INTEGRATED ENVIRONMENTAL AND SOCIAL SAFEGUARDS MANAGEMENT FRAMEWORK (IESSMF) METRO MANILA WASTEWATER MANAGEMENT PROJECT (MWMP)

LAND BANK OF THE PHILIPPINES INTEGRATED ENVIRONMENTAL AND SOCIAL SAFEGUARDS MANAGEMENT FRAMEWORK (IESSMF) METRO MANILA WASTEWATER MANAGEMENT PROJECT (MWMP) FEBURARY 3, 2011

Table of Contents SECTION 1: PROJECT DESCRIPTION... 1 1.0 INTRODUCTION... 1 1.1. Objectives of the Integrated Environmental and Social Safeguards Management Framework... 2 2.0 PROJECT OVERVIEW... 4 2.1. Project Components... 4 3.0 SUB-PROJECT SELECTION... 5 3.1. Environmental safeguards criteria for sub-project selection... 5 3.2. Timing of Environmental Assessment (EA) in Sub-loan Preparation... 6 4.0 POLICY FRAMEWORK ON ENVIRONMENTAL AND SOCIAL SAFEGUARDS... 6 4.1. Philippine laws and regulations... 6 4.2. World Bank Safeguards Policies... 7 5.0 ALIGNING SUB-PROJECT PROCESSING REQUIREMENTS WITH ENVIRONMENTAL AND SOCIAL SAFEGUARDS ASPECTS... 8 5.1. Step 1: Identification of Sub-projects According to the Selection Criteria... 8 5.2. Step 2: Screening for Potential Environmental and Social Safeguard Impacts and Determination of Safeguard Instruments for Each Sub-project. 8 5.2.1. Environmental Safeguards Screening... 9 5.2.2. Determination of Environmental Safeguards Documents for sub-projects.. 10 5.2.3. Social Safeguards Screening... 10 5.2.4. Social Safeguards Documents... 10 5.3. Step 3: Development of Safeguards Documents Including Consultation and Disclosure... 11 5.3.1. Information Disclosure and Consultation... 13 5.3.1.1. Borrower and Sub-Borrowers Public Disclosure of Documentation... 13 5.3.1.2. WB Policy on Disclosure of the EA Reports... 13 5.3.2. Grievance redress... 14 5.3.3. Rapid response to Disasters and other Crises... 14 5.4. Step 4: Review and clearance of the safeguards documents... 15 5.4.1. Review by the Borrower... 15 5.4.2. World Bank review... 15 i

5.5. Step 5: Implementation of Agreed Actions and Supervision, Monitoring and Evaluation... 16 5.5.1. Implementation... 16 5.5.2. Supervision... 16 5.5.3. Monitoring and Evaluation... 16 5.5.3.1. DENR Procedures... 17 5.5.3.2. Sub-Project s monitoring and audit... 17 SECTION 2: ENVIRONMENTAL SAFEGUARDS... 19 The Environmental Safeguard Framework (ESF)... 19 6.0 ENVIRONMENTAL MANAGEMENT PLAN (EMP)... 19 6.1. Environmental Mitigation Plan... 19 6.2. Environmental Monitoring Plan... 20 7.0 INSTITUTIONAL ARRANGEMENTS... 20 7.1. Land Bank of the Philippines... 22 7.2. Manila Water Company, Inc.... 22 7.3. Maynilad Water Systems Inc.... 23 8.0 CAPACITY BUILDING AND TRAINING REQUIREMENTS... 24 9.0 INDICATIVE ESMF BUDGET... 24 9.1. LBP of the Philippines... 24 9.2. Manila Water Company, Inc.... 24 9.3. Maynilad Water Systems, Inc.... 24 SECTION 3: SOCIAL SAFEGUARDS... 25 The Resettlement Policy Framework (RPF)... 25 10.0 RATIONALE FOR THE RESETTLEMENT POLICY FRAMEWORK... 25 11.0 RPF OBJECTIVES... 25 11.1. Overriding Development Objectives... 26 12.0 DEFINITION OF TERMS... 26 13.0 INSTITUTIONAL AND LEGAL FRAMEWORK... 30 13.1. Institutional Framework... 30 13.1.1. LBP of the Philippines (LBP)... 30 13.1.2. Sub-project Proponent... 30 13.1.3. Local Government Units (LGUs)... 31 13.1.4. External Monitoring Agency (EMA)... 31 ii

13.1.5. Affected Communities... 32 13.1.6. Resettlement Implementation Committee (RIC)... 32 13.1.7. Valuation Committee (VC)... 32 13.1.8. Complaints and Grievance Committee (CGC)... 32 13.2. Legal Framework... 33 13.2.1. Government of the Philippines (GOP) Regulations... 33 13.2.2. World Bank Policies... 33 13.2.3. GOP and WB Policies, and Framework for MWMP... 34 14.0 OPERATIONAL GUIDELINES... 34 14.1. Screening... 34 14.2. Review of Resettlement Plans... 34 14.3. Mitigation and Compensation... 36 14.4. Modes of Acquiring Private Assets... 38 15.0 APPLICATION OF THE PARTICIPATORY PROCESS... 40 15.1. Prefeasibility... 41 15.1.1. Preliminary Meeting with LGU... 41 15.1.2. General Orientation of the Community... 42 15.1.3. Social Assessment... 42 15.2. Feasibility... 42 15.2.1. Preparation of Draft Resettlement Plan... 42 15.2.2. Presentation of Draft RP... 43 15.2.3. Community Consultation... 43 15.3. Finalization of the Resettlement Plan... 43 15.4. Project Implementation... 43 15.5. Monitoring... 43 15.6. Post Project Implementation... 44 15.6.1. Evaluation of the RP Implementation... 44 16.0 DISCLOSURE AND PUBLIC CONSULTATION... 44 16.1. Key Principles... 44 16.2. Target Population... 45 16.3. Timing... 45 16.4. Information Documentation... 45 17.0 GRIEVANCE PROCEDURES... 46 18.0 RAPID RESPONSE TO CRISES AND EMERGENCIES... 46 iii

