Preparing the Songhua River Basin Water Pollution Control and Management Project (Cofinanced by the Cooperation Fund for the Water Sector)

Technical Assistance Report

Project Number: 40665 September 2007

People’s Republic of China: Preparing the Songhua River Basin Water Pollution Control and Management Project (Cofinanced by the Cooperation Fund for the Water Sector)

CURRENCY EQUIVALENTS (as of 29 August 2007)

Currency Unit – yuan (CNY) CNY1.00 = $0.13 $1.00 = CNY7.56

ABBREVIATIONS

ADB – Asian Development Bank EA – executing agency FYP – five-year plan HPG – Heilongjiang provincial government JPG – Jilin provincial government PRC – People’s Republic of China SRB – Songhua River Basin SRBPCP – Songhua River Basin Water Pollution Prevention and Control Plan TA – technical assistance

TECHNICAL ASSISTANCE CLASSIFICATION

Targeting Classification – Targeted intervention Sector – Water supply, sanitation, and waste management Subsector – Integrated Themes – Environmental sustainability, inclusive social development, capacity development Subthemes – Urban environmental improvement, human development, organizational development

NOTE

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

Vice President C. Lawrence Greenwood, Jr., Operations Group 2 Director General H. Satish Rao, East Asia Department (EARD) Director R. Wihtol, Social Sectors Division, EARD

Team leader S. Penjor, Principal Financial Analysis Specialist, EARD

118o 00'E 130o 00'E

SONGHUA RIVER BASIN WATER POLLUTION CONTROL AND MANAGEMENT PROJECT N IN THE

PEOPLE'S REPUBLIC OF CHINA 0 100 200 300 400

Kilometers

Songhua River Basin National Capital Provincial Capital City/Town H e i l River o n g o R Watershed Boundary o 52 00'N i 52 00'N v e r Provincial Boundary X Yilehuli Mountain I A

O International Boundary

Boundaries are not necessarily authoritative.

N H

I N

G Aihui

A G G

a n A R T N

e r N

O U U

T Manzhouli O r A

e I er v N i Riv

M R S ong

n Heil Y e

a lu N

e r N

HEILONGJIANG G Qiqihar

Jiamusi

N T ao Sanjiang Plain 'er

I Ri er ver

Songnen Plain Songhua Riv H

Harbin

Lalin R. A Hailin Lake Tianchi

S Wuchang D o n g h Mudanjiang u a R iv e r

INNER MONGOLIA Jilin Changchun River Liao J I L I N

LIAONING Changbai Mountain

Shenyang H E B E I

Liaodong BEIJING Bay 40 o 00'N 40 o 00'N S e a o f J a p a n

Tianjin Korea Bay TIANJIN Dalian Bohai Sea

118o 00'E 130o 00'E

07-3053 HR

I. INTRODUCTION

1. During the 2006 Country Programming Review Mission, the Government of the People’s Republic of China (PRC) confirmed the request to the Asian Development Bank (ADB) for technical assistance (TA) to prepare the Songhua River Basin Water Pollution Control and Management Project. Fact-finding for the TA was undertaken in April 2007 and an understanding was reached with the Government on the impact and outcome, scope, costs and financing, implementation arrangements, and terms of reference for the TA.1

II. ISSUES

2. Demand for urban infrastructure in the PRC is rising with increasing urbanization, and more than half the population is expected to live in cities by 2030. The Government’s 11th Five- Year Program (11th FYP), 2006–2010, focuses on continued urbanization and the development of large, medium-sized, and small cities and towns. Rapid urbanization in the PRC has taken a severe toll on the environment, and has also challenged the capacity of local governments to promote good governance, effective planning and management, sustainable financing, and timely delivery of public services. While significant progress has been made in building urban infrastructure over the past two decades, such infrastructure tends to be concentrated in the more highly developed eastern and southern coastal plains. The expansion and upgrading of public services have not kept pace with rapid industrial growth. The rural migration to urban centers currently taking place in the inland regions, in response to Government policies to promote economic development and job creation in those areas, is putting a further strain on urban infrastructure and services.

3. Cities in the north and west and around the Songhua River basin (SRB) are experiencing widespread pollution due to the discharge of untreated wastewater and improper management of solid waste. Shortages of safe drinking water are also common, particularly in the northern part of the PRC. The Government has classified more than 108 cities as having serious water problems, and 60 as being critically short of water. Municipal wastewater is a major contributor to the pollution of PRC’s rivers and lakes, with the most severe pollution impacts in the northern region of the country. Currently, only about 40% of urban wastewater in the PRC is treated and the rest is discharged untreated into rivers and lakes. Further, the growing and uncontrolled disposal of solid waste contributes to increasing contamination of groundwater supplies. Cities and towns in Heilongjiang and Jilin provinces must overcome widespread environmental degradation and meet increasing demands for public services to ensure that their economic development is sustainable.

4. The SRB is the third largest river basin in the PRC after the Yangtze and Yellow rivers. It has an area of 557,000 square kilometers and a population of 62 million. Major cities such as Changchun, Harbin, Jiamusi, and Qiqihar are located in the SRB. Agriculture is well-developed and there is a large industrial base. The Songhua River catchment area covers portions of three provinces: Heilongjiang and Jilin provinces and the autonomous region of Inner Mongolia. Changchun is located in the upstream part of the Songhua River, which flows through Harbin. After Harbin, the river joins the Heilongjiang River, enters the Russian Federation, and eventually discharges to the sea.

5. The SRB is seriously polluted and is acknowledged by the State Environmental Protection Administration (SEPA) as being one of the four most polluted river basins in the PRC.

1 The TA first appeared in ADB Business Opportunities on 13 April 2007. 2

Water pollution issues in the SRB, especially in relation to the protection of drinking water resources for the municipality of Harbin, have received increased national and international attention due to a widely publicized pollution incident in the SRB in November–December 2005. The Songhua River is contaminated with a number of known and suspected trace organic chemicals, metals, and conventional pollutants. It is classified by the Government as Class IV2 (falling below Class V during the 6-month low flow winter season), and is considered unsuitable for municipal domestic water use. In March 2003, ADB approved the Harbin Water Supply Project ($100 million)3 to address the needs of Harbin City (population 3 million) for clean and reliable drinking water from an alternative water source (Lalin River), since their existing source from the Songhua River was highly polluted. Because of the deteriorating water quality in the Songhua River, the Harbin municipal government expedited the construction of the Harbin Water Supply Project, which was completed 1 year ahead of the original schedule.

6. During the processing of the Harbin Water Supply Project, extensive dialogue was conducted with the Government on addressing pollution control in the SRB. Consequently, in 2002, ADB provided a TA for the Songhua River Water Quality and Pollution Control Management.4 The TA, which was considered highly successful,5 (i) addressed technical knowledge gaps, (ii) strengthened the capacity of the Songhua Water Resources Protection Bureau, and (iii) assisted the Government in developing a long-term water pollution control plan for the SRB beyond 2010. The TA provided strategic policy inputs to the 11th FYP and the SRB Water Pollution Prevention and Control Plan (SRBPCP).

