VOLUME 2 - Department of Environment and Natural...

TA No. 7258-PHI: Agusan River Basin Integrated Water Resources Management Project – FR – Vol. 2

FINAL REPORT

Pöyry IDP Consult, Inc.

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Nippon Koei, U.K. Schema Konsult, Inc.

Asian Development Bank

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ADB TA 7258 - PHI Agusan River Basin Integrated Water Resources Management Project VOLUME 2 REPORT AND RECOMMENDATION OF THE PRESIDENT, AND PROJECT ADMINISTRATION MANUAL

JANUARY 2011

Department of Environment and Natural Resources


This report consists of 8 volumes:

Volume 1 Main Report

Volume 2 Report and Recommendation of the President, and Project Administration Manual

Volume 3 Supporting Reports: Watershed Rehabilitation, Biodiversity Conservation, and Related Social and Indigenous Peoples Development

Volume 4 Supporting Reports: Infrastructure Development

Volume 5 Supporting Reports: Institutional Development, Capacity Building, Financial Management Assessment, and Financial and Economic Analyses

Volume 6 Supporting Reports: Safeguards

Volume 7 Supporting Reports: Field Surveys (CD softcopy only)

Volume 8 Supporting Reports: Stakeholder Consultations (CD softcopy only)


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AGUSAN RIVER BASIN INTEGRATED WATER RESOURCES MANAGEMENT PROJECT PPTA

TA NO. 7258-PHI

FINAL REPORT

VOLUME 2: REPORT AND RECOMMENDATION OF THE PRESIDENT, AND PROJECT ADMINISTRATION MANUAL

List of Contents Page Glossary and Abbreviations ii Location Maps vii A. Report and Recommendation of the President (Draft 2) B. Project Administration Manual (Draft 2)


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GLOSSARY AND ABBREVIATIONS

AD ancestral domain A&D alienable and disposable (land) ADD average daily demand (water supply) ADB Asian Development Bank ADSDPP Ancestral Domain Sustainable Development Protection Plan AIFC average incremental financial cost amsl above mean sea level AMWS Agusan Marsh Wildlife Sanctuary ANR assisted natural regeneration AP affected person APIS annual poverty indicator survey ARB Agusan River Basin barangay village/ neighborhood administrative unit BDC barangay development council BDP barangay development plan BLGU barangay local government unit BNA basic needs approach BOD biological oxygen demand BOT build-operate-transfer BRS Bureau of Research and Standards (of DRWH) BWSA Barangay Water and Sanitation Association CADC certificate of ancestral domain claim CADT certificate of ancestral domain title CBD central business district CBFM community-based forestry management CBFMA community-based forestry management agreement CBMS community-based monitoring system CBO community-based organization CDA Cooperatives Development Authority CDO community development officer CENRO community environmental and natural resources officer CEPA community education and public awareness CIP carbon-in-pulp processing, community irrigation project CLGU city local government unit CLUP comprehensive land use plan CO community organizing COA Commission On Audit COD chemical oxygen demand CPC certificate of public convenience CY calendar year DA Department of Agriculture DAO DENR Administrative Order DAR Department of Agrarian Reform DBL design-build-lease DBO design-build-operate DBM Department of Budget and Management DBP Development Bank of The Philippines DCC Disaster Coordinating Council DECS Department of Education, Culture and Sports DED detailed engineering design DENR Department of Environment and Natural Resources DILG Department of Interior and Local Government DOF Department of Finance DOH Department of Health DPWH Department of Public Works and Highways


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DRA demand responsive approach DRM disaster risk management DRRM disaster risk reduction and management DSA delineated service area DSCR debt service coverage ratio DSWD Department of Social Welfare and Development DTI-BOI Department of Trade and Industry – Board of Investment EA executing agency EARF environmental assessment review framework ECC environmental clearance certificate EIA environmental impact assessment EIRR economic internal rate of return EMB environmental management bureau EMP environmental management plan EMS environmental management system ENR environment and natural resources EO executive order EOCC economic opportunity cost of capital FGD focus group discussion FLUP forest land use plan FMAQ financial management assessment questionnaire forex foreign exchange FPIC free prior informed consent FS feasibility study FY fiscal year (1 January – 31 December) GAD gender action development GADCC gender action development coordinating committee GEF Global Environmental Facility GFI government financial institution GIS geographic information system GOCC government owned and controlled corporation GOP Government of the Republic of the Philippines GR (i) government regulation, (ii) general record (in legal cases) HDI Human Development Index HH household HRD human resources development IA implementing agency IBRD International Bank for Reconstruction and Development (World

Bank) ICC Investment Coordination Committee (NEDA) ICG internal cash generation IDAP institutional development action plan IDC interest during construction IDCB institutional development and capacity building IEC information-education-communication IEE initial environmental examination IFMA integrated forest management agreement IP indigenous peoples/persons IPDP indigenous peoples’ development plan IPO indigenous people organization IPRA Indigenous People’s Rights Act IRA internal revenue allotment IRR implementing rules and regulations ISF integrated social forestry (program) IT information technology


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JICA Japan International Cooperation Agency JSF Japan Special Fund KABP knowledge-attitudes-behavior-practices KBA key biodiversity area KFP an adaptation of KAP (knowledge, attitudes and practices) LDCC local development coordinating council LG local government LGC local government code LGU local government unit LIDAP local institutional development action plan LIHH low income household LLI local level institutions LOI letter of intent l/s liters per second lumad refers to non-Islamized indigenous peoples of Mindanao LWUA Local Water Utilities Administration MAO municipal agriculture office (of DA) MDFO Municipal Development Fund Office MDG Millennium Development Goals M&E monitoring and evaluation MENRO municipal environment and natural resources office, part of LGU MFF Multitranche Financing Facility (ADB) MGB Mines and Geosciences Bureau MHO municipal health office minahang bayan communal mining area MIS management information system MLGU municipal local government unit MMT multi-sectoral monitoring team MOA memorandum of agreement MORO municipal agrarian reform office (of DAR) MOU memorandum of understanding MPA methodology for participatory assessments MPDO municipal planning and development office MRF materials recovery facility masl metrers above sea level MSU Mindanao State University MTPDP Medium Term Philippine Development Plan MTPIP Medium-Term Public Investment Program NAMRIA National Mapping and Resources Inventory Authority NAPC National Anti Poverty Commission NCIP National Commission on Indigenous Peoples NEDA National Economic Development Authority NGA national government agency NGO non-government organization NIA National Irrigation Administration NIMBY not-in-my-backyard NLA national line agencies NPC National Power Corporation NPK nitrogrn, phosphorus, potassium (fertilizer) NPV net present value NRW non-revenue water NSCB National Statistical Coordination Board NSO National Statistics Office NSWMC National Solid Waste Management Commission NWRB National Water Resources Board


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OCD Office of Civil Defense (under Department of National Defense) OCR Ordinary Capital Resources (ADB) ODA official development assistance OJT on-the-job training O&M operation and maintenance PA protected area PAGASA Philippine Atmospheric, Geophysical and Astronomical Services

Administration PAGRO provincial agriculturist office PAM project administration manual (ADB) PAMB Protected Area Management Board PASu protected area superindentant PAWB Parks and Wildlife Bureau PD presidential decree PENRO Provincial Environment and Natural Resources Office (of DENR) PENRO-LGU Provincial Environment and Natural Resources Office (of LGU) PET polyethylene terephthalate (type of plastic) PFI private funding institution PHO provincial health office PIR poverty impact ratio PIU project implementation unit PL protected landscape PLGU provincial local government unit PMDC Philippine Mining Development Corporation PMO project management office PMU project management unit PO people organization, purchase order PPDO provincial planning and development office PPMS project performance management system PPTA project preparation technical assistance PSA poverty and social assessment PSP private sector participation PWSSR Philippine Water Supply Sector Roadmap QA quality assurance QC quality control QM quality management RA republic act RBO river basin organization R&D research and devvelopment RDCC regional development coordinating council RED regional executive director (DENR) RG regional government RIAP revenue improvement action plan RIS regional/river irrigation system RO regional office ROC resolution of consent (of affected persons) RRP report and recommendation of the president (ADB) RWSA Rural Waterworks and Sanitation Association SES socioeconomic survey SD social development SLA sub-loan agreement/ subsidiary loan agreement SMR self monitoring report (water quality) SP sangguniang panlalawigan (provincial legislature) SWM solid waste management


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TA technical assistance TESDA Technical Education and Skills Development Authority TLA timber licensing agreement TNA training needs assessment TOR terms of reference TOT training-of-trainers TWG technical working group UDP upland development program UFW unaccounted-for water UNCBD United Nations Convention on Conservation of Biological Diversity UNCCD United Nations Convention to Combat Desertification UNFCCC United Nations Framework Convention on Climate Change UNICEF USAID

United Nations Children Fund United States Agency for International Development

V variation (to contract with ADB) WASCO Water Supply Coordination Office (NAPC) WD water district WHO World Health Organization WMU watershed management unit WPEP Water Supply and Sanitation Performance Enhancement Project WQ water quality WS water supply WSP water service provider WSP-EAP Water and Sanitation Program – East Asia Pacific WSS water supply and sanitation WTP willingness-to-pay


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Location Map


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Map of Agusan River Basin


Report and Recommendation of the President to the Board of Directors

Project Number: {XXXXX} {Month Year}

Proposed Loan Republic of the Philippines: Agusan River Basin Integrated Water Resources Management Project

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CURRENCY EQUIVALENTS (as of January 2011)

Currency Unit – Philippine peso (P)

P1.00 = $0.023 $1.00 = P44.00

ABBREVIATIONS

ADB – Asian Development Bank ADSDPP – ancestral domain sustainable development protection plan AH – affected household ARB – Agusan River Basin CBDRM – community-based disaster risk management CEPA – communication, education and promotion awareness CLUP – comprehensive land use plans DA – Department of Agriculture DENR – Department of Environment and Natural Resources DILG – Department of Interior and Local Government DOF – Department of Finance DOH – Department of Health DPWH – Department of Public Works and Highways EA – executing agency EIA – environmental impact assessment EIRR – economic internal rate of return EMB – Environmental Monitoring Bureau ENPV – economic net present value EO – executive order FASPO – Foreign-Assisted & Special Projects Office FIRR – financial internal rate of return FNPV – financial net present value GAP – gender action plan GEF – Global Environment Facility GOP – Government of the Republic of The Philippines IA – implementing agency IEC – information-education-communication IEE – initial environmental examination IP – indigenous people IWRM – integrated water resources management LAC – land acquisition committee LGU – local government unit LWUA – Local Water Utilities Administration MDG – Millennium Development Goals M&E – monitoring and evaluation MIS – management information system MTPDP – Medium Term Philippine Development Plan MTPIP – Medium Term Public Investment Program NCIP – National Commission on Indigenous People NEDA – National Economic Development Authority NGO – non-government organization NIA – National Irrigation Administration NWRB – National Water Resources Board OCR – ordinary capital reserves O&M – operation and maintenance PAGASA – Philippine Atmospheric, Geophysical and Astronomical Services

Administration PAMB – Protected area Management Board PIR – poverty impact ratio PMDC – Philippine Mining Development Corporation PNP – Philippines National Police PO – people’s organization PPMS – project performance monitoring system PPTA – project preparatory technical assistance QCBS – quality and cost-based selection

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RBCO – River Basin Control Office RBCM – river basin coordination mechanism RF – resettlement framework RP – resettlement plan SES – socio-economic survey SPZ – strict protection zone WACC – weighted average cost of capital WD – water district WSP – water service provider

GLOSSARY barangay – village/ neighborhood administrative unit

NOTES

(i) The fiscal year (FY) of the government and its agencies ends on 31 December. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2008 ends on 31 December 2008.

(ii) In this report, "$" refers to US dollars

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Vice-President1 {First name initial. Surname}, {Group } Director General {First name initial. Surname}, {Department } Director2 {First name initial. Surname}, {Division, Department } Team leader {First name initial. Surname}, { Position, Department } Team member{s}3 {First name initial. Surname}, { Position, Department } {First name initial. Surname}, { Position, Department } {First name initial. Surname}, { Position, Department } {First name initial. Surname}, { Position, Department } Peer reviewers {First name initial. Surname}, { Position, Department } {First name initial. Surname}, { Position, Department }

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. 1 For departments reporting directly to the Board or the President, delete the “Vice-President” line. 2 Insert sector director or country director, depending on who took primary responsibility for supervising project

processing. If supervision was shared, both may be given. For reports that have been prepared under the leadership of the director as the team leader, place the director’s name and designation on the “Team leader” line and remove the “Director” line.

3 List team members alphabetically by surname. The list of contributors should include only members of staff. It should not list consultants. If a member of the team has moved to another department before finalization of the document, the list of contributors should give his or her affiliation at the time the work was performed.


CONTENTS

Page MAP I. THE PROPOSAL ....................................................................................................... 1 II. THE PROJECT .......................................................................................................... 1

A. Rationale ............................................................................................................ 1 B. Impact and Outcome .......................................................................................... 2 C. Outputs .............................................................................................................. 2 D. Investment and Financing Plans ........................................................................ 5 E. Implementation Arrangements ........................................................................... 5

III. TECHNICAL ASSISTANCE ....................................................................................... 8 IV. DUE DILIGENCE ....................................................................................................... 8

A. Technical {optional} ............................................................................................ 8 B. Economic and Financial ..................................................................................... 8 C. Governance ....................................................................................................... 8 D. Poverty and Social ............................................................................................. 8 E. Safeguards......................................................................................................... 9 F. Risks and Mitigating Measures........................................................................... 9

V. ASSURANCES {AND CONDITIONS} ...................................................................... 10 VI. RECOMMENDATION .............................................................................................. 10 APPENDIXES 1. Design and Monitoring Framework ....................................................................... 11 2. Linked Documents…………………………………………………………….………….14

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I. THE PROPOSAL

1. I submit for your approval the following report and recommendation on (i) a proposed loan and (ii) proposed administration of a grant to be provided by the Global Environment Facility (GEF), both to the Government of the Republic of the Philippines for the Agusan River Basin Integrated Water Resources Management Project.

2. The project is located in the Agusan River Basin (ARB) in eastern Mindanao which is blessed with abundant varied natural resources. However, the basin’s ability to deliver on a sustainable basis the benefits derived from its natural resources is being threatened by a host of activities that degrade its land, forest, water, and biodiversity resources. These activities cause soil erosion that leads to sedimentation of waterways, flooding, pollution of rivers, degradation of the environment, and reduction in the overall capacity of the basin to provide vital ecological benefits. Weak enforcement of laws and the lack of an institutional mechanism to coordinate, plan, manage, implement consistent policies and programs, and police the whole basin, contribute to the worsening of the environmental situation in the area. To mitigate the effects of the environmental degradation and improve the management of the ARB, the project will result in the following six outputs:1 (i) effective coordination of basin development and utilization; (ii) improvement of river water quality and watershed conditions; (iii) integrated ecosystem management of the Agusan Marsh; (iv) implementation of local social development and indigenous peoples development plans; (v) improvement of water resources, flood management, and water supply and sanitation infrastructure; and (vi) strengthening of project management capacity.

II. THE PROJECT

A. RATIONALE

3. Based on an analysis of the inter-locking problems confronting the ARB, the continuous “deteriorating water quality and reduced water flow, loss of biodiversity and degraded natural resources that threaten Agusan River Basin's long-term environmental and economic value” is identified as the imminent core concern that must be addressed in the long-term. This core problem is brought about by a host of interrelated causes, among them the following: lack of coordinated holistic planning and management of the basin; social conflicts; watershed deterioration; water quality deterioration; irrigation water shortages; Agusan Marsh deterioration; lack of access to basic services; and flooding.

4. The main problems are degradation of the watersheds, and the deterioration of river water quality. Specific to the upper parts of the basin, inappropriate land use (i.e., conversion to intensive agri-monocultures such as palm oil and banana) leads to severe degradation of the watershed, erosion, siltation of river channels and irrigation systems, and flooding. Moreover, gold mining activities in upstream parts cause siltation (leading to flooding) and contamination of river water (from the use of mercury and cyanide). The Agusan Marsh is a protected wetland of global importance and high environmental value, and the ecosystem is being degraded due to pollution from upstream economic activities, particularly mining and logging/ timber processing. Legal instruments on land use control involving businesses, communities and indigenous peoples are not effectively applied.

5. There is an uncoordinated approach to river basin management due to the lack of a coordinating mechanism between upstream and downstream parties—development has been largely piecemeal, without reference to the linkage between the effect of upstream developments on downstream water users. There is limited capacity in integrated river basin management in local governments and other decision-making bodies, and low public 1 Project preparatory technical assistance (PPTA) was provided (February 2010-April 2011).

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awareness. There is also lack of appreciation that the watershed boundary does not coincide with administrative boundaries and political jurisdictions. Networks to gather technical monitoring data are inadequate, as well as the analytical capability to assist decision-making.

6. From the extensive stakeholder consultations carried out during the PPTA it is clear that there is widespread appreciation of these problems amongst the LGUs and other stakeholders, and there is broad support for the proposed project and a willingness to initiate mitigation measures.

7. The proposed project is consistent with the overall policy of the Government of Philippines (GOP) on economic development and poverty reduction as reflected in the President’s 10-Point Agenda for Growth, the Medium Term Development Plan (MTDP), and the Philippine Strategy for Sustainable Development under the Philippine Agenda 21. The MTDP proposes the adoption of integrated water resources management (IWRM) approaches using ecosystem and watershed considerations to optimize economic and social welfare—but without compromising the sustainability of vital ecosystems.

8. The project is also in line with the commitments of the Philippines as a signatory to international conventions including the Millennium Development Goals (MDG), United Nations Convention to Combat Desertification (UNCCD), United Nations Framework Convention on Climate Change (UNFCCC), and United Nations Convention on Conservation of Biological Diversity (UNCBD). Moreover the project will also contribute highly to the efforts of climate change mitigation and adaptation, and disaster risk reduction, which is a key priority of the Government of the Philippines (GOP) and ADB.

9. The project is consistent with DENR’s mandate on environmental protection and conservation of natural resources, and supports the objectives of the decentralization of natural resources management and devolution of responsibilities to local government units (LGU) and communities. In addition, the project is consistent with the national policy of rationalizing river basin initiatives with the flood control projects of the Department of Public Works and Highways (DPWH).

10. The project will directly address four of the six constraints identified in the 2005-2007 ADB Country Strategy and Program: (i) inadequate infrastructure, (ii) poor management of assets, land and resources, (iii) weak institutional capacity, and (iv) geographic inequalities. The project is in harmony with ADB Philippines Country Operations and Business Plan 2009-2010 in its focus on improving rural infrastructure and environment which are core areas of operations in the ADB Strategy 2020, and is also in line with ADB’s Water Financing Program.

B. IMPACT AND OUTCOME

11. The main impact of the project will be that all of the Agusan basin will have sustained availability and more equitable distribution of adequate water of suitable quality for use for agreed domestic, economic and environmental uses, and poverty will have been reduced.

12. The main outcome will be that water and land resources management and water infrastructure in the Agusan Basin will be developed.

C. OUTPUTS

13. The proposed project investments are grouped into the following outputs: (i) effective coordination of river basin development and utilization; (ii) improvement of river water quality and watershed conditions; (iii) integrated ecosystem management of the Agusan Marsh; (iv) implementation of local social development and indigenous peoples development plans; (v)

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improvement of water resources, flood management, and water supply infrastructure; and (vi) strengthening of project management capacity.

14. Effective coordination of river basin development and utilization. The establishment of an effective river basin management body will underpin the whole project. The water and environmental problems in the Agusan River Basin can only be solved by means of an integrated approach involving both upstream and downstream key stakeholders and decision makers working together in a coordinated/ cooperative way, with reference to the principles of IWRM and the linkage between the effects of upstream developments on downstream water users. A sustainable institutional framework which is recognized and actively supported by local decision making authorities is crucial for effective river basin coordination and management.

15. This aspect was discussed during a workshop on 27 August 2010 on inter-LGU cooperation for the sustainable management of the Agusan River Basin, when there was unanimous reaffirmation of commitment from the provincial LGUs, Butuan City, DENR regional offices and other relevant national line agencies for the formation of such an institutional framework and management body. The participants proposed the name for the management body to be the “Agusan River Basin Governing Board”, with its terms of reference aimed at strengthening the basic mandate of LGUs and NGAs and the existing upper, middle and lower Agusan River operational arrangements. Following commitments made at the workshop the participanting provincial/city LGUs have passed sangguniang panlalawigan (legislative council) resolutions to enter into agreement/cooperation for the effective management of the Agusan River Basin and to authorize the LGU chief executives to sign a memorandum of agreement (MOA) or memorandum of understanding (MOU). The MOA/ MOU will be discussed after the approval of the resolutions and issuance of the Executive Order (EO) from Office of the President.

16. Improvement of river water quality and watershed conditions. This output recognizes the need to mitigate soil erosion and pollution of the river system from forest denudation, destructive mining activities in the upstream parts of the basin, and domestic solid waste. The output also aims to improve the microclimatic conditions of identified critical watersheds and their ability to contribute to climate improvement through increased carbon sequestration and oxygen generation by means of restoring vegetative covers.

17. Implementation will follow a phased approach, starting in upper sub-catchments in the headwaters of the Agusan basin in Compostela Valley Province (Region XI), and proceeding to mid and lower parts of the basin (Region XIII). The scope of interventions for four priority watersheds in Compostela Valley (Upper Agusan, manat, Logum-Baobo and Naboc) was prepared during the PPTA. Bearing in mind the loan budget amount and the need to allocate resources for both upstream and downstream areas, the integrated plan consists of the preparation of forest land use plans (FLUP) followed by a combination of forest protection, streambank stabilization, vegetative approach, vegetative cum engineering approach, and agro-forestry. Complementary activities will include land use delineation, alternative livelihood programs, an information/education/ communications (IEC) program, and social development for IPs through implementation of their ancestral domain development plans.

18. The scope of interventions for Region XIII priority watersheds2 has yet to be determined, and it is proposed that a similar exercise as was done for Compostela Valley during the PPTA is carried out during the early part of project implementation for these watersheds to determine the best use of allocated loan budget resources. 2 DENR Region XIII have proposed six watersheds in Agusan del Sur (Andanan, Gibong, Logum-Baobo, Ojot, Simulao and Wawa), and it is understood from social development studies that the Taguibo watershed in Agusan del Norte is also a priority (amongst other aspects, the Taguibo River is the water supply source for Butuan City, and according to water balance studies is water deficient).

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19. In the case of the Naboc watershed in Compostela Valley, the investments will also focus on the establishment of a mine tailings dam3 and the dredging/desilting of the Naboc River in addition to the various revegetation measures. Similar but smaller mine tailing ponds are also planned in the area in the Upper Agusan and Manat watersheds to accommodate the mine tailings disposed of by small-scale miners.

20. Integrated ecosystem management of Agusan Marsh. The output includes investments to enhance the biodiversity capacity of the Marsh that is being threatened by continuing sedimentation and pollution of water because of upstream mining and land use changes; lack of proper sanitation and solid waste disposal systems; land use conversions; soil erosion and wildlife poaching.

21. Specific activities include: demarcation of strict management zones for biodiversity conservation; establishment of rainwater supply-cum-sanitation facilities in six pilot floating villages in the Marsh, including materials recovery and plastic wastes melting facilities in the eight municipalities bordering the Marsh; and establishment of facilities and programs to promote ecotourism in the Marsh.

22. Local social development and indigenous peoples development plans. A Local Social Development Plan, which includes improving the livelihoods of indigenous peoples (IP), supports the watershed rehabilitation and biodiversity conservation subprojects. It is a cross-cutting intervention which acknowledges that social, environmental, institutional and biophysical factors are closely linked in resource management.

23. Specifically, this intervention will promote the sustainable development of the IPs that is suited to their culture and traditions and that is facilitative of the rehabilitation of the degraded areas in the basin and the protection of the remaining forests and other natural resources in the basin.

24. Improvement of water resources, flood management, and water supply infrastructure. This output includes investments to improve the drainage system in Butuan City, the municipal water systems in 17 municipalities located throughout the basin, and improvements to water resources and water quality monitoring.

25. Improvement of Butuan City drainage. The occurrence of flooding in Butuan City exacts a heavy toll in terms of economic and physical losses. Investments in drainage improvement under this output are expected to result in the improvement of the drainage system in Butuan City and reduction in annual flooding within the city. Phase 1 of the Butuan City Drainage Master Plan will be implemented under ARBIWRMP, and specific investments include the construction of some 11,000 linear meters of trapezoidal drain channels, 3,200 linear meters of rectangular drain channels and about 78,000 linear meters of rectangular drain roads. A total of six pumping stations and flood gates will also be constructed.

26. During the DFR Workshop in November 2010, there were suggestions from some participants that sewage treatment should also be considered for inclusion in the subproject since the drains in the city also collect sewage overflows from poorly constructed and maintained septic tanks and this poses a health risk to the city. Howerver, although both LGUs and water utilities (in this case Butuan City Water District) are mandated under the 2004 Clean Water Act to address sewage and sanitation, and various technical solutions can be proposed, the main consideration is the limited borrowing capacity of both Butuan City LGU and Butuan City Water District if sewage treatment is to be financed from loans. For Butuan City LGU its current borrowing capacity will be fully utilized for the proposed Phase 1 drainage works, and Butuan City Water District is not in a financial position to take on any 3 Subject to confirmation from the Philippine Mining Development Corporation whether they wish to avail of funding from the ADB loan.

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further loans. It is recommended that a thorough feasibility study is carried out during ARBIWRMP implementation to determine the most appropriate technical, institutional and financing options.

27. Municipal water supply. Access to potable water supply within the basin is currently very low and incidences of water-related diseases have been reported in the area. The outputs expected from investments in water supply are the expansion of the existing water supply facilities which would increase the served population from about 80,000 at present to about 209,000 after subproject completion.

28. Improvement to water resources and water quality monitoring. There is a need to upgrade the hydrological monitoring network and database to provide better information on water flow parameters and to assist with decision making on the equitable allocation and management of water resources, and for the upgrading and equipping of existing EMB regional laboratories in Regions XI and XIII to more effectively perform and expand water quality testing and similar services.

29. Strengthening of project management capacity. Specific activities from the investments under this output include the implementation of a capacity building program for existing institutions; and the establishment of an integrated communications technology network linking the LGUs, the Project Management Unit (PMU) and other institutions involved in basin operation and management.

30. The various support activities under the project management and implementation support component are designed to facilitate the smooth implementation of the project and transitioning to the river basin management body for the long-term institutional sustainability.

31. Assistance for project implementation and capacity building will be provided to the project management unit (PMU), project management sub-units and project implementing units (PIU) by consulting services packages.

32. The output will also include the procurement of office and field equipment, vehicles and other implementation support facilities.

D. INVESTMENT AND FINANCING PLANS 33. The project is estimated to cost $125 million equivalent, including taxes, duties, interest charges on the ADB loan, and physical and price contingencies. About $28.02 million equivalent (28%) of the base cost is allocated for improvement of water resources, flood management, and water supply infrastructure; $39.77 million equivalent (40%) for improvement of river water quality and watershed conditions; $6.71 million equivalent (7%) for Agusan Marsh biodiversity; $10.23 million equivalent for local social development and indigenous people development; $4.53 million equivalent for institutional development; and $9.92 million equivalent (10%) for strengthening of project management capacities. A summary of the cost estimates by component is given in Table 1.

34. The Government intends to request a loan of $100 million equivalent from ADB to finance the project. The loan will have a term of 25 years, including a grace period of 6 years, with an interest charge at the rate of 1.07% (comprising 0.87% 5-year Japanese Yen swap rate and 0.20% ADB spread) per annum. The ADB loan proceeds will be on-lent to the Government of the Philippines and to each participating local government unit and water district. The Government of the Philippines will bear the foreign exchange risk. Interest during the project implementation period will be capitalized.

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Table 1: Project Investment Plan ($ million)

Item Amounts a A. Base Cost b 1. Improvement of water resources, flood management and water supply

infrastructure 28.023

2. Improvement of river water quality and watershed conditions 39.772 3. Agusan marsh biodiversity 6.711 4. Local social development and indigenous people development 10.234 5. Institutional development 4.530 6 Strengthening of project management capacity 9.916 Subtotal (A) 99.186

B. Contingencies c 1. Physical contingencies 9.911 2. Price contingencies 11.126 Subtotal (B) 21.037

C. Financing Charges during Implementation d 5.245 Total (A+B+C) 125.468 a Includes taxes and duties of $14.159 million. b In October 2010 prices. c Physical contingencies computed at 10.0% of civil works and equipment base costs. Price contingencies

computed on the basis of domestic and international price escalation factors, which include a provision for potential exchange rate fluctuation assuming purchasing power parity exchange rates.

d Includes interest and commitment charges. Financing charges are estimated, assuming 1.8% interest rate on OCR loan and 0.15% commitment fee,

Source: PPTA Consultant.

35. The ADB loan will finance 79.7% of the project cost, and co-financing through the Global Environmental Facility will finance 2.4%. About $22.5 million equivalent (17.9% of the total project cost) will be provided by the Government of the Philippines through DENR, the local government units and water districts. The financing plan is summarized in Table 2.

36. The loan will be through ADB’s London interbank offered rate (LIBOR)-based lending (LBL) facility. For loans under the LBL facility all the provisions of Ordinary Operations Loan Regulations Applicable to LIBOR-Based Loans Made from ADB's Ordinary Capital Resources, dated 1 July 2001 would apply, subject to modifications if any, that may be included. The borrowers have the option to choose between eligible currencies. The loan will be for a term of 25 years, including a 6-year grace period.

Table 2: Financing Plan ($ million)

Source Foreign Exchange

Local Currency Total Cost % Total

Asian Development Bank 29.773 70.196 99.968 79.7 Government of the Philippines 13.974 8.525 22.498 17.9 Global Environmental Facility 0.803 2.198 3.002 2.4

Total 44.549 80.919 125.468 100.0 Source: PPTA Consultant.

E. IMPLEMENTATION ARRANGEMENTS

37. The implementation arrangements are summarized in Table 3 and described in detail in the project administration manual.4

4 Project Administration Manual (Appendix 2).

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Table 3: Implementation Arrangements

38. ARBIWRMP will be a complex project to manage because of the number of different implementing agencies involved, reflecting the cross-sectoral and integrated nature of the project. The project management organization will be largely dependent on the fund flow channeling structure to the implementing agencies. The following agencies will be key players: LGUs, DENR, NCIP, DPWH and LWUA (Local Water Utilities Administration).

39. There will be a central project management unit (PMU) within FASPO/ DENR, the executing agency. The PMU will be responsible for coordinating the various implementing agencies and act as the focal unit for coordination with ADB, as well as external government offices whose endorsement or approval and monitoring activities are mandated by existing policies or laws, e.g. NEDA, DOF, NWRB, DOH. There will also be a need for sub-PMUs at the two DENR regional offices to administer project implementation operations in the basin, supported by field offices. The PMU and sub-PMUs will be supported by loan consultant teams to assist with project management, and to provide capacity building services.

40. An inter-departmental project steering committee (IPSC) will be created to provide

Aspects Arrangements Implementation period January 2012 – December 2017 Estimated project completion date 31 December 2017 Project management

(i) Oversight body National level steering committee: – Department of Environment and Natural Resources (DENR) (chair) – National Water Resources Board (NWRB) – River Basin Control Office (RBCO) – National Economic Development Authority (NEDA) – Department of Agriculture (DA)/ National Irrigation Administration

(NIA) – Department of Public Works and Highways (DPWH) – National Commission on Indigenous Peoples (NCIP) – Department of Touirism – Compostela Valley Province LGU – Agusan del Sur Province LGU – Agusan del Norte Province LGU – Butuan City LGU

(members) (ii) Executing agency Department of Environment and Natural Resources – Foreign-Assisted &

Special Projects Office (FASPO) (iii) Key implementing agencies DENR Region XI

DENR Region XIII Compostela Valley Province Local Government Unit (LGU) Agusan del Sur Province LGU Agusan del Norte Province LGU Butuan City LGU

(iv) Project implementation unit LGUs, DENR regions XI and XIII, WDs, PMDC, DPWH, EMB {#} staff {number of staff proposed}

Procurement International competitive bidding

0 contracts $

National competitive bidding

18 contracts $36.42 million

Shopping 2 contracts $77,380 Consulting services QCBS (quality and

cost-based selection) 976 person-months (including GEF team)

$8.83 million

Shopping 10 person-months $ 60,000 Retroactive financing and/or advance contracting

{Specify item of expenditure being proposed for retroactive financing and/or advance contracting}

Disbursementa The ADB loan and GEF (Global Environment Facility) grant proceeds will be disbursed in accordance with ADB's Loan Disbursement Handbook (2007, as amended from time to time) and detailed arrangements agreed upon between the government and ADB.

8


policy guidance and overall coordination in the implementation of the project.

III. TECHNICAL ASSISTANCE

IV. DUE DILIGENCE

A. TECHNICAL

41. Generally all the proposed interventions will be based on standard designs and practices which are appropriate to the Philippines.

42. For the municipal water supply subproject alternatives to water sources were considered, and the current use of groundwater through springs and wells is the best option. Based on the appraisal for three case study systems, the proposed interventions are considered to be appropriate if the assumed capacities of the sources are met. These assumptions will have to be confirmed by a thorough water resources investigation as part of detailed engineering design.

B. ECONOMIC AND FINANCIAL

43. The results of the economic analysis show that the subprojects’ rates of return are much higher than the assumed economic costs of capital of 12% and 15%. Both EIRR and NPV remain robust even with 20% increase or decrease in most key input variables. On these accounts, the investments are deemed sustainable.

C. GOVERNANCE

44. DENR and its field offices will be a critical element in ensuring the success of the ARBIWRMP and its objectives. As the primary executing agency, DENR’s responsibility extends from ensuring technical soundness of project activities, particularly those related to resource management, but also assuring strong administrative, financial and institutional cohesion from within the organisation and with its relationship arrangements with other operating partners (i.e. LGUs, NCIP, local stakeholders, etc).

45. In this context, several key concerns and requirements need to be addressed to minimise potential project implementation progress; these include: (i) strong project management capacity; (ii) simplified fund disbursement and reporting, (iii) strong DENR top management project leadership, and (iv) institutional ‘home’ of watershed management.

46. ADB’s Anticorruption Policy (1998, as amended to date) was explained to and discussed with the government and DENR. The specific policy requirements and supplementary measures are described in the project administration manual.5

D. POVERTY AND SOCIAL

47. The project is designed to result in major social, gender and poverty benefits with multiple impacts. A larger proportion of the beneficiaries will be the poor, women, and children. They will benefit from the provision of water supply; increased opportunities to co- manage ecotourism projects, watershed management, opportunities to participate in income projects, and improved facilities with stakeholders’ participation.

5 Project Administration Manual (Appendix 2).

9


E. SAFEGUARDS

48. Environment. The proposed subprojects will improve the general welfare, public health and sanitation of the target communities. The expansion of the water supply systems will improve the living conditions of the target beneficiaries, while the upgrading of the Butuan City drainage system will reduce flooding and improve the productivity of in the central business district of the city. Both are expected to enhance the environmental conditions of the communities and reduce the incidence of water-borne diseases. Implementation of the subprojects will not pose significant problems to the environment because there are no significant negative impacts and risks that cannot be mitigated.

49. Involuntary resettlement (IR). The most sensitive output of the project in terms of IR impacts is the Butuan City drainage subproject which is anticipated to cause physical displacement to some 150–200 households for right-of way acquisition. In addition to displacing informal settlers, some right of way acquisition, loss of business shops and disruptions to businesses would be involved in the subproject which would require compensation for land and income losses incurred.

50. A Resettlement Framework has been drafted, and a subproject resettlement plan is being prepared for the Butuan City drainage subproject. Preparations for the conduct of the census, inventory of losses (IOL), socio-economic survey and the replacement cost survey have been undertaken. Implementation of these surveys will take place in January to early March 2011. The census and IOL will cover 100% of project-affected persons. The SES will take a sample of 20% of severely affected households which have more than 10% of their productive assets to be affected by the project and 10% of all other PAHs. The replacement cost survey will obtain data on the value of affected assets and the cost of replacing them as a basis for compensation. Data will be obtained from residents, relevant government offices and businesses.

51. Indigenous peoples. The integrated watershed management approach maximizes the participation of indigenous peoples, not only to ensure their inclusion in all subproject benefits, activities and training programs. They are recognized as key players in ancestral domain (AD) management and protection as mandated by law. Implementation of the indigenous people’s development plan will be in close partnership with IP organizations and structures and NCIP, and with LGUs and concerned departments of the DENR. NGOs and environmental organizations and IP advocates will also be partners in advocating for reforms in benefit sharing and resource management.

F. RISKS AND MITIGATING MEASURES

52. Major risks and mitigating measures are summarized in Table 4 and described in detail in the risk assessment and risk management plan.6

Table 4: Summary of Risks and Mitigating Measures Risks Mitigating Measures Uncertainty over roles between DENR agencies over institutional ‘home’ of watershed management

At the outset of the project whichever agency will be determined by DENR to fulfill its institutional mandate on watershed management must be made an integral part in the project management structure.

Implementation units fail to muster broad-based support of stakeholders

Implementation of stakeholder consultation programs and public awareness campaigns

Lack of common agreement amongst local stakeholders on development policies, plans and strategies for of the Agusan River Basin

Formation of an inter-LGU management body (ARBGB) for the whole river basin to collectively review natural resources policies, development plans and strategies and coordinate follow-up actions

6 Risk Assessment and Risk Management Plan (Appendix 2).

10


Risks Mitigating Measures Waning LGU interest or lack of adequate staffing/ funding for a river basin coordination body (ARBGB)

Institutional strengthening and capacity building, frequent project workshops to refine goals and mandate of the proposed institution (ARBGB)

Weak regulation and enforcement of forestry, mining, and environmental laws

Revision and updating of relevant regulations and laws, and enforcement if necessary with the assistance of PNP.

Encroachment and expansion of mining areas in critical watersheds and to Agusan marsh

Review of policies and strategies, and stricter licencing of mining concessions

Unregulated disposal of mine tailings and chemical wastes

Construction of mine tailings dams and ponds

Tailings dams fail Selection of competent contractors and good site supervision

Septage desluging is not carried out on proposed sanitation units in Agusan Marsh

Capacity builing of sanitation units of LGUs, and public awareness campaigns

Ecotourism marketing is not effective Continued improvements to advertising and promotions

V. ASSURANCES {AND CONDITIONS}

53. The government and DENR have assured ADB that implementation of the project shall conform to all applicable ADB policies including those concerning anticorruption measures, safeguards, gender, procurement, consulting services, and disbursement as described in detail in the project administration manual and loan documents.

54. The government and DENR have agreed with ADB on certain covenants for the project, which are set forth in the loan agreement and project agreement.

VI. RECOMMENDATION

55. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Asian Development Bank (ADB) and recommend that the Board approve

(i) the loan of $100.0 million (one hundred million dollars) to the Government of the Republic of the Philippines for the Agusan River Basin Integrated Water Resources Management Project from ADB’s ordinary capital resources, with interest to be determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility; for a term of 25 years, including a grace period of 6 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft loan and project agreement presented to the Board; and

(ii) the administration by ADB of technical assistance not exceeding the equivalent of $3.0 million to the Government of the Republic of the Philippines for Conserving Biodiversity in the Agusan Marsh Wildlife Sanctuary to be provided by the Global Environment Facility on a grant basis.

{Name} President

{Date7}

7 {Use date of the President's approval of the RRP for submission to the Board.}

11 Appendix 2


DESIGN AND MONITORING FRAMEWORK

Design Summary Performance Targets/ Indicators

Data Sources/Reporting Mechanisms

Assumptions and Risks

Impact (Goal) by 2025 All of Agusan basin will have

sustained availability and more equitable distribution of adequate water of suitable quality for use for agreed domestic, economic and environmental uses, and poverty will have been reduced

Municipal water supply demands and

irrigation demands are fully met Mercury level in river sediments at key

control points is less than 0.001 mg/l Close and open forest cover increases

from 28% of ARB area (2003) to 40% Annual soil erosion is reduced from 15-

26 tons/ha (2008) to 10-12 tons/ha Rural poverty incidence is reduced from

47-72% to 30-50%

WSP records NIA records Communal irrigation scheme

records EMB reports FMB reports MGB reports LGU P/MPDO records

Assumptions: Macroeconomic and political stability

WSPs and irrigation associations implement effective O&M programs

Risks: Weak regulation and

enforcement of forestry, mining, and environmental laws

Outcome (by 2018) Water and land resources

management, and water infrastructure, in the Agusan Basin will be developed

Effective watershed/ARB institutional

arrangements and public-private partnerships are established

IWRM principles are adopted Dialogue mechanism with civil society is

established At least 30% of the staff in ARBGB and

component units are women Infrastructure is completed as designed

and to specified quality

DENR regional offices ARBIWRMP PMU records NEDA Regional Offices XI

and XIII reports LGU P/MPDO records WSP records Project completion report M&E benchmarks/reports NCIP and ADSDPP

monitoring

Assumptions: Inter-agency cooperation

established Broad-based participation

of stakeholders Risks: Lack of common

agreement amongst local stakeholders on development policies, plans and strategies for the entire ARB

Outputs (2018) 1. Water resources, flood management, and water supply infrastructure improved

92km of new drains are constructed in Butuan City

Water supply served population increased from 80,000 (2010) to 209,000

Tariffs for municipal water supply systems adequately cover O&M

Operational river flow gauging stations increased from 8 to 20

EMB regional water quality laboratories upgraded and operational

LGU MPDO records MPDO records Contract supervision reports Contractors’ reports Philippine Atmospheric,

Geophysical and Astronomical Administration records

DPWH-BRS Regions records EMB records

Assumptions: Consumers’ willingness to connect and to pay for water services

Risks: Customers don’t pay

water connections charges

High turnover rate of trained laboratory staff

2. River water quality and watershed conditions improved

FLUPs are prepared for 4 priority watersheds in CV

Forest protection implemented for 10,100ha in in CV priority watersheds

Streambank stabilization implemented for 640ha in CV priority watersheds

Slope stabilization implemented for 10,000ha in CV priority watersheds

Agro-forestry implemented for 1,300ha in CV priority watersheds

Rehabilitation interventions identified and implemented for priority watersheds in Agusan del Sur and Agusan del Norte

Mine tailings dams completed Small-scale mining code prepared and

implemented with multisectoral support

PENRO and CENRO records/reports

LGU P/MPDO records Philippine Mining

Development Corporation reports

EMB Regions XI and XIII reports

Project completion report

Assumptions: Adequate enforcement of

laws and regulations Risks: Encroachment and

expansion of mining areas


Tailings dams fail

3. Integrated ecosystem management of Agusan Marsh established

Marsh management plan updated and harmonized with ancestral domain plans

8 strict protection zones are established Wetland Center established 146 floating rainwater collection/ sanitation units are installed

DENR Region XIII reports NCIP Region XIII reports Protected Area

Superintendant reports Protected Area Management

Board records

Assumptions: Marsh management plan

is updated Risks:

Septage desludging is not carried out

12 Appendix 2





16 materials recovery facilities and 1 plactic wastes melting facility are established

Annual visitor numbers increase from insignificant (2010) to 14,500 by 2017

Wetland Center and accommodation registers

Surveys by NGOs

Eco-tourism marketing is not effective

Encroaching cultivation and mining wastes

4. Local social and indigenous peoples development plans implemented

At least 15 municipalities benefit from ADSDPP/biodiversity and watershed management implementation

Land tenure improvement leads to increased productivity

Indigenous Peoples Organizations, Community Forestry Organizations strengthened and implementing livelihood projects and forest protection measures

Number of women participating in community action planning has increased

Enterprise development and marketing plan established for priority watersheds

Gender action plan implemented

NCIP Regions XI and XIII reports

LGU P/MPDO records Ancestral domain plans Surveys M&E reports

Assumptions: Active participation and

involvement of IPs Adequate institutional

capacities of agencies and IPs to implement ADSDPP

Risks: Uncoordinated

development policies affect other sectors

Unregulated mining opens more protection areas

5. ARB Governing Board effective in coordinating basin development and utilization

Memorandum of Agreement/ participation signed

ARBGB, secretariat and sub-management units established and operational

Local enabling policies, ordinances, standard operating procedures and implementation guidelines adopted

Local partnership building and co-management arrangements in use

Stakeholders effectively participate and contribute in ARB management

Roles and responsibilities, and coordination procedure determined and agreed

State of the basin reporting established. Long-term financing mechanisms established

LGU records, resolutions ARBGB Secretariat records DENR Regions XI and XIII

reports

Assumptions: National and local

legislative support in place

Risks: Waning LGU interest or lack of adequate staffing/ funding for ARBGB

6. Project management capacity strengthened

986 person-months of consultant specialists provided

Organizational change of DENR FASPO to streamline business processes

M&E procedures and reporting improved Institutional capacity building and human resource development programs completed

All participating LGUs are linked to GIS and data management system

Project website actively accessed by stakeholders

Consultants’ reports DENR Foreign Assisted

Special Projects Office reports

Project monitoring reports Project audit reports Training participants’ reports Website hits Active remote node pinging Online reporting of connected

systems

Assumptions: DENR has adequate project management capacity, and will establish good working relations with LGUs

Risks: Uncertainty over roles between DENR agencies


Activities: 1. Water resources, flood management, and water supply and sanitation infrastructure improved 1.1 Process of land acquisition and finalization of resettlement plans for Butuan City drainage initiated (year 0) 1.2 Resettlement plan for Butuan City drainage implemented by end year 1 1.3 Improvement of Butuan City drainage completed by year 4 (Phase 1) 1.4 Improvement and expansion of 3 case study municipal water supply systems completed by year 3 1.5 Improvement and expansion of 14 other municipal water supply systems completed by year 5 1.6 Upgrading of hydrological monitoring network and database by year 4 1.7 Early flood warning system operational by end or year 2 1.8 Improvement of regional laboratories completed by year 3 2. River water quality and watershed conditions improved

Inputs: ADB Loan: $100.0 million GEF Grant: $3.0 million GOP: $22.5 million

13 Appendix 2





2.1 Formulation of FLUP and physical framework planning in CV priority sub-catchments during year 1 2.2 Forest protection in all CV priority sub-catchments started in Year 2 and completed in year 6 2.3 Streambank stabilization in CV priority watersheds started in Year and completed in year 6 2.4 Slope stabilization measures in CV priority watersheds started in Year 2 and completed in year 6 2.5 Agro-forestry in all CV priority sub-catchments started in Year 2 and completed in year 6 2.6 Rehabilitation interventions designed in priority Agusan del Sur/ Norte watersheds by year 2 2.7 Implementation of rehabilitation interventions in priority Agusan del Sur/ Norte watersheds starts in year 3 2.8 Construction of mine tailings dams by year 4 2.9 Formulation and adoption of Code of Practice for Small-scale Mining by year 2 2.10 Planning and consensus building on mining reform (EITI) underway by year 2 3. Integrated ecosystem management of Agusan Marsh established 3.1 Marsh management plan updated and communicated with stakeholders in year 1 3.2 Strict protection zones identified, agreed with the communities, established by end year 2 3.3 Eco-tourism products and full-scale marketing developed by end of year 3 3.4 Wetland education center established by end of year 3 3.5 Floating water supply/ sanitation units for Agusan Marsh installed by end of year 4 3.6 Agusan Marsh community-based solid waste management program completed by end of year 2 4. Local social development and IP development implemented 4.1 Implementation of pilot ADSDPP, completion by year 5 4.2 Local social development and IP plans prepared and implemented for priority watersheds by year 5 4.3 Community/watershed coordination structures in place by year 3 4.4 Capacity building of IP organizations for ancestral domain and resource management started in year 2 4.5 Social marketing of Agusan River rehabilitation planning by year 1 4.6 ENR enterprise development and marketing plans prepared and implemented for target sites by year 5 4.7 Organizational strengthening of ancestral domains structures, IPOs, community organizations for livelihood/ resource management by year 5 4.8 Implementation of reforestation component as sustainable livelihood enterprise under “Treepreneur” or similar concept underway by year 2 4.9 Indigenous People’s Plan for Agusan Marsh prepared and implemented by year 5 4.10 Local Social Development Plan for Agusan Marsh prepared and implemented by year 5 4.11 Gender action plan and implemented by year 2 5. ARB Governing Board effective in coordinating basin development and utilization 5.1 Drafting and signing of MOA for ARBGB (year 0) 5.2 Pre-operation consolidation, formulation of common strategic management framework completed in year 1 5.3 Operation of ARBGB and implementation of mandate, underway by year 2 5.4 Data collection, management and analysis systems established by end year 2 5.5 State of the basin reporting established by end year 2 5.6 Long-term financing mechanisms established by end year 2. 5.7 Communication and participation processes established by end year 2 6. Project management capacity strengthened 6.1 Short-listing for consultancy packages completed (year 0) 6.2 Recruitment of consultant teams by mid-year 1 6.3 Establishment, staffing and equipping of PMU, sub-PMUs and PIUs by mid-year 1 6.4 Procurement of vehicles and other facilities by mid-year 1 6.5 Organizational change of DENR FASPO to streamline business processes completed by end year 1 6.6 Installation of database management systems and GIS in LGU and PMU offices by end year 1 6.7 Integrated monitoring and information system started in year 2 6.8 Capacity building consensus building and planning stage completed by end Year 1 6.9 Capacity building application stage completed by year 3 6.10 Capacity building institutionalization stage underway by year 4

ADB=Asian Development Bank, ADSDPP= ancestral domain sustainable development protection plan, ARB= Agusan River Basin, ARBGB=Agusan River Basin Governing Board, CENRO=community environmental and natural resources office, CV=Compostela Valley, DA=Department of Agriculture, DENR= Department of Environment and Natural Resources, DPWH-BRS= Department of Public Works and Highways - Bureau of Reasearch and Standards, EMB= Environmental Monitoring Bureau, FLUP=forest land use plan, FMB=Forest Management Bureau, GEF= Global Environment Facility, GOP= Government of the Republic of The Philippines, IA= implementing agency, IP= indigenous peoples, IWRM= integrated water resources management, LGU=local government unit, MDG= Millennium Development Goals, M&E=monitoring and evaluation, MGB= Mining and Geo-science Bureau, NCIP= National Commission on Indigenous Peoples, NEDA=National Economic Development Authority, NGO=non-government organization, NIA=National Irrigation Administration, O&M=operation and maintenance, PENRO=provincial environment and natural resources office, P/MPDO=provincial/municipal planning and development office, PO=people’s organization, WSP=water service provider.

14 Appendix 2


LINKED DOCUMENTS 1. Agreements {mandatory}

Loan Agreement

Grant Agreement

Project Agreement

15 Appendix 2


2. Summary Sector Assessment 1. More than 70% of the total land area including most of the uplands of the Philippines is located in watersheds of varying sizes. Based on the report of the National Water Resources Council11 (NWRC, 1979), there are more than 400 river basins (watersheds with area of at least 4,000 ha) in the country. Most of these watersheds are important sources of surface and groundwater that are used for various purposes. Inside these watersheds are numerous habitats harboring diverse communities of plants and animals and are home to many indigenous and migrant local communities (that could total more than 20 million) who are mostly dependent on the watershed resources for their livelihood.

2. Watersheds also provide other critical environmental services such as flood control, streamflow regulation, maintaining or restoring ecological conditions needed for ecosystem and species diversity, and climate change mitigation. Well-managed watersheds also contribute to socioeconomic development by providing sources of livelihood for millions, especially for indigenous peoples (IP) and upland communities. Watershed integrity determines the state of the delivery of ecosystem services and the consequent benefits thereof, not only for the local inhabitants but also the downstream residents and investors, and the global community.

3. Watersheds in the country, however, are mostly degraded due to deforestation that was as high as 150,000 ha per year during 1990-2005 (World Bank, 2007) and degradation of old growth forests area from about 5.5 million ha in 1988 to 2.5 million ha in 2003 (Acosta, 2005). Loss of forests leads to increased greenhouse gas (GHG) emissions as well as a reduction in important habitats. A recent ADB report on Economics of Climate Change showed that the land use change and forestry sector is the biggest source of GHG emissions from Southeast Asia. The 2005 FAO Forest Resource Assessment reports that the Philippines lost 33.5 million tons of biomass from its forests between 2000 and 2005, and may have emitted as much as 37 million tons of CO2 annually.

4. The degradation of watersheds has also been tagged as a leading cause in the increase in floods and landslides that have resulted in an annual average of 593 deaths and US$83 million worth of damage to property (Amadore, 2005). Forest cover loss in most watersheds in the Philippines have been extensive, and only watersheds in Regions II (Cagayan Valley), IV (Southern Tagalog), VIII (Bohol) and XI (Southern Mindanao, which includes ther upper ARB) have more than 30% of land area with forest cover. Regions V (Bicol) and VI (Western Visayas) have the least forest cover. The ratio of forest cover to irrigated and irrigable lands is generally quite low, that could indicate serious implications on the availability and quality of water for irrigation.

5. As forest cover dwindles, soil erosion worsens along with the downstream siltation of rivers, lakes, reservoirs, farms, coastal and marine ecosystems that translate into substantial economic losses. It is estimated that 74 to 81 million tons of soil is lost annually due to soil erosion. Soil erosion is caused usually by the combined effects of excessive rainfall, steep topography, inherent susceptibility of the soil to erosion, erosive land cover and land uses. Deforestation is one of the most significant drivers of soil erosion in many parts of the country that has seriously affected infrastructure, settlements, and productivity in the upland, lowland, aquatic, coastal and marine areas. About 21% of agricultural lands and 36% of non-agricultural lands throughout the country were assessed as moderately or severely eroded.

6. About 13 provinces have more than 50% of their land area affected by moderate to severe erosion. Sedimentation has filled up the storage capacity of the country’s major reservoirs, reducing water supplies for domestic, industrial, irrigation and power-generation purposes. There are more than 350 large scale dams in the country, mostly located in Luzon 11 Now replaced in part by the National Water Resources Board (NWRB).

16 Appendix 2


and Mindanao, that are mainly used for irrigation, domestic water supply and power generation. During the period 1973 to1998, some 20-30% decrease in area irrigated during the dry season was experienced due to severe siltation that decreased the storage capacity of reservoirs (DENR, 1999).

7. Soil erosion diminishes the productivity of land that has adverse implications on income. It is estimated that the foregone earnings due to soil erosion was about P1.2 billion in 1997, from P1.1 million a decade earlier. In 2000 the economic value of nutrient loss due to soil degradation was estimated at P1.16 billion. Further, soil erosion leads to siltation problems in rivers, lakes, and seas. Excessive siltation pollutes rivers and lakes, and damages freshwater fish and organisms by causing eutrophication, and limiting sunlight that reaches the bottom where green plants thrive. In seas, excessive siltation can damage corals.

8. Unfortunately the Philippines is also considered as one of the world’s biodiversity hotspots due to a large number of endangered and threatened species and the continued alarming rate of degradation brought about by overexploitation, deforestation, land degradation, pollution, and climate change, among others. The Philippines, therefore, plays a important role in maintaining the web of life on the planet—hence, is regarded as one of the priority conservation areas on earth.

9. The Philippines accounts for about 26% of the total reef area in Southeast Asia while more than 500 of the 800 known coral reef species in the region are found in the marine waters of the Philippines. However, less than 1 percent of these remain in excellent condition due to illegal fishing practices, water pollution and other factors. The economic losses caused by water pollution are estimated at P67 billion annually, P3 billion for health, P17 billion for fisheries production, and P47 billion for tourism

10. The loss of forest cover in many watersheds including those in the Agusan River Basin (ARB) is directly driven by conversion of forestlands into unsuitable forms of agriculture, unregulated quarrying and mining, forest fires, and illegal logging. Poverty and lack of non-erosive but viable livelihood opportunities on the other hand are two of the underlying drivers of deforestation. This is aggravated by the rapidly growing population in the uplands that is estimated at more than 20 million, and the absence of strong forest protection and forest law enforcement program to deter illegal logging and other unlawful utilization of forests and other watershed resources.

11. Over the years, huge amounts of money have been invested in many programs that were implemented to stop deforestation and accelerate the restoration of denuded forestlands. However, most of these efforts, including the highly funded first and second phase of contract reforestation programs of the DENR, did not have much success due to several weaknesses of the program design and implementation. Some of these weaknesses include the failure to address in a holistic and comprehensive fashion the direct and underlying drivers of deforestation, failure to address the weaknesses of forest protection program of the government, and the failure to strengthen the weaknesses of reforestation programs.

12. To once and for all to stop deforestation and speed up the restoration and rehabilitation of denuded and degraded forests in the country it will be essential to set in motion a comprehensive and multi-pronged river basin program that will address holistically the above drivers of deforestation and forest degradation to improve the delivery of clean and sufficient water downstream, and to minimize flood damages, water pollution and other adverse impacts of a degraded watershed.

17 Appendix 2


3. Project Administration Manual This is included in this volume.

4. Project Classification Summary

5. Contribution to the ADB Results Framework

6. Development Coordination

18 Appendix 2


7. Economic and Financial Analyses

A. Introduction 1. The project aims to improve the management of the Agusan River Basin (ARB) as well as the environmental conditions and well being of people living within the basin through a program of investments that includes: (i) rehabilitating priority watersheds which are in various states of degradation; (ii) preserving the various habitats and biodiversity in Agusan Marsh, including investments to improve the well being of indigenous people (IPs) and enhance ecotourism; (ii) rehabilitating Butuan City drainage system; and (iv) expanding the supply of piped water in 17 basin municipalities. Developing appropriate institutions of governance and coordinating mechanisms as well as capacity building are at the core of the institutional component of this project. The project will also provide investments to upgrade the existing regional environmental laboratories, improve the hydrological monitoring system, prepare forest land use plans, and support project implementation and management. B. Overall Project Benefits 2. The project addresses various concerns regarding the ARB. Foremost among these is the need to develop appropriate institutions and arrangements that will coordinate and effectively manage basin activities on a sustainable basis. There is also a need to rehabilitate degraded watersheds, especially in the upper portion of the basin, that protect important headwaters of Agusan River. Continuing threats to the biodiversity of flora and fauna in the Agusan Marsh, some of which are in the verge of extinction, necessitates protection of their habitats. Providing alternative livelihood and basic services to IPs and other Marsh inhabitants, including investments to raise awareness of the value of the wetland and its ecotourism potentials are also needed. Regular flooding in Butuan City causes damages to properties, disrupts business activities and creates inconveniences and anxieties to many urban residents. The lack of safe drinking water supply to large segments of the population in most towns within the basin increases the health risk of people. 3. The major benefits of the project are the following:

(i) Improved coordination and management of plans, investments and activities within ARB.

(ii) Enhanced benefits of watersheds in terms of increased flow and quality of water reaching the Agusan River, reduced soil erosion and sedimentation of the river system, improved climate through carbon sequestration, and increased productivity of timber and non-timber resources to support the income and other needs of the population.

(iii) Improved income of IPs and other watershed inhabitants from agro-forestry, reforestation and other vegetative interventions and those living in the Agusan Marsh from alternative livelihood opportunities created by through the implementation of social and livelihood development programs.

(iv) Improved biodiversity of flora and fauna in Agusan Marsh as well as in the watersheds as a result of habitat protection that include such critical yet ecologically unique places such as the peatland, and resource conservation.

(v) Reduced pollution of the Agusan Marsh and incidence of major waterborne and water-related diseases like diarrhea, schistosomiasis, filariasis, etc., that are endemic to the Marsh and the surrounding areas.

(vi) Reduced flood damage to properties and businesses/livelihood of Butuan City residents as a result of improved drainage system.

19 Appendix 2


(vii) Improved and expanded coverage of piped water supply in 17 basin municipalities where large portions of the household population depend on traditional water sources—hence, reducing risks and vulnerability to various types of waterborne and water-related diseases.

(viii) Downstream effect of improved flow and quality of water on farm productivity, fish production, domestic water consumption, water-using utilities, etc. because of the rehabilitation of watersheds in the upstream and improved conditions of Agusan Marsh.

C. Economic Analysis 1. Methodology and assumptions 4. Economic analysis involved: (i) determining the economic viability of the investments, (ii) testing the impact of changes in key input variables on their viability, and (iii) analyzing the distribution and impact of economic benefits of investments to various stakeholders, particularly the poor. 5. The economic viability of the subprojects was assessed by computing the economic internal rate of return (EIRR) and net present value (NPV) from a stream of incremental benefits and costs attributable to the investments over a period of 20-25 years. Using domestic price numeraire, economic costs were derived from the financial estimates of investments including physical contingencies. Taxes and duties were deducted from the financial costs, segregated into tradable and non-tradable components, then shadow priced using the following conversion factors: SERF of 1.2, SWRF for unskilled labor of 0.6, and a factor of 1.0 for non-tradable components. 6. Economic benefits, on the one hand, were identified for each subproject; however, only those that are readily quantifiable were included in the computation of the EIRR and NPV. 7. Sensitivity analysis was performed to measure the impact of possible changes in key variables affecting the economic viability of each subproject, including changes in discount rate (10% and 15%). Corresponding switching values were calculated to determine the magnitude of change in each key variable that is needed for a subproject decision to change from economically viable to non-viable or vice-versa. For some investments, distributional analysis of the net economic benefits among stakeholders was prepared to determine who benefit from the investments and determine their impact on the poor. 2. Profile and quantified benefits of sample core subprojects 8. No less than ten major investments are proposed under the project. Included under watershed rehabilitation in Compostela Valley are four watersheds with identical interventions and a social development/livelihood program for IPs. The Agusan Marsh biodiversity subproject has two major packages with major impact on health and ecotourism. The infrastructure component includes sectoral investments in drainage and community water supply, with the latter targeting a total of 17 basin communities. This report focuses on representative core subprojects consisting of the following: (i) agro-forestry development (Manat watershed rehabilitation), (ii) reforestation (Upper Agusan watershed rehabilitation), (iii) combined water supply-sanitation-solid waste management (Agusan Marsh biodiversity), (iv) ecotourism (Agusan Marsh biodiversity), (v) urban drainage improvement (Butuan City), and (vi) water supply improvement (Nabunturan Water District).

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9. The following sections present profiles of the sample subprojects, description of the direct benefits considered, and the results of the economic analysis. Detailed cost assumptions, farm budgets, benefit-costs and sensitivity analyses are presented in Volume 7. 10. Agro-forestry development. The area for agro-forestry is about 3,060 hectares. Suitable timber and non-timber species were recommended but two different combinations of fast-growing trees and industrial crops were evaluated. The representative core subproject is an agro-forestry scheme involving Falcata-coffee-rubber crop mix, a combination based on market demand and active promotion of the provincial agriculture office to shift cultivation from fruit trees (now saturating the local markets) to high-value industrial crops. The target participants are the IPs and other inhabitants of the watershed. A total of 2,040-3,060 farming households are needed to develop individual farms of 1-1.5 hectare each, or 0.35 million person-days of hired labor to establish and maintain agro-forestry plantations. The benefits from the investments are the financial returns to be derived from the sale of falcata, coffee and rubber at various stages in the 25-year period of analysis. 11. Reforestation. This activity is proposed to be carried out in about 2,382 hectares of Upper Agusan watershed. Two fast-growing species, Acacia mangium and Falcata, were selected as reforestation species for economic analysis because of the need to immediately establish forest cover in the area. Both species have a cutting cycle of 7-8 years, with succeeding two harvests generated from coppiced stocks (coppicing eliminates additional cost of replanting). Expected yields are 100m3 and 150m3 and roadside pick-up prices are P1,000/m3 and P1,200/m3. The IPs and other watershed settlers are expected to be the immediate beneficiaries of this investment for which an estimated 0.48 million person-days of hired labor is required every 8-year cutting cycle. Direct benefits are the financial returns to be derived from the sale of A. mangium and falcata poles or pulpwood. 12. Water supply-sanitation-solid waste management. This subcomponent of Agusan Marsh biodiversity includes the provision of 146 floating rainwater collectors-cum-sanitation facilities in six floating house communities within the marsh, and the establishment of community-based solid waste management facilities in eight pilot municipalities bordering the wetland. The community-based solid waste management (CBSWM) system, which is designed to handle about one-fifth of the total volume of solid wastes generated in the eight municipalities, includes two material recovery facilities (MRF) for each pilot town and one plastics waste melting facility (PWMF) for all. The rainwater collector-sanitation facilities will address the need of IPs living in the floating communities for an alternative but safer water than water obtained from the lakes. The investments are expected to reduce the incidence of waterborne diseases in the area. The sanitation component of this investment, in combination with CBSWM, will also help reduce pollution of marsh water and minimize the chance of direct human contact with water that are contaminated with schistosoma and other parasites that are highly endemic to the area. Thus, the direct and immediate beneficiaries of these combined investments are the IPs and the people living around the Marsh. The economic benefit is primarily health-related, with additional values from recyclables and resource cost savings resulting from the use of alternative water source. 13. Eco-tourism. The project aims to promote ecotourism in Agusan Marsh not only to generate revenue but also to increase public awareness of the importance and value of the wetland which could help sustain its various resources and use. To do so requires investments to develop tourism centers in Bunawan and Talacogon (two important tourism take-off points), improving access to Mambalili wetland center, constructing a boardwalk in Caimpugan peatland, and constructing floating houses with multipurpose structures for the Bunawan-Mambalili tourist route. In addition, support investments are required for the purchase of tourist boats for Bunawan and Talacogon entry points; gears and equipment; developing ecotourism products; institutional/community preparation; marketing; and

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implementation of a communication, education, participation and awareness (CEPA) program. It is projected that from the very low, insignificant base of tourist arrivals, the number will swell to significant levels during the 20-year period as investments are made and the tourism market develops, with 90% of tourists consisting of day-visitors and the remainder as overnight tourists (low-end and high-end). The average daily expenditures per tourist were assumed, based on existing tourism data, at P520, P1,020 and P26,000. 14. Urban drainage improvement. A large portion of Butuan City which includes the central business district (CBD) suffers from yearly flooding due to inadequate drainage system and clogged channels that are exacerbated by low-lying elevations and inordinately heavy rains during certain period of the year. The floods cause damage to properties, agriculture and fisheries as well as disrupt commercial operations. The project proposes to invest in rehabilitating the existing drainage system; dredging existing channels; constructing additional storm-water inlets, flood/tide control gates and pump stations; and improving segments of the Langihan and Maon-Villa Kananga-Libertad creeks. The economic feasibility of the investments was assessed over a period of 25 years in terms of the direct benefits of reduced property damage, avoided losses in fishpond and rice production, and avoided revenue losses of commercial establishments as a result of disruptions caused by flooding. 15. Community water supply. Out of the estimated 21,000 households in Nabunturan/Montevista, only about 10% are supplied with piped (i.e., Level III) water produced by the local water district. The remaining households rely on other sources, some of which are generally unsafe for drinking and are susceptible to pollution. The project proposes to extend service coverage of piped water supply to unconnected households by investing in new source facilities, pumping stations with disinfecting facilities, installing new transmission and distribution lines, and constructing new storage reservoir. From the existing 629 residential connections, service coverage is expected to reach 4,951 residential households and 157 commercial establishments by 2025. Economic analysis was carried out over a period of 20 years with benefits consisting of resource cost savings on non-incremental water, economic value of incremental water, economic value of water saved, and value of time saved for not having to collect water from existing non-piped sources.

3. Un-quantified benefits 16. Apart from the quantifiable benefits that were considered in assessing the economic viability of the core subprojects are other benefits attributable to the investments which cannot be readily quantified. In the case of watershed rehabilitation, these un-quantified benefits include (i) the downstream effect of improved water flow on productivity of lowland agriculture, fisheries, utility operation and other water-dependent activities within the basin, (ii) reduced risks of erosion, landslides, and related calamities, including floods because of sedimentation of rivers and streams, (iii) provision of non-timber products like food, medicinal plants, etc., (iv) improved air quality and temperature, (v) improved climate because of carbon sequestration, (vi) conservation of biodiversity, and (vii) recreational and ecotourism benefits. 17. For the Agusan Marsh biodiversity subproject, the un-quantified benefit is the impact of habitat preservation on biodiversity. Valuation was constrained by lack of baseline data, ascribing value to increases in the population of fauna and flora, and difficulty of measuring marginal biophysical changes resulting from habitat protection and improvement of the quality of marsh water. The ecotourism component, on the other hand, creates important economic impact on the local economy through forward and backward linkages but measuring the impact needs more time and intensive study. 18. There are also additional benefits to improved drainage other than those mentioned above. Lack of data constrained quantification of the health impact of reduced floods. Other

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benefits are savings on repair and maintenance of public infrastructure damaged by floods. For community water supply, the health impact benefit of improved water has not been quantified. 4. Summary economic indicators 19. The results of economic analysis and sensitivity tests are presented in Table 7.1. Details of the computations are shown in Volume 7. 20. Base case subproject EIRRs show that all core subprojects are economically viable, with EIRR ranging from 21% (ecotourism) to 40.3% (urban drainage). NPV ranges from P14.2 million (combined water supply-sanitation-CBSWM) to P339.8 million (agro-forestry). The sensitivity test results indicate that the investments remain viable even if capital costs or benefits are increased or decreased by 20%, or a higher discount rate (15%) is used. Of all the key variables tested, the investments are found to be most sensitive to decrease in benefits followed by increase in capital costs. For benefits, the switching values are 112% (agro-forestry), 159% (reforestation), 41% (combined water supply-sanitation-CBSWM), and -81% (water supply). In the case of the drainage subproject, the most critical parameter is reduction in property damage, with a switching value of 97%.

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Table 7.1: Summary Indicators – Base Case and Sensitivity Analysis

Subproject/Scenario NPV EIRR Switching (P million) Value 1. Agro-forestry development (Falcata-coffee- rubber investment model) Base case 339.8 35.3 20% increase in capital, O&M costs 283.3 30.1 137 20% reduction in returns from Falcata 320.6 34.3 -705 20% red. in returns from coffee, rubber 234.6 30.2 -138 20% reduction in total returns 215.3 29.0 -112 @ 15% discount rate 211.9 2. Reforestation (A. mangium-Falcata model) Base case 176.9 28.0 20% increase in capital, O&M costs 158.3 25.1 194 20% reduction in returns from Falcata 157.1 26.8 -458 20% reduction in returns from Acacia 142.8 25.9 -261 20% reduction in total returns 123.0 24.5 -159 @ 15% discount rate 96.4 3. Water supply-sanitation-SWM Base case 14.2 24.2 20% increase in capital costs 7.0 16.9 66 20% increase in O&M costs 10.5 21.0 151 20% reduction in all benefits 0.4 12.4 41 @ 15% discount rate 8.6 4. Ecotourism Base case 87.3 21.0 20% increase in capital costs 72.3 18.8 11 20% increase in O&M costs 80.2 20.1 11 20% reduction in tourism benefits m 47.7 17.4 -12 @ 15% discount rate 40.2 5. Drainage Improvement (Butuan City) Base case 313.9 40.3 20% increase in capital costs 280.5 32.9 108 20% reduction in avoided property damage 220.8 32.0 -97 20% reduction in fishpond losses 297.4 39.2 -729 @ 15% discount rate 405.7 6. Water supply improvement Base case 50.3 21.9 20% increase in capital costs 38.2 18.4 126 20% increase in O&M costs 44.0 20.8 389 20% decrease in benefits 21.9 16.5 -81 @ 15% discount rate 29.9 _____________________________________________________________________

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5. Financial analysis of core subprojects 21. The results of financial analysis indicate that the core subprojects are financially viable (Table 7.2). Subproject FIRRs range from 17.8% (ecotourism) to 25.6% (agro-forestry). Corresponding NPVs are P249.7 million and P739.0 million. 22. Sensitivity tests show that the investments remain financially viable even with with 20% reduction in benefits. The FIRR is most sensitive to this particular variable, with switching values of 13% (ecotourism) to 142% (reforestation).

Table 7.2: Summary Financial Indicators-Base Case and Sensitivity Analysis

Subproject/Scenario NPV FIRR Switching (P million) Value 1. Agro-forestry development Base case 739.0 25.6 20% increase in capital costs 725.5 24.1 349 20% increase in O&M costs 595.9 22.0 140 20% reduction in all returns 434.6 19.7 -86 @ 8% discount rate 508.6 2. Reforestation Base case 543.1 21.3 20% increase in capital costs 536.4 20.5 524 20% increase in O&M costs 500.2 19.5 239 20% reduction in all returns 385.0 18.3 -142 @ 8% discount rate 346.2 3. Ecotourism Base case 249.7 17.8 20% increase in capital costs 227.3 15.8 12 20% increase in O&M costs 229.4 16.7 11 20% reduction in tourism revenue 157.1 14.1 -13 @ 8% discount rate 108.1 4. Water supply improvement Base case 42.9 15.6 10% increase in capital costs 36.2 14.2 10% reduction in water tariff revenue 27.1 13.4 10% inc. in costs, 10% red. revenue 15.7 11.4 1-Year delay in operation 32.9 13.7 Source: PPTA Consultant.

6. Distribution analysis and poverty impact ratio

23. Both agro-forestry and reforestation investments target the IPs and other inhabitants of the watershed as participants, either as developers of agro-forest plantations or providers of hired labor. With a total area of 3,060 hectares in Manat watershed, agro-forestry requires from 2,040-3,060 farming households to develop the whole area into 1-1.5 ha individual agro-forestry farms. This means a total of 11,000-16,800 beneficiaries based on an average household size of 5.5 members. Survey results indicate that around 60% of the households spend much less than the estimated poverty line of P7,600/month. With about 60% of the households considered poor, the impact of this particular subproject on local poverty is deemed significant.

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24. In the case of reforestation, the magnitude of IP participation is less than in agro-forestry since only 2,382 hectares are proposed to be re-vegetated and the efforts required are not as intensive. Assuming that reforestation is government-financed and managed, total labor requirement is estimated at 0.35 million person-days over just a period of six years.12 Based on the results of the socio-economic surveys, poverty incidence is estimated at about 40% in Maragusan and 70% in New Bataan. The poverty impact of the investments, especially in New Bataan, will also be significant. 25. The biggest gainers in ecotourism are the tourism service providers (e.g, hotel and restaurant owners, travel operators, tourist guides, boat owners, etc.) who capture a large portion of the tourist expenditures. The poverty impact ration (PIR) is estimated at 40%. 26. Improving the existing drainage system in Butuan City will directly benefit some 5,921 urban households (around 33,000 beneficiaries) and 506 commercial establishments in 2015 when the system becomes fully operational. Analysis of gainers and losers shows the affected households to be the biggest gainers (94%) followed by commercial establishments (7%). The labor sector, through direct involvement in system rehabilitation works), will gain 3% of the benefits. The Government is expected to bear a loss (4%) because of the difference in the exchange rate. Overall, the poverty impact ratio is 38%. 27. The case of the community water supply subproject shows the major gainers to be the existing and new customers. The local water service providers will benefit from increased customer base, demand and tariff revenue while the labor sector will benefit from direct involvement in construction, repair and maintenance. Due to SERF, the Government will bear a loss owing to the differential cost of foreign exchange. The PIR for this subproject is estimated at 89%. 28. Table 7.3 summarizes the poverty impact of the investments for ecotourism, drainage and community water supply subprojects.

Table 7.3: Poverty Impact, by Core Subproject

Benefits to Poor Core Subproject PIR (P mill.) Ecotourism 40 78.2 Drainage improvement 38 210.8 Community water supply 89 9.9 Source: PPTA Consultant.

12 The period of six years corresponds to the investment period of the project. Within 25 years, which is the assumed period for economic analysis, the total labor requirement for reforestation of Upper Agusan watershed is estimated at about 1.49 million person-days.

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8. Country Economic Indicators

1. During the last five years, GDP growth rates showed significant upward and downward trends. From 5% in 2005, the economy grew at a slightly increased rate of 5.3% the following year which then peaked at 7.1% in 2007. However, because of the global financial and economic crisis that set in in 2008, GDP growth plummeted to just about half (3.8%) of the level achieved in 2007 and to a mere 0.9% in 2009 (Table 8.1).

2. With the economy largely dependent on exports, the global economic slowdown brought about significant declines in export growth, i.e., from +6.4% in 2007 to -2.5% and -22.3% during the following years. Import growth similarly declined to -22.3% in 2009. The total current account balance, however, remained positive at 5.3% of GDP in 2009 largely because of remittances from Filipinos working abroad.

3. Despite deceleration of growth during the last three years, inflation rates remained at about 3% in 2007 and 2009. Unemployment also remained at 7.3%-7.5% level during the period.

Table 8.1: Economic Indicators, 2005-2009

2005 2006 2007 2008 2009 Per capita GNI , Atlas method ($) 1,260 1,370 1,600 1,890 n.a. GDP growth rate (%) 5.0 5.3 7.1 3.8 0.9 CPI (%) 7.6 6.2 2.8 9.3 3.2 Unemployment rate (%) 11.5 8.0 7.3 7.4 7.5 Fiscal balance (as % of GDP) -2.7 -1.1 -0.2 -0.9 -3.9 Export growth (%) 3.8 15.6 6.4 -2.5 -22.3 Import growth (%) 8.0 10.9 8.7 5.6 -24.1 Current account balance (% of GDP) 2.0 4.5 4.9 2.2 5.3 External debt (% of GNI) 50.7 41.9 35.1 29.0 n.a Source: ADB 2010. Basic Statistics 2010.

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9. Summary Poverty Reduction and Social Strategy

A. Linkages to the Country Poverty Analysis

Is the sector identified as a national priority in country poverty analysis? Yes

Is the sector identified as a national priority in country poverty partnership agreement? Yes Multisector - Agriculture and Natural Resources, Water Supply, Sanitation, and Waste Management, law, economic management and public policy (TI-G)

Contribution of the sector to reducing poverty in the Philippines:

The loan is a general targeted intervention (TI-G) to support poverty reduction and Millennium Development Goals. As such, it aims to improve institutional capacity for integrated river basin management. It will improve for all residents of the ARB ancestral domain governance and water quality and sustainability of watershed functions. It also addresses infrastructure requirements to reduce environmental risks such as through drainage and mine tailings dam construction. Certain subprojects focus on specific critical watershed and biodiversity conservation sites and their inhabitants who are dependent on natural resources for their livelihood. Water and sanitation also target specific sites for system improvement. The project is included in the ADB Country Operations Business Plan (2010–2012) which is strategically aligned with the Philippine Government’s Medium Term Planning and Development Program which aims to accelerate attainment of MDGs on poverty reduction, the environment and water and sanitation. It is consistent with the attention placed by the Philippine Government and the ADB on climate change mitigation, education, infrastructure and environment.

In updating the Medium Term Philippine Development Plan (MTPDP) for 2011 to 2016, the Philippine Government also aims to focus on inclusive growth to target regions that are lagging behind.13 The project boosts development of the rural sector and some of the country’s poorest provinces.

The project supports attainment of both the MTPDP and the country’s MDG commitments under several thematic classifications including: (iii) governance (iv) environmental sustainability, (vii) regional cooperation. As a general targeted intervention (TI-G), it contributes to the attainment MDG 7 which aims to integrate the principles of sustainable development into country policies and programs to reverse the loss of environmental resources.

Target 7.B aims to achieve significant reduction in the rate of loss of biodiversity and maintain the proportion of land area covered by forest. Water supply improvement promotes Target 7.C to halve, by 2015, the proportion of people without sustainable access to safe drinking water and basic sanitation, thus contributing to MDG 1 for the eradication of extreme poverty and hunger and the poverty gap. Moreover, implementation strategies to address social issues contribute to the attainment of MDG 3 and 5 to promote gender empowerment and improve maternal and reproductive health.14

B. Poverty Analysis and Strategy

PPTA (TA 7258-PHI) for the Agusan River Basin Integrated Water Resources Management Project (ARBIWRMP) aims to reduce poverty through integrated natural resource management of the river basin. It has developed plans to strengthen the institutional basis for coordinated development and management of the basin’s resources and advance the management capacities of the relevant institutions. Key outputs of the investment project are watershed rehabilitation at the headwaters of the river basin in Compostela Valley, as well as biodiversity conservation in the Agusan Marsh. An infrastructure development output includes investments to improve the municipal water systems in 17 municipalities that are located throughout the basin, a drainage system in Butuan City and a mine tailings dam in Monkayo. All proposed interventions require significant strengthening and capacity building of existing institutions/implementing agencies, including indigenous peoples.

13 Edu Lopez. “NEDA to incorporate UN MDG in MTPDP for 2010-2016”. MB, Aug 12, 2010. 14 MDG states targets to be achieved by 2015. The eight goals were formulated to eradicate extreme 1) poverty and hunger, 2) achieve universal primary education, 3) promote gender equality, 4) reduce child mortality, 5) improve maternal health, 6) combat diseases, 7) ensure environmental sustainability, and 8) develop global partnership for development.

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Proposed project interventions are within a 10 kilometer radius from the Agusan River, covering 282 of the 804 barangay of the three ARB provinces of Agusan del Sur, Agusan del Norte in Region XIII and Compostela Valley in Region XI. The two regions had a total population of 6,450,133 in 2007. The target provinces are less densely populated than the rest of the country, with an average density of 307 per km2, but are densely populated for critical watersheds. Compostela Valley had a population of 637,366 (population density 142.3 per square kilometer), Agusan del Sur 416,800 (density 62/km2), and Agusan del Norte 314,027 (density of 115 per km², excluding Butuan City). Agusan del Norte had a density rank of 64th out of 80 provinces, Compostela was 41st while Agusan Sur was 64th. Butuan City, with population of 298,378, had a density of 365 inhabitants/km2.

The Agusan River Basin is resource rich but where target project participants are poor. Agusan del Sur is number 5 in the top 20 list of poorest provinces. Poverty incidence in Regions XI and XIII has increased since 2000. Both regions posted higher rates than the national average. In 2006, the respective averages were 31% and 46% of households as compared to 27% for the whole country. In target municipalities, poverty is chronic, with rates that have increased since 2000 at the regional, provincial and municipal levels. Certain project municipalities, such as those in Agusan Marsh, posted rates of close to 80% of the population below the poverty line. The same could be said for Compostela Valley where upland poverty is estimated to be in the same vicinity, even for such as a gold-rich town as Monkayo.

Other social indicators reveal low levels of welfare in the three provinces. For instance, around the Agusan Marsh municipalities,15 where several project components are located, the adult literacy rate is below 50% for males and just above 50% for females. The school participation rate is over 90% for elementary school but drops to just above 50% or lower for high school, highlighting disparities with national patterns. The number of underweight pre-school children is as high as 65% in the Agusan Marsh and over 30% for surrounding municipalities. More than half of households do not have access to safe water in such towns as La Paz, Talacogon and Loreto. Access to electricity is even lower (15% for La Paz). Fuel wood is used for cooking by 67–97% of the households. There is a high birth rate in interior towns compared to exterior towns reached by the road network.

In terms of resource utilization, agriculture and timber extraction are the major activities in areas surrounding the Marsh. Small-scale mining prevails along the eastern side of the Agusan Marsh and spreads out across Compostela Valley and Agusan del Norte. Similar conditions are seen in the Compostela Valley target sub-watersheds.

The average growth rate for 2000-2007 was 1.19% for Agusan del Sur, 1.32% for Agusan del Norte and 1.30% for Compostela Valley. These were below the national growth rate of 2.04% but were significantly higher in certain municipalities such as Bunawan (over 4%) or Monkayo which experienced a growth rate of 8% at the height of small-scale gold mining. Higher growth rates are also noted for some barangay in upper watershed areas that have rates that are more than double the average municipal rates. These correspond to environmentally fragile areas within the proposed conservation and watershed management areas for the project. Characteristics of Project Participants. ARBIWRMP will benefit all, but will directly benefit residents of watershed and biodiversity conservation sites. Most of the project sites are in rural barangay, except for Butuan City. The average household size for the ARB is 5.2 persons. It is slightly higher for upland areas and within the Agusan Marsh, at 6. The ARB has a young population with a high dependency ratio that is higher than 90% in certain areas, showing increased vulnerability to common resources in the coming years. Key beneficiaries of reforestation, mining reform initiatives, livelihood development and organizational strengthening in Compostela Valley watershed management sites are subsistence farmers, poor migrant families and indigenous peoples and their organizations in at least eight municipalities in Compostela Valley, and eight municipalities in the biodiversity conservation and protected area in the Agusan Marsh. Many are dependent on the unsustainable use of resources through slash and burn cultivation, small-scale mining and illegal timber cutting and conversion of marshlands. Exact numbers 15 Human Wellbeing in the Agusan River Basin, Conservation International, Presentation to the Protected Areas Management Board of the Agusan Marsh, May 26, 2010.

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are not available for small-scale miners but it has been known that gold rush areas absorbed as many as 60,000 workers in at least two sites in Compostela Valley. In the absence of local jobs, and the expansion of large scale plantations, there are no immediate alternatives to small-scale mining. This is expected to swell the number of miners, putting many more areas and the viability of project interventions at risk. Direct beneficiaries of the Mabatas Mines tailings dam are small-scale miners and their families in Diwalwal. The barangay had a population of 16,965 people in 2007. The whole area sits on a hazardous zone atop an over-mined area in gold-rich Monkayo. Mining affects livelihood and the quality of life all the way to Agusan Marsh and down to the sea through pollution. Indirectly, establishment of the dam will benefit downstream barangay, with at least 25% of respondents from the watershed claiming they are directly affected by mining operations. Others who are most vulnerable to ongoing siltation and pollution of the Agusan Marsh are the Manobo people who are dependent on the rivers and the Agusan Marsh as a source of drinking water, income and food. For the Agusan Marsh municipalities, with a population of 299,575, key target participants are 3,117 largely Manobo households, many of whom live in floating houses within the Protected Area of the Agusan Marsh. Others include migrants that reside permanently or part of the year (when there is no flooding) in the buffer zone but who use resources within the Marsh as farmers, hunters and fishermen. Rain collection and sanitation units are proposed to target 146 Manobo households in floating houses that have no access to either fresh drinking water or sanitation. Also, 17 water supply subprojects throughout the basin will benefit water districts/providers and their customers to improve water quality and increase their potential service areas. In the drainage subproject area in Butuan City, those that reported experiencing flooding were 69% for households in addition to 82% of surveyed commercial establishments. Beneficiaries for water receptacles and sanitation facilities are families in the Agusan Marsh. Living in floating houses, they are vulnerable to sickness due to the absence of safe drinking water and sanitation facilities. Similarly, the need of water supply projects to improve their services was indicated by those affected by water-related diseases which were as high as 28% in Nabunturan, Prosperidad 16.5%, and 7.2% and higher than the incidence for non-connected households. Poor households will be the largest beneficiary group of the various subprojects. Except for Butuan City, they have average incomes that are below the poverty line, ranging from 42% in Nabuturan water supply area and as much as 76% in the watershed in the Esperanza water supply target area. There is a divergence in Butuan City where the average monthly urban household income is slightly above the poverty threshold at P8,519, but where over 8% live on less than P5,000. For Agusan Marsh biodiversity target areas, 46.9% are below this threshold. For the water supply target sites, those below the poverty threshold are: Montevista/Nabunturan 42%; Prosperidad 75.7%, and Esperanza 58%. These are higher than the national average which was 27% in 2006, which was close to the level posted in 2000. In the Agusan River Basin, the regional poverty threshold was between 31-46% at per capita poverty threshold of P1,245 for Region XI and P1,271 for Region XIII. By these standards, ARB rates show an ongoing deterioration in income and living standards. The project is in some of the poorest municipalities in the two regions. Poverty in the project towns is multifaceted, ranging from a lack of employment to deficiencies in basic social services such as water, septage, and solid waste disposal. It also includes the lack health and education facilities, especially in the Agusan Marsh and in upland areas. Except for Butuan City, with 3.7% unemployment, other sites are in the vicinity that is close to 10%. The survey of project sites showed: Agusan Marsh 8.4% were unemployment with over 20% being underemployed. This corresponds with official statistics showing that Region XIII has an employment rate of 90%; for Butuan City, as much 17% are unemployed, while another 19% are underemployed in Agusan del Norte. While this is so, at least another 20% may be underemployed based on their reported occupations as temporary workers and the like. Ethnicity and Indigenous Peoples. The Agusan River Basin is the homeland of at least 10 indigenous peoples groups. It is now highly heterogeneous (at least 18 ethnic groups per site). The

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watershed covered in Compostela Valley is within five ancestral domains of the Mansaka, Mandaya, Mangguangan and the Dibabaowon as major groups. The Higaonon who are dominant in Esperanza, Agusan del Sur, are not highly represented in the target site for water supply improvement. This is similar in Prosperidad and Nabunturan. In these cases, piped service expansion is in urbanizing barangay and cannot reach upland barangay where most indigenous peoples live. Manobos are a majority in the Agusan Marsh and represent 100% of those that reside in floating houses. Migrants live in the buffer zone and also use resources in the Protected Area of the Agusan Marsh. Migrant ethnic groups most represented are Cebuanos, Ilonggo and Boholanos who also dominate political life. Indigenous peoples are also well represented in Butuan City (30%) but where they did not live in distinct settlements and are acculturated. Though now dominated by migrants, the Agusan River Basin is within ancestral domains where indigenous peoples are mandated by the Indigenous Peoples Rights Act to manage their natural resources. An Indigenous Peoples Planning Framework describes requirements to address potential social impacts of the project on indigenous peoples. Provisions of a Local Social Development and Indigenous Peoples Plan also promote capacity building for ancestral domain management.

Gender. Women constitute less than half of the population (ratio 107:100) due to migration for work; in the area, less women than men are in the labor force. There is a high percentage of women-headed households—up to 35% in the Compostela Valley; the average annual income of the female-headed household is lower than that of the male-headed household. The top three issues for women in the watershed areas in Compostela Valley are unemployment, early pregnancy and early marriage, and vices such as drug use. These and similar women’s problems are echoed in other areas. Other issues include violence against women and children, lack of water and too many children. Lack of social services encourages outmigration which is higher among women, and masks higher fertility rates. At the household level in the ARB there is a tendency towards joint-decision making on key areas of domestic and economic life. Women have been traditionally associated with water and sanitation activities. Indigenous and IP women are active in agriculture and agroforestry. Women look forward to participation in all project components such as training, water and sanitation, watershed management and agroforestry, and livelihood development. Given the overall situation in the ARB, women are more vulnerable than men. They have indicated willingness to participate in project planning, implementation and O&M activities (water and sanitation). Vulnerable groups are those who are already so marginalized that without support they may not even get themselves to benefit from the development project. The project identifies them to ensure that their needs are also prioritized during project planning and implementation. Moreover, the project also identifies potential negative impacts of any of its proposed activities on the people. It finds ways to enhance positive impacts, especially on vulnerable groups.

For water supply subprojects, there will be no land acquisition for water supply facilities. Existing piped water systems are reaching no more than a third of households. Most households rely on springs and other open sources. Many are willing to connect and yet there may be those that are unable to afford piped water service. This includes poor, IP and women-headed households who have no income or no steady sources of income as can be shown by the high incidence of low income families. In water supply subproject areas, there are no concentrations of indigenous peoples but some may be part of the sector that cannot afford services. Pro-poor measures shall be worked out into the plans such as maintaining provisions for appropriate safe water sources such as public taps.

Large numbers of indigenous peoples are not expected to be adversely affected under certain subprojects, particularly water supply, solid waste management and for the Butuan Drainage improvement, since these are in urban or urbanizing areas whereas concentrations of IP populations are in rural areas. Indigenous peoples in Butuan City do not live in a distinct settlement and are acculturated. Impacts on IPs, whether positive or negative, are generally not different from those with the same socio-economic status. Vulnerable groups are the poor, IP and non-IP, who are prone to flooding and have established settlements in marsh and in other high risk areas by the sea. There may be relocation of those living in critical waterways under the Butuan City drainage improvement subproject.

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The watershed and biodiversity conservation subproject aims to enhance access to marsh/forest protection, improve food security, incomes and livelihoods, as well as capacity for the management of ancestral domains by IPs. The biodiversity hotspots in Compostela Valley and Agusan Marsh where the ARBIWRMP will invest are in ancestral lands. These will benefit marsh/upland dwellers in rehabilitation areas but may result in temporary economic dislocation for IP swiddeners and those who cut timber for sale or who otherwise depend on forest-based livelihoods. These are similar to rights over marshlands and lake resources in the Agusan Marsh. Specific groups of Manobo fishermen/farmers/hunters in floating villages and buffer zones of the protected area in the Agusan Marsh may be curtailed in their use of certain zones for fishing, hunting and land conversion but where livelihood opportunities and fishing zones and other economic zones will be designated in recognition of IP structures and practices. Indigenous knowledge will also be the basis for biodiversity conservation. In the Agusan Marsh, most vulnerable is the Manobo population that lives in floating houses due to annual flooding of the Marsh. These houses have 100% Manobo population. They earn their livelihood through fishing in the rivers and lakes. Indices for access to health, education, water and sanitation services are lower than for those who live in buffer zone communities of the Agusan Marsh. They are also dependent on the rivers and the Marsh as a source of drinking water and income. They are key beneficiaries of ecotourism, livelihood development and capacity building support. They are specifically targeted for the provision of water tanks and for sanitation improvement. For the Compostela Valley watershed subprojects, vulnerable are indigenous peoples and poor migrant families who are dependent on subsistence farming and timber poaching. There are also those without steady income from plantation areas. They join ever-growing numbers engaged in unregulated small-scale mining as a source for additional family income. There are smaller indigenous groups living in marginalized areas of the watershed that may not be represented in ancestral domain structures—e.g. Kalagan in Laak. Their livelihood may be affected in the rehabilitation and protection of watersheds and shall be part of planning watershed activities. In the Agusan Marsh some indigenous fishing and hunting grounds may be conserved under the project so proper zoning shall be coordinated with the people as with the search for viable livelihood options. There are no immediate alternatives to small-scale mining which needs to be managed with a view to environmental reparation and improved wealth redistribution. A significant vulnerable sector is that of mine workers who are young and/or poor and are exposed to the occupational hazards of unregulated mining. Many deaths due to collapsed tunnels have allegedly gone unreported. The project addresses the concerns of the sector through policy support for small-scale mining reform and capacity building on FPIC (free prior informed consent) process in relation to mining. The construction of the Mabatas mines tailing dam in Monkayo and ore processing site supports DENR’s and local government’s plan to rationalize mining operations in the Diwalwal mineral reservation. The proposed dam is in the ancestral domain of the Four Tribes composed of the Dibabawon, Manguangan, Mansaka and Mandaya. The dam will benefit all, including IPs, by abating pollution and siltation. No land acquisition is needed since the area has already been designated for this purpose and acquired consent from the indigenous peoples through FPIC by the Philippine Mining and Development Corporation. However, in this connection, an entire mining community in Diwalwal (population 16,000), which now sits in a hazardous zone atop an over-mined area may be relocated. Other social and environmental impacts have yet to be determined as plans are prepared since this may entail relocation with potential impact on those that may be relocated and those that will host the relocation site. Given the overall situation in the ARB, women are more vulnerable than men, under various circumstances. Women-headed households tend to be poorer. Considering children and women’s role in water access and management, they are the most prone and at risk of contamination from water borne diseases. They are prone to violence against women, especially in mining areas. They are active in the informal economic spheres—subsistence agriculture, agroforestry, fish vending—but are also in charge of domestic responsibilities. For these reasons, they shall be actively involved in the planning and implementing of all project outputs in ways that best address their project-related gender issues and concerns.

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Indigenous Knowledge Systems and Practices. The subprojects for biodiversity conservation and watershed management are within ancestral domains (AD), all of which have been delineated in Compostela Valley where Ancestral Domain Sustainability Development and Protection Plans (ADSDPP) are in place. ADSDPPs and AD structures are also mainstreamed in local government. The latter is through the designation of representatives in local legislative bodies. This is similar in the case of Agusan Marsh municipalities, with 55% IP population and seven (7) ancestral domains. ADSDPPs prescribe development and protection plans for the ancestral domains as well as structures and mechanisms for AD governance. Indigenous knowledge is recognized but is under siege due to economic and population pressure. Such is the case with sacred grounds which are identified, but are often now in use for economic purpose. The role of the Balyan spiritual leader in relation to these is documented and recognized but fast waning, though elderly practitioners still live. Moreover, mining, both large and small poses a threat to the maintenance of such areas. Project interventions shall be harmonized to support resource management targets of ADSDPPs. Biodiversity is important in the traditional economy of indigenous peoples that depend on non-timber forest products and other forest resources for medicine, food, shelter, utensils, crafts, etc. In the Agusan Marsh, sago is also harvested in protected zones. Some of the resources are being depleted such as rattan, honey and specific species of bamboo. Many hardwood species are overharvested. Thus, IPs have preferences for specific indigenous tree and plant species for reforestation. The search for appropriate alternative livelihoods and biodiversity conservation and protection strategies for environmentally critical areas can therefore start from the recognition of Indigenous Knowledge Systems and Practices while reinforcing appropriate structures, beliefs and practices such as relating to sacred areas. The Manobos in floating houses in Agusan Marsh traditionally use the rivers and lake for waste disposal. This will be acknowledged in advocating for change in sanitation practices in the area through education on hygiene and sanitation. NGOs and Community Based Organizations. There are national, regional non-governmental organizations as well as community-based organizations operating in the ARB. NGOs are more active in the Agusan Marsh than in Compostela Valley. International aid and environmental agencies are also present. There are community organizations in project sites but no strong environmental movement exists. There is diversity as well in the level of community organization as reflected in membership in familiarity with NGOs (85.6%). On the other hand, community organizations are those of women (e.g. Rural Improvement Club), church, farmers, indigenous peoples and community forestry organization which are composed of IPs and non-IPs. The project will strengthen integrated watershed management networks from the grassroots level going up. It will work with existing organizations and partner with NGOs as facilitators in watershed management campaigns and strengthening watershed management networks, capacity building of indigenous peoples and other community organizations and advocacy on integrated watershed issues across boundaries and for needed reform. 1. Design Features The project and the Upper Agusan watershed subproject are designed to result in major social, gender and poverty benefits with multiple impacts. To ensure environmental sustainability, organizational capacities and institutional arrangements are also improved. Benefits could include: (i) access to sustainable livelihood opportunities and other social services tied to improved resource management and education; (ii) improved sanitation and solid waste management as support to ecotourism, thus providing additional income sources; (iii) improved capacities for ancestral domain governance and resource management; (iv) improved and more equitable sharing practices for mining reform; (v) improved awareness and management of water sources in coordination with LGUs, water districts/ water service providers, municipal governments and other agencies; (vi) improved hygiene, solid waste management and access to safe water by indigenous peoples in the Agusan Marsh and in other target municipalities; vii) empowerment of local groups (such as indigenous peoples and women’s group) to participate in project design,

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implementation and maintenance; (viii) strengthening of public-private partnership in resource management and livelihood development; (ix) empowerment of indigenous peoples and local governments officials and structures for their roles in resource management; (x) empowerment of men and women to exercise reproductive rights and responsibilities; (xi) public-private partnerships and institutionalization of mechanisms for advocacy and continuing dialogue on development and resource management issues within the river basin; (xii) directly contribute to job creation, especially during the actual construction of the infrastructure subprojects such as the Butuan drainage system, the Mabatas tailings dam, water and sanitation and “Treepreneur” reforestation interventions; and (xiii) create new employment opportunities during the operation of water supply facilities. On the other hand, while the project is expected to bring benefits, it may also have negative impacts for certain subgroups such as through curtailment of access to protected areas. Safeguards are in place to avoid or mitigate these. Safeguards also exist to address potential issues in inclusive development, participation, resource access and gender equity. To enhance attainment of benefits from the project outputs, strategies for identified issues and constraints are built into the design of the subprojects and ARB-wide institutional development. Local Social Development plans have been prepared for both watershed and biodiversity subprojects to address additional issues and concerns in resource management. This features a strong support for capability building of indigenous peoples, not only as project participants, but as managers of their ancestral domains. Harmonization of project plans with their ancestral domain plans institutionalizes ancestral domain governance structures in development, and enhances integration of Indigenous Knowledge Systems and Practices in plan implementation. Key issues such as mining, which can cancel out any gains of reforestation and biodiversity conservation, are also addressed through measures that promote mining reform in the context of policy and advocacy for transparency and improved benefit sharing. In the growing preference for large-scale mining as an alternative to unregulated small-scale mining, there is evidence of potential unrest by small-scale miners. Large-scale mining has proved unable to absorb as many workers as small-scale mining. With just 2% excise tax as the national share of wealth from mining (except in mineral reservations where the government gets a share of 15%), reinvestment of proceeds towards a long-term local development agenda cannot be supported. At this rate, it cannot even adequately support reparation for biodiversity loss and social and environmental costs. It will only ensure the escalation of an ongoing cycle of environmental and socio-economic poverty in the river basin. Project support for pollution infrastructure is thus augmented with a basin-wide agenda for mining reform.

C. Participation Process

Is there a stakeholder analysis? Yes. Identified stakeholders and affected people shall participate extensively in project implementation. Consultations and focused-group discussion regarding proposed subprojects and land acquisition and resettlement issues will continue to be undertaken with key government officials and the affected people during detailed project preparation. The EA and or the LGUs implementing the components of the projects will undertake the required consultation process that will ensure social safeguards prior and during project implementation. The project will ensure that poor households have access to basic services that are provided in target areas. It will address their needs through (i) provision of public water stand posts in poor neighborhoods; (ii) prioritizing critical areas such as the Agusan Marsh for sanitation; (iii) at least 30% employment of women in community-based programs for watershed management and water facilities maintenance; (iv) participation of indigenous peoples, and female and male community leaders, in resource management and water users’ groups; (v) participation of women and men in environmental awareness, health and hygiene, and reproductive health campaigns; and (vi) employment of labor from poor communities in civil works.

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Is there a participation strategy? Yes The Project is anchored on a participatory approach where the development interventions in the subproject communities are planned and implemented by the executing and implementing agencies in consultation with target beneficiaries affected persons and with various stakeholders such as indigenous peoples, NGOs and people’s organizations. Local government and indigenous people’s institutions such as the National Commission on Indigenous Peoples and ancestral domain management structures are recognized as key partners in project implementation. The objective of this approach is to improve the sustainability of the project and of vegetative and infrastructure components, empower critical stakeholders for continuing role in river basin management, forest protection and resource management and minimize the adverse impacts of involuntary resettlement on affected persons (AP) and ensure that target beneficiaries and Affected Persons would be better-off than their existing social conditions.

D. Gender Development

The project will deliver tangible benefits to women and is therefore categorized as one with effective gender mainstreaming. Strategy to maximize impacts on women: The community participatory planning process is the conscious pursuit of a gender-sensitive project that involves an understanding of issues and problems from the perspectives of both men and women. In communities where traditional roles are still relegated to women and their voices still could not be heard, women’s issues and concerns will be integrated in the community based process. Has an output been prepared? _X_ Yes ___ No. A Gender Action Planning Framework has been developed under the project spanning the preparatory and planning stages, and monitoring and evaluation to improve access to resources, assets, or opportunities and participation in decision-making process. Based on the above identified issues, the following activities were included in the gender action plan:

i. collecting sex-disaggregated baseline data on small and microfinance entrepreneurs; ii. developing program and conduct training on gender-sensitive micro and small enterprise and on

gender issues in water and natural resource management, livelihood development; iii. access to services will be enhanced through the targeting of poor and vulnerable groups such as

women-headed households for appropriate benefits under each of the subprojects; iv. shared leadership in community organizations and water user groups; v. reproductive health concerns will also be addressed in relation to women’s rights and population

management; vi. participation of women and men in environmental awareness, health and hygiene, and

reproductive health campaigns; vii. recruiting a social development and gender specialist; viii. incorporating the gender action plan indicators into regular project monitoring tools and formats;

and ix. conducting regular monitoring and reporting on the implementation progress of the gender action

plan.

E. Social Safeguards and other Social Risks

Item Significant/Not Significant/None Strategy to Address Issue Plan Required

Resettlement __X __Significant __X__ Not significant ______ None

A resettlement framework has been prepared to guide the preparation of a resettlement plan for the project. A sample resettlement plan is being prepared for the Butuan Cirty Drainage Subproject. Specific Action (SA) or Indigenous Peoples Plans may be

__X__ Full __X__ Short resettlement plan and resettlement

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Item Significant/Not Significant/None Strategy to Address Issue Plan Required

prepared depending on scope of impact on IPs.

framework _____ None

Affordability ____Significant __ X_ Limited ____ None

For water supply, project design is in keeping with established, proven practice on cost recovery in the sector, with additional safeguards in place to protect the poorest. Pro-poor targeting includes the installation of water collectors and sanitation facilities for representative areas in floating villages.

____ Yes ____x_ No

Labor X Employment opportunities X Core labor standards

__X__ Significant __ X_ Limited _____ None

Employment opportunities will be generated and the poor/forest resource users will be prioritized. For water and infrastructure subprojects, the project will follow ADB’s procurement procedures for contracting services of community-members as laborers. Core labor standards are addressed in assurances. Minors are protected. Women will receive the same pay for the same work rendered.

_____ Yes __X__ No

Indigenous People

__ X__Significant __X__Not significant _ _ _None

Where limitations are imposed on the livelihood of those that are dependent on the Agusan Marsh/ Compostela forestry resources under the biodiversity and watershed management outputs, provisions for alternative livelihood will be studied that takes into consideration Indigenous Knowledge Systems and Practices. IP Plans (IPP) to spell out culturally-appropriate processes and mechanisms for participation. Capacity building of indigenous people’s structure is promoted in project design. IPPs are not needed where there is no significant impact on IPs such as for water supply subprojects.

___X__ Yes ___X__ No

Other Risks and Vulnerabilities

__ __Significant __ __ Not significant _X__ None

The project's participatory planning strategy is designed to ensure that beneficiaries and affected persons and vulnerable groups are not excluded from the project and its benefits. Stakeholders, either beneficiaries or affected persons, will have proportional representation during the project’s design, implementation and monitoring.

_____ Yes X No

F. Monitoring and Evaluation

Are social indicators included in the design and monitoring framework to facilitate monitoring of social development activities and/or social impacts during project implementation? __X_Yes ____ Poverty, social and IP indicators are included in the design and monitoring framework to facilitate the tracking of project impact on indigenous peoples and MDGs.

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10. Gender Action Plan

1. Analysis of problems and opportunities. The results of rapid appraisals and socio-economic survey conducted under the PPTA identified three common issues faced by women in the ARB: (i) domestic violence; (ii) drug addiction of children, and economic difficulty due to lack of income; and (iii) conflicts among households due the scarcity of potable water. Households obtain water from a public/common faucet and deep wells. Women are at times ending up in fights due to the long queuing to get water supply.

2. In Compostela Valley, for example, violence against women (VAW) has an incidence rate of 10–20%. Thus, the LGU set up a crisis center for women victims of domestic violence in the Municipality of Nabunturan. Key problems expressed by women and gender practitioners in the area are that families have too many children to feed and send to school. Thus, women are burdened to seek additional livelihood sources and skills training to access to better income sources, mostly community-based. Jobless women in mining barangay in New Bataan find work in minefields gathering ore for transport to processing plants. There are many out-of-school youths, many of whom join their families in small-scale mining. These odd jobs for women and youths are somehow helping them meet both ends; on the other hand, small-scale mining activities is articulated by women groups to have brought additional burdens by common social problems such as drug use, gambling and prostitution among their children and household members.

3. In the Agusan Marsh early marriage is a reality. Girls who do not move on to school outside of the floating villages, marry by age 13 and may have two children by age 16. There are more men than women in indigenous communities. The number of children born from young couples is decreasing though, but there are couples that still have as many as eight (8) or more children. Indigenous peoples have been observed to be open to contraception. The problem is that many cannot afford the means for contraception. Access for women to avail of reproductive choices remains nil in their communities.

4. Women tend to find work outside of the ARB area. The population ratio tends to favor men in both Agusan del Sur and Agusan del Norte as well as Compostela Valley. Young women tend to venture out of their villages to find work. Destinations are likely to be Davao or Manila for Compostela, and for Butuan or Manila for the Agusan Marsh. On the other hand, there are high percentages (30%) of women-headed households identified in Nabunturan. In all other institutions, common activities are women organizing leadership and livelihood skills training. In Compostela Valley, reproductive rights and responsible parenthood also involves men for gender sensitization by the LGU Speakers Bureau. Barangay have less training on gender mainstreaming, so it is common to see that gender allocations, where these exist, are allocated for other development priorities. Some local government units are ahead in gender mainstreaming. Nabunturan in Compostela Valley set a budget commitment for five years for two social workers hired to implement GAD. A Council of Women is organized in all provinces of the ARB, including in each of the municipalities. These are headed by the governor’s wife at the provincial level and the mayor’s wife at the municipal level.

5. Local initiatives and experiences as in the case of the Provincial Environmental Offices (PENRO) in Compostela Valley appropriating GAD budget of P60, 000 for 2010. Though not in full implementation of the law of 5% of their annual budget, the GAD plan have contributed to the raising awareness of women on their property land rights. Additionally, the budget has been providing technical skills training among women in venturing on alternative livelihood on upland non-timber forest products. The budget afforded the office to undertake organizing women in promoting agroforestry and combating illegal logging and wildlife poaching. Many of its programs and activities are done in coordination with other agencies. The PENRO’s gender focal person is active as a member of a LGU Speakers’ Bureau on

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gender mainstreaming.

6. It is this context that gender mainstreaming will be carried out by the implementing institutions that will manage ARBIWRMP. Some of these strategies include the formation and or introduction of mechanisms to address gender such as: (i) high rate of unemployment among female-headed households; (ii) low level of skills among female heads of households and household members; (iii) low incomes of female-headed households; (iv) poor health and sanitation in the communities resulting in high incidence of sickness among women and their children and household members; (v) poor access to water resulting in added burden to women to fetch water, and increased household expenses; and (vi) limited access of women to formal financial institutions and credit facilities for additional income opportunities.

7. In recognition of these issues, opportunities to mainstream an Effective Gender Mainstreaming Strategy (EGMS) will be prepared by the DENR and the local governments during detailed designing stage of the project. This will include the preparation of Gender Action Plans (GAP) for each subproject site. These will specifically seek to (i) address gender issues for the improvement of water supply, participation of women watershed management, biodiversity conservation in Agusan Marsh and, participation in other infrastructure projects in the ARB, (ii) prepare and identify mechanisms to be included in the project design to ensure women will be involved in, and benefit from, the project, and (iii) discuss gender sensitive monitoring and evaluation.

8. Mitigation Measures and Gender Mainstreaming Strategies. Specific measures will be taken into account throughout the different stages of project preparation and implementation to address the aforementioned issues. In general, these measures fall within the following broad gender mainstreaming strategies: (i) increasing women’s participation in project activities and benefits; (ii) building-in gender-specific baseline data and indicators into project planning and monitoring systems; (iii) organizing women into development-focused groups such as cooperatives, savings groups and micro-enterprises; and (iv) increasing women’s capacities and participation in community decision-making and project management.

9. Component 1: Increasing women’s participation in project activities and benefits:

Women-led river basin resource management Community development plans and women-led resources management will be designed to engage particularly women household heads. Women generally do a substantial amount of child care and social interactions with neighbors, and will invest considerable time to educate community households on community watershed protection, preservation and protection of resources in the Agusan Marsh and identification of livelihood components as an alternative to existing practices of timber poaching, illegal hunting of wildlife. The project design will enable the community to participate in the designing more sustainable community-based and women-led watershed management. The availability and proper location of adequate facilities for community education on the conservation and protection with interventions on livelihood components will be given attention inasmuch as these represent an important concern among women. The design of tenure instruments and contracts will give equal rights to male and female heads of households and to both spouses to ensure that women are accorded equal decision-making rights, as well as asset ownership rights in ancestral land, farm lands and other resource based rights

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Community-based livelihood interventions It will focus on skills enhancement specifically for women, the development of community enterprises that can be managed or operated by women and job referrals to occupations preferred by and employing women. Home-based income-generating activities will be especially promoted and developed to enable women with child-rearing responsibilities to earn additional income while staying at home. Special efforts will be made to form cooperatives managed by women, and engaged in enterprises that supply goods and services to the community such as food preparation, ethnic jewelry arts and crafts and novelty items from indigenous materials. Training on product designing, packaging and basic entrepreneurial skills will be provided.

10. Component 2: Building-in gender-specific baseline data and indicators into project planning and monitoring systems. Based on the results of the socio-economic survey, generated gender-disaggregated data on employment, income, education, skills, savings, health status, access to basic services and financial institutions, social networks, and indigenous women’s preferences for participation in specific subprojects will be prepared. The data will also serve as the baseline of gender-specific indicators for each subproject components.

11. Component 3: Organizing women into development-focused groups such as cooperatives, savings groups and micro-enterprises. Microfinance programs will be aimed specifically at women. NGOs and microfinance institutions (MFIs) will be tapped to organize savings groups among women, not only for the purpose of accessing loans from available micro-credit financial institutions but also for meeting personal emergency needs. These savings groups can function as mutual aid associations that can extend emergency assistance for hospitalization, burial, house repair in case of fire or typhoons, and other contingencies.

12. Component 4: Increasing women’s capacities and participation in community decision-making and project management. Capability-building measures will be taken to ensure women participation not only in the livelihood programs but also in entrepreneurial leadership and project monitoring. Training in leadership for women organization watershed management and maintenance work, and value formation on cooperatives, leadership skills, financial management, project management, monitoring and evaluation are among the menu of capacitating women groups in the ARB.

13. Implementation Arrangements. A social and gender specialist or gender focal point will be designated by the EA and project implementer or LGU to coordinate and monitor the conduct of the interventions and ensure that the GAD issues are systematically attended to. The specialist will assist in the formulation of gender-specific indicators for the gender baseline as well as for monitoring purposes. He/she will oversee the capability building programs and activities to ensure the maximum participation of women. He/she will also assist in the training of women on project monitoring and oversee the actual conduct of monitoring and evaluation on gender issues.

14. Monitoring and Evaluation. Women will be specifically encouraged to take an active role in monitoring gender-specific indicators of project-related outcomes through their community associations which will be mobilized to cooperate in addressing gender-responsive projects within the ARB, and livelihood and entrepreneurial leadership. The gender-specific indicators of project outcomes that have been formulated during the preparatory phase will be used in monitoring and evaluating the project. The women tasked to monitor will be trained in the use and measurement of these indicators. The results of periodic monitoring and evaluation will be shared with community members through the community groups, indigenous women groups and associations.

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15. For the gender perspective, the choice of action will be articulated in the gender roles and responsibilities of women and men in the ARB subprojects, including gender division of labor in the planning and implementation, and monitoring and evaluation, of the sub-project components, and access factors and participation in the Integrated Water Management related concerns stipulated in the Gender Action Plan Framework

16. Gender action plan framework. The project is designed to result in major social, gender and poverty benefits with multiple impacts. A larger proportion of the beneficiaries will be the poor, women, and children. They will benefit from the provision of water supply, increaseD opportunities to co- manage ecotourism projects, water management upgrading LGU income projects and facilities to monitor the Agusan River’s enhancement water management service delivery through multi stake holders participation. Oversight arrangements, capacity development, provincial plans, eligibility criteria, and targeted funding for assisting women groups for small and medium income generating projects will help to ensure that suitable subprojects in the river basin are selected that yield maximum benefit for these vulnerable groups. The project also supports and provides improved access to credit and opportunities for improved earnings for small-scale nature tourism entrepreneurs in the proposed Agusan Marsh conservation effort and with the end view of generating a better income stream for women.

17. For the gender perspective, the choice of action will be articulated in the gender roles and responsibilities of women and men in the ARB subprojects, including gender division of labor in the planning and implementation and monitoring and evaluation of the sub-project components, access factors and participation in the Integrated Water Management related concerns stipulated in the Gender Action Plan Framework as shown in Table 10.1.

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Table 10.1: GENDER ACTION PLAN FRAMEWORK FOR ARBIWRMP GAP Component Gender Issues Mitigating Measures Indicator

Detailed Project Preparation

Component 1: Increasing women’s participation in project activities and benefits

Component 2: Building-in gender-specific baseline data and indicators into project planning and monitoring systems

Lack of participation of women

Identify gender-specific issues and needs to be taken into account in the design of housing and livelihood interventions

Involve women in identifying these needs and issues

Develop gender-specific indicators for women participation and empowerment to be used for project monitoring and evaluation

Gender indicators incorporated in the survey instrument

Number of focus group discussions (FGDs) held

Number of women and women heads of household who participated in FGDs

Set of gender-specific indicators incorporated in project monitoring and evaluation tool

Number of community women volunteers willing to serve as project monitors

Project Design and Implementation

Component 3: Organizing women into development-focused groups such as cooperatives, savings groups and micro-enterprises

a. Women led Watershed Management

Lack of opportunities to participate in development projects in watershed protection and conservation

Poor health and sanitation

Poor water supply provision

Increased household expenses for water

Ensure that community development plans for water management and ecotourism and conservation objectives take into account women’s needs for safety, income, mobility and child care

Ensure women’s access to project benefits

Ensure that tenure instruments and contracts give women equal decision-making and asset-ownership rights

IEC materials distributed

Number of women participating in community action planning

b. Microfinance for Enterprise Development and Other Livelihood Interventions

High rate of unemployment among women

Limited access to formal financial and credit facilities

Low income

Low level of skills

Ensure women’s access to project services and benefits

Increase the income-earning capacity of women beneficiaries, especially women household heads

Form collective enterprises and self-help groups managed by women

IEC materials

Number of trainings conducted

Number of participants in trainings

Number of enterprises, cooperatives, savings groups, mutual aid groups formed by women

Number of women members of these groups

Number of microfinance loans extended by MFIs

Number of job referrals and successful women job

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GAP Component Gender Issues Mitigating Measures Indicator

seekers who sought referrals

c. Institutional Strengthening and Capacity Development

Component 4: Increasing women’s capacities and participation in community decision-making and project management

Low level of knowledge and skills in participating in key decision making process in project design, implementation

Develop the capacities of women in project and community management and project designing, implementation and monitoring

Ensure women participation in water management subproject, watershed community management and conservation efforts , livelihood programs and project monitoring

Mainstream gender perspective in all project phases and components

Ensure that GAD issues are systematically attended to according to the Gender Action Plan

Number of trainings conducted

Training manuals

Number of participants in trainings

Number of women’s groups and committees formed

Presence of Gender Specialist or Gender Focal Point in the project implementation teams of DENR and with the LGUs

Monitoring and Evaluation

Women will be specifically encouraged to take an active role in monitoring gender-specific indicators of project-related outcomes through their community associations which will be mobilized to cooperate in addressing gender- responsive projects within the ARB including livelihood and entrepreneurial leadership.

Lack of opportunities to join in project planning, implementation and monitoring of projects in the ARB

Involve women in project monitoring and evaluation

Assess the project’s impact on the welfare of women through the use of gender-specific indicators

Monitoring and Evaluation tools

Number of monitoring workshops

Number of monitoring and evaluation reports

42 Appendix 2


11. Environmental Assessment and Measures

A. SUMMARY INITIAL ENVIRONMENTAL EXAMINATION OF EXPANSION OF THE NABUNTURAN WATER SUPPLY, COMPOSTELA VALLEY

I. INTRODUCTION 1. The expansion of the Nabunturan Water Supply System is one of the infrastructural development subprojects prioritized under ADB TA 7258-PHI: Agusan River Basin Integrated Water Resources Management Project (ARB-IWRMP) funded by the Asian Development Bank (ADB).

2. Nabunturan Water District (NWD) is the water supply utility operating the Nabunturan Water Supply System located in the province of Compostela Valley, Republic of the Philippines. The present service area of NWD covers the barangays of Poblacion, Basak, Libasan, Sta. Maria, New Sibonga, and Tagcogon in the municipality of Nabunturan and the Brgy. San Jose (Poblacion) of the municipality of Montevista with a total population served of 13,597.

3. This summary initial environmental examination (SIEE) report outlines the findings and recommendation in the initial environmental examination (IEE) of the proposed expansion of the Nabunturan Water Supply system.

4. The SIEE and IEE reports were prepared in accordance with Safeguards Policy Statement (2009) of the Asian Development Bank (ADB) and within the framework of the Philippine Environmental Impact Statement System.

II. DESCRIPTION OF THE PROJECT

5. The Expansion of the Nabunturan Water Supply subproject involves the following works:

For Nabunturan a. drilling and construction of four (4) wells with a total combined capacity of 40

liters/sec; b. provision of four (4) pumping stations including equipment, pump house and

accessories, including hypochlorination facilities; c. laying of about 14 km of 50 to 250 mm diameter transmission and distribution

pipelines, valves and fittings, including bridge and culvert crossings; d. construction of 600 m3 ground reservoir for the Main System, and 20 m3 for New

Sibonga; e. provision of one (1) unit 60 kVA standby power generating set; f. installation of service connections; g. provision of hydrants (under LGU); and h. provision of access road going to reservoir.

For Montevista

a. drilling and construction of two (12) wells with a capacity of 10-12 liters/sec; b. provision of one (1) pumping station including equipment, pump house and

accessories; c. laying of about 11 km of 50 to 200 mm diameter transmission and distribution

pipelines, valves and fittings, including bridge and culvert crossings; d. construction of 180 m3 ground reservoir for the Main System; e. installation of service connections; and

43 Appendix 2


f. provision of fire hydrants (under the LGU). 6. The proposed subproject aims at meeting the water demand of Nabunturan and Montevista for the year 2020 that will result in the expanding the service area of NWD to cover one (1) additional barangay in Nabunturan and the unserved portion of the existing service areas and three (3) additional barangay in Montevista. At the completion of the proposed subproject, a total population of 30,594 will be served.The existing and expanded service areas are presented in Appendix A.

7. It was estimated that the total cost of the expansion is P77.937 million, with the P53.338 million for Nabunturan and P24.599 million for Montevista. Implementation of the subproject is scheduled to start in 2012 and to be completed in December 2020.

III. DESCRIPTION OF THE ENVIRONMENT

A. PHYSICAL AND ECOLOGICAL RESOURCES

8. Nabunturan is the capital town of Compostela Valley, and is located within 125o 27’ east longitude and 7o 41’ north latitude. It is bounded on the north by the municipality of Montevista, on the west by New Corella, on southwest by Mawab, on the south by Maco and Mabini, on the southeast by Maragusan, on the east by New Bataan and by Compostela on the northeast. It has a total land area of approximately 24,120 hectares comprising twenty-eight (28) barangay and 40 sitio all interlinked by roads and bridges.

9. Nabunturan has a total of 19 identified creeks that mostly converge into Manat River. Of the 19 creeks, only five (5) have been tapped for irrigation with concrete structures as in Small Water Impounding Projects (SWIP). The municipality has hot springs discovered for its therapeutic and entertainment value in the Mainit Hot Springs Protected Landscape (MHSPL) covering an area of 1,381 hectares.

10. NWD obtains its water supply from groundwater sources through wells and a spring. It has four (4) existing water systems, namely: the main system that serves five (5) barangay in Nabunturan; the New Sibonga Water System; the Tagnocon Water System; and the Montevista system that serves Barangay San Jose. Except for the Tagnocon Water System that derives its water from a spring, the water supply demand of the rest of the system is obtained from wells.

11. The proposed sites for the subproject are within built-up areas. It is unlikely that there are habitats for large wild animals, rare or endangered species. The pipeline network and transmission are located along roads and highways that have been functional for a very long time already. Hence, over the years the ecological changes due to human activities resulted to the present residential and commercial landscapes.

B. SOCIOECONOMIC AND CULTURAL RESOURCES

12. The municipality of Nabunturan is a first class municipality with an annual income of P89,559,442 as of 2007. The major sources of the city’s revenue are tax revenues, internal revenue allotment (IRA) and operational and miscellaneous receipts. IRA serves as the main source of revenue, followed by income from government business operations at 9.2%, and with real property tax at the lowest 2%. In 2004, the municipal government accumulated a total expenditure of P62,809,403. The worth of public service per capita in the municipality was P118 in 2004.

13. The largest use of land is agricultural, with 16,513 hectares (68.5%) devoted to

44 Appendix 2


farming; next is forest with 4,592 hectares (19.0%). Grassland covers 1,550 hectares (6.4%), while the built-up area covers 934 hectares (3.870%) which includes 27 barangay; infrastructure and utilities cover 489 hectares (2.0%); quarrying covers 16 hectares (0.07%; industrial area covers about 12 hectares (0.05%); Tourism covers 6 hectares (0.025%); mining, dumpsite and agro-industrial areas cover 5 ha (0.21%), 2.3 (0.01%) and 1.3 (0.006%) hectares respectively.

14. The poblacion is the site of the central business district (CBD) where entrepreneurs are located such as: wholesale traders, retailers, banking/finance establishments, credit institutions, insurance, real estate, services, etc. The 18,954 m2 public market site is considered as the CBD, housing about 345 units of commercial stalls and some industrial establishments of the locality. There are 42 identified establishments with an aggregate area of 6,730 m2, located in a commercial strip classified as neighborhood commercial center along the main thoroughfare of the municipality.

15. The source of electrical power in Nabunturan is the Davao del Norte Electric Cooperative (DANECO), which is being supplied by the TRANSCO (NAPOCOR) that traverses six (6) barangay spanning about 25 km of transmission lines.

16. Based on census year 2000, the municipality of Nabunturan has a total population of 60,543 representing 10.43% of the total population of Compostela Valley Province, which is 580,244. It has 12,930 households with an average size of 4.68 persons per household. Based on CY 2000 annual growth rate, it is projected that the municipality’s population by year 2005 would be 65,261, and 75,453 by year 2015.

17. There are six (6) medical health facilities/services in Nabunturan, prominent of all is the Rural Health Unit. In addition, there are 11 Barangay Health Stations. The 10 leading causes of mortality are: malignant neoplasm; hypertensive diseases; cerebrovascular diseases; pneumonia; pulmonary tuberculosis; diseases of the liver; transport accidents; assault; diabetes mellitus; and ischemic heart diseases.