19.0 CAPACITY BUILDING AND TRAINING REQUIREMENTS... 47 20.0 COSTS AND BUDGETS... 47 ANNEXES ANNEX 1: ENVIRONMENTAL ISSUES... A1 Annex 1A: WB Operational Policy and Bank Procedures on Environmental Assessment... A1 Annex 1B: Template for an Environmental Management Plan Checklist... A3 ANNEX 2: SOCIAL ISSUES... A9 Annex 2A: Cultural Property and Protection Measures... A9 Annex 2B: Safeguards Procedures for Inclusion in the Technical Specifications of Contracts... A11 Annex 2C: GOP Laws and Orders on Land Acquisition... A16 Annex 2D: Elements of a Resettlement Action Plan... A19 Annex 2E: Elements of an Abbreviated Resettlement Action Plan... A24 Annex 2F: Required Social Safeguards Document per Category... A25 Annex 2G: Criteria for Review of Social Aspects... A26 Annex 2H: Compensation Table... A27 Annex 2I: Terms of Reference External monitoring Agency... A34 Annex 2J: Terms of Reference Independent Appraiser... A37 Annex 2K: Grievance and Commitment Registry... A38 Annex 2L: Where to File/Raise Complaints and Grievances (Contact Persons)... A39 ANNEX 3: Summary of Public Consultation Proceedings on the MWMP IESSMF... A40 LIST OF TABLES Table 1.0 Financing Plan...5 Table 2.0 EA Requirements for Sanitation and Sewerage Projects...12 Table 3.0 Environmental Mitigation Measures and their Coverage...19 Table 4.0 Institutional Responsibilities in Environmental Safeguards...21 Table 5: Checklist of Project-Affected Persons and Assets...37 LIST OF FIGURES Figure 1: Metro Manila Wastewater Management Project IESSMF...3 iv

ACRONYMS BP CNC DAO DENR DPD EA ECC ECR EDD EIA EIS EMA EMB EMM EMoP EMP EMR EPMAR EPMD ESMF FI FS ICC IEE ISO IESSMF LBP LGU LLDA LU MWMP MWCI MWSI MWSS NOL OP PCO PD PENRO PIU PMO RP (World) Bank Procedures Certificate of Non-coverage DENR Administrative Order Department of Environment & Natural Resources Detailed Project Description Environmental Assessment Environmental Compliance Certificate Environmental Compliance Report Environmental Due Diligence Environmental Impact Assessment Environmental Impact Statement External Monitoring Agency Environmental Management Bureau Environmental Mitigation Measures Environmental Monitoring Plan Environmental Management Plan Environmental Management Report Environmental Performance Monitoring and Audit Report Environmental Program and Management Department Environmental Safeguards Management Framework Financial Intermediary Feasibility Study Indigenous Cultural Communities Initial Environmental Examination International Standards Organization Integrated Environmental and Social Safeguards Management Framework Land Bank of the Philippines Local Government Unit Laguna Lake Development Authority Lending Units Metro Manila Wastewater Management Project Manila Water Company, Inc. Maynilad Water Services, Inc. Metropolitan Waterworks and Sewerage System No Objection Letter Operational Policy Pollution Control Officer Presidential Decree Provincial Environment & Natural Resource Office Project Implementation Unit Project Management Office Resettlement Plan v

RAP RIC ROW SA SLA Resettlement Action Plan Resettlement Implementation Committee Right of Way Social Assessment Subsidiary Loan Agreement - World Bank vi

SECTION 1: PROJECT DESCRIPTION 1.0 INTRODUCTION 1. The Philippines has been maintaining strong economic growth due to activities in urban areas, especially around Metro Manila. As the urban areas continue to grow, the challenge of providing sustainable urban services arises, especially relating to sanitation and water. Since 1997, water supply, sewerage, and sanitation services in Metro Manila have been assigned by the Manila Waterworks and Sewerage System (MWSS) to be managed by the two private concessionaires: Manila Water Company Inc. (MWCI) for the east zone and Maynilad Water Services Inc. (MWSI) for the west zone. The east and west concession zones serve about 5.7 and 7 million, respectively. However, sewerage coverage remains very low at 16 percent in the east zone and 8 percent in the west zone. The need to increase the sewerage coverage in Metro Manila is particularly important in achieving the timelines set in the Clean Water Act and the Supreme Court mandamus decision to realize an improved water quality in Manila Bay. MWCI plans to increase coverage in the east zone to 30 percent in 2010 and 100 percent by 2037. This expansion is expected to cost almost US$800 million in investments. In the west zone, MWSI also plans to expand its wastewater collection and treatment services to 14 percent by 2012 and to 100 percent by 2037, which is expected to cost around US$1.7 billion. 2. In order to meet the objectives of increasing the coverage and effectiveness of wastewater collection and treatment as well as septage management in Metro Manila and its suburbs, the Government of the Philippines is preparing the Metro Manila Wastewater Management Project (MWMP) through the Land Bank of the Philippines (LBP), which will act as the financial intermediary and Borrower for the project, and through the two concessionaires -- MWCI and MWSI, which will be the Sub-Borrowers. 3. Key stakeholders were invited to attend a public consultation which was publicly announced two weeks before the consultation date which is October 5, 2010. The full version of the Integrated Environmental and Social Safeguards Management Framework (IESSMF) was distributed to the invited participants at least a week before the consultation. Copies were made accessible to the public through the Department of Environment and Natural Resources (DENR), the Borrower and the Sub-borrowers. The IESSMF was presented and discussed in detail during the consultation, which was attended by the project stakeholders with representations from various national and local government agencies and select non-government institutions. The consultation was held October 5, 2010 at the Air Quality Training Room, Environmental Management Bureau, DENR (see Annex 3 for a summary of the proceedings). 4. The Borrower, Land Bank of the Philippines, presented an overview of the proposed project and its safeguards oversight function during the implementation of this project. The concessionaires, Maynilad and Manila Water, presented a summary of their proposed sub-projects and provided a detailed presentation of the environment and social aspects of the IESSMF and the standard procedures that will be followed during sub- 1

project design and implementation. An Open Forum capped the consultation, which ended with the government pledging its support to ensure the successful implementation of the project. The IESSMF was updated to incorporate the comments received during the consultation. 5. Separate public consultations and environmental and social impact assessments will be conducted in each of the sub-project site locations to ensure that concerns of key stakeholders, site-specific issues and local conditions are considered in each of the subproject designs, the Environmental Management Plan and the Resettlement Action Plan. 1.1. Objectives of the Integrated Environmental and Social Safeguards Management Framework 6. The IESSMF will establish the objectives, procedures, institutional framework, and implementation arrangements for identifying and managing potential environmental and social impacts of the project activities. It will form part of the project s Operations Manual and is referenced in the project s Legal Agreements. It will address mechanisms for public consultation and disclosure of project documents as well as redress of possible grievances, and includes guidance on rapid response to crises and emergencies in case this is needed during project implementation. 7. Its objectives are: To establish clear procedures and methodologies for the environmental screening, review, approval and implementation of sub-projects to be financed under the Project; To specify appropriate roles and responsibilities, and outline the necessary reporting procedures, for managing and monitoring environmental concerns related to sub-projects; To determine the training, capacity building and technical assistance needed to successfully implement the provisions of the Environmental Safeguards Management Framework (ESMF); and To identify funding requirements for the ESMF implementation for inclusion in the project cost. 8. The IESSMF is composed of two parts: Part 1- Environmental Safeguard Framework (ESF); and Part 2- Resettlement Policy Framework (RPF). 2

Figure 1 below summarizes the process of both environmental and social safeguards that will be applied for the Metro Manila Wastewater Management Project. Figure 1: Metro manila Wastewater Management Project IESSMF 3

2.0 PROJECT OVERVIEW 9. The Philippines has been maintaining strong economic growth due to activities in urban areas, especially around Metro Manila. As the urban areas continue to grow, the challenge of providing sustainable urban services arises, especially relating to sanitation and water. Investments on sanitation and wastewater collection and treatment (around P1.5 billion per year nationwide) have not kept pace with the needs and much remains to be done. 10. The development objective of the MWMP is to improve wastewater services in Metro Manila and suburbs, thereby reducing the pollution load of Manila Bay, the catchment area of all domestic and industrial wastewater for the Metro Manila area. This will be achieved by supporting the two concessionaires in increasing the coverage and effectiveness of wastewater collection and treatment as well as septage management. 11. For this investment project, Land Bank of the Philippines (LBP) will act as the Borrower, while the two concessionaires, MWCI and MWSI, will be the Sub-Borrowers. 2.1. Project Components 12. The project is designed to allow flexibility for the concessionaires in deciding on the best approach to improve their delivery of sewerage services for Metro Manila. It is expected to be effective in early 2011 and the implementation period will be for seven years. This will allow the draw-down of Bank loan funds by the two concessionaires until 2017 to achieve service obligations agreed upon in the extension of the concession period, which involves acceleration and doubling of sewerage investments to comply with the Supreme Court decision to improve the quality of Manila Bay. 13. The project has two components, namely: Component 1: Investment Loans for MWCI and MWSI. These are investments that are necessary to improve wastewater services. Eligible investments will include wastewater collection and treatment, and septage management. Consulting assignments related to project implementation are also eligible. These would include: preparation of feasibility studies, construction supervision, preparation of environmental and social safeguard reports, preparation of project summary reports and audit reports, and public awareness campaigns to inform the citizens about the project and the benefits of better wastewater services. These sub-projects have not been identified and will be defined during implementation. Component 2: Disaster Response and Recovery Contingency Financing. This is a zero-value component which will allow for rapid reallocation of project funds for reconstruction activities through streamlined procurement and disbursement procedures. 4

14. A draft cost and financing plan for the project is shown below. This plan is subject to change and will be updated during appraisal. Table 1: Financing Plan [This table needs to be updated after the loan amount is confirmed] COMPONENT COST (US$ mln.) FINANCING* (US$ mln.) Bank Concessionaire 1. Investments and 100 100 0 Technical Assistance 2. Disaster Response and Recovery Contingency Financing 0 0 0 Total 100 100 0 * Subject to revision 3.0 SUB-PROJECT SELECTION 15. The selection of the sub-projects follows a framework approach, which is used when the principles of a project and the criteria for sub-project selection are determined before appraisal, since not all individual investments can be identified and appraised before World Bank (WB) Board approval. 16. A sub-project is defined as an activity, or grouping of like activities that are within a primary sector (in this case sanitation and sewerage) covered by the project. Each subproject is bound by the legal requirements of the project, including fiduciary and safeguards aspects. Three general types of sub-projects are likely to be included: (a) those eligible for retroactive financing under the project; (b) straightforward construction/rehabilitation sub-projects; and (c) those that arise in response to crises or emergencies. 3.1. Environmental safeguards criteria for sub-project selection 17. For sub-projects, five selection criteria, relating to environmental safeguards, have been agreed by the Bank and the Borrower, and these are listed below. All sub-projects shall: i. Be consistent with the Metro Manila Sanitation and Sewerage Master Plan and other local development plans which reflect Government policies and procedures; ii. Have obtained the necessary clearances and permits from national and local regulatory agencies and in accordance with relevant national, provincial, and local standards, procedures and codes; 5

iii. Be designed to ensure sustainable service delivery, including the financing of equipment and capacity building; iv. Be designed based on a rational and efficient option analysis including technical, financial, social, environmental and safety considerations; v. Be consistent with World Bank OP/BP 8.00. These will be given first priority if they address restoration of destroyed or damaged services or facilities financed under the project. 18. The Bank team will confirm the initial project eligibility screening. After each subproject is prepared, the Bank team will conduct prior review and appraisal of the subprojects deemed complex. In the case of all other sub-projects the Bank team will conduct post-review on a sampling basis during supervision of the simpler sub-projects. 3.2. Timing of Environmental Assessment (EA) in Sub-loan Preparation 19. The basic approach in the preparation of an environmental assessment report is to have it simultaneous, closely coordinated, and integrated with the preparation of the subproject feasibility study. In doing this, all environmental aspects and impacts will be included right from the beginning to facilitate the proper selection of sub-project alternatives that will bear the minimal amount of environmental risk or negative environmental impact. 20. For eligible sub-projects a Detailed Project Description (DPD), will be prepared and an appropriate environmental assessment shall be conducted prior to engineering design. The assessment of predicted environmental impacts shall be the basis for the Sub- Borrower and the design consultants to select appropriate sub-project alternatives. 4.0 POLICY FRAMEWORK ON ENVIRONMENTAL AND SOCIAL SAFEGUARDS 21. The IESSMF is developed in line with the relevant national and local laws and regulations and the World Bank Safeguards Policies. The safeguards requirements for the project will build upon these national guidelines and requirements in order to streamline, to the extent possible, the documents required for each sub-project without compromising in any manner the Safeguard requirements of either the government or the World Bank. 4.1. Philippine laws and regulations 22. The following national laws and regulations relevant to the environmental safeguards and the protection of water bodies from pollution provide the basis for the overall framework of the ESF: Presidential Decree (PD) No. 1586, 1978 on the Environmental Impact Statement (EIS) System; Republic Act No. 9275, 2004 on the Philippine Clean Water Act; 6

Presidential Proclamation No. 2146, 1981 on Environmentally Critical Projects / Areas; Administrative Order No. 42 by the Office of the President 2002, describing categories of projects and areas subject to the EIS System; DENR Administrative Order No. 2003-30, the Implementing Rules and Regulations (IRR) for the Philippines EIS System (2003), and its Revised Procedural Manual issued August 2007; and Memorandum Circular No.: 2010-14 Standardization of Requirements and Enhancement of Public Participation in the Streamlined Implementation of the Philippine EIS System. 4.2. World Bank Safeguards Policies 23. The following World Bank policies will or are likely to be triggered by the potential sub-projects: OP/BP 4.01 Environmental Assessment: Individual sub-projects will be screened and assigned the appropriate environmental categorization and environmental due diligence will be conducted in accordance with OP 4.01. A technical guidance note on the preparation of an Environmental Management Plan/mitigation measures (EMP), including use of standard Environmental Codes of Practices for contractors are included in this framework. OP/BP 4.04 Natural Habitats: Field visits and the location of potential sub-projects in urban areas indicate that natural habitats are unlikely to be adversely affected. Nevertheless, all sub-project proposals will be screened for potential adverse impacts on critical and non-critical natural habitats and suitable mitigation measures if any needed will be prepared as part of the sub-project specific EA and EMP. OP/BP 4.11 Physical Cultural Resources (PCR): Whenever a sub-project includes reconstruction or preservation of historic or archeological sites, PCR management plans would be prepared for those sub-projects, either as part of the sub-project specific EIA or as a stand alone document. All sub-projects will be reviewed for their potential impacts on PCR in the context of their respective EIA/EMP and procedures will be included in all relevant standard bidding documents to deal with chance finds during construction. A technical guidance note on Preparation and implementation of PCR management plans is included in this framework. OP/BP 4.12 Involuntary Resettlement: Land acquisition and involuntary resettlement are anticipated under the project, particularly for sub-projects involving service expansion or reconstruction at new sites. For this reason, OP 4.12 will be triggered. Sub-projects will be screened for land-related impacts and resettlement action plans will be developed and implemented. A technical guidance note on Preparation and implementation of resettlement documents is included in this framework. OP/BP 8.00 Rapid Response to Crises and Emergencies: In the event that an actual or imminent natural or man-made crises or disaster happens that would cause major 7

adverse economic and social impacts, the Bank may provide rapid responses to a Borrower s request for urgent assistance. These include activities that support rapid response and relief to recovery operations. 5.0 ALIGNING SUB-PROJECT PROCESSING REQUIREMENTS WITH ENVIRONMENTAL AND SOCIAL SAFEGUARDS ASPECTS 24. As sub-projects will be identified and proposed for financing in a continuous manner during the project implementation period, screening for potential environmental and social impacts will be conducted and mitigation and management measures will be developed in line with the agreed IESSMF. 25. Environmental and social impact screening, mitigation and management measures development and implementation will follow these steps: Step 1 - Step 2 - Step 3 - Step 4 - Step 5 - Identification of sub-projects according to the selection criteria; Screening for potential environmental and social safeguard impacts and determination of safeguards documents required according to national regulations and World Bank policies; Preparation of safeguard documents, consultation and disclosure; Review and clearance of the safeguard documents; and Implementation of agreed actions; and supervision, monitoring, and evaluation 5.1. Step 1: Identification of Sub-projects According to the Selection Criteria 26. During Step 1, the environmental and social specialists/consultants employed by the Sub-Borrower will participate in the identification and selection of sub-projects. They will evaluate and provide input, as appropriate, on ways to optimize the sub-project concepts to reduce environmental and social impacts. 5.2. Step 2: Screening for Potential Environmental and Social Safeguard Impacts and Determination of Safeguard Instruments for Each Sub-project 27. Once sub-projects have been identified, the Sub-Borrower, will ensure that the subprojects are aligned with the screening process undertaken by DENR for its potential environmental and social safeguard impacts to determine the nature and extent of the environmental and social due diligence needed before Borrower and Bank approval of each sub-project. The choice of instruments (EA, Environmental Management Plan [EMP], Resettlement Action Plan [RAP], etc.) for each sub-project depends on the nature and magnitude of its potential impacts. Because the evaluation of the expected environmental and social impacts requires specialized technical skills, the Sub-Borrower may employ qualified environmental and social specialists as well as consultants to assist them in this task. 28. The success of an environmental safeguards screening is dependent on adequate baseline environmental data, technical expertise, good planning, management support, 8

and coordination with key players and decision makers. The Sub-Borrower must provide DENR with: a clear and concise statement of work including the expected technical and procedural standards to be met; available background information; EA documents standards; a reasonable schedule of deliverables; budgetary allocations; and procedures for post-review and comment, to include consolidation and clarification of comments by the Sub-Borrower before delivery to the EA team. 5.2.1. Environmental Safeguards Screening 29. With respect to environmental screening of sub-projects, the national regulations and World Bank policies are considered on the whole to be closely-related; both are impact-based and will require the Sub-Borrower to identify and assess potential impacts to environmental components such as water, air, land and natural habitats and biodiversity. 30. For specific screening according to World Bank policies, the Sub-Borrower will use the screening tool in Annex 1A to propose an environmental classification for each subproject as follows: Category A: A sub-project of this type would have significant adverse environmental impacts that are sensitive, diverse, or unprecedented. These impacts may affect an area broader than the physical works. Category B: A proposed sub-project may have some adverse environmental impacts, but less adverse than those of Category A projects. These impacts are typically site-specific; few if any of them are irreversible; and in most cases mitigation measures can be readily designed. The great majority of sub-projects for rehabilitation and reconstruction works are likely to fall in this category. Category C: A proposed sub-project is likely to have minimal or no adverse environmental impacts. 31. The screening results will be cross-checked with national regulations, in order to determine the applicable EA documentation requirements. Three possible instruments are specified in the regulations: (a) Environmental impact assessment (EIA) report; (b) Initial Environmental Examination (IEE); and (c) Project description. In those cases where the EA documentation required by the regulations is not equivalent in depth and scope to those required by the World Bank safeguard policy requirements, the latter will apply. 9

5.2.2. Determination of Environmental Safeguards Documents for sub-projects 32. The environmental safeguards documentation requirements for each sub-project will be determined based on the screening procedures, as follows: Category A: Sub-projects will require an Environmental Impact Assessment (EIA) and an Environmental Management Plan (EMP) prepared in accordance with Bank requirements Moreover, all bidding documents will include a standard contract clause for chance finds of physical cultural resources (refer to relevant guidance notes Annex2B). The Sub-borrower will consult with the Borrower and the Bank team during preparation of all safeguards documents for Category A projects. Both the EIA and the EMP will be submitted to the World Bank for review and clearance. Category B: Sub-projects will require an EIA or simplified EIA (as required under the laws and regulations) and or an EMP (as per the Bank policy) consisting, at a minimum, of standard environmental codes of practices supplemented, if necessary, with additional analysis. The sub-project specific EMP and/or standard environmental codes of practices, including coverage of how to handle chance-finds of physical cultural resources, will be included in all construction contracts/ bidding documents. Category C: Sub-projects that are rated Category C do not require environmental safeguards documents, but will comply with the regulatory requirement for registration. 5.2.3. Social Safeguards Screening 33. Every sub-project will be screened by the Sub-borrower for social impacts, including: (a) the need, if any, for land acquisition and involuntary resettlement (permanent or temporary); (b) the impacts on the population to be affected; and, (c) whether there is an ethnic minority community that would be affected by the sub-project (as determined through a review the demographic information in the sub-project areas). 34. In addition to any requirements to meet World Bank policies, the Sub-borrower will also screen the sub-projects for national/provincial laws and regulations regarding land acquisition and involuntary resettlement. 5.2.4. Social Safeguards Documents 35. The Social Safeguards documents for each sub-project depend on the sub-project s impacts, as follows: A resettlement action plan (RAP) is required if over 200 people will need to be involuntarily resettled. If fewer people need to be resettled, then an abbreviated RAP will be required, including if land acquisition or compensation for land already acquired under post-earthquake regulations is required. A social assessment (SA) is required if social impacts of significance are expected. 10

5.3. Step 3: Development of Safeguards Documents Including Consultation and Disclosure 36. Once the screening and documentation requirements are agreed by the Bank and confirmed by the DENR, the Sub-Borrowers will develop detailed safeguard documents and impact mitigation measures. 37. The EA Report, EMP and other documents (i.e., project study) necessary for application for the Environmental Compliance Certificate (ECC) shall be prepared by the Sub-Borrower. Subsequently, the Sub-Borrower shall then submit the documents to the DENR to comply with the ECC requirements. 38. It is the responsibility of the Sub-Borrowers to carry out the necessary EA required by the IESSMF, and to obtain the environmental clearances for each sub-project before starting the construction. Sound environmental practices have to be incorporated into the sub-project design and implementation, and potential negative impacts will have to be mitigated to acceptable levels / standards. The Sub-Borrowers are responsible for the quality and accuracy of the information in the EA document, as well as the transmission of the EA documents to DENR. 39. As the loans for investment financing are channeled to the Sub-Borrowers through the LBP, LBP shall require sub-projects to comply with existing environmental laws. The LBP s Environmental Program and Management Department (EPMD) has the environmental expertise to oversee the Sub-Borrower in carrying out the EA and attaining environmental compliance to the conditions and statement of the ECC / EMP. 40. For all Category A projects, the Bank will provide advice to the Sub-Borrowers during the preparation of the documents. For Category B projects, Sub-Borrowers are encouraged to liaise closely with the Borrower and the Bank if any issues arise that may require clarification from the Bank on the application of Bank policies. 41. Safeguard documents will be subject to consultation and disclosure in an accessible place, in a timely manner, in a form and language understandable to key stakeholders, prior to the finalization of the documents. Particular attention will be given to ensure project-affected persons have adequate time and ready access to draft documents before consultation takes place. 42. Consultation for Category A projects and projects that require RAPs, or Social Assessments (SAs) will be undertaken at least twice during the preparation: at the beginning of the preparation of documents to scope environmental and social issues as well as prior to finalization of the safeguards based on the preliminary results of the required safeguard documents in order to take into account public concerns before submitting final documents to the Bank. 11

Table 2: EA Requirements for Sanitation and Sewerage Projects (Category B) EA process Philippine EIA Law (PD 1586) Screening Category B: Threshold of coverage domestic wastewater treatment facility: equal to or greater than 5,000 cubic meters per day World Bank OP 4.01 Environmental Assessment Category B: Projects whose potential adverse environmental impacts are moderate, manageable and sitespecific Harmonized EA requirements Category B: Potential adverse environmental impacts shall be moderate, manageable and site-specific Public Consultation Conduct of EA and documentary requirements Review and Approval Public Disclosure Public Hearing/ Consultation Category B: Programmatic expansion applications: Environmental Performance Report and Management Plan (EPRMP). EPRMP and ECC DENR website and public library and available at the EIA office Public Hearing/ Consultation of project affected groups and local NGOs Category B: Potential adverse environmental impacts in Project Appraisal Document (PAD), Project Identification Document (PID), Integrated Safeguards Data Sheet (ISDS) Environmental Management Plan (EMP) Public consultations/ hearings IESSMF; 1 st year EMPs PAD PID ISDS EMP Public Hearing/ Consultation of project affected groups and local NGOs Environmental Management Plan (EMP) 1) Mitigation measures 2) Monitoring 3) Capacity development and training 4) Implementation schedule and cost estimates Public consultations/ hearings IESSMF 1 st year EMPs IESSMF PID EMP PAD (after WB Board approval) ISDS (after WB Board approval) Monitoring and reporting Environmental Compliance Report Semi-annual selfmonitoring reports EMP Annual third party audit report Environmental Compliance Report Semi-annual self- monitoring reports of ECC and EMP 12

EA process Philippine EIA Law (PD 1586) Annual Third party audit report World Bank OP 4.01 Environmental Assessment Harmonized EA requirements Annual third party audit report 5.3.1. Information Disclosure and Consultation 43. Information disclosure and public consultation are important and necessary in subproject preparation and implementation. These enable sub-project affected people and other stakeholders to participate in and contribute to the sub-project planning and implementation, and thereby help minimize sub-project adverse impacts and maximize sub-project benefits. The level of public consultation and the scope of information dissemination will be commensurate with the environmental category of the sub-project and the significance of the social impacts. 44. Information to be disclosed will include, at a minimum: sub-project design, impacts, and proposed mitigation measures. During the design and implementation phases, this information will be updated and continually made available to stakeholders. Disclosure means could vary, but may include posters, booklets, newspapers, the internet, and community meetings. All safeguard documents will be disclosed at a public place accessible to affected groups and other stakeholders prior to consultation to establish the basis for meaningful consultation. Disclosure and consultation mechanisms will be planned and detailed in the relevant safeguard documents. 5.3.1.1. Borrower and Sub-Borrowers Public Disclosure of Documentation 45. Public disclosure of documentation shall be in accordance with LBP s Executive Order No. 073 series of 2009 on Guidelines on Classification, Handling, Access and Disclosure of Information Assets, including any amendments thereof. 46. In view of the World Bank s Access to information Policy and Open Data Initiative, the Borrower and Sub-Borrowers shall allow disclosure of information regarding environment and social safeguards. 5.3.1.2. WB Policy on Disclosure of the EA Reports 47. Whenever the WB requires an environmental assessment (EA), the Sub-borrower prepares an EA report as a separate, free-standing document. The EA report is publicly available: after the Sub-Borrower has made the draft EA report available at a public place accessible to project-affected groups and local NGOs in accordance with OP/BP 4.01, Environmental Assessment, and 13

after such EA report has been officially received by the WB, but before the WB begins formal appraisal of the project. 48. For financial intermediary (FI) operations or sector investment operations that are expected to have sub-projects which, for environmental screening purposes, are classified as Category A under OP/BP 4.01, Environmental Assessment, each identified participating FI or the responsible project entity provides the WB, before the beginning of formal project appraisal, with an assessment of the institutional mechanisms or framework in place for conducting the EAs for such Category A sub-projects. 49. Any separate reports for Category B sub-projects are made available to project affected groups and local NGOs. Public availability in the borrowing country and official receipt by the World Bank for projects proposed for funding, are prerequisites to World Bank appraisal of these projects. 50. Once the Sub-Borrower officially transmits the Category A and B EA reports to the Borrower and the Bank, the Bank distributes the summary in English to the Executive Directors and makes the report available through its InfoShop. 5.3.2. Grievance redress 51. A grievance redress mechanism for the project is necessary for addressing legitimate concerns of affected individuals and groups who may consider themselves deprived of appropriate treatment under the project. The Sub-Borrower s mechanism would include: (a) a recording and reporting system, including grievances filed both verbally and in writing; (b) designated staff with responsibility at various levels; and (c) a time frame to address the filed grievances. This mechanism will be detailed in the subproject safeguards documents. The functioning of the grievance redress mechanism will be regularly monitored and evaluated by the Borrower during project implementation. 5.3.3. Rapid response to Disasters and other Crises 52. In the event that a natural disaster or a crisis occurs, the significant environmental issues that may be encountered should be immediately addressed once the disaster or crisis is under control. A specific environmental mitigating measure would require the management of wastes so as not to further harm people and the environment. This could entail the collection and disposal of large quantities of garbage from the treatment facilities that would include destroyed pumps and other mechanical equipment, debris of all types -- with possibly hazardous materials. 53. The immediate steps to be taken to address the environmental impacts generated by the project during natural disasters should be part of the mitigating measures identified in the Environmental Management Plan. A swift action plan should also be put in place by the Sub-Borrower to immediately bring back the treatment facilities back to working condition. The actions taken should be included in the Environmental Compliance report and the self-monitoring report that will submitted by the Sub-Borrower to the LBP, DENR-Environmental Management Bureau (EMB) and the WB. 14

5.4. Step 4: Review and clearance of the safeguards documents 5.4.1. Review by the Borrower 54. Review of the environmental and social safeguards documents, according to national regulations, is the responsibility of the Borrower; these documents are to be cleared by the WB. In line with its environmental credit policy, the Borrower shall monitor the Sub-Borrower s compliance with the WB safeguard policies. 55. The Borrower will exercise environmental due diligence (EDD) by keeping records of sub-project EA reports, feedback / technical information, and ECCs / Certificates of Non-Coverage (CNCs). Environmental safeguards documents may undergo substantive review by the Borrower, particularly if pressing environmentally critical issues exist. The Borrower shall conduct EDD for MWMP sub-projects, as follows: i. Description of both the positive and negative impacts to provide a balanced risk assessment. It will also recognize the DENR as the sole governmental organization that is mandated to issue ECCs based on the Philippine Environmental Impact Statement (EIS) System Law (PD No. 1586). Sub- Borrowers are required to coordinate with the DENR-EMB to certify that the proposed sub-project/s underwent environmental assessment prior to finalization and implementation of plans. ii. Environmental assessment and monitoring shall be conducted until project completion. Thereafter, the Borrower will continue monitoring of environmental compliance of the sub-projects consistent with its environmental policy on credit delivery, until the loan is fully paid. iii. LBP-EPMD is unit assigned to conduct assessment/monitoring on the environmental compliance of approved sub-projects. 5.4.2. World Bank review 56. The requirements for review and clearance of the environmental documents by the World Bank are as follows: Category A: The EIA/EMP and other relevant documents (e.g., Dam Safety Programs (DSPs), PCR management plans) for all Category A sub-projects will be subject to World Bank standard review and clearance procedures prior to approval of the sub-project. Category B: The Simplified EA (or IEE) and EMP for Category B sub-projects will not be subject to World Bank review and clearance prior to approval of the subproject. However, these documents will be post-reviewed on a selective basis during supervision missions. Category C: No review required by the World Bank. 57. The requirements for review and clearance of the social documents by the World Bank are as follows: 15

All RAPs, abbreviated RAPs, and SAs will be subject to review and clearance by the World Bank prior to approval of the sub-project. 5.5. Step 5: Implementation of Agreed Actions and Supervision, Monitoring and Evaluation 5.5.1. Implementation 58. Implementation of the safeguards measures during sub-project implementation is the responsibility of the Sub-Borrowers. Any costs associated with the government EA process (i.e., filing and processing fee of EA report) and cost of environmental monitoring shall be shouldered by the Sub-Borrower. The Sub-Borrower should put up its own funds for EA / ECC processing since the loan does not finance any processing fee and cost associated with review charged by DENR. 5.5.2. Supervision 59. The Sub-Borrowers will be responsible for the implementation of the EMP and social safeguard-related actions approved by the government and the Bank. The World Bank task team will regularly visit the sub-project areas throughout project implementation in order to: provide guidance in the preparation of safeguards instruments; review the screening results, due diligence review report, and safeguard documents of proposed sub-projects; and supervise the implementation of the safeguards instruments to ensure they are implemented in compliance with the Bank policy requirements. 5.5.3. Monitoring and Evaluation 60. Sub-projects that are covered by the Philippine EIS System are required by DENR Administrative Order (DAO) 2003-30 to conduct regular self-monitoring of parameters indicated in the sub-project s EMP. 61. The primary purpose of compliance monitoring is to ensure the implementation of sound and standard environmental procedures as defined during the project preparation. Specifically, it aims to: monitor project compliance with the conditions set in the ECC; monitor compliance with the EMP and applicable laws, rules and regulations; and provide a basis for timely decision-making and effective planning and management of environmental measures through the monitoring of actual project impacts vis-avis the predicted impacts in the EIS / IEE. 16

5.5.3.1. DENR Procedures 62. All projects covered by the Philippine EIS System which have been issued an ECC shall be subjected to periodic monitoring by the DENR ( i.e., compliance and impact monitoring in accordance with established procedures and protocols). Within the framework of the Philippine EIS System, the responsibilities of monitoring projects are lodged with the EMB regional offices to which the latter can request for the assistance of the DENR Provincial Environment & Natural Resource Office (PENRO). 63. As a minimum requirement in compliance monitoring, DENR-EMB shall focus on the following: status of Sub-Borrower s delivery of commitment made in its EMP (or, in the case of IEE Report, the Summary Matrix of Impacts); effectiveness of the committed EMP in mitigating project s environmental impacts; and meeting the terms and conditions of the ECC. 5.5.3.2. Sub-Project s monitoring and audit 64. The Sub-Borrower shall monitor compliance with the conditions of the ECC and the EMP and carry out the requisite data collection during both the pre-construction and construction phases. The Sub-Borrower must satisfy this requirement by submitting an Environmental Compliance Report (ECR), which includes an Environmental Monitoring Plan (EMoP) and a Self- Monitoring Report (SMR) on a semi-annual frequency ( i.e., within January and July of each year) to the concerned DENR-EMB regional office. Copies of the submitted ECR and SMR must be provided in two sets to the Borrower for reference and review purpose. One set of the EMR received by the Borrower will be transmitted to the WB for record keeping. 65. Semi-annual ECRs and SMRs shall be submitted to DENR-EMB, the LBP-EPMD and the WB, including: presentation of the collected data; discussion on the compliance or non-compliance to the EMP and ECC; conclusions and recommendations; and photos of environmental monitoring and adherence to mitigating measures. During the sub-project developmental phase, the Sub-Borrower shall furnish the LBP- EPMD copies of the ECR prepared for the pre-construction and construction stages of the sub-project. Once construction works are completed, the Sub-Borrower shall submit a statement of environmental closure for the construction phase to the LBP-EPMD, DENR- EMB and WB. 66. During the sub-project operational phase, the Sub-Borrower shall continue the submission of ECRs and start the submission of the SMR to LBP-EPMD, DENR-EMB and WB on a semi-annual basis. The Sub-Borrower will also commission the conduct of 17

an Annual Third Party Environmental Performance Audit and submit the Audit report to the LBP-EPMD, DENR and the WB for review and evaluation. If any irregularities are observed in the third party audit, the LBP-EPMD will report its findings to the Sub- Borrower and discuss the measures to be taken. 67. During the operational stage of the sub-project, the Borrower shall oversee the compliance and performance of the Sub-Borrower based on the environmental documents that the Sub-Borrower will prepare, including an Annual Third party Environmental Performance Audit of the project (e.g., EMP, Self-Monitoring Reports, wastewater laboratory results (if applicable), etc.) and will conduct site validation to substantiate the documents during LBP-EDD schedules and WB Missions. 68. An LBP Environmental Compliance Report (ECR) shall be prepared by the Borrower to determine the sub-project s compliance with the environmental requirements. The LBP ECR shall be submitted by EPMD to LBP s Corporate Banking Department I CBD-I with recommendations to the Sub-Borrower on noted deficiencies in the required environmental documents. 69. Monitoring and validation of the sub-project shall be undertaken annually by the Borrower until project completion to document the environmental performance of the project and note irregularities/inconsistencies/non-conformities, if there will be any. An Environmental Performance Monitoring and Audit Report (EPMAR) to include recommendations to the Sub-Borrower on noted observations/non-compliances on their operations, shall be prepared annually by EPMD and submitted to CBD-I. Thereafter, the Borrower will continue monitoring of environmental compliance of the sub-project consistent with its environmental policy on credit delivery, until the loan is fully paid. 70. Apart from the DENR review of the EA report, the WB will also conduct a review of projects to make sure the Borrower is implementing the framework adequately. WB staff will advise and support the Borrower in carrying out its responsibilities. Within the WB, operational staff will provide information to the Borrower and ascertain whether policy requirements have been met. 18

SECTION 2: ENVIRONMENTAL SAFEGUARDS The Environmental Safeguard Framework (ESF) 6.0 ENVIRONMENTAL MANAGEMENT PLAN (EMP) 71. An EMP describes possible adverse effects that the proposed projects may pose to the environment. It recommends mitigation measures, and how will they be implemented. It monitors both positive and negative effects of the project, designates the entity responsible for implementing the EMP, and estimated costs and sources of funds. Annex 1A provides the WB Operational Policy 4.01, Annex C covering what constitutes an Environmental Management Plan. Annex 1B presents a template for an EMP checklist that includes four sections: a General Project and Site Information Form, Safeguards Information, a Environmental Mitigation Measures, and an Environmental Monitoring Plan. 6.1. Environmental Mitigation Plan 72. Environmental Mitigation Measures (EMMs). Table 3 below shows examples of environmental mitigation measures (EMMs) in an Environmental Mitigation Plan that forms part of the EMP. The Environmental Mitigation Plan should include identification of the institution responsible for implementing the measures and the costs. See Annex 1B. Table 3: Environmental Mitigation Measures and their Coverage Activities generating Impacts Key Issues Addressed Project Preparation Incorporation of environmental concerns in project (Planning & Design) preparation to avoid impacts in construction and operation stages Avoidance of siting in sensitive areas that are prone to flooding or landslides, etc Compliance with legal requirements. Site Preparation Relocation of utilities, common property resources and cultural properties Avoidance of adverse effect on waterways Construction Camps Avoidance of sensitive areas for location of construction Quarry sites Avoidance of agriculture lands as quarry sites Topsoil Salvage, Storage & Replacement Drainage Redevelopment of quarry sites Topsoil removal from areas temporarily/permanently used for construction Reuse of topsoil at areas to be revegetated Conduct of hydrological investigations during 19