world bank document · cities of casinhas, frei miguelinho, salgadinho, santa maria do cambuca,...

GOVERNMENT OF THE S T A T E OF PERNAMBUCO

State Secretariat for W a t e r Resources

PERNAMBUCO SUSTAINABLE WATER PROJECT

ENVIRONMENTAL ASSESSMENT

EXECUTIVE SUMMARY

DRAFT, May 2009

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ACRONYMS

ANA APP

National Water Agency Environmental Protection Area

COBH-Cabiparibe COMPESA CONAMA CPRH EMP IBGE IPA IPHAN MRR N G O PAC PER PSH-PE SRH

Capibaribe Basin Committee Pernambuco State Water and Sanitation Util i ty National Commission for the Environment State Environment and Water Resources Agency Environmental Management Plan Brazilian Institute for Geography and Statistics Pernambuco Company for Agricultural Research National Institute o f Historical and Artistic Heritage Metropolitan Region o f Recife Non-Governamental Organization Federal Growth Acceleration Program Preliminary Environmental Report Pernambuco Sustainable Water Project State Secretariat for Water Resources

WTP WWTP

Water Treatment Plant Wastewater Treatment Plant

PERNAMBUCO SUSTAINABLE WATER PROJECT

FRAMEWORK FOR ENVIRONMENTAL AND SOCIAL MANAGEMENT 1 . INTRODUCTION ......................................................................................................................................... 1

2 . GENERAL CHARACTERISTICS OF THE CAPlBARlBE BASIN .......................................................................... 2

3 . LEGAL AND INSTITUTIONAL FRAMEWORK AND COMPARATIVE ANALYSIS WITH IRDB SAFEGUARD POLICIES ........................................................................................................................................................ 4

4 . ENVIRONMENTAL AND SOCIAL ASSESSMENT OF COUNTERPART WORKS ............................................... 5

5 . ENVl RON M ENTAL AND SOCIAL ASSESSMENT OF WORLD BAN K-FI NANCE D INTERVENTIONS ............... 12

5.1 Environmental Assessment of typologies ......................................................................................... 12

5.2 Social Analysis ................................................................................................................................... 17

6 . OVERALL PROJECT EVALUATION ............................................................................................................. 17

7 . ENVIRONMENTAL MANAGEMENT PLAN ................................................................................................ 19

7.1 Environmental Management of the Program ................................................................................... 20

7.2 Criteria and procedures for detailed project design and environmental assessment ..................... 21

7.3 Social Communication and Sanitary and Environmental Education ................................................. 22

7.4 Program for adhesion to the wastewater system and elimination of illegal connections ............... 22

7.5 Compensatory measures program .................................................................................................... 22

7.6. Study of the quality of water and alternatives for minimizing the eutrophication of the Jucazinho, Tapacua and Carpina ............................................................................................................................... 23

7.7 Pilot Study on the re-use of effluents ............................................................................................... 23

7.8 Strengthening water quality monitoring in the Capibaribe river basin ............................................ 23

7.10 WWTP Sludge Management ........................................................................................................... 24

7.11 Integrated operation of reservoirs and water collection from the MRR and the Capibaribe river basin ........................................................................................................................................................ 24

7.12 Environmental plan for the river basin ........................................................................................... 24

7.13 Toritama Urban Environment Plan ................................................................................................. 25

7.14 Resettlement Framework ............................................................................................................... 25

7.15 Environmental Construction Manual .............................................................................................. 26

8 . PUBLIC CONSULTATIONS ........................................................................................................................ 26

1. INTRODUCTION

1. This Executive Summary o f the Environmental Assessment Report on the Pernambuco Sustainable Water Project (PSH-PE) presents the project’s main potential environmental and social impacts and proposed mitigation measures as succinctly and objectively as possible.

2. A comprehensive Environmental Assessment (EA) was undertaken during the preparation o f the PSH-PE; the EA evaluates existing conditions, identifies potential direct and indirect environmental impacts, and proposes measures to mitigate negative impacts and enhance positive impacts. The Environmental Management Plan (EMP) summarizes these measures along with their associated costs, responsibilities, and schedule, and comprises an Environmental Construction Manual. Public consultations were carried out and documented following the disclosure procedures recommended by the Bank’s environmental policy.

3. A Social Analysis was undertaken in conjunction with the Environmental Assessment, and a Resettlement Policy Framework has also been prepared. Project documentation i s available at the office o f the State Secretariat for Water Resources - SRH, Government o f Pernambuco, Av. Cruz de Cabuga 11 1, Recife - PE, Brazil, and safeguard studies were made available at the InfoShop on May 29, 2009. The Environmental and Social Assessments o f the PSR-PE were commissioned by the State Secretariat for Water Resources (SRH), and prepared by the consultant Alexandre Fortes.

4. The proposed Project will be supported by a World Bank specific investment loan (SIL) in the amount o f US$190 mill ion. The project development objective i s to improve sustainable water supply and sanitation services in the Capibaribe river basin and in the Metropolitan Region o f Recife (MRR) - both in appropriate quality and quantity. The PSE-PE will support the Government o f Pernambuco’s goal o f achieving sustainable economic growth and social development, for which a reliable and efficient management o f water resources, as well as adequate irrigation, water supply and sanitation service provision are critical. The project gives priority to investments in the Capibaribe river basin (the main river under State jurisdiction) and in the MRR (42% o f the state population and 65% o f the State GDP), aiming to provide efficient water supply services and to implement wastewater collection and treatment services, to protect the main water reservoirs targeted for human consumption.

5. Within the scope o f designing the PSH-PE, S R H has requested the World Bank to consider the possibility o f recognizing some o f the sector interventions currently underway as State counterpart contributions under the future loan contract, particularly the works o f the Pirapama water supply conveyance system, estimated to cost US$220 million, and currently under construction with resources from state government and from the Federal Growth Acceleration Program (PAC).

6. The project’s concept includes strengthening state water resources management, as well as improving water and sanitation management efficiency and infrastructure, with funding from two sources: (i) ongoing State counterpart c iv i l works funded by the PAC; (ii) World Bank- financed civil works to improve the efficiency o f existing water supply systems and to install wastewater systems in selected municipalities in the Capibaribe river basin, for which typologies have been defined.

7. Thus, this report focuses on two distinct sets o f documents and works that integrate this project: (i) the social and environmental assessment o f works currently under implementation with 100% financing from counterpart funds; and (ii) a framework for environmental and social management o f future works to be implemented under the project with financing from the World Bank, including the environmental assessment o f subproject typologies and the setting o f criteria and procedures for the environmental assessment o f subprojects in the project implementation phase. The proposed PSH-PE Project i s structured in three components:

8. Component 1 - Water Sector Management and Institutional Development (US$29 million). This component covers the strengthening o f institutions and the development o f an efficient water resource management model, and supports: (i) integrated water resource management, (ii) water services and infrastructure; and (iii) project management.

9. Component 2 - Improving Efficiency in the Provision of Water Supply and Sanitation Services (US$52 million). This component will support: (i) non-revenue water, which will support activities aimed at reducing technical and commercial water losses and improving COMPESA’s services, sales and operational efficiency in the MRR, and (ii) the implementation o f a corporate development program with focus on activities that can improve COMPESA’s financial equilibrium, overall customer satisfaction, staff productivity as well as corporate organization and management.

10. Component 3 - Water Supply and Sanitation Service Expansion (US$320 million). This component i s divided into the following sub-components: (a) Pirapama Water Supply System Sub-component, which will support technical assistance and acquisition o f goods and works targeted towards increasing water supply availability and reliability in the MRR, and includes the on-going expansion and integration o f the Pirapama water supply conveyance system.; and (b) Expansion o f services Sub-component, which will finance technical assistance, acquisition o f goods and works to expand services and leverage investments in priority areas. This sub-component will support the Government o f Pernambuco to protect the main sources of water in the Capibaribe river basin by targeting areas where new sewage collection and treatment services would significantly contribute to the reduction o f pollution loads particularly from the municipalities o f Vit6ria de Santo Antgo, Salgadinho, Limoeiro, Paudalho and Toritama. This sub-component will also finance technical assistance to support to the Government of Pernambuco in the prioritization o f water supply and sewerage investments, as well as in the preparation o f regional and municipal water master plans and detailed engineering designs for priority projects.

2. GENERAL CHARACTERISTICS OF THE CAPIBARIBE BASIN

1 I. The Capibaribe Basin comprises 43 municipalities. According to the Brazilian Institute for Geography and Statistics (IBGE), in the year 2000 t h i s group o f municipalities had a population o f about 3.5 mil l ion inhabitants, which represents about 43% o f the population o f the State, 87% o f which live in urban areas, mostly in the MRR’ on the Lower Capibaribe.

The MRR includes not only the Capibaribe but also other river basins such as the Ipojuca, Jaboatao and Beberibe 1

rivers

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12. The main districts o f twenty seven municipalities are located within the basin, 19 o f which are located upstream o f the basin’s main reservoirs. Four o f those municipalities are located along the banks o f the main river (Santa Cruz do Capibaribe, Toritama, Surubim and Limoeiro) and two along the banks o f the Tapacura river (Vitoria de Santo Antiio and Pombos).

13.

The Jucazinho Reservoir

The main water supply reservoirs in the basin are:

The Jucazinho reservoir, inaugurated in 1999, has a maximum capacity o f 327.04 mill ion cubic meters, and i s used mainly for flood control purposes. Jucazinho currently supplies the cities o f Casinhas, Frei Miguelinho, Salgadinho, Santa Maria do Cambuca, Surubim, Cheus, Vertente do Lerio, Vertentes, Caruaru, C u m m , Passira and Riacho das Almas, serving a population o f about 353,000 inhabitants.

The Carpina Reservoir

The Carpina and the Jucazinho reservoirs, together, constitute the flood control system o f the upper-mid and mid-Capibaribe river.

Initially the main purpose o f the Carpina dam, inaugurated in 1978, was the control o f downstream flooding. In 2003, COMPESA started using the Carpina reservoir for water supply to the municipality o f Feira Nova, with a population o f about 15,500 inhabitants. A pipeline from this reservoir to the Gloria do Goita and Limoeiro systems i s currently under construction.

The Tapacura Reservoir

This reservoir was built in 1973 in the municipality o f Siio Lourenqo da Mata, with the purpose o f supplying water to the municipalities o f Camaragibe, Jaboatiio dos Guararapes, Recife and Siio Lourenqo da Mata, and enabling flood control on the Lower Capibaribe.

The reservoir supplies water to the population o f the following cities: Camaragibe (1 70,000 inhabitants) and part o f the cities o f Recife (900,000 inhabitants), Jaboatgo (150,000 inhabitants) and Siio Lourenqo (23,195 inhabitants) (Source: Compesa, 2008).

14. These reservoirs currently are in a stage o f hyper-eutrophication due to the flourishing o f algae and the presence o f cyanobacteria, mostly as the consequence o f the current total absence o f wastewater treatment in municipalities located upstream in the drainage basin.

15. O f the 19 municipalities located upstream from the reservoirs, only Vitoria do Santo Antgo counts with a partial wastewater collection system (without treatment). In all other cities, especially the six that are located along the banks o f the Capibaribe and Tapacura rivers, wastewater drains into the water bodies, without any treatment.

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The Cavibaribe River Basin

3. LEGAL AND INSTITUTIONAL FRAMEWORK AND COMPARATIVE ANALYSIS WITH IBRD SAFEGUARD POLICIES

16. The assessment o f the PSH-PE components was designed so as to simultaneously consider: (i) compliance with World Bank environmental safeguard policies, as a condition for the signature o f the Loan Agreement; and (ii) strict compliance with and attention to federal, state and municipal legal requirements, especially with regard to rules and procedures for the environmental licensing o f the actions foreseen under the Project.

17. During project preparation, infrastructure interventions have been grouped into two sets: (i) state counterpart interventions associated to works being built with financing from the federal Growth Acceleration Program (PAC); and (ii) the World Bank-funded works aimed at improving the efficiency o f existing water supply systems and the implementation o f wastewater systems in selected municipalities in the Capibaribe river basin.

18. For the second set o f interventions, neither conceptual nor detailed engineering designs are available at this stage. Hence, this report had taken a dual approach to assess the project:

Environmental and social assessment o f the counterpart works under execution - the Pirapama water supply system; and

Design o f an Environmental and Social Management Framework, involving the environmental and social assessment o f the typologies o f wastewater subprojects and the definition o f criteria and procedures for the environmental and social assessment o f subprojects during the implementation o f the PSH-PE.

19. Within the scope o f the World Bank’s safeguard policies, the proposed project i s classified as category A. As such, this report evaluates with- and without-project scenarios,

(i)

(ii)

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identif ies potential direct and indirect environmental impacts associated with the project and other alternatives, develops mechanisms and measures to avoid, minimize and/or mitigate negative impacts, and presents an Environmental Management Plan with specific activities, budgets and responsibilities to ensure the implementation o f these mitigating measures.

20. The following safeguard policies are triggered:

(i) OP 4.01 Environmental assessment (ii) OP 4.04 Natural Habitat (iii) OP 4.36 Forests (iv) OP 4.12 Involuntary Resettlement (v) (vi)

OP 4.1 1 Physical and Cultural Resources OP 4.37 Safety o f Dams (for the counterpart works)

Environmental Licensing for Project Interventions

21. PSH-PE interventions will be the object o f environmental licensing according to the relevant applicable environmental legislation at the federal and the state levels. For example, each intervention for the implementation o f basic sanitation systems, as determined by the environmental legislation, shall fulfill a specific environmental licensing practice, complying with document, process and timeframe requirements associated to the rules and procedures established by the licensing body - the State Agency for Environment and Water Resources (Aggncia Estadual de Meio Ambiente e Recursos Hidricos - CPRH).

22. As for the wastewater systems, the CPRH licensing process requires the presentation o f a Preliminary Environmental Report (PER). In addition, the terms o f CONAMA Resolution 377/06 on the adoption o f simplified licensing procedures for the development o f medium and small wastewater systems (which covers most PSH-PE interventions) must be taken into account.

Granting of water rights

23. The granting o f water user rights i s one o f the water resource management instruments foreseen under Federal Law No. 9433 o f January 8, 1997, whereas the competence for managing and granting licenses lies with National Water Agency (ANA) in the case o f federal rivers, and the Secretariat for Water Resources (SRH) in the case o f rivers under state jurisdiction and underground aquifers. The granting o f licenses i s closely linked to the Water Resource Plans and the classification o f water bodies.

4. ENVIRONMENTAL AND SOCIAL ASSESSMENT OF WORKS ALREADY UNDER IMPLEMENTATION WITH COUNTERPART FUNDS

24. The Pirapama water supply system aims to ensure regular public water supply to the MRR, particularly to the southern and central areas, the most populated ones, which represents about 50% o f the overall system capacity that currently supply the municipalities o f Recife, Jaboatiio and Cab0 de Santo Agostinho.

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25. The works forthis system started in the late 1980’s and were suspended after a few years mostly due to lack o f funds. Works for the Pirapama Dam which has the capacity to provide flows o f 5.13 m3/s, were resumed in 2000 and completed in 200 1. 26. This i s a gravity-type dam, with capacity for 61 mil l ion cubic meters o f water, comprising: (i) one water intake provided by an underwater tower; (ii) one bottom discharge through 2-meter diameter steel pipes.

27. The Pirapama water supply system, using water from the Pirapama Dam, i s made up by the following units, which are currently under construction (See outline - Figure 5.1 below):

28. Intake Pumping Station, located next to the dam, receives water coming out o f the intake located downstream from the dam through a 2-meter diameter pipe, with a pumping capacity o f 5.13 m3/second up to the Water Treatment Plant - WTP. I t has six motor-pump sets with 1600 cv power, one o f which acts as a reserve pump.

29. Bulk Water Main in 1,700 millimeter carbon steel pipes, that are 3,580 meters long.

30. Water Treatment Plant - a complete conventional WTP initially designed with four 1.28 m3/s modules. The current WTP project will make use o f the partially-built facilities, the works o f which have been suspended as o f 1994.

3 1. Potable Water Main designed as a 1,700 millimeter pipe, with a length o f about 19,500 meters. This pipeline i s located mostly within the area o f domain o f BR- 10 1, a federal highway.

32. Cabo de Santo Agostinho Sub-main, with 800 millimeter pipe connecting the pipeline to the existing Cab0 reservoir, currently being expanded.

33. Ponte dos Carvalhos Sub-main, with 800 millimeter pipe connecting the pipeline to the existing Ponte dos Carvalhos reservoir, currently being expanded.

34. Expansion of the Cab0 and Ponte dos Carvalhos Service Reservoirs for a capacity of 13,500 m3 and 17,000 m3, respectively.

35. Construction of the Jordiio Service Reservoir, a type supported with capacity for 90,000 m .

36. An environmental and social analysis o f the existing and under construction works for the Pirapama water supply system was carried out, including on-site inspections, and the main findings are the following:

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E€

ITEM 1

OP 4.01 - Environmental Assessment

COMPENSATION ACTIONS AMOUNT (R%) Detailed technical design o f comuensation measures 50,000.00

4

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160,000.00

3,200,000.00

Demarcation wi th landmarks o f the permanent preservation strip (1 00 m) around the reservoir Reforestation of 120 hectares per year around the lake, totaling 360 hectares, in the environmental protection area (APP) Rehabilitation o f areas used for pit disposal o f excavated material. 450,000.00

50,000.00 Compensating vegetation suppressed from raw water systems and treated water main Monitoring o f water quality 90,000.00

1 TOTAL I 4,000,000.00 1

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40. Items 1 to 4 in Table 1 above refer to the implementation o f complementary environmental measures related to the construction o f the Pirapama dam and reservoir, concluded in 200 1. Ma in measures include (i) the demarcation o f the 1 OO-meter environmental protection area (APP) surrounding the reservoir’s banks, and (ii) reforestation o f about 360 hectares in that area, which i s already owned by COMPESA.

41. The current implementation o f works counts with an informal environmental management system that includes environmentally sound construction procedures. S R H and COMPESA currently are negotiating with the construction consortium the adoption o f the procedures stated in the construction environment manual, especially items regarding:

Formalization o f environmental management/oversight actions; Social communication actions for the works, with communications and ombudsman services. Inclusion o f recuperation actions in the work area; and Inclusion o f recuperation actions in the areas used for disposal o f excavated material.

(i) (ii)

(iii) (iv)

Overall Environmental Impacts

42. The Pirapama water system integrates a set o f water production systems for the MRR and, once implemented, will represent an estimated additional 50% o f the water availability for the population. In general terms, the positive impacts o f i t s implementation are highly significant. Once the water production system i s in operation, it i s expected that the result o f the

. interventions will be highly positive and permanent, ensuring the adequate supply o f water and a significant improvement in the quality o f l i f e o f the population living in the MRR. 43. Negative impacts, on the other hand, are localized, reversible and temporary, deriving mostly from activities that are inherent to the execution o f the works and can be minimized through the adoption o f preventive measures, contemplating the appropriate planning o f interventions and appropriate procedures during its execution.

44. Some o f these measures are being adopted during the preparation o f detailed designs o f the interventions, which aim to avoid occupied areas and preserved natural environments. COMPESA and the technical-environmental team o f the works contractor normally carry out regular environmental monitoring o f works execution. Actions aimed at strengthening these procedures, as detailed in the environmental construction manual, are being adopted by S R H and COMPESA.

45. With regard to the Bank’s environmental safeguards, the adoption o f additional measures by COMPESA and SRH, the scheduled interventions and the actions adopted within the scope o f counterpart interventions, are in l ine with the procedures recommended by the World Bank.

OP 4.04 - Natural Habitats

46. Most areas used for implementing these works are anthropized, with l o w population density. The location o f interventions were conceptualized with the goal o f avoiding - as much as possible - affecting natural areas with vegetation and does not interfere with areas o f conservation.

47. On the stretches o f the conveyance system, the interventions will need to suppress 3 hectares o f secondary forest vegetation, including a stretch o f an environment preservation area (APP) along the Jaboatgo River. The appropriate authorization has already been issued by CPRH and compensation measures established by the environmental agency are being implemented.

OP 4.12 - Involuntary Resettlement

Pirapama System

Elevated water reservoir - Jord%o Water main transportation network

48. The construction o f the Pirapama water supply system, which i s under execution with financing provided by the government and constitutes the project counterpart financing, has affected 294 families, including 202 famil ies that had to be moved to other locations and 92 processes o f land acquisition. The resettlement o f families was required for the construction o f the Jordiio elevated water storage facility, as well as for the expansion o f the main water distribution system. The land acquisition was required also to expand the main water transportation system. The table below presents the resettlement and land acquisition undertaken.

Number of families resettled land acquired

138 63 92

Number of parcels of

Total 202 92

49. When the construction o f the Pirapama system was interrupted in the mid to late 1990s, several families informally occupied the areas that were allocated to the construction o f this system and were formally owned by COMPESA. Once the construction restarted, COMPESA reassessed the engineering designs aiming at reducing the number o f houses requiring removal from the project areas. The updated designs were able to reduce the number o f houses requiring removal, but s t i l l entailed the removal o f 202 houses and the acquisition o f 92 parcels o f land.

50. In order to undertake the removal o f housing, COMPESA opted for designing and implementing a broader social program, which would assist the families living in these houses to take this opportunity to also improve their living conditions. The main principle supporting this program was one o f offering a very favorable financial compensation for the families’ assets, which would allow these families to purchase a house o f higher value and better quality. Integrated with this financial mechanism, the social team o f COMPESA put in place a social program to assist the families in the removal process. COMPESA also contracted additional social workers to cope with the increased demand for social assistance.

51. The main principles o f the social and resettlement programs were: (i) qualified social professionals should provide support to the families during the removal process; (ii) the asset valuation criteria should allow the famil ies to purchase a new house o f better quality than the house they currently l ived in; (iii) the process o f resettling the families should allow them to take informed decisions and to voice their concerns; and (iv) safety measures should be in place to protect the famil ies once they receive the financial compensation for their houses.

52. The socio-economic profile o f the famil ies assisted are as follows:

(i)

(ii)

The average income o f the 202 families assisted i s among the lowest within the metropolitan area. Formal unemployment i s extremely high, reaching 43% o f the active adults.

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(iii) For the unemployed, the informal sector i s the only possible alternative for some income generation.

(iv) Among those with regular employment, 10% are retirees. (v) Among those employed, unskilled labor prevail. (vi) The average income corresponds to one minimum salary (about US$160/month). (vii) The lack o f appropriate infrastructure services further deteriorates the quality o f

l i f e in the area. (viii) There i s no formal water or sewerage service. (ix) Water i s collected from public taps and improperly stored.

53. Asset valuation criteria: The method adopted for assessing the value o f the assets ensured that the financial compensation amount would allow each family to choose to move to a house o f better quality. As a preliminary evaluation indicated that a large percentage o f those houses requiring removal had an extremely l ow market value, COMPESA opted for a increasing the value by adding the amount equivalent to a 12-month rental in the area.

54. The valuation method took into consideration the type o f construction, the structures status o f conservation, and number o f inhabitants, among others, in order to arrive at a valuation consistent to market values and allow for the fami l ies to purchase another property to move into. The calculations were done according to local c iv i l construction guidelines, and the value paid varied between R$120 to R$150 per square meter. The valuation also included the potential value o f fruit trees and existing constructions within the lot occupied. Assessments carried out in the area indicated that this mechanism would allow the families to afford a house o f good quality. The compensation value varied from about US$2,500 to US$ll,OOO. In addition, the families also received compensation to cover the expenses related to the process o f moving to a new house.

55. Social support methodology: In early 2008, before the works o f the Pirapama Water Supply system re-started, COMPESA’s social team, strengthened by the hiring o f additional social workers, carried out meetings with the families to discuss the resettlement objectives and criteria. Regular meetings were held since the preliminary information campaigns until the effective compensation for the families’ assets. The methodology included the elaboration o f a cadastre per family, in which the assets were evaluated and discussed with the family and detailed information and pictures were included. The constant presence o f the social team in the area facilitated the interlocution with the families and the provision o f timely clarification.

56. Based on the consultations carried out, one important procedure was adopted regarding precautions needed when the family was to receive the compensation. The families indicated that they would like to be closely assisted at this specific moment because o f fear of being robbed. This assistance was provided, as well as information on available houses in the neighborhood for those that requested such information. The high rate o f crime and violence in the area was taken into account, and strongly influenced the methodology adopted for the social support. A sample o f the questionnaire used i s in the project fi les.

57. Monitoring: Monitoring campaigns to evaluate the l iv ing conditions o f those resettled have been carried out as part o f the social methodology. This monitoring includes surveying affected famil ies to capture information on their current living conditions. The results indicate that the living conditions have improved significantly with respect to the quality o f the houses.

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The cadastre and picture o f the original houses compared to the new houses clearly demonstrate the improvements achieved. Many families have opted to buy a new house in the same neighborhood and they were able to choose a better location and house standard. Other families opted for returning to their city o f origin or moving to another city. Those have not been covered by the post resettlement monitoring.

Land acquisition

58. The land acquisition program undertaken in 92 areas does not prevent the famil ies from using the affected areas. The famil ies received financial compensation in case the area was being used for activities such as agriculture. Once the construction i s concluded, the families will be allowed to use the area again. Some restrictions may apply to protect the pipes installed underground. One example o f these restrictions i s that no large tree with deep roots can be planted in the right-of-way. With exception o f one case, the land ‘acquired’ constitutes jus t one portion o f the total area formally or informally owned by the family. The exception case refers to one producer that was growing bananas along the one kilometer o f right-of-way, which is being used by COMPESA, but formally belongs to the state energy company. This producer has received approximately US$70,000 in financial compensation and has legally bought some land where he i s developing a farm. This approach for restoration o f livelihoods i s consistent with OP 4.12 as COMPESA has to a significant extent pursued options to minimize involuntary resettlement and an adequate participatory process was followed for the implementation o f compensatory measures that ensured adequate compensation for the land acquired.

59. Additionally, the production system comprises a stretch o f the main connecting the Jordgo reservoir to the Recife water network (Alga dos Andis de Recife) (see figure). The detailed designs are currently being prepared and the works are likely to start in May 2009. This stretch also includes several illegal occupations, but with different characteristics from those on the areas under construction. These are areas o f public and private domain and do not fit into OP 4.12, article 15“c”. COMPESA estimates are that 100 to 120 families will need to be resettled. For this purpose, COMPESA i s preparing a Resettlement Plan in accordance with OP 4.12 requirements.

OP 4.11 - Physical and Cultural Resources

60. location o f construction activities avoided historical and cultural sites.

According to the Pirapama water supply system’s preliminary environmental report, the

OP 4.37 - Safety o f Dams

61. Works for the Pirapama dam were concluded in late 2000, and the reservoir was filled up in 2001. The construction o f the dam and the reservoir were subject to detailed environmental impact assessment and report, commissioned by COMPESA and prepared by the consulting firm Acquaplan in 1999. All required environmental licenses were issued by the State Environment Agency CPRH and the water r i hts were granted by SRH. Since 2008, the Pirapama reservoir i s providing an average o f 1.0 m / s o f bulk water to increase de production o f the Gurjau water system. The dam has been in operation since 2001 with no reported safety incidents. However, considering that the Pirapama dam i s about 20 meters high and a significant withdrawal i s expected to start on October 2010, the dam will be evaluated by an Independent Dam Safety

i?

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Panel, to be commissioned by S R H prior to the beginning o f any works related to the Pirapama water system, that are to be financed with loan proceeds, particularly the non-revenue water investment activities under Component 2.

5. ENVIRONMENTAL AND SOCIAL ASSESSMENT OF FUTURE WORLD BANK- FINANCED INTERVENTIONS

5.1 Environmental Assessment of typologies

62. An Environmental and Social Management Framework was prepared for the various subproject typologies that involve physical interventions and that will be financed by the PSH-PE under components 2 and 3. Such interventions are analyzed in the tables below, at the conceptual level.

Component 2 -Improving Efficiency in the Provision of Water Supply and Sanitation Services

Non-Revenue Water

Sectorization, pressure management and network renewal works

63. In general terms, the non-revenue water activities foresee small interventions in existing systems and will have no additional interference with the natural environment. According to federal and state environmental legislation, the actions and interventions above are not subject to environmental licensing.

64. The positive impacts, on the other hand, have a more permanent nature and will mostly occur during the operation stage. The table below presents the main impacts (positive and negative) o f this type o f intervention and i t s significance, as well as mitigation measures for the negative impacts and the corresponding environmental programs that will be part o f the Environmental Management Plan o f the overall project, as well as o f each selected intervention.

65. As shown in the table below, negative impacts are localized, transitory and o f reduced relevance, deriving mostly from activities related to the works. The mitigation o f such impacts comprise, mostly, o f appropriate care during the execution o f the works, involving good engineering practices. During the operation stage o f the interventions, most impacts are positive, relevant and permanent. It features a strong positive environmental bias by trying to reduce the consumption o f treated water, either by reducing losses and/or promoting i ts rational use, thus reducing the volume to be adducted and making water available for other uses.

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Component 2 - Positive and Negative Impacts, Mitigation Measures and Environmental Programs

Strengthening community-based mobilization

Employment generation and increased income for the local population

Positive Impacts

Planning and Construction Phase

Moderate

Moderate

Significant Improved sanitary conditions

Improved health conditions for the population Significant

Improved housing standards

Enhancing self-esteem among the population

Consolidation o f new cultural and environmental approaches

Significant

Significant

Significant

Environmental Programs

Negative Impacts

Planning and Construction Phase Mitigation Measures

Generating expectations and insecurity among the population

Alterations in the quality o f l i fe o f the resident population in areas located close to the construction sites (increased noise, dust and traffic; closing o f access roads; circulation o f people that are foreign to the community, etc.)

Interference upon existing urban infrastructure and equipment

Relatively insignificant

Actions for dissemination o f project information and social communication

Social communication

Planning o f works and appropriate construction procedures

Environmental Construction Manual

Moderate

Coordination w i th service concessionaires and responsible agencies Appropriate construction methods and recuperation o f the affected vegetation

Environmental Construction Manual Environmental Construction Manual Project criteria Environmental Construction Manual Environmental Construction Manual Environmental Construction Manual Environmental Construction Manual


Relatively insignificant Suppression o f vegetation


Appropriate construction planning and methods

Planning o f works and appropriate construction methods

Generation o f sediments

Deterioration o f environmental, urban and landscape conditions



Disposal o f waste in properly licensed areas Generating waste - pit disposal areas

~~~

Accidents risks Relatively insignificant

Planning o f works and safety procedures

13

Component 3 -Water Supply and Sanitation Service Expansion

Services Expansion

I Implementation o f collection system (household I

wastewater treatment plants

Full implementation o f the wastewater system, including

WWTP Expansion o f collection sewer networks Expansion o f trunk sewers and interceptors Implementation o f booster stations Expansion and/or implementation o f WWTP

Expansion of infimtructure of existing wastewater

66. The table below presents the main positive and negative impacts o f the typologies highlighted above and their relevance, as well as mitigation measures for negative impacts and the corresponding environmental programs to be included in the PSH-PE Environmental Management Plan and for each selected development. The table shows that most negative impacts are localized, temporary and o f reduced or moderate significance, deriving, mostly, from activities associated to the execution o f the works,

67. Appropriate concept and design criteria can greatly minimize the occurrence o f such interferences. In the case o f natural habitats, the expansion or implementation o f wastewater systems (interceptors, pumping stations and treatment stations) almost always present interferences with APPs. Considered by the legislation as public use interventions, such interferences may be authorized by the environmental agency and minimized through the use o f appropriate construction techniques and the later recuperation o f the area where the intervention took place.

68. There are a few conservation units in the Capibaribe river basin but they do not overlap with the any o f the five municipalities selected to benefit from wastewater system to be financed by the Project.

69. The possibility o f interfering with cultural heritage sites will be analyzed during the design o f works and respective environmental assessments so as to adopt recovery procedures or, as the case may be, by implementing chance-find procedures, as regulated by the National Institute o f Historical and Artistic Heritage - IPHAN.

70. The project design and i t s execution should avoid any possibility o f interference with commercial activities. Likewise, the project development should avoid the need to resettle families. In case there i s a need to displace families, a specific plan must be designed, ‘in compliance with the Resettlement Framework stated under the PSH-PE Environmental Management Plan - EMP. 71. Additionally, the project design must consider alternatives for the location o f WWTPs in relation to the urban area. Such alternatives must take into account predominant winds and a minimum distance o f 500 meters from homes and/or planned urban areas. In case that i s not feasible, the WWTP design must foresee a minimum distance o f 100 meters f rom edifications and the appropriate treatment o f gases with the elimination o f odors.

14

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72. The WWTP expansion or implementation design must include the assessment, treatment and fmal destination o f sludge, i t s treatment and final destination, both currently and in the future. All project criteria must be stated in the PSH-PE Environmental Management Plan - EMP.

73. With regards to the operation stage, the majority o f impacts at that stage are positive, relevant and permanent. I t also features a strong environmental bias by attempting to improve the quality o f water streams, leading to an improvement o f water availability in the intervention area and in associated ecological conditions (aquatic fauna and flora), thus allowing for the sustainable use o f water resources.

5.2 Social Analysis

74. The main characteristics o f the municipalities in the Capibaribe river basin have been analyzed, as well as social indicators for eight municipalities located along the main river course and i t s main affluent, the Tapacura river. In general terms, the analysis performed allows for the following considerations:

The Capibaribe river basin concentrates a major part o f the population o f the State. The average per capita income o f the area’s population, in the year 2000, was of about 0.7 minimum wages, whereas 59% o f the people lived with less than ?4 o f a minimum wage per month on average in these municipalities. The average child mortality rate (up to five years o f age) in these municipalities i s considered high (60 per 1,000) if compared with the state average o f 54 per 1,000 and the nation-wide average o f 39 per 1,000. The municipalities that have been selected for implementation o f wastewater systems feature a population with high social vulnerability and major deficits in sanitation services, without any wastewater collection or treatment systems. There i s a high demand for improving environmental health conditions for the low income population, thus reducing their social vulnerability. The low income population will benefit from the social tariffs adopted by COMPESA, which provides subsidies o f up to 60% to those paying the minimum tariff. The PSH-PE foresees the implementation o f intra-household sewers for the l ow income population which, together with the subsidies above, will allow for the connection o f this population to the new systems.

6. OVERALL PROJECT EVALUATION

75. From a more encompassing and strategic point o f view, the set o f proposed actions to be funded by the PSH-PE will positively affect a series o f policies, plans and programs at the regional and metropolitan levels. They mostly address water conservation issues by considering both quality recuperation - which includes interventions for the de-pollution o f rivers and springs - and quantity conservation interventions, through the control o f losses in water supply systems. The whole set o f interventions, in general terms, i s expected to act as the inducer for actions and strategies associated to the water resources and sanitation plans (watershed plans,

17

state and municipal sanitation plans, etc.), thus contributing to the strengthening of sector management tools.

POSITIVE EFFECTS

a) Improvement in the Quality o f Water and the Environment

76. The treatment o f causal factors - such as the withdrawal o f affluent loads to the Capibaribe river and i ts affluent rivers through the implementation o f wastewater systems with the appropriate treatment o f effluents - i s a key element to enabling a sizable improvement to the quality o f water, thus leading to an effective reduction o f expenditures with chemicals, and improving the water availability (in both quantity and quality), with direct effects upon the quality o f l i f e o f the population residing in the region covered by the PSH-PE.

77. The recovery o f water supply reservoirs also will provide for additional gains in environmental quality, enhancing health conditions and the balance o f natural phenomena, maintaining aquatic l i f e and the associated ecological processes (aquatic fauna and flora), thus allowing for the sustainable use o f water resources in the Capibaribe river basin.

b) Improvement o f the Infrastructure Network

78. The PSH-PE i s in l ine with the Millennium Development Goals, through the improvement and expansion o f water supply and sanitation infrastructure and services in highly populated areas, which i s the case o f the Capibaribe river basin. As such improvements under the proposed project, therefore, are evident and absolutely focused on the global improvement o f health, environmental and urban development indicators.

c) Improvement of the Quality o f L i fe of the Population and of Socio-economic Indicators

79. The process o f construction o f the proposed infrastructure promotes gains in terms o f access to adequate public sanitation services, expanding the possibilities for access to wastewater systems, with direct impact upon the health o f the beneficiary population. In addition, the poor will also benefit from the social tariffs adopted by COMPESA, which provide subsidies o f up to 60% to those paying the minimum tariff, and also subsidizes the implementation o f intra- household sewers.

d) Attracting investments and private capital, thus enhancing the competitiveness of these regions, in comparison to other urban centers

80. Enhanced water availability in the Capibaribe river basin can fbrther promote and attract business activities and capital, thus strengthening the regional network o f businesses, services, trade, etc., promoting the region’s economic and environmental sustainability. I t should ne noted that the industrial textile hub in Toritama may also benefit from the development o f industrial reuse o f treated wastewater, which will allow for reduced costs o f industrial water.

e) Consolidation of strategies for regional sustainable development and the protection o f springs

8 1. The de-pollution o f water courses in association with greater local and regional water availability complies with the requirements and guidelines established by national, state and regional environmental and water resource policies. In general terms, that represents a major

18

progress towards the much-desired economic, social, environmental and institutional sustainability.

education program Adhesion campaign and program for the elimination o f storm water infiltration into sewerage connections and o f illegal sewer connection into storm water systems

Study on quality o f water and alternatives for overcoming

Carpina reservoirs.

Compensatory measures program

the eutrophication o f the Jucazinho, Tapacurh and

NEGATIVE EFFECTS 82. There are no relevant negative effects identified as the consequence o f implementing this Project at the regional level. The main negative impacts refer to the local level, deriving mostly from actions related to the execution o f the works and that can be mitigated through the adoption o f appropriate project design and execution criteria and procedures. For that end, the adoption o f criteria for the design and environmental assessment o f planned interventions i s foreseen, as well as the adoption o f a Construction Environment Manual.

83. As mentioned earlier, the PSH-PE i s an initiative that i s closely linked to environmental recuperation and to improving the quality o f l i fe o f the population o f the Capibaribe watershed. Therefore, it i s a set o f actions and measures that aim to mitigate, minimize or compensate the existing socio-economic impacts, as well as to avoid new critical or negative situations, capable o f j eopardizing the sustainability o f this environmentally sensitive region.

84. Even though the Program initially did not foresee investments in developments that may require involuntary resettlement, the program must contemplate a conceptual framework that may take into account the adoption o f appropriate technical and socio-economic actions, if necessary.

COMPESA Included in construction costs

5 10,000 SRWCPRH

120,000 S R H

7. ENVIRONMENTAL MANAGEMENT PLAN

19

Pilot study on the reuse o f lagoon effluents by agriculture Strengthening o f the monitoring o f water quality in the CaDibaribe watershed

240,000 COMPESA

175,000 ~ CPRH

500,000 Strengthening o f the watershed’s environmental management CPRH

I Watershed environmental plan I 2,900,000 I SRH/CPRH 1

STP sludge management

I Toritama Environmental Plan I 300,000 I SRH/CPRH I

250,000 COMPESA

325,000 Integrated operation o f reservoirs and water collection for MRR and the Capibaribe river basin

7.1 Institutional Arrangements for Environmental Management

SRHKOMPESA

86. The environmental management o f the PSH-PE will be performed by UEGP and by the COMPESA Office for Engineering and Environment. The UEPG will be responsible for coordinating the Project’s social and environmental actions, COMPESA’s Engineering and Environment Office will be in charge o f providing inspection, follow-up and guidance to the execution o f mitigation measures required under the environmental licenses and the recommendations o f the environmental assessments undertaken, which are specific for each subproject; for the environmental oversight o f the works, following up on the implementation o f the Environmental Construction Manual.

87. In order to fulfill these tasks, the UEGP structure will include an environment expert in i t s team and count on the support o f the environment consultants o f the company supervising the works to be hired by COMPESA, who shall be summoned to act whenever necessary. The company supervising the works also shall count with a team for the environmental construction oversight, which will be responsible to ensure the application o f the Environmental Construction Manual. This team will act in accordance with the guidelines o f the COMPESA Office for Engineering and Environment and the Environmental Construction Manual.

88. The costs o f such management activities are included under Component 1 - Management and Institutional Development. The specific costs o f mitigating measures for each subproject shall be stated under the corresponding subprojects, as an integral part o f the proposed intervention, whenever required by the licensing bodies.

89. Below the Project’s main Environmental Management tasks are presented:

Coordination of Environmental Management, carried out by UEGP, that will be responsible for the socio-environmental actions o f the project, in due coordination with

Implementation o f Resettlement framework

Implementation o f Environmental Construction Manual

20

Included in construction and SRH/COMPESA management costs Included in construction costs COMPESA

the COMPESA’s Office for Engineering and Environment and with CPRH - the State Environment Agency. Environmental Oversight of Works, carried out by the work supervision company, who will be accountable for the inspection, follow-up and guidance o f environmental actions related to the Environmental Construction Manual - E C M and the mitigation measures established by the environmental licenses and in the EMP. Environmental Planning of Works. The actions for the environmental planning o f works are the responsibility o f the construction companies, who must comply with the Environmental Construction Manual and implement the mitigation measures stated in the environmental licenses and in the works’ Bidding Documents.

0

0

7.2 Criteria and procedures for detailed project design and environmental assessment

90. The EMP sets technical-environmental criteria to be observed by COMPESA during project design and in their assessment by UEGP. UEGP shall adopt socio-environmental procedures during the execution o f the project, involving the following stages:

Phase A - Detailed Engineering Design (Concept and Engineering Designs) for Components 2 and 3. During the detailed engineering design, the following procedures must be complied with:

0

J Socio-environmental criteria for the drafting o f designs; J Environmental licensing for projects; J Outreach communication and consultation;

Environmental report, in compliance with the Bank’s environmental and social safeguards.

0 Phase B - Project Implementation (works). Procedures regarding the Environmental Oversight o f Works shall be adopted during the implementation o f the project (works).

91. During the PSH-PE execution, it i s mandatory that all works planned under the project undertake environmental studies in strict compliance with national and state legislation, the environmental licensing rules and the environmental guidelines o f the World Bank, based on detailed information contained in the feasibility studies and detailed designs to be prepared during this phase. To that effect, in addition to the environmental documents required for the environmental licensing o f each intervention, an environmental assessment shall be prepared aimed at analyzing the compliance to the World Bank environmental and social safeguards.

92. Such assessment shall be collated into specific reports to be submitted to the World Bank for approval and the issuing o f a “No Objection” statement, prior to continuing with studies, bidding procedures, start o f works, etc.

93. Due to the specific environmental assessments to be carried out by the development, mitigation and compensation or enhancement measures shall be indicated, which will integrate an environmental management plan specific for the development and included in the project costs.

21

7.3 Social Communication and Sanitary and Environmental Education

94. The purpose o f this activity i s to contribute to the implementation o f the project by involving the population that i s either directly or indirectly affected by the interventions, as well as those living in areas o f project influence. The communication plan i s geared toward actions that are related to the co-existence o f the population with the works to be implemented, which should be developed in an integrated fashion to the proposed objectives can be achieved. UEGP and COMPESA are responsible for this activity.

7.4 Program for adhesion to the wastewater system and elimination of illegal connections

95. This program plans to carry out information and education interventions, aiming to promote the value o f treated water and o f the appropriate destination o f domestic wastewater. For this purpose, i t will raise the awareness and inform the population about the importance o f households adhering to the system, provide guidance on how to use it correctly, and the deadline for doing so, in order to ensure the benefits from the implementation o f domestic wastewater collection and treatment services materialize. On that occasion, clients will be informed about the financial costs generated by the maintenance o f services to be delivered.

96. After households have been connected to the wastewater collection network, clients will receive instructions on the system’s proper use, so as to ensure i t s durability, as well as the quality o f services being delivered. During this stage, the message on the project benefits (by completing the works and the adhesion o f households to the network) will be re-enforced to beneficiaries, encouraging the adoption o f appropriate system maintenance procedures. This activity i s the responsibility o f COMPESA.

97. The population benefiting from the implementation o f water supply services also must be made aware o f the importance o f using water rationally, as wel l as o f maintaining and conserving public installations.

98. With regard to the elimination o f illegal connections, the project has two main goals: (i) the identification, registration and transfer to the wastewater collection network o f the whole sewer (household connection) that i s connected to the rainwater drainage systems; and (ii) the identification, registering and elimination o f any rainwater that may f low into the wastewater collection network.

7.5 Compensatory measures program

99. Comprises the allocation and use o f US$450,000, which represent 0.5% o f the planned wastewater systems works to be implemented in the Capibaribe river basin, in accordance with the SNUC Act, which establishes this minimum percentage as environmental compensation to be invested in Conservation Units. According to negotiations held with CPRH, the value o f environmental compensation shall be proposed for destination to State Conservation Units, including areas in the caatinga biome. The definition o f the allocation i s the responsibility o f the Council for Environmental Compensation. S R H and CPRH must agree on the destination o f funds.

22

7.6. Study of the quality of water and alternatives for minimizing the eutrophication of the Jucazinho, Tapacura' and Carpina

100. A more in-depth analysis o f the data on water quality o f the Capibaribe river basin and o f preliminary eutrophication simulation studies shows a rather severe picture in regard to the evolution o f eutrophication o f reservoirs that supply the Capibaribe river basin, with a high incidence o f cyanobacteria, especially in Carpina and Tapacura.

10 1. The results o f the existing simulation indicate the need to remove 89%, 64% and 73% o f phosphorus from cities located upstream from the Tapacura, Jucazinho and Carpina reservoirs, respectively, in order to reduce existing eutrophication tendencies. Nevertheless, the simulation only considered the volume o f domestic wastewater, without considering the volume deriving from the drainage o f urban, and agricultural areas, in addition to areas with vegetation and the industrial load.

102. Therefore, the performance o f a more detailed and in-depth study o f the river basin i s being proposed, with a simulation o f the quality o f water on along the basin and o f the eutrophication o f reservoirs. In addition to an assessment o f the operational capacities and characteristics o f each reservoir, these simulations also must analyze several alternatives for reducing the volume o f phosphorus, including for farming areas, and alternatives for wastewater treatment typologies, with the nutrient removal, including implementation, operation and maintenance costs, as well as non-structural alternatives (e.g., operation o f reservoirs).

7.7 Pilot Study on the re-use of effluents

103. As one o f the treatment alternatives to be considered for some cities in the river basin - where treatment will be performed through the use o f lagoons - i s the re-use o f effluents for farming activities. An in-depth study on i t s technical, economic and environmental feasibility i s being proposed. I t s results should include technologies to be adopted (micro-sprinkler, drip irrigation, etc.) and the removal o f nutrients, in addition to benchmarks for implementation and operation costs. Reuse o f treated wastewater may also be considered and assessed for industrial use, particularly for the Toritama textile industrial hub. 104. This study should be carried out by COMPESA, either at the WWTP o f Vitoria de Santo Antgo or o f Toritama, with support from the university or o f the Pernambuco Agronomic Institute. This study should be undertaken immediately after loan agreement i s signed with the World Bank.

7.8 Strengthening water quality monitoring in the Capibaribe river basin 105. One o f the project objectives i s to improve the water quality monitoring system o f the Capibaribe river basin, with a view to use it as an instrument for environmental management and water resource management, costs are estimated at US$ 175.000,OO.

7.9 Strengthening of Environmental Management in the river basin

106. This activity comprises the structuring o f an integrated unit for environmental Management - IUEM o f the Capibaribe and Ipojuca river basins. The objective i s improve the operational structure o f the Integrated Management Unit in the Municipality o f Caruaru for the

23

effective environmental control (licensing, inspection and monitoring) within the area o f the Capibaribe and Ipojuca river basins, with special attention to (i) the textile and clothes manufacturing industries at the “Jeans Hub” established in the municipalities o f Caruaru, Belo Jardim, Toritama, Riacho das Almas and Santa Cruz do Capibaribe; (ii) to the disciplined use and occupation o f land, especially for those developments and activities located at the banks o f the aforementioned rivers; and (iii) the sanitation projects foreseen under the Hydro- environmental Plans.

7.1 0 WWTP Sludge Management

107. The sludge generated from the operation o f the wastewater treatment plants to be implemented in the watershed must be properly disposed of. One o f the alternatives i s use by agriculture, as long as it meets existing technical and environmental standards. The rehabilitation of existing and building o f new wastewater collection networks and wastewater treatment plants will follow the Brazilian technical design standards and CPRH and CONAMA standards for the quality o f discharged effluent and sludge disposal, including continuous monitoring o f treated wastewater and sludge reuse. In addition, proposed standards will be in l ine with IFC/World Bank Group Environmental, Health and Safety Guidelines for wastewater and Environmental Water Quality. Only small- and medium-sized wastewater treatment facilities will be built, which reduces the technical complexity o f these interventions. The current program intends to support COMPESA’s efforts by means o f an agreement to be signed with the Pernambuco Company for Agricultural Research (IPA) for the development o f studies and research on the agricultural and forest use o f WWTP sludge.

108. The main objective o f this agreement i s to identify and characterize the criteria for the agricultural and forest use and management o f the WWTP sludge and to prepare a Manual on the Use and Management o f Bio-solids in the State o f Pernambuco. The agreement i s estimated to last for a 2-year period, with planned costs o f US$250,000.

7.11 Integrated operation of reservoirs and other surface water sources for the MRR and the Capibaribe river basin 109. To be defined under Component 1 - Management and Institutional Development. A summary o f this program i s included herein due to i t s importance to the recuperation of the quality o f water at the reservoirddams in the river basin.

7.12 Environmental plan for the river basin

110. Under the PROAGUA program, a study regarding the Environmental Plan for the Capibaribe river basin i s currently being prepared. The study wil l comprise a diagnosis, the identification o f sustainable scenarios and tendencies, elaboration o f investment plans, and development o f a systematized database, aimed at the revitalization and reversal o f the degradation processes under way in the river basin, in order to improve the quality and quantity o f water available.

1 1 1. This plan will feature an investment plan for the river basin, containing feasible proposals aimed at reversing the degradation process o f natural resources currently under way in the Capibaribe river basin. As such, it will give priority to improving the quality and quantity o f

24

water so as to ensure social, economic and environmental sustainability, always including the effective participation o f the community, by means o f a social and environmental agenda for mobilization and environmental education. A draft Environmental Plan i s scheduled to be completed by the end o f 2009. The proposed project has allocated about US$2.9 mi l l ion to be invested in the interventions proposed by the Investment Plan.

7.13 Toritama Urban Environment Plan

112. This plan consists in the drafting o f a Regional Environmental Assessment Study that will analyze the accelerated and disorderly process o f urban and population growth o f the municipality o f Toritama, mostly due to the implementatiodconsolidation o f the local clothing manufacturing hub (Productive Local Arrangement) in the region known as Agreste Pernambucano and i t s environmental sustainability, due to the region’s natural and socio- economic characteristics.

113. For this purpose, the Urban Environmental Assessment Study shall assess the infrastructure conditions o f the clothing sector and the industrial contamination o f the soil and water resources that are verified today. The study shall complement and provide further details on the actions planned under the Environmental Plan to be prepared for the river basin, thus allowing for the appropriate design o f physical interventions and the institutional coordination to be carried out by PSH-PE, focusing on wastewater and the control o f industrial pollution. The study should also consider the possibility o f reuse o f treated wastewater from WWTP by the local clothing manufacturing hub.

7.14 Resettlement Framework

1 14. In order to ensure the implementation o f wastewater infrastructure receives appropriate treatment in case the settlement o f population and/or compensation for businesses and land i s required, the EMP provides a framework for resettlement.

1 15. This Resettlement Framework covers the following content: (i) characteristics, objectives and rationale o f developments associated to the need for displacement; (ii). foundations and guidelines o f the Service Policy; (iii) criteria for eligibility; (iv) legal framework; (v) institutional arrangements for resettlement; (vi) mechanisms for serving communities and public consultations; (vii) costs and timeframes; (viii) proposal for ex-post monitoring and evaluation methodology; (iv) definition o f minimum content for preparing a Resettlement Plan.

126. There i s a local office next to the construction mobilization area aimed at providing support to the affected families in an easily accessible location, next to the community and with experts available full time, every day o f the week. I t i s also through this local office that the community counts with a team and customer service structure to deal with possible complaints from the population. This structure i s capable o f not only receiving the complaints but also to forward them and present adequate responses given pre-established deadlines.

1 17. The foreseen mechanism for resolving complaints, includes the following decision levels: (i) a large portion o f the complaints are expected to be resolved locally; at this level the main actors are: the families residing in the area, the social workers and the COMPESA engineers; (ii) when the complaints are not resolved at the local level, the project coordination unit located at

25

the premises o f the COMPESA i s involved in the process; (iii) the complaints that are not resolved by COMPESA will be referred to the Overall Project Management Unit located at the state level (SRH and COMPESA), more specifically to the social responsibility unit at COMPESA and to i t s ombudsman, (iv) as a last resort, pending unresolved complaints can be referred to the World Bank.

1 18. Therefore, complaint resolution will initially be addressed through the presence o f social workers at the local office on the construction site, with the possibility that the persodfamily lodging the complaint can have access to COMPESA’s social responsibility unit and ombudsman, in order to try to negotiate an adequate solution internally. It i s important to note that COMPESA i s subject to independent regulation by the Pernambuco State Regulatory Agency, and that this institution also has i ts own ombudsman office. Therefore, in case a negotiated solution i s not agreed upon at COMPESA’s level, there i s s t i l l the possibility o f referring the complaint to the ombudsman office of the Pernambuco Sate Regulatory Agency. The social work to be undertaken will include making the communities aware o f the above mentioned recourse mechanisms.

7.15 Environmental Construction Manual

119. So as to ensure that the works do not cause environmental degradation, a document has been prepared to be adopted as a guide on appropriate environmental practices to be complied with by contracted companies for the execution o f wastewater works. This document - the Environmental Construction Manual - will be incorporated into the bidding processes so that the companies may be aware o f i t s conditions beforehand and i t will become a contract requirement. I t s implementation i s the responsibility o f UEGP, COMPESA and the construction companies.

120. The Environmental Construction Manual contemplates:

J The Project’s socio-environmental management system, already described under item 1 o f the EMP.

J Environmental actions and rules regarding the implementation and management of works, which covers a plan for l iv ing with the works: (i) construction sites; (ii) risk management and emergency actions on the construction site; (iii) environmental education for workers and code o f conduct at the construction site; (iv) on-site health and safety; (v) waste management and disposal; (vi) noise control; (vii) equipment patio; (viii) traffic control; (ix) service roads.

J Environmental actions and rules related to construction activities, depending on the type o f selected developments.

J A plan for the control and rehabilitation o f areas used for disposal o f excavated material.

8. Public Consultation

121. The f i rs t public hearing on the PSH-PE was held on September 2, 2008, in Recife, to provide input to the Terms o f Reference for contracting the Project Environmental Assessment report, to be financed by the World Bank. The Hearing was held at the Capibaribe Basin Committee (COBH-Capibaribe), which called a special meeting for this end and enjoyed significant member participation. The Hearing comprised the presentation o f the PSH-PE

26

Concept and the minutes o f the terms o f reference for the social and environmental assessment. Participants were divided into three groups: (i) defining the current situation; legal and institutional framework; and (iii) social and environmental assessment. Results were presented and discussed with the whole group and resulted in the consolidation o f the terms o f reference for the contracting and drafting o f the PSH-PE Environmental Assessment Report.

122. The Second Public Hearing on the PSH-PE was held by the State Water Resources Office (SRH) on April 16, 2009. This second hearing sought to discuss once more the concept o f the PSH-PE, present intervention priorities, particularly in the Capibaribe river basin, and present the Project Environmental and Social Assessment Study.

123. The announcement o f the Public Hearing was made directly by SRH, which invited participants in from the first hearing, members o f COBH-Capibaribe, officials from other basin committees in Pernambuco and mayors’ offices. The Executive Secretariat o f the Capibaribe Basin Committee (COBH-Cabiparibe) invited all i t s members through Announcement no. 15 (March 31) and no. 18 (April 13). The latter announcement included the draft Executive Summary.

124. Additionally, S R H kept an announcement on the public hearing on i t s website since April 7, also making available the executive summary and the full version o f the Draft Environmental and Social Assessment.

125. Fifty-one people took part in the Public Hearing, among them members of COBHKapibaribe and other entities and NGO invited, especially mayors’ offices.

126. The hearing was organized to include the presentation o f the Pernambuco Sustainable Water concept and the environmental and social assessment undertaken, discussion with the whole group, organization o f issues raised, and presentation o f results panel. The hearing had intense participation from those present and made it possible to clarify many issues which concerned participants, with queries fully answered by the commission o f consultants and managers. In sum, the foci o f the main themes addressed in the Hearing were the following items:

G>

(ii)

(iii)

Water quality in the Capibaribe river and the eutrophication o f reservoirs used for public water supply, with the need for removing phosphorus and possible agricultural re-use;

The issue o f Toritama, with the need for carrying out regional and sectoral studies (jeans production chain) and the possibility o f reusing treated effluents in the industrial process.

The Hydro-Environmental Plan being developed (raised as a separate issue not directly integrated into the Basin Plan) and the need for greater clarity as to i t s necessary coordination with localhegional plans and with the programs suggested in the Project Environmental Management Plan.

The strategic project bank, and the need to develop sanitation projects (water supply and sewage) which comply with the requirements and guidelines o f different sources o f financing.

Application o f the “social fee”, necessary in sewage service provision.

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(vi)

(vii)

The need for constant institutional coordination, especially between UEGP, CPRH and COBH-Cabibaribe, throughout PSH implementation.

The need for coordination between the many PGA programs during PSH-PE execution, to be carried out by UEGP.

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