18. Based on a random survey of 267 respondents during the PPTA socioeconomic survey, 85% of the house owners have piped water supply. Most of the respondents (21.7%) rely on piped connection as their primary source of water, followed by 19.1% who use deepwells. Respondents who get their water from shallow wells make up 16.5%, followed by some (12.7%) who use springs/rivers/ponds/streams, a few (10.5%) who get their water from the rain and 5.2% who buy their water from water vendors.

IV. ANTICIPATED ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES

A. DESIGN/PRE-CONSTRUCTION PHASE CONSIDERATIONS

19. The subproject sites are residential, commercial, institutional, and agricultural landscapes.There are no known archaeological and cultural assets in these sites. Nevertheless, precautions will be taken to avoid potential damage to any archaeological and cultural assets by inclusion of provisions in tender and construction documents requiring the contractors to immediately stop excavation activities and promptly inform the authorities if archaeological and cultural assets are discovered.

20. NWD, through its contractor, will secure the required Permit to Drill and Water Permit from the National Water Resources Board (NWRB) for the five deepwells that will be installed. The permits will ensure that the locations and withdrawal rates of the deepwells will not affect or compete with any existing wells within their areas of influence.

21. It has been reported that manganese concentration in groundwater in some areas in

45 Appendix 2


Nabunturan is higher than the level prescribed by the 2007 PNSDW. To avoid costly treatment of water, selection of the site of the wells shall consider the quality of the ground water. Preliminary water quality testing shall be done prior to purchase of a site for deepwells or before the actual drilling of the wells to ensure that the water is suitable for domestic supply, with chlorination as the only treatment required.

B. CONSTRUCTION PHASE ENVIRONMENTAL IMPACTS

22. Dumping of construction materials and solid wastes in watercourses will cause nuisance to the public aside from affecting water quality and the flow regime. To prevent these conditions the contractor shall be required to install the pipes within the shortest time possible and not to dump earth, stones, and solid wastes in watercourses to avoid adverse impact on water quality and flow regime.

23. Potential sources of noise are the construction equipment, such as trucks, drilling machine and other equipment. Noise nuisance can be mitigated with the use of sound suppression devices for the equipment. In areas near any house or noise-sensitive sites, noisy equipment shall not be operated during nighttime to early morning (22:00H – 06:00H). Workers using noisy equipment shall be provided with earplugs.

24. Dust generation from trenching activities during dry periods will be an air pollution problem. Intermittent episodes of air pollution from smoke belching vehicles/equipment may also occur. Another potential source of air pollution are large stockpiles of construction materials such as soil and aggregates. To avoid fugitive dust at the construction sites, the contractor shall be required to perform regular water spraying of the sites during dusty periods in order to reduce the generation of dusts. He will also be required to use trucks/vehicles that have complied with the emission testing and equipment that are properly maintained and are not smoke belchers. Covers for stockpiles that will be left idle for a long time shall be required. Trucks transporting loose construction materials such as sand, gravel, spoils, and the like shall be provided with tarpaulin cover.

25. Construction activities, such as pipelaying, may cause traffic congestion in heavily traveled highways and narrow streets. To avoid traffic congestions, the contractor shall be required to prepare a traffic plan, closely coordinate with local authorities for the closure of roads or rerouting of vehicular traffic, provide traffic enforcers in critical areas, such as areas near schools, public markets, etc, consider the schedules of local activities such as festivities, processions, etc. in the timing of construction activities; do proper stockpiling and immediate disposal of spoils to avoid nuisance and traffic/access obstruction; and do immediate restoration of roads and other areas affected by pipe laying, construction activities and vehicles.

26. Construction activities, such as pipelaying, along the roads may result to hazardous driving conditions. Movement of construction vehicles and excavations would pose some hazards to the driving public. There is also risk of people falling down in open trenches. To prevent accidents, the contractor shall be required to implement a road safety plan incorporated in his construction schedule. Safety measures shall be implemented including provision of warning signs to alert people of hazards around the construction sites, barricades, and night lamps for open trenches.

27. The contractor is expected to erect temporary workers’ camps during construction of the subproject. Improperly managed silt runoff and sanitary wastes from these camps may reach nearby areas. To maintain sanitation in the camp area, the contractor shall be required to install proper sanitary facilities such as “Portalets”, implement proper solid waste management, and prevent surface runoffs from flowing into the workers camps. Where possible, useable materials from a construction site should be reused in other sites to reduce

46 Appendix 2


wastage and expenses. Implement the required surface restoration.

28. Various construction activities for the subproject will definitely require a considerable number of workers. The impact would be beneficial and significant since employment opportunities in the area will increase. Whenever possible, the contractor shall be encouraged to use the available and qualified local labor for these construction activities. The recruitment of workers shall be coordinated with the local officials.

C. OPERATION PHASE ENVIRONMENTAL IMPACTS

29. Delivery of poor water quality will increase the health risk to water consumers, particularly during the expansion of the water system. Delivery to customers of poor water quality from new water sources can be prevented in a broader scale by implementing a Water Safety Plan as advocated by WHO1. A water safety plan shall enable NWD to prevent contamination of its water sources, treat the water to reduce or remove contamination that could be present to meet the water quality targets, and prevent re-contamination during storage, distribution and conveyance of drinking water. For controlling microbial contamination, NWD shall continue using chlorine for disinfection of its water sources and lines.

30. Expanding the water supply services to areas that are not yet served will also increase the volume of sewage and sullage. Wastewater from the toilets, kitchens, and laundry areas will normally be treated in individual septic tanks system of the water consumers. The septic tank system will: (i) treat the wastewater and reduce the pollution potential and (ii) reduce the people’s exposure to untreated domestic wastewater. This will help in interrupting disease transmission.

31. Increasing the NWD service area from 8 to 12 barangay will bring safe domestic water supply to the residents and commercial establishments in the area. As a result, there will be general Improvement in public health and the cases of water-borne diseases are expected to decline.

V. INFORMATION DISCLOSURE, CONSULTATION, AND PARTICIPATION

32. The process of assessment and prioritization of the subproject long-list culminated with a workshop held in Davao City on 3-4 March 2010. The workshop was attended by representatives from the central government agencies at regional level, the provincial LGUs, city and municipal LGUs, and NGOs, including some indigenous people groups. The Nabunturan water supply system later came up as a priority subproject to improve the water supply system in Nabunturan and Montevista, two municipalities located within the Agusan River Basin.

33. Key informant interviews were conducted during the socioeconomic survey on the Nabunturan water supply in August 2010. 267 respondents were interviewed during the survey with only 21.7% having Level III supply. Among others, the interview provided information on the level of satisfaction of the respondents with the water service provided by the NWD. Of the respondents who have Level III supply, the majority (84.8%) wants additional water from piped connection.

34. On September 30, 2010, stakeholders’ consultation was conducted by the NWD at Comval Hotel in Nabunturan. Present during the consultation were representatives of the municipal LGUs of Nabunturan and Montevista, barangay chairmen of the affected villages,

1 World Health Organization (WHO). 2008. Guidelines for Drinking-water Quality. Geneva.

47 Appendix 2


provincial government, NGO/PO representatives, and the PPTA consultants. Among the issues raised were the role of NWD in the management of the Manat watershed, which is the recharge area of the aquifer in Nabunturan, potential insecticide contamination from banana plantations, extraction of groundwater for banana plantations might result in ground subsidence. Representatives of the barangay from Nabunturan and Montevista were in favor of the proposed expansion of the water supply subproject.

35. The summary of impacts and proposed mitigating measures were presented during the Draft Final Report dissemination workshop held at Grand Menseng Hotel in Davao City on November 25-26, 2010. The forum was attended by representatives from the LGUs, DENR Region XI, XIII, and Caraga, PENROs and CENROs, NCIP from the region and province, the academe and NGOs. The participants generally supported the expansion of the Nabunturan water supply subproject. The issue on the need to include in the financing package the cost of septic tanks for households and business establishments was raised. It was pointed out that the Philippine Clean Water Act of 2004 requires polluters to pay for the cleaning of the pollution they generate. There was also a suggestion to include other ARB municipalities in the water supply subproject, which would be considered.

36. With the aim of increasing public consultation and participation, NWD will again conduct public consultations and information disclosure during detailed design. Views of the stakeholders will be considered in the overall design process. Stakeholders’ consultations shall be continued throughout the duration of the construction phase.

VI. GRIEVANCE REDRESS MECHANISM

37. Complaints about environmental performance of projects during the construction phase will be handled by an ad-hoc Water District Environmental Complaints Committee (WDECC) for expeditious resolutions to the complaints. Complaints during the operation phase can be brought to the attention of NWD or the DENR-Region XI.

38. NWD shall form the WDECC to be chaired by the Water District-Project Implementation Unit (WD-PIU) head when the subproject is about to be implemented. Members shall include the contractor’s highest official at the site, barangay officials, concerned NGOs, and women’s organizations. For the quick filing of complaints, the WDECC shall prepare a form to be used for the filing of grievances/complaints. The use of form will also facilitate the filing of complaints by illiterate persons.

VII. INSTITUTIONAL ARRANGEMENT AND ENVIRONMENTAL MONITORING

39. DENR is the executing agency, while NWD is the implementing agency. DENR will establish a Project Management Unit (PMU) to coordinate implementation at the national level, including procurement of goods, works, and services. A PMU staff shall be designated as the Environment Officer for the project. At the subproject level, NWD will be responsible during construction and operation phase of the subproject. During the construction phase, NWD shall establish a Project Implementation Unit (PIU) to work closely with DENR’s PMU.

40. During the construction period, the construction supervision consultants, together with the PIU, shall prepare monthly environmental monitoring reports to be submitted to NWD and the PMU. Based on the monthly reports, the PMU shall prepare semi-annual environmental monitoring reports, which shall be submitted by DENR to ADB. The environmental monitoring plan is presented in Appendix B.

41. Project performance monitoring presents the desired outcomes as measurable events by providing parameters or aspects that can be monitored and verified. Tendering process

48 Appendix 2


advocating environmentally responsible procurement is a desired outcome during the pre-construction phase. This can easily be verified by checking if EMP requirements are incorporated in construction contracts. Construction phase desired outcomes include effective management of environmental impacts and reduce risk to public. For the operation phase, NWD’s water supply system must meet the 2007 PNSDW for bacterial count, color, pH, turbidity, dissolved solids, hardness, alkalinity, manganese, iron, fluoride, chloride, sulfates, magnesium, calcium, carbonates, and bicarbonates.

42. Under the Revised Procedural Manual for DENR Administrative Order No. 30 series of 2003, water supply systems (complete system) with six (6) or less production wells are required to submit an IEE Report to secure ECC from the EMB regional office (Region XI). The ECC shall be secured prior to the start of the construction activities.

VIII. CONCLUSION AND RECOMMENDATIONS

43. Overall, the water supply subproject for NWD will benefit four (4) additional barangay and areas in the Poblacion of Nabunturan that are not yet served by NWD. The water supply service will bring about improvement in public health.

44. Based on the screening for potential environmental impacts and risks of the proposed subproject, there are no significant negative environmental impacts and risks that cannot be mitigated. There is no need for further environmental assessment study. A full EIA is not warranted and the subproject’s environmental classification as Category B is deemed appropriate. The IEE shall therefore be finalized as the final environmental assessment document of the proposed subproject.

45. Implementation of the proposed subproject is hereby recommended with emphasis on the following: (i) EMP of NWD subproject shall be included in the design process; (ii) Contracts of design consultants shall have provisions requiring the consultants to consider EMP recommendations in the design process; (iii) Tendering process shall advocate environmentally responsible procurement by ensuring the inclusion of EMP provisions in the bidding and construction contract documents; (iv) Contractor’s submittal of a EMP shall be included in the construction contract; (v) Contract provisions on creation and operation of the WDECC shall be included in construction contracts; (vi) DENR, with its regulatory function, shall ensure that EMP is implemented ; and (vi) NWD shall continue the process of public consultation and information disclosure during detailed design and construction phases.

49 Appendix 2


Appendix A: The Existing and the Expanded Service Areas

Source: Nabunturan Water District, 2010.

50 Appendix 2


Appendix B: Environmental Monitoring Plan

Aspects / Parameters to be monitored

Location Means of Monitoring

Frequency Implementa-tion Respon-

sibility

Compliance Monitoring

Responsibi-lity

Monitoring Cost

Pre-Construction Phase Consultation meetings; Specific provisions in tender documents on nuisance & problems to public

Pipelines routes

Verify meetings documentation; verify draft and final documents

After completion of meetings; Twice – draft and final documents

NWD, Design consultants

DENR-XI Part of project management in detailed design (minimal cost)

Construction Phase Noise levels not to exceed 50 dBA near school, 55 dBA in other areas, and 45 dBA during nighttime

Sites of wells; pipelines routes

Use of sound levels meter

Daily Contractor Construction supervision consultants, NWD PIU

Part of consultant’s construction supervision contract; minimal cost to NWD PIU

Dust, cover of stockpiles, smoke belching

Sites of wells’ pipelines routes

Visual inspection of sites



Road closure and traffic rerouting; materials stockpiles; road restoration

Pipelines routes

Traffic plans verification

Weekly Contractor Construction supervision consultants, NWD PIU


Road safety plan; sign, barricades and night lamps

Pipelines routes




Construction debris/wastes

Sites of wells; pipelines routes


Once before final stage of demobilization

Contractor Construction supervision consultants, NWD PIU


Number of local labor employed

Construction sites; pipelines routes

Verification of contractor’s records

Once a month Contractor NWD PIU No cost

Operation Phase Total coliforms; PNSDW physical & chemical

Pipelines, reservoirs, and wells

Water sampling and laboratory test

Monthly for bacteria; annual for physical & chemical

NWD DENR-XI Part of NWD’s operation cost (PhP246,800 /year)

Septic tank of water consumers

Subproject water supply service area


Once a year Water consumer

LGUs Minimal cost

51 Appendix 2


B. SUMMARY INITIAL ENVIRONMENTAL EXAMINATION OF THE BUTUAN CITY DRAINAGE SUBPROJECT

I. INTRODUCTION

1. Butuan City is located in the central portion of the province of Agusan del Norte in northern Mindanao. The floods from Agusan River frequently inundate Butuan City, particularly its central business district (CBD). Floodwaters spill out from the sides of the river and spread widely to both sides of the riverbank flooding vast lands along the river. This occurs because of its mountainous watershed, low physiography and heavy rainfall. Twenty-four (24) of the 27 urban barangay and 6 rural barangay are affected by frequent flooding ranging in height from 50 cm to 100 cm for a period 1-2 days to weeks or months, resulting in great economic losses.

2. The upgrading of Butuan City drainage system is one of the infrastructural development subprojects that has been prioritized under ADB TA 7258-PHI: Agusan River Basin Integrated Water Resources Management Project (ARB-IWRMP) funded by the Asian Development Bank (ADB).

3. This summary initial environmental examination (SIEE) report outlines the findings and recommendation in the initial environmental examination (IEE) of the proposed upgrading of the Butuan City drainage system.

4. The SIEE and IEE reports were prepared in accordance with Safeguards Policy Statement (2009) of the Asian Development Bank (ADB) and within the framework of the Philippine Environmental Impact Statement System.

II. DESCRIPTION OF THE SUBPROJECT

5. The major components of the subproject are: (i) Construction of additional drains on identified waterways along Villa Kananga, Agusan Pequeño and Langihan areas; (ii) Construction of additional rectangular drains within the CBD and adjoining areas; (iii) Replacement of non-functioning drainage lines along the CBD area; (iv) Rehabilitation of existing open drainage channels/waterways and along major roads; and (v) Construction of pumping stations and floodgates along strategic portions of the CBD. Upgrading of the drainage system will result in a significant reduction of flooding, increase the flow-carrying capacity of the system, and improve sanitation, resulting in an increase of productivity of the affected residents and commercial establishments. Appendix A presents the components of the Butuan City drainage subproject.

6. The estimated cost of the Butuan City drainage subproject is P220.7 million. It is scheduled for implementation starting 2012 (Year 1) and is expected to be completed within four years.

III. DESCRIPTION OF THE ENVIRONMENT A. Physical and Ecological Resources 7. Butuan City is located in the central portion of the province of Agusan del Norte in northern Mindanao. It serves as the regional center of the Caraga Administrative Region or Region XIII. It lies at 8o 44’ and 9o 03’ latitude, and 125o 26’ and 125o 43’ longitude. It is bounded on the north by the Butuan Bay, on the east by the Municipality of Sibagat, on the

52 Appendix 2


west by Municipality of Buenavista and on the south by Municipality of Las Nieves.

8. Butuan City has a total area of about 81,728 hectares. Of these, 67.13% or 54,862 hectares, are alienable and disposable lands, with the remaining areas classified as forestlands. A large chunk of the total land area of the city, about 47.35%, is utilized for agricultural purposes. The area categorized for forest purposes totals about 26,866 hectares or 32.87% of the city’s land area. On the other hand, the built-up or urban area consists only of about 2,024 hectares or 2.48% of the entire city.

9. There are 17 major waterways draining into Butuan Bay, the most prominent of which is the Agusan River. The other river channels include the Ampayon River, Mahay River, Tagabaca River, Agusan Pequeño River, Mantange River, Masao River, Manapa River, Taguibo River, Ambago River, Bitan-agan River, Bilay River, Masago River, Mambatua River, Subait River and Bugabus River. The rivers and streams currently are being used for irrigation and domestic purposes. The continuous siltation and sedimentation of the said channels brought about by the degradation of the watersheds threaten their viability to provide suitable water for the said purposes. Potable drinking water is sourced from pump wells of the local water district for the built-up areas.

10. Water quality monitoring of Butuan Bay conducted by the Mindanao State University – Naawan Foundation for Science & Technology Development, Inc. in September to October 2000 and in April to May 2001 showed high level concentrations of heavy metals, such as mercury, copper, cadmium and lead, particularly in water, sediments and certain species of fish that were collected from specific areas of Butuan Bay. Heavy metal contamination may have come from unregulated gold mining in the upstream watersheds of Agusan River.

B. SOCIOECONOMIC AND CULTURAL RESOURCES

11. Butuan City was classified as a Highly Urbanized City on February 7, 1985. In 2008, the city derived an income of P835, 663,087. The major sources of the city’s revenue are tax revenues, internal revenue allotment (IRA) and business income. For the same year, the city government accumulated a total expenditure of P558,933,706. Based on FY 2003–2008, the income and expenditure average growth rates were 10.52% and 5.07%, respectively.

12. The poblacion is the site of the CBD where entrepreneurs are located such as: wholesale traders, retailers, banking/finance establishments, credit institution, insurance, real estate, services, etc. There are 27 urban barangay that are mostly in the CBD. There were a total of 7,411 business establishments in 2008, with a total gross sale of P8,756,308,664.

13. Butuan City Water District provides potable water, with the Taguibo River watershed as its main source. About 82%, equivalent to 50,490 of the 61,685 households in the city, are served by the water district. Sixty-four percent have Level III service, 5.4% have Level II, and 30.7% have Level I water supply systems. Others are provided through bulkwater services. Total water consumption in 2008 was estimated at 6,559,308 m3.

14. The source of electrical power in the city is the Agusan del Norte Electric Cooperative. A total of 141,056,088 KWH of electricity was consumed in 2008, with the residential consumers utilizing 41.2%, industrial 34.6%, and commercial establishments 11.3%.

15. In 2008, Butuan City had a population of 302,255, comprising 61,685 households. The average number of household members was determined at 4.9 per household. Of the population, 39.4% was below 15 years old, while 57.3% were between 15 and 64 years old, and 3.2% were 65 years old and over. Population growth rate in 2007 was 1.53%, compared to 1.70% in 2000.

53 Appendix 2


16. Acute Respiratory Infection (ARI) was the leading cause of morbidity in 2009, with hypertension as the second leading cause of morbidity. Diarrhea, a disease associated with water and sanitation, has been a consistent top three leading cause of morbidity since 2003. Eleven hospitals and clinics provide health care to the city residents. Two of the hospitals are tertiary government hospitals while the nine are privately owned. The city has a relatively high coverage of households with a sanitary toilet facility, which was reported at 96.4% in 2009. The coverage is comparatively higher than the national figure of 76.8%. There are three to four septic tank desludgers operating in the city but there is no septage treatment facility to treat the septage at this time. The city has seven hospitals, with a total bed capacity of 525, augmented by 86 health centers.

IV. ANTICIPATED ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES

A. DESIGN/ PRE-CONSTRUCTION PHASE CONSIDERATIONS

17. The subproject sites are residential, commercial, and institutional landscapes. There are no known archaeological and cultural assets in these sites. Nevertheless, precautions will be taken to avoid potential damage to any archaeological and cultural assets by inclusion of provisions in tender and construction documents requiring the contractors to immediately stop excavation activities and promptly inform the authorities if archaeological and cultural assets are discovered.

18. Potential nuisances and problems to the public during construction can best be avoided if proactively addressed during detailed design and pre-construction phase. Consultation and information dissemination to potentially affected people shall be done during preparation of the detailed design. Tender documents shall include provisions addressing potential nuisances and problems to the public during construction. These include environmental management provisions on the following issues: (i) erosion and sediment runoff, (ii) noise and dust, (iii) vehicular traffic, (iv) construction debris/wastes, (v) oil and fuel spillages, (vi) construction camps, and (vii) public safety and convenience. In addition, prior to site works, the contractor shall coordinate with the appropriate agencies in the procurement of required clearances with regard to electricity, telephone lines and other utilities/structures that may be affected by construction activities. These shall all be reflected in the construction contracts.

19. Based on the on-going resettlement program of the city covering all danger areas along the waterways, a total of 167 households along the Langihan Creek in Brgy. Obrero have been qualified for relocation in the resettlement site located in Brgy. Pagatpatan. The on-going resettlement program implemented by the City Housing & Development Office (CHDO) known as the Balangayan resettlement program should be implemented—including those currently residing along Langihan Creek, which is part of the proposed subproject. Out of the 167 households, CHDO reported that 100 households have already been relocated. The remaining households have been issued notices of eviction dated July 29, 2010. Successful completion of the relocation as scheduled would clear the area for the upgrading of the drainage system of the city.

B. CONSTRUCTION PHASE ENVIRONMENTAL IMPACTS

20. Dumping of construction debris/solid wastes in watercourses will cause a nuisance to the public aside from affecting the water quality and the flow regime. To prevent these conditions, the contractor shall be required to install the drainage lines within the shortest time possible and not to dump earth, stones, and solid wastes in watercourses to avoid adverse impact on water quality and flow regime.

21. Construction equipment, such as trucks, drilling machines and other equipment are

54 Appendix 2


potential sources of noise nuisance. Noise nuisance can be mitigated with the use of sound suppression devices for the equipment. In areas near any house or noise-sensitive sites, noisy equipment shall not be operated during nighttime to early morning (22:00H – 06:00H). Workers using noisy equipment shall be provided with earplugs.

22. Dust generation from trenching activities during dry periods will be an air pollution problem. Intermittent episodes of air pollution from smoke belching vehicles/equipment may also occur. Another potential source of air pollution are large stockpiles of construction materials such as soil and aggregates. To avoid fugitive dust at the construction sites, the contractor shall be required to perform regular water spraying of the sites during dusty periods in order to reduce the generation of dusts. He will also be required to use trucks/vehicles that have complied with the emission testing and equipment that are properly maintained. Covers for stockpiles that will be left idle for a long time shall be required. Trucks transporting loose construction materials such as sand, gravel, spoils, and the like shall be provided with tarpaulin cover.

23. Construction activities, such as pipelaying, may cause traffic congestion in heavily traveled highways and narrow streets. To avoid traffic congestions, the contractor shall be required to prepare a traffic plan, closely coordinate with local authorities for the closure of roads or rerouting of vehicular traffic, provide traffic enforcers in critical areas, such as areas near schools, public markets, etc, consider the schedules of local activities such as festivities, processions, etc. in the timing of construction activities, do proper stockpiling and immediate disposal of spoils to avoid nuisance and traffic/access obstruction, and do immediate restoration of roads and other areas affected by pipe laying, construction activities and vehicles.

24. Pipelaying along the roads may result to hazardous driving conditions. Movement of construction vehicles and excavations would pose some hazards to the driving public. There is also risk of people falling down in open trenches. To prevent accidents, the contractor shall be required to implement a road safety plan incorporated in his construction schedule. Safety measures shall be implemented including provision of warning signs to alert people of hazards around the construction sites, barricades, and night lamps for open trenches.

25. The contractor is expected to erect temporary workers’ camps during construction of the subproject. Improperly managed silt runoff and sanitary wastes from these camps may reach nearby areas. To maintain sanitation in the camp area, the contractor shall be required to install proper sanitary facilities, such as “Portalets”, implement proper solid waste management, and prevent surface runoffs from flowing into the workers camps. Where possible, useable materials from a construction site should be reused in other sites to reduce wastage and expenses. Implement the required surface restoration as early as possible.

26. Various construction activities for the subproject will definitely require a considerable number of workers. The impact would be beneficial and significant since employment opportunities in the area will increase. Whenever possible, the contractor shall be encouraged to use the available, and qualified local labor for the construction activities. The recruitment of workers shall be coordinated with the local officials.

C. OPERATION PHASE ENVIRONMENTAL IMPACTS

27. Upgrading of the drainage system will result in significant reduction in the flooding that has become a perennial problem in Butuan City. Habitats of disease vectors such as rodents and insects will be removed, and sanitation will generally improve. As a consequence, occurrence of water-borne diseases, particularly diarrhea, will decrease and the loss of productivity of the affected residents due to loss of working hours will also be reduced. Safety and welfare of affected homeowners and commercial establishments will also be enhanced.

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The new drains will generally increase the flow-carrying capacity of the drainage system, resulting in the reduction in the frequency of flooding and the extent of the affected areas.

28. The improvement of the Butuan drainage system will continue to discharge combined storm water and sewage into the Agusan Pequeño and Masao rivers that drain into Butuan Bay. The existing drainage system is also a combined system that utilizes the same outfalls; therefore, discharge of combined wastewater into the rivers is not new, but rather, a continuing impact.

29. It is expected that the operation of the proposed subproject will increase the volumetric discharge of combined wastewater and the concomitant pollution loading at the outfalls into the rivers. However, it is anticipated that the concentrations of the pollutants in the receiving water bodies will not significantly worsen because improvement in the conveyance of wastewater will prevent anaerobic condition along the drainage system that brings about deterioration in water quality. In the future, the city should consider septage treatment coupled with other sustainable options such as strict enforcement of the requiring for septic tanks. Installing a combined sewage-drainage interceptor-treatment system to treat the combined wastewater is also an option worth consideration by the city government.

30. Regular maintenance of the upgraded drainage system will provide employment opportunities for workers and laborers. Locally available labor will be tapped to provide the required manpower.

V. INFORMATION DISCLOSURE, CONSULTATION, AND PARTICIPATION 31. The process of assessment and prioritization of the subproject long-list culminated with a workshop held in Davao City on 3-4 March 2010. The workshop was attended by representatives from the central government agencies at regional level, the provincial LGUs, city and municipal LGUs, and NGOs, including some indigenous people groups. The Butuan City drainage system came up as a priority subproject to address the frequent flooding in the city.

32. Key information interviews were conducted during the socioeconomic survey on the Butuan City drainage in July 2010. A total of 271 households plus 10% of the commercial establishments in the flood prone barangay were covered by the survey. The interviews also covered flood damage, which allows for the evaluation of direct and indirect damage of flooding on residents and business establishments and other institutions.

33. On August 4, 2010, an FGD was conducted with the concerned city government officials to generate issues, concerns and reactions to the proposed subproject. Some of the issues raised include the resettlement of informal settlers along the major drainage area and the existence of the city resettlement plan that is being implemented by the city.

34. On October 5, 2010, a consultation workshop with the stakeholders was held in Butuan City to assess the acceptability of the proposed subproject to the affected residents, communities and businesses. Among those who attended were the officials of the city led by its mayor, representatives of the affected barangays, the business sector, the religious sector, NGO/ PO representatives, NCIP, DPWH, NEDA, DA, BFAR and DENR Region XIII. Among the concerns raised were the resettlement of informal settlers, strict enforcement of environmental laws on solid waste management, and effluent regulations, and the need for establishing vertical control elevation in urban barangay through city ordinance/executive policy. There was a general consensus that the upgrading of the drainage system should be pursued.

35. The summary of impacts and proposed mitigating measures were presented during

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the Draft Final Report dissemination workshop held at Grand Menseng Hotel in Davao City on November 25-26, 2010. The forum was attended by representatives from the LGUs, DENR Region XI, XIII, PENROs and CENROs, NCIP from the region and province, the academe and NGOs. The participants generally supported the upgrading of the existing Butuan drainage system. The issue on the impact on water quality of the receiving waterbodies was raised and it surfaced that the DPWH Caraga is preparing the design of a drainage and sewerage project for Butuan City. It was pointed out by the consultant that a sewerage system is the ideal solution to water pollution that may arise, but the cost such a system is high. If DPWH has funding for a sewerage system, then ADB might not fund it.

36. Subsequent public consultations will also be held by the city government preparatory to the preparation of the detailed engineering design of the drainage subproject. Views of the stakeholders will be considered in the overall design process. Stakeholders’ consultations shall be continued throughout the duration of the construction phase. The city government shall keep records of environmental and social complaints, received during consultations, field visits, informal discussions, and/or formal letters, together with the subsequent follow-up and resolutions of issues.

VI. GRIEVANCE REDRESS MECHANISM

37. When the project is about to be implemented, the Office of the City Mayor shall form an ad-hoc Butuan Drainage Environmental Committee (BDEC) to be chaired by a representative from the Office of the Mayor. Members shall include construction manager or onstruction superintendent, barangay officials, concerned NGOs, and women’s organizations. Complaints about environmental performance of the subproject during construction will be handled by BDEC, while complaints during the operation phase can be brought to the attention of the City Engineer’s Office or the office of DENR-Region XIII. Creation of the BDEC and its operation shall be included in appropriate sections of the civil works contract.

VII. INSTITUTIONAL ARRANGEMENT AND ENVIRONONMENTAL MONITORING

38. DENR is the executing agency, while the Butuan City government is the implementing agency. DENR has overall responsibility for project coordination, implementation, and liaison with ADB and other government offices. DENR will establish a Project Management Unit (PMU) to coordinate implementation, including procurement of goods, works, and services. A PMU staff shall be designated as the Environment Officer for the project. At the subproject level, the city government will be responsible during construction and operation phase of the subproject. During the construction phase, the city shall establish a Project Management Unit (PMU) to work closely with DENR’s PMU.

39. During the construction period, the construction supervision consultants, together with the PMU, shall prepare monthly environmental monitoring reports to be submitted to the DENR-PMU. Based on the monthly reports, the PMU shall prepare semi-annual environmental monitoring reports, which shall be submitted by DENR to ADB. The environmental monitoring plan is presented in Appendix B.

40. Project performance monitoring provides indications of the desired outcomes as measurable events by providing parameters or aspects that can be monitored and verified. Tendering process advocating environmentally responsible procurement is a desired outcome during the pre-construction phase. This can easily be verified by checking if EMP requirements are incorporated in construction contracts. Construction phase desired outcomes include effective management of environmental impacts and reduce risk to public. For the operation phase, the upgrading of the drainage system shall increase the flow-

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carrying capacity of the drainage system resulting in the reduction in the frequency of flooding and the extent of the affected areas, thus reducing the flood damages.

41. Under the Procedural Manual of DAO 03-30 and the Memorandum Circular No. 2010-14 of the DENR, environmental enhancement and environmental mitigation projects such as preventive measures against natural hazards, are not required to secure ECC; instead the city government may apply online for a Certificate of Non-Coverage under the DENR’s Automated Processing System.

VIII. CONCLUSION AND RECOMMENDATIONS 42. Overall, the proposed Butuan City drainage subproject will benefit the city government of Butuan by upgrading its existing drainage system that will reduce flood damages and improve the general safety and welfare of the residents and commercial establishments in the CBD.

43. Based on the screening for potential environmental impacts and risks of the proposed subproject, there are no significant negative environmental impacts and risks that cannot be mitigated. There is no need for further environmental assessment study. A full EIA is not warranted and the subproject’s environmental classification as Category B is deemed appropriate. The IEE shall therefore be finalized as the final environmental assessment document of the proposed subproject.

44. Implementation of the proposed Butuan City Drainage subproject is hereby recommended with emphasis on the following: (i) EMP of subproject shall be included in the design process; (ii) Contracts of design consultants shall have provisions requiring the consultants to consider EMP recommendations in the design process; (iii) Tendering process shall advocate environmentally responsible procurement by ensuring the inclusion of EMP provisions in the bidding and construction contract documents; (iv) Contractor’s submittal of a CEMP shall be included in the construction contract; (v) Contract provisions on creation and operation of the BDEC shall be included in construction contracts; (vi) DENR, with its regulatory function, shall ensure that the EMP is implemented; and (vii) the city government shall continue the process of public consultation and information disclosure during detailed design and construction phases.

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Appendix A: Components of the Butuan City Drainage Subproject

Source: PPTA Consultant, 2010.

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Appendix B: Environmental Monitoring Plan of the Subproject

Aspects /

Parameters to be monitored

Location Means of Monitoring

Frequency Implementa-tion Respon-

sibility

Compliance Monitoring

Responsibility

Monitoring Cost

Pre-Construction Phase Specific provision in tender documents on archeological/ cultural relics

Drainage line trenches, civil works excavations

Verify draft and final documents

Twice – draft and final documents

Design consultants

PMU – City Engineer’s Office

Part of project management in detailed design (minimal cost)

Consultation meetings; Specific provisions in tender documents on nuisance & problems to public

Drainage line routes

Verify meetings documentation; Verify draft and final documents

After completion of meetings; Twice – draft and final documents

City Engineer’s Office, Design consultants

PMU- City Engineer’s Office

Part of project management in detailed design (minimal cost)

Construction Phase Noise levels not to exceed 50 dBA near school, 55 dBA in other areas, and 45 dBA during nighttime


Use of sound level meter

Daily Contractor Construction supervision consultants, PMU-City Engineer’s Office

Part of consultant’s construction supervision contract; minimal cost to PMU

Dust, cover of stockpiles, smoke belching



Daily Contractor Construction supervision consultants, PMU-City Engineer’s Office


Road closure and traffic rerouting; materials stockpiles; road restoration


Traffic plans verification

Weekly Contractor Construction supervision consultants, PMU-City Engineer’s Office


Sanitary toilets, garbage bins, runoff controls

Workers camps Visual inspection of camps

Once before start of construction and once monthly

Contractor Construction supervision consultants, PMU


Road safety plan; sign, barricades and night lamps



Daily Contractor Construction supervision consultants, PMU


Construction debris/wastes



Once before final stage of demobiliza-tion

Contractor Construction supervision consultants, PMU


Number of local labor employed

Construction sites

Verification of contractor’s records

Once a month

Contractor PMU No cost

Operation Phase pH, BOD, TSS, Total coliforms, Oil & Grease, DO

Drainage outfalls, upstream and downstream stations

Water sampling and laboratory test

Quarterly City ENRO DENR-Reg. XIII Part of City ENRO’s operation cost (PhP120,000 /year)

Septic tank of water consumers

Subproject service area


Once a year LGU-DOH City ENRO Minimal cost

Source: PPTA Consultant, 2010.

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C. SUMMARY INITIAL ENVIRONMENTAL EXAMINATION OF THE AGUSAN MARSH SUBPROJECT

1. INTRODUCTION

1. Conserving the Biodiversity of the Agusan Marsh Wildlife Sanctuary is a sub-project of the Agusan River Basin Integrated Water Resources Management Project, the majority of which will be funded in part through a GEF grant. The Agusan Marsh sub-project is located in eight municipalities of Agusan Del Sur on the island of Mindanao, Philippines, surrounding the Marsh. Agusan Marsh has a total area of over 111,000 ha, of which the enlarged Agusan Marsh Wildlife Sanctuary will have an area of about 40,000 ha.

2. The Agusan Marsh sub-project is essentially a biodiversity conservation and livelihoods project requiring a process approach in its implementation with much of the detailed design of activities being developed in consultation with the key stakeholders and communities living in the Marsh. It also requires adaptive management both of the activities and in the overall management of the Marsh’s biodiversity.

3. This IEE considers the environmental and social impacts of the Agusan Marsh sub-project. As is to be expected in an assessment of a project that is focused on conservation and environmental improvement, linked with livelihood enhancement, the impacts are expected to be generally positive, with negative impacts often arising out of failure of the initiatives rather than from the initiatives themselves. In this respect the IEE takes the form of an assessment of opportunities and risks, rather than a strict assessment of impacts. The resulting EMMP focuses therefore on monitoring and management of these risks.

4. The IEE was developed by the PPTA Team between August and October 2010, in collaboration with the PASu (Protected Area Superindent) office, and following extensive consultations with all the municipalities and communities living in and around the Agusan Marsh. Their assistance and ideas in developing the sub-project and assessing the impacts is appreciated.

2. DESCRIPTION OF THE PROJECT

5. Conserving the Biodiversity of the Agusan Marsh Wildlife Sanctuary is a sub-project of the overall Agusan River Basin Integrated Water Resources Management Project, which has 4 major components – 1) Watershed rehabilitation and biodiversity enhancement, and indigenous people development 2) Infrastructure development, 3) Institutional development and capacity building, and 4) Project management and implementation support. The Agusan Marsh sub-project falls into Component 1, which also includes initiatives such as the upperbasin watershed rehabilitiation (Upper Agusan and Manat watersheds), rehabilitation of the Naboc river, including addressing the gold mining pollution issues in Diwalwal.

6. The Agusan Marsh sub-project is aimed at sustainable management of the natural resources of the marsh and has the following components:

(i) Species and Habitat Protection and Rehabilitation, which includes the delineation of at least 8 Special Protection Zones within the wider Multiple Use Zones of the Wildlife Sanctuary designed to provide protection for representative habitats of the Marsh, which may also be critical for the survival of endangered species, such as the crocodiles. The component will also establish conservation actions for key species, and address the problems of alien invasive species. It will also seek to learn from the lessons of earlier reforestation attempts in revegetaion and planting of degraded areas, especially river banks. It also includes enhanced biodiversity and environmental monitoring within the Marsh.

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(ii) Capacity Building addresses the issues of lack of capacity amongst key stakeholders for the management of the Marsh, and in particular providing training for local people providing services for the ecotourists visiting the Marsh.

(iii) Communication, Education, Participation and Awareness (CEPA) attempts to raise the awareness of the importance of the marsh as a wetland ecosystem, both for residents of the Marsh, local people in the surrounding municipalities, and domestic and international visitors. It involves the construction of a Wetland Educational Centre at the existing PASu site, rehabilitation of the existing visitor accommodation and rehabilitation of the all weather access road from the main road to Mambalili in Bunawan.

(iv) Health, Water and Sanitation addresses livelihood and health issues of the IPs residing in floating houses in the Marsh. Rainwater collection systems will be developed for use by up to 5 households; 147 units will be installed within the floating villages. Similarly floating septic tanks have been designed to be fitted to serve floating houses, and a similar number of units will be installed in the same villages. The two existing floating health clinics will be rehabilitated and staffed through the provincial health department.

(v) Ecological Solid Waste Management will be provided for two barangay in each of the eight municipalities surrounding the Marsh based upon a successful solid waste management system already working in Veruela. This consists of establishing MRFs (materials recycling facility) in each barangay, collection and recycling of the glass and plastics at a plastics melting unit serving all the municipalities, and safe disposal of the hazardous domestic waste fraction.

(vi) Nature Tourism Activities The ecotourism development is intended both for raising araweness and enjoyment of the Marsh and as a livelihood alternative for local residents. The activities will provide a hub at the Wetland Educational Centre at Mambalili from which a series of ecotourism loops will be developed through the marsh, with floating visitor centres and 3 floating cottages at three of the lakes, provision for kayaking and birdwatching, and the construction of a 1,500m boardwalk to the heart of the Caimpugan Peat Dome. The feasibility of an exclusive floating eco-lodge resort in the Marsh will be investigated with a private tour company.

(vii) Climate Change Mitigation and Adaptation This component focuses on raising the awareness of the importance of the peat swamp areas for mitigating climate change, and enhancing the adaptation that is already very evident in peoples lives in response to climate changes, e.g. increased flooding.

7. The sub-project addresses environmental conservation issues within the Marsh, but the integrity of the Marsh is equally determined by deforestation and land use change outside the Marsh, affecting its hydrology and erosion, and activities such as gold mining in the upper parts of the catchment that increase sediment transport and heavy metal contamination. Other sub-projects in the upper catchment are essential for dealing with these issues, and one of the biggest risks is that failure to address these external issues will undermine the efforst to conserve the Agusan Marsh ecosystems and its biodiversity.

8. Likewise the Marsh provides critical ecosystem services for the river basin as a whole, in addition to being a reservoir and sanctuary for biodiversity. Without the ecosystem integrity of the Marsh, its role in flood mitigation and management downstream would be seriously impaired, with implications for Butuan City and other towns downstream. The Marsh also acts to purify the waters coming from the catchment, acting as a sink for heavy

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metals, and for the deposition of sediment. The peat swamps are also significant carbon sinks, and contribute to mitigation of climate change.

3. DESCRIPTION OF THE ENVIRONMENT

9. The Agusan Marsh is located in the central floodplain of the Agusan River Basin at an elevation of about 20 m above sea level. It extends for about 110 km of the river channel and covers a total of about 111,540 sq km.

10. The Marsh lies in nine municipalities of Agusan del Sur, mostly in Bunawan and La Paz, with the peat swamp area shared between Talacogon and San Francisco. Eight of the main tributaries of the Agusan River drain into the Marsh, expanding the flows in the river from 78 m3/s to 283 m3/s within a distance of about 30km.

11. An area of 19,196 ha of the Agusan Marsh was declared a Wildlife Sanctuary under NIPAS in 1996, and this was designated as a Ramsar wetland site of international importance in 1999. There is currently a proposal, pending central government approval, for extension of the protected area to cover 40,868 ha with two zoning categories.

12. The climate of the Agusan Marsh is monsoonal characterized by rainfall throughout the year, but with pronounced maximum rainfall between November and January. A total of 4,286 mm of rainfall has been recorded in the Marsh. The average temperature and humidity is 25.6oC and 86% respectively.

13. The Marsh lies in a depression, with flat topography, with areas such as the peat dome rising to about 30 masl. The soils are generally alluvial, with clay and sandy loams.

14. The flows in the river through the Marsh are relatively constant throughout the year, but with higher flows in December and January, when the water levels can rise by up to 4 m. As the floodwaters recede in May, the open waters are confined to the channels, oxbow lakes and ponds. Peak flows can be significantly greater than the mean monthly flows. The Marsh plays a significant role in absorbing flood waters, reducing the magnitude of the downstream peak discharge to 30% and delaying its onset.

15. The watershed above the Marsh is suffering from severe environmental problems—deforestation, soil erosion, siltation of the river channels and irrigation systems, and contamination of the water and sediments from small-scale gold mining and processing in many of the upper tributaries, particularly in the Naboc, Manat and Upper Agusan watersheds. A growing population in the mining areas has brought problems of bacterial contamination and organic pollution of the river.

16. The water quality of the river reaching the Marsh varies with the season, carrying higher total suspended and dissolved solids in the flood season. The dissolved oxygen in the Marsh is relatively high, and the BOD tends to increase as the river flows through the Marsh. The level of mercury in the sediments and in the water is an area of considerable concern, and there is evidence of bioaccumulation of mercury in both plant and fish tissues. Nutrient levels, especially phosphate, tend to be high and there is concern about run-off from agriculture affecting the water quality; however, contaminants from agricultural chemicals have not yet been measured.

17. The Marsh is a biodiversity hotspot in the Philippines which is itself a megabiodiversity country. The Agusan River Basin forms a part of the Eastern Mindanao Biodiversity Corridor and the Agusan Marsh Wildlife Sanctuary is one of three protected areas within the basin.

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18. There are seven different wetland habitats in the Marsh: open water ecosystems including oxbow lakes, floodplain lakes and ponds; flowing waters, such as the Agusan River and its tributaries and the creeks which flow in two directions depending upon the height of water in the Marsh; herbaceous swamps, scrub swamps, swamp forests, with Terminalia, peat swamps with pygmy forests, sago forests and mixed swamp forests; and river bank habitat and inundated forests. The swamp forest is most extensive, covering over 50% of the area, followed by peat swamp, rivers and lakes, and agricultural fields.

19. The biodiversity of the Marsh is rich, with over 192 species of vascular plants, of which 16 are endemic to the Philippines and 11 considered threatened. A total of 59 species of aquatic insects, spread widely over the whole Marsh, 44 species of fish have been recorded, of which one species of carp is endemic to the Marsh itself. However, the most abundant species are all introduced species and one, the janitor fish, an increasingly problematic invasive species.

20. There are 33 species of amphibian in five families, of which 17 are endemic to the Philippines, 10 to Mindanao and 12 species considered to be threatened. There are 53 species of reptiles of which 34 are endemic to the Philippines and 11 to Mindanao. Six of the reptiles are extremely rare and threatened, including two species of crocodile, and two species of turtle. There are three locations in the Marsh where the crocodiles breed.

21. A total of 198 species of birds have been recorded, 67 are endemic to the Philippines. Ten are considered threatened. Forty six of these species have economic importance, and hunting and trapping of birds may be a cause for concern. There are 28 species of mammals of which 15 are endemic to Philippines. There six species of bats including some significant colonies of endangered fruit bats in the Marsh. About 12 invasive alien species are present in the Marsh, including water hyacinth, janitor fish and golden apple snail.

22. The Marsh exhibits many of the key wetland ecosystem services, including flood control, sediment and nutrient retention, water purification, rich biodiversity and wetland products, its cultural values for the Manobo people, the potential for recreation and toruism and its contribution through the peat swamps to carbon sequestration and climate change mitigation.

23. Because of these features, the Marsh has been established as a Wildlife Sanctuary, with a specific management plan, designated as a Ramsar site and with an application pending as a UNESCO Natural World Heritage Site.

24. In terms of human populations, the eight municipalities surrounding the Marsh, with 61 barangay lying within the Marsh area, have a population of about 118,000 people, and 21,600 households with an average size of 5.5 persons per household. The people living in and using the Marsh fall into three classes: (i) those that live permanently on floating houses mainly on the main rivers, (ii) those that livce in the marsh during the dry period and who move out in the flood season, and (iii) those that live permanently on the periphery, but who come into the Marsh on a daily basis.

25. The floating houses are a characteristic feature of the Marsh. Most of the hosues are built of light materials. There are about just under 3,000 floating households currently in the Marsh.

26. The IP population in the municipalities surrounding the marsh makes up about 26.5% of the population. However, the majority of the people living in the Marsh are of the Manobo ethnic group. These people generally depend upon farming and fishing as their main form of livelihood. However, the various indicators of poverty show that the people living in the Marsh

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municipalities are generally poorer than the rest of the country. Poverty levels increase with distance inside the Marsh. However, the IPs have a different perspective on poverty and do not consider themselves poor if they have access to natural resources on which they depend. Indicators of public health, education, etc., are generally lower than the national averages and access to facilities is more difficult. There is about 50% adult literacy, and while 90% of children attend primary school only 50% attend secondary schools.

27. Some of the areas in the Marsh are considered sacred by the Manobo peoples, including several of the lakes and the Caimpugan Peat Dome. Most of the Marsh lies within Manobo ancestral domains, although the buffer zones have also been settled by migrants.

28. In terms of economic development, Route 16 is the main arterial road, running along the eastern side of the Marsh. Access to the western side of the Marsh is limited by poor local road infrastructure. Access into the Marsh is by pump boat, usually from Bunawan or Talacogon, linking to the other municipalities on the western side.

29. Agriculture development in and around the Marsh has been progressing, with some conversion of swamp areas to rice fields, and with dual cropping of rice in the wet season and corn in the dry season along the river banks. There is some irrigation facilities in some of the municipalities, e.g. Veruela, and Rosario.

30. In recent years oil palm plantations have increased, generally through conversion of rice fields, especially in the north-eastern and south eastern peripheries of the Marsh. There are some 12,000 ha of commercial oil palm production and two processing plants in the surrounding municipalities, and with small-scale producers, a total of 16,517 ha of oil palm. These changes are clearly reflected in land use over the past ten years. Other important crops include banana and durian, which are mostly produced by small holders.

31. The connection to electricity in the municipalities is increasing, but is limited in the villages in and around the Marsh. Most villagers use fuelwood or charcoal for cooking.

32. There is no mineral development inside the Marsh, although there is sand and gravel extraction in the surrounding areas, and small-scale gold mining in the watersheds in Compostela Valley and in Rosario. The waters from these all lead into the tributaries and thence into the Marsh.

33. At present, tourism development in the Marsh is just beginning, and a visitor reception area has been established in Bunawan with another entry and exit point in Talacogon, and with three floating visitor centres in different lakes. The number of visitors is still very limited, but the potential for eco-tourism has been clearly identified by the municipalities and include river cruise, lake hopping, kayaking, birdwatching and cultural tourism. There are a number of festivals in each of the municipalities which feature local IP culture.

34. Water supply in the municipalities is limited—San Fransico has the highest numbers of people served, covering only 25% of households. Inside the Marsh, water supply is generally from the openwater lakes and rivers, at locations where the water is traditionally know to be safe. Drinking water for sale is also available. Some households and public buildings with galvanized rooves have installed rainwater collectors.

35. Sanitation in the Agusan del Sur municipalities is generally higher than the national average, but in the marsh municipalities there is a much lower coverage of sanitation. Inside the Marsh communities, the normal practice is defecation directly into the water, exposing the openwater supplies of drinking water to serious bacterial contamination.

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36. Solid waste management in the municipalities around the Marsh is variable, with some outstanding models of materials recovery, collection and rcycling, e.g. in Veruela, and, while all municipalities have solid water management plans, the implementation has not been encouraging. It is estimated that by 2011, the total waste generated from the eight municipalities would be about 106 tons per day, including about 31 tons of plastics. The quantities of solid wastes by people living in the Marsh are generally small but during the flood season the dispersal of plastics in river banks and trees in the Marsh generally comes from communities outside the Marsh.

4. FORECASTING ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES

37. The Agusan Marsh sub-project does not fit well with any of the sectoral projects considered under the ADB screening checklists, although the checklists for forestry, water supply, sanitation and solid waste management projects have all been considered. For these, the main consideration is that the sub-project is located within a protected area of wetlands, and a special area for conservation of biodiversity.

38. All of the interventions of the sub-project are aimed at conservation of biodiversity, improvement of the environmental conditions in the Marsh and providing alternative forms of livelihood for the residents. The opportunities and risks associated with the components of the project have been considered.

39. Management zoning into special protection zones focused on relatively small key areas of importance for conservation will have an important role in conserving both habitats and certain species (e.g. crocodiles, bats and bird nesting areas). However, these are areas that have been traditionally accessed by local people living in the Marsh for hunting, fishing, collection of fuel and fibre, and for ritual purposes. Under the SPZ (special protection zone) rules, the use for ritual is allowed, but other activities mentioned would be prohibited. The delineation of SPZs would therefore have a potential impact upon livelihoods depending upon the extent of the usage. In order to minimize this impact, the following principles are suggested:

Choice of exact area to be negotiated with users, i.e. areas where access is difficult and far from communities.

Avoidance of areas where physical resettlement would be required.

Relatively small area, e.g. not more than 10% of representative habitat.

Creation of such SPZs provides a sanctuary for natural resources allowing increased yields, e.g. of fish, to be caught in the surrounding areas.

Compensation may be negotiated if there is clear evidence of loss.

40. In-situ species conservation plans may target key species in addition to conservation of their habitats. This may include enforcement of wildlife regulations as well as active measures to encourage certain feed plants, reducing invasive species etc. These are not expected to have associated risks or adverse impacts. Invasive species to be targeted include the water hyacinth and the janitor fish, considering ways of use of these invasives as a means to control.

41. Revegetation and reforestation attempts in the past have not been very successful, with seedlings being lost especially during floods. Lessons will have to be learnt from this in this component of the project, aimed at revegetating degraded areas, e.g. along the river banks. Only indigenous species should be used in locations where they are most likely to survive.

42. There are a number of risks and opportunities from the development of ecotourism,

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which include inappropriate infrastructure, disturbance of natural resources and communities by increased numbers of visitors and the risks of failure by not attracting enough visitors to make the effort economically viable, leading to disappointment.

43. Apart from the permanent building for the wetland educational center to be located on the existing 2-ha PASu site at Mambalili, all of the other infrastructure in the Marsh, will be floating or temporary structures that can be moved or reused. Concrete structures will not be allowed. The floating structures will have vernacular design in keeping with the characteristic floating houses. The location of these floating structures will be chosen with sensitivity to the situation, and all visitor accommodation will be fitted with floating septic tanks to the project design. All solid wastes generated by visitors would be removed from the Marsh.

44. The disturbance of the marsh environment by tourists is not considered to be significant. The largest number of people is expected to come to the wetland educational center at Mambalili, and is unlikely to be more than 1,000 people in a day. Only a small proportion of these people are expected to visit the inside of the Marsh, with perhaps 100 people at Bunawan and 50 persons from Talacogon. Thus the numbers of people likely to be visiting the Marsh at any one time has been estimated at not more than 150 persons in a day, spread over the whole area. In addition, visitor accommodation for overnight stays might be up to a total of 45 persons in three locations. These numbers are not considered to cause disturbance of either wildlife or local communities, but visitor rules will be negotiated with local residents, and scheduling of boat trips can manage the visitor pressure on specific locations.

45. In addition, the feasibility of establishing an exclusive eco-lodge at Lake Panlabuhan will be considered and concession agreement with a tour operator negotiated if such an initiative looks possible. This would probably be sized to allow for up to 25 visitors, with the facilities expected of such resorts. If it is likely to be developed, the proposal would be subjected to a specific IEE.

46. The Caimpugan peat dome boardwalk will introduce visitors to the peat dome and emphasise its importance. The boardwalk will be 1,500 m long and require clearance of undergrowth about 2 m wide. The main risk associated with such a boardwalk will be the increased access for local people into the heart of the peat swamp, which may lead to increased hunting, tree cutting and degradation along the boardwalk corridor. This will have to be managed in discussion with the local community.

47. The access road to the Mambalili wetland education center is currently in a very poor state of repair and will need to be rehabilitated by the Bunawan LGU to its original all-weather cover. The road is 2.3 km long and about 3 m wide. An initial walk-through assessment has shown that there are no permanent structures that would have to be removed for this rehabilitation, all of the roadside houses being 5 m or more from the road.

48. The risk of failure of the eco-tourism venture could lead to disappointment of the local municipalities and the Marsh residents who had expected to gain an alternative source of livelihood. If eco-tourism is to be developed in this situation, it must be accompanied by effective marketing and promotion, coupled with the provision of adequate facilities and the training of local service providers—guiding, food and accommodation.

49. The floating sanitation units will have an immediate positive impact upon the water quality and safety around the floating villages. The risk lies in the failure to maintain the units and to remove the septage on a regular basis—every 3–4 years. Regular cleaning and maintenance for these units shared between five households will require management, without which the units will degrade and not be used. Regular removal of the septage

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requires commitment from the LGUs, including the provision of a budget to service these units. Failure to do this will result in inefficiencies and blockage of the septic tanks and reduced quality effluents.

50. Rainwater harvesting systems will provide a safe source of drinking water for floating households. There is no adverse impact associated with these, although units that are located in prominent positions may be screened to reduce the visual impact of the bright blue PVC tanks and galvanized rooves that appear alien to the natural floating house architecture.

51. The ecological solid waste management to be promoted in the barangay around the Marsh will also have a positive impact on the quantities of solid waste reaching the Marsh, especially plastics. This will reduce the pollution and visual impacts of plastic bags in the trees. The main risks come from failure of the system, when materials recovery from the barangay cease because of technical or financial problems, and the soild wastes accumulate in the villages. Again commitment is required from the LGUs to maintain the service and provide adequate budget for this. The safe disposal of domestic hazardous wastes needs to be done with care according to appropriate guidelines, and the design and location of the plastics melting facility will also require care and appropriate environmental management measures.

52. The socio-economic impacts generally are considered to be positive, although the delineation of the SPZs may result in some loss of access to livelihood resources. Users that are directly affected by this will have to be included in the delineation process and rules for access and compensation if required agreed. The positive benefits of establishing such sanctuaries should be assessed.

53. The ecotourism development has the potential for providing employment or a supplementary source of income for many of the residents of the Marsh in different ways. However, the numbers of visitors are likely to be small and eco-tourism that is consistent with the conservation of such an area with unique biodiversity can in reality only be considered as an alternative livelihood supplement.

54. The other initiatives, such as sanitation and safe drinking water supply, will contribute significantly to the health of the floating communities. Both of these initiatives need to be developed in close collaboration with these communities.

5. INSTITUTIONAL REQUIREMENTS AND ENVIRONMENTAL MONITORING PLAN

55. The overall project proponent is DENR, and the Agusan Marsh sub-project would be implemented by the Agusan del Sur PENRO through the Agusan Marsh PASu, based in Bunawan.

56. The LGUs from each of the eight municipalities surrounding the Marsh would also play a significant role in implementing especially the water supply, sanitation and solid waste management aspects and in the ecotourism development.

57. The implementation and effectiveness of the project and its environmental management would be overseen by the AMWS PAMB which includes all the key stakeholders of the Wildlife Sanctuary.

58. The various measures to be taken to manage or mitigate the identified environmental considerations are all part of the process of the Agusan Marsh sub-project, including extensive consultation with local residents of the Marsh.

59. The monitoring of the implementation and effectiveness of the environmental

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management measures would be part of the project itself, which includes both an extension of the existing biodiversity monitoring and water and environmental quality monitoring. These are all included in the project costs.

6. PUBLIC CONSULTATION AND DISCLOSURE

60. The Agusan Marsh sub-project has been the subject of extensive public consultation during the PPTA, including a series of Focus Group Discussions with each of the municipalities and stakeholder representatives. The findings of these discussions provide important insight into the resources and significance of the Marsh, which can serve as a baseline of local knowledge.

61. The sub-project has been developed through a series of consultations with a variety fo stakeholders, who have been clearly identified.

62. The sub-project is based upon the many of the activities specified in the AMWS Management Plan 2005–2010. The proposal has been presented to the Agusan Marsh Wildlife Sanctuary PAMB and its components approved.

63. Under the Philippine Environmental Impact System, the sub-project is considered to fall under a Group II classification. Because it is located within an Environmentally Critical Area (ECA)—the Wildlife Sanctuary, a habitat for endangered speices of indigenous Philippine wildlife and an area that is traditionally occupied by cultural communities—it requires special attention. The project proponent will have to complete an IEE checklist and apply to the Regional Department of Environment and Natural Resources for an ECC.

64. The main component of the subproject requiring impact analysis is the ecotourism development. It will not cover an area of more than 25 ha and so does not get classified as a Group I development. The ecotourism development will be dispersed throughout the Marsh, and the only permanent infrastructure would be on an existing 2 ha site. The proposal for an exclusive eco-lodge at Lake Panlabuhan would be the subject of a specific IEE.

7. FINDINGS AND RECOMMENDATIONS

65. Under both the ADB and Philippine screening processes outlined above, it is considered that the Agusan Marsh sub-project falls under a Class B for ADB and a Group II within an Environmentally Critical Area. Since the subproject lies within the Agusan Marsh Wildlife Sanctary and is directed at enhancing biodiversity management and environmental management within it, an IEE is required, together with appropriate environmental management measures. This IEE covers these requirements and identifies the principal social and environmental concerns.

66. The project activities are aimed at enhancing biodiversity through establishing SPZs, which may have an impact upon the access of local people living in the Marsh, and using natural reseources in these areas for their livelihoods. The delineation of these areas will be done in close consultation with these local users, aiming to choose relatively small areas which will have least impact upon these uses, and which may actually enhance yields of natural resources in the surrounding areas. Where appropriate, compensation may be negotiated depending upon the current level of use of the actual area to be delineated, which is as yet not determined.

67. The other conservation type activities include the development of species conservation plans targeted at endangered species, e.g. crocodiles and turtles. In addition the effects of alien invasive species, such as water hyacinth and janitor fish, will be addressed through specific actions. These are not expected to have adverse social or

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environmental impacts.

68. Revegetation and tree-planting will also be undertaken in some of the degraded areas, e.g. along river banks, ensuring that the lessons are learnt from the failures of tree-planting in the past, through choice of appropriate species and siting of the areas to be replanted.

69. Many of the activities will be undertaken in collaboration with local people living in the Marsh. A key component of the sub-project will be CEPA (communication, education and promotion awareness). This will address awareness-raising and serve to strengthen the interest and commitment of local people in conservation of the Agusan Marsh and its natural resources.

70. The key subproject component that raises the profile of the biodiversity of Agusan Marsh and can provide an alternative contribution to local livelihoods is eco-tourism. It is considered that the ecotourism infrastructure and activities will have a low impact upon the environment, and will not cause permanent damage. All the infrastructure facilities proposed within the Marsh itself will be floating and can be removed or reused easily. The construction of a permanent Wetland Exhibition Centre is identified on the existing PASu site, and this will act as the hub for all visitors. Only a relatively small proportion of the visitors are expected to take the boat trips out into the main body of the Marsh, and provision will be made for a small number of vistors wanting to stay overnight. Disturbance to both wildlife and local residents by the visitors is not expected to be significant and can be managed through appropriate rules and scheduling of boat trips.

71. A 1,500 m board walk into the Caimugan peat dome will increase access into this peatland for visitors, but this could increase the exploitation of natural resources in the area around the walkway, thus leading to degradation of the immeadiate environment. This impact would have to be managed in consultation with local residents.

72. The potential for a small, exclusive floating resort at one of the lakes will be explored with a tourism operator. The specific impacts of this would have to be the subject of an impact assessment (IEE) when further details are known.

73. Three other health related components are proposed. These are rainwater collection systems for the floating communities, a floating septic tank system to provide sanitation for the floating communities, and the extension of already proven solid waste recycling and disposal in the barangay around the Marsh. These have the potential to reduce pollution and feacal contamination in the waters of the Marsh, and to reduce the extent of plastic litter and other soild waste washed into the Marsh during floods.

74. The principal risks of these three initiatives aimed at improving local environmental conditions arise when there is failure of the systems, or lack of finance to continue servicing the sanitation and solid waste management systems.

8. CONCLUSIONS

75. In conclusion, the proposed Agusan Marsh sub-project consists of a number of initiatives aimed at improving the quality of the environment of Agusan Marsh Wildlife Sanctuary, maintaining its unique biodiversity, raising the awareness of its importance of both the local IP residents and visitors to the Marsh and providing alternative forms of livelihood through ecotourism.

76. These initiatives are focused on improving the conditions within the Marsh itself. The integrity of the Marsh, however, depends upon ensuring that environmental degradation and

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pollution upstream in the Agusan basin are addressed. External influences on hydrology and heavy metal contamination could seriously impair the ecosystem services provided by the Marsh in terms of its biodiversity and natural resource productivity, hydrological services in terms of flood mitigation and groundwater recharge, water purification and carbon sequestration. The other components of the Agusan River Basin IWRM sub-projects begin to address these issues in terms of watershed management and control of mine processing effluents.

77. The Agusan Marsh sub-project does not fit neatly into the different categories of project requiring environmental impact assessments. The components are relatively small in themselves and dispersed throughout the Marsh. However, because of its presence in a protected area, the sub-project is considered to be a Group II project within a Critical Environmental Area, the Agusan Marsh Wildlife Sanctuary, and thus requires an IIER to be presented to the EMB Regional Office for approval. In this case the project proponent would be PENRO office of Agusan Del Sur in collaboration with the LGUs of the eight municipalities surrounding the Marsh. This is also consistent with the ADB categorization of a Category B project under the ADB classification system.

78. The IEE report presents an initial assessment of the environmental and social impacts, which is considered to be the basis for the IEER to be presented for approval, together with the identified institutional responsibilities and monitoring requirements. If the concept of an exclusive resort at one of the locations within the Marsh is considered feasible, a supplementary IEE will be required.

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12. Involuntary Resettlement Assessment and Measures

RESETTLEMENT FRAMEWORK

I. General Background 1. ADB considers resettlement involuntary “when displaced individuals or communities do not have the right to refuse land acquisition that results in displacement.” It recognizes that involuntary resettlement, if unmitigated, could result in severe economic, social and environmental risks. It therefore seeks to i) avoid involuntary resettlement wherever possible, ii) minimize involuntary resettlement by exploring project and design alternatives, iii) enhance, or at least restore, the livelihood of all displaced persons in real terms relative to pre-project levels and iv) improve the standards of living of the affected poor and other vulnerable groups (Safeguard Policy Statement 2009, Appendix 2).

2. For a project involving involuntary resettlement, a resettlement plan (RP) will be prepared that is commensurate with the extent and degree of the impacts. The degree of impacts shall be determined by (i) the scope of physical and economic displacement, and (ii) the vulnerability of the affected persons.

3. The ARBIWRMP is a package of institutional and infrastructure interventions that aims to address the problems of watershed degradation and deteriorating river water quality in the Agusan River Basin. Building on the recommendations of the Master Plan Final Report (May 2008) that was prepared to recommend priority projects, the ARBIWRMP investment package seeks to strengthen the institutional basis for coordinated development and management of the basin’s resources and enhance the management capacities of the relevant institutions. The largest amounts are devoted to flood management, water resources development and watershed management programs.

4. The Agusan River Basin Integrated Water Resource Management Project involves several components or sub-projects, some of which have potential IR impacts. Each sub-project with anticipated resettlement impacts shall prepare a sub-project resettlement plan (RP) based on this resettlement planning framework.

5. The Resettlement Planning Framework presents the strategies and mechanisms for implementing the Project’s safeguard policies on involuntary resettlement (IR) based on Philippine laws and ADB policy. The specific measures for addressing involuntary resettlement issues are spelt out in a resettlement plan (RP). The resettlement framework shall guide the preparation of such a plan by laying down the principles and policies to be observed, the legal bases for these policies, the objectives of the safeguard interventions, the bases for determining entitlements and compensation, the institutional arrangements and activities for implementing the safeguard policies and the mechanisms for monitoring the achievement of the resettlement objectives.

6. Among the sub-projects being proposed for implementation which could result in some physical displacement is the Butuan City Drainage Improvement sub-project. The proposed improvement works consist of the construction of new drains in the flood-affected areas where there are currently no drainage systems, replacement of existing under-sized drains by larger drains to increase the flow-carrying capacity of the drains, construction of additional stormwater inlets (catch basins), construction of flood/tide control gates and pump stations at selected locations, and implementing the segments of Langihan and Maon-Villa Kananga-Libertad Creeks which was not carried out by the Cotabato-Agusan River Basin Development Project (CARBDP) because of problems with right-of-way and compensation issues.

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7. Those portions of the Langihan and Maon-Villa Kananga-Libertad Creeks which encountered right-of-way and compensation issues under the CARBDP are the areas expected to be affected by resettlement issues under the ARBIWRMP.

8. Four types of impact are possible in the Butuan City drainage sub-project: 1) physical displacement of informal settlers residing on and along the Langihan creek; 2) loss of land by private landowners resulting from land acquisition for the possible widening of the Langihan creek channel; 3) loss of business shops and structures presently encroaching on existing drainages and right of way of new drainages to be built; and 4) temporary disruption to businesses during construction. It was mentioned during the stakeholders consultation that some existing drainages were built on private lands which have not been acquired by the city. Owners of these private lands will have to be compensated for land losses resulting from right of way acquisition. Measures will be taken in designing the civil works to avoid as much as possible acquisition of private lands and displacement of existing shops and residences.

9. Initial assessment of the proposed interventions in the Agusan Marsh Biodiversity Conservation and Priority Watersheds Management sub-projects revealed no necessity for physical relocation. Some livelihoods could be affected by restrictions on resource use in the proposed strictly protected zones (SPZs) in the Agusan Marsh and the proposed areas for protection and reforestation in the four priority watershed in Compostela Valley. However, these impacts on livelihood are not likely to be significant. Delineation of the protected areas and areas for reforestation will take into account existing resource uses and will strive to minimize economic displacement by avoiding areas with resources used by wetlands and forest occupants.

10. In the case of the Agusan Marsh sub-project, the proposed SPZs are limited in size and have been restricted to areas that are either already established as protected areas or where resource use areas can still be negotiated with users. In the case of the watersheds in Compostela Valley, the exact location of the different sub-project interventions (e.g. reforestation, agro-forestry, protection/ecotourism, mines tailing dam, riverbank stabilization, etc) have yet to be determined. The proposed mines tailing dam in Mabatas in the Naboc Watershed will not entail physical relocation because there are no residents in the proposed site. The location of the proposed mines tailing dam in the Upper Agusan watershed is yet to be determined.

11. Of the municipal water supply sub-projects, the Nabunturan sub-project has specified the project design and location of the proposed civil works. The proposed interventions for the improvement of the water supply systems in the municipalities of Nabunturan and Montevista are not likely to result in physical or economic displacement. However, acquisition of land and right of way may involve the necessity of compensation for affected landowners possibly for the proposed reservoir to be constructed in Montevista and the access road to the reservoir proposed to be built in New Sibonga, Nabunturan. The proposed site of the reservoir in Nabunturan is owned by the LGU but the access road could pass through privately owned land. No access road is needed for the proposed reservoir in Montevista.

12. The location of the proposed additional wells and pumping stations (four in Nabunturan and one in Montevista) has not been determined yet. Pending the determination of the sites of these wells and pumping stations, the existence and identity of affected private landowners cannot be ascertained as of yet.

13. The other proposed interventions, namely the laying of transmission and distribution pipes, installation of additional service connections, provision of fire hydrants and standby power generating sets will not result in any displacement, livelihood impact or land

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acquisition.

14. Pending the determination of the specific location of the proposed interventions in most of the sub-projects, the preparation of the resettlement plans of these sub-projects cannot be prepared before project appraisal. Initial assessment shows that except for the Butuan city drainage improvement project, the extent and degree of physical and economic displacement for the other sub-projects are likely to be minimal.

II. Legal and Policy Framework 15. Legal framework on resettlement in the Philippines. The following provisions in the 1987 Philippine Constitution serve as the basic legal foundation of resettlement policies for all subprojects under the ARBIWRMP:

Article II, Section 10: The State shall promote social justice in all phases of development. Article II, Section 11: The State values the dignity of every human person and guarantees full respect for human rights. Article III, Section 9: Private property shall not be taken for public use without just compensation. Article III, Section 11: Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of poverty. Article XIII, Section 10: Urban or rural poor dwellers shall not be evicted nor their dwellings demolished, except in accordance with the law and in a just humane manner.

16. Based on the above provisions, several laws and statutes were legislated and enacted to govern the implementation of resettlement in the Philippines. They deal on different aspects of resettlement and have been adopted in the ARBIWRMP for compliance in the preparation and implementation of the resettlement plan, as summarized in Table 12.1.

Table 12.1: Philippine Laws and Statutes on Resettlement Applicable to ARBIWRMP Aspects of

Resettlement Policy Relevant Laws and Statutes Description

Land Acquisition - R.A. No. 8974 (An Act to Facilitate the Acquisition of Right of Way, Site or Location of National Government Infrastructure Projects and for Other Purposes) Sections 4,5,6,7 - R.A. No. 7160 (Local Government Code), Section 19. -Executive Order 1035 (issued in 1985)

Facilitates the Acquisition of Right-of-Way, Site or Location of National Government Infrastructure Projects by providing guidelines for expropriation proceedings, negotiated sale, valuation of land and improvements Provides for the LGUs’ exercise of the power of eminent domain. Provides the procedures and guidelines for the expeditious acquisition by the government of private real properties or rights thereon for infrastructure and other government development projects

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Aspects of Resettlement Policy

Relevant Laws and Statutes Description

- R.A 7279 (Urban Development and Housing Act 1992)

and the payment of compensation to agricultural tenants, farmers, cultural minorities (indigenous peoples) and settlers. Provides for the development, award and disposal of land under usufruct arrangement for purpose and use of socialized housing

Compensation and Entitlements

R.A. 8974, Sections 8, 9, 10 and 13. R.A. 7279 (UDHA) Sec. 28 R.A. 8371 (IPRA) Sec. 7(d)

Provides for the compensation of affected properties based on current market prices. Requires the provision of “adequate relocation” with basic services and facilities and relocation assistance; if a relocation site cannot be provided, cash compensation equivalent to 60 days multiplied by the minimum wage shall be given by the local government unit. Provides that in case displacement occurs as a result of natural catastrophe, the State shall endeavour to resettle the displaced IPs in suitable areas where they can have temporary life support system and they shall enjoy security of tenure over lands to which they have been resettled.

Tenure Claims on forestlands

R.A. 8371, Indigenous Peoples Rights Act, Section 11 Community-based Forest Management (CBFM) Agreement DENR Administrative Order No. 42 Industrial Forest Management Agreement (IFMA) Certificate of Stewardship Contract (CSC)

Provides for the formal recognition of the rights of indigenous peoples over territories identified and delineated as ancestral domain through a Certificate of Ancestral Domain Title (CADT). Community-based Forest Management Agreement (CBFMA) entitles forest communities to use, develop forestland and resources for duration of 25 years; applies to areas classified as forest lands, including allowable zones within protected areas not covered by prior vested rights. IFMA is a production sharing contract entered into by and between DENR and a qualified applicant wherein the DENR grants to the latter exclusive right to develop, manage, protect and utilize a specified area of forest land and forest resources therein for a period of 25 years, renewable for another 25 years. The CSC grants farmers (individual households) a right to occupy and cultivate a maximum of 10 hectares of land in upland areas (watershed) for 25

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Aspects of Resettlement Policy

Relevant Laws and Statutes Description

years, using agroforestry principles and technologies

Community Participation and Consultation

R.A. 7160 (Local Government Code), Sections 2 (c) and 27. R.A. 7279 (UDHA), Article I, Sec. 2; Article V, Sec. 23; Article VII, Sec. 28 (2) and IRR of UDHA, Sec. 3 R.A. 8371 (IPRA) Sections 16, 17

Provides for the conduct of prior consultation with affected communities on any project and require the approval of the concerned Sangguniang Panglunsod (city council). The provisions of this law also require consultations with affected persons and communities. The results of consultations will form part of the approval of the resettlement plans by the LGU’s Sangguniang Panglunsod (SP) Protects the right of indigenous peoples to participate in decision-making on matters affecting their rights, lives and destinies; and the right to decide priorities for development and to participate in the formulation and implementation of plans and programs for national, regional and local development

Social Rehabilitation R.A. No. 7279 (UDHA), Article V, Sections 21 and 22. Implementing Rules and Regulations of UDHA, Section 3, III (b.3.0)

Provision for basic services and livelihood opportunities to meet basic needs . The resettlement project shall act as conduit for the families to avail of manpower training and livelihood program through sustained networking and resource syndication activities

Monitoring Executive Order No. 152 (Series of 2002) Amended by Executive Order 708 (2009)

Prescribes for the monitoring of all types of eviction and demolitions involving underprivileged and homeless citizens by the Presidential Commission for the Urban Poor (PCUP). All national government agencies and local Government units should secure a Certificate of Compliance (COC) prior to the implementation of any eviction or demolition. E.O. 708 devolves the power to issue COCs to the local government units, specifically to the Local Housing Board (LHB), which LGUs are enjoined to create for this purpose. PCUP retains its monitoring duties.

17. ADB’s policy on involuntary resettlement. ADB’s policy on involuntary resettlement seeks to i) avoid involuntary resettlement wherever possible, ii) minimize involuntary resettlement by exploring project and design alternatives, iii) enhance, or at least restore, the livelihood of all displaced persons in real terms relative to pre-project levels and iv) improve

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the standards of living of the affected poor and other vulnerable groups (Safeguard Policy Statement 2009, Appendix 2).

18. The policy stipulates three important elements in involuntary resettlement, which are: (a) compensation for lost assets and loss of livelihood or income at replacement cost, (b) assistance in relocation including provision of relocation sites with appropriate facilities and access to social services, and (c) assistance with rehabilitation so as to achieve at least the same level of well-being with the subproject as before. The Bank’s policy further prescribes that the absence of legal title to land is not a barrier to compensation and rehabilitation of affected people. All people adversely affected by the Project that the Bank supports are entitled to the assistance to restore pre-project conditions through compensation, resettlement and livelihood restoration. The poorest and vulnerable affected people, including households headed by women, the elderly, disabled, ethnic minorities, and the landless, must be assisted to improve their socio-economic conditions.

19. Gaps and consistencies between the two sets of policies. In the design of compensation and entitlements of AHs, consideration was given to the resettlement policies of the Philippine Government and that of ADB.

Table 12.2: Comparison of Applicable Philippine Laws and ADB Resettlement Policy Philippine Laws / Policies on

Involuntary Resettlement

ADB’s Involuntary Resettlement

Policy Requirements

Gaps and Consistencies Between

the Philippines’ and ADB’s Involuntary Resettlement

Policies R.A. 7279 Sec 28: Eviction or demolition as a practice shall be discouraged, however it may be allowed when government infrastructure projects with available funding are about to be implemented

Involuntary resettlement should be avoided where feasible. Where population displacement is unavoidable, it should be minimized by exploring all viable options

Both sets of policies declare the avoidance of resettlement where possible.

IRR of R.A. No. 8974, Section 13. Should the property owner concerned contest the preferred value of the Implementing Agency, the Court shall determine the just compensation to be paid to the owner within sixty (60) days from the date of filing the expropriation case, considering the standards set out in Sections 8, 9 and 10 hereof, pursuant to Section 5 of the Act. When the decision of the Court becomes final and executory, the Implementing Agency shall pay the owner the difference between the amount already paid as provided for in Section 8 (a) hereof and the just compensation determined by the court, pursuant to Section 4 of the Act.

People unavoidably displaced should be compensated and assisted, so that their economic and social future will be generally as favorable as it would have been without the project

Section 13 of the IRR of R.A. No. 8974 provides for the compensation of affected properties based on current market values as set forth in Sections 8, 9 and 10. While consistent with ADB’s policy, the law, however, does not provide for compensation to informal settlers, renters and vulnerable group(s), nor restoration of pre-project levels of well-being . The UDHA, IRR Section 1-b defines all actual occupants of a housing structure at the time of census as entitled to housing assistance. Beneficiary selection category for resettlement and socialized housing are as follows: Category 1, Structure/Commercial Structure owners; Category 2, Renters/ Rent-free occupants; Category 3 Sharers, bed

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Philippine Laws / Policies on Involuntary Resettlement


Policy Requirements



Policies spacers and caretakers, Category 4 AHO;

R.A. No. 7279 –UDHA, Article VII, Sec. 28 (8) applies to displaced persons in urban areas. Displaced persons should be provided a relocation site but should relocation not be possible within the said period (Note: 45 days from serving of notice) financial assistance in the amount equivalent to the prevailing minimum daily wage multiplied by 60 days shall be extended to families by the local government unit concerned.

Compensation for lost land and assets is to be provided at full replacement cost

This particular provision in Article VII, Sec. 28 (8) of R.A. No. 7279 is consistent with ADB policy. However, the law and its IRR do not provide compensation for affected lands and properties, and compensation for temporary affected lands of private persons and common property resources

EO No. 1035, Sec. 18 applies to displaced persons in rural areas. : The government implementing agencies/ instrumentalities concerned shall extend financial assistance to the displaced tenants of agricultural lands, cultural minorities and settlers who are duly accredited by the Ministry of Agrarian Reform/Bureau of Forest Development/Office of Muslim Affairs and Cultural Communities… Provided that in no case shall the financial assistance be less than P15,000/ha R.A. 8371 (IPRA) Sec. 7(d) Provides that in case displacement occurs as a result of natural catastrophe, the State shall endeavour to resettle the displaced IPs in suitable areas where they can have temporary life support system and they shall enjoy security of tenure over lands to which they have been resettled.

Compensation for lost land and assets is to be provided at full replacement cost

EO No. 1035 provides for Compensation to legal owners of land. While financial assistance will be given to agricultural tenants and settlers, the financial assistance is not necessarily equivalent to full replacement cost of affected productive assets.

R.A. No. 7279 – UDHA Law, Article 1, Sec. 2: It shall be the policy of the State to undertake a comprehensive and continuing Urban Development and Housing Program which shall…encourage more effective people’s participation in the urban

Affected people should be informed fully and closely consulted on resettlement and compensation options. Particular attention shall be paid to the needs and concerns of vulnerable groups.

All the relevant laws governing project development in the Philippines, as presented in the extreme left column, have adequate provisions for community and people’s consultation, which are consistent with ADB’s policy. The GOP and ADB are also consistent in the implementation

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Policy Requirements



Policies development process. Article V, Sec. 23. The LGUs, in coordination with the Presidential Commission for the Urban Poor and concerned government agencies, shall afford program beneficiaries or their duly designated representatives an opportunity to be heard and to participate in the decision-making process over matters involving the protection and promotion of their legitimate collective interests which shall include appropriate documentation and feedback mechanisms.

procedures. During consultations, the EA and/or the IA shall present visual aids and information materials written in the language that should be understood by the community, project beneficiaries and the AHs. Particular attention shall be paid to the needs and concerns of women and vulnerable groups.

Article VII, Sec. 28 (2). Adequate consultations on the matter of resettlement with the duly designated representatives of the families to be resettled and the affected communities in the areas where they are to be relocated IRR of UDHA Sec. 3 (e.1): The LGU or government agency authorized to demolish shall preside over the consultation meetings to be attended by the barangay chairman, the affected families and the landowners or their duly designated representatives to discuss … available options other than resettlement, possible relocation sites, roles of agencies involved. R.A. 8371 (IPRA) Sections 16, 17 Protects the right of indigenous peoples to participate in decision-making on matters affecting their rights, lives and destinies; and the right to decide priorities for development and to participate in the formulation and implementation of plans and programs for national, regional

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Policy Requirements



Policies and local development. Section 3 of IPRA provides for Free and Prior Informed Consent: The IPs shall have the right to accept or reject a certain development intervention in their particular communities. The IPs’ decision to accept or reject a certain policy, program or plan shall be assessed in accordance with their development framework and their value systems for the protection of land and resources R.A. No. 7160, Sec. 2 (c). It is likewise the policy of the State to require all national agencies and offices to conduct periodic consultation with appropriate local government units, nongovernmental and people’s organizations, and other concerned sectors of the community before any project or program is implemented in their respective jurisdictions. R.A. No. 7160, Sec. 27. No project or program shall be implemented by government authorities unless the consultations mentioned in Sections 2 (c) and 26 hereof are complied with, and prior approval of the sanggunian concerned is obtained: Provided, That occupants in the areas where such projects are to be implemented shall not be evicted unless appropriate relocation sites have been provided, in accordance with the provisions of the Constitution. IRR of UDHA, Sec. 3, III (a. b.1). Organized community-based structures shall be strengthened so as to facilitate the delivery of services in the site. The identified leaders with the assistance of the NGOs shall be trained and equipped with proper organizational skills and

Existing social and cultural institutions of resettlers and their hosts should be supported and used to the greatest extent possible, and resettlers should be integrated economically and socially into host communities so that impacts on host communities are minimized.

The IRR of UDHA law defines the roles of relevant institutions before, during and after the resettlement of AHs. However, the UDHA Law does not provide for grievance and redress committees and compensation committees, and neither are these provided for in R.A. No.

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Policy Requirements



Policies attitudes necessary to effectively manage the affairs of the Community

8974. The Project will set up a Grievance Committee and will involved representatives of the APs to enhance their skills in conflict resolution.

R.A. No. 7279, Sec. 3 (t). Underprivileged and homeless citizens refers to beneficiaries of this Act and to individuals or families residing in urban and urbanizable areas whose income or combined household income fails within the poverty threshold as defined by NEDA and who do not own housing facilities. This shall include those who live in makeshift dwelling units and do not enjoy security of tenure. Objective No. 1 of R.A. No.7279. Provide decent shelter to the underprivileged and homeless citizens in urban areas and resettlement areas whose lives are marked by economic insecurities and whose occupancy on the land is uncertain

The absence of a formal title to land by some affected groups should not be a barrier to compensation. Particular attention should be paid to the needs of the poorest affected people and vulnerable groups that may be at high risk of impoverishment. This may include those without legal title to land or other assets, households headed by females, the elderly or disabled and other vulnerable groups, particularly indigenous peoples. Appropriate assistance must be provided to help them improve their socio-economic status.

While the primary objective of R.A. No. 7279 is to provide decent shelter to the underprivileged, the law does not provide for compensation or entitlement. Special assistance to vulnerable groups like women-headed households, households headed by the elderly and ethnic minorities, among others, is not also provided.

Executive Order No. 129 – Establishing an Institutional Mechanism to Curtail the Activities of Professional Squatting Syndicates and Professional Squatters and Intensifying the Drive Against Them.

Affected people are to be identified and recorded as early as possible in order to establish their eligibility through a population record or census that serves as an eligibility cutoff date, to prevent subsequent influx of encroachers or others who may wish to take advantage of such benefits.

The LGUs will establish the cut-off date of the census. The established cut-off date will be disclosed by the LGU to the project beneficiaries as the official population record. The record of HHs it is expected to help the LGU in the prevention of new comers or new entrants in the identified informal settlements.

No equivalent law or policy As far as possible, involuntary resettlement should be conceived and executed as part of the project

The Project will adopt the ADB’s policy in the preparation and implementation of resettlement planning framework and plan.. As part of the project, the implementation of RPs must have adequate organizational mechanism before project implementation. The PMO will oversee the adoption of ADB

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Policy Requirements



Policies policy in the RP implementation at the LGU level. Special provisions for assistance will be negotiated with the EA and the participating LGU.

No explicit equivalent law or policy.

The full cost of resettlement should be included in the presentation of project costs and benefits

This ADB policy will be adopted in the Project.

No explicit equivalent law or policy.

Cost of resettlement and compensation may be considered for inclusion in ADB loan financing for the project

Since the GOP has no existing policy on this requirement, that of ADB will be adopted in the ARBIWRMP.

III. Resettlement Plan Policies and Objectives

20. The ARBIWRM Project’s policy on involuntary resettlement is based on a harmonization of existing Philippine laws covering land acquisition and resettlement and ADB’s safeguard policy (Safeguard Policy Statement 2009). ADB requires the preparation of a resettlement plan for any project or sub-project with known or anticipated involuntary resettlement impacts. The objective of the plan is to ensure that livelihoods and standards of living of displaced persons are improved, or at least restored, to pre-project levels, and that the standards of living of the displaced poor and other vulnerable groups are improved, not merely restored. These objectives are to be met by providing adequate housing, security of land tenure and steady income and livelihood sources to the affected households (ADB Safeguard Policy Statement 2009).

21. The ADB’s involuntary resettlement policy covers physical displacement (relocation, loss of residential land, or loss of shelter) and economic displacement (loss of land, assets, access to assets, income sources, or means of livelihood) as a result of i) involuntary acquisition of land, or ii) involuntary restrictions on land use or on access to legally designated parks and protected areas. These losses and involuntary restrictions are covered by the policy whether they are full, partial, permanent or temporary.

22. Philippine laws similarly require just compensation for land and assets taken from their owners for development and infrastructure projects. However, while non-owners’ entitlement to compensation for lost assets is not clearly established in Philippine laws, the Urban Development and Housing Act does make mandatory the provision of resettlement sites equipped with adequate basic services to informal settlers who do not have legal titles. If resettlement cannot be provided, cash compensation is required.

23. Resettlement plan objectives. The ARBIWRM Project shall adopt the principle of treating the resettlement of project affected persons (PAPs) and project-affected households (PAHs) as a development project that will aim to improve, or at least restore, the PAPs’ levels of social, economic and cultural well-being. It shall aim to improve the standards of living of poor and vulnerable PAPs and shall not make the absence of a legal title a barrier to receiving compensation and/or resettlement assistance. Each resettlement plan (RP) will consist of an integrated set of activities and interventions necessary to achieving these objectives.

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24. Resettlement plan policies. The following policies will be observed in the ARBIWRMP based on the preceding comparison between the two sets of resettlement policies and noting their gaps and consistencies:

(a) Land acquisition and resettlement of people will be minimized as much as possible. Interventions will be designed in such a way as to minimize the scope and degree of physical and economic displacement. (b) The last day of the census and inventory of losses that has been carried out by the LGU in the barangay (village) as part of the resettlement planning process will represent the cut-off date for eligibility, if no specific cut-off date has been established by the LGU. If a prior census has been carried out by the LGU, for which due notice was given to the affected households, the LGU may opt to use this as the cut-off date for a specific sub-project. Eligible persons are entitled to compensation and rehabilitation measures sufficient to assist them to improve or at least maintain their pre-project living standards, income-earning capacity and production levels. (c) Lack of formal legal rights to the assets lost will not prevent the PAHs from receiving compensation, resettlement and rehabilitation measures. (d) The compensation, resettlement and rehabilitation measures to be provided to PAHs are:

- adequate and appropriate replacement of land and structures or cash

compensation at full replacement cost for land, improvements and structures, including residential structures, without deduction for depreciation or the remaining salvage values of materials

- compensation for lost productive assets at full replacement cost - transfer and subsistence allowances; and - rehabilitation assistance, including livelihood and skills training

(e) Compensation rates for physical assets, i.e. house, building and other structures, and productive assets will be calculated at replacement cost. The calculation of full replacement cost will be based on i) fair market value of the lost asset, 2) transitional and restoration costs, and 3) other applicable expenses or payments. Preference will be given to land-based resettlement strategies for displaced persons whose livelihoods are land-based. These strategies may include resettlement on public land or private land acquired for resettlement. When replacement land is offered, the productive potential and location advantages of such land must be at least equivalent to those of the land taken. If replacement land is not the preferred option of the displaced persons or sufficient land is not available at a reasonable price, non-land-based options that provide employment or self-employment opportunities will be provided in addition to cash compensation. The lack of land will be demonstrated and properly documented. (f) Project-affected Households (PAHs) will be systematically informed and consulted about the Project, the rights and options available to them and proposed mitigating measures, and they will be involved in decision-making concerning their resettlement. This includes information about compensation and other entitlement and grievance mechanisms. Acquisition of land and other assets and provision for replacement land and rehabilitation measures will be carried out in consultation with the PAHs to avoid any delay in resettlement plan implementation. (g) During project preparation PAHs will have been informed about available compensation packages. Affordability and willingness to pay for resettlement land and

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housing will have been assessed as part of the project preparation. Alternatives for those unable or unwilling to pay will be provided. (h) The consultative process will include not only those affected, but also representatives of the local governments of the areas in which the Project is located, community leaders of host communities, civil society organizations such as NGOs, and members of local people’s organizations. Every consultation meeting will be recorded through minutes of consultations (MOC), and these will be made available for reference of both the PAP/PAHs and the Project Management Office. Agreements reached will be documented through the consent form to be signed by the PAHs. (i) The LGUs will preside over the consultation sessions. The consultation sessions will be attended by the PAPs/PAHs. The NGOs invited to co-facilitate the consultation process will likewise assist the PIO in documenting the consultations. The community likewise will have its own record of proceedings and agreement or disagreement on the proposed resettlement plan. Minutes of consultations will be submitted to the PMO. (j) Existing cultural and religious practices and observances will be respected, and to maximum extent practical, preserved. (k) Special measures will be incorporated in the Resettlement Plan implementation process to protect the socially and economically vulnerable groups like the poorest affected people, women-headed households, elderly, indigenous peoples and persons with disability. Special assistance will focus on the livelihood opportunities and employment for female heads of households. Skills enhancement for permanent employment is the preferred intervention for women. (l) For off-city/municipality relocation, (socialized housing or serviced plots) minimum physical site and services development standards, community facilities and resources will be provided to approximate or even better the situation of the PAHs after resettlement. (m) There shall be effective mechanism for hearing and resolving grievances and complaints during the implementation of the resettlement plan . (n) The EA will see to it that institutional arrangements are in place to ensure effective implementation of the various activities contained in the resettlement plan, among them consultation and implementation of land acquisition, compensation, resettlement, and income restoration measures such as job creation and micro-credit assistance as components of the rehabilitation program. (o) The host community that shall accommodate the PAHs in their locality should be involved in resettlement planning and decision making. Affected households are to be assisted to integrate economically and socially into host communities so that adverse impacts on the host communities are minimized and social harmony is promoted. (p) Adequate budgetary support will be fully committed and made available to cover the costs of compensation, resettlement and rehabilitation within the agreed implementation period. Clear budget commitments are required for critical activities such as formal detailed physical surveys and administrative functions associated with compensation and resettlement.

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(q) Appropriate reporting (including auditing and redress functions), monitoring and evaluation mechanisms, will be identified and set in place as part of the resettlement management system. The Project will hire an external monitoring agency (EMA) that will monitor and evaluate the resettlement process and results and with the reports to be directly submitted to the ADB.

25. ADB’s Involuntary Resettlement Safeguard Requirements do not apply to negotiated settlements. The Project will try to acquire land and other assets through a negotiated settlement wherever possible, based on meaningful consultation with affected persons, including those without legal title to assets. The negotiation and settlement processes will be documented and applicable policies and procedures for such transactions will be agreed with ADB.

26. Eligibility criteria and identification of affected households and persons. All PAHs who will experience displacement and/or loss of assets and productive capacity are qualified to receive compensation, resettlement and rehabilitation or income restoration assistance under the ARBIWRMP. Consistent with ADB policy, the following categories of affected persons will be considered displaced persons eligible for compensation, assistance and benefits: i) persons with formal legal rights to land lost in its entirety or in part; ii) persons who lost the land they occupy in its entirety or in part who have no legal rights to such land but who have recognized or recognizable claims under national laws; and iii) persons who lost the land they occupy in its entirety or in part who have neither formal legal rights nor recognized or recognizable claims to such land.

27. For the first category of affected persons, eligibility would be established through possession of a title or equivalent tenure instrument such as a free patent or certificate of ancestral domain title (applicable to tribes, not individuals). For the second category, eligibility would be established by showing proof of claims such as lot awards (for residential and agricultural lands, e.g. Certificate of Land Ownership Award, or CLOA). For the third category, actual occupation of the affected land will be the criterion, as in the case of urban or rural informal settlers, resident tenants or farmworkers on agricultural lands, to be attested to by the barangay chairperson with jurisdiction over the site and neighbours.

28. As proof of their eligibility, the name of the HH head of the PAH should appear in the master list generated from the census and IOL surveys or in cases where they have not been included in the census, a certification from the barangay chairperson and a written attestation from neighbours who are not related by blood or consanguinity will be required. The date of the census shall be considered as the cut-off date for determining eligibility for compensation and livelihood restoration benefits.

