INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized I. Basic Information Date prepared/updated: 07/19/ Basic Project Data Original Project ID: P INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE Report No.: AC6376 Original Project Name: BR - Integrated Water Management In Metropolitan Sao Paulo Project ID: P Country: Brazil Project Name: Sao Bernardo Integrated Water Management in Sao Paulo Program Task Team Leader: Oscar E. Alvarado Estimated Appraisal Date: December 7, Estimated Board Date: March 29, Managing Unit: LCSUW Lending Instrument: Adaptable Program Loan Sector: General water, sanitation and flood protection sector (89%);Public administration- Water, sanitation and flood protection (11%) Theme: Urban services and housing for the poor (37%);Pollution management and environmental health (27%);Water resource management (23%);Land administration and management (7%);Other urban development (6%) IBRD Amount (US$m.): IDA Amount (US$m.): 0 GEF Amount (US$m.): 0 PCF Amount (US$m.): 0 Other financing amounts by source: Borrower Environmental Category: A - Full Assessment Simplified Processing Simple [] Repeater [] Is this project processed under OP 8.50 (Emergency Recovery) or OP 8.00 (Rapid Response to Crises and Emergencies) [ ] No [] 2. Project Objectives The overall objectives of the Mananciais Horizontal APL Program are (i) to protect and maintain the quality and reliability of MRSPs water resources and potable water sources; (ii) to improve the quality of life of the poor populations residing in key targeted urban river basins in MRSP; and (iii) to strengthen institutional capacity and improve metropolitan management and coordination in MRSP in water resources management, water pollution control, land-use policy and basic service provision. 3. Project Description The Mananciais Horizontal APL Program is designed to respond to the land-use, water resources, environmental and social challenges described above by providing a vehicle which brings together State and municipal government interventions designed to reverse

2 the deterioration in the headwaters (mananciais) water bodies, improve land-use planning and control, increase the living conditions of the peri-urban poor residing in the reservoir basins, and strengthen and consolidate metropolitan institutional capacity in these fields. It will do so by building on the experience and the lessons learned from the predecessor Bank-financed Guarapiranga Program. The strategy adopted for the design of the Mananciais Horizontal APL Program and the content of its components considered the following design aspects: (i) the need for an integrated approach involving a number of public entities from both the State and municipal governments in the metropolitan region, as well as involving the Alto Tiete river basin committee and its respective sub-basin committees; (ii) the importance of institutional capacity building, of the refining of public policies, and of overarching coordination, in order to deal with metropolitan wide challenges; (iii) the prioritization of investments in basic urban environmental infrastructure such as water supply and wastewater systems, and the management of drainage and solid waste; (iv) the urbanization of informal/irregular settlements and slums in MRSP s key river basins; and (v) the importance of investments in water quality monitoring and evaluation, in research and diagnoses of tropical reservoir behavior and other key questions addressed by the Program, and in improving the technology and processes in water treatment plants. The interventions under the respective components of the Program, described in more detail in Annex 4 of the PAD, were identified by adopting the following analytical methodology: the current land-use patterns in the two mostly highly urbanized reservoir basins, Guarapiranga and Billings (where three-quarters of the Program's resources will be invested), were mapped and loaded into a land-use/water quality computer-based mathematical model (MQUAL 2.0). This model was then used to identify the major pollution sources in the two reservoirs. There was a very strong correlation identified between the highly urbanized areas of the basins, in general, and pollution load and between the informal and densely occupied areas of the basin, more specifically, and the pollution rates. The mapping also identified the pockets of poverty in these two basins and established their correlation with pollution loads. This mapping and modeling exercise of land-use, pollution loads and poverty rates was then used as a basis to identify and prioritize the types of physical intervention to be undertaken in the two basins: water supply; wastewater collection and treatment; solid waste management and disposal; drainage; urban upgrading; social inclusion interventions; and leisure areas and parks. As identified under the mapping and modeling exercise, the Program will undertake physical interventions in urban environmental infrastructure and urban upgrading with a prioritization of activities in those MRSP river basins that are already heavily urbanized and degraded (Guarapiranga and Billings), as well as initiating actions in those basins that are further from the city center but also witnessing similar pressure of informal urbanization (in order to help them get - ahead of the curve- with regard to land-use planning and water pollution control and thus not become the Guarapiranga and Billings of the next generation) - namely, the Alto Tiete-Cabeceiras, the Juqueri-Cantareira, and the Alto and Baixo Cotia basins. Under the leadership of GESP, the Program will also

3 support strategic activities to promote the sustainability of the interventions as well as to promote metropolitan wide management and coordination. The Horizontal APL has been organized into four components: (i) Institutional Capacity Building; (ii) Urban Integration; (iii) Environmental Protection and Recovery; and (iv) Integrated Water Supply and Sanitation. The last component incorporates activities related to a broader concept of integrated water supply and sanitation, as described in the recently-approved Federal WSS Law (11.445/2007), namely: water supply, sanitation, drainage, and solid waste management. A summary of the Program s description and costs by component is given below. Component 1 - Institutional Capacity Building (US$ million total, US$16.97 million loan). To achieve the objectives of the Mananciais Horizontal APL Program and to ensure its long term sustainability, an Institutional Capacity Building component has been designed to support GESP and the other executing agencies by strengthening their institutional capacity and promoting improved metropolitan management and coordination with regard to the key metropolitan challenges of water resources management, water pollution control, land-use policy, and basic service provision. The component will support the following activities: (i) improved integrated land-use and water resources management; (ii) environmental and water quality monitoring; (iii) environmental education and social outreach; and (iv) Program management, monitoring, evaluation and dissemination. Component 2 - Urban Integration (US$ million total, US$ million loan). The component's objectives are to improve the standards and layouts of urban occupation in the targeted basins and improve the quality of life of the residents of these basins, especially the low-income communities living in informal settlements. Component 2 will support the following activities: (i) Urbanization of slums and irregular settlements; (ii) Recuperation of high-risk and degraded areas; (iii) Involuntary resettlement; (iv) Preparation of housing plans; (v) Environmental and urban layout standardization of settlements; and (vi) Socio-environmental supervision for urban upgrading and housing interventions. Component 3 - Environmental Protection and Recovery (US$ million total, US$ million loan). The component's objectives are to protect and recover natural habitats and environmentally sensitive and degraded areas in the sub-basins with a view to improving environmental quality. Component 3 will support the following activities: (i) Revegetation and reforestation; (ii) Urbanization of public areas with creation of green and leisure spaces for common use; (iii) Establishment of environmentally protected areas; (iv) Rehabilitation and protection of reservoirs and water production systems; and (iv) Control of the transportation of hazardous substances in the region. Component 4 - Integrated Water Supply and Sanitation (US$ million total, US$ million loan). The component's objectives are to reverse the main factors that contribute to the pollution of the reservoirs and to provide integrated WSS services to the poor. Component 4 will support the following activities: (i) Wastewater management

4 improvements; (ii) Water supply system improvements; and (iii) Solid waste management improvements. The proposed Program will be implemented as a series of projects and their corresponding loans under a Horizontal APL, implemented over a six-year period. The participants under the APL will be: the State Government of São Paulo (GESP); the State Water Utility (SABESP); and the municipal governments of São Bernardo do Campo (PMSBC) and Guarulhos (PMG), under four individual Specific Investment Loans. The APL Program represents a whole that is greater than the sum of its parts and the cumulative impacts of the Program interventions will be more than the sum of the individual impact of each loan. Nevertheless, each eligible borrower can commence its interventions without having to wait for the other loans to be initiated. Given delays in approving individual loan packages, all four borrowers were not given simultaneous clearance to negotiate. The Horizontal APL structure is designed to allow subsequent loans to be presented to the Bank once they have been given the requisite clearance to negotiate. The GESP project, which is designed to provide for the coordination of all other Program activities, and SABESP's project, which represents the largest loan and the Program's major driver, are part of the package approved with the APL Program PAD Report No BR by the Board on July 9, 2009; became effective on December 21, 2010 and March 24, 2010, respectively. The PMSBC and PMG projects are presented as Annexes 16 and 17 respectively of the original Program PAD. The Municipality of São Bernardo do Campo will undertake activities under three of the components of the Mananciais Horizontal APL Program. The interventions envisaged under Component 2 - Urban Integration - include engineering designs and implementation of civil works needed for urban upgrading of poor neighborhoods (inter alia infrastructure for water and sanitation, drainage, paving, social equipment, etc.), complemented by the evacuation of risk areas and resettlement of families with the provision of housing units. Guarulhos Municipality would undertake activities under two of the components comprising water and sanitation works in the neighborhood named Bairro Água Azul. The main justification for the prioritization of these investments is the current inadequate conditions of service provided and the commitment with the Public Hearing Ministry for making the investments (existing TAC - Termo de Ajustamento de Conduta). 4. Project Location and salient physical characteristics relevant to the safeguard analysis The areas of intervention of the Program are the reservoirs/sub-basins located within the Sao Paulo Metropolitan Region, in the Alto Tiete river basin, that are used for providing public water supply to the city, namely: Billings, Guarapiranga, Alto Tiete-Cabeceiras, Juqueri-Cantareira and Alto and Baixo Cotia. The entire surface area of the Alto Tiete basin km2 - virtually coincides with the physical limits of the Sao Paulo

