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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

2 Integrated Safeguards Data Sheet (ISDS) Section I Basic Information Date ISDS Prepared/Updated: May 7, 2004 A. Basic Project Data A.1. Project Statistics Country: Brazil Project: Additional Financing-BRAZIL/ Espírito Santo Water and Coastal Pollution Management Project Project ID: P TTL: Franz R. Drees-Gross Report No.:AC706 Total project cost (by component): US$62.3 m of which (i) Water supply US$8.6m; (ii) Sewerage US$39.3; (iii) Institutional strengthening of CESAN US$2.9m; (iv) Institutional strengthening of SEAMA/IEMA US$2.0m; (v) Supervision and contingencies US$9.5m. Appraisal Date: March 22, 2004 Board Date: June 17, 2004 Other financing amounts by source: Managing Unit: LCSFW Lending Instruments: Specific Investment Loan Is this project processed under OP 8.50 (Emergency recovery? Environmental Category: B A.2. Project Objectives Loan/Credit amount($m): IBRD: 36 CESAN (State Water Company) ($26.3m) Sector: Sewerage (80%);Water supply (20%) Yes? [ ] No? [] Safeguard Classification: A US$154 million loan for the Espírito Santo Water And Coastal Pollution Management Project was approved by the Board on June 28, The estimated total project cost at appraisal was US$308 million, including US$92.5 million in counterpart funds from the State of Espírito Santo and US$61.5 from the State Water Company, CESAN. The project became effective on December 19, 1994 and was hampered by uneven implementation performance (both by CESAN and the State Secretariat for the Environment (SEAMA)) and a lack of counterpart funds (mainly those owed by the State Government) during much of its original 5-year implementation period. Significantly, the State Government failed to secure a parallel loan from the European Investment Bank (EIB) which, it was thought at appraisal, would cover all or most of the State Government s counterpart funding obligations. By the original closing date (December 31, 1999), a large number of sewage collection systems in the Grande Vitória and Guarapari areas remained unfinished and unconnected to sewage transmission, treatment and disposal infrastructure. Against this backdrop, the project was radically restructured in late 1999 and early 2000, US$54 million were cancelled from the loan to bring the project s overall size in line with the State s ability to implement it and the original closing date was extended three times for a total of three and half years. After the restructuring, implementation performance improved significantly, to the point where the Bank agreed in late 2002 to reinstate a total of US$12.5 million in previously cancelled loan proceeds to complete on-going works. By the time loan 3767-BR closed on 30 June,

3 2003, the original US$308 million operation had become a more limited US$183 million operation with commensurate reductions in physical outputs and institutional achievements. An addition loan of US$36 million is now proposed to help the State Government meet the project s original development objectives: 1. to improve the efficiency of CESAN s water supply and sewerage systems by supporting the company s efforts to operate on a commercial basis with financial self-sufficiency; 2. to increase the coverage level of CESAN s water supply and basic sanitation services (i.e. sewage collection, treatment and disposal) in the urban areas of Grande Vitória, Guarapari and other towns in the Santa Maria and Jucu river basins; and 3. to provide appropriate water and sanitation infrastructure in low-income urban areas of Grande Vitória and Guarapari. A.3. Project Description The additional loan would finance activities under the following four components: 1. Sanitation. Construction of additional sewage collection networks that would connect to the trunk infrastructure built with financing from loan 3767-BR. In addition to allowing about 354,000 additional people to enjoy the benefits of piped sewerage, the proposed investments are key to increasing CESAN s revenues from sewage charges and fundamental to increasing capacity utilization of 4 large sewage treatment plants (STP s) in Grande Vitória and Guarapari. In addition to the sewage investments that connect to existing infrastructure CESAN will construct sewage collection and treatment systems in other municipalities in the project area. 2. Water Supply. Capacity expansions for raw water intakes and water treatment plants, construction of storage tanks and distribution mains to improve the quality and service continuity of water supply in the Grande Vitória and Guarapari metropolitan regions. The proposed investments would complement the water supply infrastructure constructed with financing from loan 3767-BR. 3. Institutional Strengthening of SEAMA/IEMA. This component would strengthen the environmental management capacity of the State Secretariat of the Environment and Water Resources (Secretaria de Estado do Meio Ambiente e Recursos Hídricos / SEAMA) which is charged with defining Espírito Santo s environmental policies and its sister institution, the State

4 Environmental Institute (Instituto Estadual de Meio Ambiente e Recursos Hídricos / IEMA) which is responsible for carrying them out. Possible activities include (i) the design of an institutional strategy for SEAMA/IEMA; (ii) implementation of an integrated environmental information system; (iii) improvements to the environmental licensing process in Espírito Santo; (iv) implementation of a monitoring network for water resources; (v) construction of a water resource management system; (vi) environmental education. 4. Institutional, Financial and Operational Strengthening of CESAN. This component would include activities designed to (i) improve CESAN s financial and operational performance; and (ii) to hold CESAN accountable to its customers in terms of performance. A.4. Project Location and salient physical characteristics relevant to the safeguard analysis: Water supply and sewerage investments will be located in Grande Vitória (Vitória, Vila Velha, Cariacica, Serra, Viana municipalities) and Guarapari. All of these areas (except for Cariacica and Viana) have beaches and in-land waterways that are contaminated by uncollected and untreated sewage discharges. The project will improve the quality of these water bodies by connecting additional users to existing secondary sewage treatment plants and by constructing new systems in unserved areas (Nova Almeida/Praia Grande as well as Manguinhos in Serra; Viana, Guarapari (center)). B. Check Environmental Category A [ ], B [], C [ ], FI [ ] Comments: C. Safeguard Policies Triggered Yes No Environmental Assessment (OP/BP/GP 4.01) [] [ ] Natural Habitats (OP/BP 4.04) [ ] [] Pest Management (OP 4.09) [ ] [] Cultural Property (draft OP OPN ) [ ] [] Involuntary Resettlement (OP/BP 4.12) [ ] [] Indigenous Peoples (OD 4.20) [ ] [] Forests (OP/BP 4.36) [ ] [] Safety of Dams (OP/BP 4.37) [ ] [] Projects in Disputed Areas (OP/BP/GP 7.60) * [ ] [] * By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas

5 Projects on International Waterways (OP/BP/GP 7.50) [ ] []

6 Section II Key Safeguard Issues and Their Management D. Summary of Key Safeguard Issues. D.1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts. The original project was classified as Category B under the Bank's environmental guidelines, and an Environmental Impact Assessment (EIA) was carried out at the time of the original appraisal. For the activities to be financed under the proposed additional loan, an updated Program Environmental Assessment and an updated Environmental Management Plan were prepared and discussed in public consultations in Espírito Santo. Water supply and sanitation investments to be carried out under the additional loan are classified as category B and are not expected to have either major negative environmental impacts or to involve resettlement of population in the project area. Specific environmental assessments for individual investments will be carried out as required by local law. Issues that arise in conjunction with the implementation of works will be addressed through the incorporation of environmental guidelines for contractors as part of bidding documents. These guidelines will include rules on the disposal of construction waste in pre-approved landfills, communication with local communities, pedestrian safety, dust and noise abatement measures, etc. These guidelines have been reviewed by Bank environmental specialists. Expansion of wastewater service is expected to lead to a significant increase in sewage collection with health benefits both for local residents along polluted water ways and for users of Espírito Santo s beaches more generally. No impact on Cultural Property is expected, though appropriate procedures exist to cope with chance finds during construction. D.2 Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area. None. D.3. Describe the treatment of alternatives (if relevant) N/A. D.4. Describe measures taken by the borrower to address safeguard issues. Provide an assessment of borrower capacity to plan and implement the measures described. As stated under D.1., the Borrower has produced an updated Program Environmental Assessment and an updated Environmental Management Plan that have been reviewed by the Bank. The Borrower s overall capacity to plan and implement the proposed investments is demonstrated by performance over the last 3.5 years of project implementation under loan 3767-BR. To strengthen Borrower capacity further, the proposed additional loan will also finance strengthening activities for the SEAMA/IEMA system, Espírito Santo s state environmental planning and implementation institutions. Some of these activities (including hydro-dynamic modeling of receiving water bodies) are a direct result of the updated Program Environmental Assessment. D.5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. The updated Program Environmental Assessment and an updated Environmental

7 Management Plan were prepared and discussed in public consultations in Espírito Santo in January and February, 2004 after wide-spread publicity via radio and TV. Overall project environmental impacts on stakeholders are expected to be extremely positive, as proposed sewerage investments will improve water quality at beaches and in inland water ways. Construction may cause temporary traffic and noise inconvenience, which will be minimized through appropriate construction guidelines in the bidding documents.

8 F. Disclosure Requirements Date: 7 May, 2004 Environmental Assessment/Audit/Management Plan/Other: Date of receipt by the Bank 20 Feb, 2004 Date of in-country disclosure Feb, 2004 Date of submission to InfoShop 4 March, 2004 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors Resettlement Action Plan/Framework/Policy Process: Date of receipt by the Bank Date of in-country disclosure Date of submission to InfoShop Indigenous Peoples Development Plan/Framework: Date of receipt by the Bank Date of in-country disclosure Date of submission to InfoShop Pest Management Plan: Date of receipt by the Bank Date of in-country disclosure Date of submission to InfoShop Dam Safety Management Plan: Date of receipt by the Bank Date of in-country disclosure Date of submission to InfoShop If in-country disclosure of any of the above documents is not expected, please explain why. Section III Compliance Monitoring Indicators at the Corporate Level (To be filled in when the ISDS is finalized by the project decision meeting) OP/BP Environment Assessment: Yes No Does the project require a stand-alone EA (including EMP) report? If yes, then did the Regional Environment Unit review and approve the EA report? Are the cost and the accountabilities for the EMP incorporated in the credit/loan? OP/BP Natural Habitats: Yes No Would the project result in any significant conversion or degradation of critical natural habitats? If the project would result in significant conversion or degradation of other (non-critical) natural habitats, does the project include mitigation measures acceptable to the Bank? OP Pest Management: Yes No Does the EA adequately address the pest management issues? Is a separate PMP required?

9 If yes, are PMP requirements included in project design? Draft OP 4.11 (OPN 11.03) - Cultural Property: Yes No Does the EA include adequate measures? Does the credit/loan incorporate mechanisms to mitigate the potential adverse impacts on physical cultural resources? OD Indigenous Peoples: Yes No Has a separate indigenous people development plan been prepared in consultation with the Indigenous People? If yes, then did the Regional Social Development Unit review and approve the plan? If the whole project is designed to benefit IP, has the design been reviewed and approved by the Regional Social Development Unit? OP/BP Involuntary Resettlement: Yes No Has a resettlement action plan, policy framework or policy process been prepared? If yes, then did the Regional Social Development Unit review and approve the plan / policy framework / policy process? OP/BP 4.36 Forests: Yes No Has the sector-wide analysis of policy and institutional issues and constraints been carried out? Does the project design include satisfactory measures to overcome these constraints? Does the project finance commercial harvesting, and if so, does it include provisions for certification system? OP/BP Safety of Dams: Yes No Have dam safety plans been prepared? Have the TORs as well as composition for the independent Panel of Experts (POE) been reviewed and approved by the Bank? Has an Emergency Preparedness Plan (EPP) been prepared and arrangements been made for public awareness and training? OP Projects on International Waterways: Yes No Have the other riparians been notified of the project? If the project falls under one of the exceptions to the notification requirement, then has this been cleared with the Legal Department, and the memo to the RVP prepared and sent? What are the reasons for the exception? Please explain: Has the RVP approved such an exception? OP Projects in Disputed Areas: Yes No Has the memo conveying all pertinent information on the international aspects of the project, including the procedures to be followed, and the recommendations for dealing with the issue, been prepared, cleared with the Legal Department and sent to the RVP? Does the PAD/MOP include the standard disclaimer referred to in the OP? BP Public Disclosure: Yes No

10 Have relevant safeguard policies documents been sent to the World Bank's Infoshop? Have relevant documents been disclosed in-country in a public place in a form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies: Yes No Have satisfactory calendar, budget and clear institutional responsibilities been prepared for the implementation of the safeguard measures? Have safeguard measures costs been included in project cost? Will the safeguard measures costs be funded as part of project implementation? Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures? Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately reflected in the project legal documents? Signed and submitted by: Name Date Task Team Leader: Franz R. Drees-Gross 7 May, 2004 Approved by: Name Date Regional Safeguards Coordinator: Juan David Quintero 7 May, 2004 Comments: Sector Manager: John Stein 7 May, 2004 Comments: