PRC: Shanxi Inclusive Agricultural Value Chain Development Project

Initial Environmental Examination

Initial Environmental Examination Project Number: 48358-001 July 2019

Prepared by: Shanxi Provincial Government for the Asian Development Bank (ADB)

For Wei’erfu and Shilou

This initial environmental 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.

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Addendum to Initial Environmental Examination

Project number: 48358-001 June 2019

People’s Republic of China: Shanxi Inclusive Agricultural Value Chain Development Project

Prepared by the Shanxi Provincial Government for the Asian Development Bank

CURRENCY EQUIVALENTS

(as of 9 June 2019)

Currency unit – yuan (CNY) CNY1.00 = $0.1446 $1.00 = CNY6.9146

ABBREVIATIONS

ADB Asian Development Bank GDP gross domestic product AVC agricultural value chain GHG greenhouse gas BOD5 5-day biochemical oxygen demand GRM grievance redress mechanism CNY Chinese yuan IA implementing agency COD chemical oxygen demand MOE Ministry of Environment DO dissolved oxygen PMO project management office EA executing agency PAC project agribusiness company or cooperative EIA environmental impact assessment RP resettlement plan EIR environmental impact report SPG Shanxi Provincial Government EIT environmental impact table SOE state-owned enterprise EMP environmental management plan SPS Safeguard Policy Statement EPB environmental protection bureau WHO World Health Organization ESS environment safeguard specialist WRB water resources bureau FSR feasibility study report WRS water resources specialist FYP five-year plan WWTP wastewater treatment plant

WEIGHTS AND MEASURES

oC degree centigrade m2 square meter dB decibel m3/a cubic meter per annum km kilometer m3/d cubic meter per day km2 square kilometer mg/kg milligram per kilogram kW kilowatt mg/l milligram per liter 3 L liter mg/m milligram per cubic meter m meter t metric ton t/a ton per annum

NOTE

In this report, "$" refers to US dollars.

This is an addendum to the IEE originally posted in June 2017 available on https://www.adb.org/sites/default/files/project-documents/48358/48358-001-iee-en.pdf The IEE addendum 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. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

TABLE OF CONTENTS

I. EXECUTIVE SUMMARY ...... 4 A. INTRODUCTION ...... 4 B. THE PROJECT AND ITS SCOPE CHANGE ...... 4 C. PROJECT BENEFITS ...... 7 D. BASELINE ENVIRONMENT...... 7 E. IMPACTS AND MITIGATION MEASURES ...... 8 F. CLIMATE CHANGE ...... 9 G. PUBLIC CONSULTATION AND GRIEVANCE REDRESS MECHANISM ...... 10 H. ASSURANCES ...... 10 I. ENVIRONMENTAL MANAGEMENT PLAN...... 10 J. CONCLUSION ...... 10 II. INTRODUCTION ...... 11 III. POLICY, LEGAL, AND ADMINISTRATIVE FRAMEWORK ...... 12 A. POLICY FRAMEWORK ...... 12 B. LEGISLATIVE FRAMEWORK FOR ENVIRONMENT IMPACT ASSESSMENT IN THE PRC ...... 12 C. INTERNATIONAL AGREEMENTS ...... 14 D. APPLICABLE PRC AND ADB POLICIES AND ASSESSMENT CATEGORIES ...... 15 E. ASSESSMENT STANDARDS ...... 15 F. EMISSION STANDARDS FOR CONSTRUCTION AND OPERATION ACTIVITIES ...... 17 G. OTHERS ...... 19 IV. DESCRIPTION OF THE PROPOSED PROJECT ...... 20 A. OUTPUTS ...... 20 B. DESCRIPTION OF PROJECT SCOPE CHANGES...... 20 C. IMPLEMENTATION ARRANGEMENTS ...... 24 D. CAPACITY BUILDING ...... 26 E. ANTICIPATED ENVIRONMENTAL AND SOCIAL BENEFITS ...... 26 V. DESCRIPTION OF THE ENVIRONMENT (BASELINE DATA) ...... 28 A. ENVIRONMENTAL SETTING – SHANXI PROVINCE ...... 28 B. ENVIRONMENTAL BASELINE AT PROJECT COUNTIES AND SITES ...... 29 VI. ANTICIPATED ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES ...... 32 A. PRE-CONSTRUCTION PHASE ...... 32 B. CONSTRUCTION PHASE ...... 33 C. OPERATIONAL PHASE ...... 39 D. CLIMATE CHANGE AND GREENHOUSE GAS EMISSIONS ...... 43 E. LINKED FACILITIES AND ASSOCIATED FACILITIES ...... 44 F. INDIRECT, INDUCED AND CUMULATIVE IMPACTS ...... 45 VII. INFORMATION DISCLOSURE, CONSULTATION AND PARTICIPATION ...... 47 A. FIRST ROUND OF PUBLIC CONSULTATION ...... ERROR! BOOKMARK NOT DEFINED. B. PUBLIC CONSULTATIONS ...... 48 C. FUTURE PLANS FOR PUBLIC PARTICIPATION ...... 49 VIII. GRIEVANCE REDRESS MECHANISM ...... 50 IX. PROJECT ASSURANCES ...... 51 X. ENVIRONMENTAL MANAGEMENT PLAN ...... 53 XI. CONCLUSIONS ...... 54 APPENDIX 1: BASELINE DATA FOR AMBIENT ENVIRONMENT ...... 56 APPENDIX 2. ENVIRONMENTAL MANAGEMENT PLAN ...... 59 A. INTRODUCTION ...... 60 B. INSTITUTIONAL ARRANGEMENTS AND RESPONSIBILITIES FOR EMP IMPLEMENTATION ...... 60 C. SUMMARY OF POTENTIAL IMPACTS AND MITIGATION MEASURES ...... 62 D. MONITORING AND REPORTING ...... 72 E. TRAINING ...... 76 F. GRIEVANCE REDRESS MECHANISM ...... 76 G. COST ESTIMATES ...... 78

iii

I. EXECUTIVE SUMMARY

A. Introduction

1. The addendum to the Initial Environmental Examination (EE) for the Shanxi Inclusive Agricultural Value Chain Development Project (the Project) in Shanxi Province of the People’s Republic of China (PRC) summarizes the findings of the environment due diligence conducted for the change in project scope.

2. A change in scope of the project is required as Wei’erfu subproject in Ruicheng County is proposed to be newly added and Shude subproject in Shilou County is proposed to change site. Environmental and social due diligence has been conducted for the scope change subprojects by ADB engaged TA consultants including environment consultant, water resources consultant and social consultant in December 2018.

3. This addendum to the IEE was prepared based on environment safeguards due diligence, which includes the following: (i) a review of the draft feasibility study reports (FSRs) for the two subprojects; (ii) a review of domestic EIA reports for the subprojects (The EIR for Wei’erfu subproject was approved by Ruicheng County EPB in 3May 2018, and the EIT for Shilou subproject was approved by Shilou County EPB in 4 April 2019): (iii) an assessment of the original IEE for the project which was disclosed on ADB website in June 2017; (iv) a site visit conducted by TA environment consultant; and (v) discussions with key project stakeholders, including amongst others, Governments of Yuncheng City, Ruicheng County, Shilou County, EPBs of Ruicheng County and Shilou County, the project agribusiness companies or cooperatives (PACs) of the subprojects.

4. ADB’s environmental safeguard requirements are specified in the Safeguard Policy Statement (SPS 2009). The Project was classified by ADB as Environment Category B. The proposed new subproject and the subproject proposed to change site are the same as other subprojects in terms of the nature and seriousness of its environmental impacts. The overall environmental impact classification still remains as Category B. Thus, an addendum to the Initial Environmental Examination (IEE) including an environmental management plan (EMP) is required for the subprojects proposed to change scope. This addendum to the IEE has been prepared in compliance with the PRC laws and ADB’s SPS requirements.

B. The Project and Its Scope Change

5. Originally, there are 19 subprojects under the Project. Till 14 June 2019, the proposed changes in project scope include 5 subproject cancelled, 3 subprojects location changed and one subproject newly added. Of the 1 newly added subprojects and 3 subprojects with design/location changes, Hongsheng and Jinlong subprojects are still in preparing domestic documents for approval stage(Table 1.1). This Addendum IEE is for the one newly added Wei’erfu subproject and the Shude subproject site change.

Table 1.1 Project Components and Scope Changes

Item Subproject PAC City County Subproject Component Main Equipment and Materials Supported Status Remark 1 Shanxi Qinzhouhuang Changzhi Qinxian Annual production capacity of 20,000 tons 1. Millet processing equipment Ongoing Millet Group Co., Ltd. millet flour for elderly 2. Millet flour packaging equipment 3. Quality-testing equipment

2 Guangling Kitano Edible Datong Guangling Annual production of 45,000 tons of fungus 1. Fungus bags workshop Ongoing Fungus Industrial bags 2. Cold storage Development Co., Ltd. 3. Fungus incubator 4. Strain production workshop 5. Supporting workshop construction 3 Shanxi Phoenix Wine Datong Datong 1. Annual production of 470 tons of wine 1. Expanded area of grape vines on farmers’ land Cancelled Industry Co., Ltd. 2. Annual production of 705 tons of grapes 2. Wine-processing equipment procurement 4 Shanxi Juxin Weiye Jinzhong Taigu 1. Annual production of 1,179 million 1. Cold storage transportation equipment Ongoing Agricultural and Sci & Tech vegetable seedlings 2. Seedling nursery greenhouse reconstruction Development Co., Ltd. 2. Annual production of 10,000 tons of 3. Seedling nursery equipment vegetables 4. One vegetable cleaning production line 5 Heshun County Lvhe Jinzhong Heshun Annual production of 1,000 heads of cattle 1. Cattle shed construction Ongoing Revising bidding Ecological Agriculture & 2. Forage pool construction document following Livestock Development Co. 3. Cow procurement ADB comments Ltd. 6 Fenxi Hongchang Breeding Linfen Fenxi Annual production of 2 million chicken 1. Chicken breeding base construction Location Preparing documents Co., Ltd. 2. Chicken shed equipment Change for domestic approval 7 Fushan Guhuan Linfen Fushan 1. Annual production of 9,000 heads of pigs 1. Construction of pig houses Ongoing Husbandry Sci. & Tech. 2. Annual production of 21,000 heads of 2. Biogas digester Co., Ltd. piglets 3. Feed processing workshops and equipment 3. Annual production of 730,000 m3 biogas 4. Pig house equipment 5. Breeding pigs 8 Quwo Lvheng Agricultural Linfen Quwo Annual production of10,000 tons of mushroom 1. Equipment for mushroom cultivation greenhouses Ongoing Partly completed, Development Co., Ltd. 2. Construction of mushroom processing and storage preparing for facilities disbursement 3. Equipment for mushroom processing and storage facilities 4. Ancillary work construction 5. Production equipment 9 Shanxi Qierkang Linfen Xiangning Annual production of about 1,300 tons of fresh Annual production of 1,700 tons of Elaeagnus Mollis tree’s Ongoing Elaeagnus Biological fruit at full production (2024) based on yield of fruits (samara) Products Co. 66,667 kilograms per square meter (kg/m2) or 100kg/mu 10 Linfen Zhongde Farming Linfen Yaodu 1. Annual production of 20,000 heads of pigs 1. Pig houses and equipment Cancelled Technology Development 2. Annual production of 20,000 heads of 2. Biogas plant 5

Item Subproject PAC City County Subproject Component Main Equipment and Materials Supported Status Remark Co., Ltd. piglets 3. Breeding pigs 3. Annual production of 547,500 m3 of biogas 4. Ancillary facilities 11 Liulin Fuzhongyuan Lvliang Liulin 1. Annual production of 6,000 heads of pigs 1. Pig houses and equipment Ongoing Agricultural Development 2. Annual production of 4,000 heads of 2. Fodder processing workshop Co., Ltd. breeding pigs 3. Breeding pigs 3. Annual production of 14,000 heads of 4. Ancillary civil works and equipment piglets 12 Shilou Shude Jujube Lvliang Shilou 1. Annual production of 5,000 tons of Jujube 1. Construction of integrated processing workshop Location No change with product Industry Co., Ltd. 2. Annual production of 100 tons of walnuts 2. Production equipment Change and scope. Location 3. Annual production of 200 tons of honey change from Guocun 4. Annual production of 200 tons of village to Chagou miscellaneous grains village 13 Shanxi Tianzhirun Date Yuncheng Ruicheng Annual production of 5,000 tons (or 20 million 1. Jujube beverage production equipment Ongoing Processing Co., Ltd. cans) of jujube beverage 2. Ancillary equipment 14 Xinjiang Hefeng Grain Yuncheng Xinjiang Annual production of 2,028 tons of packed 1. Processing workshops Cancelled Planting Technology sophora japonica buds 2. Raw materials and finished product warehouse Cooperatives 3. Processing equipment 15 Shanxi Xinjiang Vegetable Yuncheng Xinjiang Annual sales of 450,000 tons of vegetable 1. Cold storage Ongoing Industry Development Co., 2. Trading market Ltd. 3. Market stalls 4. Vehicles and other equipment 16 Shanxi Kaisheng Fertilizers Yuncheng Yanhu Annual production of 1,600 tons of fresh 1. Construction of new plastic greenhouses Ongoing Preparing for Group Co., Ltd. mushrooms 2. One mushroom culturing workshop Onlending agreement 3. Two processing workshops 4. Ancillary facilities and other equipment 17 Yuncheng Xinke Taifang Yuncheng Yanhu Annual cold storage capacity and sales of 1. Construction of cold storage Cancelled Vegetable Trading Co., Ltd. 10,000 tons of fruits 2. Procurement of ancillary equipment 18 Shanxi Shanlihong Food Yuncheng Huangqu Annual production of 15,000 tons of walnuts 1. Walnut storage Cancelled Co., Ltd. 2. Cold storage 3. Production workshop 4. Ancillary building 5. Major equipment 19 Shanxi Jinglong Group Yuncheng Jishan 1. Annual production of 16,875 tons of eggs 1. Poultry house Location Preparing documents Jinghua Livestock and 2. Annual production of 58,400 tons of 2. Egg storage construction Change for domestic approval Poultry Products organic fertilizer 3. Organic fertilizer processing plant Development Co., Ltd. 4. Ancillary works 5. Equipment 20 Shanxi Wei’erfu Yuncheng Ruicheng 1. Annual production of 20 million pig vaccines 1. Processing workshops New project Construction of Biotechnology Co., Ltd. 2. Annual production of 2 billion chicken 2. Ancillary building biological products vaccines, 3. Annual production of 1.6 billion 3. Raw materials and finished product warehouse project in Ruicheng yolk antibodies 4. Annual production of 4. Processing equipment County Pharmaceutical 800,000 interferon 5. Environment facilities Industry Park 6

6. Activities of the Shude subproject include: new integrated processing workshops, machine repair shop, refrigeration stations and outdoor supporting projects; procurement of processing and production equipment. Annual production include 5,000 t of jujube, 100 t of walnuts, 200 t of honey, and 200 t miscellaneous grains.

7. Activities of the Wei’erfu subproject include: Newly construction of workshop, quality inspection center, inspection animal house, material and finished product warehouse civil construction, decoration, water supply and drainage, electrical engineering, purification engineering and equipment purchase and installation, etc. Annual production of chicken vaccine 2 billion feather, pig vaccine 20 million, interferon 800,000

8. With the one newly added Wei’erfu subproject, the total number of enterprises involved in the project increased from 19 to 20. The project aims to improve and expand the operational, environmental, and social management of 20 agricultural enterprises in Shanxi Province which promote provincial specialty products. These 20 enterprises are termed “project agribusiness companies or cooperatives” (PACs) and are in 17 counties within six municipalities. They represent 20 subprojects under the overall project. The project impacts will be (i) all rural residents falling below the PRC’s current poverty line and all the poor counties lifted out of poverty, and poverty alleviation in all regions achieved; and (ii) income disparity narrowed and portion of middle-income class increased, with a higher growth rate of rural income compared to urban income achieved. The project outcome will be increased income-generating opportunities from selected local specialty agricultural products. The project outputs are (i) agricultural value chains (AVCs) strengthened; and (ii) inclusive business mechanism piloted.

C. Project Benefits

9. The project environmental benefits include the following: (i) demonstration of improved environmental management for agricultural production, especially for increased efficiency of water and energy use, through new designs, equipment, and practices; (ii) for the 12 agricultural subprojects, promotion of organic fertilizers and integrated pest management, and improved management of agricultural chemicals; (iii) integration of project design and safeguards to avoid or minimize impacts e.g. improved wastewater of the PACs; and (iv) the development of water management plans (WMPs), especially for subprojects which utilize groundwater. This will include simple water monitoring programs, to improve understanding of the extent and sustainability of water use by the subprojects. The WMPs will represent an “added value” of the project and reflect the need for improved management of provincial water resources, especially groundwater.

10. Social benefits of the project include (i) additional income from cooperation with enterprises in terms of dividend from leasing farmland to enterprises; (ii) rental payment from leased land to enterprises; (iii) cooperation with PACs in terms of purchase of farm products at agreed prices; (iv) wage income from increased temporary and permanent employment provided by participating enterprises; and (v) enhanced farming knowledge and skills through training and technical support.

D. Baseline Environment

11. Shanxi Province is in central PRC, in the middle reaches of the Yellow River. It has an area of 156,700 km2 and covers a large part of the fertile and densely populated North China Plain. Over 80% of the province comprises mountains and hill ranges. In 2012, the provincial population was 36.12 million. The economy largely depends on declining aluminum and coal reserves, as well as agriculture, heavy industry, tourism, and retail.

12. The subproject sites are in a variety of agricultural or mountainous areas typical of the PRC’s vast Loess Plateau with a semi-arid climate. The subproject locations are on existing, developed sites already subject to agricultural production. There is little natural vegetation in the sites, nor any critical habitats, ecologically sensitive locations (such as wetlands), habitats for threatened species, protected areas, or cultural heritage values. Environmental baseline values for water, air, and noise quality were sampled to assess compliance with relevant national standards. For air quality, Wei’erfu subproject site comply with Class II of the relevant national standard (GB3095-2012 for air – the standard for residential, commercial, industrial and rural areas; but the Shude subproject site cannot. For ambient noise levels, all subprojects comply with GB3096-2008 for noise– the standard for residential, commercial and mixed industrial areas). For water quality, no subproject site is located adjacent to streams or ponds. All subprojects are in Class III of the groundwater standard (GB/T14848-93). The groundwater resources of Shanxi Province are threatened by over-extraction and/or pollution, and all subprojects are in regions that have experienced groundwater depletion.

E. Impacts and Mitigation Measures

13. All subproject facilities are relatively small and do not involve major infrastructure construction. The scope of risks, including cumulative impacts, is anticipated to be relatively small. Nonetheless, local capacity of the PACs for environmental safeguard management is low, while small, cumulative risks are present, such as inadequate wastewater treatment or soil and water pollution from agricultural chemicals. Safeguard risks have been identified and mitigation measures are prescribed in this Addendum IEE and EMP.

14. Pre-construction phase (project readiness). Indicators of project readiness are defined in the EMP and include (i) preparation of detailed construction plans for each site, by the contractors, as a pre-requisite for construction approvals. This will ensure that site boundaries, the layout of work areas, scheduling of activities, and worker health and safety, are clearly defined and are consistent with the EMP; (ii) confirmation that each contractor has nominated an environmental, health and safety officer (EHSO), and prepared a site EMP; (iii) the site EMPs will be based on the project EMP and will incorporate the identified measures for site drainage, erosion control, pollution control, and health and safety; (iii) confirmation that key safeguard staff have been assigned, including environmental and social officers within the two PACs, the provincial project management office (PPMO), and county PMOs (CPMOs); (iv) water abstraction permits for planned wells and rainwater collection systems have been obtained; and (v) engineering designs for wastewater and manure management systems have been prepared and endorsed by the PPMO, environmental protection bureaus, and ADB.

15. Construction phase. Potential construction impacts include pollution of air, surface water bodies and groundwater, noise, and impacts to the health and safety of local communities and/or workers. These risks are concluded to be minor, because (i) subprojects are expansions of existing operations and most are located some distance from water sources and populations in compliance with the PRC zoning and regulations; (ii) existing air, noise conditions are relatively good; and (iii) scale of construction activities is consistent with existing operations and current land uses. Mitigation measures to minimize construction-related risks are described in the EMP and include (i) monitoring of contractors by the PAC and CPMO environment and social officers, and construction supervision companies; (ii) measures for worker and community health and safety; (iii) establishment of a project grievance redress mechanism; and (iv) project-specific measures to address a couple of two subprojects that have a proximity to surface water.

16. Operational phase. The most significant environmental safeguard risks for the project relate to the operational phase. Risks include (i) unsustainable extraction of

groundwater resources (ii) inadequate wastewater management, resulting in runoff to soil or waterways; (iii) inadequate solid waste management for domestic sewage of on-site staff; and (iv) unsafe handling, storage or other management practices for potentially hazardous equipment or materials. Of these various risks, the unsustainable use and/or pollution of water resources is a key issue.

17. For water use, the two PACs currently use on-site groundwater wells or rainwater collection. These systems have water use permits from municipal or county water resources bureaus or village committees, yet these do not include abstraction volumes, and the actual volumes of water used are unknown. The estimated annual water consumption is of 85,165 m3 for Wei’erfu subproject and 21,281m3 for Shude subproject. During project implementation, all PACs will be required to obtain formal water abstraction permits with volumes from municipal or county water resources bureaus. These permits will help to identify those PACs located in regions of groundwater over-extraction and/or pollution. To address these issues, all 19 subprojects are required to prepare WMPs, which are consistent with measures outlined in the EMP, including (i) installation of water meters and monitoring of water usage; (ii) implementation of periodic water quality testing; (iii) provision of results to the PMO and water resources bureaus, and for inclusion within the environmental progress reports to ADB; and (iv) implementation of improved techniques for water use, as part of the project design, to strengthen efficiency.

18. Associated facilities. The ADB-funded project will be linked with existing on-site utilities, e.g., water drainage networks, electricity lines, and the PAC site roads. Virtually all subprojects will represent “associated facilities” i.e. they will partly dependent on existing facilities. All existing facilities are located on lands zoned for agricultural use and have approved environmental certifications.

19. Capacity Building. For all subprojects, capacity building and staff training will be included during project implementation, including for (i) occupational health and safety; (ii) the handling of agricultural chemicals, waste products, and management of biogas systems; (iii) implementation of the GRM and all other measures in the EMP; and (iv) water use efficiency and measurement of abstraction volumes, especially for subprojects that will utilize groundwater. Training will target the PAC staff and the PPMO and CPMO environment officers. For the PACs, training will include technical issues for agricultural management tailored to the project designs, water use efficiency, and EMP implementation. The PPMO includes some staff with experience in the implementation of ADB-funded projects, but the CPMOs and PACs do not have such experience. Training will be conducted by the loan implementation consultants and agricultural extension experts.

20. Cumulative, indirect and/or induced impacts. A potential cumulative impact is the over-use of water by subprojects. This risk appears to be small as (i) the subprojects and existing facilities are distributed across four river basins in two counties; and (ii) the total water use for the two subprojects represents less than 0.00075% of provincial water resources. Nonetheless, the decline and/or pollution of water resources, especially groundwater, is a key issue for Shanxi Province; and there are little data on water supply and demand for each subproject. The WMPs to be prepared by the subprojects will address this issue. As the subprojects are expansions of existing operations and will be sited on existing developed lands, the project will not result in the indirect or induced clearance of new lands or habitats.

F. Climate Change

21. Emissions and mitigation. Greenhouse gas (GHG) emissions will be generated during: (i) the construction phase, mainly from the use of machinery and vehicles; and (ii) the operational phase, from the use of coal, fuel oil, gas, and diesel, for management

offices, operating equipment, and vehicles.

22. Climate change over the project operational life (estimated to be 30 years, i.e. approximately 2040–2060) was modeled. Key expected changes are temperature increases of 2.2–3.0 0C, altered precipitation regimes, and more frequent and severe weather events. This represents the following risks to the project: (i) reduced and/or less reliable annual water supplies for crop growth, and/or processing needs; (ii) increased likelihood of crop diseases under warmer conditions; and (iii) increased need for cooling systems for storage and/or processing. Adaptation measures were developed for categories such as increase design storm water pipe and drainage capacity by 10% for category of food processing and cold storage.

G. Public Consultation and Grievance Redress Mechanism

23. Before completion of the project preparation phase, public consultations were conducted for two subprojects. Consultations were arranged by the domestic EIA institutes and included meetings with local communities and government agencies. A total of 210 people (110 for Wei’erfu subproject and 100 for Shude subproject) participated in consultations. The consultations comprised open events and a questionnaire. Stakeholder concerns were documents and the results were incorporated into the project design and safeguards. A grievance redress mechanism (GRM) has been developed in compliance with the SPS to provide a time-bound mechanism to identify and respond to any stakeholder concerns during the project construction and operational phases, for environmental, health, safety, and social issues. The completion of consultations for the remaining seven PACs, before any construction, is included as a condition in the EMP and the project-specific assurances.

H. Assurances

24. The project design and safeguards comply with relevant PRC laws and standards and the SPS, including for impact mitigation, monitoring, reporting, and capacity building. Project- specific assurances have been developed to further reduce risks, including for water resource management, solid waste, manure and wastewater management (Section IX).

I. Environmental Management Plan

25. A project EMP has been prepared to mitigate and manage the potential environmental impacts of project construction and operation (Appendix 2). The EMP includes institutional responsibilities, training needs, reporting schedules, pre-construction requirements, operational management prescriptions, GRM, monitoring and reporting, and costs for implementing the EMP. To support EMP implementation, the PPMO will (i) appoint a qualified environment officer within the PPMO and each CPMO; (ii) recruit an environment safeguard specialist (ESS) and water resources specialist (WRS), as part of the loan administration consultant services; and (iii) ensure that all PACs have contractual arrangements with qualified environment monitoring agencies to conduct the EMP environmental monitoring.

J. Conclusion

26. The project design has been developed in consideration of improved water resources management, treatment of wastewater, and domestic sewage, and avoidance of new land conversion. Assuming full and effective implementation of the EMP, the potential environmental impacts identified in this addendum IEE are expected to be mitigated to levels which comply with the relevant PRC standards.

II. INTRODUCTION

27. The addendum to the Initial Environmental Examination (EE) for the Shanxi Inclusive Agricultural Value Chain Development Project (the Project) in Shanxi Province of the People’s Republic of China (PRC) summarizes the findings of the environment due diligence conducted for the change in project scope.

28. A change in scope of the project is required as Wei’erfu subproject in Ruicheng County is proposed to be newly added and Shude subproject in Shilou County is proposed to change site. Environmental and social due diligence has been conducted for the scope change subprojects by ADB engaged TA consultants including environment consultant, water resources consultant and social consultant in December 2018.

29. This addendum to the IEE was prepared based on environment safeguards due diligence, which includes the following: (i) a review of the draft feasibility study reports (FSRs) for the two subprojects; (ii) a review of domestic EIA reports for the subprojects(The EIR for Wei’erfu subproject was approved by Ruicheng County EPB in 3rd May 2018, and the EIT for Shilou subproject was approved by Shilou County EPB in 4 April 2019): (iii) an assessment of the original IEE for the project which was disclosed on ADB website in June 2017; (iv) a site visit conducted by TA environment consultant; and (v) discussions with key project stakeholders, including amongst others, Governments of Yuncheng City, Ruicheng County, Shilou County, EPBs of Ruicheng County and Shilou County, the project agribusiness companies or cooperatives (PACs) of the subprojects.

30. ADB’s environmental safeguard requirements are specified in the Safeguard Policy Statement (SPS 2009). The Project was classified by ADB as Environment Category B. The proposed new subproject and the subproject proposed to change site are the same as other subprojects in terms of the nature and seriousness of its environmental impacts. The overall environmental impact classification still remains as Category B. Thus, an addendum to the Initial Environmental Examination (IEE) including an environmental management plan (EMP) is required for the subprojects proposed to change scope. This addendum to the IEE has been prepared in compliance with the ADB’s SPS requirements.

III. POLICY, LEGAL, AND ADMINISTRATIVE FRAMEWORK

A. Policy Framework

31. Planning framework. The PRC’s 13th Five Year Plan (FYP) (2016–2020) forms the basis for national development and environmental and social safeguards, and includes a focus on improving “ecological environment quality”. The FYP includes targets for improving the effectiveness of energy resources development, efficiency of energy and water use, reduction in pollution emissions, and the implementation of ecological “red lines” (areas of particular environmental important for protection and/or restricted development). The national FYP forms the basis for the Shanxi National Economy and Social Development 13th FYP (2016–2020), which sets environmental, economic and social targets until 2020. These targets are expressed in the following provincial-level plans:

• Shanxi Provincial Environmental Protection 13th FYP; • Shanxi Provincial Energy Conservation and Environmental Protection Industries Development 13th FYP • Shanxi Provincial Greenhouse Gas Emission Control 13th FYP • Shanxi Provincial Modern Agriculture Development 13th FYP; • Shanxi Provincial Agriculture and Rural Area Development 13th FYP; • Shanxi Provincial Food Industry Development 13th FYP.

32. The project aligns with ADB’s country partnership strategy for the PRC, 2016–2020. The CPS envisages broadening and deepening various aspects of the ADB-PRC partnership, including the lender-borrower relationship for the public and private sectors, knowledge partnership, collaboration in promoting regional and South–South cooperation, and the PRC’s role as a financial contributor to ADB operations. The PRC needs knowledge-based solutions as it seeks to put its economy on a more sustainable trajectory while dealing with a wide array of complex issues from environmental pollution to creating social safety nets.

B. Legislative Framework for Environment Impact Assessment in the PRC

33. Legal and administrative framework. The administrative framework for EIA in the PRC comprises national, provincial and municipal environmental protection authorities. The national authority is the Ministry of Environmental Protection (MEP), who promulgates laws, regulations and technical guidelines on EIA and pollution prevention and control, and which is represented at the provincial level by the EPD. These are usually delegated authority by MEP to approve EIA reports for provincial construction projects, except for those with national interest and/or inter-provincial projects. Local or municipal-level EPBs enforce environmental laws and conduct environmental monitoring. For the current project, the approval agencies for the domestic environmental assessments are the county and/or municipal EPBs (Table III.5).

34. The PRC has a wide range of laws, regulations, technical guidelines and standards that govern EIA and management of construction projects, including for pollution prevention and control on air, noise, water, ecology and solid waste, and technical guidelines on assessing atmospheric, noise, water and ecological impacts. National laws, regulations, guidelines, and standards relevant to the project are summarized in Tables III.1 and III.2.

Table III.1: Applicable Environmental Laws Title of the Law Year Environmental Protection Law 2015 Environmental Impact Assessment Law 2016 Water Law 2016 Water Pollution Prevention and Control Law 2008 Air Pollution Prevention and Control Law 2015 Noise Pollution Control Law 1997 Solid Waste Pollution Prevention and Control Law 2005 Water and Soil Conservation Law 2011 Forest Law 1998 Wild Fauna Protection Law 2004 Cleaner Production Promotion Law 2002 Land Administration Law 2004 Circular Economy Promotion Law 2009 Protection of Cultural Relics Law 2013

Table III.2: Applicable Administrative Regulations Regulation Year National Regulation on EIA of Plans and Programs 2009 Regulation on Environmental Protection Management for Construction Projects 1998 Directive on Wetland Protection and Management 2013 Environmental Protection Supervision Rules for Construction Projects 1998 Regulation on Culture Heritage Protection 2003 Regulation on River Course Management 1988 Requirements for the EIA Summary of Construction Project 2010 Classification of Construction Project Environmental Protection Management (MEP) 2017 National Biodiversity Strategy and Action Plan (2011-2030) 2010 Requirement for Social Risk Assessment of Large Investment Projects 2012 National Biodiversity Strategy and Action Plan (2011-2030) 2010 National regulation for public disclosure of EIAs 2012 Regulations on Scenic and Historic Areas 2006 Regulation on Hazardous Chemicals Safety Management 2011 Regulation on Wild Flora Protection 1996 Regulation on Wild Fauna Protection 1992 Regulation on Aquatic Wildlife Protection 1993 Regulation on Urban Water Supply 1994 Management of National Wetland Park ( trial) 2010 Local Shanxi Environmental Protection Ordinance 1997 Atmospheric Pollution Prevention Act of Shanxi Province 2014 Shanxi surface water environmental function zoning 2006 Shanxi Provincial People's Government to implement the State Council Opinions on Scientific 2006 Development and Strengthening Environmental Protection "Second Five Year Plan" Circular economy development in Shanxi Province 2012 Notice on the issuance of Interim Provisions of Shanxi strengthen environmental management of 2006 construction projects Shanxi Province People's Government decision on the implementation of the blue clean water 2011 project

35. Implementation of environmental laws and regulations is supported by a series of associated management and technical guidelines (Table III.3).

Table III.3: Applicable Environmental Impact Assessment Guidelines Guideline Year/Code Jurisdictional Division of Review and Approval of EIAs for Construction Projects 2009 Guideline on EIA Categories of Construction Projects 2008 Interim Guideline on Public Consultation for EIA 2006 Technical Guideline on EIA: Outline HJ2.1-2011 Technical Guideline on EIA Regarding Surface Water HJ/T 2.3-1993 Technical Guideline on EIA Regarding Atmospheric Environment HJ 2.2-2008 Technical Guideline on EIA Regarding Acoustic Environment HJ 2.4-2009 Technical Guideline on EIA Regarding Ecological Impact HJ 19-2011 Technical Specification on Water and Soil Conservation Plan GB50433-2008 Technical Guideline on Environmental Risk Assessment for Construction Project HJ/T 169-2004 Industrial Restructuring Directory (2011) Revised in 2013

36. The PRC environmental quality standard system that supports the implementation of the environmental laws and regulations is classified into two categories by function: pollutant emission/discharge standards; and ambient environmental standards (Table III.4).

Table III.4: Applicable Environmental Standards Standard Code Surface Water Quality Standard GB 3838-2002 Urban Ambient Acoustic Quality Standard GB 3096-2008 Ambient Air Quality Standard GB 3095-1996/2012 Integrated Emission Standard of Air Pollutants GB 16297-1996 Integrated Wastewater Discharge Standard GB 8978-1996 Underground Water Quality Standard GB/T 14848-93 Domestic Drinking Water Quality Standard GB 5749-2006 Emission Standards of Environment Noise for Boundary of Site Noise GB 12523-2011 Noise Limit of Industrial Enterprises GB 12348-2008 Standard for pollution control on hazardous waste storage GB 18597-2001 Pollution control for storage and disposal site for industrial solid wastes GB18599-2001 Emission Standards for Odor Pollutants GB 14554-93 Soil Environmental Quality Risk Control Standard for Soil Contamination of GB15618-2018 Agricultural Land Cratering Oil Fume Emission Standard GB18483-2001 Emission standard of air pollutants for boiler GB13271-2014 Standard for Urban Area Environmental Vibration GB10070-88 Wastewater Quality Standard for Discharged to Municipal Sewers GB/T31962-2015 (GB/T31962-2015) Limits and Measurement Methods for Emissions from Light-duty Vehicles GB18352.6-2016 Limits and Measurement Methods for Emissions from Diesel Fuelled GB17691-2018 Heavy-duty Vehicles (CHINA VI) Limits and Measurement Methods for Crankcase Pollutants from Heavy-duty GB11340-2018 Vehicles Equipped with P.I Engines Limits and Measurement Methods for Emissions from Diesel Vehicles under GB3847-2018 Free Acceleration and Lugdown Cycle Limits and Measurement Method for Emissions from Gasoline Vehicles under GB18285-2018 two-speed idle Conditions and Short Driving Mode Conditions Control Standards of Pollutants in Sludge for Agricultural Use GB4284-2018

C. International Agreements

37. The PRC is a signatory to international agreements relevant to environment protection. Those relevant to the project, along with the date of signing by the PRC, include:

• Paris United Nations Climate Change Conference, 12 December 2015. The key result was an agreement to set a goal of limiting global warming to less than 2 degrees Celsius (°C) compared to pre-industrial levels. The agreement calls for zero net anthropogenic greenhouse gas emissions (GHGs) to be reached during the second half of the 21st century. In the adopted version of the Paris Agreement the parties will also "pursue efforts to" limit the temperature increase to 1.5 °C. • Kyoto Protocol to the United Nations 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

38. National policies. The PRC Guideline on EIA Classification for Construction Projects (MEP, 2017) classifies environmental impact assessments for construction projects into three categories with different reporting requirements, based on “significance” of potential environmental impact due to the project and the environmental sensitivity of the project site as described in this directory. An Environmental Impact Report (EIR) is required for construction projects with potential significant environmental impacts. An Environmental Impact Table (EIT) is required for construction projects with less than significant environmental impacts. An Environmental Impact Registration Form (EIRF) is required for construction projects with the least significant environmental impacts.

39. According to the PRC Guideline on EIA Classification for Construction Projects (MEP, 2015), an environmental impact report (EIR) for the Wei’erfu subproject and an environmental impact table (EIT) EIT for Shude subproject were prepared in November 2017 and January 2018 respectively.

40. ADB’s SPS provides the basis for this addendum IEE. The purpose of the SPS is to establish an environmental review process to ensure that projects funded under ADB loans are environmentally sound, comply with domestic laws, and are not likely to cause significant environment, health, or safety hazards. The project is classified as “Category B”. The project scope change requires the preparation of an addendum IEE and EMP.

E. Assessment Standards

41. The environmental standard system that supports the implementation of the environmental protection laws and regulations in the PRC is classified by ambient environmental quality standards for different functions (e.g. different uses for water), and by pollutant 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) Guidelines. For this assessment, the PRC and EHS standards for air, noise, soil and water were compared and the PRC standards were found to be equivalent to or higher than the EHS standards. The PRC standards are applied in this Addendum IEE.

1. Ambient Air Quality

42. The project areas belong to the Class II of ambient air function area. The standard applied in this project is Class II of the Ambient Air Quality Standard (GB3095-2012) (Table III.5).

Table III.5: Ambient Air Quality Standards (Unit: μg /m3) Pollutants Average time Second Category Standard Concentration Limits Sulfur dioxide (SO2) annual average 60 24-hour average 150 1 hour average 500 Nitrogen dioxide (NO2) annual average 40 24-hour average 80 1 hour average 200 Respirable particulate matter (PM10) annual average 70 24-hour average 150 Particulate Matter 2.5 (PM2.5) annual average 35 24-hour average 75

2. Ambient noise conditions

43. The ambient noise environment for the project was evaluated against Class I, Class II or class 4a standards of the Ambient Acoustic Quality Standard (GB3096-2008) (Table III.6). The PRC standards are more stringent than those of EHS.

Table III.6: Ambient Acoustic Quality Standards (unit: dB (A)) Applicable Class Standard Value Day-Time Night-Time Class I (residential, hospital, education, research, administrative area) 55 45 Class II (residential, commercial and industrial mixed area) 60 50 Class 4a (along roads – within 35 m measured from the mid-line) 70 55 World Bank EHS 70 70

3. Surface Water

44. The two subproject sites are required to meet Class III standards of the PRC’s Surface Water Ambient Quality Standard (GB3838-2002) (Table III.7).

Table III.7: Surface Water Ambient Quality Standards (Unit: mg/L) Standard pH DO Permanganate COD BOD Ammonia index nitrogen Class III 6-9 5 6 20 4 1.0

4. Groundwater

45. Groundwater in this area should comply with Class III of the Groundwater Quality Standards (GB / T14848-93) (Table III.8).

Table III.8: Class III Quality Standards for Groundwater

Permanganate Total Nitrate Item pH Fluoride Total E.coli Index Hardness Nitrogen Class III 6.5—8.5 ≤3.0 mg/L ≤450 mg/L ≤20 mg/L ≤1.0 mg/L ≤3.0x103/L

5. Soil

46. Soil quality in the PRC is divided into three classes according to the Environmental Quality Standard for Soils (GB 15618-2018). Class I represents the best and Class III the worst. Class II is applicable for the proposed project area (Table III.9). Class II is appropriate in the standards for general farmland, vegetable land, tea orchard, orchard, ranch, where soil quality will not cause negative impact to or pollution to the plants or environment.

Table III.9. Environmental Quality Standard for Soils (Class II) Parameter Maximum Allowable Concentration (mg/kg dry weight) Class I Class II Class III pH <6.5 6.5-7.5 >7.5 Cadmium (Cd) 0.30 0.30 0.60 Mercury (Hg) 0.30 0.50 1.0 Arsenic (As) paddy / dry land 30 / 40 25 / 30 20 / 25 Copper (Cu) farmland / orchard 50 / 150 100 / 200 100 / 200 Lead (Pb) 250 300 350 Chromium (Cr) paddy / Dry land 250 / 150 300 / 200 350 / 250 Zinc (Zn) 200 250 300 Nickel (Ni) 40 50 60

F. Emission Standards for Construction and Operation Activities

1. Air Quality

47. Industrial fugitive emission of particulate matter is regulated under the PRC‘s Air Pollutant Integrated Emission Standard (GB 16297-1996), 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.

48. Canteen oil fume is regulated under the PRC Catering Industry Fume Emission Standard (trial) (GB18483-2001), which set 2.0mg/m3 as the maximum allowable emission concentration.

49. Emission from boilers should follow the Boiler Air Pollutant Emission Standard (GB13271-2014). Concentration limits for the standard are shown in Table III.10

Table III.10: Boiler Air Pollutant Emission Standard Values Control Items Unit GB 13271-2014 TSP mg/m3 30 SO2 mg/m3 200 NOx mg/m3 200 Ringman blackness Class I

50. Odor from the wastewater treatment plants and manure management systems should follow the Malodorous Pollutant Emission Standard (GB 14554-93). The maximum allowable concentrations at the boundary of the sites for NH3, H2S and odor are 1.5 mg/m3, 0.06 mg/m3, and “20” (dimensionless) respectively.

51. In the construction phase, impacts from air pollutants from dust and earthworks will be assessed against Grade II standard (for construction in non-urban environments) specified in Air Pollutant Comprehensive Emission Standard (GB16297-1996). In the operational phase, air emissions and odors will be assessed against Emission Standards for Odor Pollutants (GB14554-93) and Hygiene Standards for the Design of Industrial

Enterprises (TJ36-79). Concentration limits for these standards are shown in Table III.11.

Table III.11: Malodorous Emissions Standard Values Control Items Unit GB 14554-93 and TJ36-79 3 NH3 mg/m 0.2 3 H2S mg/m 0.01

2. Noise disturbance

52. Construction noise will be assessed against the PRC Emission Standards of Ambient Noise for Boundary of Site Noise (GB 12523-2011) and Class II of Emission Standard for Industrial Enterprises Noise at Boundary (GB 12348-2008) (Table III.12).

Table III.12: Construction Site Noise Limits. Unit: Leq [dB (A)] Period Major Noise Source Noise Limit Day Night Construction Bulldozer, excavators, loader; pile driving machines; 70 55 concrete mixer, vibrator and electric saw; hoist and lifter

53. During operation, site noise levels will be assessed against Class III of the Emission Standards for Industrial Enterprises Noise at Boundary (GB12348-2008) (Table III.13).

Table III.13: Industrial Enterprise Site / Social Life Ambient Noise Emission Standards Classification Day Leq[dB(A)]) Night Leq[dB(A)]) 2 60 50 3 65 55 4 70 55 EHS 70 70

3. Vibration

54. Construction activities causing vibration impact should comply with the Standard for Urban Area Environmental Vibration (GB10070-88) (Table III.14).

Table III.14: Vertical Vibration Standard Values (Unit: dB) Scope of applicable area Day Night Special residential area 65 65 Residential, cultural and educational area 70 67 Mixed area and commercial center 75 72 Industrial centralized area 75 72 Both sides of traffic trunk line 75 72 Both sides of railway main line 80 80

4. Wastewater

55. Discharge of wastewater from construction sites and operating facilities is regulated under the PRC’s Wastewater Quality Standard for Discharged to Municipal Sewers (GB/T31962-2015) – Table 1, Class B (See Table III.15).

Table III.15: Wastewater Quality Standard for Discharged to Municipal Sewers Parameter Unit Class B pH - 6–9 SS mg/L 400 BOD5 mg/L 350 COD mg/L 500 NH3-N mg/L 45 TN mg/L 70 TP mg/L 8

5. Solid Waste

56. Hazardous solid waste disposal will comply with PRC Standard for Pollution Control on Hazardous Waste Storage (GB18597-2001) and the corresponding requirements in its 2013 revision order.

57. Non-hazardous solid waste disposal will comply with PRC General Industrial Solid Waste Storage, Disposal and Site pollution Control Standard (GB18599-2001) and the corresponding requirements in the 2013 revision order.

G. Others

58. Fire prevention design will comply with PRC Code for fire protection design of buildings (GB50016-2018). Building design will comply with Design standard for energy efficiency of public buildings (GB50189-2015).

IV. DESCRIPTION OF THE PROPOSED PROJECT

A. Outputs

59. The project outcome (income-generating opportunities from selected local specialty agricultural products are increased) will be accomplished through two outputs: (i) agricultural value chains (AVCs) strengthened; and (ii) inclusive business mechanism piloted.

B. Description of Project Scope Changes

1. Newly Added Wei’erfu Subproject.

60. The production of veterinary drugs and animal vaccines in this subproject will promote the scientific and advanced epidemic prevention of farmed animals. Through the operation mode of "Company+Cooperative+Farmer" this subproject will greatly promote the prosperity and development of local livestock and poultry breeding industry, accelerate the joint development of farmers in the surrounding poor areas, and establish a long-term opportunity for farmers to increase their income thus strengthen the Project outcome.

61. The newly added Wei’erfu subproject is located in in Ruicheng County Pharmaceutical Industry Park, Yuncheng City, Shanxi Province. The geographical coordinates of the site are 34 °41 °24.3 "N and 110 °42 °2.9" E. The location map of the site is shown in figure IV-1.

Wei’erfu Subproject Site

Figure IV-1 Location of Wei’erfu Subproject

62. The subproject will construct workshops with annual production of 20 million pig

vaccines, 2 billion chicken vaccines, 1.6 billion yolk antibodies and 800,000 interferon. Major activities of the subproject include: (i) construction of 1-2 floors major processing workshop with construction area of 6,000m2; (ii) construction of a 3-floors office building and a 2-floors canteen with total construction area of 4,800m2; (iii) experimental animal rooms with total construction area of 3,000m2; (iv) QC laboratory building with total construction area of 3,000m2; (v) storages rooms with total construction area of 15,180 m2 (includes 4,380m2 for construction material and projection storage, 6,000m2 reserved for veterinary product storage and 4,800m2 reserved for other products storage); (vi) equipment purchase and installation; (vii) water supply system designed based on the water demand projection (236.67m3/d); (viii) environmental facilities construction and installation including (a) filter plus activated carbon adsorption for biological waste gas; (b) modified activated carbon for odor absorption; (c) oil smoke filter; (d) 150m3/d wastewater pretreatment station; high temperature sterilizer for dead animal disinfection treatment; (f) hazardous material temporary storage house for storage of medical waste generated from laboratories; (g) a 300m3 emergency tank. Climate change adaptation measures, such as increase storm water and drainage pipes capacity by 10% to account for projected increase in precipitation intensity, will be designed. During operation, it is required to select refrigerants with less GHG emissions. The subproject layout is shown in figure IV-2.

Figure IV-2 Layout Map of Wei’erfu Subproject

Table IV.1 Major Subproject Features No. Item Unit Amount Note

1 Operation days per year day 300 2 Workers person 115 3 Management staff person 15 4 Technical staff person 20 5 Total land taken area m2 40,962 About 61.44mu

No. Item Unit Amount Note 6 Land taken by buildings m2 29,000 7 Total construction area m2 39,948 8 Green area m2 4,800 9 Electricity consumption 10,000kWh 3,800 10 Water consumption m3/a 85,757 11 Industrial steam t/h 2.78 12 Total budget 10,000 CNY 13,700

2. Site Change of Shilou Shude Subproject.

63. The Shilou Shude subproject is proposed to change subproject site from Guocun village to Chagou village of Lingquan township, Shilou County, Lvliang City. The geographical coordinates of the new site are，36°59′27.09″N and 110°52′34.35″ E. The location map of the site is shown in figure IV-3. The subproject is one of the key poverty reduction projects of Shilou County. One of the objectives of the subproject construction is to provide employment opportunities to poor people. The reason for the site change is that the new site is closer to the concentrated poor people resettlement sites, to allow these poor people come to work in the Shude Company conveniently.

Old Site

New Site

Figure IV-3 Site Change of Shilou Shude Subproject

64. The subproject components keep no change comparing with original proposal. It will construct agricultural processing workshops with annual production of 5,000 ton jujube, 300 ton honey and 700 ton millet. Activities of the Shude subproject is shown in table IV.2 below.

Table IV.2 Components and Activities of Shude Subproject Item Activities Note 1. Workshops No.1 jujube processing A 1-floor, 8.4 high fully closed steel structure workshop that Existing

Item Activities Note workshop covers an area of 2636.55m2. Install jujube processing production line 1, candied (black jujube) processing production line 1, built-in screening machine, cleaning machine, nuclear remover, freezer, freeze-drying machine, dryer, cooking tank, sugar infiltration tank, drying room and other equipment. No.2 jujube processing Construct a 1-floor, 8.4 high fully closed steel structure New workshop workshop that covers an area of 1463m2. Install jujube pulp production line, equipped with cooking tank, beating machine, heat preservation tank, enzyme hydrolysis tank, centrifuge, filter, concentrator and other equipment Honey processing workshop Construct a 1-floor 6.2m high fully closed frame structure New workshop that covers an area of 1172.30m2. Install a honey production line, internal filter tank, concentration tank and others equipment Millet processing workshop Construct a 1-floor, 6.2m high fully closed frame structure New workshop covering an area of 927.50m2. Install a millet product processing line 2. Relevant Facilities Office building 1 floor building construction area of 1,752 m2 Existing Refrigerating station 1 floor building with construction area of 160 m2 New Machine repair shop 1 floor building with construction area of 300 m2 New Non-hazardous solid waste 1 storage room with land taken area of 30m2 New storage room Hazardous solid waste 1 storage room with land taken area of 5m2 New storage room 3. Supply Utilities Water supply Well and water supply pipelines design based on projected New water use amount of 118.2 m3/d. Power supply Local power supply system New Steam supply 2t/h boiler New 4. Environment related facilities Millet workshop dust Install with dust collection, removal system, and a 15m New high stack. Air emission from boiler Install with low nitrogen combustion facilities together with New dust removal system, and a 30m high stack. The current design is to install a biomass-fired boiler, the design institute will study feasibility of using gas-fired boiler to further reduce air emission. Industrial waste water Pretreated with hydrolytic biological oxidation wastewater New treatment process and then pipe to municipal sewer system Domestic waste water Pretreated at 40 m3 septic tank and then pipe to municipal New sewer Solid waste from workshops The skin core waste residue, impurities and residual fruit New produced by jujube production workshop, and jujube waste residue were recycled and utilized as fertilizer raw materials, and the impurities and rice chaff produced in millet processing workshop were collected and sold to the surrounding feed factory. The filter residue produced by honey processing workshop is collected and sold to the local area for resource utilization. Packing waste Be sold to registered private or state-owned waste New collection station Sludge from waste water Use for fertilizing at farmland of Chagou village New

Item Activities Note treatment Used oil Temporarily stored in hazardous storage room and New disposed by qualified company on a regular basis Greening 7,000m2 New GHG emission control and i) Increase storm water and drainage pipes capacity by climate change adaptation 10% to account for projected increase in precipitation intensity; ii) Design food processing workshops with energy saving measures, including insulation of walls, upgraded heating, lighting, ventilation systems, and adopting more energy efficient equipment; iii) Select refrigerants with less GHG emissions

C. Implementation Arrangements

65. The SPG will be the executing agency and the municipal governments will be the implementing agencies. The PPMO will be responsible for project implementation and coordination with ADB. At municipal level, the six municipal governments have established municipal project management offices (MPMOs) for daily project management and coordination among project counties. County project management offices (CPMOs) have been established to manage the implementation of subprojects in each county.

66. The PPMO will be responsible for the coordination and administration of procurement activities while PACs will undertake specific subproject and procurement activities.

67. Key agencies for project implementation are summarized in Table IV.2.

Table IV.2: Institutional Roles and Responsibilities Project Implementation Management Roles and Responsibilities Organizations Executing agency — Shanxi • Provide overall guidance, coordination, supervision, and management for Provincial Government project preparation and implementation; and • Responsible for coordinating project implementation activities among government agencies such as Poverty Alleviation and Development Office, Finance Department, Provincial Development and Reform Commission, Environmental Protection • Department, Water Resource Department, Forestry Department, Women’s Federation, etc. Provincial Project Leading Group • Provide policy guidance during implementation; Municipal Project Coordinating • Facilitate interagency coordination and coordinate with other involved Group parties at concerned level; and County Project Working Group • Resolve institutional problems affecting project preparation and implementation at concerned level. Shanxi Poverty Alleviation and • Provide overall coordination of project preparation, and comprehensive Development Office supervision of project implementation; • On behalf of SPG, enter into project implementation agreements for the project with county governments; • Supervise implementation of the project implementation agreements; and • Promote replication of the demonstrated technologies in the province. Shanxi Finance Department On behalf of SPG, responsible for overall project financial management, including: • Open and manage the project imprest account, and liquidation and replenishment of advances made; • Review, approval, and submission of loan withdrawal applications to ADB on behalf of SPG; • Sign relending agreement with the county finance bureaus;

Project Implementation Management Roles and Responsibilities Organizations • Monitor implementation of the onlending agreements under the project; and • Prepare and monitor repayment plan of ADB loan and repayment works. Provincial Project Management On behalf of the executing agency, the PPMO will be responsible for Office overall coordination and supervision of project preparation and (Poverty Alleviation and implementation, including: Development • Direct project preparation and implementation activities; Office) • Facilitate engagement of procurement agent; • Prepare annual work programs and budgets; • Guide project procurement activities, including the review and submission of bidding documents, bid evaluation reports, and • other necessary documentations to ADB for necessary approval; • Review and confirm RRs from respective project municipalities; • Engage project implementation consultants; • Coordinate training and capacity development activities; • Establish PPMS to monitor project progress, including regular monitoring of physical and financial progress, and safeguards compliance; • Consolidate and submit (a) quarterly project progress reports, (b) semi-annual environmental and social safeguard monitoring progress report, (c) annual audit reports, (d) annual consolidated • project financial statements, and (e) midterm and project completion reports to ADB and SPG with assistance from the project implementation consultant; • Ensure project implementation compliance with loan agreement and project agreement; • Cooperate with provincial audit department for audit of project accounts; • Summarize the project experience and facilitate project replication over the province. Municipal Project Management Responsible for project coordination at the municipal level: Offices • Facilitate engagement of the procurement agency to facilitate project (Municipal Poverty Alleviation procurement; and Development Office): • Coordinate procurement process, including participating in bid opening, Yuncheng Municipality Lvliang supervising the bid evaluation process, and endorsing bid evaluation Municipality reports for all NCB procurement packages; • Review WAs from respective county financial bureaus and submit the reviewed and consolidated county-wise RRs to PPMO; • Prepare and submit (a) quarterly project progress report, (b) semi- annual environmental and social safeguard monitoring progress report, and (c) subproject financial statements to PPMO; • Monitor subproject implementation and achievement of output indicators within the municipality; • Sign project implementation agreement with county governments; • Summarize the project experience and facilitate project replication in the municipality. County Finance Bureaus • Prepare county-wise RRs (as above) and submit to MPMOs; County Finance Bureaus of • Ensure timely provision of counterpart funds; and 2 subproject counties • Sign onlending arrangement with the PACs. Implementing Agencies: Coordinate procurement for the subprojects; County Project Management • Undertake day-to-day management activities during project preparation Offices and implementation; County Poverty Alleviation and • Review, confirm, and consolidate RRs from respective PAC(s); Development Offices of • Provide quality assurance and quality control for the project construction 2 subproject counties and check and review construction supervision works by the supervision agency; • Ensure PACs are in compliance with EMP, gender action plan, resettlement plans, social development plan; • Prepare (a) quarterly project progress report, (b) semi-annual environmental and social safeguard monitoring progress report, • and (c) subproject financial statements to PPMO; and • Summarize project experience and promote project replication in the county

Project Implementation Management Roles and Responsibilities Organizations Project Implementation Units • Recruit design institutes for detailed designs; Established in 2 PACs • Participate in bidding, bid evaluation, and signing and administration of contracts with the aid of procurement agents; • Ensure environmental and social safeguards are complied with • based on ADB’s Safeguard Policy Statement (2009); • Provide CPMO with inputs to (a) quarterly project progress report, mid-term report and project completion report (b) semi-annual • environmental and social safeguard monitoring progress report, • and (c) annual subproject financial statements; • Establish and maintain the required project accounting arrangement and other implementation recording systems; • Prepare RRs and submit to CPMO for review and confirmation; • Retain supporting documents under RR procedure; • Maintain the project‘s financial records, making them ready for • inspection by ADB missions; • Operate and maintain the facilities constructed or improved under the project; and • Implement the contracts signed with village committees/farmer cooperatives/farmer households. ADB • Provide guidance to SPG to ensure compliance with loan and project agreements; • Conduct regular loan review missions, a midterm review, and a project completion review mission; • Review and/or approve procurement actions for ADB-financed procurement packages; • Process withdrawal applications and release loan funds; • Monitor project implementation progress; • Review annual audit reports and follow up on audit recommendations; • Update regularly the project performance review reports with the assistance of executing and implementing agencies; • Update regularly the project information documents for public disclosure at ADB website, including the safeguard documents; • Monitor implementation of ADB’s anticorruption policies. ADB = Asian Development Bank, CPMO = County Project Management Office, EMP = Environmental Management Plan, MPMO = Municipal Project Management Office, PAC = Project Agribusiness Company or Collective, PCG = Project Coordination Group, PPMO = Provincial Project Management Office, SPG = Shanxi Provincial Government.

D. Capacity Building

68. The capacity of the PPMO, CPMOs and PACs, including their environmental and social officers responsible for EMP implementation and supervision, will be strengthened through a project training program. The PPMO has previous experience with ADB-funded projects but the MPMOs, CPMOs and PACs do not. Training will include (i) EMP implementation, supervision, and reporting; (ii) implementation of the project Grievance Redress Mechanism; (iii) the EMP environmental monitoring program; (iv) groundwater and surface water conservation, efficient use, and monitoring; (v) safe and efficient use of agricultural chemicals, integrated pest management, and reducing the use of chemical fertilizers and pesticides; and (vi) humane treatment of livestock during raising. Training will be provided by the loan implementation consultants, county bureaus, and Shanxi Agriculture University. The EMP training program is described in Appendix 2.

E. Anticipated Environmental and Social Benefits

69. Environmentally sustainable agricultural production. Measures for efficiency of water and energy use, as well as product testing and monitoring to improve food safety and quality, are part of subproject design for the PACs. Jujube with walnut is one of the most popular innovative products on the market. Many processing enterprises are producing jujube walnuts with simple processing technique, resulting in product quality and potential food

safety issue. The subproject design will comply with National Food Safety Standard for Nuts and Seeds Food (GB19300-2014). Quality control will be implemented throughout the product including raw material testing at pre-construction stage, specific production and processing procedures during construction, as well as product quality, hygienic indicators, packaging, fresh-keeping, transportation, storage and sales control in post-production stage.

70. Resource use and reuse. The design of the subprojects incorporates features to avoid or reduce environmental impacts and enhance sustainability. Design features include adoption of water use efficiencies, and use to replace power and fuel such as use biomass-fired boiler to replace original coal-fired boiler, and conversion of solid residues such as biomass ash to fertilizer.

71. Sustainable use of water. Little monitoring of current water quantity or quality is conducted currently, but will be required as part of the EMP. This will facilitate better water management by the Water Resources Boards and promote the sustainable use of water resources.

72. Infrastructure improvement and management. The project will rehabilitate agricultural infrastructure. Furthermore, the project will promote good management of the constructed infrastructure. This will contribute to improved efficiency for water and electricity use and waste management.

73. Overall improved project design and integration with safeguards to avoid and minimize impacts. The project benefits described here have been planned through close coordination between the government, design institutes to strengthen subproject design, construction, and operations. Key design elements include proper management of wastewater, and other solid waste treatment systems.

74. Socio-economic benefits. The subprojects will result in higher incomes. Specifically, beneficiaries, including farming and low- income households, will benefit from the project in following ways:

i. improvement of agricultural infrastructure facilities; ii. additional income from cooperation with enterprises in terms of dividend from leasing farmland to enterprises; iii. rental payment from leased land to enterprises; iv. cooperation with the PACs in terms of purchase of farm products at agreed prices; v. wage income from increased temporary and permanent employment provided by participating enterprises; and, vi. the farmers that work with the PACs (located in the surrounding areas), as well as members of the single cooperative, will also receive technical training and support from the technical extension officers of the provincial and county agricultural bureaus, and project implementation consultants. Training will include improved agricultural production and land management, including for water use efficiency and agricultural chemicals.

V. DESCRIPTION OF THE ENVIRONMENT (BASELINE DATA)

A. Environmental Setting – Shanxi Province

75. Location and topography. Shanxi Province is in central PRC, in the middle reaches of the Yellow River (Huang He). The province has an area of 156,700 km2 and covers a large part of the fertile and densely populated North China Plain. Neighboring provinces are Shaanxi, Hebei, Shandong, Anhui, and Hubei. The topographic condition in Shanxi Province is mostly mountains and hills accounting for over 80% of the province. Two-thirds of the province is part of the PRC’s vast Loess Plateau that lies at elevations between 1,000 and 1,800 meters above sea level. The plateau is bounded by the Mount Wutai massif and Heng Mountains to the north, the Taihang Mountains to the east, and the Lvliang Mountains to the west. The southwest corner of the province is part of the highland region that extends from Gansu to Henan provinces and is covered with a layer of loess.

76. Climate. Shanxi Province has a temperate zone continental climate with four distinct seasons. The winter is long, dry and cold and the temperature throughout the province is below 0 ℃. The summer is long in the south and short in the north, hot and rainy, and the temperature in July is around 21-26°C. Spring is short, dry, windy and prone to dust storms and drought. The autumn is relatively short with warm and shiny climate. Mean annual temperature ranges from 4.2°C to 14.2°C, increasing from north to south and decreasing from valleys to high mountains. Mean annual rainfall is 400–650 mm, which is unevenly distributed. Most annual rainfall occurs during the summer. Shanxi is one of the sunniest parts of the PRC, and heat waves in early summer are common. The western region of the province receives less rainfall than the eastern region (Figure V.1).

Figure V.1: Annual Mean Temperature and Precipitation of Shanxi Province

77. Hydrology and water resources. The Yellow River forms the western border with Shaanxi Province and part of the southern border with Henan Province. There are five major river basins in the province, which drain from north to south: Datong, Xinding, Jinzhong, Jiannian, and Shangdang. Major rivers have permanent flow, but most streams exhibit seasonal flow, reflecting the seasonality of rainfall, and have large flows in the rainy season and low or no flow during winter (Figure V.1). According to Second Assessment of the Water Resources of Shanxi Province, the annually available water resources in a normal year, calculated over the period 1956-2000 is 12.38 billion m3 in Shanxi Province. Of this volume, the amount of surface water (river runoff) is 8.7 billion m3; that of groundwater (estimated on the basis of infiltrated precipitation) is 8.4 billion m3. The river base flow (the amount that has been calculated in both categories — i.e., groundwater and surface water) is 4.7 billion m3. Irrigation is the largest water user and in 2014 utilized 64% of total extracted water resources in the province. Other large water uses are for industry and urban households, which used 19.9% and 12.8% respectively of the total extracted water resources. Other, smaller users include rural households, forestry, fisheries, livestock, and ecological flow allocation.

78. Much of northern PRC, including Shanxi Province, has insufficient surface water resources for livelihoods and economic development, and groundwater is a key water resource. The groundwater resources of Shanxi are being exploited at an unsustainable rate. Since 2009, total groundwater resources have decreased significantly and will continue to increase due to rising populations and economic development. Groundwater “cones of depression” (land subsidence) have been experienced in many parts of the province. Climate change (especially rising temperatures and altered precipitation) may further impact the recharge and long term status of groundwater tables.

79. Soils. Soils in the province include several types of light brown and brown forest soils in the mountainous regions, alluvial soils in low-lying areas of the central and southern regions, and loess soils. The ground is mostly covered with loosely structured loess, which erodes easily under the influence of gravity, water and wind. Vegetation is sparse. Natural secondary forests and natural grasslands are distributed mainly in forests areas, mountainous areas, and upland steppes. The annual precipitation in Shanxi is limited and concentrated, with a large evaporation rate. As a result, the area is dry and prone to droughts.

fifth of the province’s total land ۔-Vegetation, flora, and fauna. Forests cover one .80 area although they are mostly re-growth communities which have been subject to multiple cycles of clearance, burning and/or logging for millennia. Few natural forests remain, although isolated patches occur on steep slopes. More than 2,700 plant species occur in the province, mainly forest species, including oaks, pines, buckthorns, and honey locusts (on dry southern slopes) and lindens, hazels, maples, and ash (on humid northern slopes). Low-lying areas mainly support secondary regrowth of shrubs, grasses, and plantings for landscaping. Threatened fauna occur in some regions including Brown-eared Pheasant (Crossoptilon mantchuricum), Sika Deer (Cervus nippon) and Red-crowned Crane (Grus japonensis).

B. Environmental Baseline at Project Counties and Sites

81. Site assessments. For the two subprojects, assessment was undertaken of the local hydrology and water resources, ecological values, ambient environmental conditions (air, noise, soil, water quality), and existing management practices, in the existing facilities and proposed subprojects. Because the planned facilities under the ADB-funded project will be adjacent to and/or physically linked with the existing facilities of the PACs, survey locations were focused and well-defined. In addition to field visits by the DEA design institutes, and stakeholder consultations. Water demand projections for existing and proposed facilities were included in all subproject FSRs based on projected agricultural and industrial processes,

number of employees and other criteria.

82. Overview of subproject sites. Elevation at the subproject sites ranges from 1,000 m to 1,500 m above sea level. For hydrology and water resources, the two PACs are located in areas of intermittent streamflow based on summer rainfall as only major rivers have perennial flow and none of the PACs are located near major rivers.

83. Groundwater. Groundwater is predominantly used for water supply, and wastewater is generally re-used for agricultural irrigation after appropriate treatment. Current PAC operations involve groundwater abstractions approved by local governments and water resources bureaus, but without monitoring or abstraction quotas. Given the lack of detailed abstraction permits or licenses, there has been little incentive for the PACs to conserve or manage water efficiently. Over-extraction of groundwater leads to groundwater depletion, which has far- reaching consequences, including the drying up of lakes and wetlands but increased salinity of groundwater supplies. Over-extraction also causes land subsidence, which causes damage to infrastructure as well as reduces aquifer storage capacity. The new PRC ‘Water Pollution Prevention & Control Action Plan’ (also known as the “Water Ten Plan”) set out targets to strictly control groundwater extraction and groundwater pollution by 2020.

84. Ambient conditions for air, noise, water quality, and soil. The PAC sites generally meet PRC surface water, air quality and noise ambient standards. Air and noise quality is generally good while surface water quality varies from relatively good (Class II) to poor (Class V). The climate data available for the PAC counties shows that temperatures are much colder with less precipitation in the northern counties than in southern Shanxi Province. Baseline environmental data for the PAC sites is shown in Appendix 1

85. Biodiversity and ecological values. The land cover of the PACs is agricultural and/or industrial and the PACs all involve expansions of existing facilities. As such, there is little natural flora or fauna associated with these sites. No threatened species of flora or fauna are known to occur. None of the subprojects or existing facilities are located within or adjacent to water source protection areas, nature reserves, or scenic reserves, although at least two are located near rivers (Section VI.A). No critical habitats occur in the existing or proposed sites.

86. Physical cultural resources. No cultural resources are known to occur in the existing or planned subproject sites. In the event that such resources are detected during construction or operation, chance-find procedures will be initiated (Appendix 2).

87. Socioeconomic and administrative status. Shanxi Province administers 11 municipalities with 85 counties, 11 county-level cities, 23 urban districts, and 1,169 township- level units including 564 towns and 632 townships. The current project is in two municipalities (Yuncheng, Lvliang) with 2 counties. In 2016, the gross domestic product (GDP) of Shanxi Province was CNY1,293 billion, averaging CNY35,199 per capita, about 65.2% of the national average. GDP composition ratios for the primary, secondary, and tertiary sectors were 6.1%, 38.1%, and 55.8%, respectively. There are 4.07 million hectares (ha) (61.02 million mu) of farmland. On average, each rural person had about 0.11 ha (1.66 mu) of farmland, which was little bit higher than the national average. Income in rural areas was CNY10,082 per capita in 2016, which was only 81.5% of the national average (CNY12,363). For urban residents, the average income was CNY27,352 per capita, which was about 81.3% of the national average (CNY33,616). Like most other provinces, Shanxi has experienced rapid economic growth over the past two decades. In 2012, the total population was 36.108 million. Ruicheng County has an area of 1,176 square kilometers and a total population of 406,000, including rural population of 289000. In 2017, the GDP of Ruicheng County was CNY 8.82 billion. The per capita income of urban and rural residents reached CNY 27,487 and CNY10,404 respectively which was about 75.5% and 77.5% of the national average (CNY36,396 for urban residents

and CNY13,432 for rural residents). Shilou County has a total land area of 1,808 square kilometers and an area of 495,000 mu of cultivated land. The county administers 4 towns and 5 townships with 119 administrative villages. The total population is 119,000 among which 98,000 is rural population. In 2017, the GDP of Shilou County was CNY959 million. The per capita income of urban and rural residents reached CNY 13,800 and CNY3,277 respectively which was about 37.9% and 24.4% of the national average.

88. Key income sectors. The economy largely depends on dwindling aluminum and coal reserves, as well as agriculture, heavy industry, tourism, and retail. Due to widespread soil erosion, only about one-third of the province is under cultivation. Extensive soil and water conservation efforts in the past several decades have taken the form of terracing, afforestation, digging irrigation canals, diking cultivated plots, soil desalinization, and land reclamation along rivers. The total cultivation area in Shanxi Province was 56.93 million mu in 2005. The main crops are corn, wheat, oil plants, cotton, vegetables and fruit. The output of “minor cereals”, mainly millet, beans, and potato, account for one third of the agricultural output of the province, and Shanxi is known as “the kingdom of minor cereals”. These products are known for their high nutrition and quality. In 2005, meat production was 0.906 million tons. The demographic profiles for the project counties are summarized in Table V.1.

Table V.1: Demographic Profile of the Project Counties, 2015 (unit: 10,000; %) # house- Resident Municipality County Male Female Urban Rural holds population Yuncheng Ruicheng 151,544 406,420 206419 200001 191408 215012 Lvliang Shilou 43,838 115,211 60134 55077 48566 66655 Shanxi 12,977,400 36,641,200 18,790,900 17,850,300 20,163,700 16,475,000 Source: County Statistical Yearbooks, 2015

89. In 2015, the two project counties/districts had a total GDP of CNY850 million, or CNY12,934 per capita (65% of the provincial average, CNY35,018). The proportion of the agriculture sector in the overall economy, which is an important indicator of the level of economic development, was 27.46% in the project counties/districts, higher than the provincial average (6.2%). The proportion of the secondary sector (i.e., the industrial and building sector) was 17.3% in project counties/districts, lower than the provincial average (40.8%). The proportion of the tertiary sector was 55.25%, slightly higher than the provincial average (53.0%). Table V.2 presents basic social and economic data on the project area.

Table V.2: Economic Performance in the Project Area (2016) (1,000 CNY) County GDP (1,000CNY) Primary Secondary Tertiary GDP per Rural income (%) (%) (%) capita (CNY) per capita (CNY) Ruicheng 770,949 29.7% 31.4% 38.9% 19,017 9,225 Shilou 78,728 25.2% 3.2% 71.6% 6,851 2,727 Total Counties 849,677 27.45% 17.30% 55.25% 12,934 5,976 Shanxi 1,280 6.2% 40.8% 53.0% 35,018 Province billion CNY Source: Shanxi Statistical Yearbooks, 2016

VI. ANTICIPATED ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES

90. This section identifies potential adverse environmental impacts that may occur during the project construction and/or operational phases, and mitigation measures to avoid and/or reduce these risks. These measures are included in the project EMP (Appendix 2).

A. Pre-Construction Phase

91. Prior to construction, the following measures will be implemented.

i. Institutional strengthening. (a) One full-time PPMO Environment officer and one PPMO Social Officer will be appointed to the project (potentially the same officers who were assigned throughout the project preparation phase of this Addendum IEE) to coordinate EMP implementation. (b) Under the loan consulting services, the PMO will hire an environment safeguard specialist (ESS) to provide external support. (c) At the county level, each CPMO will include a full-time environment officer and social officer. The terms of reference for these personnel are in the EMP (Appendix 2). ii. Updating the EMP. The mitigation measures defined in the EMP will be updated, if needed, based on the final technical designs. This will be the responsibility of the PPMO, CPMOs, and design institutes. iii. Update the list of sensitive receptors. In the event that subproject locations are changed during the detailed technical design and/or any subprojects are removed or added, the list of sensitive receptors will be updated as needed and relevant mitigation measures will be added to the EMP to protect any affected communities or natural resources. iv. Contract documents. All tender documents will include the EMP obligations, including the environmental monitoring program. This will be the responsibility of the local design institute, with support of the PMO, CPMOs and the ESS. v. Training in environmental management. The ESS, in conjunction with the PPMO Environment Officer and personnel from the Shanxi EPD and county EPBs, will provide training on implementation and supervision of environmental mitigation measures to the PACs, contractors, and construction supervision companies (CSCs). This will be organized the PPMO. vi. Grievance redress mechanism (GRM). The PPMO, CPMOs, and PACs will implement the project GRM within at least 60 days of project effectiveness, to ensure that communities are well informed and have the opportunity to discuss any concerns (further to the public consultations already conducted for this Addendum IEE; Section VIII). vii. Bidding document and contract documents. The EMP will be included in the bidding documents and contracts for procurement of civil works, goods and services. All contractors and subcontractors will be required to comply with the EMP. viii. Contractor obligations. In their bids, contractors will respond to the environmental clauses for contractual terms and EMP requirements. Prior to construction, each contractor will develop a site EMP, based on the project EMP (Appendix 2), and assign a person responsible for environment, health, and safety (EHS). The site EMP shall include the following: (a) site drainage and soil erosion protection; (b) spill control and management; (c) health and safety; (d) surface water and groundwater protection; (e) temporary traffic management; (f) construction site access control. The site EMP will be submitted to the environmental officers of each CPMO for approval, with support of the EPBs.

ix. Environmental monitoring. The PACs will establish and commence the environmental monitoring (Appendix 2) to monitor their environmental performance during the construction and operational phases. The CPMOs, assisted by the ESS, will review compliance by the PACs with the EMP.

B. Construction Phase

1. Soil erosion

92. Limited soil erosion is expected because all subprojects are expansions of existing facilities and will be located on modified and stabilized surfaces i.e. there will be little clearance of vegetation. Some erosion may occur during earthworks, including excavation, transfer of spoil, and temporary exposure of cleared surfaces. To minimize the risk of soil erosion, contractors for all subprojects will be required to prepare a Site Drainage and Soil Erosion Management Plan. This will include the following measures：

i. Maintain slope stability at cut faces by implementing erosion protection measures such as terraces and silt barriers. ii. Prior to earthworks, construct berms or drainage channels around the perimeter of the spoil and borrow sites, to capture soil runoff and direct rainwater away. iii. Plan and implement construction in staged sections, with one section completed and stabilized before beginning the next. iv. Stabilize all cut slopes and other erosion-prone working areas. Protect erosion- prone sites with sand bags. v. Stabilize all earthwork disturbance areas within 30 days after earthworks are completed. vi. Minimize open excavation areas during trenching and river regulation activities. vii. Use appropriate compaction techniques for pipe trench construction. viii. Provide temporary detention ponds or containment to control silt runoff. ix. Construct intercepting channels and drains to prevent runoff entering construction sites, and divert runoff from sites to existing drainage or open ground for watering the vegetation. x. Limit construction and material handling during periods of rains and high winds. xi. Properly slope or re-vegetate disturbed surfaces e.g. pipeline trenches and cut banks. xii. Landscaping will only use native plant species. xiii. Construction camps and storage areas will be located to minimize land area required.

2. Water resources management and water pollution control

93. Water will be required for construction works e.g. concrete mixing, washing of aggregates, vehicle and machinery wash-down, general cleaning, and provision of drinking water for personnel. At the same time, the use of water will, without management, generate wastewater that could pollute nearby waterbodies. This includes wastewater generated from inappropriate storage and handling of fuel, accidental spills, and domestic wastewater and sewage from construction camps. The Shude subproject is located within 100 m of surface stream and 1,800m from the nearest well. The Wei’erfu subproject is located over 1 km from the nearest surface water body and 2080m from the nearest well. The risk of water pollution is considered low. The following measures will be applied by all subprojects for

water resources management and to minimize the risk of water pollution.

i. Contractors will be responsible for sourcing water for construction camp use. Prior to any construction, contractors will estimate the water needs for the construction duration and identify water sources with the county EPBs and water resources bureaus. ii. No groundwater shall be extracted without extraction permits/approvals. iii. Contractors will develop actions for control of oil and other dangerous substances as part of their site EMPs. iv. Wastewater from construction activities will be collected in sedimentation tanks, retention ponds, and filter tanks to remove silts and oil. v. Periodic monitoring of water quality within the retention ponds and checking for any leakage. vi. All areas where construction equipment is being washed will be equipped with water collection basins and sediment traps. vii. Fuel storage, maintenance workshop and vehicle cleaning areas must be stationed at least 500 m away from the nearest water body. viii. Storage facilities for fuels, oil, and other hazardous materials will be within secured areas on impermeable surfaces, and provided with bunds and cleanup installations. ix. Contractors’ fuel suppliers must be properly licensed. They shall follow proper protocol for transferring fuel and the PRC standard of JT3145-88 (Transportation, Loading and Unloading of Dangerous or Harmful Goods). x. Earthworks along rivers, other waterbodies and wetlands will be accompanied by measures to minimize sediment runoff into the water bodies, including sediment traps. xi. Labor camps will be located at least 500 m from water body. xii. Portable toilets and on-site wastewater pre-treatment systems will be installed at construction camps along with proper maintenance protocols.

94. For the Shude subproject that located adjacent to surface water body, contractors will also apply the following additional measures: (i) installation of sediment traps along excavation channels and (if needed) stream banks, to prevent sediment runoff; and (ii) monitoring of water quality in the surface water bodies within 50 m downstream of the construction sites.

3. Air pollution

95. Sources of air pollution will include: (i) dust from excavation, filling, loading, hauling, bare earth surfaces, uncovered construction areas, and vehicle movements on unpaved roads, especially in windy days; (ii) aggregate preparation and concrete-mixing; and (iii) vehicle and machinery emissions (gaseous CO, CH and NO2). These various sources of air pollution could affect nearby sensitive receivers, including residential areas. Two villages are located within 100 m of two subprojects (Table VI.1) and may be particularly vulnerable to dust or other air pollution during construction. Pending effective implementation of the following mitigation measures, net impacts are assessed to be low, due to: (i) the temporary nature of works; (ii) the relatively small scale of works;

Table VI.1 Sensitive Receptors of Air pollution and Noise

Subproject Sensitive site Direction of project site Distance to project site Wei’erfu suproject Huayue village West 50m Dongguan village North west 820m Shude subproject Chagou village North west 30m Nantou village South east 380m

96. Contractors for all subprojects will be required to include the following mitigation measures in their site EMPs.

i. Spraying water daily on construction sites where fugitive dust is being generated. ii. Locating asphalt plants and mixers >500 m downwind from the nearest residential areas and other sensitive receptors. iii. Dust suppression near sensitive receptors e.g. schools, hospitals, residential areas. iv. Storing petroleum or other harmful materials in appropriate places and covering to minimize fugitive dust and emission. v. Covering materials during truck transportation, in particular, fine material, to avoid spillage or dust generation. vi. Ensure vehicle and machinery emissions comply with PRC standards of GB18352-2016, GB17691-2018, GB11340-2018, GB3847-2018, and GB18285-2018. vii. Timely monitoring of air quality and inspections during construction, as defined in the project EMP. viii. Unauthorized burning of construction waste material shall be subject to penalties for the Contractor, and withholding of payment.

4. Noise

97. Construction will involve excavators, bulldozers, scrapers, dredgers, concrete-mixer, trucks and other heavy machinery. Noise will be temporary and localized. The estimated construction noise values (at 5 m distance from the machinery and vehicles) based on Class II of (GB3096-2008) are shown in Table VI.2.

Table VI.2: Noise Levels Emitted by Construction Machinery at 5 m Distance No. Machine Type Maximum Sound Level Lmax (B) 1 Excavator 85-95 2 Concrete mixer 86 3 Bulldozer (100 horse-power) 78-96 4 Scraper 85-95 5 Heavy truck 88-93 (speed up), 84-89 (steady speed) 6 Medium-duty truck 85-91 (speed up), 79-85(steady speed) 7 Drilling machine 96 8 Wheel loader 85-92 9 Vibrating roller 86 10 Two-wheeled two-vibrating roller 81 11 Asphalt concrete paver 82 12 Generating set 88-92

98. The PRC Standard of Noise Limits for Construction Sites (GB12523－2011) specifies the noise limit at boundary of construction site as 70 dB (A) during daytime and 55 dB (A) during nighttime. The standard compliance noise impact scope (m) of different machineries is listed in Table VI.3.

Table VI.3: Noise Values of Construction Machineries at Different Distances dB (A) Machinery Name Distance to Machinery 15 m 20 m 40 m 60 m 80 m 100 m 130 m 150 m 200 m Excavator 71 69 63 59 57 55 53 51 49 Bulldozer 72 70 64 60 57 56 54 52 50 Loader 61 59 53 49 47 45 43 41 39 Heavy truck 69 67 61 57 55 53 51 49 47 Drilling machine 72 70 64 60 57 56 54 52 50 Concrete-mixer 71 69 63 59 57 55 53 51 49 Applicable Standard 70 (daytime)， 55 (nighttime) Source: Project IEE, 2017

99. The noise impact distances during construction for compliance with the PRC Standard of Noise Limits for Construction Sites (GB12523-2011) are up to about 20 m away from the source during the day and 130 m at night (Table VI.4). Since both of the Wei’erfu PAC and Shude PAC are fenced with solid walls that can reduce noise level by 15-20 dB, and all of the construction sites are within the PACs and more than 20m away from the walls. Moreover, construction activities will be controlled mostly at daytime. Therefore, the noise impact during construction is not significant. The following measures will be implemented to comply with PRC construction site noise limits.

i. Ensure that noise levels from equipment and machinery conform to PRC standard of GB12523-2011. Properly maintain construction vehicles and machineries to minimize noise. ii. Apply noise reduction devices or methods for high noise equipment operating within at least 130 m of sensitive sites e.g. schools, villages, residential areas. iii. Prohibit high noise equipment within 40 m of these receptors. iv. Locate high-noise activities (e.g. rock crushing, concrete-mixing) > 2 km from sensitive areas. v. No work involving construction machinery or transport will be allowed between 21:00 and 07:00, in accordance with provincial regulations. vi. Place temporary hoardings or noise barriers around noise sources during construction. vii. Mobile sound barriers will be used for sensitive receptors during construction viii. When passing through villages, construction trucks will reduce speed to no more than 20 km/h. ix. Provide ear plugs to construction workers working at noise environment. x. Monitor noise levels at sensitive receptors during construction, and at the same time, conduct regular public consultation to identify any community concerns. If noise standards are exceeded, and/or community feedback indicates noise disturbance, equipment and construction conditions, including the times of construction utilizing high-noise machinery, shall be checked, and mitigation measures shall be implemented to rectify the situation.

100. Pending effective implementation of the mitigation measures, net impacts are assessed to be low, due to: (i) the temporary and small scale of works; and (ii) the distance of most subprojects (over 0.5 km) to the nearest settlements.

5. Vibration

101. Mechanical vibration will be generated by construction works and may be sudden

and discontinuous. This could cause stress among workers and communities. To address these issues: (i) excavation, stone-crushing and compaction operations will be prohibited at night; (ii) communities will be consulted prior to large earthworks to ensure they are informed, and, to avoid sensitive timing e.g. exams at nearby schools or festivals.

6. Solid waste

102. Solid waste will be generated from construction waste and worker camps. Covered garbage bins will be installed in the camps. The construction contractors will be responsible for: (i) the provision of sufficient garbage bins at proper locations; (ii) to ensure that bins are covered, to prevent entry of rain water and/or scavenging by animals; and (iii) to make arrangements with municipal waste collection systems for the regular collection and disposal of contents. Construction waste will be regularly transported off-site by the contractor for disposal at landfill sites approved by the local land resource bureaus, in compliance with the PRC Law on Prevention and Control of Environmental Pollution by Solid Waste, and, standards for scrap material and demolition waste disposal by the Ministry of Housing and Urban-Rural Construction.

7. Ecological resources

103. No significant ecological values are known to occur in the proposed subproject sites (Section V.B). To minimize the clearance of vegetation and to support site rehabilitation, the following measures are included in the EMP.

i. The construction of access roads, material preparation fields, construction camps and management offices will minimize the removal and disturbance to the original vegetation. As far as possible, clearance of vegetation will be avoided. ii. Removed original soils will be stored for landscaping uses. iii. Prior to construction, any vegetation and habitats in the site will be clearly demarcated, as no-go zones for workers and machinery. Workers will be trained to minimize disturbance to and protect any wildlife encountered. iv. If clearance is required the area will be immediately re-vegetated afterward. v. All re-vegetation will use native plant species of local origin, to maintain genetic fitness and reduce the risk of introducing non-local and invasive species. vi. To reduce the risk of water-borne diseases, including from mosquitos, equipment will be regularly checked to prevent stagnant, standing water. Water storage equipment will be covered. Any sediment catchment ponds and other temporary, exposed water bodies for construction will be maintained with minimal vegetation in and around the sites, and will be drained immediately upon completion, to minimize the risk of mosquito breeding.

8. Community and worker health and safety

104. Traffic congestion and risk of accidents will increase with construction traffic, causing temporary inconvenience to traffic, residents, commercial operations, and institutions. Construction may cause unexpected interruptions in municipal services and utilities because of damage to pipelines for water supply, drainage, heating supply and gas supply, as well as to underground power cables and communication cables (including optical fiber cables). Contractors will implement the following EMP measures to reduce risks to workers and community health and safety.

i. Traffic management. A traffic control and operation plan will be prepared, to

be approved by the local traffic management administrations before construction. The plan will include provisions for diverting or scheduling construction traffic to avoid morning and afternoon peak traffic hours, regulating traffic at road crossings, selecting transport routes to reduce disturbance to regular traffic, and reinstating normal routes as soon as the construction is completed. ii. Underground facilities survey and protection. Pipeline construction activities will be planned to minimize disturbances to utility services. Three-dimensional detection of underground facilities will be conducted before construction where appropriate. iii. Information disclosure. Villagers, residents and businesses will be informed in advance through media and information boards at construction sites of the construction activities, given the dates and duration of expected disruption. iv. Construction site protection. Clear signs will be placed at construction sites in view of the public, informing people about the project grievance redress mechanism (Section IX), and warning people against potential dangers such as moving vehicles, hazardous materials, and excavations, and raising awareness on safety issues. Heavy machinery will not be used at night. All sites will be secured, disabling access by the public through appropriate fencing whenever appropriate.

105. The construction industry is considered to be one of the most hazardous industries. Intensive use of heavy construction machinery, tools, and materials present physical hazards including noise and vibration, dust, handling heavy materials and equipment, falling objects, work on slippery surfaces, fire hazards, and chemical hazards such as toxic fumes and vapors. All contractors will include an environmental, health and safety management plan in their site EMPs, which will include the following.

i. Provide a clean and sufficient supply of fresh water for construction sites and camps. ii. Provide adequate number of latrines at construction sites and work camps, and ensure that they are cleaned and maintained in a hygienic state. iii. Efficient control of solid waste (collection and disposal) and standing water, to maintain hygienic conditions and minimize disease risks iv. Provide personal protection equipment to comply with PRC regulations e.g. safety boots, helmets, gloves, protective clothing, goggles, ear plugs. v. Emergency preparedness and response procedures for accidents and emergencies e.g. injuries and hazardous material spills. These procedures will be submitted to the local EPBs for review and approval. Emergency phone link with hospitals in the project towns will be established. A fully equipped first-aid base in each construction camp will be organized. vi. A records management system that will store and maintain easily retrievable records against loss or damage will be established. It will include documenting and reporting of occupational accidents, diseases, and incidents. The records will be reviewed during compliance monitoring and audits. vii. Occupational health and safety matters will be given a high degree of publicity to all work personnel and posters will be displayed prominently at construction sites. viii. All workers will be given basic training in sanitation, general health and safety matters, and work hazards. An awareness program for HIV / AIDS and other communicable diseases will be implemented for workers and the local communities. ix. Core labor standards will be implemented. Civil works contracts will stipulate priorities to (i) employ local people for works, (ii) ensure equal

opportunities for women and men; (iii) pay equal wages for work of equal value, and pay women’s wages directly to them; and (iv) not employ child or forced labor. Specific targets for employment have been included in the project social and gender action plans.

9. Physical cultural resources

106. No physical cultural resources, including officially listed heritage or archaeological sites or artefacts, are known from the subproject areas. Construction activities have the potential to disturb other cultural resources. Article 1.9 of the PRC Standard Template for Construction Contracts (GF-2013-0201) (Ministry of Urban and Rural Construction and Housing) requires that: (i) all cultural and historical relics and historical sites, fossils, coins and other objects of geological research and archeological value belong to the state; (ii) once the above-mentioned physical cultural resources are unearthed, the contractor shall adopt effective and practical protection measures and prevent any personnel from moving or damaging such objects; (iii) the contractor shall immediately report to the local relics bureau and inform the construction supervision agent; (iv) the employer, construction supervision agent and contractor shall implement effective protection measures in accordance with instructions of the local relics bureau; (v) the associated incremental costs and / or delays in construction schedule will be borne by the employer; and (vi) in case the contractor fails to report timely or conceal, the contractor shall bear the consequent loss or damage as well as legal responsibility. Chance-find procedures that address these measures are included in the EMP (Appendix 2), and include: immediate suspension of works; notification of the local cultural heritage bureau, PPMO, and CPMO; and, works resumed only after clearance of the bureau. These procedures will be included in the construction contracts for the project.

C. Operational Phase

1. Sustainable use of water resources

107. Shude subproject operations will be sourced from groundwater wells dig by the PAC while Wei’erfu subproject operation will be sourced from municipal water systems. For the current project, the over-extraction and/or pollution of groundwater represents a key environmental issue for management, because the two subprojects are located in regions subject to over-extraction and/or pollution of groundwater. All existing facilities (to which the new subprojects will be linked) are confirmed to be using government-approved groundwater wells or other supply sources, and the new subprojects will also utilize these approved sources. Despite this, the PACs do not monitor their water usage and there is little no data on extraction volumes, size of aquifers, or the sustainability of existing or proposed operations. This is a common issue in many regions of the PRC. Groundwater protection is recognized as a national priority and is listed in the PRC’s Water Pollution Prevention and Control Action Plan (“Water Ten Directives”) (State Council, April 2015).

108. Ideally, water balance assessments would be conducted for each PAC, in which anticipated rates of extraction are compared against recharge rates and volumes for each aquifer, as well as cumulatively for each county, the province and PRC. This is not possible given the lack of data for the subprojects and local aquifers. Instead, the following measures will be implemented by all subprojects.

i. Preparation of water management plans (WMPs) for each subproject. These will include water conservation measures and a simple monitoring program. ii. The monitoring program will measure water extraction volume from the extraction points of each subproject, specifically: (a) all extraction wells (for Shude subproject that use groundwater); (b) main supply pipeline entering the site (for Wei’erfu subproject that use municipal supply); and, (c) main supply

pipeline transferring rainwater from the collection facilities to processing facilities (for subprojects that use rainwater collection). iii. Installation of simple water meters.

2. Management of wastewater and protection of water quality

109. Wastewater will be produced in all subprojects. This will include waste water from processing and the use of machinery and vehicles for daily operations (all subprojects), and water from cleaning and domestic sewage of on-site staff (all subprojects) (Table VI.5). Wastewater treatment measures have been tailored to each subproject and include septic tanks, sedimentation tanks, and small on-site wastewater treatment plants (WWTPs) (Table VI.5). All subprojects will install emergency overflow ponds (of varying sizes) for periods of WWTP maintenance and/or problems.

Table VI.5: Wastewater Management for the Subprojects

Enterprise Type of Wastewater Treatment Process Mitigation measures Shanxi Wei’erfu Office domestic Pretreated at proposed new WWTP to be conducted Biotechnology wastewater and process WWTP with capacity of 150m3/d. as per design Co., Ltd. wastewater “Hydrolysis acidizing + A2O + specifications Projected Water chlorine disinfection” technique Use=236.67m³/d will be adopt. Effluent will be Estimated waste water = discharged into municipal sewer 3 52.97m /d and finally treated at Ruicheng County WWTP. Shilou Shude Office domestic Process waste water and Wastewater from Jujube Industry wastewater, machine machine washing processing and pure Co., Ltd. washing process wastewater pretreated at water preparation wastewater WWTP. “Hydrolysis facilities will be re-used Projected Water Use = acidizing + contact for dust suppression. 118.2 m3/d oxidation” technique Wastewater from Estimated waste water = adopted. equipment washing, will 68.55 m3/d Domestic waste water be pretreated at PAC pretreated at septic tank. WWTP; All of the waste water will Wastewater from be discharged to central workshop ground sewerage system and washing and surplus finally be treated at Shilou wastewater from County WWTP processing will be discharged to local sewer network; WWTP and septic tank to be constructed as per design specifications WWTP = wastewater treatment plant.

110. Disposal of treated sludge. The two subprojects will be required to periodically empty and dispose the sludge which has settled in the bottom of treatment tanks. The treated sludge from Shude PAC WWTPdoes unlikely contain heavy metals and chemicals because of the subproject raw materials such as jujube, walnut do not contain heavey metals and no chemical substance added during processing. The sludge from Shude PAC will be used for organic fertilizer for crop production within the PAC and/or surrounding lands. The sludge from Wei’erfu WWTP may contain hazardous substances such as laboratory chemicals. The Wei’erfu PAC will contract a specialized company certified for the collection of such substances. These hazardous substances will be finally transported to and disposed at the Yuncheng Ankang medical waste disposal plant, the only one certificated medical waste disposal plant in Yuncheng City. Other sludge will be disposed in landfills. Total sludge volumes will be small, and the need for disposal will be intermittent, due to the small size of the PAC and WWTP.

3. Management of solid waste – litter and other products

111. Operational activities of the subprojects will result in organic and inorganic wastes, including fruit waste and discarded materials from the subproject processing facilities and offices. Organic waste will be recycled where possible, including as on-site fertilizer for crop production. Other general and office solid waste will be disposed in landfill. In all project counties, established litter collection processes and transport systems to nearby landfills are already in place for the existing facilities, and these will be extended to the new subprojects. The two counties have certified landfill sites whose capacity and disposal systems comply with the 13th five-year master plans for county development. As per the PRC regulations, landfill capacity is developed to accommodate existing and planned county development. For the disposal of specialized substances, including laboratory and/or medical wastes (e.g., the infectious scrapped materials produced in the fermentation workshop, the animal faeces and corpses produced in the animal house used syringes after vaccinations from Wei’erfu subproject), such waste will be collected by specialized waste disposal agencies, in compliance with PRC regulations for the collection and disposal of agricultural medical waste. Overall, no significant impacts are anticipated for solid waste collection, because existing waste collection systems are already in place, the relatively small scale of the subprojects will not generate large volumes of waste, and, project activities are spread across 2 counties.

4. Air quality and odor

112. Modelling were conducted to predict the Impact on air quality. SCREEN3 was used to predict the impact from Wei’erfu subproject and AERSCREEN was applied to predict the impact from Shude subproject. For Wei’erfu subproject, it is predicted that the maximum NH3 3 ground concentration is 8.16μg/m which is 4.08% of the standard limit, the maximum H2S ground concentration is 0.68μg/m3 which is 6.8% of the standard limit. Most of the subprojects will be located in sites that meet Class II air quality standards. For Shude subproject, the predicted maximum concentration of PM10, SO2 and NOx are all less than 10% of the standard limits (Table VI-6). Therefore the impacts are not significant. Even though, the Shude subproject design institute will seek the possibility of using gas-fired boiler to instead of using biomass-fired boiler.

Table VI-6 Air Emission and Impact Prediction of the two Subprojects

Pollution Pollutants Annual Emission Max ground Max ground Standard Percentage Source emission concentration concentration concentration (μg/m3) of standard (t/a) (mg/m3) distance (m) (μg/m3) (%) Wei’erfu subproject Animal NH3 0.16 2.25 740 0.83 200.00 0.41 room H2S 0.01 0.15 740 0.05 10.00 0.53 WWTP NH3 0.16 0.15 99 8.16 200.00 4.08 H2S 0.01 0.06 99 0.68 10.00 6.83 Shude subproject Millet PM10 0.062 7.2 95 6.65 450 1.48 processing Boiler Dust 0.065 9 179 1.07 450 0.24 SO2 0.28 49 179 4.52 500 0.90 NOx 0.68 118 179 11.18 200 5.59

5. Noise

113. Most of the subprojects will be located in sites that meet Class II noise standards. The ADB-funded activities will be similar to the existing activities at the established facilities; due to the relatively small scale of the subprojects, they do not involve large noise-emitting machinery or activities. Many nearby settlements are located over 500 m from the subproject locations. Machinery which emits noise (e.g. processing machinery, small on-site WWTPs) will be housed in protective covering within the subproject facilities. All noise emissions will comply with PRC Class I or Class II standards of the Ambient Acoustic Quality Standard (GB3096-2008) at the site boundaries.

6. Humane treatment of livestock

114. The Wei’erfu subproject need use experimental animals. Human treatment of livestock during raising is an important ethical issue and also results in healthier animals. Key mitigation measures will include (i) sufficient space for individual animals to move within and prevention of over-crowding; (ii) maintenance of clean facilities; and (iii) humane slaughtering techniques. This topic is included in the EMP training program.

7. Community and worker health and safety

115. All PACs will be required to comply with PRC environmental, health and safety regulations for the safety of on-site staff as well as visitors and contractors. Health and safety procedures will be included in the on-site operational procedures and will include the following.

i. Each PAC shall prepare (or extend the existing) site environmental health and safety plans for each subproject, in compliance with the PRC Labour Law, Labour Contract Law, and Special Rules on the Labour Protection of Female Employee. ii. All reasonable steps are taken to protect any person on the site from health and safety risks. iii. Machineries and equipment are safe and well maintained. iv. Adequate training or instruction for occupational health and safety is provided, especially for new workers. v. Adequate supervision of safe work systems is implemented. vi. Entry to hazardous sites or access to equipment is strictly regulated. vii. Workers and other staff are issued with protective gear appropriate to their tasks.

viii. All electrical connections in the subprojects will be completed and periodically checked by qualified electricians. ix. Openings of water storage tanks at ground level will be fenced and gated. x. Health and safety protocols will be applied for the handling, application and cleanup of agricultural chemicals, in compliance with the PRC Regulations on Safe Management of Hazardous Chemicals (Decree 591).

D. Climate Change and Greenhouse Gas Emissions

116. Potential environmental impacts were assessed of (i) the effects of project greenhouse gas emissions (GHGs) on the climate; and (ii) the effects of climate change on the project.

117. This section summarizes the results of the project climate risk and vulnerability assessment (CRVA). Climate change over the project operational life (estimated to be 30 years, i.e. approximately 2040–2060) was modeled. Climate change risks were assessed for all subprojects based on CMIP5 climate modelling outcomes for 2050 (2041–2060) under the RCP4.5 and RCP8.5 climate change scenarios. It is projected that annual mean temperature will increase for 2.3ºC and 3.0ºC for the four northern cities whilst temperature increases for middle and southern cities are 2.2ºC and 2.9ºC under RCP4.5 and RCP8.5 climate change scenarios, respectively. CMIP5 models are also projected approximately 8%–10% of precipitation increases across the province. However, the seasonal pattern of precipitation is not changing much although winter precipitation is projected to increase more than summer in terms of percentage changes. Furthermore, climate change will also cause increased frequency and intensity of extreme weather events, such as summer rainfall storms, heat waves, and increased inter-seasonal and inter-annual variability in temperature and precipitation.

118. Key expected changes are temperature increases of 2.2ºC–3.0 ºC, altered precipitation regimes, and more frequent and severe weather events. This represents the following risks to the project: (i) reduced and/or less reliable annual water supplies for crop growth, and/or processing needs; (ii) increased likelihood of crop diseases under warmer conditions; and (iii) increased need for cooling systems for storage and/or processing. Adaptation measures such as increase design storm water pipe and drainage capacity by 10% were developed for categories of food processing and cold storage.

119. The projected increases in precipitation will increase the overall water resources of Shanxi Province. However, it is not expected that will relief the water deficiency issue due to the existing water deficiency nature of the province. Further economic development will certainly exacerbate the stressful surface and groundwater resources in the province. Currently, irrigation is the largest water user in Shanxi Province, which is accounting for over 60% of the total provincial consumption in 2014. Wheat is probably the most water demanding crop because the very dry spring in the province. It is assessed that the proposed subprojects are not likely making significant impact on the province’s water resources but may affect other users locally due to the intensity of those enterprises. Therefore, water saving measures is recommended to all subprojects in their project design.

120. There are two direct climate risks to those food processing enterprises. One is severe summer rainfall storms may cause localised floods if there is not sufficient drainage capacity designed for the enterprise. The other is increases in temperature and precipitation that may accelerate the degradation of the quality of food material after harvest, hence increasing the post-harvest handling cost to food processing enterprises. Indirect climate risks are climate change caused changes in quality and quantity of food material for the

enterprises.

121. Climate risks to those cold storages are mainly the faster deteriorating rates of food ingredients, fruits, and vegetables due to increases in temperature, precipitation and humidity. As reported earlier, both temperature and precipitation are projected to increase in Shanxi Province. Therefore, adaptation measures will be taken to mitigation such risk.

122. Adaptation measures are recommended, together with mitigation practices, to all subprojects. The structural adaptation measures will be included and constructed to the proposed infrastructure in order to proof/reduce potential risks posed by climate change. Non-structural measures are operational and/or management measures to prevent/reduce climate risks. Those are summarized in the following Table VI.7.

Table VI.7: Climate Change Adaptation Measures

Subprojects Structural adaptation Non-structural adaptation Mitigation practices measures measures Food 1). Increase storm water 1). Help the food ingredient 1). Design food processing processing pipes capacity by 10% producers, mostly local workshops with energy to account for projected farmers, for maintaining saving measures, including increase in precipitation normal raw material insulation of walls, intensity supply by adapting climate upgraded heating, lighting, 2). Good insulation and change ventilation systems, and ventilation to reduce adopting more energy potential heat stresses efficient equipment to workers Cold storages 1). Design with 1). Develop improved 1). Design with improved (Various) sufficient drainage management plans to insulation capacity for the storage minimize the cold storage 2) Adopt cooling and other related time for food and ingredients equipment with high facility to avoid 2). Select refrigerants with energy efficiency damages from flash less GHG emissions and/or floods manageable in terms of safety

E. Linked Facilities and Associated Facilities

123. Under ADB’s SPS, associated facilities are defined as “facilities that are not funded as part of the project and whose viability and existence depend exclusively on the project and whose goods or services are essential for successful operation of the project” (SPS 2009: 31).

• The linked/existing facilities of the PACs. The Shilou subproject is proposed to be extended adjacent to existing PAC site. Existing facilities include an 8.4m high 1-floor, fully closed steel structure jujube processing workshop that covers an area of 2,637m2, a 1 floor office building with construction area of 1,752 m2; an 2t/h coal boiler, a set of weighbridge, power connections from local public utilities to the PAC office building and processing workshop. New subproject will be dependent on the existing processing workshop, office building, power and telecommunication networks connections within the PAC boundaries. The power connections and telecommunication networks will be extended to the new subprojects during construction. The processing workshop and weighbridge will be used for the new subproject operation. The office building will also serve the new subproject. The coal fired boiler will be replaced by biomass - fired boiler. All existing facilities are within the boundaries of each PAC on land modified, zoned, and approved for the PAC activities. The existing facilities and activities include

small-scale processing plants, storage buildings, waste treatment systems. All of the existing PAC facilities and operations have domestic environmental approvals. • Associated facilities. The newly proposed Wei’erfu subproject is located in Pharmaceutical Industry Park of Ruicheng County. The industry park is very well equipped with national standard public facilities that allow the subproject easily connect with nearby road, power, water, sewer, gas, heat and telecommunications networks. During operation, the Wei’erfu subproject will generate about 52.91m3/d waste water. The wastewater will be pretreated within the PAC and pipe to Ruicheng WWTP through local sewer network for final treatment. The Ruicheng WWTP has a design capacity of 25,000m3/d with Arbal oxidation ditch treatment technique adopted. The first phase construction was completed and the current treatment capacity is 16,000m3/d. The subproject generated 52.91 m3/d of wastewater is only 0.33% of the WWTP existing treatment capacity. During operation, the Shude subproject will generate about 68.55m3/d of waste water of which 23.5m3/d will be reused for dust suppression and greening and the rest 45.05 m3/d will be . The wastewater will be pretreated within the PAC and piped to Shilou WWTP through local sewer network for final treatment. The Shilou WWTP is located at Dongwei village, Lingquan Township, Shilou County. The WWTP has a treatment capacity of 9,500m3/d with AAO+MBR technique adopted. The subproject generated 45.05 m3/d of wastewater is only 0.47% of the WWTP existing treatment capacity. The wastewater amount generated from the subprojects is small and can be treated with the existing county WWTPs.

124. The ADB-funded facilities will be connected to existing power, water and telecommunication networks within the existing PAC sites. There are no project designs or anticipated costs for expansion of county roads or easements, i.e., no changes are planned to county utilities outside the PAC sites.

F. Indirect, Induced and Cumulative Impacts

125. Indirect impacts. A potential indirect risk is that the hydrology of streams downstream of the project sites is negatively affected, due to water extraction and interception of runoff for the project. This risk is considered minimal, as the total estimated annual water demand is small.

126. Induced impacts. A potential induced impact is that the establishment of infrastructure and capacity achieved by the project will result in scaling up of commercial activities after the project by the project enterprises, including increases in workers, further land intensification, and/or subsequent pressures on public utilities (e.g., roads and water and electricity easements). These risks are considered small due to (i) the physical limits imposed by the boundaries of each PAC; and (ii) restrictions imposed by existing land planning and zonation. A beneficial induced impact may be the increase in demand for organic fertilizer, strengthening the viability of the industry and reducing demand for chemical-based fertilizers.

127. Cumulative impacts are defined as the combination of multiple impacts from existing projects, the proposed project, and anticipated future projects that may result in significant adverse and/or beneficial impacts that would not be expected in the case of a stand-alone project. The PAC facilities are all isolated and sited in rural lands. The two subprojects are distributed across two counties, and will utilize separate systems and public utilities for water and power supply, municipal waste collection, and landfill sites. Because the Wei’erfu subproject is located in an industrial park. All of the public utilities are already planned and constructed. The Shude subproject will use existing buildings as subproject processing workshop and office building, the increased use of resources will be achieved in a coordinated manner in parallel with existing activities. This reduces the risk of cumulative

impacts on localized resources, including excessive extraction demand from individual wells and aquifers, and operational noise and odor.

128. For water resources, the cumulative annual use of water resources by the project is approximately 90,776 481,901 m3, which is 0.00075% of the total resource of these river systems. New water metering will be required for groundwater extraction to facilitate better management and control of future groundwater depletion by the Water Resources Bureaus. In addition, all PACs will prepare WMPs and report water usage improvements based on these plans.

VII. INFORMATION DISCLOSURE, CONSULTATION AND PARTICIPATION

129. To identify key environmental issues and sensitive sites, all counties/districts of the project sites were visited. Consultation meetings were held with local authorities and potential affected people. Key findings such as farmer's willingness, environmental sensitive sites to be addressed, and suggestion from local government authorities were reviewed with the design institutes to revise the design and address environmental issues.

A. First Round of Public Consultation

130. At early stage of the EIA preparation, introductions to each PAC and the proposed facilities were prepared and posted in the public areas such as park, square and villages closed to the PACs by the EIA institutes during EIA report preparation. The information posted for the Shude PAC and Wei’erfu PAC were conducted in March 2017 and August 2017 respectively. The public was requested to provide comments and suggestions on the project and on the environment protection.

