Environmental Assessment Framework for Shanghai Urban Environment Project Financed by World Bank Adaptable j SCANN'dD FILE COPY rccesion No. BOX No. N DATE Log # 1. Background and Strategic Considerations 4jiaIPflai9 o WA r rPTF FSW COJRg AdM Nor The Shanghai Municipal Government (SMG) has adopted a sustainable development strategy to explicitly link continued environmental improvement with the city's long-term economic growth in its effort to become an international economic, trade, and shipping center, and to become a sustainable, global and competitive City-Region. In order to meet its environmental objectives and implement the strategy, SMG has established a core program of activities and billions of RMB investments that it considers to be the top priority and requested the World Bank's support over the next 5 to 10 years via a series of Adaptable Program Loans (APLs). The successful implementation of the ambitious urban environmental management strategy would not only provide sustainable conditions for the rapid economic expansion in Shanghai and improve urban and environmental infrastructure to better serve its citizens and protect the environment, but also set a model of concurrent economic development and environmental protection and turning a good environmental performance into competitive advantages for other urban areas throughout China. It would have major demonstration effects to others that investments in the environmental improvement would lie the foundation for attracting domestic and foreign investment and for fostering long-term, sustained economic growth. The proposed APLs is to help SMG in the following aspects: * implement the urban environmental improvement goal of its development strategy and thereby help to ensure that economic growth takes place in an environmentally and institutionally sustainable manner; * provide major long-term environmental benefits to its millions of citizens and to the ecology of the Shanghai area; and * develop innovative policies, institutional reforms and financing methods that are needed to support the environmental goals and that will serve as models for concurrent environmental protection/improvement and economic growth for other parts of the country. The proposed series of APLs is designed on a City-Region wide perspective to improve environmental conditions through progressive development an1 an integrated approach. The current core program is divided into three phases, each is designed to give prominence to one aspect of the urban environmental strategy being pursued which contributes to and enables the pursuit of the next phase. In Phase 1, prominence is given to further developing the underpinnings and enabling conditions to pursue an integrated/regional approach to environmental issues. Investments included in this phase are those that are already known to be priority components of the integrated/regional approach (e.g., protection of upstream sources for water supply, expansion of shared landfills, complementary investments to increase efficiency of earlier investments). Further development of integrated/regional programs and related investments is expected to be continued during subsequent phases. Phase 2 will support implementation of programs that address environmental issues of greater complexity and respond to the deepening of SMG's work on the environmental agenda (e.g., solid-waste management program, bond finance and a municipal environmental fund, pilots to test approaches to upgrading urban environment services in poorer, underserved areas). Preparations for these Phase 2 activities are to be made during implementation of Phase 1. Phase 3 is the stage at which the Shanghai authorities hope to begin realizing the fruits of their efforts to build up to a sustainable financial system for urban environment services. It is anticipated that further improvements to the operations, management and finances of at least some urban environment service utilities over the course of Phases 1 and 2 will enable them to move beyond the municipal budget to finance their capital investments on acceptable terms, either on the capital markets and/or obtaining finance from a sustainable municipal environment fund. Complementing this is the development and establishment during Phases 1 and 2 of the supply side, including enabling capital market/finance arrangements and institutions and establishment of a municipal environment fund for project finance. Phase 3 also continues the deepening of the environmental agenda, moving on to begin pursuing some of the improvements in air quality potentially available from the increased supply of natural gas to the Shanghai metropolitan area. Despite major investments over the last decades in pollution control, and urban and environmental infrastructure and services, including three previous World Bank financed projects, the environmental conditions and municipal services in Shanghai are still of serious concern, and in some cases, deteriorating. Less than 60% o the wastewater and stormwater in the city is hygienically intercepted and disposed of and about 53% of municipal sewage flows are treated and safely disposed. In several sections of the Huangpu river including the upper reaches and urban sections, water quality cannot meet the applicable surface water quality standards designated for these areas and some even worse than the lowest standards, Category V indicating serious water pollution. The area sources from agricultural activities and major point source discharges from township and village industries and pig farms in the upper Huangpu area have not been effectively controlled threatening the water quality and ecosystem downstream and drinking water safety for millions of citizens in Shanghai. Municipal solid waste volume has been and will continue increasing while the existing sanitary landfill has only two years' capacity remaining. The existing