing Qiyi Reservoir and will be provided for farmers’ irrigation use.

Shuanglang WWTP

Wastewater Treatment Plant

One sunken WWTP with a designed capacity of 5,000 m3/d. Depending on the population growth and wastewater being collected at Wase WWTP, in the long run, its designed capacity could be increased to 10,000 m3/d. The entire treatment process is being installed in a building enclosed with air ventilation and odour removal system.

Lake Basin Wastewater Interception Pipelines

6.44 km of wastewater interception pipelines along the north-eastern coast of Erhai Lake, connecting Wase Village and Haiyin Village.

Riverside Wastewater Interception Pipelines

8.68 km of wastewater interception pipelines along the rivers in the Shuanglang WWTP Area.

Influent Booster Pumping Stations

Two influent booster pumping stations (Qinshan and Changyu stations) designed with 2,800 m3/d during dry season, and 1,560 m3/h or 74,880 m3/d during wet season. In the long run, the capacity during dry season could be increased to 6,000 m3/d.

Effluent Booster Pumping Station

One effluent booster pumping station pumping effluent to Shuanglang Reservoir.

Effluent Discharge Pipelines

6.18 km of effluent discharge pipelines discharging treated wastewater to the Shuanglang Reservoir for Treated Wastewater and will be provided for farmers’ irrigation use.

Shuanglang Reservoir for Treated Wastewater

A reservoir with 90,000m3 capacity and a storage reservoir with a capacity of 600,000 m3. The treated wastewater stored in the reservoir will be used in irrigation use by farmers located nearby the reservoir.

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Figure 1 Location of Wase WWTP

Source: Preliminary Design Report of Wase and Shuanglang Subproject, 2016

Figure 2 Location of Shuanglang WWTP

Source: Preliminary Design Report of Wase and Shuanglang Subproject, 2016

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1.3. Environment

1.3.1. Environmental Assessment

DEIA and EMP

A Full-Scale DEIA was conducted by the government for the overall Dali Erhai Project (or “Project DEIA”), covering all six subprojects. The Project DEIA was approved on 1 September 2015 by Dali EPB. A Simplified DEIA (or “Subproject DEIA”) was also prepared for Wase and Shuanglang Subproject, which the Simplified DEIA was approved by the Dali EPB on 3 November 2016.

According to Mr. Liu (the Plant Manager), both Wase WWTP and Shuanglang WWTP will employ third parties to conduct regular on site environmental monitoring for the project.

Site Information

The primary process used at Wase WWTP and Shuanglang WWTP is known as Cyclic Activated Sludge Technology (CAST), a type of wastewater treatment process which operates with a single sludge in a single reactor basin to accomplish both biological treatment and solids-liquid separation.

Both Wase WWTP and Shuanglang WWTP comprises of the following wastewater treatment components:

 Coarse screen  Fine screen  Aerated Grit Chambers  Modified A2/O (CAST)  High-rate sedimentation tank  UV disinfection

All sludge produced at Wase WWTP and Shuanglang WWTP is dewatered at its sludge dewatering room to less than 80% water content. According to CWE, they are currently negotiating with Dali EPB on a sludge disposal agreement, which the designated sludge disposal site will likely be a composting plant. Alternatively, the designated sludge disposal site could be a landfill or an incinerator.

Wase WWTP and Shuanglang WWTP are also equipped with an odour removal system that treats the extracted air from the screening area and sludge dewatering plant room before being discharged into the atmosphere. Odour is removed by the use of biological deodorization.

The Influent and Effluent Booster Pumping Stations comprises of the following components:

 Coarse screen  Integrated prefabricated wastewater booster pump

The construction of Lake Basin Wastewater Interception Pipelines, Riverside Wastewater Interception Pipelines, Effluent Discharge Pipelines and Reservoir for Treated Wastewater were mostly completed during the time of site visit.

Status of Compliance with Local, National and Regulatory Requirements

The Dali Erhai Project was approved by Dali Development and Reform Commission on 27 May 2015, and the DEIA was approved by Dali EPB on 1 September 2015. Subsequently, individual DEIA for the Wase and Shuanglang Subproject was approved by Dali EPB on 3 November 2016. Construction Permit issued by the Dali Housing and Urban-Rural Development Bureau for the piping network was obtained on 6 March 2017, while construction permit of the WWTP and booster pumping station was obtained on 12 June 2017.

Shuanglang WWTP has commenced trial operation in January 2018, while Wase WWTP was undergoing testing and commissioning procedures. It is anticipated that Wase WWTP would commence trial operation in February 2018. Once environmental acceptance tests are completed,

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discharge permit will be applied. As observed on site at both WWTP, there were some remaining finishing works to be completed. Both Wase and Shuanglang WWTP are expected to commence commercial operation in July 2018.

The construction and operation of Wase and Shuanglang Subproject has to comply with the following standards.

Construction Stage

 Air and Odour: Ambient air quality in the vicinity of the site should comply with Class II of “Ambient Air Quality Standards (GB3095-2012)”. Air emission on site during construction stage should comply with Table 2 of “Integrated Emission Standards of Air Pollutants (GB16297-1996)”;

 Water: Groundwater quality in the vicinity of the site should comply with Class II of “Groundwater Quality Standards (GB/T14848-1993). All wastewater generated from the construction site should be collected and reused after treatment.

 Noise: Ambient noise level in the vicinity of the site should comply with Class II and IVa of “Environmental Quality Standard for Noise (GB3096-2008)”. On site, noise level should comply with “Emission Standard of Environment Noise for Boundary of Construction Site (GB12523-2011)” during construction stage; and

 Solid Waste and Construction Waste: Handling and disposal of general refuse should comply with “Standard for Pollution Control on the Landfill Site of Municipal Solid Waste (GB16889-2008)”. Construction waste should be reused whenever possible.

Operation Stage

 Air and Odour: Air emission and odour level should comply with Class II of “Municipal Wastewater Treatment Plant Pollutant Discharge Standards (GB18918-2002)”;

 Water: Effluent discharge should comply with Class IA of “Municipal Wastewater Treatment Plant Pollutant Discharge Standards (GB18918-2002)”. “Standards for irrigation water quality (GB5084-2005)” should also be observed if the treated wastewater will be used by local farmers for irrigation;

 Noise: Ambient noise level in the vicinity of the site should comply with Class II of “Noise Limit of Industrial Enterprises (GB12348-2008)”; and

 Solid Waste and Sludge: Disposal of sludge should comply with “Municipal Wastewater Treatment Plant Pollutant Discharge Standards (GB18918-2002)”.

Based on our site visit, as well as the EPC environmental monitoring report and the latest monthly construction monitoring report provided by CWE, Wase and Shuanglang WWTP appears to comply with the local national and regulatory requirements.

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Status of Compliance with Applicable World Bank and Other Requirements and International Standards

No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) Regulatory Permits 1. Environmental . Management Measures Environmental acceptance of completed Acceptance on Environmental facilities has not been conducted yet, as the Acceptance of project was still in construction and has just Completed completed testing and commissioning Construction Projects procedures as of the date of site visit. Gaps identified: CWE should apply for the environmental acceptance tests as soon as construction of Wase and Shuanglang Subproject is completed.

2. Operation Permits . Environmental Wase and Shuanglang Subproject has not and Licenses Protection Law of PRC obtained discharge permit yet as the . Water Pollution environmental acceptance tests have not Protection Law been conducted. . Discharge Standard of Gaps identified: Pollutants for Municipal Wastewater Treatment CWE should apply the discharge permit after Plant (GB 18918-2002) passing the environmental acceptance tests. . Environmental Quality Standards for Surface Water (GB3838-2002)

Identification of Risks and Impacts 3. Environmental Impact . Environmental Impact A Full-Scale DEIA was conducted for the Assessment Assessment Law of overall Dali Erhai Project, covering all six PRC subprojects. The DEIA was approved on 1 . ADB SPS 2009 for September 2015 by Dali EPB. An individual environment Category DEIA was also conducted for the Wase and B projects Shuanglang Subproject, which the Simplified DEIA was prepared in August 2016 and the DEIA approval was obtained from Dali EPB on 3 November 2016. CWE has prepared an Initial Environmental Examination (IEE) in accordance with ADB SPS. Gaps identified: None. 4. Baseline Data Environmental and social-economic baseline Collection data of the Project area was collected through surveys, monitoring records and relevant documents during the preparation of the Project DEIA. Sufficient data was presented in the Project DEIA. Gaps identified: None.

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) 5. Associated Facilities . Environmental Impact Wase and Shuanglang WWTPs and their Assessment Law of associated facilities were assessed in both PRC the Project DEIA and Subproject DEIA. . ADB SPS 2009 for Gaps identified: environment Category B projects None. 6. Impact Methodology The Project DEIA and Subproject DEIA were and Mitigating conducted based on relevant laws and Measures regulations in the PRC, including the “Environmental Impact Assessment Law” and “Classified Administration Catalogue of DEIAs for Construction Projects”. Mitigation measures were provided in both Project DEIA and Subproject DEIA. Gaps identified: None. Environmental Management and Monitoring Plans 7. Air emissions (odour, . Air Pollution Prevention Air emissions monitoring is required in the greenhouse gases and Control Law of environmental monitoring plan listed in the and dust) PRC Project DEIA. . Ambient Air Quality The Plant Manager reported that air quality Standards (GB3095- monitoring will be conducted regularly to 2012) ensure compliance with the air quality . Integrated Emission standards. Activated carbon filters were Standards of Air installed at Wase and Shuanglang WWTP to Pollutants (GB16297- treat the odorous air extracted. 1996) . Municipal Wastewater The Plant Manager reported that regular Treatment Plant watering was being applied to exposed site Pollutant Discharge surface and unpaved roads to reduce dust Standards (GB18918- emissions during construction. 2002) According to the Monthly Construction . ADB SPS 2009 Supervision Report, mitigation measures . WBG EHS Guidelines were in place and environmental inspections were carried out. However, air quality monitoring was not conducted. Gaps identified: It was observed during the site visit that for the purpose of reusing, construction waste and excavated materials were sorted into inert and non-inert components and temporarily stockpiled on site. However, some of the stockpiled materials were not covered or compartmented to avoid generation of dust. Air quality monitoring reports and records during the construction stage should be prepared and provided. 8. Wastewater discharge . Water Pollution According to the Simplified DEIA, the Prevention and Control discharged effluent is required to meet Class Law of PRC IA of “Municipal Wastewater Treatment Plant . Integrated Wastewater Pollutant Discharge Standards (GB18918- Discharge Standard 2002)” before discharging to the reservoir for (GB8978-1996) treated wastewater.

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) . Discharge Standard for The effluent quality of the both Wase and Municipal Wastewater Shuanglang WWTP will be monitored at the Treatment Plant water outlet of the plant area. An online (GB18918-2002) monitoring system will also be used to . Environmental Quality monitor the water quality. GB5084-2005 Standards for Surface should also be observed if the treated Water (GB3838-2002) wastewater will be used by local farmers for . Standards for Irrigation irrigation use. Water Quality (GB5084- According to the Monthly Construction 2005) Supervision Report, mitigation measures . ADB SPS 2009 were in place and environmental inspections . WBG EHS Guidelines were carried out. EPB would also conduct water sampling to monitor the water quality during construction stage. However, CWE do not have EPB’s monitoring records for the Consultant’s review. Gaps identified: None. 9. Noise Impact . PRC Law for the According to the Simplified DEIA, noise Prevention and Control generated by the Project has to comply with of Environmental Noise GB12523-2011 during construction phase Pollution and Class II standard of GB12348-2008 . Environmental Quality during operation phase. According to the Standard for Noise environmental monitoring plan of Project and (GB3096-2008) Simplified DEIA, noise monitoring will be . Emission Standard of conducted regularly to ensure compliance Environment Noise for with the environmental quality standards. Boundary of According to the Monthly Construction Construction Site Supervision Report, mitigation measures (GB12523-2011) were in place and environmental inspections . Emission Standard of were carried out. However, noise monitoring Industrial Enterprises was not conducted. Noise (GB12348-2008) Gaps identified: Noise monitoring should be conducted during the construction stage. 10. Waste management . Law of the People's According to the Plant Manager, general (including municipal Republic of China on refuse produced onsite is collected by the solid waste and the Prevention and city’s environmental sanitation department for sludge handling) Control of disposal. Construction waste and excavated Environmental Pollution materials is being reused onsite during Caused by Solid construction, while the remaining should be Wastes (2015) disposed of at public fills. . Discharge Standard for According to the DEIA, sludge generated Municipal Wastewater from Wase and Shuanglang WWTPs will be Treatment Plant dewatered to less than 80% water content, (GB18918-2002) and delivered to a sludge treatment facility . Regulation on before being sold as compost. Construction Waste Management in Urban Gaps identified: Area (2005) It was observed during the site visit that for . WBG EHS Guidelines the purpose of reusing, construction waste and excavated materials were sorted into inert and non-inert components and temporarily stockpiled on site. However, the

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) stockpiled materials were not covered or compartmented to avoid generation of dust. 11. Hazardous materials . Catalogue of The management procedures of hazardous (use of chemicals) Hazardous Chemicals materials are not mentioned in the EMP of . Measures for the DEIA. However, it is included in the Prevention and Control Emergency Response Plan. Hazardous of Environment materials/waste (if any) should be properly Pollution by Discarded stored, and hazardous waste should be Dangerous Chemicals handled by qualified waste collection . ADB SPS 2009 companies for proper disposal. . WBG EHS Guidelines Gaps identified: It is recommended a hazardous materials/waste management plan shall be prepared for the operation unit and training shall be provided to the operation staff. 12. Occupational Health . PRC Law on Work According to the Monthly Construction & Safety Safety (2014) Supervision Reports of Wase and . Technology Code of Shuanglang Subproject between October Poison Control for 2017 and December 2017, weekly safety Municipal Wastewater inspections were being carried out on site. Treatment Plant AQ There were no safety incidents since the start 4209-2010 of construction. However, the Report has . ADB SPS 2009 noted that warning signs and barriers were . WBG EHS Guidelines not provided at a few areas where there could be potential safety hazards during construction, e.g. at the biological treatment tank. The Report has also noted that some workers did not put on safety helmets while working on site, and did not put on safety harnesses while working on elevated platforms. During the site visit, it was observed that PPEs provided to site workers appear to be reasonable. Warning signs were displayed throughout the plant area, listing out the potential hazard and required protection equipment. Safety policies can be accessed easily within the construction site. Gaps identified: In general, the occupational health and safety of construction of the subproject is in line with industry standard in China and ILO core standards. PPEs were provided to workers for free. It was observed during the site visit that warning signs were displayed on site, but may still be lacking in some areas. Suggest putting up more warning signs by the pits and tanks. 13. Community Health & . Environmental The safety buffer zone should be 100m from Safety Protection Law of PRC the site boundary of Wase and Shuanglang . Standards for the WWTPs. It was confirmed in the DEIA that Construction of there were no sensitive receivers within the Municipal Wastewater safety buffer zone. It was observed during Treatment Project CJJ- the site visit that there were no sensitive 01 receivers nearby. . ADB SPS 2009

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) . WBG EHS Guidelines All CWE projects funded by ADB will comply with “Consultation and Participation” requirements stated in the Company ESMS. A stakeholder engagement plan will be prepared to ensure continuous meetings / engagement with all stakeholders. Gaps identified: CWE shall ensure community health and safety requirements in the DEIA Report is complied with, and is included in the stakeholder engagement plan. CWE shall also ensure that the Company ESMS is implemented properly. 14. Application and . ADB SPS 2009 A corporate-wide ESMS will be implemented, adoption of corporate . WBG EHS Guidelines covering topics such as incidents reporting, EHS policies and safety training, regular inspections, practices appraisals and meetings, etc. ESMS training will be provided to the environmental and safety specialists, and subsequently to all employees in the project companies. Gaps identified: It is recommended that CWE implement an Operation Manual that incorporates all EHS requirements specific to the subproject. 15. Environmental . ADB SPS 2009 According to the Plant Manager, regular Management Plan environmental monitoring will be conducted (including contractors during operational phase. According to the / sub-contractors’ Monthly Construction Supervision Report, construction / site environmental mitigation measures were in specific EMP) place and in compliance with the national standards. Gaps identified: It is recommended that CWE shall incorporate the environmental mitigation measures into the Operation Manual of Wase and Shuanglang Subproject before commercial operation commences. 16. Contingency and . Emergency Response According to the Plant Manager, construction Emergency Response Law of the People's stage emergency response plan for Plan Republic of China Shuanglang and Wase WWTP were in place. . ADB SPS 2009 Operation stage emergency response plan . WBG EHS Guidelines for Shuanglang WWTP (which the construction progress is slightly more advanced) was also in place, which provide systemic procedures to handle emergency issues such as power shortage, system failure and other environmental incidents, etc. However, the operation stage emergency response plan for Wase WWTP were not in place yet. Regular drills and inspections are indicated in the emergency response plans.

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) Gaps identified: CWE shall establish operation stage emergency response plan before commercial operation for Wase WWTP commences. 17. Organizational . ADB SPS 2009 The construction contractor has Safety Capacity and Officer and Environmental Protection Competency Committee onsite. EHS guidelines are also provided to their construction workers. During operation, there will be an EHS Officer overseeing the Project, while Operation Manager and staff will also be responsible for EHS matters. A corporate-wide ESMS will be implemented, and training will be provided to the relevant employees of the Project company. Gaps identified: It is recommended that CWE implement an Operation Manual that incorporates all EHS requirements specific to the subproject. 18. Staff Certifications . Provisions on Safety Trainings, such as operation management, and Trainings Training of Production safety production, and management policies, and Operation Entities etc., has been provided to all staff. . ADB SPS 2009 Gaps identified: . WBG EHS Guidelines As the subproject was still undergoing testing and commissioning procedures, EHS guidelines were not yet available. These documents should be ready, and provide trainings to all site staff prior to commencement of commercial operation. Training records should also be kept on site. Stakeholder Engagement 19. Community . Environmental In July 2015, the consulting agency for Social Consultation Protection Law of PRC Stability Risk Assessment conducted . Guideline on Public household interview, bureaus interview and Participation in questionnaire in project areas. 172 persons Environmental were interviewed to collect their concerns, Protection which included 121 men and 51 women. . ADB SPS 2009 Two rounds of information disclosure were conducted in June 2015 and August 2015 respectively. Project information, potential environmental impacts and mitigation measures were displayed in the affected townships and villages, as well as Dali EPB’s website for public inspection. Dali Erhai Project conducted public consultation exercise through distributing questionnaires and conducting interviews with organizations and individuals located in the affected area. 301 individuals and 43 organizations participated in the consultation exercise. The results of the exercise, as well as the issues raised by the participants were recorded in the Project DEIA report. The

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) result of the exercise shows that public supports the development of Dali Erhai Project. All CWE projects funded by ADB will comply with “Consultation and Participation” requirements stated in the Company ESMS. A stakeholder engagement plan will be prepared to ensure continuous meetings / engagement with all stakeholders. All meetings / engagement activities (e.g. public engagement, student tours) will also be properly documented. Gaps identified: None. 20. Stakeholder . ADB SPS 2009 Organization and individual stakeholders Engagement Plan . Guideline on Public were reached out during the public Participation in consultation exercise, in which their concerns Environmental and opinions on the Project were recorded Protection and addressed in the Project DEIA report. Gaps identified: A project-specific stakeholder engagement plan shall be developed as part of the operation plan in accordance with the ESMS. 21. Grievance Redress . ADB SPS 2009 Grievance redress mechanism was Mechanism established in order to address the public’s concern in a structured way. No adverse comment was recorded. Gaps identified: None.

Application of Corporate EHS and Policies, Practices and Management, Staff Training and Supervision by Subproject

All staff are regularly trained under the company’s training programme on topics such as safety operation, emergency response procedures, and management policies, etc. The records are kept on file. PPEs are also provided to employees working on site.

Implementation of EHS Measures by Subproject

CWE will implement a corporate ESMS that highlights its EHS policies and practices. All the subprojects, including Wase and Shuanglang Subproject, will have to follow the requirements set out in the ESMS, including setting up the environmental and social management committee and fulfilling the environmental and social management requirements during different phases of the project (e.g. feasibility study and bidding, preliminary design, construction and operation, etc.). Operators and contractors are expected to adhere to the company’s ESMS and emergency response plan.

Relevant Environmental Issues, Impacts, Risks and Affected Environmental Resources

The buffer zone of wastewater treatment plant is 50m from the site boundary. According to the DEIA report, no sensitive receiver is present within the buffer zone.

Wase WWTP and Shuanglang WWTP are sunken wastewater treatment plants equipped with deodorization unit, thereby reducing environmental impact to the surrounding area. The odour level

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at site boundary shall meet Grade II of GB18918-2002 and the noise level at site shall meet Grade II of GB12348-2008.

Occupational health and safety impacts

The EPC Contractor has health and safety policies and guidelines posted on site. According to the Monthly Construction Supervision Reports of Wase and Shuanglang Subproject between October 2017 and December 2017, weekly safety inspections were being carried out on site. There were no safety incidents since the start of construction.

According to the Plant Manager, while operation stage emergency response plan and contingency for environmental incidents for Shuanglang WWTP were in place, such was not prepared yet for Wase WWTP. Both will be trained prior to the commencement of commercial operation. Construction stage emergency response plan for Shuanglang and Wase WWTP were in place.

Information disclosure, consultation and participation

In July 2015, the consulting agency for Social Stability Risk Assessment conducted household interview, bureaus interview and questionnaire in project areas. In August 2015, the DEIA approval was issued on Dali EPB’s website for public inspection.

1.3.2. Environmental Management Plan

EMP and Mitigation Measures

In general, it was observed during the site visit that construction stage of the subproject has implemented most of the requirements stated in the EMP. However, air quality and noise monitoring reports were not prepared and provided for the Consultant’s review.

According to the Plant Manager, during the operation stage, regular monitoring events for the effluent quality will be conducted by qualified third parties. Air quality and odour monitoring will also be conducted regularly. In addition, as mitigation measures required in the EMP would be implemented, operation stage of the subproject appear to be in line with the EMP.

Subproject’s Contingency and Emergency Response Plan

According to the Plant Manager, construction stage emergency response plan for Shuanglang and Wase WWTP were in place. Operation stage emergency response plan for Shuanglang WWTP (which the construction progress is slightly more advanced) was also in place, which provide systemic procedures to handle emergency issues such as power shortage, system failure and other environmental incidents, etc. However, the operation stage emergency response plan for Wase WWTP were not in place yet.

Other Supplemental Plans and Environmentally Related Plans

For social audit of the subproject, refer to Attachment 3 of this IESE.

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Site Visit Photo Log

Wase WWTP

Outlook of Wase WWTP Caution/warning signs are placed on site and appear to be reasonable.

Construction materials are stored in designated areas Safety equipment are provided to the workers of the site, but not covered

Primary Treatment Tank Secondary Treatment Tank

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Tertiary Treatment Tank Sludge dewatering unit

Fire safety equipment Outlook of Class I Effluent Booster Pumping Station

Outlook of Class II Effluent Booster Pumping Station Outlook of effluent discharge point: Qiyi reservoir

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Shuanglang WWTP

Entrance of Shuanglang WWTP Caution/warning signs are placed on site and appear to be reasonable.

Odour Extraction and Air Ventilation Ducts in the Fire safety equipment are in place Wastewater Treatment Building

Effluent Pumping Station located in the plant area Coarse Screening

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Primary Treatment Tank Secondary Treatment Tank

Tertiary Treatment Tank Sludge Dewatering Unit

Outlook of effluent Booster Pumping Station Outlook of effluent Booster Pumping station located within plant area

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Reservoir for treated wastewater Effluent discharge point

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2. Subproject 2: Shangguan Area Lake Basin Wastewater Interception

The Consultant conducted site visit to Shangguan Area Lake Basin Wastewater Interception (“Shangguan Subproject”) on 31 January 2018. The due diligence team interviewed Mr. Yongjiang LIU, Manager of the Shangguan Subproject. Site visit photo log can be found at the end of this section.

2.1. Location

The Shangguan Subproject is the second subproject of the Dali Erhai Project. It is located on the northern side of Erhai Lake, Dali City, Yunnan Province. Its service area includes the Pingba Area of Shangguan Township and Shangguan Village, with an area of 5.58km2 and a population of 44,200. It is projected that the service area and population of Shangguan Subproject will reach 7.5km2 and 82,600 respectively in 2050. Location map of Shangguan Subproject’s components are shown in Figure 3.

2.2. Subproject Description

The Shangguan Subproject is comprised of the following components. Construction Permit for the piping network was obtained on 6 March 2017, while construction permit of the WWTP and booster pumping station was obtained on 12 June 2017. Majority of the components were substantially completed and undergoing testing and commissioning procedures during the site visit. It was anticipated that trial operation and commercial operation of the Shangguan Subproject would commence in February 2018 and July 2018 respectively.

Shangguan WWTP

One sunken WWTP with a designed capacity of 5,000 m3/d. Depending on the population growth and wastewater being collected at Shangguan WWTP, in the long run, its designed capacity could be increased to 15,000 m3/d. The entire treatment process is being installed in a building enclosed with air ventilation and odour removal system.

Xizha River Influent Booster Pumping Station

One influent booster pumping station designed with 1,534m3/d of pumping capacity during dry season and 910 m3/h or 21,840 m3/d during wet season. Depending on the population growth and wastewater quantity flowing through Xizha River Influent Booster Pumping Station, in the long run, its designed pumping capacity during dry season could be adjusted to 3,640 m3/d.

Miju River Influent Booster Pumping Station

One influent booster pumping station designed with 2,430 m3/d of pumping capacity during dry season and 508 m3/h or 12,192 m3/d during wet season. Depending on the population growth and wastewater quantity flowing through Miju River Influent Booster Pumping Station, in the long run, its designed pumping capacity during dry season could be adjusted to 5,673 m3/d.

Lake Basin Wastewater Interception Pipelines

17.10 km of wastewater interception pipelines along the north coast of Erhai Lake, connecting Shangguan Village and Haichao River Village.

Riverside Wastewater Interception Pipelines

26.93 km of wastewater interception pipelines along the rivers in the Shangguan Subproject Area.

Wastewater Sump Tanks

Three wastewater sump tanks where two of the tanks was being constructed at the Xizha and Miju Influent Booster Pumping Station, while the other one was being construction at the Shangguan WWTP. Their designed capacities are 1,200m3/d, 1,000 m3/d and 2,500 m3/d respectively.

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Effluent Discharge Pipelines

5.04 km of effluent discharge pipelines discharging treated wastewater to the existing Jiangwei Wetland and Xiaojia Wetland.

Figure 3 Location Map of the Shangguan Subproject's Components

Source: Preliminary Design Report of Shangguan Subproject, 2016

2.3. Environment

2.3.1. Environmental Assessment

DEIA and EMP

A Full-Scale DEIA was conducted by the government for the overall Dali Erhai Project, covering all six subprojects. The DEIA was approved on 1 September 2015 by Dali EPB. An individual DEIA was also conducted for the Shangguan Subproject, which the Simplified DEIA was approved by Dali EPB on 3 November 2016.

According to Mr. Liu (the Plant Manager), third parties will be employed to conduct regular onsite environmental monitoring for Shangguan WWTP.

Site Information

The primary process used at Shangguan WWTP is known as Cyclic Activated Sludge Technology (CAST), a type of wastewater treatment process which operates with a single sludge in a single reactor basin to accomplish both biological treatment and solids-liquid separation.

The Shangguan WWTP comprises of the following wastewater treatment systems:

 Coarse screen  Fine screen  Aerated Grit Chambers  Modified A2/O (CAST)  High-rate sedimentation tank  UV disinfection

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All sludge produced at Shangguan WWTP is dewatered at its sludge dewatering room to less than 80% water content. According to CWE, they are currently negotiating with Dali EPB on a sludge disposal agreement, which the designated sludge disposal site will likely be a composting plant. Alternatively, the designated sludge disposal site could be a landfill or an incinerator.

Shangguan WWTP is also equipped with an odour removal system that treats the extracted air from the screening area and sludge dewatering plant room before being discharged into the atmosphere. Odour is removed by the use of biological deodorization.

The Influent Booster Pumping Stations comprises of the following components:

 Coarse screen  Integrated prefabricated wastewater booster pump  Wastewater Sump Tanks

Both Xizha River and Miju River Influent Booster Pumping Station is equipped with an odour removal system that treats the extracted air from the wastewater sump tank before being discharged into the atmosphere. Odour is removed by the use of activated carbon filters.

The construction of Lake Basin Wastewater Interception Pipelines, Riverside Wastewater Interception Pipelines and Effluent Discharge Pipelines were mostly completed during the time of site visit.

Status of Compliance with Local, National and Regulatory Requirements

The Dali Erhai Project was approved by Dali Development and Reform Commission on 27 May 2015, and the DEIA was approved Dali EPB on 1 September 2015. Subsequently, individual DEIA for the Shangguan Subproject was approved by Dali EPB on 3 November 2016. Construction Permit issued by the Dali Housing and Urban-Rural Development Bureau for the piping network was obtained on 6 March 2017, while construction permit of the WWTP and booster pumping station was obtained on 12 June 2017.

Currently, Shangguan WWTP is undergoing testing and commissioning procedures. Once environmental acceptance tests are completed, discharge permit will be applied. As observed on site at both WWTP, there are some remaining finishing works to be completed. Shangguan WWTP are expected to commence commercial operation in the second half of 2018.

The construction and operation of Shangguan Subproject has to comply with the following standards.

Construction Stage

 Air and Odour: Ambient air quality in the vicinity of the site should comply with Class II of “Ambient Air Quality Standards (GB3095-2012)”. Air emission on site during construction stage should comply with Table 2 of “Integrated Emission Standards of Air Pollutants (GB16297-1996)”;

 Water: Surface water quality in the vicinity of the site should comply with Class II of “Surface water Quality Standards (GB3838-2002). All wastewater generated from the construction site should be collected and reused after treatment.

 Noise: Ambient noise level in the vicinity of the site should comply with Class II and IVa of “Environmental Quality Standard for Noise (GB3096-2008)”. On site, noise level should comply with “Emission Standard of Environment Noise for Boundary of Construction Site (GB12523-2011)” during construction stage; and

 Solid Waste and Construction Waste: Handling and disposal of general refuse should comply with “Standard for Pollution Control on the Landfill Site of Municipal Solid Waste (GB16889-2008)”. Construction waste should be reused whenever possible.

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Operation Stage

 Air and Odour: Air emission and odour level should comply with Class II of “Municipal Wastewater Treatment Plant Pollutant Discharge Standards (GB18918-2002)”;

 Water: Effluent discharge should comply with Class IA of “Municipal Wastewater Treatment Plant Pollutant Discharge Standards (GB18918-2002)”;

 Noise: Ambient noise level in the vicinity of the site should comply with Class II of “Noise Limit of Industrial Enterprises (GB12348-2008)”; and

 Solid Waste and Sludge: Disposal of sludge should comply with “Municipal Wastewater Treatment Plant Pollutant Discharge Standards (GB18918-2002)”.

Based on our site visit, as well as the EPC environmental monitoring report and the latest monthly construction monitoring report provided by CWE, Shangguan WWTP appears to comply with the local national and regulatory requirements.

Status of Compliance with Applicable World Bank and Other Requirements and International Standards

Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) Regulatory Permits 1. Environmental . Management Environmental acceptance of completed Acceptance Measures on facilities has not been conducted yet, as the Environmental project was still in testing and commissioning Acceptance of stage as of the date of site visit. Completed Gaps identified: Construction Projects CWE should apply for the environmental acceptance tests as soon as construction of Shangguan WWTP is completed. 2. Operation Permits . Environmental Shangguan WWTP has not obtained discharge and Licenses Protection Law of PRC permit yet as the environmental acceptance . Water Pollution tests have not been conducted. Protection Law Gaps identified: . Discharge Standard of Pollutants for CWE should apply the discharge permit after Municipal Wastewater passing the environmental acceptance tests. Treatment Plant (GB 18918-2002) . Environmental Quality Standards for Surface Water (GB3838-2002) Identification of Risks and Impacts 3. Environmental . Environmental Impact A Full-Scale DEIA was conducted for the overall Impact Assessment Assessment Law of Dali Erhai Project, covering all six subprojects. PRC The DEIA was approved on 1 September 2015 . ADB SPS 2009 for by Dali EPB. An individual DEIA was also environment Category conducted for the Shangguan Subproject, which B projects the Simplified DEIA was prepared in August 2016 and the DEIA approval was obtained from Dali EPB on 3 November 2016. CWE has prepared an IEE in accordance with ADB SPS. Gaps identified:

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) None. 4. Baseline Data Environmental and social-economic baseline Collection data of the Project area was collected through surveys, monitoring records and relevant documents during the preparation of the Project DEIA. Sufficient data was presented in the Project DEIA. Gaps identified: None. 5. Associated Facilities Shangguan WWTPs and its associated facilities were assessed in both the Project DEIA and Subproject DEIA. Gaps identified: None. 6. Impact Methodology The Project DEIA and Subproject DEIA were and Mitigating conducted based on relevant laws and Measures regulations in the PRC, including the “Environmental Impact Assessment Law” and “Classified Administration Catalogue of DEIAs for Construction Projects”. Mitigation measures were provided in both Project DEIA and Subproject DEIA. Gaps identified: None. Environmental Management and Monitoring Plans 7. Air emissions . Air Pollution EMP requires that monitoring of air quality on 4 (odour, greenhouse Prevention and sides of the WWTP boundary and at the booster gases and dust) Control Law of PRC pumping stations should be conducted during . Ambient Air Quality environmental acceptance only. According to Standards (GB3095- the Monthly Construction Supervision Report 2012) and the Plant Manager, mitigation measures, . Integrated Emission including regular watering to exposed site Standards of Air surface and unpaved roads to reduce dust Pollutants (GB16297- emissions during construction, were in place. Air 1996) quality monitoring is being conducted by the . Municipal Wastewater construction supervisor during construction Treatment Plant stage. However, air quality monitoring reports Pollutant Discharge and records were not prepared and provided. Standards (GB18918- The Plant Manager also mentioned that air 2002) quality monitoring will be conducted regularly by . ADB SPS 2009 third parties during operation stage to ensure . WBG EHS Guidelines compliance with the air quality standards. In addition, biological deodorization units were installed at Shangguan WWTP, and activated carbon filters were installed at Xizha River and Miju River Influent Booster Pumping Stations to treat the odorous air extracted. Gaps identified: Air quality monitoring reports and records during the construction stage should be prepared and provided.

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) 8. Wastewater . Water Pollution According to the Simplified DEIA, the discharge Prevention and discharged effluent is required to meet Class IA Control Law of PRC of “Municipal Wastewater Treatment Plant . Integrated Wastewater Pollutant Discharge Standards (GB18918- Discharge Standard 2002)” before discharging to the reservoir for (GB8978-1996) treated wastewater. . Discharge Standard The effluent quality of the Shangguan WWTP for Municipal will be monitored at the water outlet of the plant Wastewater Treatment area. An online monitoring system will also be Plant (GB18918-2002) used to monitor the water quality. GB5084-2005 . Environmental Quality should also be observed if the treated Standards for Surface wastewater will be used by local farmers for Water (GB3838-2002) irrigation use. . Standards for Irrigation Water Quality According to the Monthly Construction (GB5084-2005) Supervision Report, mitigation measures were in . ADB SPS 2009 place. EPB would also conduct water sampling . WBG EHS Guidelines to monitor the water quality during construction stage. However, CWE do not have EPB’s monitoring records for the Consultant’s review. Gaps identified: None. 9. Noise Impact . PRC Law for the According to the Simplified DEIA, noise Prevention and generated by the Project has to comply with Control of GB12523-2011 during construction phase and Environmental Noise Class II standard of GB12348-2008 during Pollution operation phase. According to the environmental . Environmental Quality monitoring plan of Simplified DEIA, noise Standard for Noise monitoring will be conducted regularly to ensure (GB3096-2008) compliance with the environmental quality . Emission Standard of standards. Environment Noise for According to the Monthly Construction Boundary of Supervision Report and the Plant Manager, Construction Site mitigation measures were in place and noise (GB12523-2011) monitoring is being conducted by the . Emission Standard of construction supervisor during construction Industrial Enterprises stage. However, noise monitoring reports and Noise (GB12348- records were not prepared and provided. 2008) Gaps identified: Noise monitoring reports and records during the construction stage should be prepared and provided. 10. Waste management . Law of the People's According to the Plant Manager, general refuse (including municipal Republic of China on produced onsite is collected by the city’s solid waste and the Prevention and environmental sanitation department for sludge handling) Control of disposal. Construction waste and excavated Environmental materials is being reused onsite during Pollution Caused by construction, while the remaining should be Solid Wastes (2015) disposed of at public fills. . Discharge Standard According to the DEIA, sludge generated from for Municipal Shangguan WWTP will be dewatered to less Wastewater than 80% water content, and delivered to a Treatment Plant sludge treatment facility before being sold as (GB18918-2002) compost. . Regulation on Construction Waste Gaps identified:

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) Management in It was observed during the site visit that for the Urban Area (2005) purpose of reusing, construction waste and . WBG EHS Guidelines excavated materials were sorted into inert and non-inert components and temporarily stockpiled on site. However, the stockpiled materials were not covered or compartmented to avoid generation of dust. 11. Hazardous . Catalogue of The management procedures of hazardous materials (use of Hazardous Chemicals materials are not mentioned in the EMP of chemicals) . Measures for the DEIA. Hazardous materials/waste (if any) should Prevention and be properly stored, and hazardous waste should Control of be handled by qualified waste collection Environment Pollution companies for proper disposal. by Discarded Gaps identified: Dangerous Chemicals . ADB SPS 2009 It is recommended a hazardous materials/waste . WBG EHS Guidelines management plan shall be prepared for the operation unit and training shall be provided to the operation staff. 12. Occupational Health . PRC Law on Work According to the Monthly Construction & Safety Safety (2014) Supervision Reports of Shangguan Subproject . Technology Code of between October 2017 and December 2017, Poison Control for weekly safety inspections were being carried out Municipal Wastewater on site. There were no safety incidents since the Treatment Plant AQ start of construction. However, the Report has 4209-2010 noted that warning signs and barriers were not . ADB SPS 2009 provided at a few areas where there could be . WBG EHS Guidelines potential safety hazards during construction, e.g. at the biological treatment tank. The Report has also noted that some workers did not put on safety helmets while working on site. During the site visit, it was observed that EPC Contractor has health and safety policies and guidelines posted on site. PPEs provided to construction workers appear to be reasonable. Warning signs were displayed on site, listing out the potential hazard and required protection equipment, but may still be lacking in some areas like the biological treatment tank. Barriers were provided at the biological treatment tank. Equipment and materials were observed to be scattered around at the Shangguan WWTP construction site, which could cause potential hazards to workers. Gaps identified: In general, the occupational health and safety of the subproject is in line with industry standard in China and ILO core standards. PPEs were provided to workers for free. It was observed during the site visit that warning signs were displayed on site, but may still be lacking in some areas. Suggest putting up more warning signs by the pits and tanks. The Shangguan WWTP construction site should be tidied up to minimize potential hazards to workers.

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) 13. Community Health . Environmental The safety buffer zone should be 100m from the & Safety Protection Law of PRC site boundary of Shangguan WWTP. It was . Standards for the confirmed in the DEIA that there were no Construction of sensitive receivers within the safety buffer zone. Municipal Wastewater It was observed during the site visit that there Treatment Project were no sensitive receivers nearby. CJJ-01 According to CWE and Monthly Construction . ADB SPS 2009 Supervision Reports, there were no issues / . WBG EHS Guidelines accidents related to the community during the construction phase. All CWE projects funded by ADB will comply with “Consultation and Participation” requirements stated in the Company ESMS. A stakeholder engagement plan will be prepared to ensure continuous meetings / engagement with all stakeholders. Gaps identified: CWE shall ensure community health and safety requirements in the DEIA Report is complied with, and is included in the stakeholder engagement plan. CWE shall also ensure that the Company ESMS is implemented properly. 14. Application and . ADB SPS 2009 A corporate-wide ESMS will be implemented, adoption of . WBG EHS Guidelines covering topics such as incidents reporting, corporate EHS safety training, regular inspections, appraisals policies and and meetings, etc. practices ESMS training will be provided to the environmental and safety specialists, and subsequently to all employees in the project companies. Gaps identified: It is recommended that CWE implement an Operation Manual that incorporates all EHS requirements specific to the subproject. 15. Environmental . ADB SPS 2009 According to the Plant Manager, regular Management Plan environmental monitoring will be conducted (including during operational phase; however, no contractors / sub- dedicated environmental management plan was contractors’ observed during the site visit. construction / site Gaps identified: specific EMP) It is recommended that CWE shall incorporate the environmental mitigation measures into the Operation Manual of Shangguan WWTP before commercial operation commences. 16. Contingency and . Emergency Response According to the Plant Manager, operation stage Emergency Law of the People's emergency response plan and contingency plan Response Plan Republic of China for environmental incidents will be prepared and . ADB SPS 2009 trained prior to the commencement of . WBG EHS Guidelines commercial operation. The operation stage emergency response plan and contingency plan for environmental incidents of Shangguan Subproject will be prepared by referencing those prepared for Shuanglang WWTP, which its construction progress is slightly more advanced.

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) Construction stage emergency response plan was in place. Gaps identified: CWE shall establish operation stage emergency response plan before commercial operation commences. 17. Organizational . ADB SPS 2009 The construction contractor has Safety Officer Capacity and and Environmental Protection Committee onsite. Competency EHS guidelines are also provided to their construction workers. During operation, there will be an EHS Officer overseeing the Project, while Operation Manager and staff will also be responsible for EHS matters. A corporate-wide ESMS will be implemented, and training will be provided to the relevant employees of the Project company. Gaps identified: It is recommended that CWE implement an Operation Manual that incorporates all EHS requirements specific to the subproject. 18. Staff Certifications . Provisions on Safety Trainings, such as operation management, and Trainings Training of Production safety production, and management policies, and Operation Entities etc., has been provided to all staff. . ADB SPS 2009 Gaps identified: . WBG EHS Guidelines As the subproject was still undergoing testing and commissioning procedures, EHS guidelines were not yet available. These documents should be ready, and provide trainings to all site staff prior to commencement of commercial operation. Training records should also be kept on site. Stakeholder Engagement 19. Community . Environmental In July 2015, the consulting agency for Social Consultation Protection Law of PRC Stability Risk Assessment conducted household . Guideline on Public interview, bureaus interview and questionnaire Participation in in project areas. 172 persons were interviewed Environmental to collect their concerns, which included 121 Protection men and 51 women. . ADB SPS 2009 Two rounds of information disclosure were conducted in June 2015 and August 2015 respectively. project information, potential environmental impacts and mitigation measures were displayed at the affected townships and villages, as well as Dali EPB’s website for public inspection. Dali Erhai Project conducted public consultation exercise through distributing questionnaires and conducting interviews to organizations and individuals located in the affected area. 301 individuals and 43 organizations participated in the consultation exercise. The results of the

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) exercise, as well as the issues raised by the participants were recorded in the Project DEIA report. The result of the exercise shows that public supports the development of Dali Erhai Project. All CWE projects funded by ADB will comply with “Consultation and Participation” requirements stated in the Company ESMS. A stakeholder engagement plan will be prepared to ensure continuous meetings / engagement with all stakeholders. All meetings / engagement activities (e.g. public engagement, student tour) will also be properly documented. Gaps identified: None. 20. Stakeholder . ADB SPS 2009 Organization and individual stakeholders were Engagement Plan . Guideline on Public reached out during the public consultation Participation in exercise, in which their concerns and opinions Environmental on the Project were recorded and addressed in Protection the Project DEIA report. Gaps identified: A project-specific stakeholder engagement plan shall be developed as part of the operation plan in accordance with the ESMS. 21. Grievance Redress . ADB SPS 2009 Grievance redress mechanism was established Mechanism in order to address the public’s concern in a structured way. No adverse comment was recorded. Gaps identified: None.

Application of Corporate EHS and Policies, Practices and Management, Staff Training and Supervision by Subproject

All staff are regularly trained under the company’s training programme on topics such as safety operation, emergency response procedures, and management policies, etc. The records are kept on file. PPEs are also provided to all employees working on site.

Implementation of EHS Measures by Subproject

CWE will implement a corporate ESMS that highlights its EHS policies and practices. All the subprojects, including Shangguan WWTP, will have to follow the requirements set out in the ESMS including setting up the environmental and social management committee and fulfilling the environmental and social management requirements during different phases of the project (e.g. feasibility study and bidding, preliminary design, construction and operation, etc.). Operators and contractors are expected to adhere to the company’s ESMS and emergency response plan.

Relevant Environmental Issues, Impacts, Risks and Affected Environmental Resources

According to the DEIA, the safety buffer zone is set at 100m from the site boundary of Shangguan WWTP. It was confirmed in the DEIA that there were no sensitive receivers within the safety buffer zone. It was observed during the site visit that there were no sensitive receivers nearby.

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The process line of Shangguan WWTP is built indoor and is equipped with deodorization unit, thereby reducing environmental impact to the surrounding area.

Occupational health and safety impacts

The EPC Contractor has health and safety policies and guidelines posted on site. According to the Monthly Construction Supervision Reports of Shangguan Subproject between October 2017 and December 2017, weekly safety inspections were being carried out on site. There were no safety incidents since the start of construction.

According to the Plant Manager, operation stage emergency response plan and contingency for environmental incidents will be prepared and trained prior to the commencement of commercial operation. Construction stage emergency response plan was in place.

Information disclosure, consultation and participation

In July 2015, the consulting agency for Social Stability Risk Assessment conducted household interview, bureaus interview and questionnaire in project areas. In August 2015, the DEIA approval was issued on Dali EPB’s website for public inspection.

2.3.2. Environmental Management Plan

EMP and Mitigation Measures

In general, it was observed during the site visit that construction stage of the subproject has implemented most of the requirements stated in the EMP. However, air quality and noise monitoring reports were not prepared and provided for the Consultant’s review.

According to the Plant Manager, during the operation stage, regular monitoring events for the effluent quality will be conducted by qualified third parties. Air quality and odour monitoring will also be conducted regularly. In addition, as mitigation measures required in the EMP would be implemented, operation stage of the subproject appear to be in line with the EMP.