5 Metropolitan Region; it is a heavily urbanized river basin, comprising 35 municipalities containing 17.7 million people. In São Bernardo do Campo the choice of the selected area for investments is justified by the following criteria: (i) the area is within the headwater-reservoir systems (#mananciais#); (ii) it has a strategic environmental condition, close to the inflow to the SABESP water intake for its water supply system (Sistema Rio Grande); (iii) it contains precarious at-risk settlements lacking of infrastructure, demanding complex and comprehensive civil works solution and a significant percentage of resettlement; (iv) it contains aggregated areas that concentrate deficient and inadequate housing and social vulnerability; (v) it has active social organizations; (vi) there is potential for integrated solutions to the existing sewage infrastructure operated by SABESP and (vii) it takes into account a detailed review of the local legislation context to comply with the State Law /2009 regarding the Billings reservoir protected areas, changes already in course for the Municipal Master Plan and development of the PLHIS (Local Housing Plan focused on Poor Population). In Guarulhos the works for the implementation of the water supply system will demand land acquisition, to ensure an area near the Bairro Água Azul. The track record shows that the SAAE (the Municipal Water and Sanitation Utility, and project's implementing agency) has experience conducting land acquisitions procedures with friendly agreement resolutions. The Municipality highlighted the existence of a local law that restricts the execution of paving works in urban areas unless there are water supply and sewage systems. 5. Environmental and Social Safeguards Specialists Mr Jose Alexandre Monteiro Fortes (LCSUW) Ms Clarisse Torrens Borges Dall Acqua (LCSEN) 6. Safeguard Policies Triggered No Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60)

6 II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: The proposed Program has received Environmental Category "A" rating in accordance with the corresponding safeguard policies. The Mananciais Horizontal APL Program triggers the following safeguards: OP 4.01 (Environmental Assessment); OP 4.04 (Natural Habitats); OP 4.11 (Physical Cultural Resources), OP 4.12 (Involuntary Resettlements); and OP 4.37 (Safety of Dams). These policies are addressed in detail in the Program#s Environmental and Social Impacts Assessment Report and in the ISDS submitted for the Program's first and second phases (ISDS No.- AC2966). The PMG and PMSBC subprojects trigger all of these policies except for OP 4.37 on Safety of Dams, as no activities involving reservoirs that depend on the operation of existing dams are planned for phases three and four of the Program. Consequently, this policy is not included in the subproject-specific discussion of applicable safeguards that follows." Environmental Assessment (OP 4.01): A regional strategic environmental assessment was prepared by the Borrower in conjunction with the State Secretariat for the Environment. The Environmental and Social Impacts Assessment (ESIA) Program reports were worked out and updated by Sao Bernardo do Campo and Guarulhos municipalities for its specifics annexes. The infrastructure interventions will generate temporary negative environmental impacts during their respective construction periods, even in those cases where the interventions are intended to mitigate existing areas of degradation and risk. It will therefore be necessary to adhere to the appropriate criteria and procedures in the ESIA report's Environmental Manual for Construction (EMC) to be handled with suitable construction techniques and procedures. The EMC will be included in the bidding documents (civil works). The environmental impacts of the Program works interventions are duly described in the ESIA report and summarized in Annex 10 of the PAD for each executing agency. The list includes a group of activities, studies and programs to mitigate, attenuate and/or counteract the negative impacts caused by the implementation of the civil works, as well as highlighting the expected positive effects of the interventions. These activities are also presented in the annexes of the ESIA report, in the Environmental Management Plans of each executing agency and in the updated ESIA annexes prepared by each municipality. Environmental assessments and management plans of associated works such as the main sewerage lines have also been reviewed. Natural Habitats (OP 4.04): Category 1 and Permanent Preservation Areas (APPs) are located along the banks of the reservoirs and the watercourses which are targeted under the Program. These areas include stretches that have been degraded by irregular urban occupation, including poorly-constructed dwellings. They also contain conservation areas and other areas that could be recuperated. The interventions in these areas will focus on relocating families, and subsequent environmental and landscape restoration of the degraded area in question. In the case of partially degraded areas or those that are still

7 preserved, the strategy will be to protect and preserve them with actions to recuperate and establish a number of parks (including linear parks on the banks of the Billings Reservoir). Long-term management of these areas will be provided for by the Municipality's environmental secretaries with/without support from local NGOs. Involuntary Resettlement (OP 4.12): A Resettlement Policy Framework (RPF) for guiding the involuntary resettlement to be carried out under the Program has been prepared in accordance with Bank guidelines and safeguards. The Resettlement Action Plans (RAPs) for each sub-project that entails resettlement will be prepared along with the engineering designs during Program implementation. Each RAP will be sent to the Bank for review and clearance before the associated civil works contract is signed and thereafter implemented. The work plans designed for Sao Bernardo do Campo describe a set of interventions in precarious settlements, including housing upgrading and new housing units, provision of infrastructure and social equipment, recreational areas, strategy for land regularization, participation and social inclusion actions and an ex-post evaluation. Multiples alternatives for resettlement will be offered, such as external resettlement in a new area in the same neighborhood, internal resettlement and regularization of urban land tenure, internal transfer and also guaranteed credit for another option of housing acquisition. The eligibility criteria are well described and complete, removing units from protected areas (e.g. APP (Area de Preservação Permanente) and/or located in risk areas, as well as houses with poor construction standard. For Guarulhos municipality, the demand already identified is restricted to land acquisition for the construction of a pumping station. There are two ways in which land is likely to be needed: (i) permanent land acquisition; and (ii) permission on the part of a landowner to guarantee permanent access to a portion of this area for maintenance purposes. In the second case, only involuntary easements are to be covered by a RAP. Physical Cultural Resources (OP 4.11): The Project is not expected to impact historic and cultural heritage areas of Sao Bernardo do Campo e Guarulhos. However, since the intervention will include construction and excavation activities to expand and replace infrastructure, the ESIA included screening for any known cultural property in the Program area and incorporated "chance find" procedures in the event that culturally significant resources are discovered during implementation. In addition, Brazil has a well-developed legislative and normative framework, which is under the oversight of the National Institute for Protection of Historical and Archeological Sites (IPHAN) and that will be followed during implementation. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: - To maintain operational control of the reservoirs. The main positive environmental impact expected is the maintenance of the operational control of the potable water reservoirs, by countering the further deterioration of the present water quality of the reservoirs and thus ensuring the continued use of the waters as potable supplies for the residents of the Sao Paulo Metropolitan Region (MRSP). By way of example, the chart in Annex 10 illustrates the expected results of the Program interventions designed to preserve and improve the water quality of the Guarapiranga reservoir by controlling the

8 phosphorus loads entering it. The non-execution of the Guarapiranga Program would almost certainly have led to a substantially more deleterious situation with regards to water quality than exists today; to not implement the Mananciais Program would allow for the continued deterioration of water quality of Guarapiranga and MRSP s other mananciais and associated reservoirs. - To improve the water quality of the watercourses that presently contribute significantly to impairing the quality of the reservoirs. Extending the coverage of the wastewater collection system in the Guarapiranga and Billings catchment areas will result in improved water quality in the watercourses which flow to the respective reservoirs. The Program activities to contribute to this goal include: (i) slum and irregular settlements urbanization which will contribute decisively to improving the water quality in these watercourses by tying these informal areas into the wastewater, drainage and solid waste infrastructure; (ii) urbanization and the resettlement of families living in at-risk homes from landslides and flooding will also contribute to improving the quality of the urban and social occupation in the headwaters basins, and hence the quality of the surrounding water bodies; (iii) recuperation of degraded areas that will contribute to improving water quality and to reducing the transportation of sediments and the consequent silting-up of the watercourses and thence the reservoirs themselves. - To control irregular occupation of the reservoir areas and improve urban land use. The Program will achieve this through activities including: (i) the implementation of urban parks and the recovery of degraded areas which will help to discourage new irregular land occupations, enhance orderly land occupation, and afford better leisure facilities for the population; (ii) the implementation of new public spaces and leisure areas which will also improve the opportunities for recreation and leisure activities in the urbanized slums, the irregular settlements, and along the banks of the reservoirs; (iii) actions targeted at institutional strengthening, technical and technological capacity-building and management training, together with improved environmental monitoring and inspection, as well as the monitoring of land use and occupation, that will contribute to better management of the human occupation of the basin, focused especially on increasing the control of irregular occupation; and (iv) environmental and sanitary promotion campaigns that will contribute to awareness building within the communities with regard to appropriate land-use development, the importance of connecting to sewer systems, appropriate community behavior with regard to solid waste disposal and the use of drainage and sewer systems, etc. The Program consists of a group of activities targeted at social-environmental improvements and the correction and mitigation of the problematic and vulnerable environmental and social situations that have been identified in the sub-basins. The Program will directly benefit approximately 3,000 families with slum urbanization, out of which 1,200 families with new housing units, and around 3,500 inhabitants that will receive improved WSS services (850 housing units). In addition, the Program will indirectly benefit a wider population residing in the Alto Tiete basin with improved water supply quality and improved environmental conditions of the region s water resources.

9 The negative impacts of São Bernardo do Campo and Guarulhos project interventions could arise from the civil works and therefore need to be handled with suitable construction techniques and procedures. The ESIA contains the Environmental Construction Manual for inclusion in the bidding documents (civil works). The most relevant impacts are positive; Project interventions will generate widespread and significant positive environmental impacts. Furthermore, the interventions could well encroach on the permanent preservation strip of the reservoirs and water courses and in the event that this takes place, appropriate landscape and environmental recovery measures must be taken. The interventions will therefore require upgrading housing, relocation and resettlement of around 3,000 families in São Bernardo do Campo and also 850 housing units (3,500 inhabitants) with new WSS services in Guarulhos. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. Among the pressing problems facing MRSP, the region s water supply and demand balance is a critical issue for the city s competitiveness and economic growth. MRSP s extremely low per capita water availability is comparable to that prevailing in the driest areas of the Brazilian Northeast. Half of the city s potable supply is imported from neighboring river systems, which is contentious given the demands of other conurbations vying for the same water. The remainder comes from headwater-reservoir systems (mananciais) within MRSP itself. The Guarapiranga and Billings reservoirs make crucial contributions, together providing potable water for some 25 percent of MRSP s population (or some 4.8 million people). Recent forecasts for the metropolitan region indicate that by 2015 there will be a serious risk of demand outstripping supply - with such projections assuming that MRSP's currently operational mananciais (Guarapiranga, Billings and other systems) will remain fully utilized or further expanded. Should Guarapiranga and Billings be lost as raw water bodies for the city supply, the nextnearest sources to replace them are at great distance and could only be brought to MRSP at multi-billion Real costs, and with considerable environmental impact concerns for the development and transmission of these alternative water supplies. During program preparation, two main evaluations were carried out. The economic analysis explored the benefits of the intervention on the water bodies by estimating the opportunity cost of the water sources. To determine the net incremental costs and benefits, with and without program scenarios were constructed. In the without program scenario, increasing operation costs related to the use of additional chemical reagents, and to the development of alternative potable sources in the future (including their incremental operational costs for electricity, chemicals, etc), were compared with the with program scenario which involves considerable investment costs in the first five years but lower operational costs. In addition, an evaluation and comparison of the data of the areas in the basin that contribute the most for phosphorus load to the water bodies, plus data of population density and poverty in these areas, assisted the program team in better defining the main areas and types of interventions that would cause major positive impacts on the quality of

10 water of the reservoirs and the watercourses that feed them, as well as positive impacts on the quality of life of the basins resident population. 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. The borrower's capacity to handle safeguard issues is generally good. The State Secretariat for Water, Sanitation and Water Resources (SSRH, former SSE) leaded the preparation of the regional strategic environmental assessment, the social assessment and the resettlement policy framework for the Program, in close collaboration with the State Secretariat for the Environment and the State Secretariat for Housing. All three secretariats, as well as the State Water Company, have considerable experience with World Bank, IDB, JBIC and other financers for programs which include environmental and resettlement issues. These three secretariats were responsible for the implementation of the Bank-financed Guarapiranga program from , with a total cost of US$ 400 million, which successfully implemented similar environmental and resettlement activities in the Guarapiranga sub-basin The proposed activities to be implemented under the Program have been developed during preparation to the conceptual level of design. During Program implementation the respective interventions will be detailed to the level of final engineering designs for the civil works interventions and to the levels of final terms of reference for the consultancies assignments. Regarding safeguard policies, specific Environmental and Social Impacts Assessment (ESIA) reports for each municipality were conducted during the preparation of the project. These reports identify the potential impacts associated with different typologies of Project investments (urbanization civil works, resettlements works, recovery of protected areas, water supply and sanitation systems and reduction of water losses), call for minimization of Project impacts; specify the guidelines and procedures to be used in assessing environmental and social impacts during the sub-project design stage; and provide guidance on the preparation of Environmental Management Plans to address sitespecific impacts during sub-project implementation. There is a sequenced approach to safeguards management: (i) safeguards procedures and frameworks have been prepared; (ii) site-specific simplified EAs will be carried out for all sub-projects with potential environmental and social impacts and impact mitigation/compensation plan drawn up, as needed; and (iii) environmental supervision of civil works, during implementation process, as described in Operational Manual (item Environmental and Social Procedures). The scope of the specific EA, including the Environmental Management Plan (EMP), will include: (i) a description of the sub-project and assessment of alternative options; (ii) identification of Project impacts; (iii) mitigation programs; (iv) arrangements and timetable consultations; (v) specification of grievance mechanisms; (vi) institutional responsibilities; (vii) timetables; (viii) budgets; and (ix) monitoring and evaluation plan. These analyses will be complemented by the requisite environmental impact studies that are an obligatory requirement for applying for environmental licenses in accordance with

11 the environmental legislation of the State of Sao Paulo. The corresponding individual environmental impact assessment (EIA) reports will be submitted to the Bank for analysis and approval. The preliminary, installation and operational environmental licenses related to each of the civil works interventions will also be submitted to the Bank. Submission to the Bank of the preliminary license for a particular intervention will be a condition for the bidding of the corresponding works, and submission of the installation license a condition for signature of the associated works contract. These implementation conditions will be presented in the respective loan agreements. Besides the ESIA report, the borrower also prepared a Resettlement Policy Framework. The Resettlement Policy Framework developed for the Program was designed to guide the resettlement process for the families living in risk-prone areas that will be targeted with investments under the Program. Activities under Component 2 of the Program (Urban Integration) will involve the resettlement of approximately 1,200 families. Precise resettlement action plans (RAPs) will be developed in consultation with area residents and in conjunction with the technical process of planning the urban improvements in each slum and irregular settlement. Each RAP will be sent to the Bank for approval prior to the signature of the corresponding slums upgrading works contract. The RPF presents the Program activities generating resettlement and the distribution of responsibilities with respect to the resettlement activities. The RPF also includes (i) principles and objectives governing resettlement preparation and implementation; (ii) a description of the process for preparing and approving resettlement action plans; (iii) resettlement alternatives to be offered with close attention to vulnerable families; (iv) eligibility criteria for defining various categories of displaced people; (v) legal framework; (vi) method of valuing assets; (vii) organizational procedures for delivery of entitlements; (viii) grievance redress mechanism; (ix) a description of arrangements for funding resettlement; (x) a description of mechanisms for consultations; and (xi) arrangements for monitoring and evaluation. The Borrower has the capacity to implement safeguard-related issues and the Program has the technical assistance and other resources needed to implement appropriate mitigating measures. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. Besides the state and municipal government entities directly involved in the execution of the Program (GESP, SABESP, SSRH (former SSE), SMA, SH/CDHU, PMSBC, PMG), the social assessment also identified a number of key stakeholders that will participate in the Program s implementation, including environmental and social NGOs, and community and other associations. During preparation, a number of consultations and discussions were carried out with the Alto Tiete basin committee and agency, and with the basin sub-committees of the Juqueri-Cantareira, Tiete-Cabeceiras, Cotia-Guarapiranga, Billings-Tamanduate - and Pinheiros-Pirapora sub-basins - including consultation on the terms of reference for the EIA. The committee and the subcommittees are composed of representatives of state and

12 municipal governments, civil society and academia, amongst others. In addition, a number of municipal and local entities and organizations were involved in these discussions/consultations. A next round of consultations, following the dissemination of the EIA report, was undertaken in June 2007, following the Pre-Appraisal mission. The Program design and objectives were endorsed during these consultations. During preparation and implementation of the engineering designs, especially those related to the urbanization of slums and irregular settlements and to the provision of WSS and related services, a considerable amount of social participation and feedback is anticipated, as was the case during implementation of the Guarapiranga Program. In addition, the proposed Program includes for the social overview of civil works interventions, as well as for the undertaking of public opinion surveys to register and mitigate any unsatisfactory aspects of the Program s interventions. Component 1 of the Program includes complementary activities that will contribute to the strengthening of communication and social participation, including: (i) capacity building events for environmental agents; (ii) workshops for community participation; (iii) development of educational videos and radio programs and the carrying out of environmental education programs for stakeholders; (iv) preparation of environmental and social diagnosis for awareness building; (v) the carrying out beneficiary surveys; (vi) support to community mobilization, social outreach and other During preparation and implementation of the project design, especially the ones related to slum urbanization, urban recovery and IWSS activities, the Mananciais Horizontal APL Program included considerable social participation, as was carried out during the Guarapiranga Program. In addition, the Mananciais Horizontal APL Program included the social supervision of works after conclusion by carrying out community surveys to improve any unsatisfactory results. The distribution of responsibilities concerning the Program#s environmental and resettlement activities across among the different participating institutions are presented in the specific annexes of the ESIA and in a summary form in Annex 10 of the Program PAD. The ESIA updated regarding the PMG and PMSBC specific annexes as well as the updated RF have been disclosed in country on 06/28/2011, at the Mananciais Program website, and in both the Guarulhos and Sao Bernardo de Campo municipality's websites, and in the InfoShop on 07/19/2011. B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other: Was the document disclosed prior to appraisal? No Date of receipt by the Bank 01/27/2011 Date of "in-country" disclosure 06/28/2011 Date of submission to InfoShop 07/19/2011

13 For category A projects, date of distributing the Executive 08/25/2011 Summary of the EA to the Executive Directors Resettlement Action Plan/Framework/Policy Process: Was the document disclosed prior to appraisal? No Date of receipt by the Bank 04/18/2007 Date of "in-country" disclosure 07/18/2007 Date of submission to InfoShop 08/21/2007 Indigenous Peoples Plan/Planning Framework: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Pest Management Plan: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop * If the project triggers the Pest Management and/or Physical Cultural Resources, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) OP/BP/GP Environment Assessment Does the project require a stand-alone EA (including EMP) report? If yes, then did the Regional Environment Unit or Sector Manager (SM) review and approve the EA report? Are the cost and the accountabilities for the EMP incorporated in the credit/loan? OP/BP Natural Habitats 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/BP Physical Cultural Resources Does the EA include adequate measures related to cultural property? Does the credit/loan incorporate mechanisms to mitigate the potential adverse impacts on cultural property? OP/BP Involuntary Resettlement Has a resettlement plan/abbreviated plan/policy framework/process No

14 framework (as appropriate) been prepared? If yes, then did the Regional unit responsible for safeguards or Sector Manager review the plan? OP/BP Safety of Dams 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? The World Bank Policy on Disclosure of Information 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 Have satisfactory calendar, budget and clear institutional responsibilities been prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included in the project cost? Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately reflected in the project legal documents? N/A N/A N/A No No D. Approvals Signed and submitted by: Name Date Task Team Leader: Mr Oscar E. Alvarado 06/03/2011 Environmental Specialist: Ms Clarisse Torrens Borges Dall Acqua 07/12/2011 Social Development Specialist Ms Clarisse Torrens Borges Dall Acqua 07/12/2011 Additional Environmental and/or Social Development Specialist(s): Approved by: Regional Safeguards Coordinator: Mr Glenn S. Morgan 07/15/2011 Comments: Sector Manager: Mr Guang Zhe Chen 07/14/2011 Comments: