Program Safeguard Systems Assessment. April Uzbekistan: Affordable Rural Housing Program

Transcription

1 Program Safeguard Systems Assessment April 2017 Uzbekistan: Affordable Rural Housing Program

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3 Affordable Rural Housing Program (RRP UZB 50022) PROGRAM SAFEGUARD SYSTEMS ASSESSMENT A. Introduction 1. This program safeguard systems assessment (PSSA) has been carried out for the Affordable Rural Housing Program (ARHP or the program), proposed for financing by the Asian Development Bank (ADB) using a results-based lending (RBL) modality. 1 The RBL program will be a portion of the broader government State Affordable Rural Housing Program (SARHP), which will operate (through financial intermediaries) in rural areas of 9 regions. Construction of dwelling units (houses and apartments) in massifs (housing complexes) under the ARHP may trigger ADB s environmental safeguards. This assessment focuses on environmental safeguards. (No land acquisition, involuntary resettlement, or indigenous peoples impacts are envisaged under the ARHP.) 2. The objectives of the PSSA are to determine whether the ARHP s systems can manage and mitigate the environmental and social impacts of the overall program; if there are areas that require improvement, the resulting measures will be included as required actions in the Program Action Plan. 2 The environmental safeguard systems of the following agencies were analyzed during preparation of this PSSA: (i) the executing agency, the Ministry of Economy (MOE); (ii) related agencies, including the State Committee for Ecology and Environmental Protection (SCEEP); and (iii) the implementing agencies, comprising the three participating commercial banks (PCBs) Qishloq Qurilish Bank (QQB), National Bank of Uzbekistan (NBU), and Ipoteka Bank and Qishloq Qurilish Invest (QQI) engineering company. The PSSA was developed by ADB staff and consultants through extensive consultations with development partners and government agencies, and regional-level government agencies during field visits to 7 of the 13 regions (Bukhara, Fergana, Jizzakh, Kashkadarya, Khorezm, and Samarkand regions; and Karakalpakstan). The PSSA incorporates experience from ADB, other development partners, and the government, as well as specific analyses carried out during preparation of the RBL program. In developing PSSA elements pertaining to climate change impacts, mitigation, and adaptation, consultations were held with relevant institutions, including the State Committee for Architecture and Construction (SCAC) and the Hydrometeorological Center at the Cabinet of Ministers (Uzhydromet). B. Summary of Program Description 3. The RBL program scope will be confined to financing construction of dwelling units in massifs in 9 regions (Bukhara, Fergana, Karakalpakstan, Kashkadarya, Khorezm, Namangan, Samarkand, Surkhandarya, and Tashkent), working with the three PCBs in the ARHP. ADBsupported interventions will add value through (i) improved sustainability of rural housing financing through bank reforms; (ii) institutional strengthening of government procurement systems; (iii) institutional strengthening of government planning and performance monitoring systems; (iv) improved transparency and equity, including social and gender equity, in selecting beneficiary families; (v) an increased availability of climate-friendly options (such as green energy standards and climate change risk assessments) in the rural housing sector, together with capacity building of regional governments on climate change risk factors and site selection; and (vi) strengthened capacity of relevant government agencies and local government personnel with regard to gender issues, program management, service delivery, and monitoring and evaluation. The program outcome will be an increase in the rural population that benefits from affordable housing in line 1 In accordance with ADB procedure, a draft of the PSSA was disclosed on ADB s website on 15 September Program Action Plan (available from the list of linked documents in Appendix 2).

4 2 with standards of equity, transparency, and quality. The MOE management and monitoring unit (MMU) will manage and monitor the program. Sites for massifs are selected by a government site selection commission and then provided to QQI for construction of dwelling units and associated infrastructure. Home buyers will obtain loans from the PCBs and sign contracts with QQI for construction of their dwelling units. QQI is responsible for complying with national environmental regulations that apply to site selection and housing construction. The PCBs monitor the progress of housing construction. To comply with the ADB Safeguard Policy Statement (2009) (SPS), an environmental and social management system (ESMS) will be required at each implementing agency to avoid and manage risks related to environmental and social issues. C. Program Environmental and Social Impacts and Risks 4. Based on site selection criteria, any construction activities that may generate significant and irreversible environmental impacts will not be included in the program. Site selection is undertaken by site selection commissions that include representatives of SCEEP to ensure no sites that are environmentally sensitive, or where construction would generate significant or irreversible environmental impacts, are selected. Uzhydromet will provide an assessment of projected climate change risk, and sites with high risk will be avoided (details are in Appendix 1). 5. Construction of dwelling units may result in minimal or moderately adverse environmental impacts. Adverse environmental impacts will be temporary, limited to the period of construction, localized within construction sites, and can be mitigated through appropriate construction practices. The following impacts are anticipated: (i) generation of dust and localized atmospheric pollution during site preparation and housing construction; (ii) generation of waste during construction, potentially including synthetic materials used as insulation materials; (iii) wastewater discharge, which could cause minor contamination of soil and water bodies; (iv) increased noise and vibration levels that create a nuisance for local residents and commercial establishments; (v) increased movement of vehicles carrying construction materials and removing debris and waste products, with attendant impacts on access roads and traffic; and (vi) use of borrow and disposal sites for spoils during site preparation. 6. The program has been classified as category B for environment, C for involuntary resettlement, and C for indigenous peoples. All ADB environmental safeguard policy principles likely to be triggered by the program will be assessed. Only the first principle of the SPS (screening to identify resettlement impacts and risks) will be triggered; any sites with potential involuntary resettlement impacts will be excluded from the program. Uzbekistan has no indigenous peoples communities as defined under the SPS, and thus no impacts to indigenous peoples are anticipated. Environmental screening criteria have been developed to ensure that any activities that could fall in the government s environment categories 1, 2, or 3 will be excluded from the program. 3 3 The environmental classification of development activities, procedures for the preparation and evaluation of environmental assessments, and environmental approval of development activities are regulated by Cabinet of Ministers Resolution No. 491 adopted in December 2001, as amended in 2005 and 2009 (Decree No. 152/5 of June 2009).

5 3 D. Safeguard Policy Principles Triggered 7. The SPS principles triggered by the RBL program are evaluated below. Policy Principles ENVIRONMENT 1. Use a screening process for each proposed project, as early as possible, to determine the appropriate extent and type of environmental assessment so that appropriate studies are undertaken commensurate with the significance of potential impacts and risks. 2. Conduct an environmental assessment for each proposed project to identify potential direct, indirect, cumulative, and induced impacts and risks. Assess potential transboundary and global impacts, including climate change. 3. Avoid, and where avoidance is not possible, minimize, mitigate, and/or offset adverse impacts. Prepare an EMP that includes the proposed mitigation measures, environmental monitoring and reporting requirements, related institutional or organizational arrangements, capacity development and training measures, implementation schedule, cost estimates, and performance indicators. Safeguard Policy Principles Triggered Current System (Policy and Legal Frameworks) and Practices Regional and district hokimiyats (local governments) are responsible for identification and allocation of state land for massifs following specific siteselection screening criteria, including environmental criteria that ensure rejection of sites that are environmentally sensitive, are critical habitats, and where significant environmental impacts may be generated. The SCEEP provides approvals only for sites that are classified as Category 4 in Uzbekistan s environmental laws and regulations (See ESMS Manual). a An IEE/ZVOS is undertaken for each housing complex by QQI and is reviewed by the SCEEP. An approval for construction of dwelling units issued by SCEEP includes specific recommendations to be observed during construction. QQI includes these recommendations in the construction contracts to be followed by the contractor; QQI is responsible for supervision and monitoring of construction contractors. Climate change risk assessment is not included in the selection criteria. The quality and coverage of the IEE/ZVOS is deficient in many respects, lacking (i) a definition of the impact area, (ii) a map showing land use within the area of impact, (iii) specifics regarding the nature and magnitude of the environmental impacts, and (iv) an EMP. Two of the three implementing agencies (QQI and Ipoteka Bank) do not have an ESMS to provide guidance in ensuring compliance with environmental safeguards. QQI and Ipoteka Bank will need capacity building support to develop and operationalize their ESMSs. The regional SCEEP reportedly conducts regular monitoring of overall environmental compliance requirements throughout the region and submits quarterly reports, but does not engage in Gaps Between ADB and Uzbekistan requirements No gaps in the screening requirements and procedure are present, although the ESMS Manual provides additional detailed environmental and climate screening checklists to exclude potentially risky sites from ADB funding. Gaps: (i) IEE/ZVOS quality: An EMP should be included in the IEE produced by QQI for each housing complex, and monitoring of and reporting on environmental safeguards should be undertaken on a regular basis (the ESMS for each implementing agency must include provisions to that effect). (ii) Two implementing agencies (Ipoteka Bank and QQI) lack an ESMS, and there are capacity constraints in developing and implementing the ESMSs. (iii) Climate change considerations are not included in the selection criteria.

6 4 Policy Principles 4. Examine alternatives to the project s location, design, technology, and components and their potential environmental and social impacts and document the rationale for selecting the particular alternative proposed. Also consider the no-project alternative. 5. Carry out meaningful consultations with affected people and facilitate their informed participation. Ensure women s participation in consultation. Involve stakeholders, including affected people and concerned NGOs, early in the project preparation process. Continue consultations with stakeholders throughout the project. Establish a grievance redress mechanism to receive and facilitate resolution of the affected people s concerns and grievances regarding the project s environmental performance. 6. Disclose a draft environmental assessment (including the EMP) in a timely manner, before project appraisal, in an accessible place and in a form and language(s) understandable to affected people and other stakeholders. Disclose the final environmental assessment and its updates if any, to affected people and other stakeholders. 7. Implement the EMP and monitor its effectiveness. Document monitoring results, including the development and implementation of corrective actions, and disclose monitoring reports. 8. Do not implement project activities in the vicinity of environmentally sensitive areas such as critical habitats, protected landscapes, Current System (Policy and Legal Frameworks) and Practices specific monitoring and reporting on massifs. Selection criteria as applied to the massifs take account of all possible alternatives and select sites that are environmentally benign or generate minimal localized impacts that are temporary in nature and can easily be mitigated. Grievance redress mechanisms are covered under the Law on the Appeals of Individuals and Legal Entities (No. 378, 3 December 2014). According to the Law on Environmental Expertise (2000), disclosure and public consultation is not required for Class 3 and 4 projects (activities that have low risk and local impact on the environment). The Law on State Ecological Expertise and the Law on Ecological Control public environmental reviews can be carried out at the initiative of NGOs and citizens in any field and for any category of project, which needs to be environmentally justified. Public environmental review can be carried out whether or not the state-prescribed ecological review is conducted. Public environmental reviews take the form of recommendations; disclosure is not documented in the IEE/ZVOS. Regional SCEEP inspectors undertake quarterly monitoring and reporting and produce compliance reports. However, no specific monitoring and reporting are conducted for massifs. Monitoring of environmental compliance has been undertaken by QQB and NBU. This monitoring is based on information provided by the banks regional branches, guided by the banks ESMSs. However, it is not undertaken in accordance with an EMP, which is not available as part of the IEE/ZVOS. QQI and Ipoteka Bank have not yet established a monitoring system and rely on monitoring carried out by the regional SCEEP. One of the criteria for selection of massifs states that they cannot be located near environmentally sensitive areas such as protected landscapes; Gaps Between ADB and Uzbekistan requirements Gap: Climate change considerations are not included in selection criteria. Gap: No documented stakeholder consultation or public disclosure as part of preparation of IEE/ZVOS. Gap: Absence of an EMP in the IEEs/ZVOS, and inadequate enforcement of monitoring and reporting by QQI. No gap in principle. However, the ESMS Manual provides more details in an

7 5 Policy Principles important biodiversity reserves and forest areas, or sites of historical or cultural significance. 9. Apply pollution prevention and control technologies and practices. Avoid pollution, or, when avoidance is not possible, minimize or control the intensity or load of pollutant emissions and discharges. 10. Provide workers with safe and healthy working conditions and prevent accidents, injuries, and disease. Establish preventive and emergency preparedness and response measures to avoid, and where avoidance is not possible, to minimize, adverse impacts and risks to the health and safety of local communities. 11. Conserve physical cultural resources and avoid destroying or damaging them by using field-based surveys that employ qualified and experienced experts during environmental assessment. INVOLUNTARY RESETTLEMENT 1. Screen the project early at the site identification stage and identify past, present, and future resettlement impacts and risks. INDIGENOUS PEOPLES None Current System (Policy and Legal Frameworks) and Practices important biodiversity reserves and forest areas; b cultural sites; religious sites such as graveyards and cemeteries; or sites of historical importance, including national or world heritage sites. The Law on Wastes (2002) addresses waste management (exclusive of emissions and air and water pollution), and confers authority on the SCEEP concerning inspections, coordination, and ecological expertise; it also establishes certain parameters with regard to the locations where waste may be processed. Approval for construction of massifs issued by the SCEEP reiterates standard operating procedures during construction to ensure worker safety and healthy working conditions and prevent accidents, injuries, and disease. Despite these provisions, preventive and emergency preparedness and response measures are inadequate at each housing complex to minimize adverse impacts and risks to the health and safety of local communities during construction. Uzbekistan is a party to the Convention on Protection of the World Cultural and Natural Heritage and has adopted a Law on Protection and Usage of Cultural Heritage Objects (No. 269-II of 30 August 2001). Environmental conclusion decisions include clear instructions to the effect that physical cultural resources, if any, will not be destroyed or damaged. Gaps Between ADB and Uzbekistan requirements environmental screening checklist. No gap in requirements for ZVOS, but enforcement is not in place. Monitoring of EMP implementation will be required by the ESMSs. Gap: Inadequate preventive and emergency preparedness and response measures. (Requirements for checking compliance are included in ESMS Manual.) No gap. Each proposed massif will be screened using a checklist to exclude any massif with potential involuntary resettlement impacts. This will be the only involuntary resettlement safeguard principle that will be triggered by the program and will be taken into account at the time of site identification. The country does not have indigenous peoples communities as defined by the ADB Safeguard Policy Statement (2009) for operational purposes, and no indigenous peoples policy principles will be triggered by the program. ADB = Asian Development Bank, EMP = environmental management plan, ESMS = environmental and social management system, IEE = Initial Environmental Examination, NGO = non-government organization, QQI = Qishloq Qurilish Invest engineering company, SCEEP = State Committee for Ecology and Environmental Protection, ZVOS = zaklyuchenie o vozdeystvii na okrujayushuyu sredu (report on impact on environment). a ESMS Manual (available from the list of linked documents in Appendix 2). b This will include any sites that may be considered as critical habitats including: habitat for endangered or critically endangered species; areas having special significance for endemic or restricted range species; sites critical for the survival of migratory species; areas supporting globally significant concentrations or numbers of individuals of congregatory species; areas with unique assemblages of species or that are associated with key evolutionary processes, or provide key ecosystem services; and areas having biodiversity of significant social, economic or cultural importance to local communities. Source: Asian Development Bank.

8 6 E. Diagnostic Assessment 8. Assessment methodology and resources. A comprehensive assessment of the current national environmental impact assessment procedures and safeguards practices applicable to the ARHP in relation to the SPS was undertaken by ADB staff and consultants through a desk review of existing reports, national policies, and safeguard systems, as well as through meetings and interviews with key staff of MOE, SCAC, SCEEP, and the implementing agencies (para. 2). Field visits to representative sites were undertaken for a better understanding of enforcement of the regulations. The assessment also included review of reports and data from ongoing ADB and other development partner projects, and equivalence assessments of ongoing government programs. An assessment of applicable and relevant laws, regulations, rules, and procedures for managing and mitigating the environmental impacts applicable to the program were analyzed with specific reference to implementation practices, including the capacity and commitment to plan, implement, monitor, and report on the safeguard measures. A review of the ESMSs of the two PCBs that had been involved in the previous ADB-supported multitranche financing facility, the Housing for Integrated Rural Development Investment Program (HIRDIP), was also undertaken. 4 The environmental impact assessment reports prepared by consultants with the support of QQI, and the conclusions (approvals) provided by SCEEP, were reviewed to understand the environmental due diligence process employed in site selection and massif construction. 9. Environment. The assessment comprises (i) an overview of environmental safeguards policies and legislation in Uzbekistan, including preparation of initial environmental examination (IEE/ZVOS) reports, stakeholder participation and public disclosure, sanitation and hygiene, waste disposal, atmospheric pollution and health and safety regulations, and monitoring and reporting; (ii) institutional arrangements; (iii) management of risks and mitigation measures; and (iv) capacity enhancement. A review of a sample of IEE/ZVOS reports produced by QQI revealed several deficiencies. First, the reports did not show a clearly demarcated area of environmental impact. Second, they lacked a map showing the location of the massif and associated land use features relevant to environmental examination within the area of impact. Third, potential environmental impacts were not described with specificity. Fourth, the reports did not contain any evidence of stakeholder consultation and disclosure. Fifth, they lacked any environmental management and monitoring plan. In addition, during field visits it was observed that enforcement of regulations on waste disposal and worker safety requires improvement and closer monitoring. 10. The review also concluded that the national and regional environmental management agencies (the state and regional Committees for Nature Protection) have the requisite environmental assessment and monitoring capacity. These agencies ensure that the environmental impacts resulting from construction of massifs are limited to category 4 of Uzbekistan s environmental regulations. As a result, all possible alternatives are considered, and selected sites are limited to those where impacts are (i) environmentally benign; or (ii) minimal, local, and temporary in nature and can easily be mitigated. However, consideration of climate change risks is not included in the selection criteria. 11. Although national regulations do not require commercial banks to have an ESMS, the two PCBs involved in the HIRDIP (QQB and NBU) established ESMSs to meet ADB requirements. These ESMSs were assessed to determine if they are appropriate for the ARHP. Although ESMS coordinators are present in the headquarters of these PCBs to plan, implement, monitor, and report on safeguard measures through their ESMSs, there was inadequate understanding of the 4 ADB Report and Recommendation of the President to the Board of Directors: Proposed Multitranche Financing Facility to the Republic of Uzbekistan for the Housing for Integrated Rural Development Investment Program. Manila.

9 7 ESMS at the regional level, resulting in ineffective compliance with environmental safeguards; this should be addressed through capacity building, training, and awareness-raising workshops. 12. Ipoteka Bank and QQI will require technical support to develop and establish ESMSs to ensure compliance with environmental safeguards requirements Institutional arrangements. Under the ARHP, the MOE MMU will include a safeguards specialist who will coordinate implementation of environmental safeguards with the PCBs and QQI. The MMU will require capacity building support in the following areas: (i) ensuring establishment and operation of ESMSs by PCBs; (ii) site environmental inspection during program implementation; (iii) preparing annual safeguard monitoring reports based on PCB reporting; and (iv) safeguard compliance under the RBL modality. QQI, which is reponsible for construction contract management, lacks an ESMS. QQI undertakes an IEE/ZVOS for each massif with the assistance of a consultant. The IEE/ZVOS is submitted to the regional SCEEP, which reviews it; seeks input from the district Committee on Nature Protection; visits the site, if needed; and either approves or rejects it. In its approval document (conclusion), the SCEEP makes specific recommendations for compliance with environmental safeguards. 14. PCBs are responsible for providing mortgage loans to creditworthy individuals who have been selected as homeowners to finance construction of dwelling units. Designated ESMS coordinators of the PCBs are assisted by specialists who monitor construction project progress. According to their annual safeguards monitoring reports, these PCBs conducted regular training to strengthen ESMS implementation, and have allocated funds to prepare staff to implement their ESMS. ESMS coordinators have been designated in all of their regional headquarters. The banks allocated adequate funding to undertake twice-monthly monitoring of massifs. The designated ESMS staff collected information about compliance with environmental safeguards. An annual ESMS report was prepared and submitted to MOE through the MOE s program implementation unit. ADB has prepared an ESMS Manual 6 to assist NBU and QQB in improving their existing ESMSs and to help QQI and Ipoteka Bank prepare their ESMSs. 15. Climate change impacts. Projected climate change impacts are variable for the country s differing agro-ecological zones. As presented in Uzbekistan s Second Communication to the United Nations Framework Convention on Climate Change, all regions in Uzbekistan are vulnerable to the impacts of climate change, which may include temperature extremes; variability in the magnitude, frequency and timing of precipitation (rain and snow); rapid glacial melt that may result in flash floods, mudflows, and landslides; and drinking water shortages. Currently, no climate change risk assessment is undertaken in any of the regions. It is imperative that climate change scenario analysis be undertaken as part of the site selection process, so that those sites that may be vulnerable to and at high risk of major threats are avoided; where no alternatives exist, climate change adaptation and mitigation measures should be put in place to increase resilience to climate change. The nature of the adaptation and mitigation interventions depend on the nature and magnitude of projected impacts, as reflected in the climate change risk analysis. Given the importance of climate change risk screening, the government has agreed that Uzhydromet will be included as a member of the regional site selection commissions and will undertake climate change risk analysis for massifs proposed to be included in the ARHP. 16. Summary assessment. The government has a sound system of environmental review and appraisal, including relevant legislation and regulations. The responsibility for overall environmental 5 Terms of reference for an environmental specialist on the technical assistance team are contained in the Program Implementation Document (available from the list of linked documents in Appendix 2). 6 Environmental and Social Management System Manual (available from the list of linked documents in Appendix 2).

10 8 management is vested with the SCEEP at the national, regional, and district levels. In the case of the ARHP, QQI is responsible for the preparation of IEEs/ZVOS, with the SCEEP responsible for their approval. The IEEs/ZVOS produced by QQI (with the assistance of consultants) need to be improved, as they lack some important elements. QQI and Ipoteka Bank will develop ESMSs. A manual for development and implementation of ESMSs has been prepared by ADB. Inclusion of Uzhydromet on the site selection committees will ensure that information on climate change risks is factored into site selection decisions. 17. There are no legal constraints to stakeholder consultation and public disclosure as part of the preparation of IEEs/ZVOS reports. However, there was no reference to such consultation or public disclosure in the reports prepared by QQI. While some monitoring and reporting is undertaken by SCEEP, NBU, and QQB, the absence of an environmental management plan in the IEEs/ZVOS, and inadequate enforcement regarding monitoring and reporting by QQI needs to be addressed. 18. Major gaps in ensuring environmental compliance include the following: (i) Ipoteka Bank and QQI lack an ESMS to ensure compliance with environmental safeguards. An ESMS Manual has been developed to provide guidance. (ii) The IEEs/ZVOS produced by QQI do not include all the relevant elements of a comprehensive environmental assessment. Problems include the absence of a defined area of impact, a map of the impact area, and an environmental management plan; the poor quality of the IEEs/ZVOS; and the lack of a climate change risk assessment in any of the regions. (iii) The IEEs/ZVOS do not document any consultation with affected people or public disclosure of the IEEs/ZVOS. The ESMSs must ensure continued consultations with stakeholders throughout project implementation, as well as public disclosure of the IEEs/ZVOS. (iv) There is a need for capacity building of the MMU, QQI, and the PCBs for the development and implementation of the ESMSs. F. Safeguard Program Actions 19. The gaps identified above are addressed through safeguard-related actions proposed in the Program Safeguards Action Plan (Appendix 2). An Integrated Risk Assessment Matrix is in Appendix 3.

11 Appendix 19 SITE SELECTION CRITERIA The environment-specific selection criteria that are to be applied in the selection of massifs include exclusion of sites (i) that are productive agricultural land or forest land; (ii) that displace existing settlement(s) or economic activities, have been vacant for less than 2 years, or may result in involuntary resettlement; (iii) are located in the vicinity of sown or cultivated major crops; (iv) are within distances specified by regulation from objects and/or developments that may have negative health impacts; or (v) are in proximity to environmentally sensitive objects or habitats such as protected areas, graveyards, world heritage or national heritage sites, or sites of cultural or historical significance. 1 The table shows the site identification and selection process. Agency Hokimiyat (district or local government) assisted by district staff from the Architecture and Construction Committee District Geology, Hydrology and Cartography Committee Regional Committee on Architecture and Construction District Nature Protection Committee Regional QQI/QQL Uzhydromet Regional Nature Protection Committee Site Identification and Selection Process Responsibility Based on the selection criteria, identify possible land for residential complexes from available land reserve for non-agricultural activities. The minutes of the meeting will be used to make a decision regarding land allocation; in some locations, the meeting is chaired by the deputy governor. Provide assessment on geology and hydrology conditions. Assess prior land use to confirm the land has been unproductive for at least 2 years, is not forest or agricultural land, and is classified as part of the state reserve land, to determine suitability of the area for development of a housing complex. Issue Confirmation of Residential Block in 2 volumes: Vol. 1. Siting and location of residential block with clear demarcation of its borders; Vol. 2. Siting and location of residential block with required connection to basic utilities (gas, electricity, and water) and roads. Reviews applicable policies and legislation pertaining to the proposed site and furnishes a report to the district hokimiyat with recommendations regarding site suitability or otherwise. Recruit a consultant to prepare an IEE/ZVOS report (together with an EMP to justify that the proposed activities generate only local impacts) and submit it to the regional Nature Protection Committee. Based on initial risk screening based on climate change projections, advise the site selection commission of the projected impacts of climate change so that an informed decision is taken regarding site selection. Based on the report of the district Nature Protection Committee representative, evaluate the IEE/ZVOS prepared by the consultant recruited by QQI and site visits, issue an opinion (Conclusion) regarding the suitability of the area for housing; and instruct the district Nature Protection Committee staff to monitor certain indicators during site preparation and construction in accordance with the EMP. EMP = Environmental Management Plan, IEE = initial environmental examination, QQI = Qishloq Qurilish Invest engineering company, QQL = Qishloq Qurilish Loyiha, project design institute, ZVOS = zaklyuchenie o vozdeystvii na okrujayushuyu sredu (report on impact on environment). Source: Asian Development Bank. 1 This will include any sites that may be considered as critical habitats, including: habitat for endangered or critically endangered species; areas having special significance for endemic or restricted-range species; sites critical for the survival of migratory species; areas supporting globally significant concentrations or numbers of individuals of congregatory species; areas with unique assemblages of species or that are associated with key evolutionary processes, or provide key ecosystem services; and areas having biodiversity of significant social, economic, or cultural importance to local communities.

12 10 Appendix 2 PROGRAM SAFEGUARDS ACTION PLAN Risks/Gaps Proposed Action Responsibility Monitoring Indicators Time Frame for Action Two implementing (i) Develop and implement an Ipoteka Bank and ESMSs established and April 2017 agencies (Ipoteka Bank and QQI) lack an ESMS, which is needed to ensure compliance with environmental safeguards. ESMS based on the guidance provided in the ESMS Manual; and (ii) Provide TA to (a) implementing agencies regarding ESMSs, and (b) the executing agency regarding the endorsement of implementing agencies ESMSs and annual QQI for development of their ESMSs; QQB and NBU to update their ESMSs. MOE MMU operational. Endorsement by MOE (ADB will review one ESMS for quality assurance to ensure MOE capacity); annual reports submitted to MOE in accordance with the ESMS template. Reporting annually, at the end of each year The IEEs/ZVOS produced by QQI do not include all the elements needed to ensure effective environmental safeguards management, including an EMP and related monitoring. Stakeholder consultation and public disclosure as part of the preparation of IEEs/ZVOS is not documented in the reports prepared by QQI. Projected climate change risks are not factored into selection criteria. Involuntary resettlement reports. IEEs must follow national laws and regulations with guidance provided in an ESMS. A template with additional requirements for a ZVOS of a massif is provided in the ESMS Manual. It should ensure IEEs include EMPs and a monitoring program and indicators. Ensure stakeholder consultation and public disclosure during the process of the preparation of IEEs/ZVOS by QQI Enhance Uzhydromet capacity to ensure that climate change risk screening is factored into selection of sites for housing massifs Screen the proposed sites for housing massifs and exclude sites that involve involuntary resettlement QQI to follow the template provided in the ESMS Manual, in consultation with the SCEEP at the regional level. All implementing agencies Executing agency for disclosure of annual safeguard monitoring reports Regional hokimiyat (local government) to include Uzhydromet in the site selection commissions All implementing agencies Number of housing massifs that have used the recommended procedures for preparation of IEE/ZVOS reports as reflected in the annual safeguards monitoring report Annual ESMS performance reports and annual safeguard monitoring reports Number of IEEs/ZVOS reports that have undertaken and documented stakeholder consultation and disclosure and are reflected in the annual safeguards monitoring report Number of housing massifs assessed for vulnerability and risks due to projected impacts of climate and reflected in the QQI annual report Completion of the screening template in the ESMS At the time of preparation, review and approval of ZVOS by SCEEP. Annual reports Stakeholder consultation during preparation of IEEs/ ZVOS, prior to submission to the SCEEP; public disclosure of IEEs/ZVOS after approval; disclosure of annual ESMS reports after submission to MMU; disclosure of annual safeguard monitoring reports after submission to ADB 2017 At the time of identification and selection of sites for housing massifs ADB = Asian Development Bank, EMP = Environmental Management Plan, ESMS = Environment and Social Management System, IEE = initial environmental examination, MOE = Ministry of Economy, MMU = Management and Monitoring Unit, QQI = Qishloq Qurilish Invest engineering company, SCEEP = State Committee for Ecology and Environmental Protection, TA = technical assistance, ZVOS = zaklyuchenie o vozdeystvii na okrujayushuyu sredu (report on impact on environment). Source: Asian Development Bank.

13 Appendix 3 11 Risks The four implementing agencies lack or have inadequate ESMSs to ensure compliance with environmental safeguards; IEEs/ZVOS reports are inadequate Capacity constraint of executing and implementing agencies for safeguards and climate change risk management INTEGRATED RISK ASSESSMENT MATRIX Rating Without Mitigation Measures Moderate Moderate Key Mitigating Measures QQI and Ipoteka Bank will each establish an ESMS. The ESMS for QQI will include an updated template used to prepare IEEs/ZVOS to ensure development of a complete and comprehensive report. NBU and QQB will revise their ESMSs. ADB has prepared an ESMS Manual to provide guidance to the executing agency and the implementing agencies in developing and effectively implementing their ESMSs. ADB will provide TA to the MMU and the implementing agencies on ESMS. ESMS = Environment and Social Management System, IEE = initial environmental examination, MMU = Management and Monitoring Unit, NBU = National Bank of Uzbekistan, QQB = Qishloq Qurilish Bank, QQI = Qishloq Qurilish Invest engineering company, TA = technical assistance, ZVOS = zaklyuchenie o vozdeystvii na okrujayushuyu sredu (report on impact on environment). Source: Asian Development Bank.