INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE Report No.: AC2531 Public Disclosure Authorized Date ISDS Prepared/Updated: 01/11/2008 I. BASIC INFORMATION A. Basic Project Data Country: China Project ID: P096812 Project Name: Yunnan Urban Environmental Project II Task Team Leader: Takuya Kamata Estimated Appraisal Date: December 3, Estimated Board Date: May 27, 2008 2007 Managing Unit: EASUR Lending Instrument: Specific Investment Public Disclosure Authorized Loan Sector: General water, sanitation and flood protection sector (100%) Theme: Pollution management and environmental health (P);Water resource management (S);Environmental policies and institutions (S) IBRD Amount (US$m.): 150.00 IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: Borrower 150.00 Financing Gap 0.00 150.00 Public Disclosure Authorized B. Project Objectives [from section 2 of PCN] The development objective of the proposed project is to assist in the fostering of environmentally sustainable economic growth of Yunnan Province by abating environmental degradation of lake basins adjacent to its largest urban centers and by providing urban environmental infrastructure critical for development of county towns. The Project is not only a financing vehicle for investments, but also a forum for experimenting with innovative approaches. In response to client?s strong interest and demand, works are already underway on the following, while not all of them may be implemented under this project: introduction of ?integrated lake basin management systems? as key pillar of project design (see the section below), issuance of utility corporate bonds ? la Shanghai APL2, consolidation of Public Disclosure Authorized intra-municipal utilities as an experimental basis, and a pilot TA program on the development of environment compensation market mechanisms for farmers, for which an EASES study is being carried out. Joint Bank/IFC team composition has also been maintained to promote IFC investments and private sector participation. C. Project Description [from section 3 of PCN] The Project would consist of two pillars: i) integrated lake basin management for Dianchi and Er?Hai and ii) urban environmental infrastructure development in about 20 county towns in Kunming Municipality, Dali Prefecture, Lijiang Municipality and Wenshan Prefecture. Those four municipalities/prefectures are selected out of 16 prefectures by, among others, the following criteria: national and provincial strategic priorities, high degree of pollution, risk mitigation needs (danger of flood etc.), fiscal needs, rapid urbanization around small towns, fast tourism development, and institutional capacity. Subsequently, participating county towns are selected by applying similar criteria. A more detailed description of the selection process is available upon request. Component I: Integrated Lake Basin Management: The component will support major policy and institutional reforms for Dianchi management systems while enhancing the existing lake basin management programs in Er?Hai. The team intends to part from the approaches adopted in the previous YEP, under which the key objective -- restoration of Dianchi to Class III quality -- was not achieved: it has actually deteriorated from Class IV to Class V. YEP relied heavily on industrial pollution control and urban wastewater treatment. Unappreciated were the needs for: sustained political will, public support and a strong organization to set program goals and priorities; institutional set-up to control/coordinate the implementation of programs over the entire watershed, including all tributaries; a full scientific understanding of causes and effects (lake basin water quality modeling); control of increasing agricultural run-off; and restoration of streambanks and lake shoreline. Through development of ?integrated lake basin management systems (ILBMS)? for Dianchi, as well as through enhancement of the existing systems for Er?Hai, these deficiencies would be addressed. Since interventions to stem degradation in Dianchi and Er?Hai cannot wait for the development of a comprehensive water quality model, prescriptive and preemptive measures have been included. It would finance measures to manage agriculture run-offs; restore and reserve wetland and shorelines; and expand urban drainage, wastewater collection and treatment, solid waste management, flood control and other sanitation facilities. Development of environmental compensation market mechanisms in Lijiang could potentially be effective instruments to manage agriculture run-offs. Component II: Urban Environment Infrastructure Development for County Towns: It will assist some 20 county towns in Kunming, Lijiang, Dali and Wenshan in developing urban infrastructure critical for economic growth. It would consist of: (i) construction of sewer collectors and wastewater treatment plants, including drainage; (ii) development of solid waste management systems; (iii) flood protection and control; and (iv) preservation work for natural assets and scenic parks. The viability of these components will be further evaluated during the project preparation. In financing conservation works, it will also engage Lijiang and Dali in policy dialogue on cultural heritage management, in coordination with other supporters such as UNESCO. To assist further project preparation, the French Government agreed to provide a grant and a consulting company has already been mobilized. Grant funding for project preparation for Dianchi/Kunming components are being considered by USTDA. D. Project location (if known) Yunnan is located in southwestern China at a latitude of 21?09?-29?19? N, and a longitude of 97?39?-106?21? E, with a total area of 394,000 km2 and a population of 43.8 million people. It is bounded by Guangxi, Guizhou, Sichuan and Tibet to the east and north in China, and bordered by Vietnam, Laos and Myanmar to the south and southwest. Yunnan Province is one of the ?western provinces? defined by the central government in its overall ?West Development? strategy, which intends to rally the urbanization and economic development in the western China to close the gaps with the eastern coastal regions of the country. Kunming is the capital city of Yunnan. It is located at the north end of Dianchi Lake, and surrounded by mountains to the east, north and west. The Municipality covers an area of 21,111 km2 and a population of 5.1 million people within its five districts and eight counties. The Kunming component under YUEP will cover Kunming City and its six counties of Songming, Luquan and Xundian, Chenggong, Yiliang and Shiling in three catchment areas of Jinsha River, Nanpan River and Dianchi Lake. Dali Prefecture is located in the central west of Yunnan, some 300 km from Kunming. It covers an area of 29,459 km2 and a population of 3.4 million people in its capital city of Dali and eleven counties. The Dali component under YUEP will target the pollution control from the Dali City, Eryuan County, and other non-point pollution sources sounding the Erhai Lake, a nationally defined protected lake for water resources and tourism. Lijiang Municipality is located in the northwest of Yunnan, some 400 km from Kunming City. It covers the capital city of Lijiang and four counties in an area of 20,600 km2 with a population of 1.1 million people. The Lijiang component under SUEP will cover Lijiang City, Yulong County and some rural counties as proposed during the July identification. Wenshan Prefecture is located in the southeast of Yunnan with bordering to Vietnam, some 300 km from Kunming City. The Prefecture covers an area of 31,400 km2 with a population of 3.4 million people in its capital city of Wenshan and seven counties. The proposed project components for YUEP for Wenshan part are located in Wenshan County, Qiubei County, Funing County, Malipo County, Yanshan County and Wenshan City. E. Borrower’s Institutional Capacity for Safeguard Policies [from PCN] Yunnan is a repeated borrower for Bank-financed urban project. From 1997-2005, it implemented Yunnan Environment Project (YEP). The current proposed Yunnan Urban Environment Project is a follow-up of YEP. F. Environmental and Social Safeguards Specialists II. SAFEGUARD POLICIES THAT MIGHT APPLY Safeguard Policies Triggered Yes No TBD Environmental Assessment (OP/BP 4.01) X This is a Category A project based on the project proposals received during the identification missions. It includes fifteen wastewater treatment systems (5000-50,000 m3/day, both or either of wastewater treatment plant and sewer/drainage system), ten landfill sites, six river or lake rehabilitation components, two cultural heritage rehabilitation and protection components and other relevant facilities of water supply and environmental monitoring. Also, for Kunming and Dali components, the proposed project would tackle the lake basin management and pollution control issues for Dianchi and Erhai lakes, and a regional EA might be necessary for this type of project components. During the identification missions, it was noted that no firm actions have been taken for the EA preparation, including baseline data collection. Currently, the provincial PMO is recruiting an EA practitioner for the project wide EA preparation, and respective project municipalities are recruiting their EA consultants after the confirmation of project components by the Bank July identification mission. Natural Habitats (OP/BP 4.04) X The proposed project finances six lake/river rehabilitation components,