The World Bank Public-private Partnership Project for Water Supply and Sanitation in Province (P168025) Public Disclosure Authorized

For Official Use Only

Environmental and Social Review Summary Public Disclosure Authorized Concept Stage (ESRS Concept Stage)

Date Prepared/Updated: 04/14/2019 | Report No: ESRSC00267 Public Disclosure Public Public Disclosure Authorized Public Disclosure Authorized

Apr 23, 2019 Page 1 of 10 The World Bank Public-private Partnership Project for Water Supply and Sanitation in Sichuan Province (P168025)

BASIC INFORMATION

A. Basic Project Data

Country Region Project ID Parent Project ID (if any)

China EAST ASIA AND PACIFIC P168025

Project Name Public-private Partnership Project for Water Supply and Sanitation in Sichuan Province

Practice Area (Lead) Financing Instrument Estimated Appraisal Date Estimated Board Date

Water Investment Project 10/29/2019 3/16/2020 Financing For Official Use Only Borrower(s) Implementing Agency(ies)

Jingyang Project Management Office

Proposed Development Objective(s) The project development objective is to improve water supply and sanitation services through a public private partnership in selected areas of Municipality.

Financing (in USD Million) Amount Public Disclosure Public Total Project Cost 200.00

B. Is the project being prepared in a Situation of Urgent Need of Assistance or Capacity Constraints, as per Bank IPF Policy, para. 12? No

C. Summary Description of Proposed Project [including overview of Country, Sectoral & Institutional Contexts and Relationship to CPF] This project will be the first water sector PPP project supported by the World Bank Group in . The approach developed under this project is intended to be replicated throughout China. The project will support the design and implementation of a PPP that establishes a modern utility in Jingyang that delivers a full range of WWS services, increases household connections for water supply and improved sanitation and reduces effluent pollution to the surrounding water courses. It will seek draw on global best practices for PPP to show how these can be applied in the rural WSS sector in China. The project has two components as outlined below. Component 1: Improving WSS Services in Peri-Urban and Rural Areas of Jingyang (Estimated Cost: US$147 million; IBRD loan: US$97 million). This component has three key activity areas, being (1) Establishment of a modern WSS Utility: support the establishment

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of systems and equipment to enable full service WSS delivery; (2) Support for Engineering Works: support of: (i) construction/ upgrading of nineteen sewage treatment plants to meet effluent discharge standards; (ii) consolidation and upgrading of 34 existing water supply plants into a smaller number of water supply plants with a total combined capacity of around 40,000 m3/day; (iii) construction of rain, sewage, and water supply pipe networks; (iv) protection of fifteen drinking water source sites and twenty-three water intakes/wells; and (v) one integrated smart water management platform for use by the PPP WSS Utility to monitor, manage, and operate the assets. The project will also finance (vi) the full cost of connecting households to the central water supply and sewer network; (3) Support for Citizen Engagement: Component 2: Technical Assistance (TA) for PPP Scale Up, Capacity Building, and Project Management (Estimated Cost: US$3 million; IBRD loan: US$3 million). This component has two key activity areas, namely: (1) Technical Assistance for Water Sector PPP Scale Up; and (2) Capacity Building and Project Management.