capacity for sanitary and safety disposal of municipal solid waste cannot handle all the solid waste generated and random dumping of municipal solid waste with little engineering control still occurs around the city. Ambient air quality, particularly nitrogen oxides and dust participation, has also deteriorated during past few years. In addition, over 3 million urban residents are still living in very crowded conditions, with in adequate access to drinking water, sanitation and other municipal services, despite substantial progress during the last decade in upgrading of environmental and municipal infrastructure. The City is responding to local, regional and global environmental issues. SMG fully understands the highly complex and interrelated nature of the measures needed to address the urban environmental issues as well as the urgency for their implementation. A strategic framework including a series of environmental and urban upgrading programs for short- and long-term developments, based on innovative, ambitious and far-reaching policy themes, has been developed, adopted by SMG and included in the city's Master Plan and Tenth Five Year Plan. These programs represent a deepening of the environment and urban sectors development agenda, as they progress from the relatively straightforward issues in water supply and primary types of infrastructure for wastewater collection (where substantial progress has been achieved under the previous two World Bank financed projects) into more difficult, complex and integrated areas such as wastewater treatment, solid waste management and air quality improvement. The proposed APLs represent World Bank's continued support to SMG in its effort to achieve the ambitious environment improvement and urban upgrading objectives. The implementation of the APLs financed projects would improve the competitive advantage of Shanghai in the region and the world through improved urban environmental conditions, thus improving the quality of urban life within the municipality and the sustainability of its infrastructure. 3.2 Approach to and Objectives of EA Framework As APLs supported projects will be a series of progressive developments over a period of 5 to 10 years and not all the sites and specifics of activities and -hysical investments have been defined at once, a two-phased approach for EA is taken. A policy, methodology and general assessment framework (this Chapter) has been drafted during APL preparation and definition. Detailed and site specific environmental impacts assessments (EIAs) and environmental management plans (EMPs) will be prepared when physical investments of APL components have been defined or triggered during the different APL phases. The purpose of the EA framework is two folds: it provides a regulatory and policy framework and a methodology framework with which the detailed EA will be conducted for specific physical investments in APLs funded projects once they are defined; and it provides a generic assessment of potential impacts based on the types of the components which would be included in the APL projects in different phases. As such, the EA framework will provide a broad understanding of the nature and scale of the potential impacts from APL projects even though the project components may not be fully developed at the planning stage. During its design, the APLs financed Shanghai Urban Environment Project (SHUEP) has taken full consideration in order to avoid or minimize activities and land occupancy that would result in adverse impacts to the natural and socio-economic environments, and to support and argument those which would result in positive impacts. According to World Bank's OP4.01 and the relevant regulatory requirements of China, if a physical investment occurs in an APL component, an EA including preparation of EIA and EMP, would be a pre-requisite before the investment is approved by the state and/or municipal regulatory authorities (depending on the scale, nature and potential environmental impacts of the investments) and the World Bank. This EA will be initiated as early as possible in project processing and definition and be integrated closely with the economic, financial, institutional, social and technical analyses, as well as with the engineering design of a proposed physical investment. Many physical components in the APL supported SHUEP will be major infrastructure developments with profound impacts to social, economic andlor natural environments. The objective of the EA is to identify and determine the levels of these potential impacts at the project planning and design stage to ensure thc development will be environmentally sound and sustainable. More specifically, the EA is to: * Evaluate the project's potential environmental risks and impacts in its area of influence; * Examine project alternatives; * Identify ways of improving project selection, siting, planning, design, and implementation by preventing, minimizing, mitigating, or compensating for adverse environmental impacts and enhancing positive impacts; * Include the process of mitigating and managing adverse environmental impacts throughout project implementation. Preventive measures will be first considered and preferred over mitigatory or compensatory measures, whenever feasible; and * Identify the responsibilities for environmental management of implementation organizations during both construction and operation phases, and clarify their timeline and obligations. 3.3 Regulatory and Policy Framework The guiding principle of the Environmental Assessment (EA) Framework is the relevant state and municipal environmental laws, regulations, guidance and environmental and urban/regional development master plans and strategic goals of China and Shanghai, as well as the World Bank's Operational Policies (OP) 4.01 on Environmental Assessment, and other World Bank safeguards policies. More specifically, the applicable regulations in conducting, EAs for all physical investments in the APLs supported projects are: * Environmental Protection Law of PRC, December 1989; * Air Pollution Prevention Law of PRC, September 2000; * Water Pollution Prevention Law of PRC, May 1996; * Noise Pollution Prevention Law of PRC, October 1996; * Solid Waste Pollution Control Law of PRC, October, 1995; * Environmental Protection Management of Construction Project, State Council, January 1998; * Environmental Impact Assessment Technical Guides of SEPA, November 1996; * Notice on strengthening environmental impact assessment work in construction projects financed by international financial organizations" No. (1993) 324 of SEPA, State Planning Committee, Chinese Ministry of Finance and People's Bank of China; and * Shanghai Environmental Protection Regulations of Shanghai Municipal Government, December 1994. One of the major objectives of EAs for the physical investments in the APL SHUEP is to support and comply with the regional environmental plans and strategic environmental goals in Shanghai. SMG has set forth ambitious urban environmental strategy and targets through the Shanghai City Master Plan (1999-2020), the Tenth Five Year Development Plan (2001-2005), Shanghai Environmental Master Plan (-------) and Comprehensive Huangpu Riverside Redevelopment Program (2002-2010). Collectively through these plans and programs, SMG has set the following environmental goals: Ambient air quality - meet the ambient air quality standards suitable for living and business development in Shanghai urban area by 2005 and meet the same quality levels as in developed countries for major air quality indicators at the time by 2010; Surface water quality - basically eliminate black and stink pollutant plumes in main waterways in the city proper and halt the water quality deterioration in the suburb by 2005, and restore the desired functioning of water bodies and aquatic ecosystem including returning of fish in waterways in Shanghai over the long term; Noise - comply 100% with residential noise standards, 90% traffic noise standards, 90% stationary source noise emission standards in short term and 95% traffic noise standards and 100% stationary source noise emission standards over the lcing terms; Solid waste management - achieve 90% sorted collection for municipal solid waste from the urban area, 64% re-use and resources recovery, and 100% environmentally sound disposal of all municipal solid waste from the urban area through landfill, incineration, bio-treatment and integrated resources recovery, by 2005; Greening - over 6 m2 of public green area per capita, 12 m2 total green area per capita, 30% green area coverage in the urban area for the short term and over 10 m2 public green area per capita, 21 m2 total green area per capita and 35% green coverage in the urban area for the long term (2020); and 2 Huangpu riverside redevelopment - convert a total of 6.83 km of riverside area, stretched along almost all urban section of the river, from current warehouses, docks, and industrial land into financial, trade, residential, parks and tourist attractions zones and potential site for the EXPO 2010 which Shanghai is applying to host. Together with regulatory requirements and standards, the above strategic goals will be the basis for the EAs for APL components. The EAs are to ensure that the APL supported activities will contribute achieving and comply with the environmental and urban development goals. Those to the contrary will be identified and analyzed in the EAs so that they can be avoided (the first choice), minimized or otherwise mitigated to acceptable levels. The EAs will also be guided by the World Bank ten safeguards policies. All the safeguards policies will be undertaken in a preliminary screening and, where triggered, applied in full assessment. These safeguards policies and the triggers for applications are summarized in Table 3-1. Table 3-1 World Bank Safeguard Policies Policies Code Objective Trigger Environmental OP4.01 To ensure that Bank-financed projects if a project is likely to have assessment are environmentally sound and potential (adverse) sustainable, and that decision-making nvironmental risks and is improved through appropriate [mpacts in its area of analysis of actions and of their likely influence. environmental impacts Forestry OP4.36 To reduce deforestation, enhance the By forest sector activities environmental contribution of nd other Bank sponsored forested areas, promote afforestation, interventions which have reduce poverty and encourage the potential to impact economic development. ;ignificantly upon forested areas. Involuntary OD4.30 * Avoid or minimize involuntary Relocation or loss of resettlement OP4.12 resettlement where feasible, shelter; (draft) exploring all viable alternative Loss of assets or access to project designs. assets; * Assist displaced persons in Loss of income sources or improving their former living means of livelihood, standards, income earning capacity, whether or not the and production levels, or at least in affected people must restoring them. move to another location * Encourage community participation in planning and implementing resettlement * Provide assistance to affected people regardless of the legality of title of land. Indigenous 0D4.20 e Ensure that the development "There are indigenous people process fosters full respect for the --peoples in the project dignity, human rights and cultural area, uniqueness of indigenous peoples. Potential adverse impacts * Ensure that they do not suffer on indigenous peoples are adverse effects during the anticipated, development process. Indigenous peoples are * Ensure that indigenous peoples among the intended receive culturally compatible social beneficiaries. and economic benefits.____________ Policies Code Objective crigger Safety of dams 0P4.37 New dams: to ensure that ik project involving experienced and competent ,:onstruction of a large dam professionals design and supervise (15 mn or higher) or a high construction; the Borrower adopts and hazard dam and a project implements dam safety measures for which is dependent upon an the dam and associated works. _. Xisting dam, or dam under Existing dams: to ensure any dam construction (DUC). upon which the performance of the project relies is identified, a dam safety assessment carried out, and necessary additional dam safety measures and remedial work are ___________implemented. Pest OP4.09 Promote the use of biological or "Procurement of pesticides management environmental control methods and is envisaged (either reduce reliance on synthetic directly through the chemical pesticides. In Bank- project, or indirectly financed agricultural operations, through on-lending, co- pest populations are normally financing, or government controlled through Integrated Pest counterpart funding). Management (PM) approaches. In The project may affect Bank-financed public health pest management in a way projects, the Bank supports that harm could be done, controlling pests primarily through even though the project is environmental methods. not envisaged to procure s Ensure that health and pesticides. This includes environmental hazards associated projects that may (1) lead with pesticides are minimized. The to substantially increased procurement of pesticides in a pesticide use and Bank-financed project is contingent subsequent increase in on an assessment of the nature and health and environmental degree of associated risk, taking risk, (ii) maintain or into account the proposed use and expand present pest the intended user. management practices As necessary, strengthen capacity of that are unsustainable, not the country's regulatory framework based on an PM and institutions to promote and approach, and r pose support safe, effective and significant health or environmentally sound pest environmental risks. management. Cultural OPN 1 B. * To assist in their preservation, and ,y projects which, prima property 03 to seek to avoid their elimination. facie, entail the risk of OP4.11 * Assist in the protection and Jamaging cultural property (draft) enhancement of cultural properties (e.g. any project that encountered in Bank-financed includes large scale projects. -xcavations, movement of ,arth, surficial Znvironmental changes or demolition) Policies Code Objective Trigger Natural OP4.04 The Bank supports the protection, By any project (including habitats maintenance and rehabilitation of subproject under a sector natural habitats in its project investment or intermediary financing, as well as policy dialogue loan) with the potential to and analytical work. The Bank :ause significant conversion supports, and expects Borrowers to (loss) or degradation of apply, a precautionary approach to natural habitats whether natural resource management to directly (through ensure opportunities for zonstruction) or indirectly environmentally sustainable (through human activities development induced by project). Project in sP4.60 To ensure that projects in disputed if the proposed project will disputed area areas are dealt with at the earliest I)e in a "disputed area." possible stage: so as not to affect Consult LEG for advice on relations between the Bank and its identifying disputed areas) member countries; to affect relations "Is the Borrower or between the Borrower and borrowers involved in any neighboring countries or other disputes over an area with claimants; any of its neighbors? and not to prejudice the position of "dIs the project situated in a either the Bank or the countries disputed area; concerned. "Could any component or sub-component financed or likely to be financed as part of the project situated in a disputed area? Project in OP7.50 To ensure that Bank-financed projects Any river, canal, lake or international affecting international waterways similar body of water that waterways would not affect: forms a boundary " Relations between the Bank and its between, or any river or Borrowers and between states body of surface water that (whether members of the Bank or flows through, two or not), and more states, whether Bank a the efficient utilization and members or not protection of international Any tributary or other waterways. body of surface water that is a component of any waterway described under (a); and Any bay, gulf strait, or concerned._ * channel bounded by two or more states, or if within one state recognized as a necessary channel of communication between the open sea and other states, and any river flowing into such waters. In this APL supported SHUEP, except Projects in International Waterways, Projects in Disputed Areas, and Safety of Dams which will not be relevant and thus be applied, all other safeguards policies will at least go through a screening arid, where triggered by the above thresholds, full application during the EAs. 3.4 Description of APLs Programs The APLs supported program will be located in Shanghai Municipality including the core urban area or city proper and the upper Huangpu catchment which is the principal source of water for the city. The core urban area had a population of 8.7 million in 1999 with a density of 7,087 persons per square kilometer while the suburban districts and counties including the upper Huangpu area had a population of 4.4 million and density of 867 persons per square kilometer. Objectives, timeframes and components in the three phases of APL programs are: Phase 1 (2002-2007, Developing underpinnings and enabling conditions to pursue integrated/regional approach to urban environment issues): * facilities for the collection, treatment and disposal of domestic wastewater in the urban area of Shanghai; * environmentally secure municipal solid and non-hazardous industrial waste disposal facilities in the urban area; * urban environmental infrastructure services upgrading in underserved areas and preserving valuable heritage elements and communities in the historic Old City, which is facing strong pressure for redevleopment; * urban environment improvement, increasing more city open space; * protection of water resources in the Upper Huangpu Catchment, through providing facilities and financing mechanisms for treatment and disposal of district wastewater and animal wastes; and * strengthening of institutions with responsibility for environmental management including executive capacity building. Phase 2 (2003-2008, Deepening the urban environment agenda and implementing the programs prepared under Phase 1): * urban wastewater management; * urban solid waste management; * urban environmental infrastructure services upgrading in underserviced area; * urban environment improvement, increasing more open space in urban areas; * Upper Huangpu catchment environmental management; * air pollution management pilot program; and * institutional and executive management strengthening. Phase 3 (2006-2010, beginning to reap the benefits of the past efforts): * environmental infrastructure improvements in the Upper Huangpu catchment; * rehabilitation of antiquated wastewater infrastructure; * redevelopment of depressed and derelict areas, containing a-L high proportion of low- income communities and large industrial communities, including housing; * first phase investments to address agricultural pollution control; * air quality management improvement investments; and * institutional and executive management strengthening and training. 3.5 General Environmental Impacts As a framework, environmental impact identification and assessment are of a generic, qualitative nature and not site and/or component specific. However, in general, the construction and operation of the APLs financed project components are expected to have the following positive and adverse impacts to the socio-economic and natural environments. Water Quality The implementation of APL financed SHUEP will significantly reduce sewage discharge into the upper Huangpu River, through the city reaches and to the Yangtze river mouth, as well as Huangpu River tributaries. Together with the Tenth Five Year Plan, SHUTEP is expected to significantly contribute to reducing the pollutant load to the Huangpu River through sewage interception, conveyance from urban center to areas of less sensitivity and more assimilative capacity, and centralized treatment. As a result, Huangpu River quality is expected to meet Category IV standards in the middle to lower reaches and Category III in the upper reaches. The project will also contribute to the elimination of below Category V water bodies in all major waterways in Shanghai. While largely beneficial, SHUEP does pose potential adverse impacts to water quality. Large volumes of wastewater will be collected and, following the treatment, discharged in a single location. While the effluent will meet the discharge standards, the large volume of the discharge will place substantial pollutant loads on the receiving water body as pollutant concentrations in the treated effluent can still be several times higher than the desired surface water quality standards. The area of influence and levels of such impacts will depend to a large extent on the assimilative capacity and sensitivity of the receiving water and adjacent areas. Therefore, siting of wastewater treatment plants and discharge outfalls based on hydrodynamic modeling and assessment of impacts not only on the near field from the outfall but also on the entire area of influence will be required each time a wastewater treatment plant is to be included in APLs funded programs. Because of the hydraulic conditions and existing water quality of Huangpu river, discharges of wastewater treatment effluent to Huangpu river could have adverse impacts on water quality extended to the downtown Shanghai including some of the water purification plants intakes, particularly in the undesirable scenarios such as dry seasons and emergency conditions requiring wastewater bypass. Other potential impacts to water quality include solid waste hauling by barge, sludge disposal, solid waste landfill leachate infiltration and drainage runoff, pesticide usage in green and landscaped areas, water front construction activities, etc. These adverse impacts can be controlled through careful evaluation and selection of alternative sites, impacts assessment, and incorporation of appropriate mitigation measures into engineering designs. Solid Waste Management By 2010, Shanghai plans to achieve 98% source separation of municipal solid waste, 20% recycling, 95% collection through compacted container tiucks, 100% disposal in a sanitary and engineering controlled manner, and 70% of night soil collected and disposed of through the municipal sewer system and sewage treatment facilities. SHUEP will be implemented in the same period and its municipal solid waste components will help in achieving these goals. However, the operation of landfill would generate leachate which, if not appropriately contained, collected and treated, could impacted the groundwater at the landfill sites. There could be other adverse impacts of the solid waste handling and disposal, including nuisance odor, flies, landfill gas, littering, and pest management. Air Quality Ambient air quality is a high priority issue for SMG. Air quality improvement components have been included in the later phases of SHUEP. These will include centralized space heating, and cleaner fuel such as compressed natural gas (CNG) for city buses and taxi, etc. Other components throughout SHUEP will also contribute to the improvement of ambient air quality in Shanghai, such as landscaping and greening. Construction of virtually all APL funded physical works will have impacts on air quality from such sources as air-borne dust. Such impacts are expec ted