SUMMARY ENVIRONMENTAL IMPACT ASSESSMENT

SUZHOU CREEK REHABILITATION PROJECT

IN THE

PEOPLE’S REPUBLIC OF

February 1999 CURRENCY EQUIVALENTS (as of 1 December 1998)

Currency Unit – Yuan (Y) Y1.00 = $0.121 $1.00 = Y8.27

On 1 January 1998, the dual exchange rate system of the People’s Republic of China was unified. The exchange rate of the yuan is now determined under a managed floating exchange rate system. For the purposes of this report, an exchange rate of Y 8.3 to $1.00 is used.

ABBREVIATIONS

BOD – biological oxygen demand COD – chemical oxygen demand EIA – environmental impact assessment EIRR – economic internal rate of return RP – resettlement plan SEMC – Environmental Monitoring Center SEPA – State Environmental Protection Administration SEPB – Shanghai Environmental Protection Bureau SMG – Shanghai Municipal Government SSCRCC – Shanghai Creek Rehabilitation & Construction Company

WEIGHT AND MEASURES

°C – degree Celsius ha – Hectare km – Kilometer km2 – square kilometers m–Meter m3 – cubic meter mg/l – Milligram per liter mg/m3 – Milligram per cubic meter mm – Millimeter m/s – meter per second m3/d – cubic meter per day m3/s – cubic meter per second t/d – ton per day

NOTE

In this report, “$” refers to US dollars. TABLE OF CONTENTS

Page

MAP ii

I. INTRODUCTION 1

II. PROJECT DESCRIPTION 1

A. Wastewater Management 2 B. Water Resources Management 2 C. Urban Renewal 3

III. DESCRIPTION OF THE ENVIRONMENT 3

A. Topography and Geology 3 B. Climate 4 C. Hydrology 4 D. Ecological Resources 4 E. Water Quality and Pollution 4 F. Social and Economic Conditions 5

IV. ANTICIPATED ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES 6

A. Impacts Associated with the Construction Phase 6 B. Impacts Associated with the Operational Phase 8

V. ALTERNATIVES 12

A. Alternatives for Siting Gate on Mudu Gang 12 B. Alternatives for the North Sewage Interception Main 12 C. Alternatives for the South Sewage Interception Main 12 D. Alternatives for Location of the Wastewater Treatment Plant 12 E. Alternatives for Solid Waste Disposal 12 F. Alternatives for Sediment Dredging of Suzhou Creek 13

VI. PROJECT COST 13

VII. ECONOMIC ASSESSMENT 14

VIII. INSTITUTIONAL REQUIREMENTS AND ENVIRONMENTAL MONITORING PROGRAM 15

A. Institutional Requirements 15 B. Environmental Monitoring 16

IX. PUBLIC PARTICIPATION 17

X. CONCLUSIONS 18 I. INTRODUCTION

1. This summary environmental impact assessment1 on the Suzhou Creek Rehabilitation Project was prepared in accordance with the requirements of the Government of People’s Republic of China and the Asian Development Bank. This summary is based on the full environmental impact assessment (EIA) report prepared by the Shanghai Academy of Environmental Sciences in June 1998. The full EIA is based on individual EIAs for each of the ten project components and was prepared for the Shanghai Suzhou Creek Rehabilitation Project Head Office. The EIA was submitted to the State Environmental Protection Administration (SEPA) as legally required by the Government, and approved by it on 9 November 1998. The report was translated into English in November 1998. The EIA was submitted to the Bank for information in December 1998.

2. The EIA concludes that the Project will have substantial positive environmental benefits for the water quality of Suzhou Creek and that adverse impacts on the physical and natural environment will be insignificant, if the mitigation measures are properly implemented. The Project will result in the resettlement of affected people, and this has been the subject of resettlement planning in accordance with the Bank’s Policy on Involuntary Resettlement.

II. PROJECT DESCRIPTION

3. Suzhou Creek is 125 kilometers (km) long, of which the downstream reach of 53 km within the administrative area of Shanghai Municipal Government (SMG) forms the basis of the project area. In addition, the project area includes the Hongkou Gang and Yangpu Gang, two adjacent heavily urbanized drainage catchments, approximately 43 square kilometers (km2) and 13 km2, respectively. The project area is bounded by the border between SMG and Province to the west, and by three major waterways: the Yunzao Bang to the north, the to the east, and the Dianpu River to the south. It encompasses about 855 km2 of the SMG, including districts of Hongkou, Zhabei, Putuo, Jiading, Baoshan, Huangpu, Jingan, Changning, Minhang, Qingpu, Luwan, and Xuhui. The project area is shown on the accompanying Map.

4. The proposed Project is the first phase of a 12-year program from 1998-2010, to rehabilitate the Suzhou Creek. The main objective of the Project is to rehabilitate the water quality and urban environment along the creek, which has been grossly polluted since the 1920s. The Project will be implemented by the Shanghai Suzhou Creek Rehabilitation and Construction Company (SSCRCC). Specific water quality targets are to achieve Class V standard in the 24 km of the lower reach of the creek, and Class IV standard in the 29 km upper reach to the border with Jiangsu Province by 2000. The longer term goal is to achieve water quality that meets Classes IV and III for the lower and upper reaches, respectively, by 2010.2 The Project will be implemented over a five-year period from 1999 to 2004, and will include components aimed at (i) improving wastewater management, including sewage collection treatment and disposal; (ii) introducing water resource management and quality control methods; and (iii) providing urban regeneration.

1 The SEIA was prepared by the Borrower, PRC and has not been evaluated, assessed or endorsed by the Bank. 2 The national water quality standards include limits on average annual dissolved oxygen level of 5, 3, and 2 milligrams per liter for Classes III, IV, and V, respectively. 2

A. Wastewater Management

5. Wastewater Interceptor Sewers for Six Tributaries. Six tributaries (Pengyue Pe, Genre Gang, Mudu Gang, Xinjing Gang, Shenji Gang, and Hualao Gang) located both north and south of Suzhou Creek, with a total catchment area of about 144 km2, have a combination of industrial and municipal wastewater flows that account for about half the pollution load entering the creek. The northern tributaries drain about 85 km2 and the southern tributaries drain approximately 59 km2. Under the Project, wastewater flow from the catchment area will be collected through the construction of interceptor sewers, with associated pumping stations, collector sewers, and pressure mains. The intercepted wastewater flow from the northern area will be transmitted to the existing Westline sewer, and treated at the proposed new Shidongku wastewater treatment plant for final disposal to the River. Intercepted sewage flows from the southern part of the catchment area will connect with the Shanghai Sewerage Project II system being funded by the World Bank.

6. Wastewater Interceptor Sewers for Hong Pu Gang and Yangpu Gang. Hongpu Gang and Yangpu Gang, two tributaries of the Huangpu River, lie immediately downstream from its confluence with Suzhou Creek. Both tributaries are heavily polluted with industrial and municipal wastewater, and are interconnected with the creek through a complex system of canals. The catchment area is about 22 km2 with a population of 840,000. The area is served by 18 stormwater pumping stations that discharge combined sewage and stormwater flows into the canal system within the catchment area. Wastewater flows from the Hongkou Gang and Yangpu Gang are estimated at 580,000 cubic meters per day (m3/d) and are projected to reach 790,000 m3/d by 2020. The Project proposes to intercept sewage flows through a system of about 16 km of sewer pipes with diameters ranging in size from 600 millimeters (mm) to 3,500 mm.

7. Shidongkou Wastewater Treatment Plant. Wastewater is transferred from Shanghai via the existing 23 km long Westline sewer and discharged untreated to the Yangtze River at Shidongkou. The discharge point at Shidongkou is a box culvert, with pipes dispersing the wastewater directly into shallow water about 50 meters (m) offshore. The purpose of the proposed Shidongkou wastewater treatment plant is to treat raw sewage from the Westline outfall sewer before discharge to the Yangtze River, to protect river water quality and the existing and planned water supply intakes.

B. Water Resources Management

8. Flow Control Structures on Mudu Gang and Six Tributaries of the Suzhou Creek. Under this component, it is proposed to construct flow control structures on the seven remaining tributaries of the creek (Mudu Gang, Xisha Jiang, Xiaofeng Bang, Laofeng Gang, Huagqiao Gang, Beijho Jing, and Gugang Jing) that do not have sluice gates. In addition, it is proposed to dredge 11 branch canals, build four storm-water pumping stations, and rehabilitate three existing sluice gates and two existing storm-water pumping stations. These works will improve control capacity to handle a storm with a once-in-50-year return frequency, reduce water leakage through the gates, and control water logging of agricultural land.

9. Low-Flow Augmentation. To augment the stream flow in the creek system during periods of low flow and to contain flood risks during high tides at the Huangpu River, it is proposed to rehabilitate the existing unidirectional high tide control gate at the mouth of the creek. Pumping stations will be built for low-flow augmentation, flood control, and improved circulation flows in the tributaries and the upper reaches, and portions of the tributaries will be 3 dredged, embankments will be strengthened, and some channels realigned and straightened. Hydrological and water quality monitoring systems will also be installed.

10. Rehabilitation of the Hongkou Gang. This component covers the improvement of canals in the Hongkou Gang area, including dredging; embankment improvements; construction of three storm-water pumping stations on the Haoqiao Gang, Xisi Tang, and Hongkou Gang; construction of two water-flow control structures; and installation of monitoring and control equipment.

11. Sediment Dredging and Disposal. It is proposed to dredge the lower 17 km of the creek to remove sediment from 10 m wide strips near each bank, to a depth ranging from 0.5 m to 1 m. The purpose of dredging is to remove polluted material from the riverbed and to improve the hydraulic characteristics of the river channel.

12. Re-Aeration. Under this component, nine re-aeration stations are proposed over a 35 km stretch of the creek between Huangdu and the river mouth. The purpose is to increase the dissolved oxygen concentration to meet the Class V water quality standard in the short term.

C. Urban Renewal

13. Embankment Reconstruction. The component includes the reconstruction, improvement, strengthening, and rehabilitation of river embankment walls to maintain flood protection and improve the urban environment.

14. Removal and Relocation of the Nightsoil and Garbage Collection Wharves. The existing nightsoil and garbage collection wharves located along the lower 5 km of the creek are to be closed, relocated, and replaced by other facilities. The new facilities will include the provision of three solid-waste transfer stations, two nightsoil discharge stations, equipment for collecting floating debris on the creek, and a solid-waste incinerator with 300 tons per day (t/day) capacity.

III. DESCRIPTION OF THE ENVIRONMENT

A. Topography and Geology

15. The project area encompasses the urban heart of SMG and has flat terrain with ground levels ranging from 3.2 m to 4.8 m above datum, which is within the tidal range imposed by the Yangtze and Huangpu rivers. The creek has a shallow slope of 0.8 centimeters per kilometer from the west to the river mouth in the east. The creek area is situated in the southeast edge of the north seismic belt of the country with medium seismic intensity.

B. Climate

16. The project area is in the northern subtropical region with the Southeast Asian monsoon, and appreciable seasonal changes. The annual average temperature is 15.4 degrees Celsius (°C), with the lowest average of 3.5 °C in January and the highest average of 27.8 °C in July. The average annual rainfall is about 1,115.2 mm with about 130 rainy days per year. There are two rainy periods, June and August-September, in the typhoon season. The prevailing wind directions in the Suzhou Creek area are east-south-east and south-east in spring; east-south- east, south-east, and south-south-east in summer; north-north-east and east-north-east in 4 autumn; and west, north-north-west, and west-north-west in winter. The wind speeds are 3.0 meters per second (m/s) on average, with a maximum of 20 m/s.

C. Hydrology

17. Suzhou Creek flows from Taihu Lake in Jiangsu and Zhejiang provinces and empties into the Huangpu River in SMG. Of the 125 km total length, 54 km are in SMG with the lowest reach of 24 km traversing the city proper. Flow measurements indicate a gradual decrease in river flow over the years with a present average annual flow of 6 cubic meters per second (m3/s) entering SMG. The average width of the creek is 70 m to 80 m with a water depth of 2 m to 4 m at low tide and 7 m to 8 m at high tide. The net outflow rate increases to about 10 m3/s at the river mouth, of which 40 to 60 percent is from wastewater discharges. Tidal inflow at the mouth may reach 200 m3/s. The average tidal level is at 1.93 m. The flow velocity is normally 0.1 to 0.2 m/s; at high tide the flow velocity is around 0.58 m/s. A total of 37 tributaries intersect the project area and most of the tributaries lie in a north-south direction, with a general bank gradient from north to south. The groundwater table is usually about 1 m below the surface.

D. Ecological Resources

18. Biological monitoring results of Suzhou Creek in 1996 indicated 12 species of equizoa at Baihe (at the boundary with Jiangsu province) with peritricha as the predominant species. A Shannon-Weaver Diversity Index of 3.27 showed that the creek is moderately polluted at this point. At Huangdu, and further downstream, there were 8 species of equizoa with Epistylis plicatilis, Epistylis lacustris, and Chilodonella uncinata as the predominant species; the Shannon-Weaver Diversity Index of 2.27 indicates moderate pollution. At Huacao near the upstream edge of the city proper, two species of equizoa — Branchiura sowerbyi and Limnodrillus hoffmeisteris — were found, both in large quantity; this, and a Goodnight Revision Index of 0, indicate heavy pollution at this point. The same effects of heavy pollution are found at the remaining downstream monitoring stations at Beixinjing Bridge, Wuning Road Bridge, and Zhejiang Road within the city proper. The anaerobic conditions of the creek and its tributaries are not favorable for the survival of fish. There are no rare or endangered species in the project area.

E. Water Quality and Pollution

19. Suzhou Creek has been seriously polluted for almost 80 years, although some improvement has occurred since the commissioning of Shanghai Sewerage Project I. Water quality monitoring results for 1996 indicate that chemical oxygen demand (COD) levels at all monitoring stations were still below Class V standard. Biochemical oxygen demand (BOD) levels met the Class V standard in the upper reaches, but were below Class V standard in the lower reaches. The worst water quality is found at the section of Wuning Road, about 10 km from the river mouth. Although influenced by the tide, the creek water is generally black in color, smells badly, and shows high levels of BOD, COD, nutrients (nitrogen and phosphorus), and oil.

20. The other tributaries and waterways in the project area also show serious degrees of pollution, generally below the Class V standard. The most severely polluted tributaries are in the urban area, followed by Yangpu Gang, Hongkou Gang, Yunzao Bang, and tributaries in rural areas.

21. The poor water quality situation is, to a large extent, due to wastewater discharges from within the project area, but the quality of surface water that reaches the creek is also poor. The 5 project area is partially served by the existing Shanghai Sewerage Project I, Westline and Southline sewerage systems, and a few smaller separate sewer systems and treatment plants. Pollution sources in the investigated area of 375 km2 include: 1,257 industrial establishments generating 272,000 m3/d of wastewater, 238 t/d of COD, and 60 t/d of BOD; 1,255,000 people generating 216,000 m3/d of sewage, 100 t/d of COD, and 50 t/d of BOD; and livestock generating 95,900 m3/d of wastewater, 178 t/d of COD, and 58 t/d of BOD. Other pollution sources include pollution loads from river bed sediment, urban runoff, discharges from water transport, and solid waste and nightsoil spillage from loading wharves and boats.

22. In the Hongkou Gang area, the total pollution from industrial and domestic sources is estimated at 479,000 m3/d of wastewater, 130 t/d of COD, and 57 t/d of BOD. For the Yangpu Gang area, the pollution loads are 303,000 m3/d of wastewater, 80 t/d of COD, and 35 t/d of BOD.

F. Social and Economic Conditions

23. About three million people live and work in the districts along the banks of the creek. Population density in 1996 varied from 58,964 persons/km2 in Huangpu District to 676 persons/km2 in Qingpu County. Traditionally, economic activities along the creek include industries and navigation/transport services. Most areas are congested and characterized by mixed urban land uses including dilapidated residential housing, factories, vacant lots, warehouses, construction sites for redevelopment, and some large office and residential towers. Despite the important role in the social and economic , the areas along both sides of the creek are significantly underdeveloped compared with other parts of Shanghai, primarily due to the poor environmental quality of the creek.

24. In 1996 the average household size was 2.9 persons, and the average housing density was about 1,790 houses/km2. Survey results indicate an average annual per capita income of Y8,190, of which Y3,416 was spent on food. The surveys show that the main priorities of the population are to achieve improved housing, better transportation, and improved solid waste disposal.

25. A nightsoil collection system is used by a portion of the population, gray water is discharged to the local combined sewers, and a small portion of the population is connected directly to combined sewers. The remaining population is served by septic tanks or cesspits, which have overflow pipes connected to combined sewers.

26. Health conditions in the project area generally reflect those of the city as a whole, where life expectancy is about 78 years for women and 74 years for men. However, the morbidity rate from infectious diseases, including dysentery, is higher in the project area than in SMG in general. Most of the urban districts have negative natural growth rates, with more deaths than births. However, the net increase in population was 0.49 percent in 1996 as a result of migration from other parts of the country. 6

IV. ANTICIPATED ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES

A. Impacts Associated with the Construction Phase

1. Construction of Facilities

27. Construction activities for pipe laying, sewage treatment plants, pumping stations, gates, and sediment dredging will involve the use of heavy machinery and trucks. Construction activities may produce short-term noise, vibration, air pollution, muddy runoff, safety hazards, sewage from construction personnel, and traffic congestion. Environmental protection measures in connection with construction operations are required as integral parts of the engineering contracts. The contractors are required to comply with Shanghai Environmental Protection Regulations, which prohibit construction activities involving high levels of noise and vibration between 10 p.m. and 6 a.m. Operations that produce excessive noise are required to obtain special permits from the Shanghai Environmental Protection Bureau (SEPB). Normally, all construction sites are required to install runoff prevention fences to a height of 0.5 m. Settling ponds must be provided for runoff from the sites. Suitable signs must be posted to warn pedestrians of hazards. Solid and liquid wastes generated must have suitable disposal facilities. Contractors with waste soil or construction debris must register with the local waste soil control office, which will ensure that suitable arrangements for disposal are followed. To minimize traffic congestion, the contractors are required to provide a traffic management plan. All construction activities will be closely monitored by the local environmental protection units for noise, vibration, air pollution, dust, and waste disposal; the police for traffic congestion; and the local waste soil control offices for waste soil transport and disposal.

2. Resettlement

28. Eight out of ten project components require land acquisition and resettlement. Overall, the Project requires the permanent acquisition of about 150 hectares (ha) of land. In addition, approximately 125 ha of land will be temporarily borrowed during project implementation. Approximately 100 ha of agricultural land will be permanently acquired, while 30 ha will be borrowed temporarily. The primary resettlement impacts include permanent loss of agricultural and industrial land, relocation of houses and enterprises (partial or total), loss of jobs and other income-earning activities, and loss of various assets and infrastructure. The total number of permanently affected persons is estimated to be 10,000. These include about: (i) 1,340 affected by loss of agricultural jobs; (ii) 7,700 affected by house relocation; and (iii) 1,000 boat operators, who are expected to be affected by the reduction in transportation of nightsoil and solid waste via waterways. Approximately 120 persons are classified as vulnerable, 250 enterprises will be partially or totally relocated, and about 7,500 workers will be affected by a temporary interruption of industrial activities. Among the challenges to restore the livelihood of affected persons are the creation of job opportunities and the provision of training programs to facilitate the shift from agricultural to nonagricultural skills. The Project is also expected to create about 3,830 permanent jobs.

29. The new Land Law that became effective on 1 January 1999 provides a comprehensive framework of regulations and procedures for implementing resettlement. The SSCRCC, in collaboration with the Shanghai Academy of Social Sciences and the consultants, was responsible for preparing the resettlement plan (RP). The Academy has participated in several projects financed by multilateral organizations, including the World Bank, and ensured that the Bank’s requirements contained in the Policy on Involuntary Resettlement and the Handbook on Resettlement: A Guide to Good Practice were met in the preparation of the RP. The RP is also 7 in compliance with the new Land Law and applies the compensation rates and other resettlement practices introduced by it.

30. Eight RPs have been prepared on the basis of the feasibility studies and preliminary designs, and a summary RP provides detailed information for each project component. When the detailed designs are finalized, the RPs will be revised and updated accordingly. The eight RPs document the location and features of both the households and enterprises to be relocated, and propose several options for relocation sites. Interviews in the affected areas stressed the preference of affected persons to be relocated close to their current home and/or in the vicinity of the workplace. The owners of small businesses and enterprises stressed the importance of being close to developed trading areas and access to transportation. Socioeconomic surveys of the affected persons were prepared with Bank-financed technical assistance,3 and the results indicate a high level of expectation among those surveyed of achieving improved living conditions in the relocated facilities.

31. The Project Preparatory Department and the Resettlement Coordination Group have been created within SSCRCC to implement the RPs. The representation of all agencies involved in the preparation of RPs (e.g. Shanghai Water Conservancy, Municipal Engineering Administration, Sanitation Administration, and environmental bureaus) in the Project Leading Group should ensure the coordination of resettlement measures during the implementation stages. In addition to the internal monitoring carried out by the Project Preparatory Department, the Academy of Social Sciences has been nominated to undertake independent monitoring and evaluation of the impact of resettlement.

32. Entitlements will be provided to the affected persons before demolition and ground- leveling commence. SSCRCC, through resettlement offices established by different districts, will play an important role in making the RPs public; ensuring that affected persons are aware of compensation entitlements, job creation schemes, training activities, and alternative relocation sites; and reflecting their comments and concerns in the revised RPs and during their implementation.

3. Sediment Removal and Disposal

33. Dredging operations in the Project involve sediment removal of about 300,000 dry cubic meters (m3) from the heavily polluted downstream reaches of Suzhou Creek; 340,000 dry m3 from upstream reaches and some tributaries in connection with low flow augmentation; and 460,000 dry m3 from Hongkou Gang making a total of about 1.1 million dry m3.

34. Facilities and expertise for removing river sediment are available locally. Local companies have been operating in river sediment dredging for a long time. The companies have working crafts and barges of various sizes to suit different site conditions and are able to remove sediment. Dredged spoil is brought, by boat, to a transfer station on the Huangpu River and is then pumped through about 17 km of 700 mm diameter pipeline to the second disposal site. The site is a planned and engineered land reclamation site on the bank of the Yangtze River with no human settlement nearby. All stages of the operations will be monitored closely to avoid adverse impacts on the environment.

35. Analytical tests on sediment for heavy metals indicate that most sediment samples taken from the creek meet the control standards for agricultural uses. In the case of sediment analysis

3 TA No. 3025-PRC: Suzhou Creek Environmental Rehabilitation Project, for $965,000, approved on 3 June 1998. 8 for Hongkou Gang and its five tributaries, samples are within the control standards, with the exception of one tributary (Zouma Tang). In this tributary, samples indicate high levels of chromium, copper, and zinc exceeding the control standards for agricultural use, but not necessarily identified as hazardous (Table 1). A number of samples were tested for the presence of organic micropollutants and some priority pollutants were found in low concentrations, well below the United States Environment Protection Agency standards.

Table 1: Comparison of the Pollutants between Sediment and Standard (mg/kg, dry weight)

Sediment Standard content for Pollutant Hongkou Gang Suzhou Creek agriculture sludge System Cadmium 0.1-4 0.1-0.25 20 Lead 10-30 59.5-160.5 1,000 Copper 20-200 515.8-2724.5 500 Nickel 30-50 78.7-165.1 200 Iron 18,000-25,000 Arsenic 6-20 7.7-10.6 75 Mercury 0.1-0.4 15 Chromium 30-100 210-3913 1,000 Zinc 501-1,338.3 1,000 Source: Project EIA

36. As a precaution, appropriate investigations will be undertaken, under the supervision of SEPB, to sample the areas most likely to be contaminated with organic micropollutants or high levels of heavy metals before dredging operations to ensure that the removed sediment is not hazardous. Any sediment found to be hazardous will be properly transported to and disposed of in the secure landfill facilities of the Shanghai Hazardous Waste Treatment Center of SEPB. The landfill, located in Jiading District, is presently under construction and is scheduled for completion by late 1999. The secure landfill facilities will thus be available before dredging operations begin in 2000.

B. Impacts Associated with the Operational Phase

1. Impact on the Hydrological Regime

37. Water levels in the creek will be affected by the operation of completed works, especially the low-flow augmentation facilities. Water levels in the upper reaches, 40–60 km from the river mouth, will be unchanged. In the lower reaches, the maximum change will be at the river mouth where water levels will decrease by 0.4–0.9 m at high tide, and will increase by 0.4–0.6 m at low tide. Such changes will have an insignificant impact on the river system.

38. Changes in net flow in some segments and tributaries due to operation of the low-flow augmentation procedures are expected to have a negligible adverse impact on the hydraulics of the river system. In the Huangpu River, operations for low flow augmentation may have a slight influence in dry years. Given the much larger flow rate in the Huangpu River, the influence will be limited. 9

2. Impact on Water Quality in Six Tributaries Intercepted

39. When the sewage currently being discharged to Pengyue Pu, Zhenru Gang, Mudu Gang, Shenji Gang, Beixin Jing, and Huacao Gang is collected by the interceptor sewers, the main pollution load in these creeks will be reduced. At the same time, the integrated low-flow augmentation of the main waterway of the creek greatly increases the flow of Pengyue Pu and Mudu Gang, accelerating the exchange velocity of the tributaries. The predictions from water modeling indicate that improvements in water quality and significant decreases in BOD and COD will occur. However, the water quality will remain inferior to Class V standard.

3. Impact on Water Quality in Yunzao Bang

40. Gates to be constructed on the tributaries may divert polluted water to the tributaries and other waterways. By operating the gates and low-flow augmentation together, the result will be sufficient to counterbalance the pollution transfer effect. The exceptions, in the short term, are certain reaches of Yunzao Bang for which the situation is mixed. Water quality will improve in the lower reaches of Yunzao Bang but may deteriorate for certain periods in the upper reaches, with an average increase in BOD level of about 2.76 milligrams per liter (mg/l). However, as in Suzhou Creek itself, the current BOD level in these reaches (12 mg/l) already exceeds the Class V Standard of 10 mg/l. By the time low-flow augmentation will begin in 2000, the Project’s sewage interception facilities for the Mudu Gang, the most polluted of the tributaries, should already be in operation. Together with the planned instream biological treatment facilities on Mudu Gang, the potential for increased BOD levels in Yunzao Bang will be minimized, if not eliminated. It will also be possible to modify the operation of the gate at the upstream end of Yunzao Bang (Yunxi Gate) to release flushing water to improve water quality in the upper reaches of Yunzao Bang. The project water quality monitoring system will provide the necessary data for such remedial action.

4. Impact on Water Quality of Huangpu River

41. Water quality of Huangpu River should improve, as the Project will reduce the pollution inflow from the creek. The BOD level will decrease by up to 11 percent under various flow conditions at the Linjiang raw waterworks intake.

5. Impact on Taihu Lake Basin

42. The effect on Taihu Lake Basin of the diversion of 30 m3 of water into the upper reaches of SC for low-flow augmentation has been modeled and studied extensively by Shanghai Water Conservancy Bureau. The lake basin is connected to a complex network of waterways providing water from various sources including the Yangtze River. Diversion of flow at one point is balanced by drawing water from all other available sources through the network. Water modeling indicates that there will be no overall impact.

6. Impact of the Shidongkou Wastewater Treatment Plant

43. The proposed Shidongkou wastewater treatment plant will treat wastewater intercepted from the northern catchment of the creek to protect water quality of the Yangtze River. The provision of sewage treatment is in accordance with national and local policies for environmental protection, particularly for river basins and water sources. By 2001 it is estimated that up to 400,000 m3/d of sewage will be collected and discharged via the Westline sewer. Under the proposed Project, the Shidongku plant will be designed to accommodate this initial 10 flow, with the flexibility to expand the capacity to treat an ultimate flow rate of 800,000 m3/d. The sewage treatment process will be designed to remove 90 percent of BOD, 92 percent of suspended solids, and 85 percent of COD. A 64 ha site has been reserved at Shidongkou for the plant; it is capable of accommodating both the phase 1 design and the ultimate design capacity. The site is surrounded by a gas factory, oil tanks, and storage facilities. There are no residential communities nearby, thus eliminating the need for a green buffer zone.

44. To ensure safe disposal, without causing secondary pollution, sludge from the treatment plant will be biologically digested and dewatered before being transported for final disposal in the Laogang landfill, which has reserved capacity for this purpose.

7. Impact of Sewage Interception for the Southern Catchment

45. Sewage intercepted from the southern catchment of the creek will be collected in about 27 km of gravity interceptor sewers ranging in diameter from 800 mm to 2,400 mm. The interceptor sewers will be routed along highways and roads and will connect to the Shanghai Sewerage Project II system. The sewage will be discharged to the Yangtze River at Bailong Gang through the existing outfall facilities. As a result of this increase in flow, the mixing zone of the outfall will increase from 3.2 km2 to 3.68 km2. Although this is not an issue in the medium term, the existing preliminary treatment plant will be upgraded to secondary treatment in the future to improve water quality at the outfall. Land has been reserved for the expansion.

8. Impact of the Proposed Gate near the Mouth of the Creek

46. To remove the discolored and malodorous water from the creek by 2000, it is proposed to rehabilitate the existing one-way gate at its mouth to enable it to contribute to the low-flow augmentation regime in the short term. The main purpose of this gate is to provide flood protection during times of high tide. The results of the low-flow augmentation regime will be monitored to determine if additional measures are needed.

9. Impact of the Solid Waste Disposal Facilities

47. With the removal of loading sites for solid waste barges along the lower reaches of the creek, permanent land-based transfer stations, and a temporary disposal site are proposed, to allow time for construction of transfer stations and an incinerator. To avoid the potentially adverse impacts on water quality and health associated with temporary disposal sites, and ensure that the environmental quality of the surrounding area is not degraded, these facilities will be constructed to meet the standards for permanent facilities (Municipal Solid Waste Sanitary Landfill Standard, CJJ17-88).

48. The country does not have specific emission standards for incinerators. Some substances of the proposed incinerator may exceed the tentative standard for incinerator emissions issued by SEPB, as shown in Table 2. Under the 20 most frequent meteorological conditions, the estimated maximum ground concentrations of total suspended particulates, sulfur dioxide, nitrogen oxides, and hydrogen chloride of the proposed incinerator emission are low, and well within Class II of the national ambient air standards and maximum allowable concentration in residential areas. Under exceptionally unfavorable meteorological inversion conditions, the level of nitrogen oxides for specific areas within 1,000 m around the incinerator site may exceed the ambient air quality standards. Mitigation measures being considered in the detailed design include source control, as well as proven technologies for air pollution control, such as flue gas scrubbing. 11

Table 2: Estimated Emissions from the Incinerator with 50 m High Stack

Pollutant TSP HCl HF SO2 NOx CO H.Metal Hg Cd Org. Emission Concentration 23 38 0.63 26 248 11 3.1 0.2 0.015 7.0 (mg/m3)* Emission standard 30 50 2 300 200 50 6 0.01 0.5 20 (mg/m3)*

Cd – cadmium NOx – nitrogen oxide CO – carbon monoxide Org. – organics HCl – hydrogen chloride SO2 – sulfur dioxide HF – hydrogen fluoride TSP – total suspended particulates Hg – mercury mg/m3 = milligrams per cubic meter H. Metal – heavy metal

Source: Component environmental impact assessment

49. Analogous investigation indicates that the residue from the incinerator will not be hazardous. Nevertheless, the residue will be tested before disposal in the municipal landfill at Laogang. However, the heavy metal contents of the fly ash could be quite high. The maximum lead concentration can be 12 times higher than the permissible concentration (3.0 mg/l) stated in the Standard for Identification Standard of Hazardous Wastes (GB5085.3-1996). Fly ash will therefore be solidified and tested for hazardous content before disposal. Any hazardous waste will be properly transported and disposed of in the secure landfill of Shanghai Hazardous Waste Disposal Center of SEPB, scheduled for completion in 1999.

50. In its approval of the Project EIA, SEPA indicated that it is necessary to carry out a more detailed EIA on whether landfill or incineration is the preferred method for solid waste disposal. The executing agency has assured that this work is in progress as part of the Project preparation activities and will be developed to a level of detail and standards acceptable to SEPA and the Bank. If selected, the incinerator design will ensure that incineration is the most cost effective method for solid waste disposal and that the incineration process will effectively mitigate adverse environmental impacts. The incinerator design will ensure that the emissions do not contain levels and concentrations of dioxins, chlorinated hydrocarbons, partially oxidized hydrocarbons, and other by-products from the combustion of municipal solid wastes that are known to be carcinogenic substances. Background levels and concentrations of these substances will be established before the incinerator is operated, in order that the actual environmental impact of the incinerator may be monitored, measured, and reported to SEPA and the Bank. Appropriate covenants will be included in the loan and project documents to ensure that the design, construction, operation, and maintenance of the incinerator are in accordance with internationally recognized best practices and standards.

51. After the trial burn of the incinerator and before its commercial operation may commence, special monitoring will be conducted on the standards of air emissions and fly ash to ensure that acceptable standards are reached. The results will be reported to SEPA and the Bank.

10. Impact of Odor and Noise Pollution

52. Offensive odor and noise from operation of solid waste and nightsoil handling and disposal facilities, sewage interception pumping stations, and sewage treatment plant may have an adverse impact on the population in surrounding areas. A sanitary protection greenbelt of 5- 12

10 m in width will be provided to minimize the impact. In addition, odor and noise control procedures will be adopted for relevant facilities.

V. ALTERNATIVES

A. Alternatives for Siting Gate on Mudu Gang

53. The Project includes the construction of lock gates on seven tributaries of the creek. Of these, Mudu Gang contributes 83 percent of pollution in terms of BOD and therefore is the most significant pollution source. Four alternatives were considered in siting the gate for Mudu Gang: (i) at the mouth of the old river bed; (ii) at the mouth after straightening the winding river section; (iii) near the Municipal Sugar, Tobacco, and Wine Corporation warehouse after straightening the winding river section; and (iv) near the Municipal Housing Corporation Second Concrete Factory after straightening the winding river section. Seven significant factors including environmental impact and pollution control efficiency were considered and alternative (ii) was selected, based mainly upon environmental considerations and most efficient pollution control.

B. Alternatives for the North Sewage Intercepting Main

54. Two alternatives were considered: (i) along the Outer Ring Road, Hujia Express Way and Wengshui Road; and (ii) along the Outer Ring Road and Nanda Road. Alternative (i) was selected because it will have less impact on traffic and permit improved ease in making sewer connections for pollution control, along with factors such as cost and less power consumption.

C. Alternatives for the South Sewage Intercepting Main

55. Two alternatives were considered: (i) serving only the Jiwang, Zhudi, Qibao, and Xinzhuang areas; and (ii) serving these areas plus the service areas of the existing Tianshan and Chengqiao sewage treatment plants. Since the amount of pollution reduction by eliminating discharge of the existing treatment plant effluents into the creek is less than 2 percent of total pollution loading, alternative (i) was selected to reduce the capital cost.

D. Alternatives for Location of the Wastewater Treatment Plant

56. Three alternatives were considered for the location of the proposed wastewater treatment plant: (i) Shidongkou with the discharge outfall at Shidongkou; (ii) Panjing with the discharge outfall at Shidongkou; and (iii) Panjing with the discharge outfall near the bank of the Huangpu River. Factors considered in the selection process included the need for a greenbelt as a buffer, convenient connection to the inlet main, transmission requirements for the discharge outfall, environmental impact on the surrounding area, environmental impact of the outfall on the receiving waters, sludge disposal, land acquisition, and environmental impacts during construction. Based mainly on environmental impact considerations and the length of transmission pipeline needed, alternative (i) was selected as the preferred alternative.

E. Alternatives for Solid Waste Disposal

57. Several options were considered in connection with the municipal solid waste generated in the project area after the discontinuation of the present barging arrangement. Landfill was considered impractical due to lack of adequate sites in the SMG area as existing landfills are either being closed or approaching capacity in the medium term. Another proposal was to transport the solid waste to the site proposed for a larger (1,000 t/d) incinerator. However, this 13 was not feasible in view of the long transport distance. A 300 t/d incinerator was decided on as the preferred option.

58. Two alternative sites were considered for the proposed incinerator: (i) at Baziqiao and (ii) near the North Suburb Railway Station. The latter was selected mainly in view of environmental concerns as the former was closer to inhabited areas already experiencing increasing development. Another factor in favor of the second site was that it is close to an electricity transformer station obviating the need for high-tension transmission lines for electricity generated by the incinerator. Other detailed site and transport analyses will be conducted, as required, during the detailed design stage.

F. Alternatives for Sediment Dredging of Suzhou Creek

59. Five alternatives were considered for sediment removal from the most heavily polluted segment between the creek’s mouth and Beixinjing Bridge: (i) complete removal of the polluted layer of sediment; (ii) removal of sediment from 10 m wide strips containing most of the sediment deposits along both sides of the creek; (iii) removal of sediment from selected sections containing a thick layer of sediment; (iv) similar in principle to alternative (ii) with some substantial modification (para. 58); and (v) removal of only the top layer of sediment followed by complete coverage of the river bed with geotextile fabrics for the most polluted segment.

60. The modification for alternative (iv) includes the removal of sediment for a depth of of 0.5 m and width of 3 m along both banks of the creek and removal of 1.0 m (depth) for the remaining 7 m width. After sediment removal, the 10 m strips would be covered with a layer of geotextile fabrics weighted down by stone blocks. The main reason for this modification is that deep dredging along the banks might undermine the stability of the retaining walls.

61. Altogether, seven categories involving 18 factors were considered in the screening process. Environmental impact and beneficial effects on water quality and traffic were among the factors considered. Alternative (iv) was selected as the preferred choice.

VI. PROJECT COST

62. The project cost is estimated at $955 million equivalent, comprising $367 million in foreign exchange (38 percent) and $588 million equivalent in local currency (62 percent). The cost estimates are summarized in Table 3. The base cost estimates are in 1998 prices and the total costs include provision for physical and price contingencies, interest, and other charges during construction. The cost estimates comprise foreign exchange costs, including both direct and indirect foreign costs and local costs. The foreign exchange cost component is estimated at 45 percent for civil works and 100 percent for equipment and materials. 14

Table 3: Total Project Cost ($ million) Foreign Local Total Categories Exchange Currency Costs A. Base Cost Land Acquisition 0.0 13.5 13.5 Resettlement 0.0 235.2 235.2 Civil Works 125.2 153.0 278.1 Equipment and Materials 136.8 0.0 136.8 Consulting Services Engineering Design 0.0 17.5 17.5 Construction Supervision 0.0 5.4 5.4 Project Management 2.0 0.0 2.0 Training 2.0 0.0 2.0 Administration 0.0 51.5 51.5 Subtotal (A) 266.0 476.0 742.0 B. Contingencies Physicala 19.4 15.3 34.7 Priceb 14.7 26.0 40.7 Subtotal (B) 34.1 41.3 75.4 C. IDC and Other Charges 66.6 71.2 137.8 Total 366.7 588.5 955.2 Note: a 10 percent for civil works and 5 percent for equipment and materials. b 4 percent per annum on local costs and 2.4 percent per annum on foreign exchange.

VII. ECONOMIC ASSESSMENT

63. The poor environmental condition of Suzhou Creek acts as a constraint on the economic growth and development potential at the heart of the city center of Shanghai. The removal of this constraint will act as a catalyst to economic regeneration and urban renewal in an important location. In a similar way, the creek, in its present condition, has a negative impact on the overall image and perception of Shanghai as an international city. Through the Project the amelioration of this constraint will contribute to economic growth and the further development of the city.

64. The economic analysis assesses the impact of the Project on the overall welfare of the citizens. The analysis first identifies the economic costs of each Project component, separating foreign exchange and local currency costs and using appropriate shadow prices. Secondly, the analysis identifies the benefits streams, which accrue from Project implementation. Some benefits are quantified and these form the benefits streams for the base-case scenario for the economic analysis. Other benefits cannot be quantified but nevertheless are important and should be considered when evaluating the worth of the Project.

65. The results of the analysis show economic internal rates of return (EIRR) exceed the economic opportunity cost of capital, which is assumed to be 10 percent. Quantifiable benefits come from environmental improvements, identified through the willingness-to-pay survey, and include the removal of discolored and malodorous water, and nightsoil and solid waste collection wharves, and the creation of greenbelt areas. These benefits account for around 90 percent of the total benefits accrued. Other quantifiable benefits (about 10 percent of the total) relate to specific population groups that are more adversely affected by the poor environment of the creek, when compared with the willingness-to-pay survey sample. Health benefits are associated with resettled population. Flood control benefits affect the population along tributaries and are based on evidence of compensation paid out in recent floods. 15

66. Unquantifiable benefits are also important. These include the increase in rental values, which could be significant, and the benefits associated with increased tourism.

67. The base case delivers an EIRR of 15.5 percent, with a net present value of Y2,213 million, equivalent to $266 million. The EIRR falls to 10 percent under the worst case scenario of the sensitivity analysis.

68. The quantifiable economic analysis demonstrates that the Project is worthwhile, and the sensitivity tests indicate that the analysis is robust. This is a conservative assessment and the actual worth of the Project is likely to be higher than the EIRR indicates.

VIII. INSTITUTIONAL REQUIREMENTS AND ENVIRONMENTAL MONITORING PROGRAM

A. Institutional Requirements

69. In April 1996, SMG established a Leading Group chaired by the city mayor for making major decisions for rehabilitating the creek in accordance with the municipal master plan. The Shanghai Suzhou Creek Rehabilitation Project Head Office is the executing office of the Leading Group. Its main functions include organizing and coordinating studies and implementation activities of the various agencies involved in the rehabilitation effort, as well as supervising and inspecting their related activities. It is also the planning unit for the Project.

70. On 1 September 1998, SSCRCC was established for project implementation. It will manage, administer, and coordinate the construction work of the various Project components, as well as coordinate the operation of the completed facilities. However, sewerage facilities, including interception and pumping stations, will be managed by Shanghai Municipal Sewerage Company, facilities related to solid waste disposal will be under the administration of Shanghai Environmental Sanitation Administration Bureau, locks and gates on the waterways are to be controlled by the Shanghai Water Conservancy Bureau, and environmental monitoring is under the jurisdiction of SEPB. Environmental enforcement will be the responsibility of SEPB and the local environmental protection bureaus.

71. To ensure environmental due diligence, SSCRCC will allocate full-time environmental managerial personnel, located within its Office of the Chief Engineer, to assist in coordinating and facilitating the following:

(i) Prepare and manage an annual environmental monitoring and protection program for the Project.

(ii) Coordinate project actions required to assure compliance with relevant environmental laws and regulations, and track issuance of all necessary clearances and permits related to environment, safety, and occupational health.

(iii) Ensure that detailed engineering designs for project facilities incorporate environmental mitigation measures identified in the EIAs of each project component.

(iv) Ensure that construction contracts include the necessary environmental safeguards, including mitigation measures identified in the EIAs, and that 16

contractors abide by regulations for potential impacts during the construction phase.

(v) Liaise with the Shanghai Environmental Monitoring Center (SEMC) of the SEPB in the environmental monitoring of the Project (air quality around incinerator, water quality in tributaries and the creek, water quality in estuary, surveys of sediment quality, etc.), and the local environmental protection bureaus for local environmental monitoring stations.

(vi) Submit annual reports on environmental protection data during project construction and operation to SEPB and associated institutions for review. The annual reports will cover compliance with environmental standards, unanticipated issues encountered, and status of environmental mitigation measures.

(vii) Undertake public liaison for environmental matters.

B. Environmental Monitoring

72. SEMC of SEPB is well equipped with highly trained scientists to undertake environmental quality monitoring of the Project. SEMC has a current staff of 140 with departments for sampling, chemical analysis, advanced instrumentation, biology, physical analysis, quality control,and comprehensive technology to deal with monitoring of water, air, and noise pollution.

73. SEPB is responsible for the overall city-wide routine monitoring of surface water quality, ambient air quality, and noise, as well as compiling annual reports on environmental quality. The monitoring activities will be carried out, respectively, by SEMC, district and county environmental monitoring stations, municipal drainage monitoring stations, and general hydrographic stations in different subprograms of monitoring. Shidongkou wastewater treatment plant and solid waste incinerator will undertake monitoring within their plants, while SEMC will undertake random checks. The main tasks for SEMC will be to (i) carry out the monitoring programs for the construction phase and the operational phase; and (ii) prepare reports on monitoring work as required.

74. Conduct of the monitoring program will be coordinated and implemented by SEPB, the Shanghai Water Conservancy Bureau, and SSCRCC. The monitoring program, to be developed based on EIA recommendations, will include the existing routine monitoring on the waterways pertinent to the Project such as the Yangtze River estuary, Huangpu River, Suzhou Creek, Yunzao Bang, Hongkou Gang, Yangpu Gang, and Taopu River and additional monitoring at specific places in the Yangtze River estuary, creek tributaries, and the Hongkou Gang system. The monitoring frequencies vary from 2 to 12 times a year depending upon the scale and significance of those waterways. The indicators to be measured will include ordinary parameters listed in the Environmental Standard for Surface Water Quality, as well as some biological parameters where required. The monitoring for pollution source control and operational conditions of project facilities will include, but not be restricted to the following, changes in flow due to locks/gates; water quantities and qualities of influent and effluent of dischargers and pumping stations; change in water flow and quality before and after the augmentation operates; quantity and quality of leachate from garbage and of water separated from sediment; change in water quality and maintaining period by re-aeration; stack emission of the incinerator; ambient air quality at downwind points of transfer stations, nightsoil discharge stations, temporary disposal site, Shidongkou wastewater treatment plant, and re-aeration facilities; and heavy 17 metals in sludge, incinerator residue/fly ash, and sediment, as well as their quantities and transport routes. The monitoring of noise will be carried out during both construction and operation phases. Spoil generated from construction sites will also be traced along with its transportation and ultimate disposal according to the plan. These monitoring programs will be conducted regularly during project construction and five years into its operation. Programs for the monitoring the environmental protection of the project components during construction and operation will be included under the special operation and maintenance budget of SSCRCC. Mitigation measures will be adopted and implemented if the monitoring results indicate the need.

IX. PUBLIC PARTICIPATION

75. Direct public involvement has been an ongoing element in the development and design of the Project. Public participation has occurred: (i) as part of the process of investigating sites for facilities; (ii) for the preparation of social impact assessments and eight resettlement plans where land acquisition is necessary; (iii) to educate those who will be resettled about the project objectives and process, and understand their priorities and needs; and, (iv) to evaluate the priorities and estimate the value of project benefits based on the willingness-to-pay of Shanghai residents in general.

76. For each of the 10 components, a site investigation was carried out that included questionnaires, workshops and interviews. These investigations were carried out by the design units responsible for the feasibility studies, and the results were incorporated into the planning process to screen design options to minimize social and environmental impacts. The site investigations and results have played a role in facility alignment, location, scale, and construction methods.

77. The surveys collected information on age, education, occupation, gender, attitudes toward the project components, land acquisition, resettlement, the method of resettlement, the importance of distance from a person’s existing home, and the type of new house. The results indicated favorable responses, in the range of 85 to 98 percent, to all the components, despite the high impact on people’s lives. For example, about 90 percent had a favorable attitude toward land acquisition and their own resettlement. Opinions were more diverse over compensation offered as cash, a new house, or a combination of the two. A survey of boat operators who would lose their livelihood due to changes in navigation showed less enthusiasm for the Project and less optimism about improved personal conditions as a result. The main environmental issues raised relate to possible noise, odor, and traffic impacts arising from project construction activities.

78. The Shanghai Academy of Social Sciences carried out further house-by-house investigations of project-affected persons in the locations of project facilities. These included establishing baseline information to produce social assessments for some of the components and detailed resettlement plans for households, enterprises, and public facilities for eight of the components. The main impact noted on households was the long history, and cultural and social attachment that exists for places that will be left behind and the difficulty compensating for the type of loss in the new more modern relocation sites. The main employment impact, for which no appropriate substitute has been identified, is the loss of the vocation of boat operators.

79. In addition, a survey of 607 households was carried out to assess the value of and willingness-to-pay for benefits of the project components, as compared with impacts on project- affected persons. Households were randomly selected from a representative sample classified 18 by zones of distance from Suzhou Creek and tributaries, income, and housing type in all residential and residential/commercial districts of Shanghai. The survey results were used to understand the overall priorities, habits, and preferences of Shanghai residents and the uses and value they place on the creek. Project benefits were calculated from these values.

X. CONCLUSIONS

80. The Project will improve the water quality of Suzhou Creek and the living standards of residents living along it. Since the project area is situated at the urban center of Shanghai Municipality, improvements brought by project implementation will provide economic development opportunities, recreational amenities, aesthetic benefits, and public health improvement to the inhabitants of the city and enhance the image of Shanghai Municipality as an international metropolis.

81. The Project’s adverse impact on the environment will be minimal, mostly short-term construction phase impacts that will be mitigated. Implementation of the various project components, together with the planned mitigation measures, will have relatively insignificant adverse environmental impacts. The Project’s significant impacts on affected people will be mitigated through full compensation and relocation as provided for under the Project. A comprehensive monitoring program for the preconstruction, construction, and operation phases will be undertaken to ensure that all mitigation requirements are met.