Gate of the PAC (Shude subproject) Longma Park of Shilou County (Shude)

Yueliangwan Square of Shilou County (Shude) Huayue village (Wei’erfu subproject)

Dongguan Village (Wei’erfu subproject)

131. For example the translation the notice for Shude subproject read:

The first round of information disclosure of EIA of Shilou Shude Agricultural Products Deep Processing Project In accordance with the “Interim Measures for Public Participation in Environmental Impact Assessment, State Environmental Protection Bureau 2006 [the 28th]”, information disclosure on the Shilou Shude Agricultural Products Deep Processing Project as following, to encourage the public to supervise and participate in the environmental impact assessment activities of this project. 1. Project description 2. Name and contact information of project construction company 3. Name and contact information of the domestic EIA institute 4. Environmental impact assessment procedures and main tasks 5. Main items for public comments 6. The main ways for public comments collection

(further details are included under each of these headings)

132. No written or oral comments had been received.

133. The second information dissemination phase was undertaken by the EIA Institute progressively as EIA preparation proceeded and was completed from 21 March to 4 April 2017. Information disclosures explained the basic specifications of the project construction, status of the surrounding environment, and the potential pollutants and control measures. This involved a second online posting.

B. Public Consultations

134. First round of public consultation. The Wei’erfu subproject first round of formal community meetings was held between June and November 2017. The Shude subproject first round of formal community meetings was held between December 2018 to January 2019. The consultation scope included the villages close to the PACs, where people more likely to be impacted by the project construction and operation. The meetings were used as an opportunity to: (i) present the main anticipated impacts and the final proposed mitigation measures as defined in the DEAs; and (ii) introduce the project grievance redress

mechanism. Meetings were held in the PAC local office or a village committee office near the planned site. The meetings explained the basic specifications of the project construction, status of the surrounding environment, and the potential pollutants and control measures.

135. The community meetings explained the basic specifications of the project, EIA process, surrounding environment status, potential pollutants, mitigation measures and grievance redress mechanism (GRM). Participants expressed support for the project.

136. Second round of public consultation. A second round of information disclosure was made after the completion of the first draft domestic EIR and EIT by the EIA Institutes. The main environmental impacts and mitigation measures, as well as the environmental management plan described in the EIR and EIT were notified in public media and information boards of villages near the subproject sites. During this second round of information disclosure, the grievance redress mechanism was also introduced, with assurances that the mechanism and contact points for complaints will be fully publicized at subproject localities before construction commences.

C. Future Plans for Public Participation

137. Since some participants raised their concerns on construction programs and impacts, it is important to maintain a dialogue with the stakeholders throughout the construction stage. Continued public participation will facilitate such dialogue so that the stakeholders’ concerns are understood and dealt with in a timely manner. Public consultation will continue throughout detailed design, construction and operation phases. The future public consultation program is included in the project EMP.

138. The EMP for this project is included as Appendix 2 to this Addendum IEE. Besides public participation plans, the EMP specifies the mitigation measures to be adopted and the environmental monitoring to be undertaken during project implementation, as well as institutional strengthening and training for the IAs.

VIII. GRIEVANCE REDRESS MECHANISM

139. A grievance redress mechanism (GRM) has been developed in compliance with ADB’s SPS (2009) requirement to address environmental, health, safety, and social concerns associated with project construction, operation, land acquisition, and leasing arrangements. The GRM is designed to achieve the following objectives: (i) provide channels of communication for local communities to raise concerns about environment- and social-related grievances which might result from the project; (ii) prevent and mitigate adverse environmental and social impacts to communities caused by project construction and operation, including those associated with resettlement; (iii) improve mutual trust and respect and promote productive relationships between the project agencies and local communities; and (iv) build community acceptance of the project. The GRM is accessible to all members of the community, including women, youth, and poverty-stricken residents. Multiple points of entry are available, including face-to-face meetings, written complaints, telephone conversations, e-mail, and social media.

140. Public grievances related to project construction to be addressed by the GRM may include damage to public roads, residences, and/or interruption of public services, dust emissions, noise, soil erosion, inappropriate disposal of waste materials, and safety for the general public and construction workers. Public grievances related to involuntary resettlement may relate to the lack, or un-timely payment of, compensation monies, other allowances, and/or lease monies as per entitlements described in the resettlement plan and associated documents.

141. The GRM meets the regulatory standards of the PRC that protect the rights of citizens from construction-related environmental and/or social impacts. Decree No. 431 Regulation on Letters and Visits, issued by the State Council of PRC in 2005, codifies a complaint acceptance mechanism at all levels of government and protects the complainants from retaliation. Based on the regulation, the former State Environmental Protection Administration (SEPA) published updated Measures on Environmental Letters and Visits (Decree No. 34) in 2006.

142. Currently in Shanxi Province (and generally in the PRC), when residents or organizations are negatively affected by a development, they may complain, by themselves or through their community committee, to the contractors, developers, the local EPB, provincial EPD, or by direct appeal to the local courts. The weaknesses of this system are: (i) the lack of dedicated personnel to address grievances; and (ii) the lack of a specific timeframe for the redress of grievances. The project GRM addresses these weaknesses.

143. The details of the GRM, including a time-bound flow chart of procedures, are included in the project EMP (Appendix 2).

IX. PROJECT ASSURANCES

144. ADB-funded projects are required to comply with a standard set of loan assurances for environmental safeguards. In addition, the following project-specific assurances are included in the project agreement between ADB and the SPG.

(i) Pre-construction readiness. The PMO will implement the following measures in the pre- construction phase to ensure the project’s environment management readiness: (a) appoint at least one qualified environment officer within the PPMO (the ‘PPMO Environment Officer’), (b) recruit at least one environment safeguard specialist (ESS) and one water resources specialist, as part of the loan administration consultant services; (c) ensure that all PACs have arranged contractual agreements with county or private environment monitoring agencies (EMAs) to conduct the environmental impact monitoring described in the EMP. All EMAs will be certified to conduct the monitoring; and (d) ensure that the EMAs report their monitoring results to the CPMOs at the same time as the PACs. (ii) Tendering and contracts. The PPMO and county PMOs (CPMOs) will ensure that all construction tenders, plans and contracts include the EMP obligations, including the environmental monitoring program. (iii) Reporting. During construction: (a) the PACs will provide regular environmental monitoring reports to the CPMOs and PPMO, at a frequency to be determined between the PACs and PPMO. Note that this only concerns the frequency of reporting. The frequency of monitoring is already fixed in the EMP; (b) the PPMO will prepare and submit to ADB semi-annual environmental reports in a format acceptable to ADB until the completion of all construction activities. (iv) Training. Before and during subproject construction, the PPMO will organize and conduct training on implementation and supervision of the project EMP to the CPMOs, PACs, construction supervision companies, and contractors. The PPMO will be supported by the ESS in these tasks. (v) Grievance redress mechanism (GRM). The PPMO and CPMOs will ensure that the project GRM for environmental and social matters is established with clear procedures to receive, resolve, and document any grievances. The GRM will be established and fully operational within at least 60 days of loan effectiveness. (vi) Water resources. Prior to any construction activities, all PACs will do the following: (a) obtain water resource permits for their existing facilities (to which the new subprojects will be linked), and the new subprojects, and provide the PPMO and CPMOs a copy of these permits; (b) with the support of the loan implementation consultants, especially the water resources specialist, finalize the design of a water management plan (WMP) for each subproject, including a water monitoring program; (c) install the necessary equipment to implement the water monitoring program, including water meters at key water source and/or extraction points (e.g. wells, reservoirs, and/or municipal pipeline services); (d) initiate the monitoring program first with existing operations and then expanded to the new operations as they come online; and (e) implement the water efficiency measures included in the facility designs and operational procedures. (vii) Solid waste and wastewater. All PACs will ensure that the design and operation of facilities for solid and liquid waste collection, treatment, storage, and disposal: (a) comply with relevant regulatory standards; (b) match predicted waste volume levels; and (c) avoid pollution of surface water, groundwater and lands. (viii) Energy. All PACs will (a) be equipped with electricity meters to measure energy use; and (b) maximize energy savings measures in facility design and operation. (ix) Scope of operations. PACs will not expand site operations beyond the PAC 51

lands, and stock inventories, as described in the domestic feasibility study reports and ADB project documents. (x) Associated facilities. Associated facilities which contribute to the project viability include the existing facilities of the 2 PACs and offsite facilities such as fertilizer plants receiving waste products from PACs. SPG shall ensure that (a) associated facilities will be operational at the same time as, or before, completion of the project facilities, to ensure the timely and effective operation of all structures; and (b) should any changes be made to these facilities which might impact their capacity or functioning, and subsequently the project viability, SPG and ADB shall jointly review and identify follow-up actions.

X. ENVIRONMENTAL MANAGEMENT PLAN

145. A project EMP has been prepared (Appendix 2), based on the DEAs, desktop review, and stakeholder discussions with the PPMO, CPMOs, EPBs, other government agencies, and local communities. The EMP defines mitigation measures for the anticipated environmental impacts, institutional responsibilities, and mechanisms to monitor and ensure compliance with PRC’s environmental laws, standards and regulations and ADB’s SPS, as well as the estimated costs for EMP implementation. The EMP will be the key guiding document for environmental-related issues in the construction and operational phases of the project. It will be coordinated by the PPMO and implemented by the CPMOs, construction contractors, construction supervision companies, and PACs. The EMP will be incorporated within the detailed engineering designs and technical specifications for contractors.

XI. CONCLUSIONS

146. The project will improve the management and use of natural resources, especially surface and ground water, for 20 agricultural and livestock subprojects in Shanxi Province. The inclusion of water resource monitoring systems for the enterprises represents a significant added value of the project, reflecting the need to improve regional management of groundwater resources. Other environmental benefits include the improved management and application of agricultural chemicals.

147. Construction-related impacts are assessed to be relatively minor, pending implementation of the mitigation measures described in this addendum IEE and EMP. Most issues are generic to construction projects and include the need for careful management of earthworks and construction, to minimize the risks of soil erosion, water and air pollution, and community and worker health and safety. Sensitive receptors have been mapped and there are relatively few communities and waterbodies near the subproject sites (most surface water bodies are located several kilometers away).

148. Potential environmental risks are largely related to the operations phase of the project. These include (i) the unsustainable extraction of water resources, especially groundwater; (ii) pollution of groundwater, surface water, and/or soil. Among these issues, groundwater over-extraction and/or pollution is a key consideration, because some aquifers in Shanxi Province are already declining from over-use and/or are polluted. Technical analysis of sustainability is hindered due to a general lack of aquifer size, recharge rates, and extraction volumes for most subprojects and areas. A key project mitigation measure will be the preparation of water resource management plans for each subproject, including the installation of water meters and simple monitoring programs to establish baseline data on water use.

149. Wastewater will receive treatment appropriate to the type of wastewater produced and discharged. For the two subprojects, the wastewater comprises washing water for crop and vegetable processing, and sewage of on-site staff.

150. For solid waste, collection, treatment and disposal management measures include the reuse of organic agricultural waste as animal feed or fertilizer and proper landfill disposal for other waste streams. Groundwater pollution will be avoided through proper containment of site drainage and waste streams. For noise, operational noise levels have been estimated to be within the relevant standard at facility boundaries.

151. In addition to the project mitigation measures, project-specific assurances have been developed to strengthen the implementation of the EMP.

152. The project EMP brings together the mitigation measures identified in the IEE and also prescribes the supervision, training, monitoring, and reporting requirements for the project environmental safeguards. The EMP includes a project-specific GRM to ensure affected people have a mechanism to express any project-related safeguard concerns, and for such concerns to be addressed in a timely manner, and, an environmental monitoring program, to monitor compliance with the EMP mitigation measures and the regulatory standards for air, water, noise and soil prescribed for the project.

153. A climate risk vulnerability assessment (CRVA) was conducted to identify the threat that climate change presents to the viability of the project, assuming a design life of 30 years. Modeling predicted that mean annual temperature will increase 2.20C from 2017 to 2040 and 3.0 0C by 2060, annual precipitation will decrease, variability in precipitation will increase, and storm severity will increase. This represents the following risks to the project viability: (i)reduced and/or less reliable annual water supplies for crop growth, and/or

processing needs; (ii) increased likelihood of crop diseases under warmer conditions; and (iii) increased need for cooling systems for storage and/or processing. Adaptation measures have been developed to address these issues. Overall, the project design is oriented toward improved resilience to climate change, through the improved efficiency of operations and use of natural resources, by the subprojects.

154. Conclusion. Based on the information presented in this addendum IEE, and assuming full and effective implementation of the project addendum IEE (Appendix 2), the loan assurances, and training, potential adverse environmental impacts are expected to be minimized and/or mitigated to acceptable levels and to within the standards applied in this Addendum IEE.

APPENDIX 1: BASELINE DATA FOR AMBIENT ENVIRONMENT

Wei’erfu subproject

Monitoring Location: Monitoring location is shown in figure App1-1.

Project site

大气评价范围

地下水评价范围

Legend

Air

Ground water quality Ground waterlLevel

.Ground water quality monitoring results are shown in Table App1-1.

Table App1-1 Ground Water Monitoring Results (unit:mg/m3)

Miaodi Miaodi Standard County Xiannan Sandaoxie No. Parameter village group village, village village mg/L site 2 group 8 1 pH 6.5~8.5 7.57 7.8 7.9 8.22 7.86 2 NH3-N 0.2 0.1 0.055 ND 0.04 0.03 3 Nitrate 20 2.5 4.66 3.2 2.71 3.08 4 Nitrite 0.02 ND 0.002 0.003 ND ND Volatile 5 0.002 ND ND ND ND ND phenols 6 Chloride 0.05 ND ND ND ND ND 7 As 0.05 0.002 ND ND ND ND 8 Hg 0.001 0.0006 ND ND ND ND 9 Cr+6 0.05 ND 0.37 0.26 0.018 0.016 10 Hardness 450 269 329 339 270 251 11 Pb 0.05 ND ND ND ND ND 12 Fluoride 1.0 0.34 0.28 0.32 0.982 0.935 13 Cd 0.01 ND ND ND ND ND 14 Fe 0.3 ND ND ND ND ND 15 Mn 0.1 ND ND ND ND ND 16 Dissolved solid 1000 405 377 364 341 382 Permanganate 17 3.0 0.47 2.1 2.4 1.32 1.17 index 18 Sulphate 250 22.3 28.5 62.1 11.2 9.98 19 Chloride 250 2.09 13.7 8.19 24.3 13 20 Total coliforms ≤3.0 ≤3.0 ≤2.0 ≤2.0 ＜2 ＜2 21 Total bacteria ≤100 54 54 48 61 61 22 K+ 4.65 2.34 2.77 34.7 31.1 23 Ca2+ 45.2 25.7 30.4 37.3 67.9 24 Na+ 14.4 72.8 91.4 61.4 34.1 25 Mg2+ 8.12 7.42 14.0 34.2 28.8 2- 26 CO3 1.0L 1.0L 1.0L 1.0L 1.0L - 27 HCO3 256 293 315 291.3 276 28 CL- 19.3 24.4 25.2 24.3 13 2- 29 SO4 11.8 12.3 12.6 11.2 9.98

It can be seen from above table that ground quality can meet Class III of PRC Ground Water Quality Standard (GB/T14848-93).

Air quality monitoring results are shown in Table App1-2.

Table App1-2 Air Quality Monitoring Results Hourly concentration（mg/m3） No. Name of monitoring site H2S NH3 1 County Sit 0.003-0.008 0.003-0.008 2 Nanwei Village 0.002-0.005 0.002-0.005 Standard (TJ36-79) 0.01 0.2 Note: ND means the value lower than the method detection limit.

Table App1-2 showed that the air quality can meet PRC Hygienic Standard for Industrial Enterprises (TJ36-79).

Noise level monitoring results are shown in Table App1-3.

Table App1-3 Noise Monitoring Results (unit: dB(A))

Location 1# 2# 3# 4# Item Leq 50.9 53.4 52.1 52.8 L90 48.9 51.4 50.3 50.5 Day L50 51.5 54.1 53.6 53.7 L10 53.6 55.3 54.7 54.9 Leq 43.5 44.5 44.2 45.1 L90 39.9 40.5 40.1 39.8 Night L50 44.2 45.8 45.2 46.2 L10 45.3 46.7 46.5 46.4

The monitoring results show that the noise level is below the limit of Class II PRC Ambient Acoustic Quality Standard (GB3096-2008).

Shilou Shude Subproject Baseline

No site specific baseline monitoring was conducted for the subproject. Ambient air quality at urban area of Shilou county in 2017 was collected. The results is shown in Table App1-4.

Table App1-4 Ambient air quality of Shilou County in 2017

Annual average Standard Exceedance No. Parameter (ug/m3) Class II (GB3095-2012) (times) 1 SO2 95 60 0.58 2 NO2 22 40 0 3 PM10 100 70 0.43 4 PM2.5 50 35 0.43

Table App1-4 showed that the ambient air quality in Shilou County is poor. It can not meet Class II PRC National Ambient Air Quality Standard (GB3095-2012).

Poor baseline air quality triggered strict control on new subproject approval. In 2016, the EMP issued Circular on Strengthening the Management of Environmental Impact Assessment to Improve Environmental Quality. The circular stated that “For areas that do not meet the assessment requirements of environmental quality objectives, in addition to livelihood projects and energy conservation and emission reduction projects, environmental assessment documents for projects that discharge new major pollutants in that area shall be suspended in accordance with the law.” For the Shude subproject, the poor baseline air quality will not affect the subproject approval and the Shilou County EPB has approved the EIT in 4 April 2019. This is mainly because: • the subproject components include millet processing thus it is a livelihood project; • currently the Shude PAC is using coal-fired boiler. With construction of the new subproject, the coal-fired boiler will be replaced by biomass-fired boiler according to the FSR. Thus the subproject is an emission reduction project • the subproject is a food process project with less air emission. The total emission including 0.065t/a of dust, 0.28t/a of SO2 and 0.68t/a of NOx.

Although the Shude subproject has no approval issue, air emission mitigation measures proposed in the EMP should be strictly implemented during the subproject construction and operation. It is also suggest that the Shude PAC and design institute to study the feasibility of using gas-fired boiler.

APPENDIX 2. ENVIRONMENTAL MANAGEMENT PLAN

ENVIRONMENTAL MANAGEMENT PLAN FOR THE SHANXI INCLUSIVE AGRICULTURAL VALUE CHAIN DEVELOPMENT PROJECT

People’s Republic of China

Prepared by the Shanxi Provincial Government

This document is an attachment to the Initial Environmental Examination Report, which is an official 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 the ADB website (www.adb.org).

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgement as to the legal or other status of any territory or area.

D. Introduction

1. This environmental management plan (EMP) is for the Whole Shanxi Inclusive Agricultural Value Chain Development Project (the project). The EMP is to ensure project compliance with PRC environmental laws and ADB’s Safeguard Policy Statement (SPS 2009). It is to be implemented in all phases of the project: design, pre-construction, construction, and operation. The EMP describes: roles and responsibilities of all project agencies to implement this EMP; mitigation measures; inspection, monitoring, and reporting arrangements; training and institutional strengthening; grievance redress mechanism (GRM); and future public consultation.

2. In the design stage the provincial project management office (PPMO) will pass this EMP to the design institutes for incorporating mitigation measures into the detailed designs. The EMP will be updated at the end of the detailed design, as needed. To ensure that bidders will respond to the EMP’s provisions, the PPMO and county PMOs (CPMOs) will prepare and provide the following specification clauses for incorporation into the bidding documents: (i) a list of environmental management requirements to be budgeted by the bidders in their proposals, (ii) environmental clauses for contractual terms and conditions, and (iii) the domestic environmental assessments (DEAs) prepared for each subproject, and this EMP, updated as needed during the stage of detailed engineering designs. This EMP is disclosed on the ADB public website (www.adb.org) and is also part of the project administration manual.

E. Institutional Arrangements and Responsibilities for EMP Implementation

3. The Shanxi Provincial Government (SPG) is the executing agency (EA) for the project. At the provincial level, the SPG has established a project coordinating group (PCG), to facilitate liaison with project agencies, and a provincial project management office (PPMO), for daily project coordination. The PCG comprises representatives from the Shanxi Development and Reform Commission (SDRC), Shanxi Financial Department (SFD), Shanxi Poverty Alleviation and Development Office (SPADO), Environment Protection Department (EPD), Poverty Alleviation Bureau and the PRC Women’s Federation. The PPMO comprises representative officers from the PCG agencies. The 17 county or district governments will be the implementing agencies and are termed the CPMOs.

4. Environment staff within the PPMO and CPMOs. The PPMO will have main EMP coordination responsibility. The PPMO has designated two full time PPMO environmental officers responsible for EMP implementation. The officers will (i) coordinate the implementation of mitigation measures during project design, construction, and operation; (ii) ensure that environmental management, monitoring, and mitigation measures are incorporated into bidding documents, construction contracts, and operation management plans; (iii) submit semiannual EMP monitoring and progress reports to ADB; (iv) implement the GRM; and (v) respond to any unforeseen adverse impacts beyond those mentioned in the EMP. The officers will be technically supported by the national environment safeguard specialist (ESS). At the county level, each CPMO will include one environment officer, i.e., a total of 19 officers. These officers will be responsible for daily implementation of the EMP, working closely with the PPMO environment officers, the loan implementation consultants, and the participating project agribusiness companies and cooperative (PACs). Terms of reference (TORs) for the PPMO and CPMO environment officers are in Section H.

5. Loan implementation consultants – environment safeguard specialist (ESS) and water resources specialist (WRS). Two national consultants for the environment will be recruited under the loan consultant services. The ESS will advise the PPMO, CPMOs, contractors, and construction supervision companies on all aspects of environmental management and monitoring for the project. The ESS will (i) assist in updating the EMP and

environmental monitoring program, as needed; (ii) supervise the implementation of the mitigation measures specified in the EMP; (iii) support the PPMO and CPMOs to prepare the semi-annual EMP monitoring and progress reports in English and Chinese and submit them to ADB; (iv) provide training to the project agencies on the PRC’s environmental laws, regulations and policies, ADB’s Safeguard Policy Statement (SPS, 2009), EMP implementation, and GRM in accordance with the training program (Table EMP-7); (v) identify any environment-related implementation issues, and propose necessary corrective actions; and (vi) undertake site visits for EMP inspection as required. The WRS will assist the PACs to develop water management plans. The terms of reference for both positions are in Section H.

