E1193 Volume 1 THE SOCIALIST REPUBLIC OF VIETNAM MINISTRY OF TRANSPORT. PROJECT MANAGEMENT UNIT No 5 (PMU 5) Third Rural Transport Project (RTP3)

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Third Rural Transport Project Consultancy Services for Technical Assistance for Project Preparation Environmental Framework Model 1 and 2 THE SOCIALIST REPUBLIC OF VIETNAM MINISTRY OF TRANSPORT PROJECT MANAGEMENT UNIT No 5 (PMU 5) Third Rural Transport Project (RTP3) E1193 Volume 1 Volume 1: ENVIRONMENTAL FRAMEWORK FOR MODEL 1 &2 Prepared by ROUGHTON INTERNATIONAL JUNE 2005 Rural Transport Project 3 30/06/2005 Page 1 of 41

2 Third Rural Transport Project TABLE OF CONTENTS Consultancy Services for Technical Assistance for Project Preparation Environmental Framework Model 1 and 2 1. EXECUTIVE SUMMARY PROJECT DESCRIPTION Role of RT3 in Rural Transport Financing Models used in RT RURAL ROAD SECTOR STRATEGIES AND INSTITUTIONS Background Environment Sector Policies and Strategies Regulations Review of Regulations Institutions WORLD BANK SAFEGUARD POLICIES Operational Directives Comparison of GoV and World Bank Environmental Safeguards ENVIRONMENT AND SOCIAL BACKGROUND LESSONS LEARNT FROM RT1 AND RT RT2 Environmental Procedures Review of RT2 Environmental Assessment RT2 Staff Capacity Environmental Impacts Associated with RT RT3 PROJECT AWP Second and Subsequent A WP RT3 Components POTENTIAL ENVIRONMENTAL AND SOCIAL IMPACTS Impacts Identified for RT Rational for EA process EMP and Technical Guidelines Standard EMP Technical Guidelines: Environmental Activities RT3 ENVIRONMENTAL ASSESSMENT AND APPROVAL PROCESS Sub-project Screening Environmental Assessment Roads which do not require an RMES Roads which require an RMES Roads which require an EIA Tendering and Contract Bidding Construction Monitoring Comments Received on Environmental Assessment Process Workshop Issue of Verification Letter by DONRE PDoT Approval of RMES Institutional Arrangements for RT Central Level Provincial Level Capacity Building Training and Procurement Requirements Training Provincial Level Rural Transport Project 3 30/06/2005 Page 2 of 41

3 Third Rural Transport Project Consultancy Services for Technical Assistance for Project Preparation Environmental Framework Model I and Training in RT3 Environmental Procedures Training in Environmental Monitoring Capacity Building Procurement Requirements At Central Level At PPMU /evei MONITORING OF RT Institutional Requirements for Monitoring PPMU Rural Transport Project 3 30/06/2005 Page 3 of 41

4 Third Rural Transport Project Consultancy Services for Technical Assistance for Project Preparation Environmental Framework Model I and 2 ANNEXES Annex A Annex B Annex C Annex D Annex E Annex F Annex G Annex H Annex I Annex J Annex K Annex L Annex M Annex N Appendix 10.2 A and 10.2 B - Screening of roads and bridges DONRE Verification Letter Annex 10.3 A and B - EA Process for roads and bridges Annex EMP Technical Guidelines: Division 5 Environmental Activities Public Disclosure Document Contractor's Environmental Conditions Statement Contractor's Acknowledgement of Environmental Compliance Construction Site Memorandum ToR for PID1 Environmental Officer ToR for PPMU Technical Specialist - Environment ToR for PPMU Site Engineer - Environmental Inclusions ToR for PMU5 Project Monitoring and Evaluation Specialist - Environmental Inclusions Copy of RMES issued by DONRE Annex 0 EA Workshop 12 May 2005 Rural Transport Project 3 30/06/2005 Page 4 of 41