D. Environmental and Social Overview For Official Use Only D.1. Project location(s) and salient characteristics relevant to the ES assessment [geographic, environmental, social] Jingyang District (Jingyang) is the main district of Deyang City, located in the northeast edge of the Plain in Sichuan Province, about 70 kilometers northeast of Chengdu City, the capital city of Sichuan. The topography of Jingyang District slopes from the northwest to the southeast. The landform in the west is primarily formed by the alluvial plain, while the east has rolling terrain.This region is situated amidst the upper tributaries of the Yangtze River, and is a priority area for pollution control and water quality improvement. The total population of Jingyang is over 750,000, with about 250,000 living in rural areas. In 2016, the district had total economic output of RMB 298 billion. Despite some rural water and environmental protection projects in the 2000's, accelerating urban construction and development pose significant challenges to the local water environment in Jingyang. Jingyang District is in the region influenced by the subtropical humid and semi-humid climate characterized with distinct seasons and rich precipitation, which gives rich water resource to Jingyang. The total area of Jingyang District is 648 km2. The district is the main urbanized area of Deyang Municipality, including 4 urban communities namely Jingyang, Gongnong, Chengbei, and Chengnan, 10 towns by the name Huangxv, Xiaoquan, Bolong, Dexin, Yangjia, Tianyuan, Xiaogan, Public Disclosure Public Xinzhong, Shuangdong, and Hexinzhen and 1 township called Donghu Xiang. The project will be developed in the outskirts and rural area of the Jingyang District to provide service for the total population of 250,000, living in the 10 towns and 1 township. Citizens in the 4 urban communities already have sufficient water supply and will not be serviced by the project. People in Jingyang District are predominantly Han Chinese, with about 4,700 ethnic minority people belong to 35 different ethnic groups. However, no ethnic minority concentrated area is expected in Jingyang District. This is a traditional agricultural area, with recent industrial development, and expected to receive more industries moving from China’s more developed coastal regions in search of cheap labor and less cost related to land price. The first draft FSR has been prepared which determined the service scope and the demand. Following on the first draft, the second draft is being prepared with focuses on water resource availability study and the alternative study for water supply and wastewater discharge and treatment schemes as well as the service that private sector will provide to local people. According to the milestones of the project, the FSR will be completed by the appraisal by the Jingyang District Government, and the private entity will be responsible for completing the preliminary design and the final design during the implementation. According to the FSR, the alternative of water treatment plant with the largest capacity is in the northwest of Jingyang District, which is supposed to meet all the water demand of the project by taking water from the Renmin Canal. However, given the poor quality (irrigation water quality now) and the competing water demands in the Renmin Canal, this alternative seems not feasible. The other three alternatives propose to build several small drinking water treatment facilities in the project area by taking water from small reservoirs and the Renmin Canal which is under careful evaluation in terms of water quality, treatment technology

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and establishment of protection zone. Thus, it is estimated that the size of each proposed water treatment facilities is much smaller than 50,000 m3/d. The effluent of the wastewater treatment facilities to be constructed under the project may flow into the Mianyuan River and the Shiting River, which are currently receiving rural and sub-urban wastewater from the project area where the wastewater treatment capacity is limited. D. 2. Borrower’s Institutional Capacity The Government of Jingyang District has very limited experience in managing projects financed by international financial institutions. The staff of the government has limited technical capacity themselves. Their capacity largely depends on the quality and capacity of the technical teams hired. For this project, the government of Jingyang District has allocated funds to hire technical institute, EA consultant and social consultants. A steering committee has been established within the district government, consisting of the directors from the water resources bureau, housing and urban-rural development bureau, Environmental Protection Bureau (EPB), planning (DRC), and finance bureau. The district EPB has good experience in regulating the environmental issues associated with the small-medium size wastewater and water facilities. Under the committee, a PMO has been established for daily work during the For Official Use Only preparation of the project. Four young staff from the EPB and the DRC are designated to work under the PMO and coordinate the ESIA preparation. Experienced EIA consultants have been engaged to prepare the ESIA. A social consultant team has been commissioned to assist PMO to undertake social assessment and stakeholder engagement. The social team has no previous experience working for Bank financed projects, and they have not been trained for ESF procedures. The Bank social specialist provided comments on the Terms of Reference for recruitment of social assessment team in the early stage when the project was expected to follow the pre-ESF safeguards policies. A workplan was submitted to the Bank during the identification mission, but it needs much more work to address additional risk management areas such as ESS2, ESS4, and ESS10, in light of the new ESF. It is expected much work will be needed from Bank’s social specialists to provide hands-on assistance to the social team in order to prepare the social assessment, and training on ESF to all consultants working on environmental and social assessment is needed. Land acquisition and resettlement is the responsibility of county land bureau, and normally implemented at township level by resettlement office comprising township officials and village representatives. Land acquisition and

Public Disclosure Public resettlement has become daily operations for local land bureaus to support urbanization, and it is expected that staff with experience could be readily identified and recruited if there is a need. The responsibilities of the government and the private entities in this project are not clear at current stage. The team suggested to incorporate appropriate requirements of the environmental and social management capacities into the bidding documents and contracts for the private entities to be selected during the implementation stage.

