INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE I. Basic Information Date prepared/updated: 05/27/2005 Report No.: 32460 1. Project Statistics Country: Lao People's Democratic Project ID: P090693 Republic Project Name: Lao Environment and Social Project Task Team Leader: Patchamuthu Illangovan Estimated Appraisal Date: May 24, 2005 Estimated Board Date: June 30, 2005 Managing Unit: EASES Lending Instrument: Specific Investment Loan Sector: Central government administration (50%);Forestry (50%) Theme: Environmental policies and institutions (P) IBRD Amount (US$m.): 0.00 IDA Amount (US$m.): 4.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: BORROWER/RECIPIENT 0.80 0.80 Environmental Category: F - Financial Intermediary Assessment Simplified Processing Simple [X] Repeater [] Is this project processed under OP 8.50 (Emergency Recovery) Yes [ ] No [X] 2. Project Objectives The Project Development Objective (PDO) is to strengthen the management of environmental and social issues in the use of natural assets in Lao PDR for enhancing quality of growth and reducing poverty. Specifically, the project aims to: a. Strengthen institutions and instruments for assessment, monitoring and compliance for environmental and social sustainability, and broaden the constituency for environmental change; b. Invest in on-the-ground environmental improvement activities identified in the national Growth and Poverty Reduction Strategy (NGPES), with emphasis on biodiversity conservation, community environmental management and livelihoods enhancements; and c. Operationalize the Lao Environment and Conservation Fund (LECF) to become a permanent entity that is eligible to use NT2 revenues for priority environmental protection activities by developing two windows that will serve as models for the LECF operations and potentially become permanent structures within LECF. 3. Project Description The project is proposed as an IDA Development Grant. Its primary objective is to contribute to long-term environmental protection and social development objectives of the country through capacity building efforts both at the national and local levels. The Government of Lao PDR (GOL) is introducing policies, legislations and plans to replicate NT2 experiences nationally, and their implementation emerges as the main focus of the proposed Project. The Project?s geographical focus has a mix of both national and provincial coverage, with the three central provinces ? Bolikamxay, Khammouane, and Savannakhet ? being the main focus target of the project. The project comprises of three components as outlined below: a. Component 1 ? Policy Implementation and Capacity Enhancement (PICE; US$ 1.91 million): This component will strengthen at the national, provincial, and district levels: (i) environmental and social safeguards policy formulation and implementation; (ii) assessment, and monitoring of compliance; (iii) integrated river basin management; (iv) hydropower sector sustainability; and (v) resettlement management; and (vi) environmental education and awareness. b. Component 2 ? Conservation and Community Investments (CCI; US$ 1.74 million): This will support initiatives to strengthen conservation practices and livelihood improvement activities in and around protected areas (building on the Social and Environment management Framework and First Operational Plan (SEMFOP) experiences in Nakai Nam Theun), and to improve localized environmental conditions through partnership activities of communities, local governments and small businesses, in Central Lao. c. Component 3 ? Management and Monitoring Support (US$ 1.15 Million) will support the following activities: the day-to-day operation of the LECF, specifically PICE and CCI Windows; marketing and business development of the Windows to assist beneficiaries to prepare sub-grants; and developing and implementing a monitoring, evaluation and dissemination process to assess performance of the two windows. The Project will provide sub-grants to finance activities submitted by national, provincial and district government agencies and other eligible beneficiaries such as community groups, universities, mass organizations, civil society organizations, international non-governmental organizations. The type of activities include: (i) capacity building grants for Component 1 which will include studies, surveys, workshops, training, preparation of technical guidelines, monitoring and assessment of environmental conditions, etc; and (ii) grants for protected area management and community environmental management activities. In addition, the Project will also support the sourcing of international expertise to assist in the implementation of some tasks for Component 1 activities. 4. Project Location and salient physical characteristics relevant to the safeguard analysis A priori, there is no specific physical location for the Project activities, as these will be selected and implemented on an open menu basis throughout the course of the project. Activities involving construction and/or land use changes will take place principally under Component 2 and will be concentrated in and around protected areas in central Lao. Activity locations will therefore typically be in close proximity to important natural habitats and in areas inhabited by ethnic minorities and other relatively isolated and vulnerable groups. Despite the sensitivity of these locations, significant negative impacts are not anticipated as Component 2 activities will be selected specifically to improve the management of natural habitats and the livelihood security of the people dependent on them. 5. Environmental and Social Specialists on the Team Mr Anthony J. Whitten (EASEN) Mr Svend Jensby (EASSD) Ms Nina Bhatt (EASSD) Mr Chaohua Zhang (EASSD) 6. Safeguard Policies Triggered Yes No Environmental Assessment (OP/BP 4.01) X Natural Habitats (OP/BP 4.04) X Forests (OP/BP 4.36) X Pest Management (OP 4.09) X Cultural Property (OPN 11.03) X Indigenous Peoples (OD 4.20) X Involuntary Resettlement (OP/BP 4.12) X Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: No large-scale, significant or irreversible impacts are anticipated. Social and environmental impacts of sub-grants are expected to be positive as the objectives and eligibility criteria for sub-grants are established to support improved environmental management . Project benefits have been defined in the Results Framework and Monitoring. Possible adverse impacts which might occur as a result of the sub-grants are most likely related environmental impacts, land acquisition/compensation, and resource restriction (Indigenous People). Environmental Impacts: The nature and scale of sub-grants, are such that the vast majority will result in no adverse environmental impacts. In some case only minor and easily mitigable negative environmental effects may occur, in particular related to the community grants (i.e., those associated with small construction works and minor natural habitats conversion issues). Although the cost of the subprojects will limit the size of infrastructure projects, in some cases, municipal environmental infrastructure such as small wastewater treatment plants or trash disposal facilities may be proposed. If applicable, sub-grant agreements will include conditions and mitigation measures to address all possible adverse impacts. These would focus on sensible site selection criteria, good construction practices and diligent management practices in the operational phase for different types of sub-grants. In addition, construction contracts will include common- sense environmental clauses, with specific expected performance standards relating to environmental protection. These include measures to ensure that erosion is controlled and waste materials are disposed of in appropriate manners. Land Acquisition and Resettlement: No significant resettlement or land acquisition is anticipated. No involuntary resettlement will be allowed and the project will not fund the acquisition of land. However, there may be some land acquisition or voluntary resettlement based on voluntary contributions or with compensation provided by the village. In such cases, project facilitators will ensure that affected families agree with the proposed arrangements, as discussed and recorded in open village meetings. Indigenous Peoples: It is acknowledged that the socio-economic and ethnic diversity of Lao PDR and the traditionally centralized development planning processes are key challenges for designing and implementing any community development component successfully. Experiences from the SEMFOP (Nakai Nam Theun watershed) will be used in designing sensible strategies for appropriate local decision making processes that would ensure the participation of vulnerable groups such as ethnic groups and women. There may also be instances that sub-grants may affect indigenous peoples or their ancestral domains. As such, concerns of ethnic groups are met primarily through the design of the project itself, since the demand-driven and participatory design features aim to allow local decision-making over the use of development funds through a facilitated and inclusive process. In addition, other measures support the involvement of ethnic groups, such as: hiring staff, as far as possible and needed, that come from local ethnic groups, and providing additional training if needed; training of project staff and facilitators on ethnic group issues; grievance redress mechanism that allows ethnic groups an avenue for complaints; and particular attention to ethnic minority issues in monitoring and evaluation. Finally, the project includes screening procedures in the ESSF to address situations where vulnerable ethnic groups may be adversely affected by sub-grants. If protected area management proposals involve involuntary resource access restriction. In these instances, the Project will follow a standard participatory framework based on models developed in the SEMFOP. Detailed procedures are included in the ESSF to meet the requirements of the Bank's policy on Involuntary Resettlement (OP 4.12). 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: In Lao PDR in general, the dependence of economic growth on natural resources means that both local impacts and cumulative impacts within river systems are likely to result from future hydropower and mining developments. Pressure on forests, and other natural habitats and renewable resources are also likely to increase with growing population densities and improvements in transport infrastructure. The direct impacts of the Project will be minor, however, and are not expected to be intensified by these future developments. Fundamentally the project is designed to strengthen the ability to manage long term environmental and social impacts from the development process. Long-term benefits of the Project stem from support for safeguards implementation and management within those sectors anticipated to be at the forefront of Lao economic development, including river basin management and cumulative impact assessment, and support for the establishment and operation of the LECF as a long-term vehicle for sustainable environmental finance. By establishing the two Windows, the project will provide the required experience of preparing environmental improvement and conservation activities, which will continue after the end of the Project with earmarked revenues from NT2 and eventually other natural resources development projects. Regarding the focus on the three target provinces in Central Lao, the project will address possible cumulative impacts from further development of hydropower in the area. The cumulative impact analysis that was conducted for the NT2 Project in the Nam Theun/Nam Kading River Basin, concluded that the full suite of hydropower projects (four projects totaling 2100 megawatts by 2012) when developed would have significant cumulative impacts in the basin encompassing these two rivers and their major tributaries. The mitigation of cumulative impacts fall within the responsibility of the Government to addressing them. As such, the Government of Lao PDR (GoL) sees the need for a long-term basin-wide strategic approach to integrated water resources management, which would involve the key stakeholders in planning and decision making roles. Moreover, it would require strengthening of the GOL?s capacity to implement the forthcoming national decree on resettlement , including the establishment of a Division for Resettlement in the Department of Environment, capacity in the three central provinces, and developing guidelines and other technical instruments. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. The considered alternatives for the entire project focused on the general design of the project, and the focus of capacity building in Lao. A safeguard related design aspects has been the channeling of the funds through the LECF, which would improve overall transparency and more efficient delivery of sub-grants and allocation of funding for conservation and environmental protection. As the sub-grants are still to be defined, project alternatives will be considered and included during sub-grant preparation. The Environmental and Social Safeguard Framework, as included in the Project Implementation Plan and subsequent Operations Manual, details the screening procedures to be applied, and will emphasize the need for considering alternatives if any environmental or social concern is expected. 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. The development of the Nam Theun 2 Hydroelectric Power Project (NT2) project, and its extensive consultations and assessment/mitigation of environmental and social impacts, has served as a catalyst for the Government of Lao (GOL) to improve its environmental and social performance. Based on the NT2 experiences, STEA, responsible as Chair of the Project Steering Committee for implementing and monitoring the project, has prepared an Environmental and Social Safeguard Framework (ESSF), as included in the Project Implementation Plan. Moreover, it is in the process of preparing a detailed Operations Manual, outlining in detail all safeguard procedures and conditions to be applied during the preparation, screening and implementation of sub-grants. It is acknowledged that the current implementing capacity for conservation and environmental/social protection activities is still relatively weak in Lao PDR. This is partly due to an insufficient allocation of Government funding for environmental and social protection. The Government has addressed this constraint by establishing the LECF, which will allow the Windows to operate relatively independent and attract highly qualified staff on a competitive basis. Moreover, during the first two years of the project an international full time advisor will support the WMU in implementing all safeguard procedures as part of the sub-grant review and implementation process. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. The key stakeholders for the LENS are all government agencies and Organizations eligible to apply for funding from the LECF. These include all Ministries, mass organizations, non-Governmental organizations, and communities. Other key stakeholders are the members of the Project Steering Committee, which includes amongst others Science, Technology, and Environment Agency (STEA), Ministry of Agriculture (MAF), Ministry of Industry and Handicraft (MIH), Committee for Planning and Investment (CPI), the Ministry of Finance (MOF), the Ministry of Education (MOE), Ministry of Culture and Information (MCI), and representatives of the three target provinces. Various meetings and a Consultation Workshop (May 12, 2005) were conducted with the key stakeholders to discuss the concept of the project, and to initiate the process of grant preparation. The process of promoting and supporting grant preparations has been included into the Project design as a key activity for the first two years. B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other: Date of receipt by the Bank 05/16/2005 Date of "in-country" disclosure 05/20/2005 Date of submission to InfoShop 05/20/2005 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors Resettlement Action Plan/Framework/Policy Process: Date of receipt by the Bank 05/16/2005 Date of "in-country" disclosure 05/20/2005 Date of submission to InfoShop 05/20/2005 Indigenous Peoples Development Plan/Framework: Date of receipt by the Bank 05/16/2005 Date of "in-country" disclosure 05/20/2005 Date of submission to InfoShop 05/20/2005 * If the project triggers the Pest Management, Cultural Property and/or the Safety of Dams policies, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) OP/BP/GP 4.01 - Environment Assessment Does the project require a stand-alone EA (including EMP) report? No If yes, then did the Regional Environment Unit review and approve the EA No report? Are the cost and the accountabilities for the EMP incorporated in the Yes credit/loan? OD 4.20 - Indigenous Peoples Has a separate indigenous people development plan been prepared in No consultation with the Indigenous People? If yes, then did the Regional Social Development Unit review the plan? No If the whole project is designed to benefit IP, has the design been reviewed Yes and approved by the Regional Social Development Unit? OP/BP 4.12 - Involuntary Resettlement Has a resettlement plan, abbreviated plan, or process framework (as Yes appropriate) been prepared? If yes, then did the Regional Social Development Unit review and approve No the plan / policy framework / policy process? BP 17.50 - Public Disclosure Have relevant safeguard policies documents been sent to the World Bank's Yes Infoshop? Have relevant documents been disclosed in-country in a public place in a Yes form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities Yes been prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included in the project Yes cost? Does the Monitoring and Evaluation system of the project include the Yes monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed with the Yes borrower and the same been adequately reflected in the project legal documents? D. Approvals Signed and submitted by: Name Date Task Team Leader: Mr Patchamuthu Illangovan 05/20/2005 Environmental Specialist: Mr Anthony J. Whitten 05/20/2005 Social Development Specialist Mr Svend Jensby 05/20/2005 Additional Environmental and/or Mr Chaohua Zhang 05/20/2005 Social Development Specialist(s): Approved by: Regional Safeguards Coordinator: Mr Glenn S. Morgan Comments: Sector Manager: Ms Maria Teresa Serra Comments: