Initial Environmental Examination Project Number: 42184 January 2016 Mongolia: Southeast Gobi Urban and Border Town Development Project Additional Financing Prepared by the Ministry of Construction and Urban Development of Mongolia for the Asian Development Bank. CURRENCY EQUIVALENTS (as of 10 December 2015) Currency unit – Mongolian Tughrik (MNT) MNT1.00 = $0.0005025 $1.00 = MNT1990 ABBREVIATIONS ADB Asian Development Bank – AF – AdditionalAsian Development Financing Bank AP – Affected Person ASP – Activated Sludge Process BOD – Biological Oxygen Demand DEIA – Detailed Environmental Impact Assessment EA – Executing Agency EHSO – Environmental Health and Safety Officer EIA – Environmental Impact Assessment EMP – Environmental Management Plan ESS – Environmental and Social Specialist GHG – Greenhouse Gas GoM – Government of Mongolia GRM – Grievance Redress Mechanism HSMP – Health and Safety Management Plan IEE – Initial Environmental Examination IEM – Independent Environment Monitor IFAS – Integrated Fixed-film Activated Sludge IGES – Institute for Global Environmental Strategies IPCC – Intergovernmental Panel on Climate Change IWRMP – Integrated Water Resource Management Plan IWRMP Integrated Water Resource Management Plan – LIEC Loan Implementation Environment Consultants – MARCC – Mongolian Assessment Report on Climate Change MBBR – Moving-Bed Bio-Reactor Process MBR – Membrane Bio-Reactor System MCUD – Ministry of Construction and Urban Development MEGDT – Ministry of Environment, Green Development and Tourism MNS – Mongolian National Standard MoMo – Integrated Water Resources Management for Central Asia: Model Region Mongolia NGO – Non-Governmental Organization NO2 – Nitrogen Dioxide PCB – Polychlorinated Biphenyl PCU – Public Complaints Unit PIU – Project Implementation Unit PM – Particulate Matter PMU – Project Management Unit POP – Persistent Organic Pollutants PPE – Personal Protective Equipment PSC – Pr oject Steering Committee PSG – PUSO Support Group PUSO _ Public Utility Service Organization RCAG – Research Center of Astronomy and Geophysics of the Mongolian Academy of Sciences SE – Supervising Engineer SFIA – State Professional Inspection Agency SGUBTD – Southeast Gobi Urban and Border Town Development SNC – Second National Communication SO2 – Sulfur Dioxide SOx – Sulfur Oxides SPS – ADB Safeguard Policy Statement UNEP – United Nations Environment Program UNFCCC – United Nations Framework Convention on Climate Change WCS – World Conservation Society WFPF – Water Financing Partnership Facility WHO – World Health Organization WWF – World Wildlife Fund WEIGHTS AND MEASURES oC – degree Celsius dB – Decibel km – Kilometer kWh Kilowatt hour m – Meter NOTES In thО rОport, “$” rОfОrs to US Нollars. This initial environment 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 bО prОliminary in naturО. Your attОntion is НirОctОН to thО “tОrms of usО” sОction of this wОbsitО. 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. CONTENTS I. EXECUTIVE SUMMARY .......................................................................................... 1 A. INTRODUCTION AND PURPOSE .................................................................................... 1 B. IMPACT, OUTPUT, OUTCOMES, SAFEGUARD CATEGORIZATION ...................................... 2 C. PROJECT BENEFITS .................................................................................................... 2 D. ADVERSE IMPACTS AND MITIGATION MEASURES .......................................................... 2 E. CONSULTATION, INFORMATION DISCLOSURE, GRIEVANCE REDRESS MECHANISM (GRM) . 5 F. RISKS AND ASSURANCES ............................................................................................ 5 G. CONCLUSION ............................................................................................................. 5 II. POLICY, LEGAL AND ADMINISTRATIVE FRAMEWORK ...................................... 7 A. MONGOLIA ENVIRONMENTAL POLICY AND LEGAL FRAMEWORK ..................................... 7 1. Legal Framework ................................................................................................................................ 7 2. Environmental Policy Framework .................................................................................................... 8 3. Environmental Institutional Framework ........................................................................................... 9 4. International Environmental Commitments ................................................................................... 11 5. Environmental Impact Assessment Legal Framework and Procedures................................... 12 6. Mongolian EIA Report ...................................................................................................................... 14 B. MONGOLIA POLICY & STRATEGY IN URBAN WATER AND WASTEWATER SECTORS ........ 14 1. Urban Sector Strategy ..................................................................................................................... 14 2. Water and Wastewater Sector Strategy ........................................................................................ 15 3. Urban Environmental Policy and Strategy .................................................................................... 16 C. APPLICABLE MONGOLIAN ENVIRONMENTAL STANDARDS ............................................. 16 D. APPLICABLE ADB POLICIES, REGULATIONS AND REQUIREMENTS ................................ 24 III. DESCRIPTION OF THE PROJECT ....................................................................... 26 A. PROJECT RATIONALE ............................................................................................... 26 B. EXISTING WASTEWATER TREATMENT FACILITIES ......................................................... 26 C. PROJECT OUTPUTS .................................................................................................. 27 D. OUTPUT 1: MODERN WWTPS IN AIMAG CENTERS ..................................................... 28 1. Wastewater Treatment Process Components ............................................................................. 28 2. Wastewater Treatment Process – Key Features ......................................................................... 29 E. OUTPUT 2(A): INSTITUTIONAL REFORM AND CAPACITY BUILDING ................................. 31 F. OUTPUT 2(B): PROJECT MANAGEMENT SUPPORT ....................................................... 31 G. WATER SUPPLY AND WASTEWATER PROJECTIONS ..................................................... 38 H. IMPLEMENTATION ARRANGEMENTS ........................................................................... 39 I. PROJECT OPERATION AND MAINTENANCE ................................................................. 39 J. PROJECT AREA OF INFLUENCE, PROJECT IMPLEMENTATION SCHEDULE ....................... 40 IV. DESCRIPTION OF THE ENVIRONMENT (BASELINE) ......................................... 42 A. URBAN FORM, SOCIO-ECONOMIC CONDITIONS ........................................................... 42 B. PHYSICAL CONDITIONS WITHIN THE PROJECT AREAS.................................................. 47 1. Location, Topography, Geology and Soil ...................................................................................... 47 2. Climate ............................................................................................................................................... 54 3 3. Hydrology, Surface Water Quality .................................................................................................. 56 4. Air Quality .......................................................................................................................................... 57 5. Acoustic environment....................................................................................................................... 60 C. ECOLOGICAL AND PHYSICAL CULTURAL RESOURCES WITHIN THE PROJECT AREAS ........ 61 1. Protected Areas and Endangered Species .................................................................................. 61 2. Flora and Fauna at project sites ..................................................................................................... 63 V. ALTERNATIVE ANALYSIS ................................................................................... 68 A. NO ACTION ALTERNATIVE ......................................................................................... 68 B. LOCATION ALTERNATIVES ......................................................................................... 68 C. WASTEWATER TREATMENT PLANT OPTION ALTERNATIVES ......................................... 68 VI. ANTICIPATED IMPACTS AND MITIGATION MEASURES ................................... 80 A. ENVIRONMENTAL IMPACT SCREENING ....................................................................... 80 B. POSITIVE IMPACT AND ENVIRONMENTAL BENEFITS ..................................................... 80 C. IMPACTS ASSOCIATED WITH PROJECT LOCATION, PLANNING AND DESIGN ................... 80 D. ENVIRONMENTAL IMPACT AND MITIGATION MEASURES DURING CONSTRUCTION .......... 83 E. ENVIRONMENTAL