II. SCREENING OF POTENTIAL ENVIRONMENTAL AND SOCIAL (ES) RISKS AND IMPACTS

A. Environmental and Social Risk Classification (ESRC) Substantial

Environmental Risk Rating Moderate Although the specific information of the physical investment on the drinking water and wastewater facilities, i.e. capacity and location, are unknown, it is clear that the total size of the project is to be medium. Overall, the project will have positive environmental and social benefits in terms of reducing the water-borne diseases and water pollution in receiving water bodies by providing clean drinking water and collecting and treating the wastewater. The adverse environmental and social impacts of the project in construction stage include noise, dust, solid waste and wastewater, the social disturbance, such as the traffic safety. In the operation stage, the project will produce odor, noise and sludge, occupational health concern due to bacteria and pathogens within the wastewater treatment

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facilities, and health and safety issue by the use of liquid chlorine for disinfection in the water and wastewater treatment facilities. These impacts in operation stage are expected to be at limited magnitude given the overall size of the project. The environmental impacts are moderate, site-specific, predictable and/or reversible. These adverse impacts can be readily and reliably managed through the environmental mitigation hierarchy. Per the Environmental and Social Directive, the environmental risk for this project is classified as Moderate. The client has good experience and adequate capacity in managing environmental issues associated with the wastewater and water facilities at the size commensurate with this project. The client has allocated funds to hire professional institutions for FSR, EIA and social documents and assigned qualified staff to work in the PMO to deal with environmental issues on daily basis during the cycle of the project. So the environmental risk on the capacity of the borrower is moderate. Social Risk Rating Substantial . An initial visit to the project sites and early discussions with key stakeholders suggested that impacts described in ESS5 (restrictions to land and other income sources) is at moderate scale, involving small patches of land acquisition For Official Use Only of a few hundred square meters and possible resettlement to allow construction of water supply facilities. There are existing facilities invested by both public and private players, such as 3 waste water treatment plants currently being constructed by different companies, and 34 water supply stations/centers will be consolidated. The environmental baseline in the project area is overall not sensitive or vulnerable, with project implementation expected to affect mainly areas with existing human habitat and infrastructure footprints. The client’s internal management structure in relation to water supply and waste water treatment is complex, calling for coordination among different agencies, a challenge faced by most previous projects in China. A few key stakeholder agencies, such as labor bureau and administration of workplace safety, are missing from the currently identified and invited list by the PMO. There are over 90 staff employed by these facilities, who are key stakeholders to be consulted. Given the institutional complexity, the lack of experience of the PMO in implementing Bank financed projects, and that the social consultants already commissioned will be among the first to observe new ESF requirements, the amalgamated social risk for this project is classified as Substantial. A more hands-on approach will be adopted to assist the social assessment team in conducting social impact assessment, which will focus on all ESSs Public Disclosure Public and in particular ESS1 and ESS10. Experienced consultants will be recommended to join forces with the existing social team. Specific actions will be considered at a later stage to strengthen coordination among local agencies.

B. Environment and Social Standards (ESSs) that Apply to the Activities Being Considered

B.1. General Assessment

ESS1 Assessment and Management of Environmental and Social Risks and Impacts Overview of the relevance of the Standard for the Project: The environmental and social specialists reviewed the previous draft FSR and conducted site visit. Based on the information collected, it is expected that the adverse environmental and social impacts of the project in construction stage include the noise, dust, solid waste and wastewater, and social disturbance/community safety due to increased traffic, construction workers, and construction of pipeline in villages connected with gas supply. In the operation stage, the project will produce odor, noise and limited amount of sludge, occupational health issue, and community health and safety issue by the use of liquid chlorine for disinfection. It is expected that this project will not cause significant land conversion and the likelihood of presence of critical natural habitats in the project area is very low. Assessment will be carried out in the further preparation stage to identify the modified habitats and natural habitats, and to avoid or minimize the impact on modified habitats and avoid impacts on natural habitats. Local laws and

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practice regulating labor and working conditions will be assessed at preparation stage, and mitigation measures will be considered based on findings. It is expected that land acquisition/resettlement cannot be avoided. The presence of ethnic minorities as described in ESS7 will be further assessed by the social assessment commissioned by the PMO. IPP will be developed if ethnic minorities are identified in Jingyang District. The EIA, SIA, ESMP, ESCP, SEP and RAP will be prepared prior to the appraisal, and the dam safety reports may be developed later on during the implementation stage. Given the possibility that some physical activities may not be determined before the appraisal, an ESMF will be developed to guide the preparation of ESIA documents for such activities. Areas where reliance on the Borrower’s E&S Framework may be considered: Although China has an advanced E&S Framework, its use for the project is not recommended due to the limited experience of the implementing agencies in implementing and applying ESF and its associated environmental and social standards. Also, a comprehensive assessment of the borrower framework has not been completed.

For Official Use Only ESS10 Stakeholder Engagement and Information Disclosure The key stakeholders identified at current stage include the residents near water supply facilities and wastewater treatment plants and networks, the management of the reservoirs and the Renmin Canal, and government agencies regarding management of water supply, water resources, cultural heritage, and natural habitats. Namely, key government agencies include housing and urban-rural development bureau (where the PMO is hosted, responsible for water supply to urban areas and waste water treatment), water resources bureau (responsible for water supply to rural areas), planning commission, finance bureau, EPB, labor bureau, administration of work safety, land bureau, and possibly forestry, civil affairs, ethnic minority affairs commission for confirming status of ethnic minorities in Jingyang District, and public health bureau. A few agencies have not been involved in project preparation and will have to be invited, such as administration of work safety, labor bureau, etc. Existing facilities including current WUAs managing water supply centers/stations established at township level, and three waste water treatment plants invested by private companies, will be included into the project. These facilities have over 90 employees, whose livelihoods may Public Disclosure Public be affected depending on how the project will absorb these facilities. The Stakeholder Engagement Plan (SEP) will be developed and disclosed at the early stage of the preparation. These key stakeholders will be engaged and consulted during the project preparation by the means of interview, hearings and questionnaires. The private entities are regarded as the key stakeholder for this project and will be engaged during the implementation stage. The GRM will have a dedicated component to respond to complaints related to construction nuisance, especially since there will be civil works to connect households to sewers. A more detailed workplan will be needed from consultants conducting environmental and social assessment on their SEP. The list of key stakeholders and area of interests of these stakeholders will be agreed between bank team and the consultants. Additional key stakeholders will include staff of existing facilities whose livelihoods will be impacted by how these facilities will be incorporated into the project and how they should be involved in maintenance and management of project invested facilities if deemed necessary, as well as end users of water supply and sanitation such as villagers who benefit from improved water source and sanitation. If ethnic minorities are identified, FPIC will be included as a process in the assessment. All the ESIA documents will be disclosed locally and at the website of the Bank.

B.2. Specific Risks and Impacts

A brief description of the potential environmental and social risks and impacts relevant to the Project.

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ESS2 Labor and Working Conditions The project may involve limited number of direct workers, contracted workers, and community workers. The labor management procedure for the direct workers, contracted workers and community workers will be developed as part of the ESMP, and the requirements for management of occupational health and safety will be developed and integrated into the ESMP. In addition, government staff will be involved in the preparation of the project. The GRM will be established separately for this ESS2 in the ESIA document. The labor management procedure and the GRM on ground should be before the employment of the first workers. In one of the townships, a prison with around 10,000 prisoners has been identified. The project will provide services to the prison in terms of water supply and waste water treatment. Initial assessment confirmed that no prisoners will be allowed outside the prison for the whole duration of serving time. This will be further assessed as part of the social assessment.

ESS3 Resource Efficiency and Pollution Prevention and Management For Official Use Only This project will not be located in water scarce areas, and the water consumption in the project area will not be significantly increased. Conversely, the valuable groundwater will be conserved by using surface water to replace the groundwater in this project. In addition, this project will neither consume large amount of energy and raw materials, nor use or procure pesticides. This project will not produce toxic waste but general wastes, such as spoils and wastewater in construction stage and sludge in operation stage. These general wastes will be readily managed by good engineering design and mitigation measures. During the operation, liquid chlorine may be used for disinfection. But this can be easily avoidable by good engineering design, such as use of ClO2 or UV.

ESS4 Community Health and Safety Limited number of workers will be introduced to the site for construction of the facilities given the overall size of the project. The water supply and wastewater pipelines will be constructed along the roads that will disturb the local Public Disclosure Public traffic during the construction phase. In addition, the increased traffic of vehicles transporting equipment and materials on the roads near the communities may pose safety impact. Thus a traffic management plan will be developed as an integral part of the ESIA. The need for establishing any labor camps will be determined during the preparation of the ESIA and the potential impact of influx of worker will be assessed. However, given the size of the project and its dispersion across the large project area, labor influx would be expected to be minor and impacts on communities not severe. A labor camp management plan with code of conducts will be developed if any labor camps will be established. This project will not affect any ecosystem services for the communities. The risk of water-borne diseases will be reduced by the project by providing clean drinking water and collecting and treating wastewater. Use of the liquid chlorine may pose threat to community safety, but this can be avoided by good engineering design. Otherwise, an emergency preparedness and response plan will be prepared as a part of the EIA and ESMP. Use of security personnel at the sites is very limited that will not bring material treat to local communities. In addition, this project will not build or repair any dams. But some alternatives propose to take water from some reservoirs, thus, if such alternatives are adopted in the later stage of project preparation, dam safety reports should be prepared by the client and submitted to the Bank for review.

ESS5 Land Acquisition, Restrictions on Land Use and Involuntary Resettlement

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Small patches of land in the size of a few hundred square meters are expected to be taken at places where water supply facilities and waste water treatment plants and related networks need to be constructed. Temporary restrictions to land during construction period will also be an impact to local communities. A fresh water pond of 40 hectares will be acquired as water resource reserve area. The pond belongs to local village collectively and is currently contracted out to about 20 households for fish cultivation. These households will be compensated based on their contractual arrangements and make up their loss caused by early termination of contracts. This will be factored in the resettlement plans to be prepared before project appraisal. SEP will also include assessment of local people’s views on the site selection of water supply and wastewater treatment plants. Construction should be done at idle season to avoid and minimize restrictions to income resources, and any loss of income as a result of construction will be compensated. This should be communicated to affected persons in advance. The RAP and resettlement framework to be prepared should be informed by consultations with the affected persons.

For Official Use Only ESS6 Biodiversity Conservation and Sustainable Management of Living Natural Resources As described in D1, the size of each of the wastewater and water facilities will be small that will not lead to significant land conversion. In addition, given that the project area is in the Chengdu Plain which is already intensively developed by human activities for thousands of years, and the project area is in the outskirts and rural area around the urban developed area, the possibility of existence of critical habitats is very low. However, TORs for the ES instruments to be produced during further project preparation will include the identification of modified habitats and natural habitats in the project area, an assessment of any potential risks the project might bring to them, and measures to avoid or minimize impacts on the modified habitats and avoid impacts on the natural habitats. In addition, this project will neither introduce alien species nor purchase and use natural products.

ESS7 Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities

Public Disclosure Public Whether there are ethnic minorities as defined by World Bank ESF in project sites is unknown at this stage. This will be assessed as part of the social assessment. A quick research of information indicates that the total ethnic minority population in Jingyang District is 4,732 in year 2016 and that there are 35 different ethnic groups such as Man, Hui, Zang, Tu, and Zhuang etc.. This will be confirmed by the social assessment. Ethnic Minority Development Framework (EMDF) will be prepared before appraisal if the social assessment confirmed that ethnic minorities present in the project area. Finding from the social assessment with regard to ethnic minority presence will be reviewed by Bank’s social specialists.

ESS8 Cultural Heritage Given that the specific locations of the facilities are unknown, the impacts on cultural heritages will be assessed during the preparation of the EIA. However, TORs for the ES instruments to be produced during further project preparation will include the identification of cultural heritage in the project area, an assessment of any potential risks the project might project to cultural heritage, and the production of a cultural heritage management plan, if required. In any case, a chance find procedure will be produced as part of the ESIA/ESMP. The social assessment should also include identification of intangible cultural heritage and assess impact from project activities. Safeguards instruments will be prepared if physical or intangible cultural heritage is identified.

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ESS9 Financial Intermediaries This project will not involve any FIs.

C. Legal Operational Policies that Apply

OP 7.50 Projects on International Waterways No

OP 7.60 Projects in Disputed Areas No

III. WORLD BANK ENVIRONMENTAL AND SOCIAL DUE DILIGENCE For Official Use Only A. Is a common approach being considered? No Financing Partners there are no financing partners

B. Proposed Measures, Actions and Timing (Borrower’s commitments) Actions to be completed prior to Bank Board Approval: EIA, SIA, ESMP, ESMF, RAP, RPF, EMDF, ESCP, SEP will be completed prior to appraisal and the Bank Board Approval. Possible issues to be addressed in the Borrower Environmental and Social Commitment Plan (ESCP): Completion of the dam safety reports, if any, before the preliminary designs for water supply facilities are completed;

Public Disclosure Public Implementation of SEP, particularly with private entities; Implementation of the EMDF, RAP, ESMF and ESMP; Commitment to prepare and implement the relevant instruments per ESSs’ requirements, including, if necessary, improvement on labor and working conditions for workers identified as required by ESS2; and in particular, the preparation of ESIA, ESMP, RAP, RPF and EMDF according to the ESMF for the activities not clear in the preparation stage; a brief description of the environmental and social design standards to be met on the project; submitting for the Bank review and clearance the PPP organization’s ESMS that will apply to the design, construction and operational phases of the project as well as the following plans (Traffic Management Plan, Labor Camp Management Plan, Emergency Preparedness and Response Plan, dam safety reports, Cultural Heritage Management Plan, if any, and Chance Finds Procedures); commitment to consider the E&S in the TORs for the TAs according to the ESF.

C. Timing Tentative target date for preparing the Appraisal Stage ESRS 30-Sep-2019

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IV. CONTACT POINTS

World Bank Contact: Yongli Wang Title: Environmental Engineer

Telephone No: 5788+7619 / Email: [email protected]

Contact: Aimin Hao Title: Social Development Specialist

Telephone No: 5788+7715 / Email: [email protected]

Contact: Yiren Feng Title: Senior Environmental Specialist

For Official Use Only Telephone No: 5788+7723 Email: [email protected]

Borrower/Client/Recipient

Implementing Agency(ies) Implementing Agency: Jingyang Project Management Office

V. FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW

Public Disclosure Public Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects

VI. APPROVAL

Task Team Leader(s): Victoria Hilda Rigby Delmon, Gang Qin

Safeguards Advisor ESSA Surhid P. Gautam (SAESSA) Cleared on 19-Apr-2019 at 11:25:30

Practice Manager Sudipto Sarkar (PMGR) Concurred on 23-Apr-2019 at 12:30:38

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