to be short-term and localized and can be controlled to acceptable levels with appropriate mitigation measures. Wastewater operation such as grit removal, sludge disposal, solid waste collection, transfer and disposal can also generate nuisance odor affecting the immediate surrounding areas. Ecological Conditions The urban environment improvement (greening and landscape) components in SHUEP will help improve the urban eco-environment and the living conditions. The benefits will primarily be demonstrated in the following areas: * Alleviation of the "heat island" effect in the micro-climate of the project areas. The high population density, dense buildings and development, and industrial, commercial, transport and other major city activities are all among the cause of the serious "heat island" effect in urban Shanghai. Creation of more green areas and large open spaces, especially large trees will be used to introduce micro-climates on the project sites and in the immediately adjacent areas. Studies have shown that large green and open space is capable of creating a micro-climate with lowered the area ambient air temperature by approximately 0.60C. * Improvement of urban scenery. The greening and landscaping will have positive visual impacts in the urban area largely dominated by concrete and glass towers. Old Town upgrading, cultural property preservation and industrial community redevelopment will improve the environmental conditions in these areas. * Air quality and noise control. Plants are known to be able to reduce air borne dust, and absorb certain air contaminants. Thick trees and woodland can also help attenuate urban noise. Land Acquisition and Resettlement A certain amount of land will be permanently occupied by physical works in SHUEP. Houses on the land will be demolished and residents, relocated and resettled. Most of the land is urban land or sterile land in the suburbs already reserved for infrastructure projects. The redevelopment of these land, particularly those for greening, landscape, Old City upgrading and industrial community redevelopment will help improve the impacts areas, including reduction of population density, increase in land value, and neighborhood environment improvement. The residents and organizations on the project acquired/occupied land will be relocated mostly to the outer part or suburb of the city. The impacts will be mixed. The residents will lose their current convenience of being in the urban center., such as public transport network, shopping, education, entertainment, and access to other services and institutions typically located in the downtown areas. However, the relocated residents will enjoy much improved living conditions compared with their current conditions. Most of the project affected residents now live in underserviced areas of the city with very crowded housing and in adequate municipal services such as water supply and plumbing. According to the relevant guidelines and resettlement action plans, The relocated housing will provide up to four times of more living space than their current residences and the new housing will be fully equipped with water supply and sanitation, situated in a better surrounding environment and ambient surrounding conditions such as much more green and open spaces, low noise, better air quality, less traffic congestion, etc. The new areas will also be provided with public transport, school, hospitals, commercial areas and other urban infrastructure and services. Cultural Properties One of the objectives of SHUEP is the preservation of cultural properties through Old City upgrading and cultural property preservation components. The implementation of the program will provide better protection of the cultural properties. However, cultural property preservation and upgrading components require special assessment by cultural heritage professionals and archaeologi ,t. Any mis-design, even with the intention of preservation, or inappropriate construction activities could result in potential damage to the valuable historical and cultural sites or architecture. Professional archaeological screening will also be needed in the physical works sites to ensure SHUEP projects will not impact currently unknown archaeological and other cultural relics potentially existing on the project sites. Policy and Institutional Reform Policy and financial reform, capacity building and institutional strengthening will be an integral part of SHUEP and critical to its success. Through these initiatives, SHUTEP will aim to achieve: * Substantial corporatization of municipal services to ensure urban environment infrastructure will operate efficiently and sustainably; * Establishment of reasonable and affordable service tariff system for water and municipal solid waste so that the municipal services will eventually be financially self-supporting; * Effective water conservation program to reduce water usag;e rates and preserve the natural resources; * Private participation in infrastructure project financing in order to widen funding sources, optimize capital structure in urban environment projects and balance risks between public and private parties in infrastructure development; * Successful issuance of municipal bonds - another non-government funding source for infrastructure project funding; * Establishment of an independent price setting mechanisms for municipal services; and * Waste management mechanisms, including permitting and permit trading, solid waste management, wastewater treatment plant operations, etc. Compatibility with Shanghai's Master Plan and Other Development Programs The overall objectives and definition APLs project fully comply with the Shanghai's development strategy, economic reform and re-structuring and policy themes. The components proposed for APLs funding over the next eight years support the implementation of specific items in the Shanghai's Master Plan in urban infrastructure development and upgrading in areas of sewerage systems, environmental sanitation, landscape, greening, historical site preservation, and improvement in policy, planning and implementation mechanisms. The APLs financed projects are also in full compliance with the objectives and physical investments of other relevant city plans in Shanghai such as the Tenth Five Year Plan and the Comprehensive Redevelopment Program for the Huangpu riverside. 