5 Third Rural Transport Project Consultancy Services for Technical Assistance for Project Preparation Environmental Framework Model 1 and 2 1. EXECUTIVE SUMMARY The RT3 project is to be implemented in 33 provinces in the northern and central areas of Vietnam and will rehabilitate about 4,500 km of rural roads. The project design including implementation of environmental safeguard measures will be implements in 4 pilot provinces over about 100 km of roads. The project will address rural roads where physical and social infrastructure is weak and significant levels of poverty exist. The project will be implemented by the Ministry of Transport via its Project Management Unit No 5 (PMU5). At the provincial level RT3 will be implemented by the Provincial Project Management Unit (PPMU) of the Provincial Department of Transport (PDoT). The GoV environmental legislation will be re-issued later this year and this should strengthen and clarify environmental procedures and institutions that are not well developed with Vietnam. The consequences of having a centralisation of environmental management and responsibilities within MONRE and its provincial organisation DONRE has been to limit the development of environmental responsibility and awareness in other line ministries where environmental matters are normally given little attention. This is also the case with PDoT where the PPMU has little overall environmental capacity despite several of the provinces having already been exposed to WB requirements in RT1 and RT2. There are three main areas where GoV and WB procedures do not harmonise. These include the need for public consultation, public disclosure and the development of an environmental management plan. Environmental impacts for rural road rehabilitation projects were shown to be mainly insignificant, the main concerns were caused off-site by poor contractor performance during construction and maintenance where borrow pits and quarries were not rehabilitated. Accordingly RT3 will strengthen the EMP, contract specifications, bidding and award, and contractor environmental performance monitoring for both construction and maintenance. Based on an assessment of the environmental capacity of the PDOT's an environmental assessment procedure has been developed that is based on addressing risks within PDoT (low environmental awareness) and meeting GoV and WB safeguard requirements. The procedure has simplified and strengthened the RT2 procedure while several checks have been added by including DONRE at both the screening and EA review process to support the environmental safeguards. PDoT's environmental responsibilities will be strengthened by giving greater responsibility to PDoT to include approval of minimum works required for rural roads. This is not possible using the existing environmental legislation but it may be possible to create a special situation for RT3 using powers contained within other supporting GoV legislation. Recognising the degree of risk inherent in applying the project to poorly trained PPMU staff, RT3 will provide support for the adoption and implementation of environmental safeguards by providing two training projects in environmental assessment and another in environmental monitoring. These will be coordinated within the PID1 structure. A monitoring and evaluation program has also been developed. The total cost of capacity building for RT3 is $484,000. All costs for the environmental management programs are included as project costs and are to be addressed as contractor costs. There are no other costs associated with any other programs. Rural Transport Project 3 30/06/2005 Page 5 of 41

6 Third Rural Transport Project Consultancy Services for Technical Assistance for Project Preparation Environmental Framework Model I and 2 2. PROJECT DESCRIPTION 2.1 Role of RT3 in Rural Transport RT3 is the third rural transport' project to be funded in Vietnam. It builds on two other projects, RT1 and RT2 which have rehabilitated about 6,800 km of Basic Access Roads that mainly provide links between commune and district centres. The projects have supported improved planning, management, maintenance and execution of rural transport at the local and national level. They have also created a conducive environment for private contracting companies to compete for rural roads contracts. However, maintenance of rural roads continues to be a major concern. Both RT1 and RT2 were designed to improve access in poor rural areas, by building low cost, mainly gravel roads. Construction was prioritised as (i) construction of Basic Access Roads (BAR) to provide all weather 4-wheel links between commune and district roads and (ii) rehabilitation and upgrading of commune and district roads. RT2 was designed to continue the RT1 program but was given added emphasis on completing the BAR program so as to connect as many communes as possible that had no road connection. RT2 roads mainly constructed gravel pavements and where required, bridges were also constructed. RT3 differs from RT2 in that while RT3 continues with BAR requirements it will have a significantly larger civil works component so as to address concerns that have arisen with low maintenance standards for RT1 and RT2 roads. Additionally many of the RT1 and RT2 gravel roads that have high traffic volumes or are located in urban areas may be resurfaced with bitumen so as to reduce periodic maintenance requirements. The RT3 programme will rehabilitate 4,500km of rural roads in 33 provinces over 4 years. During the first year of RT3 project preparation, the TA will identify 1,500km of rural roads for rehabilitation in 33 provinces. During RT3 project preparation the TA will design and compile the tender documents for 100km of rural road in 4 pilot provinces or approximately 25km of road per province. This will be part of the 1,500 km. The remaining 1,400km will be planned in 16 provinces in the first year of the project while the remaining 3,000km of road will be planned over the following 3 years in all 33 provinces. The project will be implemented over a four year period commencing at the end of Funds available for RT3 are $125m which is made up of $100m from the World Bank and $25m from DFID. Of this $90m will be spent on road rehabilitation and $25m on road maintenance, in addition to technical assistance and capacity building consultancies of $10m. This is in addition to on-going official development assistance projects and GoV funding at national and provincial level for road construction and maintenance. The project will be located within the Ministry of Transport (MoT) and managed through its Project Management Unit No. 5 (PMU5). The project will be initially implemented at the provincial level by Provincial Project Management Units (PPMU's) that are established within the Provincial Departments of Transport (PDoT's) for undertaking project work. A further component of RT3 is the development of a sector wide approach (SWAp) to rural roads so that in future all investments in the rural road sector can follow a common policy. This will eliminate the need for a specialised PPMU and full implementation responsibility will be transferred to PDoT's. 2.2 Financing Models used in RT3 Three financing models are proposed for RT3 so that provinces may progressively change their funding approach away from a project based system to a sectoral based funding system as proposed for the SWAp model. This will also allow existing institutions to be used rather than setting up separate project institutions to manage the project. The three stages are: IRural transport is defined as "the movement of people and goods within the Districts and Communes". MoT, 2000, Rural Transport Strategy Study, facilitated by DFID. Rural Transport Project 3 30/06/2005 Page 6 of 41