Subproject’s Contingency and Emergency Response Plan

According to the Plant Manager, operation stage emergency response plan and contingency plan for environmental incidents will be prepared and trained prior to the commencement of commercial operation. The operation stage emergency response plan and contingency plan for environmental incidents of Shangguan Subproject will be prepared by referencing those prepared for Shuanglang WWTP, which its construction progress is slightly more advanced. Construction stage emergency response plan was in place.

Other Supplemental Plans and Environmentally Related Plans

For social audit of the subproject, refer to Attachment 3 of this IESE.

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Site Visit Photo Log

Outlook of Shangguan WWTP Construction materials are stored in designated area without cover

Safety signs are installed at designated working areas Primary sedimentation Tank for construction wastewater

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Safety Production policies are displayed at construction Safety equipment are assigned to site staff site

Primary Treatment Tank Secondary Treatment Tank

Tertiary Treatment Tank Outlook of Miju River Booster Pumping Station

Outlook of Xizha River Booster Pumping Station Outlook of effluent discharge point: Xiaojia Wetland

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3. Subproject 3: Xizhou Area Lake Basin Wastewater Interception

The Consultant conducted site visit to Xizhou Area Lake Basin Wastewater Interception (“Xizhou Subproject”) on 31 January 2018. The due diligence team interviewed Manager of Xizhou Subproject, Mr. Runan LIU, and his team. Site visit photo log can be found at the end of this section.

3.1. Location

The Xizhou Subproject is the third subproject of the Dali Erhai Project. It is located on the north- western side of Erhai Lake, Dali City, Yunnan Province. Its service area is bounded by Taoyuan Village and Renhe Village on the north, Xizhou Township on the south, Erhai Lake on the east and Cangshan Village on the west, serving an area of approximately 9.94 km2 and a population of about 141,600. Location map of Xizhou Subproject’s components are shown in Figure 4.

3.2. Subproject Description

The Xizhou Subproject is comprised of the following components. Construction Permit for the piping network was obtained on 6 March 2017, while construction permit of the WWTP and booster pumping station was obtained on 13 June 2017. Majority of the components were substantially completed and undergoing testing and commissioning procedures during the site visit. It was anticipated that trial operation and commercial operation of the Xizhou Subproject would commence in February 2018 and July 2018 respectively.

Xizhou WWTP

One sunken WWTP with a designed capacity of 10,000 m3/d. Depending on the population growth and wastewater being collected at Xizhou WWTP, in the long run, its designed capacity could be increased to 25,000 m3/d. The entire treatment process is being installed in a building enclosed with air ventilation and odour removal system.

Renliyi Influent Booster Pumping Station

One influent booster pumping station designed with 3,800 m3/d of pumping capacity during dry season and 1,230 m3/h or 29,500 m3/d during wet season. Depending on the population growth and wastewater quantity flowing through Renliyi Influent Booster Pumping Station, in the long run, its designed pumping capacity during dry season could be adjusted to 7,600 m3/d.

Lake Basin Wastewater Interception Pipelines

11.99 km of wastewater interception pipelines along the north-western coast of Erhai Lake, connecting Jiangshang Village and Taoyuan Village.

Riverside Wastewater Interception Pipelines

4.79 km of wastewater interception pipelines along the rivers in the Xizhou Subproject Area.

Wastewater Sump Tanks

Two wastewater sump tanks where one of the tanks was being constructed at the Renliyi Influent Booster Pumping Station, while the other one was being construction at the Xizhou WWTP. Their designed capacities are 2,000 m3/d and 4,500 m3/d respectively.

Effluent Discharge Pipelines

6.35 km of effluent discharge pipelines discharging treated wastewater to the existing Zuoyi Reservoir for farmers’ irrigation use. Longhu Wetland would be a backup discharging point.

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Figure 4 Location Map of the Xizhou Subproject’s Components ErhaiLake Legend Legend New Booster Pumping Station Station Booster Pumping New (Non-CWE Project)(Non-CWE Village Station WWT Planned Village Station WWT Existing Wastewater Village New Tank Sump Tank Wastewater Sump New New WWTP New Subproject WastewaterSubproject Ending Point of Xizhou Xizhou Point of Ending Interception Pipelines Pipelines Interception Influent Pumping Pumping Influent Renli Station yi Booster New Village Wastewater Network Village Pipe New Collection Wastewater Network Village (Next Stage) Pipe New Collection New Effluent Discharge Effluent Pipelines New Wastewater Pipelines Riverside New Interception Basin Wastewater Lake New Interception Pipelines Pipelines Sewage Existing ErhaiLake Xizhou WWTPXizhou Starting Point of Xizhou Xizhou Point Starting of Subproject WastewaterSubproject Interception Pipelines Interception Ending Point of Wanqiao Point of Wanqiao Ending Subproject WastewaterSubproject Interception Pipelines Interception

Source: Preliminary Design Report of Xizhou Subproject, 2016.

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3.3. Environment

3.3.1. Environmental Assessment

DEIA and EMP

A Full-Scale DEIA was conducted by the government for the overall Dali Erhai Project, covering all six subprojects. The DEIA was approved on 1 September 2015 by Dali EPB. An individual DEIA was also conducted for the Xizhou Subproject, which the Simplified DEIA was approved by Dali EPB on 3 November 2016.

According to Mr. Liu (the Plant Manager), third parties will be employed to conduct regular onsite environmental monitoring for Xizhou WWTP.

Site Information

Xizhou WWTP comprises of the following wastewater treatment systems:

 Coarse screen  Fine screen  Aerated Grit Chambers  Modified A2/O (CAST)  High-rate sedimentation tank  UV disinfection

Sludge produced at Xizhou WWTP will be dewatered at its sludge dewatering room to less than 80% water content before being transferred to a composting plant for recycling into organic compost. According to CWE, they are currently negotiating with Dali EPB on a sludge disposal agreement, which the designated sludge disposal site will likely be a composting plant. Alternatively, the designated sludge disposal site could be a landfill or an incinerator.

Xizhou WWTP is also equipped with an odour removal system that treats the extracted air from the primary treatment, secondary treatment and sludge dewatering areas before being discharged into the atmosphere. Odour is removed by the use of biological deodorization.

Renliyi Influent Booster Pumping Station comprises of the following components:

 Coarse screen  Integrated prefabricated wastewater booster pump  Wastewater sump tank

Renliyi Influent Booster Pumping Station is equipped with an odour removal system that treats the extracted air from the wastewater sump tank before being discharged into the atmosphere. Odour is removed by the use of activated carbon filters.

The construction of Lake Basin Wastewater Interception Pipelines, Riverside Wastewater Interception Pipelines and Effluent Discharge Pipelines were mostly completed during the time of site visit.

Status of Compliance with Local, National and Regulatory Requirements

The Dali Erhai Project was approved by Dali Development and Reform Commission on 27 May 2015, and the DEIA was approved Dali EPB on 1 September 2015. Subsequently, individual DEIA for the Xizhou Subproject was approved by Dali EPB on 3 November 2016. Construction Permit issued by the Dali Housing and Urban-Rural Development Bureau for the piping network was obtained on 6 March 2017, while construction permit of the WWTP and booster pumping station was obtained on 13 June 2017.

During the site visit, it was noted that CWE has mostly completed the construction of the subproject pipelines and civil structures of the booster pumping station and Xizhou WWTP. Installation of the

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wastewater treatment process equipment was also substantially completed, and was undergoing equipment testing and commissioning procedures. It was anticipated that trial operation and commercial operation of the Xizhou Subproject would commence in February 2018 and July 2018 respectively.

The construction and operation of the Xizhou Subproject has to comply with the following standards:

Construction Stage

. Air and Odour: Ambient air quality in the vicinity of the construction sites should comply with Class II of “Ambient Air Quality Standards (GB3095-2012)”. Air emission on site during construction stage should comply with Table 2 of “Integrated Emission Standard of Air Pollutants (GB16297-1996)”;

. Water: Surface water and groundwater quality in the vicinity of the construction sites should comply with Class II of “Environmental quality standards for surface water (GB3838-2002)” and “Quality standard for ground water (GB/T14848-1993)” respectively. Surface runoff, groundwater seepage and construction wastewater collected at the construction sites should be treated via sedimentation before being reused for construction. Pit latrines were provided to construction workers. Sewage should be collected at the pit latrines before being provided to local farmers as fertilizer if necessary. In case wastewater collected during the construction stage needs to be discharged to the sewage network, “Integrated Wastewater Discharge Standards (GB8978-1996)” should be observed.

. Noise: Ambient noise level in the vicinity of the site should comply with Class II of “Environmental Quality Standard for Noise (GB3096-2008)”. On site, noise level should comply with “Emission Standard of Environment Noise for Boundary of Construction Site (GB12523-2011)” during construction stage; and

. Solid Waste, Construction Waste and Excavated Materials: Handling and disposal of general refuse should comply with “Standard for Pollution Control on the Landfill Site of Municipal Solid Waste (GB16889-2008)”. Construction waste and excavated materials should be reused onsite whenever possible, while the remaining should be disposed of at public fills.

Operation Stage

. Air and Odour: Ambient air quality in the vicinity of the site should comply with Class II of “Ambient Air Quality Standards (GB3095-2012)”. Air emission on site and odour intensity at the site boundary during operation stage should comply with Table 4 Class II of “Discharge Standard of Pollutants for Municipal Wastewater Treatment Plant (GB18918-2002)”;

. Water: Effluent discharge to Zuoyi Reservoir for treated wastewater should comply with Class IA of “Municipal Wastewater Treatment Plant Pollutant Discharge Standards (GB18918-2002)”. “Standards for irrigation water quality (GB5084-2005)” should also be observed if the treated wastewater will be used by local farmers for irrigation;

. Noise: Ambient noise level in the vicinity of the site should comply with “Environmental Quality Standard for Noise (GB3096-2008)”. On site, noise level should comply with Class II of “Emission Standard of Industrial Enterprises Noise (GB12348-2008)” during operation stage; and

. Solid Waste and Sludge: Handling and disposal of general refuse should comply with “Standard for Pollution Control on the Landfill Site of Municipal Solid Waste (GB16889-2008)”. Disposal of sludge should also comply with “Municipal Wastewater Treatment Plant Pollutant Discharge Standards (GB18918-2002)”.

Based on our site visit and the latest monthly construction monitoring reports provided by CWE, Xizhou Subproject appears to comply with the local national and regulatory requirements.

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Status of Compliance with Applicable World Bank and Other Requirements and International Standards

Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) Regulatory Permits 1. Environmental . Management Measures Environmental acceptance of completed Acceptance on Environmental construction project has not been conducted yet, Acceptance of Completed as Xizhou Subproject was still in the testing and Construction Projects commissioning stage as of the date of site visit. Trial operation for of Xizhou Subproject was scheduled to commence in February 2018. Gaps identified: CWE should apply for the environmental acceptance tests as soon as construction of Xizhou Subproject (including testing and commissioning procedures and trial operation) is completed. 2. Operation Permits . Environmental Protection Xizhou Subproject has not obtained operation and Licenses Law of PRC and discharge permits yet as the environmental . Water Pollution acceptance tests have not been conducted. Protection Law Gaps identified: . Discharge Standard of Pollutants for Municipal CWE should apply for the operation and Wastewater Treatment discharge permits after passing the Plant (GB18918-2002) environmental acceptance tests. . Environmental Quality Standards for Surface Water (GB3838-2002) Identification of Risks and Impacts 3. Environmental . Environmental Impact A Full-Scale DEIA was conducted for the overall Impact Assessment Assessment Law of PRC Dali Erhai Project, covering all six subprojects. . ADB SPS 2009 for The DEIA was approved on 1 September 2015 by environment Category B Dali EPB. An individual DEIA was also conducted projects for the Xizhou Subproject, which the Simplified DEIA was approved by Dali EPB on 3 November 2016. CWE has prepared an IEE in accordance with ADB SPS. Gaps identified: None. 4. Baseline Data Environmental and social-economic baseline data Collection of the Project area was collected through surveys, monitoring records and relevant documents during the preparation of the Project DEIA. Sufficient data was presented in the Project DEIA. Gaps identified: None. 5. Associated Facilities Xizhou WWTPs and its associated facilities were assessed in both the Project DEIA and Subproject DEIA. Gaps identified:

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) None.

6. Impact Methodology The Project DEIA and Subproject DEIA were and Mitigating conducted based on relevant laws and Measures regulations in the PRC, including the “Environmental Impact Assessment Law” and “Classified Administration Catalogue of DEIAs for Construction Projects”. Mitigation measures were provided in both Project DEIA and Subproject DEIA. Gaps identified: None. Environmental Management and Monitoring Plans 7. Air emissions . Air Pollution Prevention EMP requires that monitoring of air quality on 4 (odour, greenhouse and Control Law of PRC sides of the WWTP boundary and at the booster gases and dust) . Ambient Air Quality pumping station should be conducted during Standards (GB3095- environmental acceptance only. According to the 2012) Monthly Construction Supervision Report and the . Integrated Emission Plant Manager, mitigation measures, including Standards of Air regular watering to exposed site surface and Pollutants (GB16297- unpaved roads to reduce dust emissions during 1996) construction, were in place. Air quality monitoring . Municipal Wastewater is being conducted by the construction supervisor Treatment Plant Pollutant during construction stage. However, air quality Discharge Standards monitoring reports and records were not prepared (GB18918-2002) and provided. . ADB SPS 2009 The Plant Manager also mentioned that air quality . WBG EHS Guidelines monitoring will be conducted regularly by third parties during operation stage to ensure compliance with the air quality standards. In addition, biological deodorization units were installed at Xizhou WWTP, and activated carbon filters were installed at Renliyi Influent Booster Pumping Station to treat the odorous air extracted. Gaps identified: Air quality monitoring reports and records during the construction stage should be prepared and provided. 8. Wastewater . Water Pollution According to Monthly Construction Supervision discharge Prevention and Control Report and the Plant Manager, mitigation Law of PRC measures were in place. Surface runoff, . Integrated Wastewater groundwater seepage and construction Discharge Standard wastewater collected at the construction sites (GB8978-1996) should be treated via sedimentation before being . Discharge Standard for reused for construction. Pit latrines were provided Municipal Wastewater to construction workers. Sewage collected at the Treatment Plant pit latrines are being provided to local farmers as (GB18918-2002) fertilizer if necessary. EPB would also conduct . Environmental Quality water sampling to monitor the water quality during Standards for Surface construction stage. However, CWE do not have Water (GB3838-2002) EPB’s monitoring records for the Consultant’s review.

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) . Standards for Irrigation According to the DEIA, effluent discharge to Water Quality (GB5084- Zuoyi Reservoir for treated wastewater should 2005) comply with Class IA of GB18918-2002 during . ADB SPS 2009 operation stage and should be monitored with an . WBG EHS Guidelines online system. The Plant Manager mentioned that effluent quality will be monitored online. GB5084- 2005 should also be observed if the treated wastewater will be used by local farmers for irrigation use. Gaps identified: Some parts of the onsite stormwater channels were observed to be filled with construction waste during the site visit. Such construction waste should be removed to avoid clogging the stormwater channels. 9. Noise Impact . PRC Law for the EMP requires that monitoring of noise on 4 sides Prevention and Control of of the WWTP boundary and at the booster Environmental Noise pumping station should be conducted during Pollution environmental acceptance only. According to the . Environmental Quality Monthly Construction Supervision Report and the Standard for Noise Plant Manager, mitigation measures were in (GB3096-2008) place. Noise monitoring is being conducted by the . Emission Standard of construction supervisor during construction stage Environment Noise for and will be conducted regularly by third parties Boundary of Construction during operation stage to ensure compliance with Site (GB12523-2011) the noise standards. However, noise monitoring . Emission Standard of reports and records were not prepared and Industrial Enterprises provided. Noise (GB12348-2008) Gaps identified: Noise monitoring reports and records during the construction stage should be prepared and provided. 10. Waste management . Law of the People's According to the Plant Manager, general refuse (including municipal Republic of China on the produced onsite is collected by the city’s solid waste and Prevention and Control of environmental sanitation department for disposal. sludge handling) Environmental Pollution Construction waste and excavated materials is Caused by Solid Wastes being reused onsite during construction, while the (2015) remaining should be disposed of at public fills. . Regulation on According to the DEIA, sludge generated from Construction Waste Xizhou WWTP will be dewatered to less than Management in Urban 80% water content, and delivered to a sludge Area (2005) treatment facility before being sold as compost. . Discharge Standard for Municipal Wastewater Gaps identified: Treatment Plant It was observed during the site visit that for the (GB18918-2002) . WBG EHS Guidelines purpose of reusing, construction waste and excavated materials were sorted into inert and non-inert components and temporarily stockpiled on site. However, the stockpiled materials were not covered or compartmented to avoid generation of dust. 11. Hazardous materials . Catalogue of Hazardous The management procedures of hazardous (use of chemicals) Chemicals materials are not mentioned in the EMP of DEIA. . Measures for the Hazardous materials/waste (if any) should be Prevention and Control of properly stored, and hazardous waste should be Environment Pollution by

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) Discarded Dangerous handled by qualified waste collection companies Chemicals for proper disposal. . ADB SPS 2009 Gaps identified: . WBG EHS Guidelines It is recommended a hazardous materials/waste management plan shall be prepared for the operation unit and training shall be provided to the operation staff. 12. Occupational Health . PRC Law on Work Safety According to the Monthly Construction & Safety (2014) Supervision Reports of Xizhou Subproject . Technology Code of between October 2017 and December 2017, Poison Control for weekly safety inspections were being carried out Municipal Wastewater on site. There were no safety incidents since the Treatment Plant AQ start of construction. However, the Report has 4209-2010 noted that warning signs and barriers were not . ADB SPS 2009 provided at a few areas where there could be . WBG EHS Guidelines potential safety hazards during construction, e.g. at the biological treatment tank. The Report has also noted that some workers did not put on safety helmets while working on site. During the site visit, it was observed that EPC Contractor has health and safety policies and guidelines posted on site. PPEs provided to construction workers appear to be reasonable. Warning signs were displayed on site, listing out the potential hazard and required protection equipment, but may still be lacking in some areas like the biological treatment tank. Barriers were provided at the biological treatment tank. Equipment and materials were observed to be scattered around at the Xizhou WWTP construction site, which could cause potential hazards to workers. Gaps identified: In general, the occupational health and safety of the subproject is in line with industry standard in China and ILO core standards. PPEs were provided to workers for free. It was observed during the site visit that warning signs were displayed on site, but may still be lacking in some areas. Suggest putting up more warning signs by the pits and tanks. The Xizhou WWTP construction site should be tidied up to minimize potential hazards to workers. 13. Community Health & . Environmental Protection The safety buffer zone should be 100m from the Safety Law of PRC site boundary of Xizhou WWTP. It was confirmed . Standards for the in the DEIA that there were no sensitive receivers Construction of Municipal within the safety buffer zone. It was observed Wastewater Treatment during the site visit that there were no sensitive Project CJJ-01 receivers nearby. . ADB SPS 2009 According to CWE and Monthly Construction . WBG EHS Guidelines Supervision Reports, there were no issues / accidents related to the community during the construction phase.

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) All CWE projects funded by ADB will comply with “Consultation and Participation” requirements stated in the Company ESMS. A stakeholder engagement plan will be prepared to ensure continuous meetings / engagement with all stakeholders. Gaps identified: CWE shall ensure community health and safety requirements in the DEIA Report is complied with, and is included in the stakeholder engagement plan. CWE shall also ensure that the Company ESMS is implemented properly. 14. Application and . ADB SPS 2009 The EPC Contractor has EHS policies in place. adoption of . WBG EHS Guidelines For CWE, a corporate-wide ESMS will be corporate EHS implemented, covering topics such as incidents policies and reporting, safety training, regular inspections, practices appraisals and meetings, etc. ESMS training will be provided to the environmental and safety specialists, and subsequently to all employees in the project companies. Gaps identified: It is recommended that CWE implement an Operation Manual that incorporates all EHS requirements specific to the subproject before commercial operation commences. 15. Environmental . ADB SPS 2009 According to the Plant Manager, they do employ Management Plan third parties to conduct regular onsite (including environmental monitoring for the project. There is contractors / sub- also an EMP in the DEIA. contractors’ Gaps identified: construction / site specific EMP) It is recommended that CWE shall incorporate the EMP into the Operation Manual to the subproject before commercial operation commences. 16. Contingency and . Emergency Response According to the Plant Manager, operation stage Emergency Law of the People's emergency response plan and contingency plan Response Plan Republic of China for environmental incidents will be prepared and . ADB SPS 2009 trained prior to the commencement of commercial . WBG EHS Guidelines operation. The operation stage emergency response plan and contingency plan for environmental incidents of Xizhou Subproject will be prepared by referencing those prepared for Shuanglang WWTP, which its construction progress is slightly more advanced. Construction stage emergency response plan was in place. Gaps identified: CWE shall establish operation stage emergency response plan before commercial operation commences. 17. Organizational . ADB SPS 2009 The construction contractor has Safety Officer Capacity and and Environmental Protection Committee onsite. Competency

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) EHS guidelines are also provided to their construction workers. During operation, there will be an EHS Officer overseeing the Project, while Operation Manager and staff will also be responsible for EHS matters. A corporate-wide ESMS will be implemented, and training will be provided to the relevant employees of the Project company. Gaps identified: It is recommended that CWE implement an Operation Manual that incorporates all EHS requirements specific to the subproject. 18. Staff Certifications . Provisions on Safety Trainings, such as operation management, safety and Trainings Training of Production production, and management policies, etc., has and Operation Entities been provided to all staff. . ADB SPS 2009 Gaps identified: . WBG EHS Guidelines As the subproject was still undergoing testing and commissioning procedures, EHS guidelines were not yet available. These documents should be ready, and provide trainings to all site staff prior to commencement of commercial operation. Training records should also be kept on site. Stakeholder Engagement 19. Community . Environmental Protection In July 2015, the consulting agency for Social Consultation Law of PRC Stability Risk Assessment conducted household . Guideline on Public interview, bureaus interview and questionnaire in Participation in project areas. 172 persons were interviewed to Environmental Protection collect their concerns, which included 121 men . ADB SPS 2009 and 51 women. Two rounds of information disclosure were conducted in June 2015 and August 2015 respectively. Project information, potential environmental impacts and mitigation measures were displayed at the affected townships and villages, as well as Dali EPB’s website for public inspection. Dali Erhai Project conducted public consultation exercise through distributing questionnaires and conducting interviews to organizations and individuals located in the affected area. 301 individuals and 43 organizations participated in the consultation exercise. The results of the exercise, as well as the issues raised by the participants were recorded in the Project DEIA report. The result of the exercise shows that public supports the development of Dali Erhai Project. All CWE projects funded by ADB will comply with “Consultation and Participation” requirements stated in the Company ESMS. A stakeholder engagement plan will be prepared to ensure continuous meetings / engagement with all stakeholders. All meetings / engagement

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) activities (e.g. public engagement, student tour) will also be properly documented. Gaps identified: None. 20. Stakeholder . ADB SPS 2009 Organization and individual stakeholders were Engagement Plan . Guideline on Public reached out during the public consultation Participation in exercise, in which their concerns and opinions on Environmental Protection the Project were recorded and addressed in the Project DEIA report. Gaps identified: None. 21. Grievance Redress . ADB SPS 2009 Grievance redress mechanism was established in Mechanism order to address the public’s concern in a structured way. No adverse comment was recorded. Gaps identified: None.

Application of Corporate EHS and Policies, Practices and Management, Staff Training and Supervision by Subproject

Staff are regularly trained under the company’s training programme on topics such as operation management, safety production, and management policies, etc. The records are kept on file. PPEs are also provided to construction workers. A H2S sensor will be installed in the wastewater treatment building to detect the level of H2S in the building.

Implementation of EHS Measures by Subproject

CWE will implement a corporate ESMS that highlights its EHS policies and practices. All the subprojects, including Xizhou Subproject, will have to follow the requirements set out in the ESMS including setting up the environmental and social management committee and fulfilling the environmental and social management requirements during different phases of the project (e.g. feasibility study and bidding, preliminary design, construction and operation, etc.). Operators and contractors are expected to adhere to the company’s ESMS and emergency response plan.

Relevant Environmental Issues, Impacts, Risks and Affected Environmental Resources

According to the DEIA, the safety buffer zone is set at 100m from the site boundary of Xizhou WWTP. It was confirmed in the DEIA that there were no sensitive receivers within the safety buffer zone. It was observed during the site visit that there were no sensitive receivers nearby.

The process line of Xizhou WWTP is built indoor and is equipped with deodorization unit, thereby reducing environmental impact to the surrounding area.

Occupational health and safety impacts

The EPC Contractor has health and safety policies and guidelines posted on site. According to the Monthly Construction Supervision Reports of Xizhou Subproject between October 2017 and December 2017, weekly safety inspections were being carried out on site. There were no safety incidents since the start of construction.

According to the Plant Manager, operation stage emergency response plan and contingency for environmental incidents will be prepared and trained prior to the commencement of commercial operation. Construction stage emergency response plan was in place.

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Information disclosure, consultation and participation

In July 2015, the consulting agency for Social Stability Risk Assessment conducted household interview, bureaus interview and questionnaire in project areas. In August 2015, the DEIA approval was issued on Dali EPB’s website for public inspection.

3.3.2. Environmental Management Plan

EMP and Mitigation Measures

In general, it was observed during the site visit that construction stage of the subproject has implemented most of the requirements stated in the EMP. However, air quality and noise monitoring reports were not prepared and provided for the Consultant’s review.

According to the Plant Manager, during the operation stage, regular monitoring events for the effluent quality will be conducted by qualified third parties in addition to online monitoring. Air quality and odour monitoring will also be conducted regularly. In addition, as mitigation measures required in the EMP would be implemented, operation stage of the subproject appear to be in line with the EMP.

Subproject’s Contingency and Emergency Response Plan

According to the Plant Manager, operation stage emergency response plan and contingency plan for environmental incidents will be prepared and trained prior to the commencement of commercial operation. The operation emergency response plan and contingency plan for environmental incidents of Xizhou Subproject will be prepared by referencing those prepared for Shuanglang WWTP, which its construction progress is slightly more advanced. Construction stage emergency response plan was in place.

Other Supplemental Plans and Environmentally Related Plans

For social audit of the subproject, refer to Attachment 3 of this IESE.

Site Visit Photo Log

Outlook of Xizhou WWTP. Safety Instructions and Signboards On Site.

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Safety Warning Signs On Site. Construction workers equipped with PPE.

Extraction of Groundwater Seepage During Sedimentation tanks for groundwater seepage and Construction. construction wastewater collected before being reused for construction or providing to local farmers for irrigation use.

Primary Treatment of Xizhou WWTP Secondary Treatment of Xizhou WWTP

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Tertiary Treatment of Xizhou WWTP Odour Extraction and Air Ventilation Ducts in the Wastewater Treatment Building

Deodorization Unit in the Wastewater Treatment Zuoyi Reservoir for Treated Wastewater shared Building between Xizhou WWTP and Wanqiao WWTP.

Signboard by Zuoyi Reservoir for Treated Outlook of Renliyi Influent Booster Pumping Wastewater prohibiting people from swimming or Station fishing in it.

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4. Subproject 4: Yinqiao and Wanqiao Area Lake Basin Wastewater Interception

Site visit to Yinqiao and Wanqiao Area Lake Basin Wastewater Interception (“Yinqiao and Wanqiao Subproject”) was carried out on 31 January 2018. The due diligence team interviewed with Manager of Yinqiao and Wanqiao Subproject, Mr. Runan LIU, and his team. Site visit photo log can be found at the end of this section.

4.1. Location

The Yinqiao and Wanqiao Subproject is the fourth subproject of the Dali Erhai Project. It is located on the western side of Erhai Lake, Dali City, Yunnan Province. Its service area is bounded by Heyi River and Jiangdu Village on the north, Mei Creek on the south, Erhai Lake on the east and Cangshanjiao Village on the west (including both Yinqiao and Wanqiao Townships), serving an area of approximately 12.74 km2 and a population of about 115,000. Location map of Yinqiao and Wanqiao Subproject’s components are shown in Figure 5.

4.2. Subproject Description

The Yinqiao and Wanqiao Subproject is comprised of the following components. Construction Permit for the piping network was obtained on 6 March 2017, while construction permit of the WWTP and booster pumping stations was obtained on 13 June 2017. The Yinqiao and Wanqiao Subproject was entering its final stage of construction during the site visit before commencing the testing and commissioning procedures tentatively by the end of February 2018. It was anticipated that trial operation and commercial operation of the Yinqiao and Wanqiao Subproject would commence in May 2018 and October 2018 respectively.

Wanqiao WWTP

One sunken WWTP with a designed capacity of 10,000 m3/d. Depending on the population growth and wastewater being collected at Wanqiao WWTP, in the long run, its designed capacity could be increased to 20,000 m3/d. The entire treatment process is being installed in a building enclosed with air ventilation and odour removal system.

Influent Booster Pumping Stations

Three influent booster pumping stations. Gusheng Village Influent Booster Pumping Station is designed with 1,900 m3/d of pumping capacity during dry season and 770 m3/h or 18,500 m3/d during wet season. Panxi Village Influent Booster Pumping Station is designed with 4,100 m3/d of pumping capacity during dry season and 890 m3/h or 21,400 m3/d during wet season. Fumeiyi Influent Booster Pumping Station is designed with 2,000 m3/d of pumping capacity during dry season and 820 m3/h or 19,700 m3/d during wet season. Depending on the population growth and wastewater quantity flowing through these influent booster pumping stations, in the long run, their designed pumping capacity during dry season could be adjusted to 3,800 m3/d, 8,200 m3/d and 4,000 m3/d respectively.

Lake Basin Wastewater Interception Pipelines

17.8 km of wastewater interception pipelines along the western coast of Erhai Lake, connecting Heyi River and Mei Creek.

Riverside Wastewater Interception Pipelines

A total of 30.3 km of wastewater interception pipelines along Yang, Jin, Lingquan, Baishi, Shuangyang, Yinxian and Mei Creeks in the Yinqiao and Wanqiao Subproject Area.

Wastewater Sump Tanks

Four wastewater sump tanks where one of each being constructed at the three pumping stations and the WWTP. Their designed capacities are 1,200 m3/d (both Gusheng Village and Fumeiyi), 1,300 m3/d (Panxi Village), and 2,500 m3/d (WWTP).

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Effluent Discharge Pipelines

6.81 km of effluent discharge pipelines discharging treated wastewater to the existing Zuoyi Reservoir for farmers’ irrigation use. Longhu Wetland would be a backup discharging point.

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Figure 5 Location Map of the Yinqiao and Wnaqiao Subproject’s Components Starting Point of Xizhou Subproject Wastewater Interception Pipelines

Ending Point of Wanqiao Subproject Wastewater Interception Pipelines

Zuoyi Reservoir for Treated Wastewater PumpingStation GushengVillage InfluentBooster Legend Legend NewBooster Pumping Station NewVillage WastewaterSump Tank NewWastewater Sump Tank NewWWTP ErhaiLake NewVillage WastewaterCollection Pipe Network NewEffluent Discharge Pipelines NewRiverside Wastewater Interception Pipelines NewLake Basin WastewaterInterception Pipelines Existing SewagePipelines WanqiaoWWTP PumpingStation InfluentBooster Panxi VillagePanxi ErhaiLake BoosterPumping FumeiyiInfluent Station

Starting Point of Wanqiao Subproject Wastewater Interception Pipelines

Source: Preliminary Design Report of Yinqiao and Wanqiao Subproject, 2016.

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4.3. Environment

4.3.1. Environmental Assessment

DEIA and EMP

A Full-Scale DEIA was conducted by the government for the overall Dali Erhai Project, covering all six subprojects. The DEIA was approved on 1 September 2015 by Dali EPB. An individual DEIA was also conducted for the Yinqiao and Wanqiao Subproject, which the Simplified DEIA was approved by Dali EPB on 3 November 2016.

According to Mr. Liu (the Plant Manager), third parties will be employed to conduct regular onsite environmental monitoring for Wanqiao WWTP.

Site Information

Wanqiao WWTP comprises of the following wastewater treatment systems:

 Coarse screen  Fine screen  Aerated Grit Chambers  Modified A2/O (CAST)  High-rate sedimentation tank  UV disinfection

Sludge produced at Wanqiao WWTP will be dewatered at its sludge dewatering room to less than 80% water content before being transferred to a composting plant for recycling into organic compost. According to CWE, they are currently negotiating with Dali EPB on a sludge disposal agreement, which the designated sludge disposal site will likely be a composting plant. Alternatively, the designated sludge disposal site could be a landfill or an incinerator.

Wanqiao WWTP is also equipped with an odour removal system that treats the extracted air from the primary treatment, secondary treatment and sludge dewatering areas before being discharged into the atmosphere. Odour is removed by the use of biological deodorization.

Gusheng Village, Panxi Village and Fumeiyi Influent Booster Pumping Stations each comprise of the following components:

 Coarse screen  Integrated prefabricated wastewater booster pump  Wastewater sump tank

Each of the Influent Booster Pumping Stations is equipped with an odour removal system that treats the extracted air from the wastewater sump tank before being discharged into the atmosphere. Odour is removed by the use of activated carbon filters.

The construction of Lake Basin Wastewater Interception Pipelines, Riverside Wastewater Interception Pipelines and Effluent Discharge Pipelines were mostly completed during the time of site visit.

Status of Compliance with Local, National and Regulatory Requirements

The Dali Erhai Project was approved by Dali Development and Reform Commission on 27 May 2015, and the DEIA was approved Dali EPB on 1 September 2015. Subsequently, individual DEIA for the Yinqiao and Wanqiao Subproject was approved by Dali EPB on 3 November 2016. Construction Permit issued by the Dali Housing and Urban-Rural Development Bureau for the piping network was obtained on 6 March 2017, while construction permit of the WWTP and booster pumping stations was obtained on 13 June 2017.

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During the site visit, it was noted that CWE has mostly completed the construction of the subproject pipelines and civil structures of the booster pumping stations and Wanqiao WWTP. Installation of the wastewater treatment process equipment was entering its final stage, and is tentatively scheduled for testing and commissioning procedures by the end of February 2018. It was anticipated that trial operation and commercial operation of the Wanqiao Subproject would commence in May 2018 and October 2018 respectively.

The construction and operation of the Yinqiao and Wanqiao Subproject has to comply with the following standards:

Construction Stage

. Air and Odour: Ambient air quality in the vicinity of the construction sites should comply with Class II of “Ambient Air Quality Standards (GB3095-2012)”. Air emission on site during construction stage should comply with Table 2 of “Integrated Emission Standard of Air Pollutants (GB16297-1996)”;

. Water: Surface water and groundwater quality in the vicinity of the construction sites should comply with Class II of “Environmental quality standards for surface water (GB3838-2002)” and “Quality standard for ground water (GB/T14848-1993)” respectively. Surface runoff, groundwater seepage and construction wastewater collected at the construction sites should be treated via sedimentation before being reused for construction. Pit latrines were provided to construction workers. Sewage should be collected at the pit latrines before being provided to local farmers as fertilizer if necessary. In case wastewater collected during the construction stage needs to be discharged to the sewage network, “Integrated Wastewater Discharge Standards (GB8978-1996)” should be observed.

. Noise: Ambient noise level in the vicinity of the site should comply with Class II of “Environmental Quality Standard for Noise (GB3096-2008)”. On site, noise level should comply with “Emission Standard of Environment Noise for Boundary of Construction Site (GB12523-2011)” during construction stage; and

. Solid Waste, Construction Waste and Excavated Materials: Handling and disposal of general refuse should comply with “Standard for Pollution Control on the Landfill Site of Municipal Solid Waste (GB16889-2008)”. Construction waste and excavated materials should be reused onsite whenever possible, while the remaining should be disposed of at public fills.

Operation Stage

. Air and Odour: Ambient air quality in the vicinity of the site should comply with Class II of “Ambient Air Quality Standards (GB3095-2012)”. Air emission on site and odour intensity at the site boundary during operation stage should comply with Table 4 Class II of “Discharge Standard of Pollutants for Municipal Wastewater Treatment Plant (GB18918-2002)”;

. Water: Effluent discharge to Zuoyi Reservoir for treated wastewater should comply with Class IA of “Municipal Wastewater Treatment Plant Pollutant Discharge Standards (GB18918-2002)”. “Standards for irrigation water quality (GB5084-2005)” should also be observed if the treated wastewater will be used by local farmers for irrigation;

. Noise: Ambient noise level in the vicinity of the site should comply with “Environmental Quality Standard for Noise (GB3096-2008)”. On site, noise level should comply with Class II of “Emission Standard of Industrial Enterprises Noise (GB12348-2008)” during operation stage; and

. Solid Waste and Sludge: Handling and disposal of general refuse should comply with “Standard for Pollution Control on the Landfill Site of Municipal Solid Waste (GB16889-2008)”. Disposal of sludge should also comply with “Municipal Wastewater Treatment Plant Pollutant Discharge Standards (GB18918-2002)”.

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Based on our site visit and the latest monthly construction monitoring reports provided by CWE, Yinqiao and Wanqiao Subproject appears to comply with the local national and regulatory requirements.

Status of Compliance with Applicable World Bank and Other Requirements and International Standards

Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) Regulatory Permits 1. Environmental . Management Measures Environmental acceptance of completed Acceptance on Environmental construction project has not been conducted yet, Acceptance of Completed as Yinqiao and Wanqiao Subproject was only Construction Projects entering its final stage of construction as of the date of site visit. Testing and commissioning procedures for of Wanqiao Subproject was scheduled to commence by the end of February 2018. Gaps identified: CWE should apply for the environmental acceptance tests as soon as construction of Yinqiao and Wanqiao Subproject (including testing and commissioning procedures and trial operation) is completed. 2. Operation Permits . Environmental Protection Yinqiao and Wanqiao Subproject has not and Licenses Law of PRC obtained operation and discharge permits yet as . Water Pollution the environmental acceptance tests have not Protection Law been conducted. . Discharge Standard of Gaps identified: Pollutants for Municipal Wastewater Treatment CWE should apply for the operation and Plant (GB18918-2002) discharge permits after passing the . Environmental Quality environmental acceptance tests. Standards for Surface Water (GB3838-2002) Identification of Risks and Impacts 3. Environmental . Environmental Impact A Full-Scale DEIA was conducted for the overall Impact Assessment Assessment Law of PRC Dali Erhai Project, covering all six subprojects. . ADB SPS 2009 for The DEIA was approved on 1 September 2015 by environment Category B Dali EPB. An individual DEIA was also conducted projects for the Yinqiao and Wanqiao Subproject, which the Simplified DEIA was approved by Dali EPB on 3 November 2016. CWE has prepared an IEE in accordance with ADB SPS. Gaps identified: None. 4. Baseline Data Environmental and social-economic baseline data Collection of the Project area was collected through surveys, monitoring records and relevant documents during the preparation of the Project DEIA. Sufficient data was presented in the Project DEIA. Gaps identified: None.

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) 5. Associated Facilities Wanqiao WWTPs and its associated facilities were assessed in both the Project DEIA and Subproject DEIA. Gaps identified: None. 6. Impact Methodology The Project DEIA and Subproject DEIA were and Mitigating conducted based on relevant laws and Measures regulations in the PRC, including the “Environmental Impact Assessment Law” and “Classified Administration Catalogue of DEIAs for Construction Projects”. Mitigation measures were provided in both Project DEIA and Subproject DEIA. Gaps identified: None. Environmental Management and Monitoring Plans 7. Air emissions . Air Pollution Prevention EMP requires that monitoring of air quality on 4 (odour, greenhouse and Control Law of PRC sides of the WWTP boundary and at the booster gases and dust) . Ambient Air Quality pumping stations should be conducted during Standards (GB3095- environmental acceptance only. According to the 2012) Monthly Construction Supervision Report and the . Integrated Emission Plant Manager, mitigation measures, including Standards of Air regular watering to exposed site surface and Pollutants (GB16297- unpaved roads to reduce dust emissions during 1996) construction, were in place. Air quality monitoring . Municipal Wastewater is being conducted by the construction supervisor Treatment Plant Pollutant during construction stage. However, air quality Discharge Standards monitoring reports and records were not prepared (GB18918-2002) and provided. . ADB SPS 2009 The Plant Manager also mentioned that air quality . WBG EHS Guidelines monitoring will be conducted regularly by third parties during operation stage to ensure compliance with the air quality standards. In addition, biological deodorization units were installed at Wanqiao WWTP, and activated carbon filters were installed at the influent booster pumping stations to treat the odorous air extracted. Gaps identified: Air quality monitoring reports and records during the construction stage should be prepared and provided. 8. Wastewater . Water Pollution According to Monthly Construction Supervision discharge Prevention and Control Report and the Plant Manager, mitigation Law of PRC measures were in place. Surface runoff, . Integrated Wastewater groundwater seepage and construction Discharge Standard wastewater collected at the construction sites (GB8978-1996) should be treated via sedimentation before being . Discharge Standard for reused for construction. Pit latrines were provided Municipal Wastewater to construction workers. Sewage collected at the Treatment Plant pit latrines are being provided to local farmers as (GB18918-2002) fertilizer if necessary. EPB would also conduct water sampling to monitor the water quality during

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) . Environmental Quality construction stage. However, CWE do not have Standards for Surface EPB’s monitoring records for the Consultant’s Water (GB3838-2002) review. . Standards for Irrigation According to the DEIA, effluent discharge to Water Quality (GB5084- Zuoyi Reservoir for treated wastewater should 2005) comply with Class IA of GB18918-2002 during . ADB SPS 2009 operation stage and should be monitored with an . WBG EHS Guidelines online system. The Plant Manager mentioned that effluent quality will be monitored online. GB5084- 2005 should also be observed if the treated wastewater will be used by local farmers for irrigation use. Gaps identified: Some parts of the onsite stormwater channels were observed to be filled with construction waste during the site visit. Such construction waste should be removed to avoid clogging the stormwater channels. 9. Noise Impact . PRC Law for the EMP requires that monitoring of noise on 4 sides Prevention and Control of of the WWTP boundary and at the booster Environmental Noise pumping stations should be conducted during Pollution environmental acceptance only. According to the . Environmental Quality Monthly Construction Supervision Report and the Standard for Noise Plant Manager, mitigation measures were in (GB3096-2008) place. Noise monitoring is being conducted by the . Emission Standard of construction supervisor during construction stage Environment Noise for and will be conducted regularly by third parties Boundary of Construction during operation stage to ensure compliance with Site (GB12523-2011) the noise standards. However, noise monitoring . Emission Standard of reports and records were not prepared and Industrial Enterprises provided. Noise (GB12348-2008) Gaps identified: Noise monitoring reports and records during the construction stage should be prepared and provided. 10. Waste management . Law of the People's According to the Plant Manager, general refuse (including municipal Republic of China on the produced onsite is collected by the city’s solid waste and Prevention and Control of environmental sanitation department for disposal. sludge handling) Environmental Pollution Construction waste and excavated materials is Caused by Solid Wastes being reused onsite during construction, while the (2015) remaining should be disposed of at public fills. . Regulation on According to the DEIA, sludge generated from Construction Waste Wanqiao WWTP will be dewatered to less than Management in Urban 80% water content, and delivered to a sludge Area (2005) treatment facility before being sold as compost. . Discharge Standard for Municipal Wastewater Gaps identified: Treatment Plant It was observed during the site visit that for the (GB18918-2002) purpose of reusing, construction waste and . WBG EHS Guidelines excavated materials were sorted into inert and non-inert components and temporarily stockpiled on site. However, the stockpiled materials were not covered or compartmented to avoid generation of dust.

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) 11. Hazardous materials . Catalogue of Hazardous The management procedures of hazardous (use of chemicals) Chemicals materials are not mentioned in the EMP of DEIA. . Measures for the Hazardous materials/waste (if any) should be Prevention and Control of properly stored, and hazardous waste should be Environment Pollution by handled by qualified waste collection companies Discarded Dangerous for proper disposal. Chemicals Gaps identified: . ADB SPS 2009 . WBG EHS Guidelines It is recommended a hazardous materials/waste management plan shall be prepared for the operation unit and training shall be provided to the operation staff. 12. Occupational Health . PRC Law on Work Safety According to the Monthly Construction & Safety (2014) Supervision Reports of Yinqiao and Wanqiao . Technology Code of Subproject between October 2017 and December Poison Control for 2017, weekly safety inspections were being Municipal Wastewater carried out on site. There was one safety incident Treatment Plant AQ early in the construction stage. CWE has 4209-2010 conducted investigation to determine the . ADB SPS 2009 circumstances and causes of the incident and . WBG EHS Guidelines come up with measures to avoid similar incident happening again in the future. A few key safety issues mentioned in the Monthly Construction Supervision Report include: . Some elevated platforms for construction works were not properly set up; . Some construction workers working on elevated platforms did not put on safety harnesses; . Some workers did not put on safety helmets while working on site; . Oxygen and acetylene cylinders were not kept sufficiently apart; . Fire safety equipment were not sufficiently provided at Wanqiao WWTP; and . Barriers and safety net were not provided at some of the pits and tanks. During the site visit, it was observed that EPC Contractor has health and safety policies and guidelines posted on site. PPEs provided to construction workers appear to be reasonable. Warning signs were displayed on site, listing out the potential hazard and required protection equipment, but may still be lacking in some areas like the biological treatment tank. Barriers were provided at the biological treatment tank. However, some of the safety issues mentioned in the Construction Supervision Reports could still be observed. Also, equipment and materials were observed to be scattered around at the Wanqiao WWTP construction site, which could cause potential hazards to workers. Gaps identified: The occupational health and safety of the subproject could be improved by rectifying all the safety issues mentioned in the Monthly Construction Supervision Reports. It is also

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) suggested that CWE should attend the weekly safety inspection together with the construction supervisor if not already done so. Otherwise, the occupational health and safety of the subproject is in line ILO core standards. PPEs were provided to workers for free. 13. Community Health & . Environmental Protection The safety buffer zone should be 100m from the Safety Law of PRC site boundary of Wanqiao WWTP. It was . Standards for the confirmed in the DEIA that there were no Construction of Municipal sensitive receivers within the safety buffer zone. It Wastewater Treatment was observed during the site visit that there were Project CJJ-01 no sensitive receivers nearby. . ADB SPS 2009 According to CWE and Monthly Construction . WBG EHS Guidelines Supervision Reports, there were no issues / accidents related to the community during the construction phase. All CWE projects funded by ADB will comply with “Consultation and Participation” requirements stated in the Company ESMS. A stakeholder engagement plan will be prepared to ensure continuous meetings / engagement with all stakeholders. Gaps identified: CWE shall ensure community health and safety requirements in the DEIA Report is complied with, and is included in the stakeholder engagement plan. CWE shall also ensure that the Company ESMS is implemented properly. 14. Application and . ADB SPS 2009 The EPC Contractor has EHS policies in place. adoption of . WBG EHS Guidelines For CWE, a corporate-wide ESMS will be corporate EHS implemented, covering topics such as incidents policies and reporting, safety training, regular inspections, practices appraisals and meetings, etc. ESMS training will be provided to the environmental and safety specialists, and subsequently to all employees in the project companies. Gaps identified: It is recommended that CWE implement an Operation Manual that incorporates all EHS requirements specific to the subproject before commercial operation commences. 15. Environmental . ADB SPS 2009 According to the Plant Manager, they do employ Management Plan third parties to conduct regular onsite (including environmental monitoring for the project. There is contractors / sub- also an EMP in the DEIA. contractors’ Gaps identified: construction / site specific EMP) It is recommended that CWE shall incorporate the EMP into the Operation Manual to the subproject before commercial operation commences.

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) 16. Contingency and . Emergency Response According to the Plant Manager, operation stage Emergency Law of the People's emergency response plan and contingency plan Response Plan Republic of China for environmental incidents will be prepared and . ADB SPS 2009 trained prior to the commencement of commercial . WBG EHS Guidelines operation. The operation stage emergency response plan and contingency plan for environmental incidents of Yinqiao and Wanqiao Subproject will be prepared by referencing those prepared for Shuanglan WWTP, which its construction progress is slightly more advanced. Construction stage emergency response plan was in place. Gaps identified: CWE shall establish operation stage emergency response plan before commercial operation commences. 17. Organizational . ADB SPS 2009 The construction contractor has Safety Officer Capacity and and Environmental Protection Committee onsite. Competency EHS guidelines are also provided to their construction workers. During operation, there will be an EHS Officer overseeing the Project, while Operation Manager and staff will also be responsible for EHS matters. A corporate-wide ESMS will be implemented, and training will be provided to the relevant employees of the Project company. Gaps identified: It is recommended that CWE implement an Operation Manual that incorporates all EHS requirements specific to the subproject. 18. Staff Certifications . Provisions on Safety Trainings, such as operation management, safety and Trainings Training of Production production, and management policies, etc., has and Operation Entities been provided to all staff. . ADB SPS 2009 Gaps identified: . WBG EHS Guidelines As the subproject was still undergoing testing and commissioning procedures, EHS guidelines were not yet available. These documents should be ready, and provide trainings to all site staff prior to commencement of commercial operation. Training records should also be kept on site. Stakeholder Engagement 19. Community . Environmental Protection In July 2015, the consulting agency for Social Consultation Law of PRC Stability Risk Assessment conducted household . Guideline on Public interview, bureaus interview and questionnaire in Participation in project areas. 172 persons were interviewed to Environmental Protection collect their concerns, which included 121 men . ADB SPS 2009 and 51 women. Two rounds of information disclosure were conducted in June 2015 and August 2015 respectively. Project information, potential environmental impacts and mitigation measures were displayed at the affected townships and

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Concerned Item Relevant Regulation(s) Comments / Gaps Identified No. and/or Standard(s) villages, as well as Dali EPB’s website for public inspection. Dali Erhai Project conducted public consultation exercise through distributing questionnaires and conducting interviews to organizations and individuals located in the affected area. 301 individuals and 43 organizations participated in the consultation exercise. The results of the exercise, as well as the issues raised by the participants were recorded in the Project DEIA report. The result of the exercise shows that public supports the development of Dali Erhai Project. All CWE projects funded by ADB will comply with “Consultation and Participation” requirements stated in the Company ESMS. A stakeholder engagement plan will be prepared to ensure continuous meetings / engagement with all stakeholders. All meetings / engagement activities (e.g. public engagement, student tour) will also be properly documented. Gaps identified: None. 20. Stakeholder . ADB SPS 2009 Organization and individual stakeholders were Engagement Plan . Guideline on Public reached out during the public consultation Participation in exercise, in which their concerns and opinions on Environmental Protection the Project were recorded and addressed in the Project DEIA report. Gaps identified: A project-specific stakeholder engagement plan shall be developed as part of the operation plan in accordance with the ESMS. 21. Grievance Redress . ADB SPS 2009 Grievance redress mechanism was established in Mechanism order to address the public’s concern in a structured way. No adverse comment was recorded. Gaps identified: None.

Application of Corporate EHS and Policies, Practices and Management, Staff Training and Supervision by Subproject

Staff are regularly trained under the company’s training programme on topics such as operation management, safety production, and management policies, etc. The records are kept on file. PPEs are also provided to construction workers. A H2S sensor will be installed in the wastewater treatment building to detect the level of H2S in the building.

Implementation of EHS Measures by Subproject

CWE will implement a corporate ESMS that highlights its EHS policies and practices. All the subprojects, including Yinqiao and Wanqiao Subproject, will have to follow the requirements set out in the ESMS including setting up the environmental and social management committee and fulfilling the environmental and social management requirements during different phases of the project (e.g.

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feasibility study and bidding, preliminary design, construction and operation, etc.). Operators and contractors are expected to adhere to the company’s ESMS and emergency response plan.

Relevant Environmental Issues, Impacts, Risks and Affected Environmental Resources

According to the DEIA, the safety buffer zone is set at 100m from the site boundary of Wanqiao WWTP. It was confirmed in the DEIA that there were no sensitive receivers within the safety buffer zone. It was observed during the site visit that there were no sensitive receivers nearby.

The process line of Wanqiao WWTP is built indoor and is equipped with deodorization unit, thereby reducing environmental impact to the surrounding area.

Occupational health and safety impacts

The EPC Contractor has health and safety policies and guidelines posted on site. According to the Monthly Construction Supervision Reports of Yinqiao and Wanqiao Subproject between October 2017 and December 2017, weekly safety inspections were being carried out on site. There was one safety incident early in the construction stage. CWE has conducted investigation to determine the circumstances and causes of the incident and come up with measures to avoid similar incident happening again in the future.

According to the Plant Manager, operation stage emergency response plan and contingency for environmental incidents will be prepared and trained prior to the commencement of commercial operation. Construction stage emergency response plan was in place.

Information disclosure, consultation and participation

In July 2015, the consulting agency for Social Stability Risk Assessment conducted household interview, bureaus interview and questionnaire in project areas. In August 2015, the DEIA approval was issued on Dali EPB’s website for public inspection.

4.3.2. Environmental Management Plan

EMP and Mitigation Measures

In general, it was observed during the site visit that construction stage of the subproject has implemented most of the requirements stated in the EMP. However, air quality and noise monitoring reports were not prepared and provided for the Consultant’s review.

According to the Plant Manager, during the operation stage, regular monitoring events for the effluent quality will be conducted by qualified third parties in addition to online monitoring. Air quality and odour monitoring will also be conducted regularly. In addition, as mitigation measures required in the EMP would be implemented, operation stage of the subproject appear to be in line with the EMP.

Subproject’s Contingency and Emergency Response Plan

According to the Plant Manager, operation stage emergency response plan and contingency plan for environmental incidents will be prepared and trained prior to the commencement of commercial operation. The operation stage emergency response plan and contingency plan for environmental incidents of Yinqiao and Wanqiao Subproject will be prepared by referencing those prepared for Shuanglan WWTP, which its construction progress is slightly more advanced. Construction stage emergency response plan was in place.

Other Supplemental Plans and Environmentally Related Plans

For social audit of the subproject, refer to Attachment 3 of this IESE.

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Site Visit Photo Log

Outlook of Wanqiao WWTP. Outlook of Wanqiao WWTP.

Outlook of Wanqiao WWTP. Safety Instructions and Signboards On Site.

Safety Warning Signs On Site. Construction workers equipped with PPE installing the odour extraction and air ventilation ducts in the Wastewater Treatment Building.

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Extraction of Groundwater Seepage During Sedimentation tanks for groundwater seepage and Construction. construction wastewater collected before being reused for construction or providing to local farmers for irrigation use.

Primary Treatment of Wanqiao WWTP Secondary Treatment of Wanqiao WWTP

Tertiary Treatment of Wanqiao WWTP Deodorization Unit in the Wastewater Treatment Building

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Zuoyi Reservoir for Treated Wastewater shared Signboard by Zuoyi Reservoir for Treated between Xizhou WWTP and Wanqiao WWTP. Wastewater prohibiting people from swimming or fishing in it.

Outlook of Gusheng Village Influent Booster Integrated prefabricated wastewater booster pump Pumping Station

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5. Subproject 5: Dali Town Area Lake Basin Wastewater Interception

The Consultant conducted a site visit to Subproject 5: Dali Town Area Lake Basin Wastewater Interception (“Dali Town Subproject””) on 29-31 January 2018. The due diligence team interviewed the Project Manager of Subproject 5 and Subproject 6, Mr. Haidao SHI, and his team. Site visit photo log can be found at the end of this section.

5.1. Location

Dali Town WWTP is the fifth subproject of the Dali Erhai Lake Basin Wastewater Interception Project. It is located in the Dali Old Town of Dali City, southwestern bank of Erhai Lake, Dali City, Yunnan province. This subproject would mainly collect wastewater from the residential and commercial properties in the southern part of the Yinqiao Town and the majority of Dali Old Town area with an estimated service population of 100,000 and a long term estimate of 180,000 by 2050. Subproject’s components are shown in Figure 6.

5.2. Subproject Description

The Dali Town Subproject comprises Dali Old Town Wastewater Treatment Plant (“Dali Town WWTP”) and a sewage pipeline network (including one pumping station) of approximately 40.92km. The design of the subproject was commenced in October 2015 and the construction in April 2016. The construction was underway at the time of visit with the sewage pipeline network substantially completed.

It is expected the construction of phase 1 WWTP would be completed by April 2018 and commence trial operation in May 2018. The WWTP was expected to enter commercial operation by October 2018. The construction of the pipeline network was completed in January 2018. The schedule of the design and construction of Phase 2 depends on the future demand of the WWTP.

Dali Town WWTP

The WWTP occupies 4.04 hectare of land. The Dali Town WWTP has a design capacity of 20,000 m3/day by 2018 (phase 1) and a planned long term total capacity (phase 2) of 40,000m3/day by 2050.

Caicun Influent Booster Pumping Station

One influent booster pumping station designed with 1,311 m3/d of pumping capacity during dry season and 383 m3/h or 9,200 m3/d during wet season. Depending on the population growth and wastewater quantity flowing through Caicun Influent Booster Pumping Station, in the long run, its designed pumping capacity during dry season could be increased to 7,600 m3/d.

Riverside Wastewater Interception Pipelines

21.29 km of wastewater interception pipelines along multiple creeks in the Dali Town Subproject Area.

Wastewater Sump Tanks

Two wastewater sump tanks where one of the tanks was constructed at the Caicun Influent Booster Pumping Station, while the other one was situated inside the Dali Town WWTP. Their designed capacities are 3,800 m3/d and 8,100 m3/d respectively.

Lake Basin Wastewater Interception Pipelines

10.68 km of wastewater interception pipelines along the southwestern bank of Erhai Lake, starting from the southern shore of Mei Creek to the southern bank of Mocan creek, where the Dali Town WWTP locates.

Effluent Discharge Pipelines

5.92 km of effluent discharge pipelines discharging treated wastewater to the existing Dali Town South Reservoir for irrigation use.

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Figure 6 Location Map of the Dali Town Subproject’s Components

Starting Point of Dali Town Subproject Interception Pipelines

Dali Town WWTP and Ending Point of Dali Town Subproject Wastewater Interception Pipelines

Planned Village WWT Station (Non-CWE Project) Source: Preliminary Design Report of Dali Town Subproject, 2016

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5.3. Environment

5.3.1. Environmental Assessment

DEIA and EMP

A Full-Scale DEIA was conducted by the government for the overall Dali Erhai Lake Basin Wastewater Interception Project, covering all six subprojects. The DEIA was approved on 1 September 2015 by Dali EPB. A subsequent Simplified DEIA was conducted for the Subproject 5: Dali Town Area Lake Basin Wastewater Interception. The DEIA Report was prepared in August 2016, and subsequently approved by the Dali EPB on 3 November 2016.

A proposed environmental monitoring plan was proposed in the Simplified DEIA. According to Mr. Shi (the Plant Manager), the subproject company will employ third parties to conduct regular on site environmental monitoring for the Dali Town WWTP during operation phase.

Site Information

Dali Town WWTP is designed to use Cyclic Activated Sludge Technology (CAST) and comprises of the following wastewater treatment systems:

 Coarse screen  Fine screen  Aerated Grit Chambers  Modified A2/O (CAST)  High-rate sedimentation tank  UV disinfection

Treated effluent is designed to be discharge to an existing irrigation reservoir in the Dali Old Town. All sludge produced at Dali Town WWTP is designed to be dewatered at its sludge dewatering room to less than 80% water content, before it is transferred to a planned third-party Dali City Sludge Integrated Utilization Centre for further sludge dewatering and subsequently to be co-incinerated with municipal solid waste.

Dali Town WWTP will be equipped with a biological odour removal system that treats the extracted air from the screening area and sludge dewatering plant room before being discharged into the atmosphere.

Caicun Influent Booster Pumping Station comprises of the following components:

 Coarse screen  Integrated prefabricated wastewater booster pump  Wastewater sump tank

Sludge produced at the Caicun Influent Booster Pumping Station will be delivered and dewatered at the Dali Town WWTP. The station is equipped with an activated carbon odour removal system that treats the extracted air from the wastewater sump tank before being discharged into the atmosphere.

Status of Compliance with Local, National and Regulatory Requirements

The Subproject was approved by Dali City Development and Reform Commission on 11 May 2016, the DEIA approved by Dali EPB in November 2016 and the construction permit obtained from Dali City Housing and Urban Rural Construction Bureau on 28 February 2017.

As of the time of visit, construction of the wastewater pipeline network has been completed while the Dali Town WWTP was under construction with most civil works completed. The plant is planned to enter trial operation in May 2018, with environmental acceptance tests and application of discharge permit followed. It is expected that the Dali Town WWTP will commence commercial operation in October 2018.

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The potential environmental impacts of the construction and operation of Dali Town WWTP were identified and are required to comply with the following standards:

Construction Stage

 Air and Odour: Ambient air quality in the vicinity of the site should comply with Class II of “Ambient Air Quality Standards (GB3095-2012)”. Air emission on site during construction stage should comply with Table 2 Class II of “Integrated Emission Standards of Air Pollutants (GB16297-1996)”;

 Water: Surface runoff and groundwater discharge from the construction site should be treated via sedimentation treatment and meet Class I of “Integrated Wastewater Discharge Standards (GB8978-1996)” before discharging to existing sewage network. All wastewater generated from the construction site should be collected and reused on-site after treatment. Domestic wastewater will be stored in septic tank and collected by licensed collector ;

 Noise: Ambient noise level in the vicinity of the site should comply with “Environmental Quality Standard for Noise (GB3096-2008)”. On site, noise level should comply with “Emission Standard of Environment Noise for Boundary of Construction Site (GB12523-2011)”; and

 Solid Waste and Construction Waste: Handling and disposal of general refuse should comply with “Standard for Pollution Control on the Landfill Site of Municipal Solid Waste (GB16889- 2008)”.

Operation Stage

 Air and Odour: Ambient air quality in the vicinity of the site should comply with “Integrated Emission Standards of Air Pollutants (GB16297-1996)”. Air Emission should comply with Class II in Table 4 of “Municipal Wastewater Treatment Plant Pollutant Discharge Standards (GB18918-2002)”;

 Water: Effluent discharge to the reservoir should comply indicators under Class IA of “Municipal Wastewater Treatment Plant Pollutant Discharge Standards (GB18918-2002)”. “Standards for irrigation water quality (GB5084-2005)” should also be observed if the treated wastewater will be used by local farmers for irrigation;

 Noise: Ambient noise level in the vicinity of the site should comply with Class II of “Noise Limit of Industrial Enterprises (GB12348-2008)”; and

 Solid Waste and Sludge: Handling and disposal of general refuse and sludge should comply with “Standard for Pollution Control on the Landfill Site of Municipal Solid Waste (GB16889-2008)”. Disposal of sludge should comply with “Municipal Wastewater Treatment Plant Pollutant Discharge Standards (GB18918-2002)”.

Status of Compliance with Applicable World Bank and Other Requirements and International Standards

No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) Regulatory Permits 1. Environmental . Management Measures Environmental acceptance of completed facilities Acceptance on Environmental has not been conducted yet, as the project was Acceptance of Completed still under construction as of the date of site visit. Construction Projects Gaps identified: CWE should apply for the environmental acceptance tests as soon as construction of the subproject (including testing and commissioning procedures and trial operation) is completed.

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) 2. Operation Permits . Environmental Protection Dali Town subproject has not obtained discharge and Licenses Law of PRC permit yet as the environmental acceptance tests . Water Pollution have not been conducted since the construction Protection Law was still underway as of site visit. . Discharge Standard of Gaps identified: Pollutants for Municipal Wastewater Treatment CWE should apply the discharge permit after Plant (GB 18918-2002) passing the environmental acceptance tests. . Environmental Quality Standards for Surface Water (GB3838-2002) Identification of Risks and Impacts 3. Environmental . Environmental Impact A Full-Scale DEIA was conducted for the overall Impact Assessment Assessment Law of PRC Dali Erhai Project, covering all six subprojects. . ADB SPS 2009 for The DEIA was approved on 1 September 2015 by environment Category B Dali EPB. A Simplified DEIA for this subproject projects was prepared in August 2016 and the DEIA approval was obtained from Dali EPB on November 2016. CWE has prepared an IEE in accordance with ADB SPS. Gaps identified: None. 4. Baseline Data Environmental and social-economic baseline data Collection of the Project area was collected through surveys, monitoring records and relevant documents for the preparation of the Project DEIA. Sufficient data was presented in the Project DEIA. Gaps identified: None. 5. Associated Facilities Associated facilities including booster pump stations and pipeline under this subproject was assessed in both the Project DEIA and subproject Simplified DEIA. Gaps identified: None. 6. Impact Methodology The Project DEIA and Subproject DEIA were and Mitigating conducted based on relevant laws and Measures regulations in the PRC, including the “Environmental Impact Assessment Law” and “Classified Administration Catalogue of DEIAs for Construction Projects”. Mitigation measures were provided in both Project DEIA and Subproject DEIA. Gaps identified: None. Environmental Management and Monitoring Plans 7. Air emissions . Air Pollution Prevention Construction Phase: (odour, greenhouse and Control Law of PRC A third party construction supervision consultant, gases and dust) Yunnan Xindi Construction Consultation

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) . Ambient Air Quality Supervision Limited, has been engaged for Standards (GB3095- construction supervision and environmental 2012) monitoring during construction. As part of the . Integrated Emission DEIA requirement, the consultant is required to Standards of Air ensure mitigation measures of environmental Pollutants (GB16297- impacts are in place. According to the 1996) Construction Monitoring Report from the . Municipal Wastewater supervision consultant, mitigation measures were Treatment Plant Pollutant in place but no regular air quality monitoring was Discharge Standards conducted. (GB18918-2002) Operation Phase: . ADB SPS 2009 . WBG EHS Guidelines According to the environmental monitoring plan in the DEIA, monitoring of air quality on 4 sides of the WWTP boundary and at the booster pumping station should be conducted during environmental acceptance only. According to our interview onsite, air quality monitoring will be conducted regularly to ensure compliance with the air quality standards. Biological deodorization units will be installed at Dali Town WWTP and activated carbon filters will be installed at Caicun Influent Booster Pumping Station to treat the odorous air extracted. Gaps identified: CWE or its contractor shall carry out regular air quality monitoring during the construction phase. 8. Wastewater . Water Pollution Construction Phase: discharge Prevention and Control Based on our on-site observations, sedimentation Law of PRC systems for construction wastewater and . Integrated Wastewater groundwater discharge during excavation were Discharge Standard appeared to be in place and it is reported that (GB8978-1996) spot checks were carried out by the local EPB to . Discharge Standard for ensu Municipal Wastewater re the plant’s effluent discharge is in compliance with the national standards, but CWE Treatment Plant do not have access to (GB18918-2002) EPB’s monitoring records . . Environmental Quality for the Consultant’s review Standards for Surface Operation Phase: Water (GB3838-2002) According to the Simplified DEIA, the discharged . Standards for Irrigation effluent is required to meet the standards set in Water Quality (GB5084- 2005) the 1A of Table 1 of “Discharge Standard for . ADB SPS 2009 Municipal Wastewater Treatment Plant” before . WBG EHS Guidelines discharge to the reservoir. According to our online interview, the effluent quality of the WWTP will be monitored at the water outlet of the plant area. Local EPB will also install a separate online monitoring system will also be used to monitor the effluent quality. Gaps identified: None. 9. Noise impact . PRC Law for the Construction Phase: Prevention and Control of According to the Simplified DEIA, noise Environmental Noise generated by the Project has to comply with Pollution GB12523-2011 during construction phase and

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) . Environmental Quality Class II standard of GB12348-2008 during Standard for Noise operation phase. As part of the DEIA (GB3096-2008) requirement, the construction supervision . Emission Standard of consultant is required to ensure noise mitigation Environment Noise for measures are in place but no regular noise Boundary of Construction monitoring was conducted. Site (GB12523-2011) Operation Phase: . Emission Standard of Industrial Enterprises According to the environmental monitoring plan in Noise (GB12348-2008) the DEIA, monitoring of noise on 4 sides of the WWTP boundary and at the booster pumping station should be conducted during environmental acceptance only. According to the Project Manager, noise monitoring will be conducted regularly by third parties during operation. Gaps identified: CWE or its contractor shall prepare noise monitoring report and records during the construction phase. 10. Waste management . Law of the People's According to the Simplified DEIA and onsite (including municipal Republic of China on the interview, general refuse produced at the plant solid waste and Prevention and Control of during construction and operation stages is sludge handling) Environmental Pollution collected by the city’s environmental sanitation Caused by Solid Wastes department. (2015) Construction waste and excavated materials is . Regulation on being reused onsite if possible, while the Construction Waste remaining should be disposed of at public fills. Management in Urban Area (2005) Sludge generated from the treatment process will . Disposal of Sludge from be dewatered to below 80% water content, and Municipal Wastewater delivered to a third-party sludge treatment facility. Treatment Plant – Quality Gaps identified: of Sludge for Co- landfilling (GB/T23485- None. 2009) . WBG EHS Guidelines 11. Hazardous materials . Catalogue of Hazardous The management procedures of hazardous (use of chemicals) Chemicals materials are not mentioned in the EMP of DEIA. . Measures for the Hazardous materials/waste (if any) should be Prevention and Control of properly stored, and hazardous waste should be Environment Pollution by handled by qualified waste collection companies Discarded Dangerous for proper disposal. Chemicals Gaps identified: . ADB SPS 2009 . WBG EHS Guidelines It is recommended a hazardous materials/waste management plan shall be prepared for the operation unit and training shall be provided to the operation staff. 12. Occupational Health . PRC Law on Work Safety Health and safety policies of the contractor are in & Safety (2014) place. Health and safety trainings have been . Technology Code of provided to all site workers. Poison Control for During the site visit, it was observed that PPEs Municipal Wastewater provided to site workers appeared to be Treatment Plant AQ reasonable. Warning signs were displayed 4209-2010 throughout the construction area, listing out the . ADB SPS 2009 potential hazard and required protection . WBG EHS Guidelines equipment. However, it was observed that safety

