Sustainable Tourism Development Project (RRP MON 50013) Initial Environmental Examination Project number: 50013 March 2019 Mongolia: Sustainable Tourism Development Project Prepared by the Ministry of Environment and Tourism of Mongolia for the Asian Development Bank CURRENCY EQUIVALENTS (as of 17 March 2019) Currency unit – togrog (MNT) MNT1.00 = $0.00038 $1.00 = MNT2,616.50 ABBREVIATIONS ADB Asian Development Bank JFPR Japan Fund for Poverty Reduction BOD5 5-day Biochemical Oxygen Demand KLNP Khuvsgul Lake National Park C-EMP Contractor’s environmental management plan LIEC Loan implementation environment consultant CKTC Chinggis Khaan Tourism Complex MET Ministry of Environment and Tourism COD Chemical oxygen demand O&M Operation and maintenance DO Dissolved oxygen OBNP Onon-Balj National Park EHS Environmental, health and safety PIU Project Implementation Unit DEIA Detailed Environmental Impact Assessment PSC Project Steering Committee DPAM Department of Protected Area Management SPS Safeguard Policy Statement EIA Environmental impact assessment SWM Solid waste management EMP Environmental management plan TRTA Transaction technical assistance EMR Environment monitoring report UDDT Urine Diversion Dry Toilets GEIA General Environmental Impact Assessment VIP Ventilated Improved Pit GHG Greenhouse gas WHO World Health Organization GOM Government of Mongolia WRB Water Resources Bureau GRM Grievance redress mechanism WWTP Wastewater treatment plant IEE Initial environmental examination WEIGHTS AND MEASURES °C - degree Centigrade m3 - cubic meter g or gm - gram m3/d - cubic meter per day h - hour m3/s - cubic meter per second ha - hectare mg - milligram km - kilometer mg/l - milligram per liter Km² - square kilometer mg/m3 - milligram per cubic meter l - liter mm - millimeter LAeq - Equivalent continuous A-weighted pcu/h - passenger car unit per hour sound pressure level m - meter t - metric ton m/s - meter per second t/d - metric ton per day t/a - metric ton per annum GLOSSARY Aimag - Province Ger - Traditional round-shaped dwelling Ger camp/guest house - Unlicensed tourism accommodation; basic facilities. Owned by local resident Soum - District Tour camp - Licensed tourism accommodation. Usually with restaurant, toilet, shower NOTES In this report, "$" refers to US dollars. This initial environmental examination is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. Your attention is directed to the “terms of use” section on ADB’s website. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. i TABLE OF CONTENTS I. EXECUTIVE SUMMARY 1 A. Introduction 1 B. Background 1 C. Project Components 2 D. Project Benefits and Features 7 E. Baseline Environment 7 F. Potential Environmental Impacts and Mitigation Measures 10 G. Analysis of Alternatives 13 H. Public Consultation and Grievance Redress Mechanism 13 I. Climate Change 14 J. Environmental Management Plan 14 K. Conclusion 15 II. INTRODUCTION 16 III. POLICY, LEGAL AND ADMINISTRATIVE FRAMEWORK 18 A. Overview 18 B. Mongolia’s Environmental Policy and Legal Framework 18 C. Protected Areas 21 D. Environmental Standards 26 E. Mongolia’s Occupational Health and Safety Standards 31 F. ADB Safeguard Policy Statement 31 IV. DESCRIPTION OF THE PROJECT 34 A. Rationale 34 B. Impact, Outcome, and Outputs 36 C. Design scheme and Construction Methods 37 D. Associated Facilities 65 V. DESCRIPTION OF THE ENVIRONMENT (BASELINE) 66 A. Khuvsgul Subproject 66 1. Location, Geography and Topography 66 2. Geology and Soils 66 3. Climate, Hydrology, and Water Quality 69 4. Ecology, Wilderness Values, and Protected Area Management 73 5. Human and Socio-Economic Context 82 6. Cultural Heritage and Physical Cultural Resources 87 7. Noise 89 8. Air quality 89 9. Sanitation and Solid Waste Management 90 10. Other Environment-Related Issues 95 B. Khentii Subproject 97 1. Location, Geography and Topography 97 2. Geology and Soils 98 3. Climate, Hydrology, and Water Quality 102 4. Ecology, Wilderness Values, and Protected Area Management 108 5. Human and Socio-Economic Context 121 6. Cultural Heritage and Physical Cultural Resources 122 7. Noise 124 8. Air quality 125 ii 9. Sanitation and Solid Waste Management 126 10. Other Environment-Related Issues 129 VI. ANTICIPATED ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES 131 A. Approach 131 B. Project Areas of Influence and Sensitive Receptors 131 C. Anticipated Project Benefits 132 D. Pre-Construction Phase of KLNP and Khentii Sub-Projects 134 E. Khuvsgul Subproject Impacts and Measures 134 1. Construction Phase 134 2. Operational Phase 142 3. Indirect, Induced and Cumulative impacts 143 F. Khentii Subproject Impacts and Measures 144 1. Construction Phase 144 2. Operational Phase 152 3. Indirect, Induced and Cumulative impacts 154 G. Climate Change and Greenhouse Gas Emissions 154 VII. ANALYSIS OF ALTERNATIVES 165 A. Khuvsgul Subproject 165 B. Khentii Subproject 168 VIII. PUBLIC CONSULTATION, PARTICIPATION AND INFORMATION DISCLOSURE 172 A. Khuvsgul Subproject 173 B. Khentii Subproject 176 C. Future Information Disclosure and Public Consultation 180 IX. GRIEVANCE REDRESS MECHANISM 182 X. ENVIRONMENTAL MANAGEMENT PLAN 183 XI. PROJECT ASSURANCES 183 XII. CONCLUSIONS 184 ATTACHMENT 1: ENVIRONMENTAL MANAGEMENT PLAN ATTACHMENT 2: MEDIA ARTICLES ON THE CHINGGIS KHAAN TOURISM COMPLEX ATTACHMENT 3 : RESULTS OF THE SECOND AND THIRD ROUND OF PUBLIC CONSULTATIONS FOR THE KHENTII SUBPROJECT iii I. EXECUTIVE SUMMARY A. Introduction 1. The Government of Mongolia (GOM) has requested the Asian Development Bank (ADB) to provide investment and technical assistance support for the Sustainable Tourism Development Project (the project). The project will support the GOM to develop and strengthen an integrated approach for livelihoods, sustainable tourism, sanitation and solid waste, and park management, within and around the Khuvsgul Lake National Park (KLNP) in Khuvsgul Aimag (northern Mongolia), and in the buffer zone of the Onon-Balj National Park (OBNP) in Khentii Aimag (eastern Mongolia). The project will be funded by a loan of $38 million and will be implemented over five years (2019–2024). The executive agency will be the Ministry of Environment and Tourism (MET). The implementing agencies will be MET’s Department of Protected Area Management (Khuvsgul subproject) and Department of Tourism Policy Coordination (Khentii subproject), supported by the KLNP and OBNP administrations and governments of Khuvsgul and Khentii aimags. Based on the ADB Safeguard Policy Statement (SPS, 2009) the project is classified as environmental Category B, requiring the preparation of an initial environmental examination (IEE) and environment management plan (EMP). 2. This IEE has been prepared in accordance with the ADB SPS requirements and the GOM’s related environmental laws, regulations and standards. It is based on information and data from: (i) environmental and social assessments and site visits conducted between March and October 2017 (Khuvsgul subproject) and between June and November 2018 (Khentii subproject) by a consultant team for the project transaction technical assistance (TRTA), in cooperation with the local governments; (ii) two domestic general environmental impact assessments (GEIAs) (one per subproject) prepared by certified domestic EIA institutes; (iii) stakeholder consultations; (iv) preliminary design documents prepared by the TRTA team in consultation with MET, the project steering committee (comprising MET, KLNP and OBNP Administrations, Ministry of Finance, and other line ministries), Khuvsgul and Khentii aimag governments, the Eg River and Onon-Balj River Basin Authorithies, and local communities. B. Background 3. Mongolia has a small but rapidly growing tourism sector, and government plans to expand tourism are focused on ecotourism in the country’s large network of protected areas. The National Program on Tourism Development (2016–2030) prioritizes several sites to pilot and catalyze ecotourism development, of which two are designated the highest priority: the KLNP and OBNP. 4. The KLNP (1.18 million hectares [ha]) and OBNP (0.42 million ha) are the largest national parks in northern and eastern Mongolia. Khuvsgul Lake in the KLNP is Mongolia’s largest freshwater resource. The OBNP is the documented birthplace of Chinggis Khaan, a historical leader revered in Mongolia. Both parks support global biodiversity values, small populations with high poverty rates, and transboundary river basins with the Russian Federation. Despite these similarities, the parks are in very different stages of tourism development. In 2017, the KLNP received about 89,000 visitors and the OBNP received about 20,400 visitors. Improved road and air access to the KLNP was established in 2010. Since then, visitor numbers have increased rapidly, and the park has become a major national tourism destination. Growth has been unplanned and has resulted in severe seasonal congestion, damage to natural resources, and few community benefits. In contrast, the OBNP has limited road and no air access, but a road to the park will be constructed in 2021 as part of government efforts for regional tourism. Without planning, this may result in rapid increases