6. Project agribusiness companies or cooperatives (PACs). There are two PACs, distributed across two counties. The PACs will implement the project components and EMP mitigation measures, administer and monitor contractors and suppliers, and be responsible for construction supervision and quality control at each subproject site. Each PAC has assigned an environment and social officer. For the EMP monitoring, the PACs will: (i) collect quarterly data from the contractors, CSCs and direct observations of PAC staff; (ii) at end of each quarter, enter raw data into a standardized Excel sheet and submit to the PPMO and CPMOs; (iii) ensure raw data forms (hard copies) and Excel files are stored in a safe, clean and dry place, and can be easily retrieved (e.g. if requested by PPMO and/or ADB).

7. Construction contractors and construction supervision companies (CSCs). Construction contractors will be responsible for implementing relevant EMP mitigation measures during construction, under the supervision of the CSCs and environment officers of the CPMOs and PACs. Contractors will develop site-specific EMPs on the basis of this project EMP. Each contractor will assign at least one lead team member to oversee the site EMP, including health and safety. The CSCs will be selected through the PRC bidding procedure by the CPMOs. The CSCs will be responsible for supervising construction progress and quality, and EMP implementation on construction sites. Each CSC shall have at least one environmental engineer on each construction site to: (i) supervise the contractor’s EMP implementation performance, and (ii) prepare the contractor’s environmental management performance section in monthly project progress reports submitted to the CPMOs and PMO.

8. Environmental Monitoring Agency (EMA). In each project county, a certified EMA will be contracted by the PAC or CPMO to implement the external environmental monitoring program described in this EMP. The EMA may be the environmental monitoring station of the local environment protection bureau, or an independent agency, as long it is nationally certified to conduct environmental monitoring. The CPMO will supervise this monitoring. Each EMA will report to the local EPBs and CPMO. Each EMA will be identified in the project procurement plan. Monitoring will be conducted until the works are completed. Semiannual monitoring reports will be prepared by the EMSs and submitted to PMO and the CPMOs.

9. Project readiness inspection. Before construction, the ESS will assess each PAC’s readiness in terms of environmental management based on a set of indicators (Table EMP.1) and report it to ADB and PPMO. This assessment will demonstrate that environmental commitments are being carried out and environmental management systems are in place before construction starts, or suggest corrective actions to ensure that all requirements are met. Some of these commitments are particularly important because information relating to them was either not submitted (or submitted too late) during the project preparation phase. These include compliance with loan assurances relating to the management of treated wastewater as liquid fertilizer, and, the sustainability of groundwater extraction.

Table EMP.1: Project Readiness Assessment Indicators Indicator Criteria Assessment Environmental • Yes / No Supervision ESS and WRS are in place • Qualified EMAs contracted by PACs and endorsed by CPMOs Yes / No Compliance with • The borrower complies with loan covenants and assurances Yes / No loan assurances related to project design and environmental management l i Domestic • Domestic EAs updated and are consistent with the IEE and Yes / No Environmental EMP Assessments Public involvement • Meaningful consultation completed Yes / No • GRM established with entry points Yes / No Contracts include • Bidding documents and contracts incorporating the Yes / No environmental environmental activities and safeguards listed as loan safeguards assurances Construction plans • Site construction plan prepared for each PAC Yes / No Water extraction • Permit / approval for construction water received Yes / No permits/approvals • Permit / approval for PAC facility operation received Yes / No • Yes / No Solid waste Documents showing capacity and willingness of agencies to arrangements accept waste from each PAC (includes all waste streams not used for EMP financial • The required funds have been set aside for EMP Yes / No support implementation by each PAC EMP = environmental management plan, ESS = environment safeguard specialist, GRM = grievance redress mechanism, PAC = project agribusiness company or cooperative, WRS = water resources specialist.

F. Summary of Potential Impacts and Mitigation Measures

10. Potential environmental issues and impacts during the pre-construction, construction and operation phases, and corresponding mitigation measures, are summarized in Table EMP.2. Table EMP.3 provides a summary overview of the applicability of the impacts and mitigation measures for the two subprojects with scope changes.

Table EMP.2: Summary of Potential Impacts and Mitigation Measures Item Issue Mitigation / Safeguard measure Agency Inspect PRE-CONSTRUCTION PHASE 1.1 Detail a. Public consultations Complete public consultations for two PACs (for which consultations were not conducted during the EIA design PPMO, Design Stage project preparation phase): Shanxi Tianzhirun Date Processing Co., Ltd., and Shanxi Xinjiang institutes, CPMO, ESS Vegetable Industry Development Co., Ltd. The detailed technical designs should reflect the findings PACs of the consultations, as needed. b. Wastewater • Guangling Kitano Edible Fungus Industrial Development Co., Ltd.: ensure the wastewater PACs, DIs, CPMOs, treatment design treatment designs in DEA are included in the detailed engineering designs; EIA Institute PPMO, ESS and disposal • All other PACs: ensure that all wastewater management measures and specifications in the DEAs are addressed, including new or upgraded WWTPs and emergency overflow ponds. This includes pretreatment facilities if discharging to central sewerage systems. Verify design and performance parameters of existing facilities. c. Manure treatment Prepare and submit to PPMO details of the design, management and monitoring of biogas systems PACs PPMO arrangements or manure fermentation systems to ensure compliance design standards and with standards for discharge and use as organic fertilizer (GB7959-87). d. Water extraction PACs will obtain a water use permit for their water inputs from the local Water Resources Bureaus – PACs WRBs, permission providing all details required for that application to the WRB PPMO, ESS e. Climate change Ensure that the measures in Table EMP.4 of this EMP are addressed as far as possible in the PACs, DIs PPMO, adaptation and detailed engineering designs. This includes specific features for mitigation and adaptation, related CPMO, ESS mitigation measures to energy efficiency and resource use. f. Air emission control For Shude PAC: PACs, DIs PPMO, • Conduct feasibility study on using gas-fired boiler instead of currently proposed biomass boiler. CPMO, ESS • Ensure air emission control designs in DEAs are included in the detailed engineering designs. 1.2 Project Establish and Contract two external specialists, one ESS and one WRS PPMO ADB environmental implement Contract environmental monitoring agencies in each county PAC CPMO Support environmental support positions Appoint PPMO Environmental and Social Officers PMO PPMO Appoint County Environment and Social Officers CPMOs PPMO Assign Environment and Social officers at each PAC PACs CPMO, ESS 1.3 Construction Update EMP Update mitigation measures defined in this EMP based on the detailed design, including DIs, ESS, ADB Preparation Stage re-disclosure (if needed) of EMP on ADB website PACs, PPMO Construction plans • Prepare environment section in the terms of reference for construction bidders PACs (using PPMO, ESS and documents • Prepare environmental contract clauses for construction from EMP Tables EMP.2 –EMP.8 DIs) Establish and • Identify GRM entry points and brief them on their role PACs, PPMO, ESS publicize GRM • Publicize GRM entry points, people and contacts at each PAC construction site, in local CPMOs newspapers, websites, and village committee and community premises

Item Issue Mitigation / Safeguard measure Agency Inspect Construction site • Prepare construction plans for each PAC, including (i) measures to avoid disturbance to Head PACs, planning existing operations; (ii) inclusion of relevant actions from this table contractor for PPMO, • Nominate an Environmental, Health and Safety Officer (EHSO) in contractors’ team each PAC ESS • Develop site environmental health and safety plan for approval by the PAC. Construction water • If contractor will use tankers to supply construction water: obtain approvals, submit to PPMO PAC, PPMO, ESS, use arrangements • If water from on-site well(s) is to be used, obtain approvals, submit to PPMO contractor WRS Environmental Provide training to contractors on their roles and responsibilities in EMP ESS PPMO Training CONSTRUCTION PHASE 2.1 Soil Erosion Construction related Before construction, prepare a Site Drainage and Soil Erosion Management Plan, with the Contractors, CPMOs, ESS soil erosion impacts following: PACs • Maintain slope stability at cut faces by erosion protection measures e.g. terraces and silt barriers • Prior to earthworks, construct berms or drainage channels around the perimeter of the spoil and borrow sites, to capture soil runoff and direct rainwater away • Plan and implement construction in staged sections, with one section completed and stabilized before beginning the next • Stabilize all cut slopes and other erosion-prone working areas. Protect erosion-prone sites with sand bags • Stabilize all earthwork disturbance areas within 30 days after earthworks are completed • Identify and demarcate the sites for borrow pits and spoil disposal sites. Ensure all sites are within the boundaries of the existing PAC subproject land • Minimize open excavation areas during trenching and river regulation activities • Use appropriate compaction techniques for pipe trench construction • Provide temporary detention ponds or containment to control silt runoff • Construct intercepting channels and drains to prevent runoff entering construction sites, and divert runoff from sites to existing drainage or open ground for watering the vegetation. • Limit construction and material handling during periods of rains and high winds • Properly slope or re-vegetate disturbed surfaces e.g. pipeline trenches and cut banks • Landscaping will only use native plant species • Construction camps and storage areas will be located to minimize land area required • Coordinate with local authorities and communities for the movement of heavy vehicles and machinery, especially along narrow roads, to avoid traffic jams and risks to community safety. See also Item 2.9 2.2 Water Construction water • Construction water. Obtain water from approved source. No groundwater shall be extracted Contractors, CPMOs, Resources and preparation of without extraction permits/approvals (see Item 1.3) WRS, PAC WRS WMPs • WMPs. Prepare WMPs, including water monitoring program, for each subproject. Initiate pilot

Item Issue Mitigation / Safeguard measure Agency Inspect monitoring at existing PAC facilities. Program to be extended to the new ADB-funded facilities in operation phase. See TOR for WRS (Section H of EMP) for details • Car washing water should be reused for dust depression after sediment. 2.3 Water Pollution of surface • Develop actions for control of oil and other dangerous substances Contractors, CPMOs, ESS pollution water and • Collect construction wastewater in sedimentation tanks, retention ponds, and filter tanks to PACs groundwater remove silts and oil • Equip sites for washing of machinery with collection basins and sediment traps • Locate fuel storage, maintenance workshops and vehicle cleaning areas >500 m from water bodies • Locate the storage facilities for fuels, oil, and other hazardous materials in secured areas on impermeable surfaces, and provided with bunds and cleanup installations • Contractors’ fuel suppliers must be licensed. They shall follow proper protocol for transferring fuel and the PRC standard of JT3145-88 (Transportation, Loading and Unloading of Dangerous or Harmful Goods) • Minimize sediment / soil runoff into streams or rivers from earthworks, including sediment traps • Locate labor camps >500 m from nearest water bodies • Install portable toilets and on-site wastewater pre-treatment systems at construction camps along with proper maintenance protocols • Monitor water quality during construction as per the EMP 2.4 Air Quality Local air pollution • Spraying water daily on construction sites where fugitive dust is being generated Contractors, CPMOs, ESS from construction • Locate asphalt plants and mixers >500 m downwind from the nearest residential areas and PACs activities other sensitive receptors • Dust suppression near sensitive receptors e.g. schools, hospitals, residential areas • Store petroleum or other harmful materials in appropriate places and covering to minimize fugitive dust and emission • Cover materials during truck transport, especially fine materials, to avoid spillage or dust • Ensure vehicle and machinery emissions comply with PRC standards of GB18352-2005, GB17691-2005, GB11340-2005, GB2847-2005, and GB18285-2005 • Timely monitoring of air quality and inspections during construction, as defined in the project EMP. • Unauthorized burning of construction waste material shall be subject to penalties for the Contractor, and withholding of payment • Site greening per DEA requirements to assist with air quality and odor mitigation • Implement emergency air pollution control measures (such as suspend construction, limit construction hours) required by local government during heavily polluted weather. 2.5 Noise Construction related • Ensure that noise levels from equipment and machinery conform to PRC standard of Contractors, CPMOs, ESS noise impacts PACs

Item Issue Mitigation / Safeguard measure Agency Inspect GB12523-90, Properly maintain construction vehicles and machineries to minimize noise • Apply noise reduction devices or methods for high noise equipment operating within 200 m of sensitive sites e.g. schools, villages, residential areas • Locate high-noise activities (e.g. rock crushing, concrete-mixing) > 1 km from sensitive areas • Prohibit operation of high-noise machinery, and movement of heavy vehicles along urban and village roads, between 21:00 and 07:00, in accordance with provincial regulations • Place temporary hoardings or noise barriers around noise sources during construction • Mobile sound barriers will be used for sensitive receptors during construction • When passing through villages, construction trucks will reduce speed to no more than 20 km/h • Monitor noise levels at sensitive receptors during construction • Conduct regular public consultation to identify any community concerns. • If noise standards are exceeded, and/or community feedback indicates noise disturbance, then: (i) check equipment, construction conditions, and timing; (ii) including the times of construction utilizing high-noise machinery, shall be checked, and mitigation measures shall be implemented to rectify the situation 2.6 Vibration Potential vibration • Prohibit excavation, stone-crushing and compaction operations at night; Contractors, CPMOs, ESS impacts • Consult communities prior to large earthworks. PACs • Avoid sensitive timing e.g. exams at nearby schools or festivals 2.7 Ecology Potential ecological • Minimize vegetation removal through detailed construction planning Contractors, CPMOs, ESS impacts • All sites which are cleared for temporary construction purposes, will be re-vegetated PACs • For sites to be rehabilitated, first remove and stockpile the top soil • Prior to construction, demarcate vegetation and habitats as no-go zones for workers and machinery. • Workers will be trained to minimize disturbance to and protect wildlife • Revegetate a site using the original top soil, and, native plant species • Use native plant species for all site rehabilitation, to maintain genetic fitness and reduce the risk of introducing non-local and invasive species • Remove and/or prevent standing or stagnant pools of water, to reduce the risk of water-borne diseases; cover water storage equipment; • Upon completion of construction, drain any sediment traps and pools 2.8 Physical Protection of • Prepare chance find procedure that complies with PRC regulations. Including: Contractors, CPMOs, cultural chance finds • Immediately suspend works PACs CACH, ESS resources • Notify cultural heritage bureau, PPMO, and CPMO • Wait for bureau to inspect site and issue next steps • Resume site work only after clearance of the bureau 2.9 Health and Construction safety • Traffic management. Prepare traffic control and operation plan, to be approved by local traffic Contractors, CPMOs, ESS safety for management administrations before construction. PACs

Item Issue Mitigation / Safeguard measure Agency Inspect workers and • Underground facilities survey and protection. Plan the pipeline construction to minimize general public disturbances to utility services. • Information disclosure. Inform villagers, residents, businesses in advance through media and information boards at construction sites, including dates and duration of expected disruption • Construction site protection. Install signs at construction sites in view of the public, informing people about the GRM and warning people of safety hazards • Prohibit the use of heavy machinery at night. • Secure all sites, e.g. with fencing, to prevent public access • Closely regulate the use of explosives. Ensure staff are experienced and have relevant certifications Worker safety • Prepare an environmental, health and safety management plan which will include the Contractors, CPMOs, ESS following: PACs • Provide a clean and sufficient supply of fresh water for construction sites and camps • Provide adequate number of latrines at construction sites and work camps, and ensure that they are cleaned and maintained in a hygienic state • Establish garbage receptacles at construction sites and camps, and periodically clear these to prevent outbreak of diseases • Provide personal protection equipment to comply with PRC regulations e.g. safety boots, helmets, gloves, protective clothing, goggles, ear plugs • Establish emergency preparedness and response procedures. Establish emergency phone link with hospitals • Install fully equipped first-aid base at each construction camp • Implement a records management system to store records of loss or damage of public utilities, local property, occupational accidents, diseases, and incidents. Include these data in progress reports to the CPMOs • Occupational health and safety matters will be given a high degree of publicity to all work personnel and posters will be displayed prominently at construction sites • Explosives. Comply with national regulations and procedures, including for secure storage, handling by qualified personnel, procedures for the planning, pre-site clearance, and post-site • inspection before after the use of explosives • Train all staff in sanitation, general health and safety, and work hazards. Conduct awareness program for staff and communities about HIV / AIDS and other communicable diseases • Implement core labor standards. Civil works contracts will stipulate priorities to (i) employ local people for works, (ii) ensure equal opportunities for women and men; (iii) pay equal wages for work of equal value, and pay women’s wages directly to them; and (iv) not employ child or forced labor.

Item Issue Mitigation / Safeguard measure Agency Inspect OPERATIONAL PHASE 3.1 Water a. Impact on water • Finalize the water management plans (WMPs) prepared during the construction phase for the PACs, WRS CPMOs, resources existing PAC facilities, by extending the designs to the new ADB-funded facilities. This includes: (i) WRBs, ADB implementation of project design measures for improved water use efficiency; (ii) extension of the pilot water use monitoring program to the new ADB-funded subproject facilities (Item 2.2). Draft WMPs to be reviewed and endorsed by the PPMO and WRBs. • Initiate the water use monitoring program in the new subproject facilities. Including: purchase and installation of water meters; monitoring at the locations and frequency described in the program manual (Item 2.2). See TOR for WRS (Section H of EMP) for further details • Install water metering devices to monitor water use • Conduct periodic water quality monitoring (Table EMP.4) • Prepare and implement WMPs • For Wei’erfu subproject, a 3,000m3 pool will be constructed to store water circulated for cooling; • For Shude subproject, waste water from processing, pure water preparation should be reused for dust depression of the PAC. b. Wastewater • Ensure that all wastewater streams receive the recommended level of wastewater treatment by PACs CPMOs management individual PAC. Ensure that existing WWTPs have sufficient capacity and operational condition for proposed expansions • For Wei’erfu PAC: wastewater from washing of instrument, culture vessels, rotating bottles, and storage tanks, fermentation wastewater from vaccine production process, wastewater from washing of animal room and wastewater generated during quality inspection should be sterilized and disinfected for 1 hour with 121 ℃ steam at high temperature and pressure disinfection tank, before piping to WWTP of the PAC. • For Wei’erfu PAC, construct WWTP with a capacity of 150m3/d and treatment technique of Hydrolytic acidizing + A2O + chlorination”. • For Shude PAC, construct a WWTP with “hydrolyze + bio-oxidation” technique adopted • Properly maintain the operation of WWTPs to ensure effluent water quality meet the Class B standard set in Table 1 of “Wastewater Quality Standard for Discharge to Municipal Sewers (GB/T31962-2015)” c. Impact on • Separate storm water drainage system and sewerage collection system (store the storm water PACs CPMOs groundwater quality on site for use) • Dot not build any open trenches • Install anti-seepage measures for drainage vessels and cement pipes, to convey wastewater and prevent overflow and infiltration • Design all facilities (e.g. storage facilities, pre-treatment tanks, digesters, settling tanks, drainage pipes, digester storage tanks, rain water collection tanks) with high quality materials and monitor for leaks

Item Issue Mitigation / Safeguard measure Agency Inspect 3.2 Agricultural Use of fertilizers and • Do not use agri-chemicals on the PRC List of Forbidden and Restricted Agriculture Chemical PACs CPMOs chemicals pesticides in 2016 and/or listed as hazardous by the WHO • Pesticide application rates to comply with the PRC’s Action Plan for Reaching Zero Growth of Fertilizer and Pesticide Application till 2020 and are designed to target and reduce pesticide usage. 3.3 Manure Manure at animal • Minimize the manual handling of manure from the animal pens to the treatment facilities PACs CPMOs Management raising facilities through wet and dry manure handling systems as possible • Provide health and safety equipment and training to workers tailored to the work tasks • For manure treatment in biogas facilities, proper management of produced gas and biogas residuals to minimize risks. Maintain gas storage facilities to under 50t to keep risk level at Level 2 under PRC regulation Environmental Risk Assessment Guidelines for Project Construction • (HJ/T169-2004) • For reuse of biogas liquid and solid residuals on farmland, ensure that sufficient land and appropriate crops are utilized to prevent potential groundwater contamination. Best management practices for land application of these residuals will be applied to all facilities with residual reuse • For manure fermentation for use as organic fertilizers, ensure that surface runoff is diverted around storage piles and runoff from the piles are property treated to avoid surface or subsurface pollution. For reuse of fermented manure on farmland, ensure that sufficient land and appropriate crops are utilized to prevent potential groundwater contamination. Best management practices for land application of the fermented manure will be applied to all facilities with residual reuse • Ensure that all use of agricultural waste products as organic fertilizer complies with the PRC’s Organic Fertilizer Standard (NY525-2012), including application rates, and content and quality of the source waste 3.4 Other Solid Other waste • As far as possible, re-use organic waste from agricultural production and processing as animal PACs CPMOs Wastes management feed and/or fertilizer. For Shude subproject, waste jujube will be re-used as fertilizer; rice bran will be re-used as animal feed and filter residue from honey processing workshop will be sold out for resource utilization. • Sludge from Shude WWTP will be used for organic fertilizer; • For Wei’erfu subproject, the laboratory chemicals and or/medical waste, the infectious scrapped materials produced in the fermentation workshop, the animal faeces and corpses produced in the animal house should be sterilized at high temperature, and then be treated as hazardous waste together with the sludge from Wei’erfu WWTP .For disposal of hazardous substances, including laboratory chemicals, contract a specialized company certified for the collection and disposal of such substances • Waste packaging materials sold to waste collection station for recycling

Item Issue Mitigation / Safeguard measure Agency Inspect • Dispose general solid waste in landfills • For livestock subprojects, dispose dead livestock in compliance with HJ/T 81-2001): (i) disposed in a timely manner; (ii) do not sell or use dead livestock as feed for recycling; (iii) dispose by incineration method; and (iv) if the farm is unable to establish an incinerator, then at least two sanitary landfill wells will be outfitted to dispose the dead livestock • For Wei’erfu subproject, two sanitary landfill wells will be constructed under the subproject for disposal of dead animals. 3.5 Air quality Air pollution, Odor and • WWTPs will be constructed underground and all of the tanks will be covered. .Maintain Local and PPMO, SPG safety (NH3 and H2S) operations in accordance with PRC regulations and in compliance with Class 2 ambient county standards government For Shude subproject • Millet flour processing workshop will be fully closed. • Install gas collecting facilities in the cleaning, rice hulling and milling processes respectively. The waste gas will be emitted through a 15m high stack after being treated by bag dust collector. • The biomass fired boiler is equipped with a low nitrogen combustion device, and the flue gas is discharged by a 30m high exhaust cylinder after being treated by a bag dust collector. For Wei’erfu subproject: • Fermentation waste gas from workshop, odor from animal house will be treated with activated carbon adsorption filter and then emitted through 15m high smokestack. • Canteen oil fume will be collected and treated by electrostatic oil fume purifier 3.6 Noise Noise impacts • Maintain operations in accordance with PRC regulations and in compliance with Class 2 Local and PPMO, SPG ambient standards county government 3.7 Cooling Chemical storage at • Management of level 2 hazard under HJ/T169-2004 to be implemented PACs CPMOs systems, gas cold storage • All facilities to be designed and operated in compliance with “Hazard Level 2” of systems, and facilities HJ/T169-2004, including the following: biogas  Plant layout includes emergency rescue facilities and emergency evacuation shelter  Automatic monitoring, alarm, emergency shut-off and emergency shutdown systems  Automatic gas detection and alarm systems  Explosion/hazardous area zoning of site and fire alarm and fire management systems  Emergency Plans 3.8 Health and Community and • Ensure safe working environment for staff PACs CPMOs, safety worker health and • Prepare site environmental health and safety procedures. These will comply with the PRC’s SSSO safety Labor Law, Labor Contract Law, and Special Rules on the Labor Protection of Female Employees • Ensure that: (a) all reasonable steps are taken to protect any person on the site from health and safety risks; (b) the construction site is a safe and healthy workplace; (c) machineries and

Item Issue Mitigation / Safeguard measure Agency Inspect equipment are safe; (d) adequate training or instruction for occupational health and safety is provided, especially for new workers; (e) adequate supervision of safe work systems is implemented; and (f) means of access to and egress from the site are without risk to health and safety • Issue staff with protective gear appropriate to their tasks • Regularly check electrical connections • Fence off and secure the openings of water storage tanks at ground level • Apply health and safety protocols for staff in the handling, application and clean-up of agricultural chemicals, to comply with the PRC’s Regulations on Safe Management of Hazardous Chemicals (Decree 591) • Implement safeguard measures for “Level 2” environmental risk for gas storage systems (see above) 3.9 Impacts site See Table EMP.3. PACs CPMOs Miscellaneous specific to PACs

ADB = Asian Development Bank, CACH = County Administration of Cultural Heritage, DEA = domestic environmental assessments, DI = design institute, EIA = environmental impact assessment, EPB = environment protection bureau, EMP = environmental management plan, ESS = environment safeguard specialist, GRM = grievance redress mechanism, PAC = project agribusiness companies or cooperatives, , PPMO = provincial project management office, SSSO = Shanxi Safety and Security Office, SPG = Shanxi Provincial Government, WMP = water management plan, WRB = water resources bureau. Note: See Tables A1.6, 8–9 for costs. Note: Items 1.1 and 1.3 = costs are part of the project design costs; item 1.2 = items funded under the project loan (loan consultants) or PMO costs.

Table EMP.3: Project Impacts and Mitigation by the two Subprojects with Scope Changes

Municipality County Enterprise Environmental Impact/Mitigation Applicability (Table EMP.2 Numbers) Pre-construction Construction Operation 1a 1b 1c 1d 1e 1f 1.2 1.3 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 Lvliang Shilou Shilou Shude Jujube X X X X X X X X X X X X X X X X X X X X X Industry Yuncheng Ruicheng Shanxi Wei’erfu X X X X X X X X X X X X X X X X X X X X X X X Biotechnology Co., Ltd. Others See original EMP

Table EMP.4: Climate Change Adaptation and Mitigation Measures by Subproject Subprojects Structural adaptation Non-structural adaptation Mitigation practices measures measures Food 1). Increase storm water 1). Help the food ingredient 1). Design food processing processing pipes capacity by 10% producers, mostly local workshops with energy to account for projected farmers, for maintaining saving measures, including increase in precipitation normal raw material insulation of walls, intensity supply by adapting climate upgraded heating, lighting, 2). Good insulation and change ventilation systems, and ventilation to reduce adopting more energy potential heat stresses efficient equipment to workers Cold storages 1). Design with 1). Develop improved 1). Design with improved (Various) sufficient drainage management plans to insulation capacity for the storage minimize the cold storage 2) Adopt cooling and other related time for food and ingredients equipment with high facility to avoid 2). Select refrigerants with energy efficiency damages from flash less GHG emissions and/or floods manageable in terms of safety

G. Monitoring and Reporting

11. Three types of project monitoring will be conducted under the EMP: (i) compliance monitoring, by the ESS and PPMO. This comprises periodic inspections of construction sites, discussions with PAC personnel, CSCs and contractors, and review of PAC and CPMO progress reports. The findings will be reported to ADB through the semi-annual EMP monitoring and progress reports; (ii) internal monitoring, by the CSCs and PACs. This comprises on-site sampling to determine whether the safeguard parameters for air and water quality, noise levels, and other indicators, are within the standards specified in this EMP. Results will be reported to the CPMOs; and (iii) external monitoring, by an EMA, to independently verify that construction activities are complying with the standards for air, noise, water and soil specified in this EMP.

12. ADB will oversee project compliance on the basis of the semiannual environmental monitoring reports provided by the PPMO and site visits as required. Monitoring and reporting arrangements defined for this project are described below. 13. Table EMP.5 shows the environmental monitoring program designed for this project, defining the scope, location, parameter, duration and frequency, and responsible agencies, for monitoring during the construction and operational stages. Monitoring parameters were identified in the environmental assessment for each PAC and also reflect the requirements of national regulatory standards. Internal environmental monitoring will include monitoring of air quality and noise in the construction stage and wastewater quality and groundwater in the operations stage. External monitoring will include air, noise and water during construction and air (odor from biogas plant and organic fertilizer plant), noise, wastewater quality and groundwater during operations.

14. The monitoring results will be compared with relevant PRC performance standards (Table EMP.6). Noncompliance with these standards will be highlighted in the monitoring reports. Monitoring results will be submitted to the CPMOs and PPMO and reported by the PPMO to ADB in semiannual environmental monitoring reports.

Table EMP.5: Environmental Monitoring Program Item and Subprojects Parameter Monitoring Location Monitoring Implementing Supervising Affected Frequency and Agency Agency Duration 1. CONSTRUCTION PHASE Internal monitoring Ambient air quality Dust mitigation Visual inspection at all Daily Contractor, CPMO [All subprojects] measures in EMP; PAC construction sites PAC equipment maintenance Solid waste Garbage and Visual inspection at all Daily Contractor, CPMO, [All subprojects] construction construction sites and PAC EPB, waste work-camps sanitation bureau Soil erosion and re- Soil erosion Visual inspection at spoil Daily; and Contractor, CPMO vegetation intensity sites and all construction immediately after PAC [All subprojects] sites, especially near heavy rainfall banks of rivers, channels, reservoirs, wetland Re-vegetation of Visual inspection at all Quarterly Contractor, CPMO embankments, spoil sites PAC disposal sites, construction sites Occupational health Camp hygiene, Inspection at all 1 time / week Contractor, CPMO and safety safety, availability construction sites and PAC [All subprojects] of clean water, work-camps emergency response plans Construction EMP Inspection at all 1 time / week Contractor, CPMO wastewater including implementation of construction sites and PAC domestic sewage construction work-camps [All subprojects] wastewater controls and domestic sewage management External monitoring Dust and Noise TSP, LAeq At 500 m from Quarterly (24-hr EMA CPMO. [All subprojects] PAC boundary or continuous) PPMO at sensitive receptors located closer than 100 m from PAC Groundwater quality Groundwater PAC wells 2 times / year to EMA PAC, EPB, and level (Shude level, pH, NO3-N, establish CPMO subproject) CODMn, As, Hg, Pb, baseline Cr6+ Solid waste (garbage, Work camps and Visual inspection at all Quarterly EPB, CPMO ESS construction waste) construction construction sites and [All subprojects] waste at construction work-camps sites Soil erosion and re- Soil erosion Visual inspection at spoil Quarterly EPB, CPMO ESS vegetation intensity sites and all construction [All subprojects] sites, especially near banks of rivers, channels, reservoirs, wetland Re-vegetation of Visual inspection at Quarterly EPB, CPMO ESS embankments, spoil sites, and disposal sites and temporary occupied construction sites lands Occupational health Work camp Inspection at all At least once a EPB, CPMO ESS

Item and Subprojects Parameter Monitoring Location Monitoring Implementing Supervising Affected Frequency and Agency Agency Duration and safety hygiene, safety, construction sites and year, and once [All subprojects] availability of clean work-camps after completion of water, emergency construction response plans 2. OPERATIONAL PHASE (first year of operations minimum) WWTP effluent pH, SS, NH3- N, , effluent of PAC monthly EMA PAC, water Quality CODcr,, BOD5 CPMO, EPB [All subprojects] Groundwater quality Groundwater PAC Wells 2 times / year EMA PAC, and level level, pH, NO3-N, CPMO, EPB [Shude Subproject] CODMn, As, Hg, Pb, Cr6+ Water usage Volume Water usage and Continuous (as PAC PAC, [All subprojects] implementation of per WMP CPMO, water monitoring EPB management plan program) Noise LAeq At boundary of PAC quarterly EMA PAC, [Shude Subproject] CPMO, EPB Odor from animal house NH3, H2S At 200 m from PAC 1 time per EMA PAC, (Wei’erfu subproject) boundary or at quarter CPMO, sensitive EPB receptors located closer Soil and Vegetation Plant survival and All re-vegetated sites Spot check, CPMO PAC, [All subprojects] coverage twice a year CPMO, EPB 3. Compliance monitoring Assess compliance Number of PAC construction and Monthly ESS PPMO, ADB with project EMP and site violations of EMPs operation sites specific EMPs prepared reported or observed by contractors during site inspections [All subprojects] BOD = biological oxygen demand, CaCO3 = calcium carbonate, COD = chemical oxygen demand, CPMO = county project management office, EMA = environmental monitoring agency, EPB = environment protection bureau, ESS = environment safeguard specialist, PAC = project agribusiness company or cooperative, PPMO = provincial project management office, TN =total nitrogen, TP = total phosphorous, NH3-N = ammonium nitrate. Table EMP.6: Monitoring Indicators and Applicable PRC Standards Phase Indicator Standard Construction Dust at PAC Air Pollutant Comprehensive Emission Standard (GB16297-1996) boundary Dust at Class II Ambient Air Quality Standard (GB 3095-1996) nearby village(s) Noise limits at Emission Standard of Environmental Noise for Boundary of Construction boundary of Site (GB 12523-2011) PAC Table 1 Class B of “Wastewater Quality Standard for Discharge to Municipal Sewers (GB/T31962-2015) Surface water Surface Water Ambient Quality (GB3838-2002). The target standard for quality each monitoring site is the existing (pre-construction) class at that site. Operation Odor (NH3, Emission Standards for Odor Pollutants (GB 14554-93) and Hygiene H2S) Standards for the Design of Industrial Enterprises (TJ36-79) Noise Emission Standard for Industrial Enterprises Noise at Boundary (GB 12348-2008) Wastewater Standards for Irrigation Water Quality (GB5084-2005) Sanitary Standard for the Non-Hazardous Treatment of Manure and Might Soil (GB7959-87) For subprojects that discharge waste water to WWTPs, Groundwater Quality Standards for Groundwater (GB/T14848-1993). The target

Phase Indicator Standard standard for each monitoring site is the existing (pre-construction) class at that site.

15. Reporting requirements and frequency. The project-reporting schedule includes requirements for internal reports and external monitoring reports. Internal reports are mostly a section of project progress reports from: (i) the contactors and CSCs to the PACs and CPMOs; (ii) the PACs to the CPMOs (quarterly reports); (iii) the CPMOs to PPMO (quarterly reports); and the external environmental monitoring reports include (i) ambient environmental quality monitoring conducted by environmental monitoring agencies, and (ii) the environmental monitoring reports to be submitted to the ADB for disclosure in the ADB website (Table EMP.6). The progress reports will summarize the monitoring results, any issues encountered, how these were resolved, and lessons learned.

Table EMP.6: Reporting Plan Reports From To Frequency Pre-construction Phase Project Project Readiness report ESS PPMO, Once before readiness ADB construction Construction Phase Internal Progress report Contractor, PAC Regular monitoring CSC Internal Progress report PAC CPMO, Quarterly monitoring ESS Internal Progress report CPMO PPMO Quarterly monitoring External Environmental monitoring report EMA EPB, Quarterly environmental CPMO, monitoring PAC Compliance Environment progress report PPMO ADB Semi-annual monitoring Acceptance Environmental acceptance Licensed EPB, EPD Once; within 3 report report acceptance months of institute completion of physical works Operational Phase (at least first year of operation) Internal Progress report PAC CPMO Quarterly monitoring Internal Progress report CPMO PPMO Quarterly monitoring Compliance Progress report ESS PPMO, Quarterly monitoring ADB External Environmental monitoring report EMA EPB, Quarterly environmental CPMO, monitoring PAC Progress Environmental progress report PPMO, ESS ADB Semi-annual report ADB = Asian Development Bank, CPMO = county project management office, EMA = environment monitoring agency, EPD = environmental protection department, EPB = environment protection bureau, ESS = environment safeguard specialist, PAC = project agribusiness company or cooperative, PPMO =

16. Environme ntal acceptance reports. In addition, within 3 months after the completion of each subproject, an environmental acceptance report for each subproject shall be prepared by a licensed environmental monitoring institute, in accordance with the PRC Regulation on Project Completion Environmental Audit (MEP, 2001). The report will be reviewed and approved by the Shanxi EPD and reported to ADB. The environmental acceptance reports of the component completions will indicate the timing, extent, effectiveness of completed mitigation and of maintenance, and the needs for additional mitigation measures and monitoring during operations.

H. Training

17. The capacity of the project environmental officers in the PPMO, CPMOs and PACs will be strengthened through a project training program (Table EMP.7). The CPMOs have little previous experience with ADB-funded projects and safeguard requirements. The training will provide an understanding of the goals, methods, and practices of project environmental management. Training will include workshops and on-the-job management with the ESS and other specialists. The training will cover (i) the EMP, including the mitigation measures, monitoring, and reporting; (ii) groundwater awareness and use; (iii) sustainable agriculture practices, especially for wastewater treatment and the use of agricultural chemicals; and (iv) the humane treatment of livestock during raising and slaughter.

Table EMP.7: Training Program Topic Attendees Content Trainer No. of training EMP PPMO, • Roles, responsibilities ESS 3 (prior to, and implementation CPMOs, • Environment monitoring program after first year of EPBs and • Public consultation and participation project and once PACs after mid-term • Grievance redress mechanism review) • Environment, health and safety • Other key content of EMP Groundwater PPMO, • Water conservation WRS, 3 (prior to, and awareness CPMOs, • Regulations and requirements WRBs, after, first year of EPBs and • Groundwater conditions and aquifer EPD project and once PACs using depletion after mid-term ground- review) • water Monitoring groundwater use • Pollution control measures Agriculture PPMO, • Safe use of agrochemicals LIC, As above Extension CPMOs, • Integrated pest management SAU EPBs and • Water, fertilizer and mulch applications PACs • Management of manure, biogas solids/liquids to prevent groundwater contamination and health and safety concerns Humane PPMO, • Global ethical considerations LICs, As above treatment of CPMOs, • Humane treatment during raising SAU livestock EPBs and • Humane slaughtering techniques PACs Grievance PPMO, • Roles and responsibilities, procedures ESS As above Redress CPMOs Mechanism Environmental PPMO, • Pollution control on construction sites ESS, As above protection and CPMOs (air, noise, waste water, solid waste) WRS monitoring CPMO = county project management office, EPD = environment protection department, LIC = loan implementation consultant, ESS = environment safeguard specialist, PAC = project agricultural company or cooperative, PPMO = project management office, SAU = Shanxi Agricultural University, WRB = water resource bureau, WRS = water resources specialist.

I. Grievance Redress Mechanism

18. A grievance redress mechanism (GRM) has been established as part of the project EMP to receive and manage any public environmental and/or social issues which may arise due to the project. All concerns from construction workers, nearby residents and visitors will be addressed. The PPMO and CPMO environmental and social officers will coordinate the GRM and will (i) instruct the PAC environmental and social officers, contractors, CSCs, and local government agencies, on their responsibilities in the GRM and regularly coordinate with these agencies; (ii) establish a simple registry system, to document and track grievances received (including forms to record complaints and how they have been resolved); and (iii)

report on progress of the GRM in the semi-annual environmental monitoring and progress reports to ADB. Staff of the PPMO, CPMO, PACs, CSCs and contractors will be trained and supported by the ESS and Loan Implementation Social Consultant (LISC) for GRM implementation.

19. At least 1 month before construction commences, the following details will be publicly disclosed: (i) the GRM procedures; (ii) contact details for the GRM entry points (phone numbers, addresses, e-mail addresses); and (iii) construction schedule and activities. These details will be circulated through town hall meetings, public boards, and on the websites of the PPMO and Shanxi EPB.

20. Once a complaint is received and filed, the PPMO officers will identify if it is eligible under the GRM. Eligible complaints include those where (i) the complaint pertains to the project; and (ii) the issues arising in the complaint fall within the scope of environmental issues that the GRM is authorized to address. Ineligible complaints include those where: (i) the complaint is clearly not project-related; (ii) the nature of the issue is outside the mandate of the environmental GRM (such as issues related to resettlement, allegations of fraud or corruption); and (iii) other procedures are more appropriate to address the issue. Ineligible complaints will be recorded and passed to the relevant authorities, and the complainant will be informed of the decision and reasons for rejection. The procedure and timeframe for the GRM is as follows and also summarized in Figure EMP-1.

• Stage 1 (5 days): If a concern arises during construction, it is most likely that the first lines of communication by an affected person would be with the agencies nearest the site i.e. the PAC, contractor, CSC, CPMO, EPB, or village committee. The person may submit an oral or written complaint to any of these agencies. Contractors and workers will be instructed to be courteous to residents and, in the event they are approached by the general public with an issue, to immediately halt their work and report the issue to the foreman. Whenever possible, the agency will resolve the issue directly with the affected person and shall give a clear reply and action within five (5) working days. The agency will inform the PAC and CPMO of the complaint on the same day it is received, and the CPMO will inform the PPMO on the same or following day.

• Stage 2 (5 days): If the issue cannot be resolved in Stage 1, after 5 days, the CPMO and/or PPMO will take over responsibility and inform the ADB. Eligibility of the complaint will be assessed, a recommended solution will be given to the complainant, and if the solution is agreed by the complainant, the solution will be implemented by the contractor or other relevant agency. These steps will be completed within five (5) days.

• Stage 3 (10 days): If no solution can be identified by the PPMO and/or CPMO, and/or the complainant is not satisfied with the proposed solution, the PPMO and/or CPMO will organize a stakeholder meeting (including the complainant, contractor, PAC, local EPB, PPMO, CPMO). A solution acceptable to all shall be identified including clear steps. The contractors (during construction) and facility operators (during operation) will immediately implement the agreed solution. These steps will be completed within ten (10) days. • Written records will be kept by the PPMO of all stages and outcomes.

21. The GRM does not affect the right of an affected person to submit their complaints to any agency they wish to, for example the local village committee, community leaders, courts, PPMO, and/or Asian Development Bank.

22. If the GRM process is unsuccessful, affected people may submit complaints to ADB’s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted projects can voice,

and seek a resolution of their problems, as well as report alleged violations of ADB‘s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, affected people should make a good faith effort to solve their problems by working with the concerned ADB operations department (in this case, the ADB East Asia Department). Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism.6

23. The PPMO and CPMO shall bear any and all costs of implementing the GRM, including meeting, travel, and/or accommodation costs of the project staff or affected person. The GRM will be implemented throughout project construction and at least the first year of operation for all subprojects.

24. The tracking and documenting of grievance resolutions by the PMO will include the following elements: (i) tracking forms and procedures for gathering information from project personnel and complainant(s); (ii) regular updating of the GRM database by the PMO Environment and Social Officers; (iii) processes for informing stakeholders about the status of a case; and (iv) a simple but effective filing system, so that data can be retrieved for reporting purposes, including reports to ADB.

J. Cost Estimates

25. The cost for EMP implementation comprises three items: mitigation measures

(Table EMP.2), environmental monitoring (Table EMP.3), and training (Table EMP.6). The costs are summarized in Table EMP.8. Excluded from the budget are (i) detailed design revisions and adjustments, (ii) infrastructure costs which relate to environment and public health but which are already included in the project direct costs, and (iii) remuneration for the PMO Environment and Social Officers and loan implementation consultants.

26. The PACs will pay for compliance environmental monitoring costs during construction and initial operation. The PACs and their contractors will pay for all mitigation measures during construction, including those specified in the contract documents and any unforeseen impacts due to construction activities. The PMO and PACs will bear the costs related to environmental supervision during construction and operation respectively. The PMO will bear the costs for training and the GRM (Table EMP.8).

Table EMP.8: Estimated PPMO Costs for EMP Implementation for Five Years PMO No. Unit Total 2018 2019 2020 2021 2022 ADB PMO Item Unit units cost Consultant – ESS PM 18 28,000 504,000 100,800 100,800 100,800 100,800 100,800 504,000 0 Consultant – WRS PM 19 28,000 532,000 106,400 106,400 106,400 106,400 106,400 532,000 0 GRM LS 1 5,000 5,000 1,800 800 800 800 800 0 5,000 Training program EMP implementation PD 140 600 84,000 42,000 42,000 0 84,000 Groundwater PD 50 600 30,000 30,000 0 30,000 awareness Agriculture PD 50 600 30,000 30,000 0 30,000 extension Humane treatment PD 50 600 30,000 30,000 0 30,000 of livestock GRM PD 40 600 24,000 24,000 0 24,000 Environmental PD 40 600 24,000 24,000 0 24,000 protection, monitoring TOTAL in CNY 1,263,000 389,000 250,000 208,000 208,000 208,000 1,036,000 227,000 TOTAL in USD 203,710 62,742 40,323 33,548 33,548 33,548 167,097 36,613 EMP = environment management plan, ESS = environment safeguard specialist, GRM = grievance redress mechanism, LS = lump sum, PD = person days, PM = person months, WRS = water resources specialist.