The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) Appraisal Environmental and Social Review Summary Appraisal Stage (ESRS Appraisal Stage) Public Disclosure Date Prepared/Updated: 03/11/2022 | Report No: ESRSA01991 Mar 11, 2022 Page 1 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) BASIC INFORMATION A. Basic Project Data Country Region Project ID Parent Project ID (if any) Lao People's Democratic EAST ASIA AND PACIFIC P176088 Republic Project Name Southeast Asia Regional Economic Corridor and Connectivity Project Practice Area (Lead) Financing Instrument Estimated Appraisal Date Estimated Board Date Transport Investment Project 3/7/2022 5/31/2022 Financing Borrower(s) Implementing Agency(ies) Lao People's Democratic Ministry of Public Works and Republic Transport Proposed Development Objective Public Disclosure To improve regional and domestic trade and climate resilient transport connectivity along an East-West corridor in Southeast Asia, and to provide immediate and effective response in case of an Eligible Crisis or Emergency. Financing (in USD Million) Amount Total Project Cost 202.40 B. Is the project being prepared in a Situation of Urgent Need of Assistance or Capacity Constraints, as per Bank IPF Policy, para. 12? No C. Summary Description of Proposed Project [including overview of Country, Sectoral & Institutional Contexts and Relationship to CPF] Lao PDR is the key country linking land trade routes across Northern Southeast Asia and could benefit substantially from becoming a land-linked country. Lao PDR achieved rapid growth and significant poverty reduction between 2005 and 2015, though inequality widened. Most of the population in Lao PDR is still dependent on agriculture for jobs and livelihoods. And, Lao PDR is highly susceptible to climate change-induced natural hazards, particularly floods and landslides. With the COVID-19 pandemic, regional connectivity and participation in the global supply chains have become more important to Lao PDR and the region as a whole. Lao PDR’s National Road No. 2 (NR2), a section of Asian Highway No. 13 (AH13), is one of the prioritized investments under the Master Plan for ASEAN Connectivity Mar 11, 2022 Page 2 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) (MPAC 2025) and has the potential to fill a major connectivity gap to support regional integration once upgraded to the Asian Highway Standards. On the soft side, the implementation of cross-border transport agreements among the countries also remains challenging with current border clearance procedures in Lao PDR being one of the bottlenecks in the supply chain links. With the interests from Vietnam and Thailand in developing regional connectivity in the North, improvements of major regional corridors and cross-border trade procedures are expected to have significant regional spill-over benefits. From the domestic connectivity perspective, Lao PDR’s transport infrastructure is particularly vulnerable to the impacts of extreme weather events and climate change. High transport and logistic costs further constrain agricultural growth and integration into growing urban markets within the country and into the regional export markets. Although the Government approved the national logistics development strategy and action plan include nine locations for international logistics parks and dry ports in 2015, there are still implementation challenges in terms of identifying the appropriate location and size of consolidation centers. In addition, Lao PDR enacted a multi-modal transport law in 2013, but it is not yet effectively implemented. The limited local capacity is also challenging for the country to implement policy reforms and ensure the quality of investment. The proposed project aims to improve the domestic and regional road network connectivity and logistics facilities, with associated policy reforms for increased economic activities along selected transport corridors in Northern Lao PDR. Starting with the improvement of domestic connectivity in Lao PDR, agriculture trade facilitation, border crossing control management with Vietnam and Thailand, and institutional strengthening on multi-modal transport, logistics, and sanitary and phyto-sanitary standards management, the proposed project will help to attract more Public Disclosure investment, boost more cross border trade, generate more employment in the northern part of Lao PDR, and contribute to the efficiency of regional supply chains. The Project is closely aligned with the World Bank Group Country Partnership Framework (CPF) with Lao PDR for FY2017-2021 discussed by the Board of Executive Directors on April 27, 2017, and the upcoming CPF for FY2022-2026 on connectivity, trade facilitation, climate resilience, and disaster risk management. National Road 2 (NR2) is a main transport corridor that connects Lao PDR with Vietnam and Thailand and cuts across the Lao-China railway and expressway. NR2 has a total length of 295 km consists of NR2 W with the length of 145 km connecting the Thailand border at Huai Kone to Oudomxay province and NR2 E with a length of 150 km connecting Oudomxay province to the Vietnam border at Tay Trang, Dien Bien Phu province. The project will be jointly financed by the Bank’s IDA (US$ 120.25 million); the government of Lao PDR (US$12.5 million); and the unguaranteed commercial financing (US$ 50 million). The Australian Government through its Partnerships for Infrastructure (P4I) program has also expressed its interest to provide parallel co-financing to implement institutional strengthening activities under the project. The Project will work at both national and provincial levels. The potential consolidation locations are in Luangnamtha, Oudomxay, Xayabouli, Phongsali, and Luangprabang Provinces. The project will achieve its objectives through the implementation of the following Components: Component 1: Lao PDR and regional connectivity enhancement. Activities include (i) improvement of the condition, safety, and climate resilience of select sections of National Road 2 West (NR2W) to meet the ASEAN Highway Class lll standards, including widening of the road from 6 meters to 8 meters (6 meters of the carriageway and 2 meters of shoulders-one meter each side to accommodate pedestrian’s safety); (ii) improvement of climate resilience and safety Mar 11, 2022 Page 3 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) of selected local roads in project provinces; (iii) improvement of the border crossing facilities at (a) Pang Hok in Phongsaly bordering to Dien Bien Phu, Vietnam and (b) Muang Ngeun in Xayabouly bordering to Nan province, Thailand through the upgrade of the existing facility and provision of goods and equipment for digitization of cross- border business processes; and (iv) design and supervision of the road and cross border facilities improvement and local road maintenance. Component 2: Logistics services development and border-crossing management. Activities include (i) development of potential dry ports, market places, trucking terminals, consolida tion locations which include technical assistance for preparation of market assessments, technical studies, environmental and social studies, and transaction support to leverage private sector financing. Public sector financing may include the provision of the critical public utilities; (ii) technical assistance to support the platform for collaboration among Lao PDR, Thailand, and Vietnam to update the cross-border transport agreement and address transboundary issues; and (iii) strengthening institutional and operation capacity of Customs, Immigration and Quarantines (CIQ) in managing and operating border facilities, harmonizing customs and trade facilitation regulations, developing customs-bonded warehouse management guidelines, border clearance procedures, and border crossing manuals, modernizing business process through streamlining the procedure. Component 3: Strengthening institutional capacity and regulatory framework in agriculture, transport, and investment planning. Activities include: (i) Institutional capacity development for the Ministry of Agriculture and Forestry (MAF), Provincial Agriculture and Forestry Offices (PAFOs), District Agriculture and Forestry Office (DAFOs), and smallholder Producer Organizations Public Disclosure (POs) of the targeted provinces and districts in agricultural value chains. Key activities will include (a) capacity development to support agricultural trade; and (b) capacity building for SPS management. (ii) Institutional capacity development for the transport sector. The key activities include: (a) multi-modal transport technical assistance, which includes updating of the Transport Sector Strategy, development of a multi- modal transport framework, development of a public transportation plan, development of regulations and guidelines to support strategy implementation; (b) supporting the implementation of road safety action plan, which will focus on road safety engineering, road safety data management, road safety campaigning and enforcement, post-crash response capacity improvement; and, (c) Strategic Capacity Building Program (SCBP) which will focus on strengthening the institutional and organisational capacity necessary to deliver the above plans and actions, enhancing the skills and capabilities required to implement the above multi-modal transport framework and strategy, and strengthening capacity to address the gender gaps in the transport sector, including integrating gender and social inclusion (GESI) considerations in developing regulations and guidelines to support the implementation of the sector strategy. Component 4: Project Management. This Component will provide technical and operational assistance for strengthening safeguard capacity, the day-to-day management, monitoring and evaluation of the Project, and the carrying out of technical and financial audits. In addition, this component will provide support for compliance monitoring for environmental and social aspects. Component 5: Contingent Emergency Response Component (CERC). (Estimated IDA financing US$0 million). This component will provide an immediate response to an eligible crisis or emergency, as needed. In the event of an eligible crisis or emergency, the World Bank to re-allocate project funds to support emergency response and recovery. Mar 11, 2022 Page 4 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) With the support from the European Investment Bank (EIB), MPWT will conduct a feasibility study (FS) and an environmental and social assessment (ESA) for the entire NR2 corridor (both NR2 East and NR2 West) and the related local/feeder roads. The studies would commence in December 2021 with conceptual design expected to be completed by December 2022. The EIB-funded ESA will contribute to s ite-specific assessments once the sites are selected. Discussions with EIB and other potential development partners were conducted for the possibility of harmonization between the WB and EIB on Environmental and Social approaches (i.e the EIB following the WB re quirements for NR2 E), as distinct from a common approach. The Government of Laos (GoL) is expected to use EIB funding to finance road upgrade works on one section of the corridor (NR2 East), while World Bank financing will be used for upgrading another distinc tand separate section of the corridor (NR2 West). These road sections are separated from each other by the provincial town of Oudomxay. As such, the EIB investment will not be treated as an associated facility as defined under paragraph 11 of ESS1, as the road upgrade investments planned under the EIB funded section of NR2 will not be necessary for the WB project to be viable. Also, the EIB section is not reliant on the WB project for its viability, as the overall functioning of the road network is not critically affected if one of these investments does not go ahead. During implementation, the harmonization of the WB and EIB E&S risk management requirements across the investments will be undertaken in order to leverage the EIB financed E&S work, to minimize the risk of social conflict arising from different mitigation measures being applied in different districts along the corridor. The detailed technical designs of the road works will only be available during project implementation. There are several agricultural programs operating in northern Lao PDR, financed by a range of development Public Disclosure organizations, working on various livelihood programs, including value chains. The project will invest in distinct capacity building activities, including technical advice. There will be no support for agricultural infrastructure (irrigation systems) nor agricultural inputs to farmers. It will focus on capacity building, extension services, and training. D. Environmental and Social Overview D.1. Detailed project location(s) and salient physical characteristics relevant to the E&S assessment [geographic, environmental, social] The NR2 corridor passes through Oudomxay, Phongsaly and Xayabouli Provinces. The road passes through diverse communities, several district towns, and one provincial capital. As of 2020 an estimated 256,000 people live in districts along NR2. In 2015, more than 73 thousand people in just over 14 thousand households live in 81 villages along the NR2W corridor. The project target area covers 5 provinces, with 31 districts, 2096 villages and a total population of 1,627,000. Most villages in these provinces are in highland areas. The mountain terrain of Phongsaly Province is a challenge in terms of improving transport and agricultural land use. A range of communities are expected to be affected (both positively and adversely) by the project, including diverse ethnic groups whose livelihood is mainly dependent on agriculture and forest land and resources. At least 43 ethnic groups reside along the NR2W corridor. The number of people of each ethnic group ranges, however, from 1 person to just under 50,000 people. Ethnic groups with more than one percent of the total population in a given district include Hmong, Hor, Khmou, Lao, Lue, Phounoy and Tai. The Khmou ethnic group account for the majority in almost all districts, except for Mar 11, 2022 Page 5 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) Meuang Ngeun. Among the five northern provinces, three have poverty rates higher than the national average, and is highest (although decreasing) in the districts bordering Vietnam. NR2 West is approximately 190km and extends through Ngeun district in Xayaboury (36 km), and Pakbeng, Houn, Beng, and Xay districts in Oudomxay province (154 km). The topography of NR2W consists of relatively flatland with agricultural crops such as rice, maize and rubber plantation, while sections traverse areas covered with shrubs, grassland, and sparse trees. Lowland rice cultivation is the main activity, but other crops grown include cashew, pumpkin, corn, banana, rubber and pepper. Ethnic groups such as Mon-Khmer, Sino-Tibetan practice swidden cultivation. The soils tend to be low fertility in general because of heavy leaching and high acidic content. Soils have low water retention capacity and as a result are not well-suited to intensive cultivation practices. Approximately sixty rivers flow through these provinces, some of which form tributaries to the Mekong River which flows through southern part of Oudomxay and through central Xayaboury provinces. Nam Beng River flows on flat terrain along NR2W, and the road crosses the river at several points. Nam Beng river flows into Mekong River about 9 km beyond the end of NR2W section proposed for bank financing. Laos’s inland fish species are diverse and mostly native. Together with other aquatic species, they form important sources for household subsistence, income, and small-scale trade. The project target provinces contain a large area of national protection and production forests. The main vegetation types present in the Oudomxay, Xayaboury and Phongsaly provinces are Unstocked Forest (stock are less than 20% due to logging and swidden cultivation) and Upper Mixed Deciduous Forest. Small areas of other vegetation were also Public Disclosure identified along NR2W including Riparian Forest on the river edge and Bamboo Forest. Activities such as small gardens, raising of livestock or upland rice fields are allowed in the protection and production forests, as well as collection of NTFPs. However, large scale logging is restricted. Biodiversity in Oudomxay is still considered to be high. Plant diversity is rich with four species are classified as threatened on the IUCN Red List for Lao PDR (2007). The majority of habitats situated directly along the NR2 were previously cleared and modified, and communities mainly rely more on agricultural farming for their livelihood. The fauna along the road alignment is largely made up of large and small livestock raised by some households. There are two major conservation reserves in the region of NR2: the Nam Ha National Project Area (NPA) in Luang Namtha Province and the Phou Hinphee NPA in Oxdomaxy Province. The Nam Ha NPA is located approximately 50 km north-west from the NR2 alignment; has the highest conservation status in Lao PDR; and is the 3rd largest NPA in the country. This reserve covers 2230 km2 and is continuous with the Shiang Yong Protected Area in Xishuangpanna National Nature Reserve in China (ADB, 2002). These reserves form an important trans-boundary wildlife corridor for endangered species which require large territories, such as Asian elephants. Some sections of NR2 East in Oudomxay Province are close to Phou Hinphee National Protected Area (87,350 ha), approximately 25 km from Maung Xay City. The northern edge boundary of Phou Hinphee extends around 20 km along the NR2 E. The NPA contains a large area of mixed deciduous forest including pristine old growth forest with giant dipterocarps (nyang oil tree) and limestone outcrops. The reserve is rich in biodiversity, with a range of birds, reptiles, insects, and mammals. Although Phou Hinphee provides potential significant habitats for high conservation species, currently little information is available regarding the biodiversity species. This area is one of the most beautiful and desired ecotourism destinations in Lao PDR while ensuring its protection through the promotion of sustainable travel practices. Mar 11, 2022 Page 6 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) Several forms of land use have a range of land use certificates/titles, but other forms of land use, especially in more remote areas, are likely to not have formal title but traditional land use rights. A range of agricultural crops are cultivated in the corridor, including those for own consumption, as well as cash crops. Traders from Lao, Thailand, Vietnam, and China are active along the corridor. The border control point with Vietnam is on a mountain top, surrounded by forest, and also close to an internationally recognized Key Biodiversity Area (KBA) with important bird species and biodiversity value, with a community several kilometers away, on a lower location of the mountain. The border control point with Thailand is in a low sloping hilly area, surrounded by agricultural lands, several kilometers away from a community. Both border posts provide accommodation to the staff working at them. Due to COVID-19 related border crossing restrictions, current road traffic volumes are low compared to 2019, especially on the eastern section towards Vietnam. Local government expects a 5-fold increase of traffic over the 2019 volume. Lao PDR is considered extremely susceptible to the effects of climate change, and is prone to floods and landslides following seasonal tropical storms. Bridge crossings along the road alignment have historically exhibited flood conditions under heavy rainfall events. These natural hazards largely affected the country’s agricultural and transport sectors. The transport infrastructure in Lao PDR is vulnerable to extreme weather events and climate change due to their poor design and low construction standards, lack of adequate maintenance, and technical designs that are not Public Disclosure climate resilient. In 2018 flood damaged one-fifth of the Lao PDR’s road network. D. 2. Borrower’s Institutional Capacity The Ministry of Public Works and Transport (MPWT) will take lead in implementation and work with government at national, provincial, district, and village level. Sectoral implementing agencies include: (a) Ministry of Agriculture and Forestry (MAF) responsible for institutional and operational capacity development in agricultural value chains; (b) Customs Department, of the Ministry of Finance (MOF), and the Department of Import and Export of the Ministry, of Industry and Commerce (MOIC), will be responsible for implementing Customs and trade facilitation activities through the National Trade Facilitation Committee (NTFC) and Provincial Trade Facilitation Committee (PTFC); (c) Ministry of Planning and Investment (MPI) will be responsible for Public Private Partnerships (PPP) and strengthening provincial capacity on management of private sector investments; and (d) Ministry of Public Security (MOPS) will oversee border facility management and security, immigration and border crossings, with relevant provincial authorities, working on the border facility management, management of private sector investment, and ensure consistency between national regulations and local practices of border facility operation. A project steering committee will be established, led by Minister of MPWT and comprise the vice ministers of MAF, MOIC, MOF, MOPS, MPI and provincial governors. A project secretariat will be established in MPWT. There will be focal points in MAF, MOIC, and Customs Department of MOF appointed for each of their relevant subcomponent. At provincial level, there will be a Provincial Project Committee (PPC) chaired by the vice governor in each of the project provinces. The PPCs will include the directors of the provincial departments of MPWT, MOIC, MAF, MOPS, and MPI in each province. MPWT will serve as secretariat for the PPC. Mar 11, 2022 Page 7 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) At the national level MPWT, MAF, MOIC and MPI have experience working with World Bank financed projects, but only limited experience of implementing environmental and social (E&S) risk management under the Environmental and Social Framework (ESF). Participating local government departments are known to have institutional capacity constraints and current systems for E&S risk management are weak. Building social risk management capacity for land acquisition and stakeholder engagement including on post-construction wildlife protection, use of forest resources is included in the project through various ways, including formal as well as informal training, as part of the capacity building program under Component 3 and the TA support for project management under Component 4. A Capacity Needs Assessment has been carried out as part of the preparation of the Environmental and Social Management Framework (ESMF). This informed Component 3 and 4 which will have activities to support building capacity and knowledge on the Environmental and Social Framework (ESF), and also inform potential ESF capacity building initiatives in the road sector. The ESMF contains a targeted capacity building approach. The staff of the PMU, CMU and key personnel from collaborating ministries/agencies will receive trainings and attend workshops through the project consultancy services, included a part of Component 4 to ensure adequate capacity to implement and monitor all relevant Environmental and Social Standards (ESSs). Training will also be provided to PPCs to enhance capacity on E&S Risk Management at provincial level during project implementation. The MPWT has a dedicated unit working on E&S risk management, including on E&S compliance. Currently, EDPD/PTI has seven staff fully responsible for safeguards and natural disaster prevention related tasks. Of these seven staffs, there are 3 senior members. Their overall Environmental and Social Management System (ESMS) at the national level for MPWT needs strengthening in terms of the number of staff, clearer allocation of roles and responsibilities, Public Disclosure database or MIS related to grievances reporting, road safety and traffic management plans, E&S incident reporting, and SEA/SH monitoring and reporting. Specific institutional capacity strengthening measures such as the provision of additional resources and training needs are identified and listed in the ESMF and committed to in the Environmental and Social Commitment Plan (ESCP) to ensure ownership and sustainability of the resources. II. SUMMARY OF ENVIRONMENTAL AND SOCIAL (ES) RISKS AND IMPACTS A. Environmental and Social Risk Classification (ESRC) Substantial Environmental Risk Rating Substantial The environmental risk is classified as Substantial for the following reasons: (i) direct impacts related to construction works on border crossing facilities and road improvement including widening and rehabilitation of the existing road network, (ii) indirect impacts related to the operation phase, (iii) downstream impacts from TA type of activities, and (iv) the limited experience of the implementing agency with ESF. Potential direct impacts associated with the construction works may include sourcing of material for earthworks, noise, dust, sedimentation, erosion, wastes generated from road and building constructions, management of storm water, community safety related to traffic during construction and operation, and health and safety of the workers. Road widening may have impacts on natural habitats along the corridor’s Right of Way (ROW). Asbestos Containing Material (ACM) risks may stem from demolition of existing building. The nature and magnitude of these direct environmental impacts and risks during Mar 11, 2022 Page 8 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) construction phase are temporary, site specific, predictable and reversible if relevant mitigation measures are properly implemented. During operation phase, potential risks and impacts on community health and safety, forests and biodiversity are likely to be significant due to the increased connectivity from improved road network and railway, but the residual risks are not likely to be significant. Mitigatory measures are readily available and reliable. Potential indirect environmental (transboundary) impacts may arise as a result of the road upgrade and the increased connectivity among Lao PDR, Thailand and Vietnam. For instance, improved road condition may allow the flow of illegal trades of timber and wildlife products from nearby forests and national protected areas/biodiversity conservation areas. Another indirect impact is community road safety risks from increased heavy traffic due to road upgrade, including large international hauling trucks going back-and-forth along the corridor. Local communities such as traders working in adjacent markets along the road corridor and children are facing this risk while using the road as pedestrians (e.g., daily short trips to schools). Potential downstream environmental impacts may arise from the Technical Assistance (TA) type of activities such as the institutional strengthening, related policy and regulatory reforms, market assessments and technical studies for agricultural value chain development. These TA activities may not result in any direct environmental risks and impacts but can have downstream environmental implications. For example, improved facilitation of agricultural trade may increase agricultural production and that may prompt intensive agricultural farming and/or increased use of agrochemicals, and consequently may result in water and soil resources deterioration and/or accelerate the change to agricultural landscape from remaining protection forests. The implementing agencies are currently implementing World Bank-financed project requirements under safeguards policies, and the environmental safeguard performance rating has consistently been Satisfactory. Environmental safeguard requirements were largely complied with by the implementing agency. However, the project will present additional challenges, including adjusting to the ESF requirements. Public Disclosure Social Risk Rating Substantial The social risk is classified as Substantial. Project activities have the potential to generate social risks and impacts including (a) pre-construction phase impacts from land acquisition including the disruption of livelihoods and the relocation of households and vendors located near the road, along with the potential loss of culturally significant or spiritual spaces (b) construction phase risks such as restricted access to roadside properties, risks related labor and working conditions for construction workers, along with the risk of increased substance abuse and sexual exploitation and abuse/harassment and transmission of communicable diseases associated with labor influx (c) operational phase risks to community health and safety due to the increases in heavy traffic, and associated increases in road safety, human trafficking and SEA/SH risks. While some of these risks and impacts may be significant, they are for the most part predicable and possible to mitigate during the lifetime of the project. Those risks related to longer term risks of SEA/SH and human trafficking during the operational phase will be mitigated during activities included in the project design (sub-component 2.3 and component 4). Also, while there are a number of sensitive social receptors that have the potential to be affected by the project, if the screening and assessment procedures laid out in the ESMF are applied it should be possible to avoid or minimize such disruption, or to apply reliable mitigatory or compensatory measures. The term “Ethnic Groups” is often used for ethnic minority groups belonging to the Hmong Iew Mien, Mone-Khmer and Chine-Tibetan ethno-linguistic families who meet the characteristics and definition of Indigenous Peoples under ESS7. Meaningful engagement will be key for managing concerns as well as the potential risks and impacts resulting from the project activities. The engagement will need to take into consideration consent, language, literacy, access to information, vulnerability, child protection, and cultural needs of the various groups including ethnic groups. The project is expected to bring substantial benefits to the quality of life of local communities around the main road and selected feeder roads and improve incomes and sustainability of the farmers participating in the agricultural components, streamlined procedures and Mar 11, 2022 Page 9 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) better facilities at border crossings. The expected increase in number of (international) trucks going back-and-forth along the corridor could increase a dust, noise, smells, and road safety issues. Component 2 activities are likely to have similar social impacts as Component 1, depending on their designs and locations, but at a smaller scale per location. Facilities such as dry ports, truck terminals etc. may require land acquisition for the facility and/or access roads and (temporary) construction camps, as well as water supply, electricity, and internet, will involve limited number of workers, and are likely to lead to a concentration of large haulage trucks at their locations. They may be constructed in locations where Ethnic groups are present. If facilities for staying overnight are to be provided, this can exacerbate the risk of SEA/SH occurring. ToRs for TA studies on dry ports, truck terminals etc. will include the need to identify and address social risks and impacts. The social risk rating is updated to reflect the selection of NR2W and more clarity on the expected labor influx. The Client capacity for managing social aspects related to road construction is medium and they have a limited familiarity with ESF requirements and implementation. The client will be challenged in managing and mitigating livelihood impacts from land acquisition to landowners and land users – especially vendors, some of whom are socially marginalized and vulnerable. B. Environment and Social Standards (ESSs) that Apply to the Activities Being Considered B.1. General Assessment ESS1 Assessment and Management of Environmental and Social Risks and Impacts Overview of the relevance of the Standard for the Project: The WB and EIB financed operations will be prepared and implemented as separate projects, and will invest in Public Disclosure distinct, separated sections of the corridor (NR2 West by the WB and NR2 East by EIB). As such, the EIB investment will not represent an associated facility as it will not be necessary for the WB project to be viable. A harmonized approach to E&S management was discussed (i.e the EIB to follow the WB requirements for NR East as well). MPWT has prepared, consulted and disclosed the Project’s ESMF which includes: (i) Preliminary Environmental and Social Impact Assessment (Pre-ESIA) for the NR2 West Corridor (145 km) that the Bank will be financing; and (ii) framework(s) for managing E&S aspects of feeder roads/local roads in Phongsaly, Oudomxay, Luangnamtha, Xayabouly and Luangprabang Provinces to determine geographic location specific risks and impacts; border facilities in Phongsaly and Xaybouly Provinces; other physical facilities to which the Bank will provide financing for TA (e.g. dry ports, market places, consolidation centers, etc.); (iii) biodiversity management plan (BMP) template; and (iv) budget, staffing, and operational arrangements for project E&S risk management, including a training plan informed by the capacity needs assessment, all to be funded by the Client as part of the project. The field survey along the NR2W included interview with some villagers, village leaders and some businesses. Key informant interviews were also conducted with selected project key stakeholders at all levels (central, provincial, district and village levels). Due to Covid-19 lockdowns and restrictions for travel, some interviews were done by phone or through virtual consultations using Whatsapp. The Pre-ESIA on the NR2W alignment (Chapter 3 of the ESMF) and the framework assessment of other proposed project activities have identified potential environmental impacts and risks, including: (1) Direct impacts and risks related to road construction: slope stability in landslide prone areas, air quality and community health due to emission of dust and burning of waste at the project sites, exhaust from engines of earth Mar 11, 2022 Page 10 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) moving equipment, erosion, wastes generated during earth movement and construction, community safety related to traffic during construction and operation, health and safety of the workers and communities, increased potential for infectious diseases, vector-borne diseases, soil, water and waste-related diseases, impacts on river ecology of Nam Beng River, and natural habitats along the ROW due to road widening and construction facilities (e.g. workers accommodation and laydown area) that may need land clearing; (2) Direct impacts and risks related to building construction on the border crossing facilities, consolidation centers and dry ports: dust, noise, handling and disposal of ACM which maybe relevant if it involves demolition of existing building, health and safety of workers, and KBA nearby Vietnam border crossing facility; (3) Indirect impacts that may be potentially amplified following road upgrading and the increased connectivity among Lao PDR, Thailand and Vietnam: illegal trades of timber and wildlife products from nearby forests/protected areas, community road safety risks, cumulative air quality and noise impacts for nearby sensitive receptors due to increased traffic volume and incremental impacts on environmental characteristics due to works conducted along the NR2 corridor; (4) Downstream impacts arising from TA type of activities which may not result in any direct environmental risks and impacts but can have downstream environmental implications (e.g. impact on water quality from extensive use of agrochemicals due to improved agricultural trade, and accelerate change of landscape from remaining protection forests to agricultural landscape). Public Disclosure Social risks and impacts anticipated for this project are: (a) land acquisition, economic displacement and possible loss of access to properties; (b) risk of enhancing impoverishment of vulnerable groups to be economically displaced by the project, in case livelihood restoration plans are not adequately implemented; (c) if not appropriately managed labor and working conditions impacts related with the construction works; (d) road safety and increase of heavy traffic (especially international long haul trucks); (e) temporary labor influx of workers, which might increase the risk of substance abuse; (f) increased risk of SEA/SH from workers and their proximity to vulnerable groups, as well as opening up of the corridor; (g) increased risk of human trafficking; (h) likely impacts to ethnic groups and their land and resource use; (i) impacts to cultural and spiritual spaces; and (j) risk of exclusion of ethnic or vulnerable farmers from the benefits of the agricultural programs. Direct environmental and social impacts and risks are expected to be largely along the existing alignment, and will be readily managed through standard mitigation measures, occupational health and safety (OHS) measures prescribed within the standard procurement documents, good engineering designs, and good practices for civil construction and transport-related impacts. Indirect impacts and risks will be further assessed in site-specific assessments and managed through the implementation of site-specific management plans. The EIB financed Environmental and Social Assessment (ESA) for the entire NR2 corridor will consider incremental impacts on environmental characteristics, among others: (i) cumulative, transboundary, and indirect risks and impacts on critical habitats, river ecology, downstream use of Nang Ben River; and (ii) ways to engage with local stakeholders on post-construction wildlife protection. The findings from ESA will feed into the site-specific E&S assessments during the implementation stage. The site-specific E&S assessments will be conducted following the screening procedure to inform site specific management plans which will be based on the project’s ESMF. Based on the screening, and specifics for the road Mar 11, 2022 Page 11 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) upgrade and border facilities, it may be necessary to prepare site-specific Ethnic Group Engagement Plans (EGEPs), Resettlement Action Plans (RAPs), and Biodiversity Management Plan (BMP). The RAPs will need updating during project implementation, to reflect replacement values at the time of compensation. The TORs for project’s activities (technical studies, institutional strengthening and update of legal framework) will be reviewed by the WB to ensure that ESF requirements are effectively integrated. Potential risks and impacts associated with any downstream activities will be considered through the TA TORs. This will allow due consideration of the potential environmental and social implications of activities under the studies/analysis. This provision was clearly mentioned in the ESCP. A Stakeholder Engagement Plan (SEP) including a Grievance Redress Mechanism (GRM) was prepared prior to appraisal to guide the Borrower to identify stakeholders, build and maintain a constructive relationship with them, and to meet communication and disclosure requirements, with a particular focus on project-affected parties. This will also guide the road traffic safety campaign and engagement with respect to cultural and spiritual places. Further details are provided under ESS10. ESS10 Stakeholder Engagement and Information Disclosure MPWT prepared an SEP, including a GRM, before appraisal and incorporated the engagement for, and findings from, Public Disclosure the E&S assessment process during preparation. The SEP will be implemented, updated, and disclosed throughout the different phases of the project life cycle. It was developed early in the project preparation process to inform engagement to address key risks and develop communication and engagement strategies and materials to effectively reach out to affected and interested stakeholders to ensure accessibility and culturally appropriateness. Stakeholder identification, analysis and engagement informed the assessment of both the Pre-ESIA and processes and practices prescribed in the ESMF. The approach to engagement activities takes into account the needs of ethnic groups, vulnerability, language, literacy as well as consent, and child protection measures, both as part of engagement and also assessment process as well as COVID19 measures. The engagement ensured not only risks are managed but benefits are accessible to all. The project will involve different groups of stakeholders from national to village levels, including local communities, government line agencies, mass organizations and the private sector. The project’s stakeholders and the level of their engagement was identified and analyzed by MPWT during project preparation. Stakeholder groups include: (a) those directly affected: people living along the road corridor, selected feeder roads and farmers participating in the agricultural activities, government staff benefitting from the capacity building and government staff working at the border posts, (b) line ministries: MPWT, MAF, Customs Department of MOF, the Department of Import and Export of MOIC, NTFC, and PTFC; (c) MPI, MOPS, and the Ministry of Health (MOH) (d) local government administrations: provincial and local authorities and village chiefs, (d) interested individuals and groups including: communities located nearby the project areas, civil society organizations, women’s organizations, ethnic group leaders and organizations; (e) private sector: road construction companies, agribusiness, road transport companies, (f) academics, non-governmental and community based organizations working with children and women and human trafficking (g) and development partners at the central level. Mar 11, 2022 Page 12 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) To raise awareness on road traffic safety, the project includes a road safety action plan. Road safety awareness will require an effective campaign, targeting the most vulnerable sections of the populations in ways accessible to them. This is included in the SEP. Consultations with local communities and gathering of information from cultural heritage authorities will help to both identify cultural heritage present in project areas and understand the nature and significance of potential project- identified heritage. Consultations during project implementation with local communities will be important to identify cultural and spiritual spaces and understand the values and significance attached to these by different stakeholders. Any consultation will need to take into consideration the different interpretations of cultural heritage by different communities and the importance they place on them. Women and girls have a different attachment to spaces and their own cultural and spiritual spaces than men and boys and this should inform engagement to identify and understand impacts, and to develop appropriate measures. Success of this project in delivering socially inclusive benefits and achieving planned project outcomes will depend on meaningful and culturally appropriate stakeholder engagement, including with vulnerable households, women, ethnic groups and children. The SEP seeks to ensure that beneficiaries and affected communities are and will continue to be engaged during the implementation phase, especially regarding project design options. The SEP also contains the outline of the GRM Specific public communications campaign and consultations about the risks, impacts and project benefits will be undertaken. Livelihood Restoration Plans (LRPs), if required, will include specific engagement requirements to reach out to stakeholders to ensure accessibility and inclusiveness effectively. Public Disclosure As part of the information disclosure arrangements, the drafts of ESMF (including Pre ESIA results), SEP and ESCP, including translations of the executive summaries in Lao language were disclosed publicly on 15 November 2021 on the MPWT website (http://www.mpwt.gov.la/en/projects-en/nlrecc-project) Due to COVID19 restrictions, a series of public consultation meetings were conducted online during the period between 29 November to 3 December 2021. At national level (29 November), 65 participants from 6 government agencies; 5 International NGOs; 2 CSOs; 2 funding agencies and development partners; 1 private sector joined the consultations. Out of the 65 participants 12 are female. Virtual Consultations at the province, district and village level were conducted from 30 November 2021 to 03 December 2021, with 95 participants (16 are female) from the Provinces; 62 participants (9 are female) from the Districts; and 16 representatives from village level (4 are female) and 4 are from the ethnic groups including Khmu and Hmong. The results of these meaningful consultation with relevant stakeholders are adequately recorded in the updated instruments and these instruments are scheduled to be redisclosed on the same website on 18 January 2022 (English version) and 19 January 2022 (Lao version). Finalized instruments in English were disclosed by MPWT on 3 March 2022, using the MPWT website (http://www.mpwt.gov.la/en/projects-en/nlrecc-project). B.2. Specific Risks and Impacts A brief description of the potential environmental and social risks and impacts relevant to the Project. ESS2 Labor and Working Conditions Mar 11, 2022 Page 13 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) The project is expected to finance construction of infrastructure and civil works that would bring a limited influx of laborers due to the nature of the works. Given the scale of the works, current procurement plans aim for national competitive bidding for undertaking the road works, reducing the likelihood for labor influx from neighboring counties. Based on recent experience with similar investments, it is expected that the construction labor force will have an upper limit of 450 workers, with most workers being sourced from surrounding districts, and less than 10% (mainly skilled and professional workers) being sourced from outside Lao PDR. NR2W stretches over 150 km: Oudomxay – Pakbeng, passing through four relatively big districts: Xay, Houn, Beng, and Pak Beng, which have capacity to absorb this labor. On local labor, there are number of local contractors working in Oudomxay and nearby provinces, who can provide local labor. The project will involve civil servants (government staff appointed from the implementing and concerned agencies at all levels), direct workers (workers hired directly by the project secretariat/PPC), contracted workers (employees of civil works contractors and subcontractors, service providers, employees of consulting firms), and primary supply workers (workers from providers of essential goods and materials). It is not anticipated that the project will require any community workers. Labor related risks include: (i) employment discrimination, (ii) labor related disputes, (iv) SEA/SH, (v) child labor in construction work, (vi) inadequate workers housing, including housing for government staff at the border posts; and (vii) occupational health and safety or OHS related issues such as inadequate personal protective equipment (PPE) and sanitation facilities for workers at construction sites, and unsafe handling and disposal of asbestos containing material (ACM) at building renovation/demolition sites. The client has prepared Labor Management Procedures (LMP) annexed to the ESMF. The LMP sets out how all Public Disclosure categories of project worker will be managed and treated in line with the national Labor Law and ESS2. The LMP will also ensure that different project teams and workers will be provided with adequate resources, including personal protective equipment (PPE), accommodation, transport, first aid-kits available at working sites, and can be contacted/reached in case of emergency. The project secretariat located in MPWT will ensure that Social Security (health and life insurance) is provided to all workers according to the Labor Law before the commencement of project activities. Labor, especially construction labor and drivers have an increased risk for substance abuse, such as alcohol and amphetamine. Such substance abuse is often a contributing factor to accidents and incident and associated with SEA/SH. During project preparation, the client assessed the risk of substance abuse and put in measures in the LMP to address the risks and impacts of substance abuse including Codes of Conduct (CoCs). The CoCs which will be included in the letter of appointment for government staff and contractors. The Client has agreed to a dedicated Worker Grievance Mechanism, as part of LMP, for all groups of workers, to collect and address potential grievances coming from project workers. The project’s Labor Management Procedures (LMP) also take into account the latest COVID-safe guidelines mandated by the government and/or best practice in the country, in order to maintain a safe working environment for workers and for the community and minimize the risk of COVID transmission. This should include hygiene practices, use of PPE and ensuring sick workers can self-isolate and access pay. The LMP also includes a worker grievance procedure. Mar 11, 2022 Page 14 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) Site-specific management plans to be developed during project implementation will include the following provisions for managing potential impacts and risks associated with OHS: (i) The contractors are to comply with all national and good practice regulations regarding workers’ safety; (ii) The contractors are to provide required training on occupational safety regulations and use of PPE; (iii) The contractors are to provide safety measures as appropriate during works such as first aid kits etc.; (iv) The asbestos audit is to be undertaken prior to renovation/refurbishment/demolition works; (v) Safe removal of ACM is to be performed and disposed of by specially trained workers in line with the WBG guideline on asbestos management; (vi) Documentation and reporting of occupational accidents/incidents/diseases; (vii) Emergency prevention and preparedness and response arrangements to emergency situation; and (viii) Remedies for adverse impacts such as occupational injuries and disease. Contractor management and preparation of contractor requirements particularly for the OHS/CHS aspects through the operations manual and more specifically through qualifications, bidding criteria and contracts will be considered. The project management/implementation unit will ensure that all tender documents for civil works include the site- specific management plan, and budget provisions for all relevant aspects of the OHS. The project will also regularly monitor the contractor’s performance in implementing OHS measures. Project’s regular reporting system will include project’s performance on the OHS implementation. ESS3 Resource Efficiency and Pollution Prevention and Management The ESS3 on Resource Efficiency and Pollution Prevention and Management is relevant. The project investment on Public Disclosure road improvement and border crossing infrastructure needs to be technically and financially feasible to ensure efficient use of energy, water and raw materials. The potential risks and impacts related to construction activities (road upgrade and border crossing building) may include waste generation (including hazardous and nonhazardous waste) during earth movement and construction. Pollution may arise from mis-handling or improper disposal of oils, cement, plastic waste and other types of solid waste. The dumping of construction waste to nearby water ways may cause blockage of water flows, affect water quality and aquatic animals’ biological cycles (e.g., migration, spawning). Improper disposal of construction waste along the roads and lubricants or fuels leakage from project vehicles and equipment in use may pose health and safety risks to the project workers. The storages of petroleum-based products may potentially be a source of fire outbreak to the project sites and nearby communities. Potential direct impacts and risks related to building construction may include handling and disposal of ACM if works include demolition of existing building. Safe removal of ACM is to be performed and disposed of by specially trained workers in line with the WBG guideline on asbestos management. This provision will be included in site specific ESMP. The project will ensure that all tender documents for civil works to include the ESMP; which will allow contractors to better prepared for potential costs associated with ACM management. Construction related activities including onsite excavation and movement of earth materials, vehicle movement, transport of construction materials may generate dust emission. Another source of emission may include exhaust from diesel engines of project vehicles and earth moving equipment as well as from open burning of solid waste on project site. These impacts and risks will be managed by the following measures: avoid or minimize air, water, and Mar 11, 2022 Page 15 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) land pollution through the application of good engineering designs and good practices for construction by incorporating environmental mitigation measures (e.g., dust prevention measures, proper management of hazardous and non-hazardous site wastes and surplus materials, etc.) in the technical design and tender documents. The project will ensure that pollution prevention and management as well as spill prevention and response measures are included in the site-specific management plan. The Environmental and Social Codes of Practice for construction works was prepared as part of the ESMF, and that highlighted good practices for construction works (either roads or buildings), and the environmental mitigation measures (e.g., solid waste management, quarry management plan etc.). These requirements will be included in the work contracts, and contractor ESMPs. This provision is included in the Environmental and Social Commitment Plan (ESCP) that was prepared, consulted and disclosed prior to project appraisal. The project activities – through facilitation of border trade, improved road condition, improved efficiency in agricultural value chains and speedy custom clearance due to the policy reforms – may indirectly encourage agricultural crop production. With the potential increased agricultural exports in the region, it is likely that it will indirectly increase the use of agrochemicals and prompt intensive agricultural farming that can deteriorate, in the long run, water and soil resources or destroy habitats for some wild flora and fauna. Subject to the type of pesticide and method of use, the handling and dispose of agrochemicals and hazardous wastes from agriculture practices may poses serious risk to human health and environment. Terms of References (TORs) for studies in agricultural value chains, market assessment will consider such Public Disclosure downstream environmental implications. Technical studies will include analysis of alternatives for a more environmentally friendly agricultural practices that may result in the adoption of good agricultural practices (GAPs) such as promoting organic crops, crop rotation, inter-cropping and multi cropping to manage pests and diseases rather than using pesticides. The ToRs will be reviewed by the Bank to ensure that the requirements of the World Bank ESF policy is effectively integrated. This provision will be clearly mentioned in the Environmental and Social Commitment Plan (ESCP), to be prepared prior project appraisal. An analysis of GHG was undertaken based on fuel consumption rates at different speeds under without-project and with-project scenarios. Without the project, the deteriorated condition of the roads limits vehicle speed and leads to higher fuel consumption per vehicle-km compared to the with-project scenario. With the project, improved road condition leads to improved speed and hence lower fuel consumption. Gross GHG emission in the with-project scenario is 919,256 tCO2e. The total net greenhouse gas (GHG) emissions is estimated to be −85,973 tCO2e; a net reduction over the evaluation period (20 years). The annual average net GHG emission is −4,299 tCO2e per year. The social benefit from GHG reduction is estimated to be US$2.58 million, based on the social cost of emission reduction from the World Bank’s Guidance Note on Shadow Price of Carbon in Economic Analysis (2017). ESS4 Community Health and Safety Direct and contract workers, excluding the PIUs-DPWT, are expected to be assigned to the sub-project areas which may be closed to villages. Because NR2W passing through four relatively big districts: Xay, Houn, Beng, and Pak Beng, the number and frequency of people staying overnight in villages is estimated to be limited. The risks and impacts of Mar 11, 2022 Page 16 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) Community, Health and Safety (CHS) anticipated from their visit and stay in the villages include increased potential for infectious diseases, vector-borne diseases, soil, water and waste-related diseases, privacy effect and mental well- being. A Community Health and Safety Plan (CHSP) was prepared as a part of the ESMF. The CHSP assesses community health and safety risks and impacts, and includes mitigation measures that can be incorporated in the site-specific management plans, where relevant. Those measures are in line with the WB Environmental Health and Safety Guidelines (EHSG) and Good International Industrial Practices (GIIP). Contractor management and preparation of contractor requirements particularly for the community health and safety aspects through the operations manual and more specifically through qualifications, bidding criteria and contracts will be considered given that the project will likely involve a number of contractors over a large area. Proportionate and tailored provisions will be included in site specific CHSPs to be developed prior to any project construction being started. If well managed, this project has a substantial potential to improve the environmental, social, and health conditions of the communities living along the road corridor. However, the project activities will increase heavy traffic, including large international hauling trucks going back-and-forth along the corridor. To address road safety risks during construction and operation phases, the site-specific assessments and management plans will include road traffic safety assessments and plans. They will pay special attention to children and vulnerable populations along the roads, with specific attention to receptors including schools (kindergarten until secondary school), clinics, hospitals and religious structures located along the road. Road design will include pedestrian pavements on both sides of the road in villages and built-up areas. The exact scale of labor influx and the installation of temporary workers’ camps is unknown at this stage, but Public Disclosure estimates from recent similar bank financed investments indicate an upper limit of 450 workers, most of whom will be sourced locally, and no more than 10% (mostly skilled and professional workers) being sourced outside Lao PDR. To address the risk of SEA/SH during the construction phase, the project’s CHSP and LMP includes provisions to prevent and manage SEA/SH and violence against children (VAC). In addition to this, since this project has been screened as “Moderate Risk” on SEA/SH, a SEA/SH Action Plan brining all these measures together, is included in the ESMF. Among others, it will include provisions to promote local recruitment of the workforce, plus mitigation measures such as a worker codes of conduct (including requirements for both worker-community and worker-worker interactions), mapping of third-party service providers, plus specific actions (training, public awareness, etc.) to avoid sexual harassment, sexual assault, and exploitation and human trafficking. Labor, especially construction labor and drivers have an increased risk for substance abuse, such as alcohol and amphetamine. Such substance abuse is often a contributing factor to accidents and incidents. It also is a contributing factor for gender-based violence. During project preparation, the client assessed the risk of substance abuse as part of the Pre-ESIA. To address the risk of substance abuse, the project’s CHSP includes provisions to prevent and manage substance abuse. The Project also has a potential risk of spreading COVID19 to communities and the CHSP took into account the latest COVID-safe guidelines mandated by the government and/or best practice in the country. Improved roads and increased transportation have the potential to increase the risk of human trafficking, as well as SEA/SH during the operational phase of the project. To address these risks, the design of the project includes activities under sub-component 2.3 to provide training to strengthen institutional and operational capacity of CIQ, Mar 11, 2022 Page 17 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) including communicable diseases and human trafficking. In addition, component 4 includes activities to strengthen the resilience of communities living along the project roads against human trafficking, communicable disease, road safety, sexual exploitation abuse and harassment through campaigns, training, dissemination of information Codes of Conduct (CoCs) will also be included in the letter of appointment for government staff and contractors. The potential impacts and risk may also include (i) potential incremental risk of exposure to operational accidents or natural hazards, including extreme weather events; (ii) exposing to hazardous materials and substances that might be released from the construction activities such as air pollution due to emission from dust, vehicles exhausts and burning of wastes at the project sites. The project will manage these impacts and risks by: (i) ensuring that technical/engineering road design to include solutions to mitigate risks of natural disasters such as integrate flood control and climate resilience with road design, integrate slope stability with erosion control plan, and structural design to incorporate earthquake resilience; (ii) address pollution prevention and management throughout the project life-cycle, implement ambient air quality and noise management plan, and implement plant/equipment maintenance and management plan. The site-specific assessment will include a more detailed identification of areas along NR2W that are likely to be impacted by extreme flood events. Site specific management plans will adequately address the identified impacts and risks management. ESS5 Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Public Disclosure Upgrading and widening of the roads will require land acquisition, including housing, commercial, agricultural land, and impact cultural and spiritual spaces as well as lead to temporary and permanent economic displacement. Detailed construction designs are required to determine the exact impacts on the selected road sections and because these will not be available until implementation (following the completion of the EIB financed feasibility study) the precise location of works that may require land acquisition and resettlement, or lead to livelihood disruption, will not be known prior to appraisal. Also, the final alignments of the roads will try to minimize as much as possible land acquisition and resettlement activities, following the principles of the mitigation hierarchy. Therefore, a Resettlement Policy Framework (RPF), including provisions for livelihoods restoration, have been prepared and are annexed to the ESMF. Following the identification of specific sites during implementation, Resettlement Action Plans (RAP) can be prepared. Obtaining land through Voluntary Land Donations (VLD) has been excluded from the project. Construction of roadside drainage risks cutting off access to private and public properties, spiritual and cultural spaces, and other resources, if adequate crossing structures are not put in place to bridge these roadside drainage channels. Road design and construction will include restoration of access to properties. If temporary economic impacts would occur during construction works a direct result of land acquisition or land use restrictions imposed by the project, then these would need to be compensated. Measures to address temporary economic impacts are included in the RPF. There are several agricultural programs operating in northern Laos, financed by a range of development organizations, working on various livelihood programs, including value chains. The project will invest in distinct capacity building activities, including technical advice. There will be no support for agricultural infrastructure Mar 11, 2022 Page 18 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) (irrigation systems) nor agricultural inputs to farmers. It will focus on capacity building, extension services and training. No land acquisition nor associated facilities are expected as a result of the agricultural program. Component 2 activities are likely to have similar social impacts as Component 1, depending on their designs and locations, but at a smaller scale. ToRs for studies on dry ports, truck terminals etc. will include the need to assess and address social risks and impacts. Such facilities may require land acquisition for the facility and/or access roads and (temporary) construction camps, as well as water supply, electricity, and internet. The possible harmonization of the WB and EIB E&S risk management requirements, including the RPF, across the investments will be undertaken in order to leverage the EIB financed E&S work, and to minimize the risk of social conflict arising from different mitigation measures being applied in different districts along the corridor. ESS6 Biodiversity Conservation and Sustainable Management of Living Natural Resources The ESS6 on biodiversity conservation and sustainable management of living natural resources is relevant. The project target provinces are rich in biodiversity and forest resources, covering national project areas and protection and conservation forests. All works for road widening at NR2 West, feeder roads, and border crossing facilities will be carried out within the existing boundaries of road sections and existing footprint of building facilities. However, noise, emissions and more frequent movement of traffic (during construction and operational stages) might affect the important forest habitats and related biodiversity along the NR2 corridor that passes through protection and Public Disclosure conservation forests. This standard is also relevant to the areas adjacent to the border crossing facilities and construction facilities (workers accommodation and laydown area) that may need land clearing within and/or close to environmentally sensitive areas. The NR2 West crosses Nam Beng River several points. In addition to construction activities for road improvement, there is a possibility of a need for constructing a new bridge crossing the river and the associated risks and impacts will be further assessed in the full-ESIA. In the context of road improvement, there is a potential of short-term impacts on aquatic flora and fauna of Nam Beng River due to increased turbidity during the construction phase. This is predicted to be minor and a very short duration, returning to normal again once the works are completed. These short-term impacts will be reduced and kept to a minimum through mitigation measures controlling release of sediments, erosion control, and maintenance of buffer zones around waterways. The design and construction of bridges have the potential for longer term impacts on some of the river ecology (fish population) such as interrupting spawning or seasonal migrations and restricting access to preferred habitat and available food resources. Design of bridges will need to ensure that they do not obstruct the flow of water and the structure will need to ensure that they do not cause significant changes to the hydrodynamic environment; ensuring that river flow is not too fast for fish species to travel. The full ESIA will assess characteristics of aquatic flora and fauna specific for Nam Beng River and take into consideration of potential change in river habitats. The outcome of the assessment will feed into the bridge design. The constructions for road improvement and border crossing facilities may temporarily restrict movement of nearby communities to access to resources such as small timbers, fibers, medicinal plants, food and freshwater. Potential Mar 11, 2022 Page 19 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) risks and impacts on ecosystem services (e.g., provisioning, regulating, cultural, and supporting) will be considered and addressed in the full-ESIA. Due to the scale and nature of project, the road widening, and construction of border crossing facilities are less likely to severely affect supporting service. Biodiversity risks were screened during the pre-ESIA for NR2 corridor using direct observations, iBAT, the BirdLife International Data Zone tool, and the World Database of Key Biodiversity Areas. No significant areas of biodiversity value are anticipated to be directly impacted with designated areas being over 20 km from the current NR2 W road alignment; potential for indirect impacts and cumulative impacts on biodiversity will be further assessed in the full ESIA. Although the NR2 West passes through area of national protection and conservation forests, vegetation cover along the road alignment was previously cleared and modified, and consists of agricultural crops, shrubs, grasses and sparse trees. The fauna along the road alignment is largely made up of large and small livestock raised by some households. The project will not support the priority local or feeder roads that are located within/or passes through critical habitats with high biodiversity values. The construction works of border control building (bordering with Vietnam) may have potential impacts on the nearby forest area and the Key Biodiversity Area (KBA) which was designated due to its important bird species and other biodiversity value. Information on biodiversity value and habitat types in the KBA. The full ESIA will take into consideration terrestrial environment nearby the border control building, particularly potential harms to wildlife populations including migratory birds and their habitats. The ESMF included screening procedure that is in line with the Government and the WB policies, to guide and inform site specific assessments and management plans based on the degree of significance of anticipated impacts and associated risks. Public Disclosure The full ESIA will further consider cumulative, transboundary and indirect risks (e.g induced illegal wildlife and timber trade) particularly considering that the NR2 provides a critical link in improving cross border connectivity and trade and logistics between Thailand, Lao PDR and Viet Nam. The magnitude of incremental impacts on environmental characteristics along the NR2 corridor including biodiversity and critical habitats in Phou Hinphee Protected Area which is adjacent to NR2 East, and river ecology and downstream river use of Nam Beng River will be assessed during the full ESIA. It will also assess ways to engage with local stakeholders on post-construction wildlife protection. At the implementation stage and once sections to be funded within NR2 West are identified, based on the outcome of ESIA and FS, a site-specific management plan will be prepared to manage identified impacts which may require specific biodiversity management plan (BMP). An indicative content or template of the BMP is included in the ESMF to guide the plan preparation. ESS7 Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities The project area is culturally diverse, there are 50 distinct ethnic groups in Laos. The project covers a section of the country where ethnic groups are known to be present. The 50 ethnic groups in Laos are classified into four ethno- linguistic families namely Hmong Iew Mien, Mone-Khmer, Chine-Tibetan and Lao-Tai. The term “Ethnic Groups” is often used for ethnic minority groups belonging to the first three ethno-linguistic families (Hmong Iew Mien, Mone- Khmer and Chine-Tibetan) who meet the characteristics and definition of Indigenous Peoples under ESS7. The Constitution (amended 2015) recognizes ethnic groups’ self-identification as members of a distinct cultural group with a separate identity from the mainstream society. The Lao Front for National Development (LFND), through its Mar 11, 2022 Page 20 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) Department of Ethnic Affairs (DEA), is the main counterpart responsible for dealing with issues related with Ethnic Groups. LFND is a GOL mass organization with a strong local presence in all provinces and districts. In Oudomxay Province, the Khmu (among them Khmu Lu, Khmu Khong, Khmu Am, Khmu Bit) make up approximately 60% of the population; the Hmong (among them Hmong Khao, Hmong Dam and Hmong Lai) approximately 15% of the population; and other ethnic groups are the Akha, Phouthai (Thai Dam and Thai Khao), Phou Noy (Phou Xang, Phou Kongsat, Phou Nhot), Lao Houy (also Lenten), Phouan, Ly, Yang, Ikho, and Ho. In Phongsali Province, there are the Khammu, Thai Dam, Thai Daeng, Yao, Leu, Hor, Hmong, Akha, Yang, Bid, Lolo, and other ethnic groups. While the Xayabouli Province has the Thai Lue, Khmu, Thai Dam, Htin, Phai, Kri, and Akha ethnic groups. The preliminary SA conducted as part of the Pre-ESIA identified that at least 43 ethnic groups reside along the NR2W corridor. The number of people of each ethnic group ranges, however, from 1 person to just under 50,000 people. Ethnic groups with more than a percent of the total population in a given district include Hmong, Hor, Khmou, Lao, Lue, Phounoy and Tai. The Khmou ethnic group account for the majority in almost all districts, except for Meuang Ngeun. The preliminary SA conducted as part of the Pre-ESIA assessed the nature and degree of the expected direct and indirect economic, social, cultural, and environmental impacts on ethnic groups who are present in or have collective attachment to the project area. Given that the exact location of project activities (road sections, feeder roads and support to farmer groups) will not be known until implementation, following the completion of an EIB financed FS, an Ethnic Group Engagement Framework (EGEF) has been be prepared to cover all components of the project. If impacts related to one or more of Public Disclosure the circumstances requiring Free Prior and Informed Consent (FPIC) then FPIC will be used for engagement. Guidelines for conducting FPIC, culturally appropriate meaningful consultation and grievance redress, as well as site- specific ethnic group engagement plans are included in the Ethnic Group Engagement Framework. Special attention was paid to ensure the active participation of the different ethnic groups and representatives in the project’s stakeholder engagement activities during project preparation and to ensure that any information shared is sensitive to cultural needs, with special attention given to the road safety action plan under Component 3 (the road safety action plan has been prepared by Global Road Safety Facility TA. The project includes support to implement the action plan). ESS8 Cultural Heritage Based on the information available during the Pre-ESIA, most sites of natural and/or cultural significance are likely to lie outside the proposed NR2W alignment disturbance and are not expected to be directly impacted by construction and operation of upgraded road. Cultural heritage takes many forms in Laos. Some of it may be visible, and many others may not be identifiable without consultation. The site-specific assessments will determine the baseline condition of proposed project locations and further assess any potential risks and impacts on and restriction of access to cultural heritage (tangible Mar 11, 2022 Page 21 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) and intangible). The assessment will be informed through engagement with communities, including women and girls, to identify cultural and spiritual places of value and significance to them. Construction of border crossing buildings and road upgrades may include excavation works. In this context, there is the potential of discovering unknown cultural heritage during the excavation activities. A guidance for chance finds procedure was developed in participation with key stakeholders, taking into consideration views of communities including women and girls, and that will be included in the site-specific management plans and contractor contracts. ESS9 Financial Intermediaries This standard is currently considered not relevant. The project will not make use of or support financial intermediaries as defined by this standard. B.3 Other Relevant Project Risks All relevant risks and impacts are covered under each of the standards. C. Legal Operational Policies that Apply Public Disclosure OP 7.50 Projects on International Waterways No OP 7.60 Projects in Disputed Areas No B.3. Reliance on Borrower’s policy, legal and institutional framework, relevant to the Project risks and impacts Is this project being prepared for use of Borrower Framework? No Areas where “Use of Borrower Framework” is being considered: The Borrower's E&S Framework will not be used for the Project, in whole or in part. IV. CONTACT POINTS World Bank Contact: Sombath Southivong Title: Senior Infrastructure Specialist Telephone No: 5784+6228 / 856-21-266-228 Email: ssouthivong@worldbank.org Mar 11, 2022 Page 22 of 23 The World Bank Southeast Asia Regional Economic Corridor and Connectivity Project (P176088) Contact: Konesawang Nghardsaysone Title: Economist Telephone No: 5784+6248 / 856-21-266-248 Email: knghardsaysone@worldbank.org Contact: Chanin Manopiniwes Title: Senior Infrastructure Economist Telephone No: 5778+8377 / 66-2-686-8377 Email: chanin@worldbank.org Borrower/Client/Recipient Borrower: Lao People's Democratic Republic Implementing Agency(ies) Implementing Agency: Ministry of Public Works and Transport V. FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects Public Disclosure VI. APPROVAL Task Team Leader(s): Konesawang Nghardsaysone, Sombath Southivong, Chanin Manopiniwes Practice Manager (ENR/Social) Mona Sur Cleared on 06-Mar-2022 at 18:31:1 GMT-05:00 Safeguards Advisor ESSA Nina Chee (SAESSA) Concurred on 11-Mar-2022 at 10:02:48 GMT-05:00 Mar 11, 2022 Page 23 of 23