7. The Government is paying increasing attention to water resources management, wastewater treatment and pollution control, and the formulation of investment plans to address water supply shortages and wastewater treatment. The SRBPCP (2006–2010), approved in principle by the State Council on 29 March 2006, is an action program to set pollution control targets from 2006 to 2010, requiring that urban environmental pollution and ecological damage be controlled by 2010. Large and medium-sized cities’ wastewater treatment rate should not be less than 70% by 2010.

8. The Jilin Water Supply and Sewerage Development Project ($100 million),6 approved in 2005, was the first major ADB investment directly addressing pollution control in the SRB. The proposed Jilin Urban Environmental Improvement Project ($100 million), currently being processed for approval in 2007, is the second, and follows the priority list of the SRBPCP. The proposed project with an indicative ADB loan of $200 million will be the third major ADB investment in the SRB, and also follows the priority list of the SRBPCP. This comprehensive strategic approach to addressing pollution control in the SRB will serve as a good model for replication elsewhere in the PRC.

9. The proposed project municipalities are Baishan, Changbaishan, Changchun, Huinan, Jilin, and Tonghua in Jilin Province; and Harbin, Heihe, Jiamusi, Qiqihar, Qitaihe, and

2 PRC water quality standards have five classes covering about 40 pollution parameters. Class I is pristine, while class V is suitable only for industrial use. 3 ADB. 2003. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the People’s Republic of China for the Harbin Water Supply Project. Manila. Some districts are already receiving the new high quality project water. 4 ADB. 2002. Technical Assistance to the People’s Republic of China for Songhua River Water Quality and Pollution Control Management. Manila. 5 ADB. 2006. Technical Assistance Completion Report Songhua River Water Quality and Pollution Control Management. Manila (TA 4061-PRC). 6 ADB. 2005. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the People’s Republic of China for the Jilin Water Supply and Sewerage Development Project. Manila.

Shuangyanshan in Heilongjiang Province. Heilongjiang has identified 14 subprojects focusing on wastewater treatment and water supply. Jilin has identified 15 subprojects focusing on water supply, wastewater treatment, solid waste management, and river improvement. Sector and project lending were thoroughly discussed and considered as alternative approaches. The Government expressed its strong preference for the project lending approach because all subprojects have been identified and feasibility study reports have been prepared. All components of the proposed project have one common impact, to improve the urban environment and enhance the quality of life in the above cities and contribute to pollution control in the SRB.

10. The project is consistent with ADB’s water policy7 and will help the PRC achieve Millennium Development Goal (MDG) 7, target 10, which establishes the 2015 target of reducing by 50% the proportion of people without sustainable access to safe drinking water and improved sanitation. The project is also consistent with ADB’s strategic objectives in the PRC to make markets work more efficiently through infrastructure development and to promote environmental sustainability. Over the past decade, ADB has significantly increased its involvement in urban development and water resource management in the PRC through its lending and TA operations. The experience gained from similar projects in Changchun, Fuzhou, Harbin, Hefei, Nanjing, Shandong, Shanghai, Tianjin, Wenzhou, and Wuhan has been considered in the design of the proposed TA. Given the large financing needs of pollution control in the SRB, during TA implementation innovative options for attracting private sector participation will be explored and discussed, including the public–private participation model developed under the Nanjing Qinhuai River Environmental Improvement Project.8 The environmental aspects of the ensuing project will be assessed comprehensively, including innovative approaches to addressing environmental issues.

III. THE PROPOSED TECHNICAL ASSISTANCE

A. Impact and Outcome

11. The expected impact of the TA is an improved urban environment and enhanced quality of life in the municipalities of Baishan, Changbaishan, Changchun, Huinan, Jilin, and Tonghua, in Jilin Province; and Harbin, Heihe, Jiamusi, Qiqihar, Qitaihe, and Shuangyanshan in Heilongjiang Province. The expected outcome is the agreed-upon design of the SRB Water Pollution Control and Management Project. The design and monitoring framework is in Appendix 1, and the initial poverty and social analysis is in Appendix 2.

B. Methodology and Key Activities

12. The TA will (i) evaluate the project in the context of strategic long-term development plans, the 11th FYP, the SRBPCP, alternative strategies for wastewater management, water supply capacity development, and solid waste management, to meet the project cities’ increasing demand; (ii) identify sector investment priorities in each city; (iii) review and assess the feasibility of the selected subprojects based on technical, institutional, environmental, social, economic, and financial assessments; (iv) develop an institutional strengthening component, based on a needs assessment for the implementing agencies (IAs) of the subprojects in each city; and (v) design a corporate development plan for the IAs, based on a financial management

7 ADB. 2001. Water for All: The Water Policy of the Asian Development Bank. Manila. 8 ADB. 2006. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the People’s Republic of China for the Nanjing Qinhuai River Environmental Improvement Project. Manila. 4 assessment. Household surveys will be conducted to address issues of public awareness and preference, willingness to pay, and affordability. The TA will identify stakeholders and develop a participatory strategy for project preparation, design, construction, and operation. Consultation workshops and tripartite meetings will be scheduled strategically during the implementation of the TA.

13. The major assumptions and risks that need to be considered for successful TA implementation include (i) inadequate counterpart support and performance, (ii) lack of adequate and timely provision of necessary data, (iii) delay in submitting required studies, (iv) delays in appointing and mobilizing consultants, and (v) inadequate performance of the consultants. The Government has agreed to provide sufficient counterpart support, to provide all necessary data when required, and to undertake and update all required studies according to a timetable agreed on with ADB. Efforts will be made to ensure that consultants are recruited on time and that their performance is closely monitored and reviewed. Close coordination among ADB, the executing agencies (EAs) and IAs, and the consultants will further mitigate the potential risks.

C. Cost and Financing

14. The total cost of the TA is estimated at $1,700,000 equivalent. The Government has requested ADB to finance $1,300,000 equivalent.9 The TA will be financed on a grant basis by ADB’s TA funding program ($1,104,000) and the Cooperation Fund for the Water Sector ($196,000). The Government has agreed to provide the balance of $400,000 in kind to cover counterpart staff, office space, furniture, administrative support services, and local transport and logistics. Details of the cost estimates and financing plan are in Appendix 3. The Government has been advised that approval of the TA does not commit ADB to finance the ensuing project.

D. Implementation Arrangements

15. A project steering committee will be established at the central Government level to coordinate project activities in Heilongjiang and Jilin. The Heilongjiang provincial government (HPG) will be the EA for the Heilongjiang component, and the Jilin provincial government (JPG) will be the EA for the Jilin component. A vice governor will chair the provincial-level TA steering committee in each province, with members from the respective development and reform commissions, and bureaus of construction, finance, environment protection, and water resources.

16. The TA offices in Heilongjiang and Jilin will be headed by the vice directors of the development and reform commissions, and will include staff from the abovementioned bureaus to ensure consultants’ access to relevant project information and data, and to liaise with ADB on matters relating to TA implementation. HPG and JPG have agreed to provide 10 experienced and qualified counterpart staff each to work with the consultants on a full-time basis. Prior to the start of TA implementation, the concerned municipal governments in Heilongjiang and Jilin will establish similar organization structures, chaired by their respective vice mayors, to implement the TA. HPG and JPG will provide the consultants with a suitably furnished office with utilities, telecommunication access, materials, maps, data, and all required project documents.

9 The TA budget will be $650,000 for Heilongjiang, and $650,000 for Jilin. Cost tables for Jilin and Heilongjiang components have been prepared separately.

17. The TA will be implemented over a 6-month period. It is expected to start in January 2008 and be completed by July 2008. Total consultants’ inputs are estimated at 90 person- months, 34 international and 56 national.10 The consultants will be engaged through a firm in accordance with ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time). ADB will select and engage consultants on the basis of the quality of the proposal (90%) and the cost (10%) of the services to be provided (the quality- and cost-based selection method) using the full technical proposal procedures. The 90:10 weighting is considered appropriate because the TA is a complex multidisciplinary assignment involving two provinces that requires innovation and creativity, and the quality of the consulting services will have a high impact on the ensuing loan. The TA will be conducted by a separate team for each province. The TA will have one project team leader11 who will be responsible for coordinating the work among the two separate teams of consultants and establishing synergies, particularly in terms of demonstration effects and innovativeness among the two provinces; and two teams of international and national consultants who will be stationed in the two provinces, respectively, to implement the TA. The consultants will have expertise in water supply, wastewater treatment, domestic solid waste management, river hydrology and flood control, financial and economic analyses, institutional and regulatory development, social analysis, resettlement, and environment. The outline terms of reference for the consultants are in Appendix 4. TA equipment will be procured by the consultants in accordance with ADB’s Procurement Guidelines (2007, as amended from time to time), and will be retained by the EAs upon completion of the TA.

18. The consultants will submit to ADB and HPG and JPG, in English and in Chinese, the inception, interim, draft final, and final reports; the summary environmental impact assessment report; and an English translation of the Government’s resettlement plan and its summary. The consultants will maintain close working relations with ADB, HPG, and JPG, and will regularly discuss progress and findings. Tripartite meetings involving ADB staff, the consultants, and HPG and JPG will be held in Harbin and Changchun cities, respectively, to provide guidance to the consultants and to review their reports. Study findings on the project objectives and scope, components, cost and financing plan, implementation arrangements, and main issues will be presented in three workshops.

IV. THE PRESIDENT’S RECOMMENDATION

19. The President recommends that the Board approve (i) ADB administering a portion of technical assistance not exceeding the equivalent of $196,000 to be financed on a grant basis by the Cooperation Fund for the Water Sector, and (ii) ADB providing the balance not exceeding the equivalent of $1,104,000 on a grant basis, to the Government of the People’s Republic of China for preparing the Songhua River Basin Water Pollution Control and Management Project.

10 17 person-months international consultants and 28 person-months national consultants, each for Jilin Province and Heilongjiang Province, respectively. 11 The team leader will be in the field for 6 person-months. The team leader will be assisted by the institutional specialist/deputy team leader, who will be in the field for 5 person-months. 6 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Data Sources/Reporting Assumptions and Design Summary Performance Targets/Indicators Mechanism Risks Impact Assumptions Improved urban Water supply capacity increased Monitoring reports of • Jilin’s and environment and and vulnerability to drought ends Heilongjiang and Jilin Heilongjiang’s 11th enhanced quality of life in by 2016. provinces, and their Five-Year Program the cities of Baishan, respective environmental and other medium- Changbaishan, Water quality of 40 drinking water protection and water to long-term Changchun, Huinan, sources including Songhua Lake resource bureaus development plans Jilin, and Tonghua in Jilin improves to Class III by 2018. are implemented Province; and Harbin, Household surveys and on time. Heihe, Jiamusi, Qiqihar, Water quality of Mudanjiang, Nen, public feedback at public • The concerned Qitaihe, and Second Songhua, and Songhua hearing meetings for tariff municipalities’ Shuangyanshan in rivers improves to Class III by adjustments urban plans are Heilongjiang Province 2018. successfully (contributing to the implemented. achievement of MDG 7, Wastewater collection efficiency improves through service target 10). Risks extensions and separation of • Urban growth, combined sewers. including influx of migrants, in the concerned municipalities exceeds forecasts and exerts more pressure on available urban infrastructure. • Environmental laws and regulations are weakly enforced. • There is no effective environmental quality monitoring.

Outcome Assumptions Agreed-upon design of Project design is agreed upon by PPTA report and RRP • JPG and HPG the Songhua River Basin Government and ADB and remain committed Water Pollution Control represents an investment project MOU of loan Appraisal to the project and Management Project that is suitable for ADB financing. Mission proposed for ADB Loan documents financing. MOU is signed by the • Priorities for public Government and ADB during the Record of loan infrastructure Appraisal Mission. disbursements investment do not change. The loan is approved and signed.

Loan disbursement Is timely, with Risks minimum of loan savings. • Government plans change. • The Government plans to seek alternative funding.

Appendix 1 7

Data Sources/Reporting Assumptions and Design Summary Performance Targets/Indicators Mechanism Risks Outputs Assumptions 1. Analysis of SRB Sector analysis is completed. Inception report and first • Community Water Pollution tripartite review meeting ownership is Prevention and Control (2nd month) developed through Plan, urban stakeholder MTR (4th month) development plans, and participation. policies and overall justification of project • Support from Changchun and 2. Technical peer Technical review and redesign MTR (4th month) Yanji government review of subproject are completed. Least-cost agencies is strong. selection, design, costs, analysis is completed. Feasibility Second Tripartite Review etc. Subprojects study reports are finalized and Meeting (5th month) • Domestic FSRs are translated and revised and refined as approved. DFR (5th month) necessary available early in the PPTA. 3. Analysis of financing Financial management MTR (4th month) needs, financial assessment, financial • Required data is management, and sustainability assessment, and Second tripartite review made available institutional capacities in institutional assessment are meeting (5th month) and social surveys are successfully the concerned completed. DFR (5th month) municipalities conducted.

4. Assessment of social Household surveys and other MTR (4th month) Risks and economic impacts social impact analyses are of subprojects on completed. Second tripartite review beneficiaries, affected meeting (5th month) • Assigned Detailed economic analyses persons, poor and DFR (5th month) consultants are not vulnerable persons (willingness to pay, cost and available due to benefit assessment, EIRR, etc.) scheduling are completed. conflicts. 5. Assessment of Surveys in resettlement areas are Completed RPs and • Completion of the involuntary resettlement completed (4th month). summary RP and draft RP various TA tasks is impacts and preparation delayed because of RP RPs are developed and approved (6th month). of staffing, data, and other 6. EIAs, SEIA, and EMP Draft SEIA and EMP are EIAs, SEIA, and EMP problems. submitted for review (5th month). reports • Coordination and 7. Institutional capacity JPG, HPG, and municipal Capacity building plan support from the building plan and governments agree to include the documented in the DFR PMO of the EA are corporate development capacity building component in weak. plan the project design and to improve

corporate governance in relevant agencies. 8. Participatory planning Stakeholder workshops are Stakeholders’ workshops process developed and conducted at inception, midterm, completed as planned implemented and final tripartite meetings. Survey findings, public Participatory methods are used in meetings, and other environmental, social, and participatory methods resettlement work. documented in the DFR 8 Appendix 1

Data Sources/Reporting Assumptions and Design Summary Performance Targets/Indicators Mechanism Risks 9. Investment project Complete financing plan is in DFR documentation of proposal for ADB place. project costs and financing financing plan Terms, conditions, and covenants of the ADB loan are agreed upon. Draft RRP Draft RRP is submitted as part of Final report approved by the final report submitted to ADB ADB and JPG (6th month). Activities with Milestones Inputs

1. Inception International consultants: 1.1 Inception report completed (month 1) 34 person-months 1.2 Urban sector review completed (month 2) 1.3 First tripartite meeting for the inception report and first stakeholder National consultants: workshop (month 1) 56 person-months

2. Interim ADB: $1,300,000 2.1 Assessment of subprojects in terms of their technical, financial, and economic performance and sustainability (month 2-4) Government: 2.2 Analysis of the subprojects for environment impact, poverty reduction, $400,000 social impact, and involuntary resettlement (month 2-4) 2.3 Estimation of detailed costs and financing plan and institutional arrangements for different subproject/policy options (month 2-4) 2.4 Development of the project design and monitoring framework ,and monitoring and evaluation system for the project (month 3) 2.5 Development of the capacity building component and corporate development plan (month 4) 2.6 Conduct of the stakeholder workshop and second tripartite and review meeting (month 4)

3. Final

3.1 Fine-tuning of the technical, financial, economic, environmental, and social assessments based on tripartite discussions (month 5) 3.2 Conduct of the final stakeholder workshop (month 5) 3.3 DFR and third tripartite meeting (month 5) 3.4 Final report

ADB = Asian Development Bank, DFR = draft final report, EA = executing agency, EIA = environmental impact assessment, EIRR = economic internal rate of return, EMP = environment management plan, FSR = feasibility study report, HPG = Heilongjiang provincial government, JPG = Jilin provincial government, MDG = Millennium Development Goal, MOU = memorandum of understanding, MTR = midterm report, PMO = project management office, PPTA = project preparatory technical assistance, RP = resettlement plan, RRP = report and recommendation of the President, SEIA = summary environmental impact assessment, SRB = Songhua River Basin, TA = technical assistance.

Appendix 2 9

INITIAL POVERTY AND SOCIAL ANALYSIS

A. Linkages to the Country Poverty Analysis

Is the sector identified as a national Yes Is the sector identified as a national Yes priority in country poverty analysis? priority in country poverty partnership No agreement? No Contribution of the sector or subsector to reduce poverty in the People’s Republic of China: The Songhua River Basin Water Pollution Control and Management Project will improve the urban environment of the cities of Baishan, Changbaishan, Changchun, Huinan, Jilin, and Tonghua in Jilin Province; and Harbin, Heihe, Jiamusi, Qiqihar, Qitaihe, and Shuangyanshan in Heilongjiang Province, enhancing the quality of life and health conditions of more than 12.5 million urban residents. Changchun is the capital of Jilin, and Harbin is the capital of Heilongjiang. Overall, improvements to water quality from the project will improve the quality of life and health conditions, especially of the poor who are most vulnerable to environmental impairments.

B. Poverty Analysis Targeting Classification: Targeted intervention

What type of poverty analysis is needed?

Poverty analysis will be carried out to develop a pro-poor design and quantify how the project will help reduce poverty, and incorporate other social dimensions within the scope of project implementation. The analysis will be conducted following the guidelines in the Asian Development Bank’s (ADB) Handbook on Poverty and Social Analysis.

C. Participation Process

Is there a stakeholder analysis? Yes No

Major stakeholders include national, provincial, municipal, and county governments; water supply, wastewater, and solid waste management entities; and project beneficiaries including utility service customers, residents near impacted rivers and neighborhoods, and persons affected by resettlement. Stakeholder analysis, including a household survey, will be conducted during the implementation of the TA.

Is there a participation strategy? Yes No

Three stakeholder workshops will be conducted during TA implementation. Findings from the household survey will be used as inputs. Public consultation will be carried out by the Executing Agency (EA), local government officials, design institutes, and others during preparation of the feasibility study, poverty and social assessment, environmental impact assessment, and resettlement plan. Separate consultations with resettlement-affected persons on resettlement and compensation options will be conducted in addition to public consultations.

D. Gender Development

Strategy to maximize impacts on women:

ADB’s Policy on Gender and Development will be followed by the EAs during project preparation and implementation. Gender aspects will be incorporated into the design and implementation of some project components, particularly in relation to employment opportunities and the resettlement plan.

Has an output been prepared? Yes No

This will be prepared during the implementation of the TA.

10 Appendix 2

E. Social Safeguards and Other Social Risks

Item Significant/ Plan Required Not Significant/ Strategy to Address Issues None A resettlement plan (RP) will be prepared following the Significant Land Administration Law of the People’s Republic of Full Resettlement China and ADB’s Policy on Involuntary Resettlement. A Not significant full RP will be prepared for a few subprojects that would Short be identified as significant, and a short RP for most None subprojects that would involve only compensation for None trees and crops with no or little resettlement impacts. The RP will be disclosed to the public and affected people. Internal and external monitoring arrangements will be developed. Economic and financial analyses will be conducted to Significant assess affordability issues for all subprojects involving Yes Affordability cost recovery through user charges. Not significant No

None The project will not have any negative impact on labor. Significant Yes Labor Not significant No

None The ethnic minority groups present in the subproject Significant areas range from less than 1% to about 10%. Most of Yes Indigenous them have similar customs and economic activities; Peoples Not significant some groups, mainly the Korean ethnic group in some No subproject areas, maintain their culture and language. None The situation will be assessed in detail during TA implementation.

The project may have a negative impact on the poor Significant through land acquisition and resettlement associated Yes Other Risks with certain subprojects. The needs of vulnerable and/or Not significant groups will be addressed in the RP. No Vulnerabilities None

Appendix 3 11

COST ESTIMATES AND FINANCING PLAN ($'000)

Total Item Cost A. Asian Development Bank (ADB) Financing a 1. Consultants a. Remuneration and Per Diem i. International 643.2 ii. National 192.4 b. International and Local Travel 130.0 c. Reports and Communications 20.0 2. Equipment and Software b 52.0 3. Survey 40.0 4. Miscellaneous Administration and Support Costs 40.0 5. Workshops and Training 30.0 6. Representatives for Contract Negotiations 10.0 7. Contingencies 142.4 Subtotal (A) 1,300.0

B. Government Financing – Heilongjiang Provincial Government 1. Office Accommodation and Transport 70.0 2. Remuneration and Per Diem 60.0 of Counterpart Staff 3. Others 70.0 Subtotal (B) 200.0

C. Government Financing – Jilin Provincial Government 1. Office Accommodation and Transport 70.0 2. Remuneration and Per Diem 60.0 of Counterpart Staff 3. Others 70.0 Subtotal (C) 200.0

Total 1,700.0 a Financed by ADB’s technical assistance funding program and Cooperation Fund for the Water Sector, administered by ADB. b Including computers, copier, facsimile machine, scanner, and other associated equipment. Source: ADB estimates.

12 Appendix 3

Cost Estimates and Financing Plan Heilongjiang Component ($'000)

Total Item Cost A. Asian Development Bank (ADB) Financing a 1. Consultants a. Remuneration and Per Diem i. International 321.6 ii. National 96.2 b. International and Local Travel 65.0 c. Reports and Communications 10.0 2. Equipment and Software b 26.0 3. Survey 20.0 4. Miscellaneous Administration and Support Costs 20.0 5. Workshops and Training 15.0 6. Representatives for Contract Negotiations 5.0 7. Contingencies 71.2 Subtotal (A) 650.0

B. Government Financing – Heilongjiang Provincial Government 1. Office Accommodation and Transport 70.0 2. Remuneration and Per Diem 60.0 of Counterpart Staff 3. Others 70.0 Subtotal (B) 200.0

Total 850.0 a Financed by ADB’s technical assistance funding program and Cooperation Fund for the Water Sector, administered by ADB. b Including computers, copier, facsimile machine, scanner, and other associated equipment. Source: ADB estimates.

Appendix 3 13

Cost Estimates and Financing Plan Jilin Component ($'000)

Total Item Cost A. Asian Development Bank (ADB) Financing a 1. Consultants a. Remuneration and Per Diem i. International 321.6 ii. National 96.2 b. International and Local Travel 65.0 c. Reports and Communications 10.0 2. Equipment and Software b 26.0 3. Survey 20.0 4. Miscellaneous Administration and Support Costs 20.0 5. Workshops and Trainings 15.0 6. Representatives for Contract Negotiations 5.0 7. Contingencies 71.2 Subtotal (A) 650.0

B. Government Financing – Jilin Provincial Government 1. Office Accommodation and Transport 70.0 2. Remuneration and Per Diem 60.0 of Counterpart Staff 3. Others 70.0 Subtotal (B) 200.0

14 Appendix 4

OUTLINE TERMS OF REFERENCE

A. Introduction

1. The assignment is to prepare an investment project suitable for Asian Development Bank (ADB) financing. The project will help the selected subproject cities, municipalities, counties, and townships in Heilongjiang and Jilin provinces improve their urban environments and achieve long-term sustainable development through investments in (i) water supply treatment and distribution, (ii) wastewater collection and treatment, (iii) solid waste management, and (iv) river water treatment.

2. The final output of the consultants is a report and associated appendixes, prepared in accordance with the policies and guidelines of ADB, which will serve as the basis for formulating an investment project to improve the urban infrastructure and environment of the concerned cities, municipalities, counties, and townships in Heilongjiang and Jilin. The terms of reference for the consultants are described in the following sections.

B. Overview of Requirements

1. Review of Subproject Cities Comprehensive Urban and Specific Sector Development Plans

3. The consultants will review the comprehensive urban development plan of the subproject cities, particularly with regard to the cities’ overall strategies for sustainable growth and development. They will also evaluate relevant municipal sector development plans and programs pertaining to water supply, wastewater treatment, solid waste management, integrated water resources management, river basin management, and water resources and regional watershed; and higher-level planning documents for the Songhua River basin (SRB), Yalu and Tumen river basins, including proposed activities for controlling pollution in the SRB in the 11th Five-Year Plan.

4. Following the review, programs and projects aimed at improving the urban environment and quality of life in the subproject cities in Heilongjiang and Jilin will be identified and assessed in terms of their relative importance and in the context of the proposed project. For additional information, the consultants can also refer to the relevant reports on ongoing Loan 2175-PRC: Jilin Water Supply and Sewerage Development Project and associated technical assistance (TA) reports on the completed TA 4061-PRC: Songhua River Water Quality and Pollution Control Management and TA 4804-PRC: Jilin Urban Infrastructure Project, and the proposed Jilin Urban Environmental Improvement Project.

5. On the basis of the review of these plans and background materials, the consultants will carry out a situation analysis of the urban environment improvement program of the subproject cities to ensure that least-cost options have been considered in selecting the subprojects. The situation analysis will also serve as the basis for recommending a strategic policy and program improvements for the subproject cities to achieve sustainable development through the implementation of the various sector plans (e.g., wastewater master plan, water supply master plan, solid waste management plan) relevant to the project. In evaluating the selected subprojects in the context of these plans, the consultants will undertake technical, environmental, social, financial, economic, and institutional studies following relevant ADB guidelines. Additional subprojects may be identified or proposed for possible inclusion in the project during the inception phase of the TA, and subprojects may be changed or dropped. The

Appendix 4 15 consultants should identify other externally assisted projects dealing with public infrastructure or the environment and those that have been proposed for funding by other external agencies, with the view of promoting coordination with such agencies.

2. Policy Discussion and Related Activities

6. The People’s Republic of China (PRC) and ADB have closely collaborated on several policy-oriented studies and investment projects aimed at promoting sustainable urban development and environmental protection. This partnership has grown substantially and is expected to continue as urbanization accelerates in the PRC. To strengthen the policy content of the project, the consultants will prepare notes on such policy issues as (i) water, wastewater, and solid waste cost recovery and tariff reform; (ii) corporate governance and enterprise reform; (iii) integrated water resources management and water conservation; (iv) environmental regulatory enforcement and monitoring; (v) private sector participation; and (vi) urban poverty reduction and social protection. The consultants will review material prepared under related TAs.1

3. Review of Domestic Feasibility Studies

7. The consultants will review domestic project proposals, feasibility studies, environmental assessments, resettlement plans (RP) for the subprojects, and other related reports used to substantiate the analyses of the feasibility studies.

8. The findings of the domestic feasibility study reports (FSRs) will be confirmed, as required, on the basis of the consultants’ review involving the following points:

(i) Review of the preliminary design, including cost estimates and civil works packages and project implementation schedules. (ii) Assessment to determine whether identified subproject alternatives adequately represent possible options including, as appropriate, alternative facility routes and sites, alternative levels of capacity development, alternative process technologies, alternative facility designs, alternative management policies and practices, etc.. (iii) Confirmation that the proposed subproject (a) is a defensible least-cost option, (b) is compliant with environmental and social requirements, and (c) will meet specified goals and objectives. (iv) Based on the review, the consultant will provide guidance and support to responsible specialists in finalizing the FSRs in line with ADB‘s policies and guidelines. Where details are lacking or analyses are inadequate, the consultants will collaborate with the reports’ authors to make the necessary changes so as to satisfy ADB’s requirements for appraising projects. In this collaboration, the domestic authors will assume primary responsibility for providing missing information, including information describing project alternatives for the least-cost analysis. The domestic authors will also assume primary responsibility for revisions and new analyses.

1 ADB. 2000. Technical Assistance to the People’s Republic of China for Transjurisdiction Environment Management. Manila; ADB. 2001. Technical Assistance to the People’s Republic of China for National Guidelines for Urban Wastewater Tariffs and Management Study. Manila; and ADB. 1999. Technical Assistance to the People’s Republic of China for Water Tariff Study II. Manila. 16 Appendix 4

(v) In conjunction with the review of FSRs, the PPTA will review and comment on subproject environmental impact assessment reports (EIAs) and land acquisition and resettlement plans and assist the domestic authors in preparing EIAs and RPs that comply with ADB guidelines and requirements. The domestic authors will assume primary responsibility for revisions and new analyses for these documents.

4. Design and Monitoring Framework

9. The consultants will develop a project design and monitoring framework in consultation with government agencies and ADB. Relevant ADB staff will provide a sample framework that will include performance targets or measurable benefits for the monitoring and evaluation analysis. The consultants will work closely with the Jilin provincial government (JPG), Heilongjiang provincial government (HPG), and municipal and county governments where subprojects are located in collecting existing information to serve as baseline indicators— including data on public health, such as incidence of waterborne and respiratory diseases that can be attributed to environmental pollution.

5. Reporting

10. The consultants will submit (i) an inception report within 1 month from the start of the TA, which will describe work completed to date as well as methodologies to be used in the project preparatory TA analysis; (ii) an interim report within 3.5 months from the start of the TA, which will describe work completed to date, identify key issues to be resolved, and provide a preliminary analysis of the main areas for analysis (e.g., technical peer review, environment, costing, finance, economics, social, etc.); (iii) a draft final report, within 5 months from the start of the TA; and (iv) a final report, 1 month after receiving comments on the draft final report from the Government and ADB. All reports should address all aspects of the terms of reference, as outlined in this section and Section C, to the level of detail appropriate for the given stage of the TA. Each of the four reports should provide a progressively refined project design and monitoring framework.

11. The consultants will submit to ADB and HPG and JPG, in English and in Chinese, the inception, interim, draft final, and final reports, the summary EIA (SEIA) report, and an English translation of the Government’s resettlement plan and its summary. Study findings will be presented in workshops.

C. Detailed Tasks by Area of Expertise

1. Water and Wastewater Management Specialists/Team Leader (one international specialist for 6 person-months; and national, 10 person-months [two national specialists for 5 person-months for each province])

12. The specialist / team leader will undertake the following tasks. (i) Prepare a detailed work plan and formulate a project design and monitoring framework that captures the nature of the SRB Water Pollution Treatment Project. (ii) Review the recommendations of the completed TA for the SRB Water Quality

Appendix 4 17

and Pollution Control Management,2 and propose an action plan for further promoting the river basin management approach in the SRB, related capacity building, and further supporting the introduction of integrated water resources management in the SRB, in continuation of work done in the earlier TA. (iii) Review and assess all relevant government urban and sector development plans, environmental policies, and the FSRs of all subprojects. (iv) Oversee the detailed peer review of FSRs. (v) Prepare the project implementation schedule and detailed implementation arrangements. (vi) Ensure that crosscutting concerns (resettlement, environment, poverty, social issues, gender, private sector development, and anticorruption) are rigorously addressed at subproject and project levels. (vii) Liaise and coordinate with the Executing Agency (EA), steering committee, and ADB on project-related matters, such as reporting, TA administration, and counterpart funding. (viii) Ensure the timely preparation of the inception, interim, draft final, and final TA reports and their submission to the Government and ADB. Analyze the current situation of water supply and wastewater management, including its implications and impact on subproject cities and towns’ water resources and the Government’s proposals for water supply and wastewater management. (ix) Conduct a peer review of domestic FSRs dealing with water supply and wastewater management. The scope of the peer review with respect to subproject alternatives includes alternative treatment plant designs and sites, alternative levels of capacity development, alternative designs and routes for subproject mains and pipes. Confirm the least-cost solution for each subproject. (x) Review subproject costs considering the costing approach, phasing of project costs, and, where applicable, unit costs and related physical quantities; prepare a listing of contract packages by type and budget value. (xi) Review and evaluate projections of water sales and production, and wastewater generation (volume and strength). Comment on the reasonableness and suitability of projections for planning purposes and develop alternative projections as appropriate for the TA analysis. Consider industrial effluents and pretreatment requirements in assessing wastewater strength. (xii) Review and comment, as appropriate, on municipal policies and project measures (e.g., sewer replacement and rehabilitation) to control storm water inflow and groundwater infiltration into sanitary sewers in the subproject catchments. (xiii) Review and comment on measures in place to reduce nonrevenue water, including subproject components involving replacement or rehabilitation of existing transmission and distribution pipes. (xiv) Evaluate arrangements and plans for managing, operating, and maintaining subproject facilities. (xv) Review the experience and lessons learned from past ADB and other projects with reference to the lessons compiled in the Operations Evaluation Department’s Evaluation Information System at the following website http://evis.adb.org/oed001p.nsf/index?OpenForm.

2 ADB. 2002. Technical Assistance to the People’s Republic of China for Songhua River Water Quality and Pollution Control Management. Manila. 18 Appendix 4

2. Solid Waste Management Specialists (international, 2 person-months [two international specialists for 1 person-month for each province]; and national, 4 person-months [two national specialists for 2 person-months for each province])

13. The specialists will undertake the following tasks.

(i) Analyze the current situation of solid waste management including its implications and impact on each subproject city’s water and air resources, and the government’s proposals for solid waste management. (ii) Conduct a peer review of domestic FSRs dealing with solid waste management. The scope of the peer review with respect to subproject alternatives includes alternative landfill and transfer station designs and sites, alternatives to land- filling, solid waste reduction/reuse/recycle options, etc. (iii) Review subproject costs, considering costing approach, phasing of the project costs, and, where applicable, unit costs and related physical quantities. (iv) Review the sites selected for solid waste treatment and disposal, and comment on their suitability for the purpose, adequacy, limitations, and predicted life span. (v) Evaluate arrangements and plans for managing, operating,, maintaining and eventually decommissioning the subproject facilities. (vi) Assist the project preparatory TA financial specialists in assessing financial requirements for managing, operating, maintaining, and eventually decommissioning the subproject facilities. (vii) Assist in preparing the project design and monitoring framework. (viii) Review and comment on measures in place and required to encourage/enforce the prohibition of solid waste disposal within urban areas, canals and rivers, and adjacent landscaped areas. (ix) Review and comment on risks to the performance and safety of subproject landfill facilities from the inappropriate disposal of hazardous wastes. (x) Prepare an indicative list of contract packages by type and budget value. (xi) Review the EIA of subprojects and assist in preparing the SEIA and the environmental management plan.

3. Environmental Analysis Specialists (international, 3 person-months [two international specialists for 1.5 person-months for each province]; and national, 10 person-months [two national specialists for 5 person-months for each province])

14. The specialists will undertake the following tasks.

(i) Conduct rapid environmental assessment(s) to propose or justify the project’s environmental categorization, and list environmental issues and approaches to be mitigated or addressed in the EA analysis. (ii) Undertake all aspects of the environmental work in coordination with the work of other technical experts. (iii) Identify the cumulative project environmental benefits. (iv) Summarize resettlement issues and key social economic conditions for the project areas and compare with PRC-wide conditions. (v) Review SEIAs for the Jilin Water Supply and Sewerage Development Project (TA 4227- PRC) and for the Jilin Urban Infrastructure Project (TA No. 4804) for those sectors also covered in the proposed project.

Appendix 4 19

(vi) Review EIAs of each subproject, suggest improvements, and assist the subproject cities to revise the EIAs and prepare a SEIA, in accordance with ADB’s Environmental Guidelines (2003) and Environment Policy (2002). (vii) Assist the subproject cities to carry out the necessary EIA and SEIA investigations and analyses. (viii) Assist the subproject cities to revise EIA and SEIA reports in response to comments from ADB, the environmental protection bureaus at all levels, and other project preparatory TA stakeholders. (ix) Assist the subproject cities to plan and implement two rounds of stakeholder participation and consultation and other public involvement activities deemed appropriate during EIA and SEIA preparation. Ensure that appropriate methods that promote broad-based acceptance of the project are used. Ensure full disclosure and documentation of methods and results in the EIA and SEIA reports as required by ADB. (x) Help the subproject proponents develop environmental management plans (EMPs) at the project and subproject levels in conformity with ADB’s guidelines. The EMPs must address the costs of environmental monitoring and mitigation, responsibilities of stakeholders, and institutional strengthening and capacity building. (xi) Identify risks and recommend mitigating measures, where appropriate, and provide inputs in the write-up for the EIAs and relevant sections of the FSRs; (xii) Provide the necessary environment analyses and justification inputs for the economic and social development analyses of each subproject. (xiii) Assist in preparing the project design and monitoring framework, including establishing environmental baseline indicators and performance targets such as the quality of water and air. (xiv) Prepare policy notes for the discussion of urban air and water quality, water resources management, and solid waste management. (xv) Prepare the terms of reference and budgetary requirements for independent environment monitoring and evaluation during project implementation.

4. Financial Analysis Specialists (international, 7 person-months [two international specialists for 3.5 person-months for each province]; and national, 9 person-months [two national specialists for 4.5 person-months for each province])

15. The specialists will undertake the following tasks.

(i) Evaluate the historical financial performance of all entities that manage the revenue-generating subprojects. The analysis will include calculation of standard financial performance indicators, cost recovery, borrowing capacity, billing and collection, accounts receivable, reliance on subsidies, etc. (ii) Conduct a financial management assessment of all entities involved in project and subproject implementation and subproject operation. This assessment will follow ADB's Guidelines for Financial Management and Analysis of Projects (2005). (iii) Complete a pro forma financial analysis of all subprojects at a subproject level or at an operating entity level as appropriate. The analysis will be based on standard accounting relationships, will cover a period of at least 20 years of operations, and will account for all costs and revenues including subproject investment and financing costs and revenues. Make clear and explicit 20 Appendix 4

assumptions related to costs, revenues, payables, receivables, financing, capital plans, etc. On the basis of this analysis, (a) prepare pro forma financial statements in nominal terms (income and expenses, balance sheet, cash flow) for entities that will operate revenue- generating subprojects; (b) forecast standard financial performance indicators for entities that will operate revenue-generating subprojects; (c) estimate the financial internal rate of return and perform sensitivity and risk analysis including switching value calculation and calculation of the real weighted average cost of capital (WACC) for each revenue- generating subproject; and (d) estimate a time-bound profile of future tariff adjustments leading to establishment of full financial cost tariffs. (iv) Assess the financial sustainability of the project and all subprojects. (v) Review existing levels, structures, and policies for tariffs and charges for water and wastewater, solid waste, and central heating. Determine their adequacy in terms of financial cost recovery, and recommend reforms taking into account: state and lower level regulations, full financial cost recovery over the life of the project, cross subsidies, and affordability. (vi) Assist in the economic review of all subproject tariffs and charges. (vii) Assist in preparing a corporate development plan and the associated training program for the subproject companies (water supply, wastewater, and solid waste management) in line with ADB’s Guidelines for Financial Management and Analysis of Projects. This task includes identifying areas for capacity development and training with respect to accounting, financial management, and project management. (viii) Assist in reviewing subproject costs. (ix) Analyze and summarize project costs, using required ADB reporting formats and incorporating ADB's requirements for physical and price contingencies and financial charges during construction; prepare a financing plan and project cost estimates. (x) Assist in developing indicative contract packages. (xi) Assist in preparing the project design and monitoring framework.

5. Economic Analysis Specialists (international, 4 person-months [two international specialists for 2 person-months for each province]; and national, 7 person-months [two national specialists for 3.5 person-months for each province])

16. The specialists will undertake the following tasks.

(i) Conduct an economic analysis of the project in accordance with ADB’s Guidelines for the Economic Analysis of Projects and other relevant guidelines and technical notes. (ii) Review government goals, objectives, policies, and plans relating to general social and economic development and to development within each subproject sector. On the basis of the review, evaluate the social and economic justification for the project and subprojects, This evaluation will include an assessment of (a) public attitudes and opinions with respect to the subprojects, and (b) public priorities with respect to the provision and improvement of public services.

Appendix 4 21

(iii) Review and evaluate existing levels, structures, and policies for tariffs and charges for water and wastewater, solid waste, and central heating from the perspective of their economic performance. (iv) Evaluate, as appropriate and in consultation with the TA social development specialist, the beneficiaries’ willingness to pay for subproject benefits. (v) Forecast the demand for subproject services, taking into account, as appropriate, the response of the demand to population and economic growth, changes in the efficiency of service delivery, and changes in tariffs and charges. Evaluation of the demand will be completed in consultation with TA sector and financial specialists. (vi) Identify all quantifiable and nonquantifiable economic benefits and costs of each subproject based on with- and without-subproject scenarios. Quantify, as appropriate and feasible, incremental and non-incremental economic benefits and costs. This task will include an assessment of the impacts on health. (vii) Carry out a distribution analysis of project benefits and costs following the methodology set forth in ADB's Guidelines for the Economic Analysis of Projects (Appendixes 25 and 26) and Handbook for Integrating Poverty Impact Assessment in the Economic Analysis of Projects. The distributional analysis should explicitly consider poor and vulnerable persons and households. (viii) Assist the TA sector specialists in identifying and assessing subproject alternatives, and complete the economic least-cost calculations to determine the net present values of costs and, as appropriate, the average incremental economic costs for subproject alternatives. (ix) Assist the TA financial specialist and the authors of domestic FSRs in preparing project cost reports to ensure that financial cost estimates will support the estimation of economic costs based on standard conversion factors and shadow prices. (x) Estimate the economic internal rate of return of the project and perform sensitivity and risk analysis including calculation of switching values. (xi) Assess the financial sustainability of the project and the subprojects, taking into account cost recovery options, the fiscal capacity of governments responsible for debt servicing of nonrevenue-generating subprojects, the financial performance of entities responsible for debt servicing of revenue-generating subprojects, the willingness and ability of project beneficiaries to pay for the subprojects. (xii) Assess and justify, from an economic perspective, the proposed subproject subsidies. (xiii) Evaluate opportunities for private sector delivery of subproject services. Assess and justify, from an economic perspective, the delivery of subprojects services by the government rather than by the private sector. (xiv) Review and assess the feasibility of market-based policy instruments for controlling pollution.

6. Social Development and Resettlement Specialists (international, 7 person- months [two international specialists for 3.5 person-months for each province]; and national, 10 person-months [two national specialists for 5 person-months for each province])

17. The specialists will undertake the following tasks.

(i) Prepare a community participation and public awareness action plan on water supply, wastewater, and solid waste management. Based on this plan, help the 22 Appendix 4

project management office (PMO) establish consultation and participatory processes that will be used during project preparation and will continue throughout project design, construction, and operation. The participatory processes will include an assessment of stakeholders, stakeholder consultations, and formulation of recommendations to incorporate stakeholder needs in the project. (ii) Undertake a socioeconomic analysis of the project municipalities, cities, and counties, and project beneficiaries to assess household and business characteristics of interest, public perceptions of the environment and the proposed subprojects, estimates of willingness to pay, socioeconomic and health benefits, etc. The analysis is to include a study of published statistics; surveys of beneficiaries by subproject, gender, and income group; and other methods as appropriate. (iii) Conduct an assessment of poverty in accordance with ADB’s Guidelines for Incorporation of Social Dimensions in ADB Operations and ADB’s Handbook on Poverty and Social Analysis. The assessment will include an estimation of the number of project beneficiaries with income below the official poverty line, identification and characterization of vulnerable groups (e.g., ethnic minorities [EMs], single-parent households, illegal residents, disabled persons, women and children, etc.), assessment of project impacts on the poor and vulnerable groups, and an affordability analysis. (iv) Using the outcome of the socioeconomic and poverty analysis, assist the project economist to carry out a distribution analysis of project benefits and costs. (v) Using as basis the assessment of poverty, prepare a poverty reduction and social development strategy in accordance with ADB’s Handbook on Poverty and Social Analysis. The strategy should recommend measures to mitigate adverse impacts and enhance beneficial impacts on the poor and vulnerable groups. (vi) Using as basis the characterization of women as a vulnerable group, prepare a gender action/intervention plan. (vii) Identify EMs in the subproject areas, and examine the nature of their vulnerabilities. (viii) Analyze the EMs’ current access to social and economic services and institutions. (ix) Identify key constraints including inter- and intra-ethnic groups’ conflicts in their mobilization. (x) Provide adequate coverage for investigations and consultations with EMs, in relation to the detailed assessment, and if needed, prepare an EM development plan or specific action for EMs in accordance with ADB’s policy on indigenous people. (xi) Collect and analyze health data, including morbidity and mortality rates due to diseases associated with poor water supply and sanitation, and help the project economist prepare a health impact/benefit analysis of the project. (xii) Analyze the project impacts with respect to Millennium Development Goal 7, targets 10 and 11. (xiii) Develop a project performance monitoring system to estimate benefits and impacts, including the relevant benchmark for health indicators. (xiv) Assess the policy and legal framework for resettlement, identify any gaps in relation to ADB policies, and propose measures to bridge the gap between ADB and PRC policies. (xv) Review the draft RPs for each subproject to ensure compliance with ADB's Involuntary Resettlement Policy (1995) and requirements of the OMF2 on

Appendix 4 23

Involuntary Resettlement (2006), ADB's Handbook on Resettlement (1998) and Policy on Indigenous Peoples (1998). The RPs should address all project components and must (a) include village-level impact assessment of project-affected people, land, assets, and occupations;. (b) identify potential impoverishment risks3 and vulnerable groups, including those severely affected through loss of land, those with low income, and others (e.g., disabled, aged, unemployed, illiterate); (c) provide special mitigation measures, if required; and (d) document the extent to which the project design has avoided or minimized land acquisition and displacement of people and businesses. (xvi) In collaboration with the EA and local government officials, define categories for impact and compensation eligibility of affected people, and prepare an entitlements matrix based on the PRC Land Administration Law, recent policy documents, local government regulations, and ADB’s Policy on Involuntary Resettlement. The entitlements matrix will cover compensation and other assistance for all types of impacts. (xvii) Assess and justify that the compensation standards in the entitlements matrix are designed to achieve full replacement for lost assets, income, and livelihood. (xviii) Prepare a consultation plan for the EA and assist the EA and local government officials to consult with affected communities, local leaders, proponents, and stakeholders who may oppose the project. Assess their concerns and consider possible changes in the project design to minimize land acquisition and resettlement effects. The consultation plan should include a format for documenting consultation with affected persons, listing events and summarizing the outcomes and improvements resulting from consultation. (xix) Assist the EA to prepare a resettlement information booklet4 containing measurement of losses, detailed asset valuations, entitlements and special provisions, grievance procedures, timing of payments, and displacement schedule. Ensure that Chinese versions of the RP will be distributed to all affected villages and households, all relevant local government offices, and affected village leaders. (xx) Conduct due diligence for resettlement completed in the past 5 years for closely related projects and associated project components that are not financed by ADB. (xxi) Review the organizational structure and capacity for resettlement implementation, and recommend improvements and actions required before the start of land acquisition. As required, provide the PMO and local government officials with training on ADB's Involuntary Resettlement Policy requirements and procedures. (xxii) Assess and justify that the overall resettlement budget is sufficient to acquire land and implement the RP. (xxiii) Assist the subproject cities to prepare a detailed resettlement implementation schedule that is linked to the overall project schedule. A summary of milestones for resettlement supervision should be developed and agreed to with the EA and ADB before the RP is finalized. (xxiv) Assist the PMO in revising individal subproject RPs as required.

3 Refer to ADB draft paper on impoverishment risks. 4 ADB has sample formats available. 24 Appendix 4

(xxv) Using individual subproject RPs, prepare a summary resettlement plan (SRP) for the project. The SRP should be based on preliminary design data. The SRP should include a plan for continuous internal monitoring and supervision by the EA, and a plan for periodic external monitoring and evaluation by an independent agency, including a minimum of annual updates during resettlement implementation, on completion, and 2 years thereafter. Include a 3- to 5-page executive summary in the SRP. Using an assessment of the socioeconomic condition of affected persons, prepare livelihood/income restoration programs in consultation with the affected persons.

7. Institutional Development Specialists/Deputy Team Leaders (international, 5 person-months [two international specialists for 2.5 person-months for each province]; and national, 6 person-months [two national specialists for 3 person- months for each province])

18. The specialists will undertake the following tasks.

(i) Assess the institutional capacity of the Jilin provincial government, and the subproject municipalities and cities in formulating urban development plans. (ii) Assess the technical and managerial capacity of implementing agencies to implement, operate, maintain, and manage subproject facilities. (iii) Prepare an institutional capacity-building program for the responsible water and wastewater management companies, the solid waste management entity, the central heating company, and the subproject municipalities and cities. The capacity-building program may include consulting services, training, etc. (iv) Assess the organizational structure, staffing, etc., of the PMO to determine its capacity to implement the project. Recommend appropriate measures to strengthen the capacity of the PMO. (v) Prepare a corporate development plan and associated training program for the relevant subproject companies (water supply, wastewater, solid waste management, and central heating) in line with ADB’s Guidelines for Financial Management and Analysis of Projects. (vi) Evaluate and assist in designing contractual and functional relationships between entities that will be jointly responsible for delivery of subproject services. This analysis may include, as appropriate, drafting of water purchase agreements, cost-sharing agreements, or agreements to allocate subproject management, operation and maintenance responsibilities between responsible entities. (vii) Assist in evaluating opportunities for private sector delivery of subproject services.