7 Third Rural Transport Project Consultancy Services for Technical Assistance for Project Preparation Environmental Framework Model I and 2 a) Centrally managed implementation with all payments made through PMU5 but as many implementation functions decentralised to the provincial level as possible. The project is managed by a separate unit - the PPMU. b) Decentralised implementation (partial SWAp operation) with all payments made through the state treasury system but donor funds identified as a separate line item. All implementation functions will be managed by the province. The project continues to be managed by a separate unit - the PPMU. c) Full budget support or full SWAp where donor funds are not separately identified from state budget items. Full decentralised implementation with all project functions integrated within existing institutions. All of these frameworks will require different institutional arrangements with differing capacity requirements to meet the goal of SWAp. This framework addresses models 1 and 2 which are predicated on the existence of a separate project management unit to track funds and manage the project. Model 3 - the SWAp approach is addressed by a separate framework. 3. RURAL ROAD SECTOR STRATEGIES AND INSTITUTIONS 3.1 Background Vietnam has an extensive rural transport network of 213,400 km of roads. The network serves 75 percent of the total population which includes 90 percent of the nation's poor households. District and commune roads are mainly earth or gravel surfaces which are poorly maintained. It is estimated that over three quarters of rural roads are in poor condition 2. Many are impassable to motorised transport during the wet season. Most passengers and goods in rural areas move by road, mainly by bicycle, or motorcycle, while Cong Nongs 3 are often used for heavier items. Poor transport conditions represent a major constraint to rural populations and hinder social and economic growth. Studies have shown that improvements in rural roads provide recognisably strong benefits in reducing poverty, while improved access increases school enrolments and use of public health facilities. Social responses to improvements in rural transport are greatest in poor provinces RT Development Strategy, Institutions and Policies Rural transport (RT) is recognised as an important component of the transport sector and is addressed by the following; i) The National Transport Strategy was developed by MoT in early 2000 as a requirement of its planning mandate. The National Transport Strategy looks at the whole transport sector of Vietnam which includes roads, railways, air and sea transport. In such a broad strategy rural transport is not a detailed component of the national transport sector strategy. The National Transport Strategy is to be periodically updated. The strategy is published in Vietnamese. ii) A Rural Transport Strategy Study was completed in 2000 under a DFID grant to the MoT. The study was nationally focussed and reviewed rural transport as a vehicle to address poverty concerns. The study looked at ways of increasing local level management and participation in planning and maintenance since communities make a major contribution of resources to rural roads for their construction and maintenance. project. The strategy proposed that the way forward for an effective rural road system was the need for the system to be organised on a sectoral basis rather than as series of discrete but often sometimes poorly coordinated projects 4. The strategy is presently being reviewed by MoT. iii) Vietnam Integrated Transport Strategy Study (VITRANSS), The objective of VITRANSS was to propose strategies across the sector and to define policies, 2 Much of the material in this section has been drawn from the Project Concept Note for RT3. 3Cong nongs are a locally produced light trucks. They are slow and are mainly powered by a two cylinder diesel engine. Cong nongs typically have a 1-2 t capacity and are the favourite choice for short distance haulage of bulky items. 4 This has been developed as the SWAp approach or as funding model 3 and is to be applied in RT3. Rural Transport Project 3 30/06/2005 Page 7 of 41

8 Third Rural Transport Project Consultancy Services for Technical Assistance for Project Preparation Environmental Framework Model I and 2 procedures and responsibilities of the agencies concerned. This strategy is published in Vietnamese. iv) Rural transport is also addressed within the Public Investment Programme for which proposes that investment in rural transport be increased so as to support agriculture and rural development. v) The Comprehensive Poverty Reduction and Growth Strategy proposes that budget allocations for rural transport be increased so as to initially complete all Basic Access Roads, followed by increasing the proportion of roads with all-weather access. National strategies are addressed by development plans and programmes at both national and local levels. At the local level, Provincfal Master Plans are prepared that includes rural transport development. The Master Plan goals are addressed by the various provincial organisations to develop Annual Work Plans. Rural transport Annual Work Plans are prepared by PDoT for each years activities. Annual Work Plans are approved by the Provincial People's Committee Institutions The Ministry of TransDort (MoT) is the central body that is responsible for planning and development of transport within Vietnam. Rural transport is treated as one of the sectors of the master plan that the MOT is required to use as its planning basis. Rural transport is organised within MoT by the Rural Transport Unit (RTU). PMU 5 is one of several Project Management Units that has been established for project management by the MoT. PMU 5 is headed by a General Director with four sectional Vice Directors. PID1 (Project Implementation Division 1) is located within PMU 5. PID1 is responsible for implementing overseas development projects while PID2 is responsible for implementing domestically funded roads. PID1 is headed by a Chief and consists of several technical staff including the Environmental Officer who will be responsible for overseeing the environmental implementation arrangements for RT3. PDoT. At provincial level PDoT is the decentralised arm of MoT and undertakes the planning and implementation of transport activities. Rural transport is included as part of PDoT's activities. PDoT structure varies by province. In the RT3 structure PDoT will be headed by a Director with two Vice Directors who are responsible for (i) Transport and Industry and (ii) Construction and Maintenance. PPMU Projects are implemented via a Provincial Project Management Unit (PPMU) that is attached to PDoT. In the RT3 structure the PPMU reports to the Vice Director of the Construction and Maintenance Section. The PPMU consists of a Director, who oversees three groups; (i) the Technical Group (ii) Land Acquisition, Environment and Social Group (LAE&S group), and (iii) an Administration Group. The Technical Group normally consists of 3 Construction Supervision Engineers, one Maintenance Engineer and 2-3 Technical Planning staff. In some situations construction supervision may be outsourced to a locally hired consultant. Environmental (one position) and land acquisition (one position) is undertaken within the LAE&S group. In many cases though this staff may not be present and the PPMU technical staff often share these responsibilities with other project duties. In the RT3 structure the PPMU communicates via the responsible PDoT Vice Director to PID Environment Sector Policies and Strategies In 1988 the GoV approved the National Conservation Strategy which framed the basis for the first National Strategy on Environment and Development The National Action Plan for the Environment and Sustainable Develooment was prepared by the National Committee for Science with the assistance of the United Nations Development Programme (UNDP), the International Union for the Conservation of Nature (IUCN) and other Rural Transport Project 3 30/06/2005 Page 8 of 41

9 Third Rural Transport Project Consultancy Services for Technical Assistance for Project Preparation Environmental Framework Model I and 2 organizations and approved by the Prime Minister in The National Action Plan was presented at the Rio Conference in The National Strateav for Environmental Protection was prepared in 1998 by the National Environment Agency to address problems in the earlier National Conservation Strategy. The strategy states that sustainable development is the basis for development of the country and that development has to be underpinned by the overall improvement in socioeconomic conditions or environmental protection will fail. This concept was incorporated as part of the "Strateav of Socio-economic Development from 2001 to 2010" which states that economic growth should be compatible with social development and environmental protection. In 2003 MONRE issued the National Environmental Protection Strategv as an integral part of Vietnam's Socio-economic Development Strategy. This strategy developed plans to 2010 with a vision for 2020 and proposes a series of cross-sectoral programs to implement the strategy. The strategy was approved by the Prime Minister in December 2003 and reaffirms the concept that economic growth must be harmonised with social development and environmental protection. The strategy is used to establish a set of environmental goals that are to be achieved by 2020, to reduce environmental pollution, provide access to safe water, improve the conservation and quality of natural resources and meet environmental labelling and standards so as to improve the peoples' quality of life while ensuring sustainable development Regulations Vietnam has enacted one environmental law which is supported by several decrees, directives, circulars and instructions. The National Law on Environment Protection (NLEP) was passed in 1993 which frames environmental protection and established the Ministry of Science, Technology and Environment (MOSTE 5 ) as the mandated agency for the management of environmental protection. The legislation: - Identifies the responsibility of the state, provinces, organizations and individuals to prevent and remedy environmental deterioration and pollution and carry out specified environmental protection functions; - Provides for the development of environmental criteria (standards) and submission of environmental impact assessment reports on new and existing facilities; - Provides for responsible parties to pay compensation for environmental damage; - Establishes the right of individuals and organizations to petition for enforcement of environmental regulations; - Calls for civil and criminal penalties for violations; and - Encourages international environmental cooperation. The National Law on the Environment is currently being reviewed and a new law is expected to be approved at the end of Decree 175/CP. Decree 175/CP was promulgated in October 1994 to guide implementation of NLEP and provides broad guidelines for: - Division of responsibility among Ministries; - Environmental Impact Assessment; - Pollution prevention and disaster control; - Financial sources; and - Environmental inspections and standards. Decree 175/CP stipulates that any project invested, financed, loaned or joint invested by foreign or international individuals or organizations on Vietnam territory are subject to its requirements. As noted, RT3 will be undertaken with the support of the World Bank and, as such, requires environmental assessment pursuant to NLEP. S In 2002 MOSTE was superseded by MONRE (the Ministry of Natural Resources and Environment). Rural Transport Project 3 30/06/2005 Page 9 of 41

10 Third Rural Transport Project Consultancy Services for Technical Assistance for Project Preparation Environmental Framework Model I and 2 Vietnamese Standard of Environment. Environmental standards for environmental parameters were issued by the (then) Ministry of Science, Technology and Environment (MOSTE) in Standards were prepared for; air quality, water quality and noise. Decree 143/2004/ND-CP was issued on 12 July 2004 by Government for modification and supplementation of Article 14 Decree 175/CP dated 18 October The Decree allocates the right of assessing and ratifying environment impact assessment for all kinds of projects. Circular 490/1998 is the main decree that applies to environmental assessment and was issued on 29 April 1998 by MOSTE. Circular 490/1998 provides guidance for the preparation of projectlevel environmental assessments required for investment projects to comply with Decree 175/CP. Two categories of investment projects are recognized: a) Cateaorv I proiects includes all projects which may cause major environmental impacts. Category I projects require a full environmental impact assessment. Appendix I of Circular 490 shows that if a road is located in any of the following areas an EIA report is required; Projects to be developed in or adjacent to environmentally sensitive areas, wildlife reservation parks, tourist areas, and historical and cultural relics of national and international significance. b) Category II proiects includes all other investment projects not considered Category I. These require the submission of a Registration of Meeting Environmental Standards (RMES) to the provincial environmental authority (now DONRE). The RMES is not an EIA and its required content differs substantially from that of an EIA. The RMES requires only a baseline assessment of existing conditions and does not require any detailed assessment of potential impacts. An RMES is an application to DONRE to approve an existing or proposed project with regard to a brief environmental statement agreeing to meet environmental standards. Appendix Ill provides an outline for submitting an RMES which shows that the structure for an RMES is designed for industries that may require pollution control rather than roads. The required outline includes: 1. Description of the land site 2. Description of production technology 3. Sources of pollution 4. Measures to mitigate pollution 5. Environment monitoring program 6. Undertaking to meet environmental standards Based on this assessment all rural roads that do not meet Category I requirements will be classed as Category II and require an RMES to be submitted to DONRE. Chapter III of Circular 490/1998 outlines responsibilities for the appraisal of Category I and 11 projects. Thus; Review of Regulations Clause 5 specifies 60 days for appraising an EIA Report, while, Clause 6 specifies that the time period for considering an RMES shall not exceed 20 days. New environmental legislation is expected at the end of It is not known what this legislation may contain. Issues in regulations that have relevance for RT3 include the following. Rural Transport Project 3 30/06/2005 Page 10 of 41

11 Third Rural Transport Project Consultancy Services for Technical Assistance for Project Preparation Environmental Framework Model I and 2 a) While Circular 490/1998 provides a good screening basis for projects based on their location with regard to environmentally sensitive areas, Category II projects require an RMES. The RMES contains poorly expressed conditions since the intention of the RMES appears to apply to polluting industries, not to road projects. b) The RMES was intended as a self-registration of the industry/project. As such it does not provide a license to operate but rather a declaration of the project/industry which DONRE can then address with regard to providing operating conditions. Hence as the RMES is the only vehicle to hang the RT3 EMP and EA assessment conditions on, it is an administratively weak link. Despite these inherent weaknesses the RMES will need to be applied by RT3 to meet EA approval requirements that will be needed by the WB Institutions a) Central Level: The Ministry of Natural Resources and Environment (MONRE) is the ministry that is charged with the responsibility for overseeing the implementation of the NLEP. MONRE exercises responsibility by approving, licensing, and control of projects with regard to; land, water resources, minerals the environment, meteorology and hydrology, and surveying and mapping. MONRE is responsible for the approval of Category I projects which require an EIA. b) At the provincial level MONRE is represented by DONRE which issues and approves RMES applications. As RT3 operates at provincial level and as the majority RT3 roads will meet Category II standards as defined by Circular 490/1998, DONRE will be the responsible agency to approve the RMES for RT3 roads. At provincial level DONRE are often a small organisation with few staff and many activities to manage. Approval of the rehabilitation of rural roads is often not seen as a major RMES requirement by DONRE as this does not meet the intention of what the RMES was supposed to do which was intended as self-registration of the project or industry. During RT2 DONRE have frequently delayed RMES approvals since they neither considered that issuing an RMES was warranted nor did they have the manpower or time to check the roads so as to verify the road for issuing an RMES. It is recommended later in the Framework that to avoid this problem that PDoT be delegated some of the approval responsibility. 4. WORLD BANK SAFEGUARD POLICIES The operations of the World Bank are guided by a comprehensive set of policies and procedures, dealing with the Bank's core development objectives and goals. These are set out in Operational Policies (OPs) and Operational Directives (ODs) which are short, focused statements that follow from the Bank's Articles of Agreement, general conditions and from policies specifically approved by the Board. Within the overall set of Operational Policies, Bank management has identified ten key policies that are critical to ensuring that potentially adverse environmental and social consequences are identified, minimized, and mitigated. The ten policies collectively form the Bank's safeguard policies and receive particular attention during the project preparation and approval process. The ten safeguard policies are summarised in Table 1 Table 1: Environmental Safeguard Policies of the World Bank Ref Name Objectives OP 4.01 Environmental This OP is triggered by RT3. See detailed summary below Assessment Rural Transport Project Page II of 41

12 Third Rural Transport Project Consultancy Services for Technical Assistance for Project Preparation Environmental Framework Model 1 and 2 OP 4.04 NHabitats This OP is triggered by RT3. See detailed summary below. Op 4.09 Pest * Minimise environmental and health hazards arising as a Management * consequence of pesticide use. Ensure that pest management activities follow an IPM approach. * Develop a national capacity to implement IPM. * Effectively monitor the distribution and use of pesticides. OP 4.11 Cultural This OP is triggered by RT3. See detailed summary below Property OD 4.20 Indigenous Ensure that indigenous peoples (or ethnic minorities) that may be Peoples/Ethnic affected by the project: Minorities * Receive full respect for their dignity, human rights and cultural uniqueness. * Do not suffer adverse effects. * Receive culturally compatible social and economic benefits. * Benefit through prior consultation and informed participation. OD 4.30 Involuntary * Avoid or minimise involuntary resettlement and related economic Resettlement disruption, including loss of livelihood. * Provide transparent compensation procedures for involuntary acquisition of land and other assets. * Resettle people in a manner which provides them with sufficient investment resources and opportunities to share in the project benefits. * Restore or improve living standards of project affected peoples. * Compensate PAP's at full replacement costs. * Resettlement planning and mitigation measures are undertaken in consultation with PAP's via a participatory approach. OP 4.36 Forestry * Reduce deforestation Enhance the environmental contribution of forested areas. * Promote forestation and thereby reduce poverty and encourage economic development. * Reduce forest encroachment * Protect communities traditional use of forested areas OP 4.37 Safety of * New dam construction projects Dams * Projects which may be affected by the safety or performance of an existing dam or dams under construction * Consider: dam height, reservoir capacity, suitability of dam safety standards. OP 7.50 Projects on * Ensures that projects will neither affect the efficient utilisation and International Waterwational protection of international waterways, nor adversely affect relations between the Bank and it's Borrowers, and between riparian states. OP 7.60 Projects in Ensures that territorial disputes that may affect a project are identified 7. roje ssind at the earliest possible stage so as: ADs Areas * Not to prejudice the position of either the Bank or the countries concerned. * Not to affect relations between the Bank and Member Countries. * Not to affect the relations between the Borrower and neighbouring countries. (Source: World Bank Environmental Safeguard Policies, Technical Guidelines for the Transport and Agriculture and Rural Development Sectors, The World Bank in Vietnam, Ministry of Planning and Investment). The following section discusses the three relevant World Bank OPs that are relevant to the RT3 project. Rural Transport Project 3 30/06/2005 Page 12 of 41

13 Third Rural Transport Project Consultancy Services for Technical Assistance for Project Preparation Environmental Framework Model I and 2 OP-4.01: Environmental Assessment The requirements of World Bank OP 4.01 apply to RT3. RT3 has been screened and classified using OP4.01 as a Category B project, i.e., a project whose 'impacts are site-specific; few if any of them are irreversible; and in most cases mitigatory measures can be more readily designed than for Category A projects... The scope of EA for a Category B project may vary from project to project and is narrower than a Category A project. The EA for Category B projects examines the project's potential negative and positive environmental impacts and recommends any measures needed to prevent, minimize, mitigate, or compensate for adverse impacts and improve environmental performance." Footnote 11 for Category B projects states; Category B projects that are not in environmentally sensitive areas and that present well defined and well understood issues of narrow scope, the Bank may accept altemative approaches for meeting EA requirements: for example,. environmentally sound operating procedures for road rehabilitation projects. Op 4.01 details requirements to be met for Sector Investment Lending (SIL) which would also apply to RT3 since RT3 is a sector based loan and is also intending to introduce SWAp procedures. Footnote 12 defines SILS as follows; SILs normally involve the preparation of and implementation of annual investment plans or subprojects as time slice activities over the course of the project... Furthermore the implementing institution carries out appropriate EA according to country requirements and the requirements of this policy. OP 4.01 requires the Institutional Capacity of the borrower to be assessed. If required a capacity building component will be included in the project loan. OP 4.01 requires Public Consultation to be carried out during the EA for all Category A and B projects. The borrower is required to consult project affected groups and NGO's and to take their views into account. The consultation is to be done as early as possible. OP 4.01 requires Disclosure of the relevant material in a timely manner so that meaningful consultations may be held between the borrower and project-affected groups. Category B project EAs are made available through the World Bank InfoShop. During Implementation OP 4.01 requires the borrower to report on (a) compliance with measures agreed with the Bank, including implementation of any EMP; (b) status of mitigation measures; and (c) findings of monitoring programs. OP 4.04 Natural Habitats The Bank requires the conservation of natural habitats and expects borrowers to apply a precautionary approach to natural resource management. The Bank does not support projects that involve significant conversion or degradation of critical natural habitats. The policy applies to subprojects under sectoral loans. OP 4.11 Management of Cultural Propertv in Bank Financed Proiects "Cultural property" includes archaeological, paleontological, historical, religious and places with unique natural environmental values such as canyons and waterfalls. Under OP 4.11 the Bank will not finance projects that cause significant damage to non-replicable cultural property. 4.1 Operational Directives Operational Directives (ODs) that are applicable to RT3 but are not directly part of the ambit of this section include: * OD 4.20 Indigenous People, and * OD 4.30 Involuntary Resettlements Rural Transport Project 3 30/06/2005 Page 13 of41

14 Third Rural Transport Project Consultancy Services for Technical Assistance for Project Preparation Environmental Framework Model I and 2 These are discussed in the Resettlement Action Plan and Ethnic Minority Development Plan which are presented in a separate report. 4.2 Comparison of GoV and World Bank Environmental Safeguards Circular 490/1998 is the most relevant GoV document for RT3 as it categorises the RT3 subprojects as Category II projects, which allows these to be approved at provincial level. Provincial approval is seen as a benefit as this integrates environmental approval with the project's overall aims of decentralising approval, design and implementation activities to PPMU level. The following activities are required in the EA system and this is shown in Table 2. In the event that Vietnamese laws and policies are inconsistent with World Bank Operational Policies and/or Directives concerning this Project, the normal solution is that the more stringent shall apply. Table 2 shows that there are three main areas of difference between the GoV EA process and the WB process. These are: * Need for an adequate and robust Environmental Management Plan. * Need for Public Consultation. * Need for Public Disclosure. To meet WB standards these differences will need to be resolved and included within the EA procedures to be adopted for RT3. Rural Transport Project 3 30/06/2005 Page 14 of 41

15 Third Rural Transport Project Consultancy Services for Technical Assistance for Project Preparation Environmental Framework Model I and 2 Table 2: Review of GoV and World Bank Environmental Processes. EA process GoV World Bank Differences 1. Project and sub- Circ 490/1998 separates projects into OP 4.01 categorises projects as No large differences. GoV screening project Screening Category I (req. EIA) or Category II projects Cat A, B, C or Fl projects. RT3 requirements should be acceptable (req. RMES). RT3 will mainly require RMES. meets Category B criteria. RT3 to WB. Should RT3 consider approving a road in a will require EA but with a narrower If SEA is required this would have to protected area, historic or cultural site, scope than Cat A projects. be done to Bank standards. classified scenic area OR the road extends For sector loans an SEA may be into two provinces, or has bridges longer than needed m then Cat I EA assessment is required. (Decree 143/2004) SEA is not required as part of the EA process. 2. Preparation of EA While not directly specified it would be ToR is required for both Cat A and No large differences between GoV ToR expected that a ToR would be required for a B projects. The ToR for Cat A and WB procedures. Cat I project. Public discussion to frame the projects would also be established ToR is not required. by public discussion. This is not a For Cat II projects a ToR would not be requirement for Cat B projects. expected as it involves providing answers to an established set of procedures contained in the RMES. (Circular 490/1998 Appendix l l). 3. Contents of EA Stipulated for Cat I projects by Article 11 of The WB have well documented GoV requirements are vague and for report Decree 175/1994, whereby a preliminary and procedures and source books to RT3 the contents of the RMES would detailed EIA are prepared. undertake comprehensive EA need to be improved to (a) give it a For Cat II projects the contents of the RMES preparation. road focus and (b) ensure that an report are given in Appendix IlIl of Circular EMP and Env Monitoring adequate EMP and monitoring 490/1998. Programs are directly specified as program is included. This is required EMPs and Env Monitoring Programs are not a requirement for both Cat A and so that it may be carried through to specifically mentioned as a requirement, B projects. the contract specifications, be though under current understanding of EA addressed by the contract bidding preparation they would be expected to be included. Rural Transport Project 3 30/06/2005 Page 15 of 41 document, be appraised at the time of awarding the contract and be instituted at implementation (construction).

16 Third Rural Transport Project Consultancy Services for Technical Assistance for Project Preparation Environmental Framework Model 1 and 2 Table 2 continued 4. Public consultation Not required. Required for both Cat A and B Major difference and is required in projects. RT3 preparation. 5. Public Disclosure Not required. Required for both Cat A and B Major difference and is required in projects. RT3 preparation. 6. Implementation Responsibility of the authority that either WB clearly states that it requires Though institutional responsibilities monitoring appraise Cat I projects (MONRE) or who the borrower to report on for supervising monitoring are issue the decision for Cat II projects compliance measures, status and determined as either MONRE or (DONRE). Circular 490/1998, Chap l1l, Clause findings of the monitoring DONRE, the actual requirements for 3. program. undertaking implementation monitoring i.e. what, how, who, when and cost, must be detailed as part of the EMP. Needs to be strengthened for RT3. Rural Transport Project 3 30/ Page 16of41

17 Third Rural Transport Project EA Framework Model 1 5. ENVIRONMENT AND SOCIAL BACKGROUND Vietnam is a long narrow country with a length of 1,650 km and a surface area of 331,040 km' The country's location and length results in great variation in climate and diversity in flora and fauna. Vietnam receives abundant rainfall and most of the country receives an average annual rainfall of about 2,000 mm which increases to 3,300 mm in the Central Highlands. The country has a monsoon climate with a distinct wet season that commences about June in the north and progressively moves further south where the wet season may commence in October and continue through to January. Frequently associated with the wet season are numerous natural disasters including floods and typhoons. Vietnam has abundant water resources which are estimated at 880 billion m 3, (11,647 m 3 /person) of which 325 billion m 3 arise from within the country. The remainder arise from outside the country in large rivers such as the Mekong. The major rivers are the Red River in the north and the Mekong in the south. Surface water is fairly evenly located throughout the country. Present extraction is about 6 percent of the total water resources, with about 86 percent used for irrigation, 10 percent for industry and 4 percent for domestic use (World Bank, 2000). Vietnam has high a degree of bio-diversity and contains 10 percent of the world's mammals, birds, reptiles, and fish species which includes 275 mammals, 826 birds and 180 reptiles6. Of the 10,500 plant species, 40 percent are endemic. Biodiversity is supported by a diverse range of terrestrial and marine ecosystems that are located through out the country. Terrestrial ecosystem habitats include large delta plains with extensive wetlands, rising to broad plateaus and heavily dissected mountains that are often in advanced stages of deforestation. Marine and coastal wetland ecosystems occur along the 3,260 km coast line and the off-shore islands. These support extensive mangrove forests and sea grass beds that support over 2000 marine species, some with high bio-diversity and economic value. Protected areas are grouped as Special-use Forest areas 7. These mainly comprise terrestrial forest but may also include a small number of wetland and marine sites. The Ministry of Agriculture and Rural Development (MARD) is responsible for their management and administration. As at February 2004 there were 95 decreed and 88 proposed Special-use Forest areas. Special-use forests are further subdivided into national parks, nature reserves and cultural and historical sites. Thus the 95 Special-use forests consist of 27 national parks, 40 nature reserves and 28 cultural and historic sites with a total area of over 1.8 million ha. To support marine biodiversity 24 Marine Protected Areas have been proposed. Wetlands are among the most threatened habitats in Vietnam with 20 of Vietnam's 40 globally threatened bird species being dependent on these areas. However, despite large conversion of wetland areas for agricultural use this may now be changing as Vietnam has ratified the Convention on Biological Diversity which promotes the establishment of a representative network of protected wetland areas. MONRE has identified 79 wetland areas of which 23 are already included within decreed Special-use forests, 14 are included within proposed Specialuse forests and 7 are included within proposed marine protected areas. The situation of the remaining 35 wetland areas is not clarified in the report. (MARD, 2004). Since 1943, Vietnam has seen a large decline in forest area and by 2000 only 9.6 million ha (29 % of the country's area) remained forested, of which 1.4 million ha is plantation. The majority of the forests are concentrated in the upland regions with about 40 percent found in the central highlands. An active government program promoting plantation forests and a timber harvesting ban that came into effect in 1997 is now reversing the decline in forest area. 6 Biodiversity Information Management Systems, www. geoanalytics.com. 7 The information on protected areas is sourced from Sourcebook of Existing and Proposed Protected Areas in Vietnam. Second Edition. 2 volumes. Issued February Published by the Ministry of Agriculture and Rural Development with BirdLife International. Rural Transport Project 3 30/06/2005 Page 17 of 41

18 Third Rural Transport Project EA Framework Model 1 Productive alluvial soils are found in the delta areas of the Red and Mekong Rivers, while in the upland areas, a variety of soil types are found that are mainly of low to moderate fertility with acid reaction trends. Production from the upland areas relative to the lowlands is significantly lower. Agricultural land occupies 22 percent of the country of which 17 percent is arable, the remainder being upland agricultural areas. Many of these upland areas are home to ethnic minorities who have traditionally used these areas for slash and burn agriculture. The deltas of both rivers are the main rice producing areas of the country with yields tending to increase southwards8. Agriculture represents the main employment opportunity and economic activity with agriculture and fisheries accounting for 39 percent of GDP. Ho Chi Minh city in the southern part of the country has higher income levels and industrialisation than the north and is the major economic growth centre for Vietnam. While about 50 percent of industrial output is generated from the southeast and about 20 percent from the Red River delta, the north is now becoming rapidly industrialised. In 2003 Vietnam had an estimated population of 81.3 million people (WB, 2003, WB Dev Indicators). The country is predominantly rural with only 20 percent of the population living in urban areas. The main centres of population are in the productive rice growing deltas of the Red River (21.9 % of the country's total population) and the Mekong (21.0%).The crude birth rate has fallen from 45 per thousand ( ) to 19.9 per thousand (1999) due to adoption of birth control measures and health policies which have increased life expectancy. In 2001 the population growth rate was 1.35 percent which has resulted in a smaller population in the 0-4 year age group than the next three older age groups. (5-19 years). Life expectancy has increased from 67 years in 1992, to 68.6 years in The average population density is 231 persons/km2 which ranges from 55 persons/km2 in the Central Highlands to 1,176 persons/km2 in the Red River delta which is the most densely settled area of the country. Migration from the northern densely settled areas to the Central Highland areas where population densities are lower 9 is occurring. These areas are also home to traditional ethnic groups and much of the country's remaining forests. Vietnam has 54 ethnic groups with distinct languages and customs. The Kinh are the dominant group which make up 87 percent of the population and are found in the lowland areas and deltas. The Muong and the Thai groups are the next most numerous and mainly occupy areas in the south of the country. Apart from the highland areas, extensive mixing has now occurred with the Kinh which has diminished much of the cultural and geographic distinctiveness of these groups. Ethnic groups have not developed at the same pace as the rest of Vietnam and many of these groups are significantly economically and socially disadvantaged in comparison to the Kinh. In 1986, the Sixth Communist Party Congress introduced the policy known as doi moi by which Vietnam would change from a centrally planned socialist economy to a more open market economy. Combined with a favourable global economy this has rapidly changed the economic environment of Vietnam and has brought corresponding changes to the country's social development. This has seen economic growth peak at 9.5 percent in 1995, before falling to 5.8 percent following the impact of the Asian economic crisis. In 2003, Vietnam had an average per capita GDP of $482. (WB, Development Indicators, 2003). Between 1992 and 1998 poverty was nationally reduced from 30 percent to 18 percent. However poverty has not been uniformly decreased with the incidence of rural poverty being much higher (45 percent) than urban areas (10 to 15 percent). The incidence of rural poverty is also higher in the less fertile upland areas than the lowland rural areas. The gains in poverty reduction have been attributed to benefits arising from economic growth and the adoption of the National Poverty Alleviation Program. ethe Mekong delta provides 40 percent of the country's agricultural output. 9 Growth rates remain high in the Central Highlands where an average annual growth rate of 4.87 percent is recorded, part of this is due to in-migration. Rural Transport Project 3 30/06/2005 Page 18 of 41