3.6 Methodology Framework When physical investments of project components for each phase of APLs are being defined, a site/component specific EA will need to be conducted to identify and quantitatively evaluate potential impacts in greater details, to analyze alternatives, and to plan measures for mitigating potential adverse impacts. The EA for each APL phases will be conducted through the following tasks: Project Analysis The objective of a project analysis is to identify pollutant sources, quantity, discharge loads and discharge routes through analysis and understanding of proposed APLs funded physical investments. As such, the analysis will also determine the key factors which could potentially bring in adverse impacts of the road to the surrounding biophysical and socio-economic environments, and bridge construction and operation, help determine the feasibility of various mitigation measures and provide a basis for the impact assessment and mitigation planning. The methodology used for the project analysis will include collection and review of available information and existing data, particularly APLs components planning, feasibility and other project study documents, analogy with similar operating projects elsewhere, for the types and intensity of pollution, and site investigation as necessary. Environmental Baseline Understanding of environmental baseline in the project region and project sites is critical to analyze alternative sites and evaluate the potential impacts in the later stage of the EA. The baseline conditions include existing air quality, water quality and hydrology, soil and hydro-geology, flora and fauna, acoustic conditions, and sensitive receptors such as drinking water sources, residential areas, natural habitats, cultural properties, etc. A complete inventory of sensitive receptors in the project area are important as they will be the focus of impact assessment and mitigation planning. Environmental baseline data are obtained through collection of historical data, supplemented by environmental monitoring programs designed specifically for the project. Detailed investigations of the project sites and the surrounding areas are essential for understanding environmental baseline. Water Quality Impact Assessment Two and/or three dimensional mixing and degradation models are the most important tool to establish necessary knowledge of the water fluxes and r:o predict the impact of wastewater discharges following the treatment to the surface water bodies, basically Huangpu river or Yangtzi river estuary. The water quality model will be primarily used for assessment of project impact. The model will be applied for both high and ebb tides, during the dry season and during the emergency conditions when the wastewater treatment must be shut down and wastewater will be bypassed without treatment. Water impact assessment must be closely related to the conditions and sensitivity of the receiving water. Nature of the river side land uses, future development plan of the riverside, functioning and water quality category designation of the receiving water bodies, locations of drinking water intakes and fish habitats, visual impacts and environmental aesthetics, etc. Sludge disposal is probably single largest adverse environmental impact a largely beneficiary wastewater treatment project can generate. Impact assessment for wastewater treatment plants must include detailed assessment for sludge handling and disposal, including sludge generation, thickening and dewatering, storage, hauling, and disposal. The EA must ensure that any proposed sludge disposal option be technically mature and feasible, and economically sustainable. Noise Impact Assessment Noise impact will be predicted by using models which have been proven fit to the project site conditions. The results of the noise prediction modeling will be applied to determine the potential impacts of the project construction and operation in comparison with the applicable standards with a focus on sensitive receptors. The modeling results are particularly relevant as a reference for development of mitigation measures. Air Quality Impact Assessment Air emissions sources from various project facilities in both construction and operation stages will be identified. The impact such emissions will be assessed through dispersion modeling to determine the potential adverse impacts on the areas immediately surrounding the project areas, particularly the sensitive receptors such as schools and residential areas, as well as regional impacts. Biological Systems and Scenery Impact Assessment The scope of the impact assessment for biological systems and scenery will include all plants and major scenery within 200 m of proposed sites. Impacts to trees and greens areas will be determined based on the potential damages or removal/occupation. The scenery assessment will be mostly conducted through visual observations. Construction Phase Impact Assessment Construction phase impact assessment will be conducted based on the understanding of construction activities for APL projects. For many components such as interception pipelines, sewer network upgrading, urban environment improv.ment through creation of more green and open space and cultural property preservation. construction is the main activities which could result in adverse impacts and therefore is the focus of the impact assessment. The potential impacts will include, but not limited to: * Air quality primarily from airborne dust caused by excavation, demolition, materials handling and increased traffic; * Noise from construction machinery and construction trucks, particularly at night and other sensitive time periods near the sensitive receptors; * Water quality from construction camps discharges and machinery or construction vehicle washing; In- and near water construction could also impact the waterbodies potentially through increased suspended solids, oil and grease and impacts on hydrology; * Impacts on traffic, particularly in the congested areas in the urban centers, as many of the construction activities would require temporary occupation of urban roads, forced them to semi- or completely closed during construction; and * Construction materials exploration and transportation, such as sand, gravel and earth, spoiled materials disposal, construction camps, traffic disruption, site safety, hazardous materials handling, etc. Safeguards Policies Screening and Assessment The EA will include considerations of the World Bank's ten safeguard policies. Those which are likely the issues with SHUEP will undertake a screening and, if triggered, a full assessment. The likely application of safeguards policies in the APL funded project components are: Full Application * OP/BP/GP4.01, Environmental Assessment; and * OD4.30, Involuntary Resettlement. Screening and if triggered, full application A screening will first be conducted for the following policies. If the screening results exceed the thresholds, a full assessment will be triggered. If the screening results do not, the application of the particular policies in this EA will be terminated: * OP/GP4.36, Forestry; * OP/BP4.04, Natural Habitats; * OPN1 1.03 and soon to be OP4. 11, Cultural Property; and * OP4.09, Pest Management. Not applicable The APL funded project components do not involve issues related to the following safeguards policies and they will therefore not applied in the EA. * Safety of Dams (OP/BP4.37); * Indigenous People (OD4.20); * Projects in Disputed Areas (OP/BP/GP7.60); and * Projects on International Waterways (OP/BP/GP7.50). Mitigation Planning Mitigation planning will be based on the result of the impact assessment. The overall objective is to avoid, reduce or minimize the adverse impacts to the acceptable levels. The general criteria for acceptable impacts will be compliance with applicable state and local discharge and/or ambient environmental quality standards. The mitigation measures will be developed for three stages of the project: * Design stage: those which need to be incorporated into project engineering design, such as noise mitigation, wastewater treatment and soLd waste landfill design modifications, etc. * Construction stage: those which will be applied in the construction stage such as mitigation measures to be implemented by contractors at the construction sties; and * Operation stage: those which will be implemented in operation stage such as those to be implemented by the wastewater and solid waste management operation company. The mitigation measures will cover air, noise, water, biological systems, and socio- economic systems, and will be specific and detailed enough for implementation and supervision. Public Consultation There will be at least two rounds of public consultation: the first round will be carried out at the EA terms of reference stage to inform the public of the project and solicit public concerns and opinions. The second stage will be at the draft EA report stage to inform the public of the results of the assessment, including assessment of issues raised by the public in the first round of consultation. Also in the second round, the mitigation measures planned for the project will be communicated to the public, focusing on those raised by the public, to determine whether the affected and concerned public is satisfied with the mitigation proposed. The major methods of public consultation will include: * Public meetings/hearings; * Interviews with selected public members or institutions; and * Public opinion polls. The public consultation will focus primarily on those groups or individuals who will be directly affected by the project construction and operation. More specifically, these include schools, urban residences, rural villages, shops, institutions/office towers, and factories within the project impacted areas. To reach the affected public, public notice for the consultation process will be distributed or advertised to ensure those who are concerned and wish to express their opinions on the environmental issues of the project have the opportunities to express their thoughts. In addition, EA TOR, draft report and final report, when finish-,d, will be released and displayed in public accessible places for public review. Public consultation and information release are a continued process and the EA team will maintain such a process throughout the EA process as well as recommending project executing agencies to continue the consultation process during project construction and operations. Environmental Management Planning Based on the impact assessment results and mitigation planning of An environmental management plan will be developed for APL funded projects covering both the construction and operation stages. The environmental management plan will have, but not limited to, the following key components: * Environmental management organizations and their specific responsibilities in APL project development; * Key impact mitigation measures; * Environmental monitoring programs for both construction and operation stages, focusing on monitoring of the receiving environment of the project; * Environmental training; and * Cost estimate for environmental management. Besides a chapter in the EIA report, a stand alone Environmental Management Plan (EMP) will be prepared as part of the EA documentation for each of the APL projects.