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) harnesses were not used by some workers working on elevation platforms. Gaps identified: In general, the occupational health and safety of the facility is in line with industry standard in China and ILO core standards. PPEs were provided to workers for free. It’s recommended the safety harness shall be used by all staff working at height. The contractor shall also ensure the construction to be kept clean and tidy to avoid any safety hazard. 13. Community Health & . Environmental Protection Based on the DEIA Report, the safety buffer zone Safety Law of PRC is set at 100m from the site boundary. It was . Standards for the observed during the site visit that there were no Construction of Municipal sensitive receivers located within the buffer zone. Wastewater Treatment According to CWE and Monthly Construction Project CJJ-01 Supervision Reports, there were no issues / . ADB SPS 2009 accidents related to the community during the . WBG EHS Guidelines construction phase. All CWE projects funded by ADB will comply with “Consultation and Participation” requirements stated in the Company ESMS. A stakeholder engagement plan will be prepared to ensure continuous meetings / engagement with all stakeholders. Gaps identified: CWE shall ensure community health and safety requirements in the DEIA Report is complied with, and is included in the stakeholder engagement plan. CWE shall also ensure that the Company ESMS is implemented properly. 14. Application and . ADB SPS 2009 A corporate-wide ESMS will be implemented, adoption of . WBG EHS Guidelines covering topics such as incidents reporting, safety corporate EHS training, regular inspections, appraisals and policies and meetings, etc. practices ESMS training will be provided to the environmental and safety specialists, and subsequently to all employees in the project companies. Gaps identified: It is recommended that CWE implement an Operation Manual that incorporates all EHS requirements specific to the subproject. 15. Environmental . ADB SPS 2009 Environmental management plans of the Management Plan construction contractor are in place. (including According to the Plant Manager, regular contractors / sub- environmental monitoring will be conducted contractors’ during operational phase. However, no dedicated construction / site operation environmental plan was observed specific EMP) during the site visit. Gaps identified:

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) It is recommended that CWE shall incorporate the environmental mitigation measures into the Operation Manual of Dali Town Subproject before commercial operation commences. 16. Contingency and . Emergency Response According to the Plant Manager, construction and Emergency Law of the People's operation stage emergency response plan for Response Plan Republic of China Dali Town WWTP is in place, which covers topics . ADB SPS 2009 such as power shortage, system failure and other . WBG EHS Guidelines environmental incidents, etc. Regular drills and inspections are indicated in the emergency response plans. Gaps identified: None. 17. Organizational . ADB SPS 2009 The construction contractor has Safety Officer Capacity and and Environmental Protection Committee onsite. Competency EHS guidelines are also provided to their construction workers. During operation, there will be an EHS Officer overseeing the Project, while Operation Manager and staff will also be responsible for EHS matters. A corporate-wide ESMS will be implemented, and training will be provided to the relevant employees of the Project company. Gaps identified: It is recommended that CWE implement an Operation Manual that incorporates all EHS requirements specific to the subproject. 18. Staff Certifications . Provisions on Safety According to the Plant Manager, operation staff is and Trainings Training of Production being recruited and will be trained in other CWE and Operation Entities facilities before commencement of work. . ADB SPS 2009 Gaps identified: . WBG EHS Guidelines As the subproject was still under construction, EHS guidelines were not yet available. These documents should be ready, and provide trainings to all site staff prior to commencement of commercial operation. Training records should also be kept on site. Stakeholder Engagement 19. Community . Environmental Protection In July 2015, the consulting agency for Social Consultation Law of PRC Stability Risk Assessment conducted household . Guideline on Public interview, bureaus interview and questionnaire in Participation in project areas. 172 persons were interviewed to Environmental Protection collect their concerns, which included 121 men . ADB SPS 2009 and 51 women. Two rounds of information disclosure were conducted in June 2015 and August 2015 respectively. Project information, potential environmental impacts and mitigation measures were displayed at the affected townships and villages, as well as Dali EPB’s website for public inspection.

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) Dali Erhai Project conducted public consultation exercise through distributing questionnaires and conducting interviews to organizations and individuals located in the affected area. 301 individuals and 43 organizations participated in the consultation exercise. The results of the exercise, as well as the issues raised by the participants were recorded in the Project DEIA report. The result of the exercise shows that public supports the development of Dali Erhai Project. All CWE projects funded by ADB will comply with “Consultation and Participation” requirements stated in the Company ESMS. A stakeholder engagement plan will be prepared to ensure continuous meetings / engagement with all stakeholders. All meetings / engagement activities (e.g. public engagement, student tour) will also be properly documented. Gaps identified: None. 20. Stakeholder . ADB SPS 2009 Organization and individual stakeholders were Engagement Plan . Guideline on Public reached out during the public consultation Participation in exercise, in which their concerns and opinions on Environmental Protection the Project were recorded and addressed in the Project DEIA report. A stakeholder engagement plan for the operation phase was not presented. Gaps identified: A project-specific stakeholder engagement plan shall be developed as part of the operation plan in accordance with CWE’s ESMS system. 21. Grievance Redress . ADB SPS 2009 Grievance redress mechanism was established in Mechanism order to address the public’s concern in a structured way. No adverse comment was recorded. Gaps identified: None.

Application of Corporate EHS and Policies, Practices and Management, Staff Training and Supervision by Subproject

Some of the newly hired operation staff are being trained under the company’s training programme on topics such as safety operation, emergency response procedures, and management policies, etc. PPEs are also provided to employees working on site. PPE were also provided to all personnel entering the construction area.

Implementation of EHS Measures by Subproject

CWE will implement a corporate ESMS that highlights its EHS policies and practices. All the subprojects, including Dali Town WWTP, will have to follow the requirements set out in the ESMS, including setting up the environmental and social management committee and fulfilling the environmental and social management requirements during different phases of the project (e.g. feasibility study and bidding, preliminary design, construction and operation, etc.). Operators and contractors are expected to adhere to the company’s ESMS and emergency response plan.

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Relevant Environmental Issues, Impacts, Risks and Affected Environmental Resources

The buffer zone of wastewater treatment plant is 100m from the site boundary. According to the DEIA report, no sensitive receiver is present within the buffer zone. Site visit confirmed there was no sensitive receiver present in the adjacent area.

The wastewater treatment plant will be equipped with deodorization unit, thereby reducing environmental impact to the surrounding area. The odour level at site boundary shall meet Grade 2 of GB18918-2002 and the noise level at site shall meet Grade 2 of GB12348-2008.

Occupational health and safety impacts

The construction Contractor has health and safety policies in place and guidelines posted on site. According to the Monthly Construction Supervision Report of Dali Town Subproject between October 2017 and December 2017, weekly safety inspections were being carried out on site. There were no safety incidents since the start of construction.

According to CWE, safety training will be provided to all operation staff before the commencement of the operation. An explosive gas monitoring and alarm system will be installed throughout the WWTP.

Information disclosure, consultation and participation

In July 2015, the consulting agency for Social Stability Risk Assessment conducted household interview, bureaus interview and questionnaire in project areas. In August 2015, the DEIA approval was issued on Dali EPB’s website for public inspection.

5.3.2. Environmental Management Plan

EMP and Mitigation Measures

In general, it was observed during the site visit that construction stage of the subproject has implemented most of the requirements stated in the EMP. However, air quality and noise monitoring shall also be conducted and recorded in accordance with the EMP.

According to the Plant Manager, monitoring of the construction wastewater during the construction phase are conducted by the local EPB and there was no record of conviction or penalty.

During operation phase, air quality, odour and noise monitoring will be conducted regularly. Effluent quality will be monitored by both CWE and local EPB through their respective online monitoring system.

Subproject’s Contingency and Emergency Response Plan

According to the Plant Manager, construction and operation stage emergency response plan for Dali Town WWTP is in place, which covers topics such as power shortage, system failure and other environmental incidents, etc.

Other Supplemental Plans and Environmentally Related Plans

For social audit of the subproject, refer to Attachment 3 of this IESE.

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Site Visit Photo Log

Outlook of Dali Town WWTP under construction Safety information /warning signs on site

Inlet of the sedimentation tank for construction Sedimentation tank for collected groundwater groundwater discharge

Construction workers with Personal Protection Construction worker working at height without Equipment (PPE) safety harness

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Some construction waste not stored in designated Area with ponteitial falling hazards fenced off area with potential tripp hazards

Construction materials scattered on site with Flammable gas stored in specific area with proper potential tripping hazards signage

Safety passage for entering the building in Dali Old Town Irrigation Reservoir for Treated construction Wastewater

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Aerial view of the Surroundings of Dali Town Outlook of Caicun Influent Booster Pumping WWTP Area Station

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6. Subproject 6: Xiaguan North Area Lake Basin Wastewater Interception

The Consultant conducted site visit to Xiaguan North Area Lake Basin Wastewater Interception (“Xiaguan Subproject”) on 29 January 2018. The due diligence team interviewed the Project Manager of Subproject 5 and Subproject 6, Mr. Haidao SHI, and his team. Site visit photo log can be found at the end of this section.

6.1. Location

The Xiaguan Subproject is the last subproject of the Dali Erhai Basin Wastewater Interception Project. It is located south-western bank of Erhai Lake, Dali City, Yunnan Province.

The Xiaguan Subproject’s service area is bounded by the southern bank of the Mocan Creek in the north, northern bank of the Yangnan Creek in the south, serving part of the Dali Old Town area and part of the Xiaguan North area with an area of 11.9.km2 and a population of about 140,400 by 2050.

6.2. Subproject Description

The Xiaguan Subproject is the only subproject under the Dali Erhai Project only comprises of a sewage pipeline network and no WWTP. All wastewater collected and intercepted through the system will be diverted to the Dali 1st WWTP1 for processing.

The design and construction of the subproject was commenced in October 2015 in April 2016. Construction Permit for the piping network was obtained on 28 February 2017. The Subproject’s pipelines are under construction during the site visit. It was anticipated that the Subproject would commence by October 2018.

The Xiaguan Subproject includes the following components:

Lake Basin Wastewater Interception Channels

2,607m of wastewater interception channel along the south-western of Erhai Lake, starting from Yangnan creek running south to the east side of Xingsheng Bridge, connecting to the existing interception channels in the south.

Lake Basin Wastewater Interception Pipelines

5,871m of wastewater interception pipelines along the north-eastern coast of Erhai Lake, connecting the Dali Town WWTP and starting point of this Subproject’s wastewater interception channels.

Riverside Wastewater Interception Pipelines

5.7 km of wastewater interception pipelines along Yangnan Creek and Tingming Creek.

Location map of the Xiuaguan Subproject components are shown in Figure 7.

1 Dali 1st WWTP is an existing Wastewater Project Plant operated by third-party.

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Figure 7 Location of Xiaguan Subproject Components

Dali Town WWTP (Subproject 5)

Dali City WWTP (Non-CWE Project)

Existing Village WWT Station

Source: Preliminary Design Report of Xiaguan Subproject, 2016

6.3. Environment

6.3.1. Environmental Assessment

DEIA and EMP

A Full-Scale DEIA was conducted by the government for the overall Dali Erhai Lake Basin Wastewater Interception Project, covering all six subprojects. The DEIA was approved on 1 September 2015 by Dali EPB. A Simplified DEIA was conducted for the Subproject 6: Xiaguan North Area Lake Basin

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Wastewater Interception. The Simplified DEIA was prepared in August 2016, and subsequently approved by the Dali EPB) on 3 November 2016.

Status of Compliance with Local, National and Regulatory Requirements

The subrpoject was approved by Dali City Development and Reform Commission on 11 May 2016, the DEIA was approved by Dali City EPB in November 2016 and the construction permit was obtained from Dali City Housing and Urban Rural Construction Bureau on 28 February 2017.

As of the time of visit, construction of the wastewater pipeline network was underway. The wastewater pipelines network was planned to enter trial operation in May 2018, with environmental acceptance tests followed. It is expected that this subproject will commence commercial operation in October 2018.

As this Subproject only comprises of construction pipeline network, the environmental impact is limited compared to other subprojects. The potential environmental impacts of the construction and operation of Dali Town WWTP are identified and are required to comply with the following standards:

Construction Stage

 Air and Odour: Ambient air quality in the vicinity of the site should comply with Class II of “Ambient Air Quality Standards (GB3095-2012)”. Air emission on site during construction stage should comply with Table 2 Class II of “Integrated Emission Standards of Air Pollutants (GB16297-1996)”;

 Water: All wastewater generated from the construction site should be collected and reused on-site after treatment. Domestic wastewater will be collected in the septic tank and collected by licensed collector ;

 Noise: Ambient noise level in the vicinity of the site should comply with “Environmental Quality Standard for Noise (GB3096-2008)”. On site, noise level should comply with “Emission Standard of Environment Noise for Boundary of Construction Site (GB12523-2011)” during construction stage; and

 Solid Waste and Construction Waste: Handling and disposal of general refuse should comply with “Standard for Pollution Control on the Landfill Site of Municipal Solid Waste (GB16889- 2008)”.

Operation Stage

It is expected a wastewater pipeline network will generate minimal environmental impacts during operation.

Status of Compliance with Applicable World Bank and Other Requirements and International Standards

No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) Regulatory Permits 1. Environmental . Management Measures Environmental acceptance of completed facilities Acceptance on Environmental has not been conducted yet, as the project was Acceptance of Completed still under construction as of the date of site visit. Construction Projects Gaps identified: CWE should apply for the environmental acceptance tests as soon as construction of the subproject is completed.

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) 2. Operation Permits . Environmental Protection No local operation permit or license is required and Licenses Law of PRC for the wastewater treatment network alone. . Water Pollution Gaps identified: Protection Law None. Identification of Risks and Impacts 3. Environmental . Environmental Impact A Full-Scale DEIA was conducted for the overall Impact Assessment Assessment Law of PRC Dali Erhai Project, covering all six subprojects. . ADB SPS 2009 for The DEIA was approved on 1 September 2015 environment Category B by Dali EPB. A Simplified DEIA for this subproject projects was prepared in August 2016 and the DEIA approval was obtained from Dali EPB in November 2016. CWE has prepared an IEE in accordance with ADB SPS. Gaps identified: None. 4. Baseline Data Environmental and social-economic baseline data Collection of the Project area was collected through surveys, monitoring records and relevant documents for the preparation of the Project DEIA. Sufficient data was presented in the Project DEIA. Gaps identified: None. 5. Associated Facilities Environmental impacts of the pipeline networks and the associated facilities were assessed in both the Project DEIA and Subproject DEIA. Gaps identified: None. 6. Impact Methodology The Project DEIA and Subproject DEIA were and Mitigating conducted based on relevant laws and Measures regulations in the PRC, including the “Environmental Impact Assessment Law” and “Classified Administration Catalogue of DEIAs for Construction Projects”. Mitigation measures were provided in both Project DEIA and Subproject DEIA. Gaps identified: None. Environmental Management and Monitoring Plans 7. Air emissions . Air Pollution Prevention A third party construction supervision consultant, (odour, greenhouse and Control Law of PRC Yunnan Xindi Construction Consultation gases and dust) . Ambient Air Quality Supervision Limited, has been engaged for Standards (GB3095- construction supervision and environmental 2012) monitoring during construction. As part of the . Integrated Emission DEIA requirement, the consultant is required to Standards of Air ensure mitigation measures of environmental Pollutants (GB16297- impacts are in place. However, during our site 1996) visit, it was noted that no dust suppression measures was implemented out during

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) . Municipal Wastewater excavation process. No air quality monitoring Treatment Plant Pollutant report was prepared and no air quality monitoring Discharge Standards data was made available to the Consultant. (GB18918-2002) Gaps identified: . ADB SPS 2009 . WBG EHS Guidelines It is recommended proper dust suppression measure should be implemented during excavation. Air quality monitoring report shall be prepared during the construction phase. 8. Wastewater . Water Pollution Construction Phase: discharge Prevention and Control According to the DEIA report Groundwater Law of PRC discharge and construction wastewater will be . Integrated Wastewater collected and reused on site if possible. All Discharge Standard wastewater will go through sedimentation before (GB8978-1996) discharging to existing wastewater network. No . Environmental Quality noise monitoring report was prepared and no Standards for Surface noise quality monitoring data was made available Water (GB3838-2002) to the Consultant. . ADB SPS 2009 . WBG EHS Guidelines Gaps identified: None 9. Noise impact . PRC Law for the Construction Phase: Prevention and Control of According to the Simplified DEIA, noise Environmental Noise generated by the Project has to comply with Pollution GB12523-2011 during construction phase. As . Environmental Quality part of the DEIA requirement, the construction Standard for Noise supervision consultant is required to ensure noise (GB3096-2008) mitigation measures are in place. No noise . Emission Standard of monitoring report was prepared and no noise Environment Noise for monitoring data was made available to the Boundary of Construction Consultant. Site (GB12523-2011) Gaps identified:

Noise monitoring report shall be prepared during the construction phase. 10. Waste management . Law of the People's According to the Simplified DEIA and onsite (including municipal Republic of China on the interview, general refuse produced during solid waste and Prevention and Control of construction and operation stages is collected by sludge handling) Environmental Pollution the city’s environmental sanitation department. Caused by Solid Wastes Construction waste and excavated materials is (2015) being reused onsite if possible, while the . Regulation on remaining should be disposed of at public fills. Construction Waste Management in Urban Gaps identified: Area (2005) None. . Disposal of Sludge from Municipal Wastewater Treatment Plant – Quality of Sludge for Co- landfilling (GB/T23485- 2009) . WBG EHS Guidelines 11. Hazardous materials . Catalogue of Hazardous The management procedures of hazardous (use of chemicals) Chemicals materials are not mentioned in the Simplified . Measures for the DEIA and Environmental Management Plan of Prevention and Control of the subproject. It is estimated there will be little to Environment Pollution by

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) Discarded Dangerous no use of hazardous materials on site during the Chemicals construction of the pipelines. . ADB SPS 2009 Gaps identified: . WBG EHS Guidelines None. 12. Occupational Health . PRC Law on Work Safety Health and safety policies of the contractor are in & Safety (2014) place. Health and safety trainings have been . Technology Code of provided to all site workers. Poison Control for During the site visit, it was observed that PPEs Municipal Wastewater were not fully-equipped by some of the workers. Treatment Plant AQ 4209-2010 Gaps identified: . ADB SPS 2009 In general, the occupational health and safety of . WBG EHS Guidelines the subproject is in line with industry standard in PRC and ILO core standards. PPEs were provided to workers for free. The Contractor shall ensure PPEs to be worn at all times in the construction area. 13. Community Health & . Environmental Protection As there is no operation impact, the impacts for Safety Law of PRC community health & safety is short-term and . ADB SPS 2009 limited. The construction area is properly fenced . WBG EHS Guidelines off from the public. According to CWE and Monthly Construction Supervision Reports, there were no issues / accidents related to the community during the construction phase. All CWE projects funded by ADB will comply with “Consultation and Participation” requirements stated in the Company ESMS. A stakeholder engagement plan will be prepared to ensure continuous meetings / engagement with all stakeholders. Gaps identified: CWE shall ensure community health and safety requirements in the DEIA Report is complied with, and is included in the stakeholder engagement plan. CWE shall also ensure that the Company ESMS is implemented properly. 14. Application and . ADB SPS 2009 A corporate-wide ESMS will be implemented, adoption of . WBG EHS Guidelines covering topics such as incidents reporting, corporate EHS safety training, regular inspections, appraisals policies and and meetings, etc. practices ESMS training will be provided to the environmental and safety specialists, and subsequently to all employees in the project companies. Gaps identified: It is recommended that CWE implement an Operation Manual that incorporates all EHS requirements specific to the subproject. 15. Environmental . ADB SPS 2009 Environmental management plans of the Management Plan construction contractor are in place. (including contractors / sub-

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) contractors’ Gaps identified: construction / site None. specific EMP) 16. Contingency and . Emergency Response According to the Plant Manager, operation stage Emergency Law of the People's emergency response plan and contingency plan Response Plan Republic of China for environmental incidents will be prepared and . ADB SPS 2009 trained prior to the commencement of commercial . WBG EHS Guidelines operation. The operation stage emergency response plan and contingency plan for environmental incidents of Xiaguan Subproject will be prepared by referencing those prepared for Shuanglan WWTP, which its construction progress is slightly more advanced. Construction stage emergency response plan was in place. Gaps identified: CWE shall establish operation stage emergency response plan before commercial operation commences. 17. Organizational . ADB SPS 2009 The construction contractor has Safety Officer Capacity and and Environmental Protection Committee onsite. Competency EHS guidelines are also provided to their construction workers. During operation, there will be an EHS Officer overseeing the Project, while Operation Manager and staff will also be responsible for EHS matters. A corporate-wide ESMS will be implemented, and training will be provided to the relevant employees of the Project company. Gaps identified: It is recommended that CWE implement an Operation Manual that incorporates all EHS requirements specific to the subproject. 18. Staff Certifications . Provisions on Safety According to the Plant Manager, operation staff is and Trainings Training of Production being recruited and will be trained before and Operation Entities commencement of work. . ADB SPS 2009 Gaps identified: . WBG EHS Guidelines As the subproject was still under construction, EHS guidelines were not yet available. These documents should be ready, and trainings to be provided to all site staff prior to commencement of commercial operation. Training records should also be kept on site. Stakeholder Engagement 19. Community . Environmental Protection In July 2015, the consulting agency for Social Consultation Law of PRC Stability Risk Assessment conducted household . Guideline on Public interview, bureaus interview and questionnaire in Participation in project areas. 172 persons were interviewed to Environmental Protection collect their concerns, which included 121 men . ADB SPS 2009 and 51 women. Two rounds of information disclosure were conducted in June 2015 and August 2015

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No. Concerned Item Relevant Regulation(s) Comments / Gaps Identified and/or Standard(s) respectively. project information, potential environmental impacts and mitigation measures were displayed at the affected townships and villages, as well as Dali EPB’s website for public inspection. Dali Erhai Project conducted public consultation exercise through distributing questionnaires and conducting interviews to organizations and individuals located in the affected area. 301 individuals and 43 organizations participated in the consultation exercise. The results of the exercise, as well as the issues raised by the participants were recorded in the Project DEIA report. The result of the exercise shows that public supports the development of Dali Erhai Project. All CWE projects funded by ADB will comply with “Consultation and Participation” requirements stated in the Company ESMS. A stakeholder engagement plan will be prepared to ensure continuous meetings / engagement with all stakeholders. All meetings / engagement activities (e.g. public engagement, student tour) will also be properly documented. Gaps identified: None. 20. Stakeholder . ADB SPS 2009 Organization and individual stakeholders were Engagement Plan . Guideline on Public reached out during the public consultation Participation in exercise, in which their concerns and opinions on Environmental Protection the Project were recorded and addressed in the . Project DEIA report. A stakeholder engagement plan for the operation phase was not presented. Gaps identified: A project-specific stakeholder engagement plan shall be developed as part of the operation plan in accordance with CWE’s ESMS system. 21. Grievance Redress . ADB SPS 2009 Grievance redress mechanism was established in Mechanism order to address the public’s concern in a structured way. No adverse comment was recorded. Gaps identified: None.

Application of Corporate EHS and Policies, Practices and Management, Staff Training and Supervision by Subproject

Some of the newly hired operation staff are being trained under the company’s training programme on topics such as safety operation, emergency response procedures, and management policies, etc. All newcomers will be trained before commencement of operation. PPEs were also provided to employees working on site but it was observed some personnel were not fully equipped with PPE. PPE were also provided to all personnel entering the construction area.

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Implementation of EHS Measures by Subproject

CWE will implement a corporate ESMS that highlights its EHS policies and practices. All the subprojects, including Dali Town WWTP, will have to follow the requirements set out in the ESMS, including setting up the environmental and social management committee and fulfilling the environmental and social management requirements during different phases of the project (e.g. feasibility study and bidding, preliminary design, construction and operation, etc.). Operators and contractors are expected to adhere to the company’s ESMS and emergency response plan.

Occupational health and safety impacts

The construction Contractor has health and safety policies in place. According to the Monthly Construction Supervision Report of Xiaguan Subproject between October 2017 and December 2017, weekly safety inspections were being carried out on site. There were no safety incidents since the start of construction.

According to CWE, safety training will be provided to all operation staff before the commencement of the operation and maintenance contract.

Information disclosure, consultation and participation

In July 2015, the consulting agency for Social Stability Risk Assessment conducted household interview, bureaus interview and questionnaire in project areas. In August 2015, the DEIA approval was issued on Dali EPB’s website for public inspection.

6.3.2. Environmental Management Plan

EMP and Mitigation Measures

In general, it was observed during the site visit that construction stage of the subproject has implemented most of the requirements stated in the EMP. However, air quality and noise monitoring reports and records shall also be prepared in accordance with the EMP.

According to the Plant Manager, there was no record of any record of violation of environmental requirement or penalties incurred as of site visit. However it was observed dust suppression measure was not properly implemented during the site visit.

Subproject’s Contingency and Emergency Response Plan

According to the Plant Manager, operation stage emergency response plan and contingency plan for environmental incidents will be prepared and trained prior to the commencement of commercial operation. The operation stage emergency response plan and contingency plan for environmental incidents of Xiaguan Subproject will be prepared by referencing those prepared for Shuanglan WWTP, which its construction progress is slightly more advanced. Construction stage emergency response plan was in place.

Other Supplemental Plans and Environmentally Related Plans

For social audit of the subproject, refer to Attachment 3 of this IESE.

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Site Visit Photo Log

Construction site for wastewater Site with pipelines installed pending on landscape interception pipeline restoration

Site staff with Helmet but not full PPE Excavation works without dust suppression

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D. Conclusion and Recommended Corrective Actions

In general, the environmental audit noted and considered that the subprojects under “Dali Erhai Lake Basin Wastewater Interception Project” are in most part in line with the industry practice as well as ADB SPS, World Bank and other requirements and international standards. Some relatively minor corrective actions are suggested and provided in Table 1 below.

Categorization of risks and impacts

These subprojects under “Dali Erhai Lake Basin Wastewater Interception Project” are proposed to be classified as Category B for environment as the environmental impacts are likely mitigatable and site-specific.

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Table 1 Proposed Corrective Action Plan

No. Concerned Description of Issue(s) Risk Suggested Corrective Action(s) Responsible Indicative Cost Suggested Unit* Party(ies)* Time Frame Environmental Management and Monitoring Plans 1. All Although certain mitigation measures were Medium It is recommended that an All ≤RMB50,000 per Ongoing during Subprojects appeared in place during the site visit, the environmental monitoring report shall be Subprojects subproject construction air and noise monitoring reports and records prepared in accordance with the EMP period for the construction phase were not for the construction period. prepared 2. All Some parts of the onsite stormwater Medium Construction waste in stormwater All Around 1 day of Ongoing during Subprojects channels were observed to be filled with channels should be removed to avoid Subprojects management time construction construction waste during the site visit. clogging the stormwater channels. per month period 3. All It was observed during the site visit that for Medium The stockpiled materials should be All ≤RMB50,000 per Ongoing during Subprojects the purpose of reusing, construction waste covered or compartmented to avoid Subprojects subproject construction and excavated materials were sorted into generation of dust. period inert and non-inert components and temporarily stockpiled on site. However, the stockpiled materials were not covered or compartmented to avoid generation of dust. 4. All It was observed that warning signs appear Medium Suggest putting up more warning signs All ≤RMB50,000 per Ongoing during Subprojects to be lacking in some areas, like the by the pits and tanks. Subprojects subproject construction biological treatment tank. period 5. All Equipment and materials were observed to Medium Construction sites should be tidied up to All ≤1 week of Ongoing during Subprojects be scattered around at construction sites, minimize potential hazards to workers. Subprojects management time construction which could cause potential hazards to period workers. 6. All It was observed during the site visit, safety Medium It is recommended CWE’s safety All Around 4 man-days Ongoing during Subprojects harnesses were not used by some of the personnel shall carry out spot checks on Subprojects of CWE’s safety construction Contractor’s workers working on elevation the construction site and schedule personnel per period platforms. The contractor shall also ensure periodic safety meetings with the month the construction site to be kept clean and contractor to ensure safety procedures tidy to avoid any safety hazard. are strictly followed.

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No. Concerned Description of Issue(s) Risk Suggested Corrective Action(s) Responsible Indicative Cost Suggested Unit* Party(ies)* Time Frame It was observed during the site visit, PPEs (including safety helmets) were not fully- equipped by some of the workers. 7. All The management procedures of hazardous Medium It is recommended a hazardous All ≤1-3 months of Before Subprojects materials are not mentioned in the EMP of materials/waste management plan shall Subprojects management time commencement DEIA. Hazardous materials/waste (if any) be prepared for the operation unit and of commercial should be properly stored, and hazardous training shall be provided to the operation waste should be handled by qualified waste operation staff. collection companies for proper disposal. 8. Yinqiao & There was one safety incident early in the Medium It is recommended CWE’s safety All Around 4 man-days Ongoing during Wanqiao construction stage. CWE has conducted personnel shall carry out spot checks on Subprojects of CWE’s safety construction investigation to determine the circumstances the construction site and schedule personnel per period and causes of the incident and come up with periodic safety meetings with the month measures to avoid similar incident contractor to ensure the required safety happening again in the future. measures are implemented. 9. Yinqiao & In addition to No.3-5 above, a few key safety Medium It is recommended CWE’s safety All Around 4 man-days Ongoing during Wanqiao issues were observed, including: personnel shall carry out spot checks on Subprojects of CWE’s safety construction the construction site and schedule personnel per period . Some elevated platforms for construction periodic safety meetings with the month works were not properly set up; contractor to ensure safety procedures . Oxygen and acetylene cylinders were not are strictly followed. kept sufficiently apart; and . Fire safety equipment were not sufficiently provided at Wanqiao WWTP.

10. Xiaguan During our site visit, it was noted that no Medium It is recommended CWE’s Xiaguan Around 4 man days Ongoing during dust suppression measures were environmental personnel shall carry out of CWE’s construction implemented during excavation process. spot checks on the construction sites environmental period and schedule periodic environmental personnel per meetings with the contractor to ensure month all mitigations measures identified in the DEIA are strictly followed.

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No. Concerned Description of Issue(s) Risk Suggested Corrective Action(s) Responsible Indicative Cost Suggested Unit* Party(ies)* Time Frame 11. All Despite there were community health and Medium CWE shall ensure community health All ≤1-3 months of Before Subprojects safety requirements in the DEIA Report, and safety is included in the stakeholder Subprojects management time commencement community health and safety plan was not engagement plan, and that the of commercial included in stakeholder engagement plan. Company ESMS is implemented operation properly. 12. Wase Emergency response plans for operation Low CWE shall establish emergency Wase ≤1-3 months of Before stage were not in place yet during the time response plans for the operation stage management time commencement Shangguan Shangguan of site visit. before commercial operation of commercial Xizhou commences. Xizhou operation Yinqiao & Yinqiao & Wanqiao Wanqiao Xiaguan Xiaguan Stakeholder Engagement 13. All A stakeholder engagement plan for the Low It is recommended a project-specific All ≤1-3 months of Before Subprojects operation phase was not presented. stakeholder engagement plan shall be Subprojects management time commencement developed in accordance with CWE’s of commercial ESMS. operation Note: - Wase & Shuanglang = Wase and Shuanglang Area Lake Basin Wastewater Interception Subproject; - Shangguan = Shangguan Area Lake Basin Wastewater Interception Subproject; - Xizhou = Xizhou Area Lake Basin Wastewater Interception Subproject; - Yinqiao & Wanqiao = Yinqiao and Wanqiao Area Lake Basin Wastewater Interception Subproject; - Dali Town = Dali Town Area Lake Basin Wastewater Interception Subproject; and - Xiaguan = Xiaguan North Area Lake Basin Wastewater Interception Subproject.

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ATTACHMENT 3: SOCIAL AUDIT REPORT

Table of Content

ATTACHMENT 3: SOCIAL AUDIT REPORT ...... 1

1 METHODOLOGY ...... 1

2 PROJECT IMPACTS ...... 2

2.1 Summary of the Project Impacts ...... 2 2.2 Subproject 1- Wase and Shuanglang Area Lake Basin Wastewater Interception ...... 3 2.3 Subproject 2 - Shangguan Area Lake Basin Wastewater Interception ...... 4 2.4 Subproject 3 - Xizhou Area Lake Basin Waste Water Interception ...... 4 2.5 Subproject 4 - Yinqiao and Wanqiao Area Lake Basin Wastewater Interception ...... 4 2.6 Subproject 5 - Dali Town Area Lake Basin Wastewater Interception ...... 5 2.7 Subproject 6 - Xiaguan North Area Lake Basin Wastewater Interception ...... 6

3 COMPENSATION AND RESETTLEMENT ...... 7

3.1 Land Acquisition ...... 7 3.1.1 Compensation Rates ...... 7 3.1.2 Income Restoration ...... 9

3.2 House Demolition ...... 12

4 INFORMATION DISCLOSURE, CONSULTATION AND PARTICIPATION ...... 16

5 GRIEVANCE REDRESS MECHANISM ...... 20

6 CONCLUSION ...... 22

7 CORRECTIVE ACTION PLAN ...... 23

APPENDIX I – LIST OF PERSONS INTERVIEWED ...... 24

APPENDIX II - PRE-EXAMINATION OF LAND USING FOR DALI ERHAI LAKE BASIN WASTEWATER INTERCEPTION PROJECT...... 25

APPENDIX III - APPROVAL OF TRANSFERRING FARMLAND TO CONSTRUCTION LAND ...... 27

i List of Tables

Table 1- Project Impacts ...... 2 Table 2- LAR Impacts of the Subproject 1 ...... 3 Table 3- LAR Impacts of the Subproject 2 ...... 4 Table 4- LAR Impacts of the Subproject 3 ...... 4 Table 5- LAR Impacts of the Subproject 4 ...... 4 Table 6- LAR Impacts of the Subproject 5 ...... 5 Table 7- House Demolition Impacts of the Subproject 5...... 5 Table 8- House Demolition Impacts of the Subproject 6...... 6 Table 9- Compensation Rates for Land Acquisition (Unit: yuan/mu) ...... 7 Table 10- Compensation Rate for Temporary Land Occupation ...... 8 Table 11- Interest Generated by the Compensation ...... 10 Table 12- Pension Insurance ...... 11 Table 13- Compensation Rates for Houses ...... 12 Table 14- House Compensation ...... 12 Table 15- Relocation Options of Each AH ...... 15

ii List of Figures

Figure 1- Meetings with Officials of Local Government Agencies ...... 1 Figure 2- Land Acquisition Agreement for Caicun Lifting Pump Station (subproject 5) ...... 8 Figure 3- Compensation for the Wase Class II Lifting Pump Station (subproject 1)...... 8 Figure 4- Compensation Table for Temporary Land Occupation in Caicun Village ...... 9 Figure 5- Interview with AP and Village Leader ...... 10 Figure 6- Confirmation Letter from Dali Prefecture Labor Resource and Social Insurance Bureau 11 Figure 7- Appraisal Report ...... 13 Figure 8- House Demolition and Compensation Agreement ...... 13 Figure 9- Receipt of Compensation ...... 14 Figure 10- Interview of One HH Affected by House Demolition ...... 15 Figure 11- Land Acquisition Notice ...... 16 Figure 12- Public Hearing Notice (Caicun Village of Dali Township) ...... 16 Figure 13- Receipt of Public Hearing Notice (Caicun Village of Dali Township) ...... 18 Figure 14- Confirmation Letter That There’s No Need to Organize the Public Hearing Meeting18 Figure 15- Agreement to Solve One Grievance ...... 21

iii

Abbreviations

ADB Asian Development Bank AESPR Annual Environment and Social Performance Report AHs Affected Households APs Affected Persons CWE China Water Environment Group Limited DMS Detailed Measurement Survey EIA Environment Impact Assessment ESMS Environmental and Social Management System FSR Feasibility Study Report GRM Grievance Redress Mechanism HD House Demolition LA Land Acquisition LAR Land Acquisition and Resettlement LRB Land Resource Bureau WWTP Wastewater Treatment Plant

iv

WEIGHTS AND MEASURES km kilometer m2 square meter mu Chinese land measuring unit (1 hectare = 15 mu) 1 mu = 666.7 m2

v

1 METHODOLOGY

1. Land acquisition and resettlement activities of the Project have been completed by the local government. ADB’S assistance to CWE falls under the category of 'Corporate Finance' in Safeguards Requirements 4 (Special Requirements for Different Finance Modalities, section H) of the 2009 ADB Safeguards Policy Statement (SPS)1. As required by the SPS, a Social Safeguards Compliance Audit was undertaken for CWE’s past and present performance with regard to managing social dimensions of the Subproject, particularly on land acquisition and involuntary resettlement, indigenous peoples/ethnic minority issues, labor and working conditions, stakeholder engagement, among other related issues.

2. In the course of conducting the social safeguards audit for the Project, the following were undertaken: (i) a desk review of the CWE’s existing environmental and social management system (ESMS); (ii) a review of relevant national laws, regulations and guidelines related to social impact assessment, land acquisition, ethnic minorities and consultation and participation; (iii) interviews with the CWE’s Management and key staff, representatives of local government agencies, local farmers affected by land acquisition, and the list of persons met is presented as appendix I; and (iv) site inspection of the subprojects. The documentary review and interviews were carried out during the course of the site visit with an aim to assess the labor and working conditions, land acquisition and involuntary resettlement (LAR), indigenous peoples, and gender and development aspects. The desk review also included a review of project documents and literature including project proposal, feasibility study report (FSR), environment impact assessment report (EIA), land acquisition and compensation agreements, result of detailed measurement survey (DMS), consultation records and receipts of compensation.

Figure 1- Meetings with Officials of Local Government Agencies

1 The Safeguards Policy Statement is available from http://www.adb.org/Documents/Policies/Safeguards/default.asp

1 2 PROJECT IMPACTS

2.1 Summary of the Project Impacts

3. The Project acquired 393.3307 mu land, which included 15.6195 mu state-owned land and 377.7112 mu collective land. 3,443.58 m2 houses were demolished. Land acquisition affected 1,423 persons and 327 HHs from 18 villages of 9 townships, and house demolition affected 9 HHs and one enterprise from 7 villages of 3 townships. Totally, land acquisition and house demolition affected 26 villages of 9 townships.

Table 1- Project Impacts

Land Acquisition (mu) House Number Number Affected of Affected of No Subproject Demolition State- Township Affected Affected Collective Subtotal 2 Villages owned (m ) Township Villages Dajianpang Qinshan Huoshan Wase and Shuanglang Shuanglang; Haichaohe Area Lake 1 15.6195 155.962 171.5815 0 Wase; 3 Wase 9 Basin Wastewater Haidong Wenbi Interception Guangyi Dacheng Shuanglang

Shangguan Hewei Area Lake 2 Basin 0 43.2161 43.2161 0 Shangguan 1 Daying 3 Wastewater Interception Shaping Xizhou Area Lake Basin Shacun 3 0 52.1145 52.1145 0 Xizhou 1 2 Waste Renliyi Water Interception Panxi Yinqiao and Wanqiao Shilling Area Lake Yinqiao; 4 0 50.259 50.259 0 2 Yangbo 5 Basin Wanqiao Wastewater Xiangyangxi Interception Shuangyang Dazhuang Dali Town Caicun Area Lake Xiaguan; 5 Basin 0 76.1596 76.1596 151.44 2 Xiajiyi 5 Wastewater Dali Interception Xiaocen Dongmen

Xiaguan Daguanyi North Area 6 Lake Basin 0 0 0 3,292.14 Xiaguan 1 Dazhuang 3 Wastewater Interception Erbin Total 15.6195 377.7112 393.3307 3443.58 9 26

2 2.2 Subproject 1- Wase and Shuanglang Area Lake Basin Wastewater Interception

4. Totally, 171.5815 mu land was acquired for subproject 1, which included 15.6195 mu state- owned land and 155.962 mu collective land. Permanent collective land acquisition affected 5 villages of Shuanglang Township, 3 villages of Wase Township and 1 village of Haidong Township. In addition to permanent land acquisition, 157.04 mu land was temporarily occupied for laying the pipelines. There’s no house demolition impact.

5. For Shuanglang WWTP, 15.57 mu state-owned land was allocated for construction. Lifting pump station #1, 2, 3, 4 in Wase area were updated based on the existed stations, so additional land acquisition was not induced. Details of impact of each component of Subproject 1 are presented in Table 2. Table 2- LAR Impacts of the Subproject 1 Number Component Permanently land acquisition Affected Affected Township Village State- Collective Subtotal owned Shuanglang Area 1 Shuanglang 15.57 0 15.57 Shuanglang - WWTP 2 Changyu lifting 0.0495 0.0805 0.13 Shuanglang Dajianpang pump station 3 Qinshan lifting 0 0.135 0.135 Shuanglang Qinshan pump station 4 Reservoir for 0 17.8 17.8 Shuanglang Huoshan treated wastewater 0 103.72 103.72 Shangguan Haichaohe 5 treated wastewater 0 1.35 1.35 Shuanglang Shuanglang lifting pump station2 Subtotal 15.6195 121.7355 138.705 Wase Area 5 Wase WWTP 0 27.1845 27.1845 Wase Wase 6 Wenbi lifting pump 0 0.0720 0.0720 Haidong Wenbi station 7 Wase class II 0 3.75 3.75 Wase Guangyi lifting pump station 8 Wase class III 0 1.87 1.87 Wase Dacheng lifting pump station 9 #1,2,3,4 lifting 0 0 0 - - pump station Subtotal 0 32.8765 32.8765 Total 15.6195 155.962 171.5815 Source: land acquisition agreements

2 The land has been permanently acquired and will not be transferred to state-owned land.

3 2.3 Subproject 2 - Shangguan Area Lake Basin Wastewater Interception

6. Totally, 43.2161 mu collective land was acquired for subproject 2, which affected 3 villages of Shangguan Township. In addition to permanent land acquisition, 893.83 mu land was temporarily occupied for laying the pipelines. There’s no house demolition impact. Details of impact of each component of Subproject 2 are presented in Table 3.

Table 3- LAR Impacts of the Subproject 2 Number Component Permanently Affected Affected Land Township Village Acquisition 1 Shangguan WWTP 11.5091 Shangguan Hewei 25.4059 Shangguan Daying Subtotal 36.9681 2 Xizhahe lifting pump station 3.0030 Shangguan Shaping 3 Mijiuhe lifting pump station 2.862 Shangguan Hewei 4 Luoshijiang lifting pump 0.383 Shangguan Shaping station3 Total 43.2161 Source: land acquisition agreements

2.4 Subproject 3 - Xizhou Area Lake Basin Waste Water Interception

7. Totally, 52.1145 mu collective land was acquired for subproject 3, which affected 2 villages of Xizhou Township. In addition to permanent land acquisition, 360.68 mu land was temporarily occupied for laying the pipelines. There’s no house demolition impact. Details of impact of each component are presented in Table 4.

Table 4- LAR Impacts of the Subproject 3 Number Component Permanently Land Affected Affected Acquisition Township Village 1 Xizhou WWTP 48.177 Xizhou Shacun 2 Xizhahe lifting pump station 3.9375 Xizhou Renliyi Total 52.1145 Source: land acquisition agreements

2.5 Subproject 4 - Yinqiao and Wanqiao Area Lake Basin Wastewater Interception

8. Totally, 50.259 mu collective land was acquired for subproject 4, which affected 2 villages of Wanqiao Township and 2 villages of Yianqiao Township. In addition to permanent land acquisition, 905.91 mu land was temporarily occupied for laying the pipelines. Details of impact of each component of Subproject 4 are presented in Table 5. Table 5- LAR Impacts of the Subproject 4

3 The land has been permanently acquired and will not be transferred to state-owned land.

4 Number Component Permanently Land Affected Affected Acquisition Township Village

1 Wanqiao WWTP 15.8730 Yinqiao Panxi 25.0440 Wanqiao shiling Subtotal 40.917 2 Fumeiyi lifting pump station 3.3000 Yinqiao Yangbo 3 Panxi lifting pump station 3.0510 Yinqiao Panxi 4 Gusheng lifting pump station 2.9910 Wanqiao Xiangyangxi Total 50.259 Source: land acquisition agreements

9. Demolition of wall affected one household (Xu Shengzhi) of Shuangyang Village, Yinqiao Township.

2.6 Subproject 5 - Dali Town Area Lake Basin Wastewater Interception

10. Totally, 76.1596 mu collective land was acquired for subproject 5, which affected 2 villages of Xiaguan Township. In addition to permanent land acquisition, 741.41 mu land was temporarily occupied for laying the pipelines. Details of impact of each component are presented in Table 6.

Table 6- LAR Impacts of the Subproject 5 Number Component Permanently Affected Affected Land Township Village Acquisition 1 Gucheng WWTP 61.2405 Xiaguan Dazhuang 2 Caicun lifting pump station 5.4814 Dali Caicun 3 Green space for the WWTP (outside of the 9.4377 Xiaguan Dazhuang boundary of the WWTP) Total 76.1596 Source: land acquisition agreements

11. House demolition affected 2 HHs and 1 enterprise, as presented in table 7. 151.44 m2 houses were demolished.

Table 7- House Demolition Impacts of the Subproject 5

Affected area Affected Affected Number Name of the owner (m2) Township Village Dali Lvzhikang Agriculture 1 128.41 Dali Xiajiyi Development Company Only gate was 2 Yang Manbin Dali Xiaocen affected 3 Yang Jianyong 23.03 Dali Dongmen Total 151.44 Source: house demolition agreements

5

2.7 Subproject 6 - Xiaguan North Area Lake Basin Wastewater Interception

12. This subproject did not induce permanent land acquisition. 123.9 mu land was temporarily occupied for laying the pipelines.

13. Demolition of 3,292.14 m2 houses affected 7 HHs in 3 villages of Xiaguan Township. Details are presented in Table 8.

Table 8- House Demolition Impacts of the Subproject 6 Number Name of the owner Affected Area Affected Township Affected Village (m2) 1 Chen Shaohen 348.63 Xiaguan Daguanyi 2 Qi Jianjun 257.00 Xiaguan Daguanyi 3 Wang Fu 831.49 Xiaguan Dazhuang 4 Qi Jianbing 1,363.00 Xiaguan Daguanyi 5 Yang Yuesheng Only gate affected Xiaguan Dazhuang 6 Zhao Aiyou 143.39 Xiaguan Erbin 7 Zheng Jianheng 348.63 Xiaguan Daguanyi Total 3,292.14 Source: house demolition agreements

6 3 COMPENSATION AND RESETTLEMENT

3.1 Land Acquisition

3.1.1 Compensation Rates

14. For land acquisition, Dali City Government issued Implementation Measures of Land Acquisition and House Demolition for Dali Erhai Lake Basin Wastewater Interception Project (DSZBF[2016]No.61) on 13 May 2016 based on the Yunan Provincial Land Administrative Regulation (1999) and Compensation Rates for Land Acquisition in 15 Prefectures (cities) of Yunnan Province (revised version, effective on 1 June 2014).

15. A good practice of this Project is in order to provide more benefits to the APs, in addition to the compensation required by the provincial regulations, local government provided additional subsidy. According to the Compensation Rates for Land Acquisition in 15 Prefectures (cities) of Yunnan Province (revised version, YTGZ(2014)No.27, effective on 1 June 2014), the average annual output value in Dali City is 1,537 yuan/mu, so the compensation is at least 52 times of AAOV. The 2nd 30-years land contract in project area is signed in 1998, so there are only 11 remaining years. Thus, the compensation paid to the APs is regarded much higher than the outputs. Interviews with the APs verified that the APs were satisfied with the compensation rates received.

Table 9- Compensation Rates for Land Acquisition (Unit: yuan/mu) Compensation Land Additional Total Township Type of Land for standing compensation* Subsidy** compensation crops

Paddy land 1,200 (Paddy Xiaguan 88,672 41,328 130,000 Other farmland land) 1,200 (Paddy Dali Paddy land 80,693 29,307 110,000 land) Paddy land Yinqiao Other farmland 1,200 (Paddy Wanqiao 55,380 44,620 100,000 Construction land land) Xizhou Unused land Shangguan Paddy land

Shuanglang Other farmland 1,200 (Paddy 55,380 24,620 80,000 Wase Construction land land) Haidong Unused land * indicated in Compensation Rates for Land Acquisition in 15 Prefectures (cities) of Yunnan Province (revised version, YTGZ(2014)No.27, effective on 1 June 2014) ** added by local government

16. All the land acquisition and compensation agreements were reviewed by the audit consultants, and the compensation rates strictly follow the Implementation Measures of Land Acquisition and House Demolition for Dali Erhai Lake Basin Wastewater Interception Project (DSZBF[2016]No.61). Figure 2 and Figure 2 are two examples.

17. Figure 2 is the land acquisition agreement for Caicun lifting pump station (subproject 5), which is signed between Dali City Land Resource Bureau (LRB) and the Caicun Village Committee of Dali Township on 6 September 2016. The land compensation rate is 88,692 yuan/mu, and the rate of

7 additional subsidy is 29,307 yuan/mu, while the compensation rate for standing crops is 1,200 yuan/mu. The Caincun station acquired 5.4814 mu land and the total compensation is 609,532 yuan.

Figure 2- Land Acquisition Agreement for Caicun Lifting Pump Station (subproject 5)

18. Figure 3 is the compensation table for the Wase class II lifting pump station (subproject 1). The land compensation rate is 55,380 yuan/mu, and the rate of additional subsidy is 24,620 yuan/mu. The compensation table is endorsed by the affected Guangyi village committee, Wase Township Government, CWE, construction unit, and the supervision agency.

Figure 3- Compensation for the Wase Class II Lifting Pump Station (subproject 1)

19. For temporary land occupation, the compensation included land occupation fee and the compensation for the standing crops, which was compensated for 2 seasons.

Table 10- Compensation Rate for Temporary Land Occupation

8 Township land occupation fee compensation for the standing crops 1st season 2nd season Yinqiao Paddy land: 3,000 2500 yuan/mu 2500 yuan/mu/year yuan/mu Wanqiao

Xizhou Forest land: Shangguan Refer to the compensation rates for the 2500 Paddy land: 3000 standing crops of the Dali Haidong New yuan/mu Shuanglang Zone Sancha Reservoir Water Diversion Wase Project. Dali 2500 yuan/mu Xiaguan

20. Figure 4 is the compensation table for temporary land occupation in Caicun Village of Dali Township. Land occupation fee (3,000 yuan/mu) and the compensation for the standing crops (2500 yuan/mu/season) was paid. The compensation table is signed by the APs and also endorsed by the affected Caicun village committee, Wase Township Government, CWE, construction unit, and the supervision agency.

Figure 4- Compensation Table for Temporary Land Occupation in Caicun Village

3.1.2 Income Restoration

21. Two options which included cash compensation and pension insurance were provided to APs. In the affected villages, as most areas of China, the young people prefer to go out to work in the coast provinces or Kunming City (the capital of Yunnan Province), and only the older people are farming on the land. The older people prefer to deposit the compensation in the bank as they do not need to farm

9 on land and the interest is even higher. Taking the lowest compensation rate (80,000 yuan/mu), the annual interest is 2,600 yuan, which is higher than the AAOV, as presented in table 11. For the young people who go out for work in the cities, before land acquisition, they lease the land to other farmers and the normally the rent is 1,000 yuan/year. Land acquisition released them from the land, and they spend the compensation to buy apartments in the city, build new houses in the village, deposit in the bank for children’s education or start small business related to tourism.

Table 11- Interest Generated by the Compensation Compensation rate Annual interest rate Annual interest AAOV 80,000 yuan/mu 3.25% 2,600 1,537

22. Interview with AP. Mr Yangyue (Bai, 55 years old) lost 1.3 mu land due to construction of the Gucheng WWTP (subproject 5). He received the compensation included land compensation (130,000 yuan/mu), standing crops (10,000 yuan/mu) and the additional subsidy provided by the local township government (30,000 yuan/mu). The total compensation is 221,000 yuan. He once joined the village meetings to discuss land acquisition 3 times. Before land acquisition, he and his wife farmed on the land. He did not join the pension system due to he still have around 0.5 mu land. He deposited his compensation in the bank and the interest is enough for living. Now, he is working as cleaner in the village committee, and the salary is 1,000 yuan/month. The income is higher than before. The remaining land is enough to plant for own consumption.

Figure 5- Interview with AP and Village Leader

10 23. Pension system. According to the Implemenation Measures of Pension Insurance for Farmers Affected by Land Acquisition [DSZBF(2008) No.38], farmers who are more than 16 years old and all their land has been acquired can join the pension insurance depends on their own wishes. Before land acquisition, land is regarded as the guarantee for the life in the PRC’s village. The pension system can solve this problem.

Table 12- Pension Insurance Amount paid to the Governemnt Farmer Village Pension received governemnt’s pension committee insurance account Minimum living subsidy for 50% 25% 25% Minimum living subsidy for Urban Residents x 12 Urban Residents of the months x15 years month received pension

24. The cost of farmer’s pension insurance is paid by the individuals (25%), village committee (25%) and the government (50%). Dali Prefecture Labor Resource and Social Insurance Bureau has issued the confirmation letter (Figure 6) on 19 December 2016 that before land acqusition the pension insurance fund based on 20,000 yuan/mu has been received by the special account.

Figure 6- Confirmation Letter from Dali Prefecture Labor Resource and Social Insurance Bureau

11 3.2 House Demolition

25. Compensation for the houses is based on the market value which is appraised by the qualified angencies. In addition to compensation for houses, the AHs also can receive moving subsidy, award for signing agreement in advance, transition subsidy and award for moving within the required deadline, which are presented in table 13. compensation for each HH/enterprise is presented in table 14.

Table 13- Compensation Rates for Houses Number Item Rate Remark 1 Compensation for Houses Based on appraisal 2 Moving subsidy 600 yuan/HH Include 2 times; Only the HHs who need to move can get this. 3 Award for signing agreement in 200 yuan/day advance 4 Award for moving within the 1000 yuan/HH required deadline 5 Transition subsidy 600 yuan/month x 3 Only for the HHs who need months transition

Table 14- House Compensation Number Name of the owner Compensation received (yuan) Subproject 4 - Yinqiao and Wanqiao Area Lake Basin Wastewater Interception 1 Xu Zhisheng 14,828 Subproject 5 - Dali Town Area Lake Basin Wastewater Interception 2 Dali Lvzhikang Agriculture Development Company 102,245.2 2 Yang Manbin 70,590 3 Yang Jianyong 95,622 Subproject 6- Xiaguan North Area Lake Basin Wastewater Interception 1 Chen Shaohen 817,271.00 2 Qi Jianjun 811,754.00 3 Wang Fu 70,990.00 4 Qi Jianbing 2,616,737.00 5 Yang Yuesheng 139,000.00 6 Zhao Aiyou 225,819.00 7 Zheng Jianheng 935,913.00 Source: house demolition and compensation agreements

26. Taking the affected Dali Lvzhikang Agriculture Development Company as an example, house demolition and compensation was implemented by following 3 steps: (i) Market value appraisal. As presented in Figure 7, based on the appraisal report issued by the Yunnan Yajia Real Estate Appraisal Company on 10 May 2017, for the affected houses and other facilities of Dali Lvzhikang Agriculture Development Company, the total compensation is 102,245.2 yuan. The appraisal report is also shared with the company for review.

12 Figure 7- Appraisal Report

(ii) Sign the agreement. Based on the appraisal report and negotiation, house demolition and compensation agreement is signed on 28 December 2017, which is presented as Figure 8.

Figure 8- House Demolition and Compensation Agreement

13

(iii) Payment of compensation. On 8 January 2018, the 102,245.20 yuan compensation was paid to the account of the Dali Township Financial Bureau and then transferred to the affected company.

Figure 9- Receipt of Compensation

27. According to the Implementation Measures of Land Acquisition and House Demolition for Dali Erhai Lake Basin Wastewater Interception Project (DSZBF[2016]No.61), for the affected HHs, they can select cash compensation or get the new housing plot of 150 m2/HH for construction. During negotiation, only 4 HHs plan to reconstruct the houses on the remaining housing plots. According to agreements, they can reconstruct the same area as the demolished area. Table 15 presents the relocation options

14 they selected. By January 2018, all affected houses have been demolished. After the Project completed, they will commence to rebuild their houses.

Table 15- Relocation Options of Each AH Number Name of the Owner Relocation Option Subproject 4 - Yinqiao and Wanqiao Area Lake Basin Wastewater Interception 1 Xu Zhisheng Cash compensation Subproject 5 - Dali Town Area Lake Basin Wastewater Interception 2 Dali Lvzhikang Agriculture Cash compensation Development Company 2 Yang Manbin Cash compensation 3 Yang Jianyong Cash compensation Subproject 6- Xiaguan North Area Lake Basin Wastewater Interception 1 Chen Shaohen Re-construct the demolished house on the remaining housing plot 2 Re-construct the demolished house on the Qi Jianjun remaining housing plot 3 Wang Fu Cash compensation 4 Re-construct the demolished house on the Qi Jianbing remaining housing plot 5 Yang Yuesheng Cash compensation 6 Zhao Aiyou Cash compensation 7 Re-construct the demolished house on the Zheng Jianheng remaining housing plot 28. Case study of one AH (Mr. Qi Jianjun). All family members are Hui muslim. 257 m2 houses were demolished and totally 811,754 yuan compensation was received. The demolished house was a restaurant, which was operated by his wife. The family is also operating a family hotel, which is not affected. Due to near the Erhai Lake, the hotel has good business. After the Project finished, there will be more tourists come to Dali, so he plans to use the compensation to rebuild houses to expand the reception capacity of the family hotel and will employ more local women.

Figure 10- Interview of One HH Affected by House Demolition

15 4 INFORMATION DISCLOSURE, CONSULTATION AND PARTICIPATION

29. On 12 December 2016, Dali City Land Resource Bureau posted the land acquisition notices in all affected villages. From the notice, the APs were informed the following information:  The project name;  The proposed acquired area, ownership and scope;  The compensation rates and the applied documents;  The cut-off date;  The GRM and public hearing arrangements;

Figure 11- Land Acquisition Notice

30. Detailed measurement survey (DMS) was conducted by the affected farmers, representatives of village committees, CWE, and officials from LRB. The results of the DMS which include the type/area of land, name of the householder, number of the land, type of ground attachments, compensation rate and total compensation, were confirmed and signed by the farmers, the representatives from the LRB, village committee and CWE. Samples are presented in Figure 3 and 4 in Chapter 3.

31. During implementation, great importance was paid to the public participation, and consultation meeting was organized. Public participation had made good achievements, and the needs of the villagers were incorporated into implementation.

32. Public hearing notices were sent to each affected village, and the officials of the village committee should sign to confirm that they have received the notice. After village meetings, all affected villages issued the confirmation letter that they did not need to organize the public hearing meeting. Figure 12, 13 and 14 are examples of these documents of Caicun Village of Dali Township.

Figure 12- Public Hearing Notice (Caicun Village of Dali Township)

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Public Hearing Notice Dali Erhai Lake Basin Wastewater Interception Project proposes to acquire 0.3598 hectare land from the Caicun Village Committee of Dali Township. In order to protect the famer’s rights, according to the Regulations of Public Hearing, this is to inform you that: 1. The total land to be acquired is 0.3598 hectare collective land. The type is paddy land. The land belongs to the No. 15 village team. The land compensation rate is 121.0395 yuan/ha which is based on the Land Acquisition in 15 Prefectures (cities) of Yunnan Province (YTGZ(2014)No.27). The Village Team has the right of public hearing on compensation and resettlement. 2. Date for public hearing: 3-9 June 2016. 3. Location for public hearing: village committee of Caicun Village. 4. Participants: leader of No. 15 village team and one representative of the villagers Dali City LRB 2 June 2016

17 Figure 13- Receipt of Public Hearing Notice (Caicun Village of Dali Township)

Receiver of No. 15 village team, Caicun Village Committee of Dali Township the notice Item Land acquisition for Dali Erhai Lake Basin Wastewater Interception Project Delivery Caicun Village Committee of Dali Township place Name of the Deliver Date recipient Way of delivery remark document people Public Yang 2016.6.3 Yin Changqing personally delivered Hearing Shijun Notice

Figure 14- Confirmation Letter That There’s No Need to Organize the Public Hearing Meeting

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Confirmation Letter That There’s No Need to Organize the Public Hearing Meeting

Dali Erhai Lake Basin Wastewater Interception Project proposes to acquire 0.3598 hectare collective land for our village team. The type is paddy land. The land belongs to the No. 15 village team. All the representatives of the villagers agree that the compensation and acquisition procedures follow the related national policies, so we do not request to organize the public hearing.

Signatures of the leader of No. 15 village team and representatives of the villagers

6 June 2016

19 5 GRIEVANCE REDRESS MECHANISM

33. Complete appeal and grievance system was established to deal with the problems induced by land acquisition, so the APs could find relevant department for their appeal and grievance. Steps of appeal and grievance are shown as the following.  If any AP was aggrieved by any aspect of the resettlement, he/she could state his/her grievance and appeal to village committee in oral or in written form. If an oral appeal was made, the village committee would record it on paper and process it. The village committee would make a decision on or resolve it in two weeks.  If the aggrieved AP was not satisfied with the decision of the village committee, he/she could state the grievance and appeal to the Township Government in oral or in written form. The Township Government would decide on or resolve it in two weeks.  If the aggrieved AP was not satisfied with the decision of the township government, he/she could appeal to the Dali City LRB, which would reach a decision within two weeks.

34. According to Administration Procedure Law of the People’s Republic of China, the APs could appeal to administration departments who had administration rights for arbitration. If the APs were still dissatisfied at the decision of the arbitration, they could appeal to a people’s court according to the Civil Procedure Law (2012) after receiving the decision of the arbitration.

35. The contact information of the related agencies has been disclosed to the AHs during LAR. The related government agencies confirmed that up to now, those agencies had not received any significant appeal and grievance from the affected people. Normally, for the complaints received, CWE and the local government negotiated with the APs firstly and solved the issue as soon as possible.

36. Case Study. During laying the pipelines, He Wanxing (Longkan Village of Dali Township) worried about construction cause damage to the houses and living in the houses, as his house is near the construction site. After negotiation, local government and CWE provided transition subsidy of 600 yuan/month for 10 months and moving subsidy of 600 yuan/HH. Figure 15 is the agreement signed between He Wanxing and the Dali Township Government and CWE.

20 Figure 15- Agreement to Solve One Grievance

37. The director of each WWTP is responsible for addressing other social and environmental concerns from community and other stakeholders. The nearby village leaders know the contact information of the director. The villagers can state his/her grievance and appeal to village leaders firstly or directly go to the company. The director of WWTP would record it and make a decision on or resolve it in two weeks.

21 6 CONCLUSION

38. Before land acquisition, pre-examination of land using was issues by Yunnan Provincial Land Resource Department on 2 September 2015, which is presented as appendix 2. Approval of Transferring Farmland to Construction Land is issued by Yunnan Provincial Land Resource Department on 20 March 2017, which is presented as appendix 3. All domestic approval procedures have been completed, and there is no remaining issue.

39. The site selection and design of the subproject has been optimized to minimize the LAR impacts. Completed land acquisition and resettlement were carried out by local government in conformity with government laws and regulations. The compensation for permanent land acquisition was in compliance with the PRC’s Land Law, Implementation Regulations of Land Law, applicable regulations of Yunnan Province and Dali City. All mitigating measures implemented complied with ADB SPS SR2 requirements, and there is no outstanding noncompliance issue.

40. An effective organizational system has been established for the all subprojects at all levels. The responsibilities of the agencies concerned are well defined and their staff is well trained, thereby promoting the successful implementation of land acquisition. CWE actively joined the DMS and consultation activities.

41. During project preparation and implementation, many public participation activities were conducted to address the concerns of the affected households, such as the detailed measurement survey, the compensation rates, and disbursement of the compensation fees. All affected villages issued the confirmation letter that they did not request to organize the public hearing meeting.

42. The grievance redress channel for the APs is unobstructed and effective, and the APs know the appeal channels. The related government agencies confirmed that up to now, those agencies had not received any significant appeal and grievance.

22 7 CORRECTIVE ACTION PLAN

43. For the 4 HH affected by house demolition induced by Subproject 6 who select to rebuild their new houses on the remaining housing plots, progress of relocation needs to be presented in the AESPR.

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APPENDIX I – LIST OF PERSONS INTERVIEWED Number Name Agency Title 1 Yang Lihua CWE Dali Company Deputy General Manager 2 Liu Yongjiang CWE Dali Company Manager of Subproject 1&2 3 Liu Runan CWE Dali Company Manager of Subproject 3&4 4 Shi Haidao CWE Dali Company Manager of Subproject 5&6 5 Gu Zhiwen CWE Dali Company Manager of the Operation Department 6 Li Yulan CWE Dali Company Manager of the Prophase of the Project Department 7 Yin Yan CWE Dali Company Manager of the Human Resource Department 8 Yang Hongwei Dali Land Resource Bureau Government Official 9 Zhao Lianhong Dali Housing and Construction Government Official Bureau

APPENDIX II - PRE-EXAMINATION OF LAND USING FOR DALI ERHAI LAKE BASIN WASTEWATER INTERCEPTION PROJECT

Key provisions: (i) Land using for Dali Erhai Lake Basin Wastewater Interception Project complies with national policy for land supply and local Land Using General Plan. Pre-examination of land is approved; (ii) The proposed area of the Project is 17.9606 ha. (iii) The project owner and the design agency should minimize the land acquisition impacts;

Issued by Yunnan Provincial Land Resource Department on 2 September 2015

APPENDIX III - APPROVAL OF TRANSFERRING FARMLAND TO CONSTRUCTION LAND

Key provisions: (i) Totally, 16.3254 ha4 collective land is approved for construction. (ii) The compensation should be paid based on the approved rates and pension insurance fund should be arranged to restore the livelihoods of the affected farmers to pre-project levels; (iii) All related information should be disclosed;

Issued by Yunnan Provincial Land Resource Department on 20 March 2017

4 This does not include the 121.52 mu land for the Reservoir for treated wastewater (Subproject 1) and 9.4377 mu green space for the Gucheng WWTP (Subproject 5). These land does not need to be transferred to construction land which’s confirmed by the official of local LRB.

ATTACHMENT 4: LIST OF IUCN STATUS OF PROTECTED ANIMAL SPECIES FROM THE PROJECT AREA

PRC’s Name Protected IUCN Status Assessment Information Animal Level Amphibian Tylototriton verrucosus Class II Least Concern Listed as Least Concern in view of its wide (Crocodile Newt) distribution, tolerance of a broad range of habitats, presumed large population, and because it is unlikely to be declining to qualify for listing in a more threatened category. Bird Elanus caeruleus Class II Least Concern The population trend appears to be stable, (Black-winged Kite) and hence the species does not approach the thresholds for Vulnerable under the population trend criterion. Milvus migrans Class II Least Concern Despite the fact that the population trend (Black Kite) appears to be decreasing, the decline is not believed to be sufficiently rapid to approach the thresholds for Vulnerable under the population trend criterion. Accipiter nisus Class II Least Concern The population trend appears to be stable, (Eurasian and hence the species does not approach the Sparrowhawk) thresholds for Vulnerable under the population trend criterion. Accipiter virgatus Class II Least Concern Despite the fact that the population trend (Besra) appears to be decreasing, the decline is not believed to be sufficiently rapid to approach the thresholds for Vulnerable under the population trend criterion. Buteo buteo Class II Least Concern The population trend appears to be stable, (Eurasian Buzzard) and hence the species does not approach the thresholds for Vulnerable under the population trend criterion. Circus cyaneus Class II Least Concern The population trend is not known, but the (Hen Harrier) population is not believed to be decreasing sufficiently rapidly to approach the thresholds under the population trend criterion. Falco peregrinus Class II Least Concern The population trend appears to be stable, (Peregrine Falcon) and hence the species does not approach the thresholds for Vulnerable under the population trend criterion. Falco tinnunculus Class II Least Concern Despite the fact that the population trend (Common Kestrel) appears to be decreasing, the decline is not believed to be sufficiently rapid to approach the thresholds for Vulnerable under the population trend criterion. Fish Schizothorax taliensis Class II n/a Not evaluated on the IUCN Red List. Cyprinus barbatus Provincial Critically The species is restricted to Erhai Lake in Endangered China, where it is impacted by threats from agricultural and domestic pollution and introduced species. Cyprinus daliensis Provincial n/a Not evaluated on the IUCN Red List. Cyprinus longipectoralis Provincial n/a Not evaluated on the IUCN Red List. Cyprinus Provincial n/a Not evaluated on the IUCN Red List. megalophthalmus

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