29. Subject to further discussion with and approval by the LGU, the following criteria for qualifying PAHs may be used: (i) must be household head and/or members of a family unit; (ii) the HH head or any of his/her designated members as representative of the household should be a Filipino citizen and registered resident of the LGU census master list; (iii) land and structure owners or if urban informal settlers, resident structure owners, renters, sharers, bed spacers or caretakers as provided for in the Implementing Rules and Regulations (IRR) of the Urban Development and Housing Act (UDHA) or in the case of rural dwellers, landowners or resident farmers, tenants and agricultural workers; (iv) they must have stayed on the site for at least a given number of years and are actual occupants at the time of the conduct of the IOL. The date of the IOL conducted by the LGU are the basis of entitlement subject to the qualification criteria set forth by the project and agreed with the LGU; and (v) the household does not own any real estate property in the case of urban informal settlers to be relocated.

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30. Table 12.3 presents the likely categories of physically and economically displaced persons by type of sub-project.

Table 12.3: Categories of displaced persons by sub-project/type of sub-project Sub-project/Type of sub-

project Categories of (possible)

physically displaced persons Categories of (possible) economically displaced

persons 1. Butuan city drainage improvement

- informal settlers occupying public land who stand to lose their houses

- legal owners of land subject to right-of-way acquisition for Langihan channel expansion, construction of new drainages, pumping stations - owners of business shops encroaching on existing drainages on privately-owned land

2. Agusan Marsh Biodiversity Conservation

- None likely - resource users (e.g. fishers, forest products gatherers) whose access to resources may become restricted as a result of the delineation and enforcement of strict protection zones (SPZs)

3. Municipal Water Supply - None likely - legal owners of land subject to right-of-way acquisition for the construction of wells, pumping stations, reservoir and access road

4. Rehabilitation of Priority Watersheds in Compostela Valley

- forest dwellers occupying areas to be delineated for forest protection

- farmers cultivating forest lands in areas delineated for forest protection - owners of trees in areas delineated for forest protection - resource users (small scale miners, timber and forest product gatherers) whose access to resources may become restricted as a result of the delineation of forest protection areas

IV. Project Entitlements and Implementation Arrangement

31. Entitlements, assistance and benefits. The RP specifies the entitlements of the PAPs and PAHs, the eligibility criteria and the resettlement assistance measures to be provided by the Project. These are best presented in the RP in the form of an entitlement matrix such as shown in Table 12.4. This section of the resettlement plan also specifies the assistance to be extended to poor and vulnerable groups, including women, elderly and persons with disability. Finally, opportunities for affected persons to derive development benefits from the project will also be identified.

32. Losses incurred by PAHs for which compensation would be provided by the Project will be determined using information obtained through the Inventory of Losses which would have been conducted by the LGU-PIO before the preparation of the RP.

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Table 12.4: Sample Entitlement Matrix for Project Affected Households Categories of Eligible PAHs

according to type of loss incurred

Compensation/Entitlement No. of PAHs (Estimated based

on Census and IOL)

Percentage to Total

Loss of agricultural land

Replacement land or cash at replacement cost

xxx xx

Loss of residential land

-Replacement land or cash at replacement cost - Transportation, dismantling and reconstruction, transitional assistance -Livelihood assistance -Capacity building assistance

xxx xx

Loss of agricultural crops and trees

-Cash compensation based on the remaining productive life of the tree, quantity and prevailing price of the produce

xxx xx

Loss of residential units and other structures

-Housing materials assistance - Transportation, dismantling and reconstruction, transitional assistance

xxx xx

Loss of business income

-Cash compensation based on average daily income of business

xxx xx

Other types of losses xxx xx 33. Compensation measures. Following GOP and ADB policies, the RPs shall adopt the following ARBIWRMP guidelines in defining PAHs’ compensation and other entitlements:

1. Compensation for loss of agricultural land

This type of loss will be compensated preferably by providing replacement land of equivalent value and/or productivity. If the lost agricultural land is irrigated, irrigated land will be provided.

If no replacement land can be acquired and provided at reasonable cost, cash compensation at replacement cost would be given.

2. Compensation for loss of residential land

Owners of residential land with legal title (including Free Patent) or those in possession of legal documents attesting to a defensible claim on the land will be compensated with land in a resettlement site or cash at replacement cost. Occupants of residential land who do not have a title, such as agricultural tenants, resident farmworkers, and informal settlers, who will be displaced as a result of the sub-project will be entitled to a serviced plot in a resettlement site to be provided by the Project. Lot sizes will be based on socialized housing standards. Provision of security of tenure will be ensured through different modalities including ownership, lease or usufruct. Lot awards will be paid for by the recipients through monthly amortization to be determined by the PIO, in consultation with the regional housing agencies (e.g. NHA, HUDCC, HLURB). The resettlement sites will be equipped with basic services like water, electricity, drainage, sanitation and roads according to Batas Pambansa 220 standards.

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3. Compensation for loss of trees and agricultural crops

Trees will be compensated based on the remaining productive life of the tree, its average annual production and price of its fruits as certified by the local office of the Department of Agriculture. PAHs who may have standing crops will be allowed to harvest the produce if possible. If this is not possible given the construction or resettlement schedule, compensation will be paid based on the estimated quantity of the produce and the prevailing market price of the crop.

4. Compensation for loss of structures, including residential units Owners of structures and improvements, including residential units, on land owned by the structure owner will be compensated at replacement cost. PAHs who own residential structures built on land not owned by them, such as urban informal settlers, agricultural tenants and farmworkers residing in their landowner’s land, will be provided a home plot in a resettlement site on which the PAH can rebuild its house. Assistance in the form of housing materials amounting to P 10,000 pesos will be provided. Alternatively, a replacement housing unit may be provided which would be paid for in monthly instalments by the recipient PAH.

.

5. Compensation for Loss of Income from Business

PAHs included in the master list of those eligible for compensation who stand to lose their daily earnings from micro-enterprises and shops that would be relocated shall be compensated for the loss of business incomes. The amount shall be based on the average daily earnings or its equivalent computation based on the minimum daily wage in the area, as validated through surveys of owners of small business shops of the same size within the vicinity, and the number of days it would take to re-establish the shop in the new site.

6. Transportation, Dismantling/Reconstruction, and Transitional Assistance

Cash amount or equivalent services shall be given to relocating PAHs in the form of transportation, dismantling and rebuilding of housing units (or business units) and transitional food assistance. Transportation assistance includes the actual cost of: (a) transfer from original settlement to the resettlement area, (b) transfer to destinations or sites other than the designated resettlement area up to 80 km from the site of origin. Dismantling/reconstruction assistance will be provided to PAHs for the cost of labor in dismantling their housing structures and rebuilding the same in the designated relocation sites. This amount, to be determined by the LGU, will be based on minimum wage and will vary according to the size and type of structure. Transitional food assistance shall be provided to every project-affected household in the amount equivalent to the local minimum wage (as set by the Regional Wage Board) multiplied by 7 days.

7. Compensation for loss of common property and cultural resources

If the sub-project causes destruction or loss of access to common property and/or cultural resources such as parks, grazing areas, forest land, chapels, temples, graveyards and other similar communal resources, the Project will provide access to alternatives.

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8. Capacity building assistance

PAHs in the resettlement community will be provided training in estate management, maintenance of community facilities and other skills that may be helpful for developing their new community. Capacity building activities for empowerment such as orientation on opportunities for participation in local development bodies, including the barangay development councils and networking with NGOs will likewise be provided.

9. Livelihood Assistance

PAPs will be given livelihood support through livelihood and skills training, referrals, development of micro-enterprises and access to micro-credit provided by micro-finance institutions.

34. Relocation of housing and settlements. PAHs must be provided options for the relocation of their home sites. This section enumerates and describes the options for relocating dwellings and other structures, including replacement housing, replacement cash compensation and/or self-relocation. It will identify the alternative relocation sites considered, present the feedback from the community consultations conducted and the justification for the selected sites, including details about their location and environmental conditions.

35. Also to be presented are the timetable for site preparation and transfer as well as the measures to assist the PAHs with their transfer and resettlement in their new home sites. Measures to facilitate the integration of the PAHs into the host community will also be specified. Finally, the legal arrangements to provide legal land and/or housing tenure to the PAHs will be described.

36. While PAHs in principle should be given the right to choose among the options of relocating to a relocation site, cash compensation or self-relocation, Philippine relocation policy favors the provision of a relocation site to ensure security of tenure to the displaced PAHs. Proximity to the original settlement will be the most important consideration in selecting a relocation site. Other considerations could be taken into account such as environmental factors, cost and size of the available land and PAHs’ preferences. Whatever site is eventually selected should be justified in the RP.

37. Implementation arrangement. The prompt delivery of entitlements will be organized, implemented and monitored by the Project Implementation Office (PIO) lodged at the LGU or the appropriate implementing agency (e.g. Local Water District). The PIO shall keep a data base of the qualified PAHs and their respective entitlements. It shall conduct information dissemination activities such as meetings and community assemblies and distribute information materials to inform the PAHs of their entitlement and the procedure and schedule of their distribution. Upon the delivery of the various entitlements, receipt of the entitlement will be properly recorded and acknowledged by the recipient PAH/PAP.

V. Relocation and Rehabilitation Strategies

38. Relocation strategy. The resettlement and rehabilitation schemes to be implemented will take into account options that would minimize the costs of displacement to the PAPs. In the choice of resettlement sites, preference will be given to sites that are adjacent to the PAPs’ present areas of residence or at least within the same barangay. If no resettlement site of adequate size which can be acquired at reasonable cost can be found within the

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barangay, the next choice is an areas within the same municipality. Government-owned lands would be preferred as this would simplify land acquisition. But if no government-owned land is available in a proximate location, private lands may be acquired for the purpose of resettlement. If acquisition of private land is not feasible, the option of usufruct may be adopted, pursuant to R.A. 7279, subject to negotiation with the owner of the land.

39. As much as possible, relocation of PAHs to temporary or staging areas will be avoided. Relocation will not be undertaken until the resettlement sites are acquired and equipped with the necessary basic services to ensure acceptable living conditions for the PAHs. Should relocation to a staging or temporary area be unavoidable, the staging areas must be located very close to the site of origin and equipped with adequate basic services.

40. Project-affected owners of land will be provided replacement land valued at replacement cost. Non-owners of land such as informal settlers and agricultural tenants shall be given plots in a relocation site in accordance with equivalent entitlements provided to informal settlers displaced by government infrastructure projects as prescribed by the Urban Development and Housing Act (UDHA) and its implementing rules and regulations (IRR).

41. In all cases, security of tenure shall be assured to the resettled PAPs. The use of other forms of tenure, such as usufruct, could be resorted to if land ownership is not feasible for the selected sites. The host local government units shall be involved in the identification of possible of resettlement sites and will help ensure that existing zoning regulations and necessary safety and environmental standards are observed in the choice of resettlement sites.

42. Livelihood restoration strategy. Relevant data obtained from the socio-economic survey on PAH’s sources of livelihood and the risks resulting from project impacts will be analyzed to determine appropriate interventions based on the PAHs’ skills and interests. The RP must describe the income restoration interventions, including different options for restoring lost productive capacity and sources of livelihood.

43. In the Agusan Marsh, opportunities for livelihood restoration could be explored in the proposed eco-tourism activities either through employment or small enterprises to supply needed goods and services. The development of agriculture and aquaculture will also be explored, supported by appropriate market studies to identify the most feasible products.

44. In the watershed areas of Compostela Valley, livelihood interventions would be dovetailed with the livelihood development interventions proposed by the Social and IP Development Component of the Project. The same livelihood interventions will be implemented, but targeting project-affected households which have experienced economic displacement. Possible interventions could include skills training, provision of micro-credit and development of micro-enterprises. Market studies will be commissioned and undertaken to identify feasible and profitable small enterprises and crops. Measures for providing social safety nets such as crop and social insurance should be explored and appropriate ones adopted. Special measures for organizing women, responding to their needs and for assisting and supporting vulnerable PAPs and PAHs must also be identified. The RP will describe the training programs to be provided for restoring incomes.

45. In the Butuan city drainage project, livelihood restoration activities could include the development of a transport cooperative, providing subsidized transport to shuttle people from the resettlement site to the central business district or the market, skills training and microcredit for microenterprises.

46. Consultations with the PAHs and PAPs will be conducted to identify appropriate livelihood measures. The Project Implementing Office will coordinate all livelihood and

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income restoration activities, tapping the assistance of MFIs , local NGOs and relevant government agencies.

VI. Resettlement Plan Preparation and Implementation

47. Based on the detailed design of the different sub-projects, the Project will determine the requirements for the preparation of subproject RPs. The detailed design will, to the extent feasible, explore all viable options to reduce the need for off-site involuntary resettlement as such resettlement would result in the risk of impoverishment or decline in levels of well-being.

48. RP preparation. The procedure for the preparation of the RP involves the following activities:

1. Provide project- and resettlement-related information to all PAPs and PAHs in a form and language they can understand and closely consult them on compensation and/or resettlement options, including relocation sites, and socioeconomic rehabilitation measures.

2. Undertake a census of all PAPs and PAHs in cooperation with the barangay. 3. Undertake an inventory and survey of all losses of all PAPs and PAHs. 4. Identify and record people requiring particular assistance such as the poor,

vulnerable persons like the elderly, persons with disability, women-headed households and plan specific measures to mitigate hardships and to assist them in improving their livelihoods.

5. Undertake house tagging of PAHs covered by the census. 6. Undertake a replacement cost survey for various types of affected assets as a

basis for determining compensation rates at replacement cost. 7. A pply the various types of losses on the agreed entitlements as set out in

theentitlement matrix below. If there are new categories of PAPs/PAHs and types of losses identified, the entitlements will be included in accordance with ADB’s Policy on Involuntary Resettlement.

8. Formulate a time-bound action plan or schedule for implementing the RP, procedures for grievance redress, monitoring and evaluation activities and a budget.

9. Prepare the RP document. Translate into local languages and present the draft during consultations and public meetings for comments. The final RP will take into account the comments and suggestions of the affected household and communities.

10. Submit the final RP to ADB for approval. After ADB’s approval, disclose the final RP to the affected communities.

11. Implement the approved RP and submit progress reports to ADB as part of the monitoring activities.

49. RP implementation. Once the RP is approved, implementation will commence in accordance with the implementing schedule contained therein. Implementing the RP involves the following activities:

1. Approval and release of budget for RP. 2. Acquisition of resettlement site. 3. Designing internal systems for management and monitoring of RP

implementation. 4. Submission of documents for Certificate of Compliance (COC) to the concerned

LGU office and securing COC. 5. Registration of PAHs with LGU-PIO.

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6. Conduct of capacity-building seminar(s). 7. Consultation with men and women concerning livelihood training. 8. Conduct of livelihood training and other measures for PAPs, women. 9. Payment of compensation to PAHs; 10. Dismantling of structures and relocation to resettlement site or staging area. 11. Provision of trucking or storage arrangements for personal belongings, and

house construction assistance for female-headed households and vulnerable groups.

12. Site development and house construction. 13. Resettlement of PAHs. 14. Engagement in livelihood activities by PAPs. 15. Operationalization of grievance and redress mechanism. 16. Internal monitoring of RP activities by the LGU-PIO. 17. External Monitoring of RP implementation by Project Management Office (PMO).

50. Disclosure and updating of the RP. As per ADB’s Public Communications Policy, the resettlement planning documents will be made available to the public and in particular to the PAHs.

51. The draft and final resettlement plans will be disclosed to PAHs through consultations and PIBs. Copies of these documents shall be made available by the appropriate LGU office and the PIO.

52. Revisions to the RP may be done after the detailed technical design of the sub-project. The revised RP, particularly changes in the scope of resettlement and number and identity of affected PAHs, will also be disclosed to the PAHs and copies of the revised RP made available to them. Information contained in the RP will be disclosed in the form of brochures, leaflets, or booklets translated in the local language or dialect. For non-literate persons, this will be read to them by any literate household member. If none is available, the PIO shall provide personnel to read the information to the non-literate PAP. The final RP will also be translated in the vernacular and made available in the PIO, barangay hall, community center and public health center.

53. The ADB shall make publicly available both the Resettlement Framework and the final RP on its website.

VII. Socio-economic Information

54. Socio-economic survey. The socioeconomic survey will collect information from 100% of the PAHs. The data to be collected will be disaggregated by gender. The purpose of the socio-economic survey is to provide baseline data on HHs/AHs to assess resettlement impacts, and design rehabilitation measures, and to be used for resettlement monitoring.

55. The scope of data to be collected includes: (i) the names and the personal information about the households (civil status and gender, information on women-headed households, elderly members, etc); (ii) land and housing and security of tenure that denote status of ownership, type of real property and their location; (iii) economic profile of the households which will indicate their monthly incomes and expenses, occupation, levels of education, sources of livelihood or employment, information on savings, assets owned, and borrowings; (iv) access to health services, water and sanitation; (v) social networks such as membership in associations, types and projects of the associations, if a registered voter of the community and type of assistance extended by the organization; (vi) risks and vulnerabilities (pertaining to environmental risks, calamities, impoverishment brought about by relocation, social exclusion by being very poor, and households headed by women, elderly, disabled, etc.), peace and order and discrimination experience in the community, in which all data collected

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will be disaggregated for gender; and (vii) the perceived needs of the community.

56. Questionnaires will be used by the LGUs and the PMO staff during the survey. Maps of existing structures of the informal settlers and other PAHs will also be prepared and photos taken to document baseline conditions.

57. Design of survey instruments and data analysis. The Project Management Office (PMO) at the DENR headquarters will coordinate with and assist the LGUs in preparing and implementing their RPs. The PMO will hire the services of a Social Development and Resettlement Specialist to provide technical assistance. The specialist will assist in the design of the instruments to be used in the census, inventory of losses, and socioeconomic survey to capture the essential information about the PAPs and PAHs.

58. Each questionnaire will be assigned an alpha-numeric code for tracking and safekeeping the records of the PAHs. The census and socio-economic data to be presented in the individual sub-project RPs will highlight the status of vulnerable household heads like women, elderly and those with disabilities. Such information is essential in allocating funds for special assistance to the vulnerable groups in addition to the regular entitlements.

59. Method for conducting inventory of losses. The inventory of lost assets will collect data on the affected assets from 100 per cent of PAHs following detailed design. Using the information provided by the project design and delineation of the sites for the various sub-project interventions, the affected areas will be determined. These will be mapped out, indicating affected land parcels and structures. Owners of land, residential, business and other structures, assets, including productive trees, within the affected areas will be interviewed to assess and validate what assets would be affected.

60. The IOL will be conducted by the LGU-PIO, with assistance from the PMO. For each PAH, the scope of the data will include:

(i) Total and affected areas of agricultural and residential land, by type of land assets;

(ii) Total and affected areas of structures, by type of structure (main or secondary)

(iii) Legal status of affected land and structure assets, and duration of tenure and ownership;

(iv) Quantity and types of affected productive crops and trees; (v) Quantity of other losses, e.g., business or other income, jobs or other

productive assets; (vi) Quantity/area of affected common property, community or public assets, by

type; (vii) Summary data on PAHs, by ethnicity, gender of head of household,

household size, primary and secondary source of household income viz-a-viz poverty line, income level, presence of elderly or person with disability or special needs;

(viii) A list of tagged affected structures houses and households resulting from the IOL will be kept by the LGU-PIO and the PMO.

(ix) Identify whether affected land or source of income is primary source of income.

(x) PAH knowledge of the subproject and preferences for compensation and, as applicable, preferred relocation sites and rehabilitation measures.

(xi) Digital photograph of household head and residential/ commercial structures.

61. The data collected during the census and IOL will constitute the formal basis for determining PAHs’ entitlements and levels of compensation. The date of the census and IOL

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conducted by the LGU is the cut off date of the project and shall be the basis for the identification of PAPs and PAHs by the PMO.

62. Assessment of land losses. Land losses due to the project will be assessed based on the principle of replacement cost. Replacement cost will be determined through a survey of the prices of land of the same quality within the vicinity of the original site.

63. Methods for valuing affected assets. The value of affected assets will likewise be determined based on the principle of replacement cost. The calculation of full replacement cost will be based on i) fair market value of the lost asset, 2) transitional and restoration costs, and 3) other applicable expenses or payments. Where applicable, the Engineering Office of the concerned LGUs will also conduct surveys on land costs and the prices of replacement materials within the vicinity of the affected sites. Trees will be valued based on the remaining productive life of the tree, its average annual production and price of its fruits as certified by the local office of the Department of Agriculture.

64. Database Management. The PIO will be responsible for database management during the preparation of the RPs. From the questionnaires, they will transcribe the PAH data to ledger cards with each ledger to be assigned a numeric code. For the beneficiaries of lots or housing units, the ledgers will contain the names of household heads and their spouses, the type of assets such as agricultural and residential plots and the corresponding entitlements such as the amounts and forms of compensation, relocation assistance and other entitlements and the status of the receipt of these entitlements by the PAHs. For each payment made, a space in the ledger will be allotted for recording the serial number of the receipts and the dates of payment.

65. Upon the creation of a local resettlement office in the LGUs, the PIO will turn over the ledgers to this office as the former will be responsible for the overall operation of sub-projects, including collection of amortization payments if applicable. The PIO will retain the ledger cards containing information on informal dwellers that will be relocated for future reference in external monitoring.

VIII. Vulnerability, Gender, Ethnicity Issues

66. Among the vulnerable groups that could potentially experience IR impacts are poor households in the various sub-project sites, poor women and indigenous peoples.

67. In the Butuan drainage sub-project, the vulnerable groups include informal settlers with incomes below the poverty line, whose sources of livelihood depend on their proximity to the market. If they are subjected to physical displacement, they would lose access to sources of income and the resulting additional cost of transportation to regain access to livelihood would be an excessive burden to these households.

68. In the municipal water supply sub-projects, there is little likelihood of negative impact on poor households. However, access issues might limit the ability of poor households to share in the benefits of the project if these are not able to afford the service connections that would be made available as a result of the project.

69. In the watershed and Agusan Marsh sub-projects, the vulnerable households belong to indigenous peoples and the most vulnerable are the poor members and women of these IP communities. The IP population of the province of Agusan del Sur, site of the Agusan Marsh sub-project, is estimated at 28% of the provincial population. Majority belong to the Manobo tribe, with a few Higaonon, Banwaon, Kamayo and Talaandig. The Manobo are found in all fourteen municipalities of the province. In the Agusan Marsh, they are engaged

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in fishing and gathering of forest products. The poorest among them live in floating houses with no access to potable water and sanitation. Access to their traditional sources of livelihood could be affected by the enforcement of restrictions in the strict protection zones.

70. Based on the Rapid Rural Systems Appraisal (RRSA) socio-economic survey conducted in the four priority watersheds of Compostela Valley (sample size of 267), 35% of the respondents had household incomes below P4000. These are the households considered most poor and economically vulnerable. Given that the poverty threshold of the province is P6195 (NSCB, 2007), the proportion of income-poor households could be in the range of 35%-50%. Seventy percent have an income of P8000 and below. Majority of the households are engaged in fishing and farming. Some are believed to be engaged in the prohibited practice of kaingin (slash and burn agriculture) Twenty-three percent of the respondent households are female-headed. Majority of the watershed occupants are settlers of ethnic origins coming from outside Mindanao. The biggest linguistic/ethnic groups are the Cebuanos (58%), Boholanos (16%), Waray (6%) and Ilongo (4%). Indigenous peoples are a minority, comprising only 12% of the respondents. The biggest IP groups in the sample are the Mandaya (5.2%), Dibabaw’n (3.4%) and Surigaonon/Kamayo (2.6%). The most vulnerable households would be those belonging to an IP group, that are at the same time income-poor (with incomes below the poverty threshold) and female-headed.

71. As in the Agusan Marsh, some poor and IP households could be in danger of losing all or part of their access to traditional sources of livelihood once strict protection regulations are implemented in the watershed areas as part of the proposed sub-project interventions involving forest protection and reforestation. The RRSA revealed that lack of income and employment opportunities are the top two concerns of women. Potential livelihood impacts, should they occur, will therefore most likely affect women who are mostly responsible for looking after the well-being of the entire household.

72. It is not likely that there will be tenure issues involving IPs and watershed occupants and users as the project is committed to recognizing existing tenure claims based on instruments such as the CADT, CBFMA and Certificates of Stewardship Contracts (CSCs).

IX. Information Disclosure, Consultation and Participation

73. Meaningful consultations with the affected persons and households, host communities, local governments and other relevant stakeholders are important to ensure that correct information is disseminated to these stakeholders and their needs, concerns and views are adequately taken in consideration in the decision making processes involved in project design, mitigation measures, sharing of development benefits and opportunities and implementation issues.

74. The Project will undertake information dissemination and consultation activities throughout different stages of the project. In the consultations, particular attention will be paid to the needs and concerns of disadvantaged and vulnerable persons, particularly those with incomes below the poverty line, the landless, elderly, female headed households, women and children, indigenous peoples, persons with disability and those without legal title to land.

75. As the first step in every community consultation, affected persons, owners and residents of the affected community will be provided Project Information Booklets (PIBs) as part of project disclosure. The PIB will contain information needed by the affected households and host communities such as those relating to project objectives, benefits and resettlement impacts. It will describe the objectives of the project, the required activities and the schedules of project implementation, the criteria for eligibility to compensation and

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assistance, entitlements and their schedule of delivery, consultation processes and grievance procedures. The PIB will be written in English and in the vernacular.

76. The participatory and consultative process will be observed in preparing the resettlement plan (Table 12.5). The consultation process will involve the conduct of focus group discussions, meetings and assemblies for the purpose of project disclosure and community feedback. All meetings and consultation sessions will be documented through minutes of consultations (MOCs). The PIO will be responsible for the preparation of the MOCs and will form part of the requirements for the resettlement plan. Affected persons and households will be informed that the list of eligible PAHs and the full resettlement plans will be available at the PIO, barangay and/or municipal/city planning offices. This information will be repeated to the PAPs/PAHs during individual visits and meetings. The PIO will document the minutes of meetings and visits completed as well as agreements reached with the PAPs/PAHs.

Table 12.5: Consultation Framework of the Resettlement Plan Stages of Project Topics to be covered

in the consultations Role of Affected

Households/Persons Reasons for Community Participation

Preparation of the Resettlement Plan

Rationale and Objectives of the project. • Possible resettlement impacts; alternatives considered; why resettlement cannot be avoided • Entitlements, compensation and assistance to be provided • Contents of the resettlement plan - Grievance Procedures; Election of representatives in the Grievance Committee

-Understand the Project rationale and objectives and need for resettlement - Give feedback on the entitlements, compensation and assistance policies and procedures - Give consent to the resettlement plan - Elect representatives in the Grievance Committee

- Early information about the project and possible resettlement impacts will enable AHs and APs to prepare for the impending displacement and to give their views and recommendations - Consultations will increase the likelihood of cooperation if concerns are addressed

Implementation of the Resettlement Plan

- Phasing or schedule of the transfer to the relocation sites - Procedures to be observed during relocation - Relocation assistance to be provided; who will provide them - Schedule and manner of distribution of entitlements - Grievance Procedures - Institutional arrangements, particularly responsible parties or offices and their respective roles in the resettlement process

- Provide feedback on the relocation schedule and procedures - Provide feedback on the schedule and manner of distribution of entitlements - Raise implementation issues and concerns - Utilize grievance mechanism if they have any grievance - Utilize institutional arrangements - Provide information relevant to project monitoring

-Facilitate smooth implementation of the resettlement plan - Facilitate prompt delivery of entitlements, compensation and assistance to the AHs and APs - Grievances channelled through appropriate grievance mechanism and are promptly addressed or resolved - Feedback on the conduct and effects of resettlement are taken into account in implementation decisions

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- Monitoring objectives, indicators and processes

Construction or Implementation Stage of the Project

- Additional assistance to be provided to AHs and APs, if needed - Continuing project impacts, if any - Opportunities for possible participation of APs in construction works

- Provide information on continuing project impacts if any - Present implementation issues and concerns

-Enable the Project to continually monitor resettlement impacts and respond to them promptly. - Enhance APs’ sense of ownership of the project and sharing in project benefits

Project Monitoring - Monitoring objectives - Process of monitoring; the activities and who are responsible - How APs and AHs would be able to participate in monitoring

- Provide feedback to the monitoring objectives, indicators and activities - Provide information relevant to the indicators and activities being monitored - Provide feedback to the findings of the monitoring activities

Enable the Project to get the perspectives of the APs and host communities in monitoring and assessing the achievement of resettlement objectives

X. Grievance Redress Mechanism

77. The RP defines the mechanism for receiving and resolving grievances of PAPs and PAHs.

78. A mechanism for receiving and facilitating the resolution of APs’ concerns and grievances, will be put in place in partnership with local and barangay officials and with the participation of the PAPs. To ensure that the mechanism is accessible to the APs, representatives from the affected households or persons will be made part of the Grievance Redress Committee.

79. Complaints related to any aspect of resettlement and compensation will be addressed by the GRC. The GRC will receive complaints during all stages of project implementation.. The GRC will render impartial decisions on the complaints filed by the PAPs. Entitlements will be provided regardless of the decision of the GRC. The PIO will ensure that the households are made aware of the procedures in filing the complaints and the mechanism for redress. The procedures will be provided in print form and included in PIBs that will be distributed to the AHs and APs during project disclosure and public consultations. Any grievance or complaint shall be solved in a timely and satisfactory manner.

80. In preparation for the setting up of the GRC, the LGU-PIO will meet with the Barangay Chairman to elect the members of the Grievance and Redress Committee (GRC. The GRC will be composed of five members: a barangay (village council) representative who will chair the GRC, a representative from LGU-PIO as the vice-chairperson, a community leader who has been nominated by the PAPs/PAHs in previous consultations and two representatives of the PAPs/PAHs, one male and one female, as members.

81. Complaints will be documented by any of the GRC members and the written complaint will be given to the community leader for endorsement to the Chairperson. A meeting with the complainant will be called by the GRC, with one of the two PAP/PAH representatives serving as the secretary.

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82. Below are the steps to be followed in filing grievances and the procedures for redress.

Step 1: The complainant provides the background and files the grievance/complaint verbally or in writing to the GRC. If unwritten, the GRC Secretary will put it in writing and will reproduce it in four (4) copies for distribution; the original copy to GRC, two are for the concerned party and the LGU-PIO, and one for the complainant. The GRC will call for a meeting with the complainant. The GRC will then discuss the complaint and resolve it within 15 days. Step 2: If no solution or understanding is reached, the complainant files the grievance/complaint to the GRC central desk at the PMO for it to be resolved within 15 days after filing. The written complaint shall be reproduced in four (4) copies; the original to PMO/GRC Central Desk, two for the concerned party and the LGU-PIO, and one for the complainant. Step 3: Again, if no solution or understanding is reached and if the grievance/complaint qualifies for the filing of a legal case at the Municipal or Regional Trial Court, the PAP may request for assistance of a pro bono lawyer from the Public Attorney’s office, through the GRC. The pro bono lawyer shall assist the household in reproducing the formal complaint in six (6) copies to be distributed as follows; the original to the appropriate court, one each for PMO, LGU-PIO, GRC, the concerned party and the complainant. Step 4: The Municipal Trial Court (MTC) or Regional Trial Court (RTC) assesses the merits of the grievance/complaint, schedules the hearing and renders a decision. Appeals can be elevated to a higher court in accordance with standard judicial procedures observed in the Philippines. A process flowchart for filing and resolving grievances is shown in Figure 12.1.

XI. Implementation Arrangement 83. Executing and implementing Agencies. RP preparation and implementation entails the participation of a host of agencies as well as that of the affected families. At the national level, the DENR, as the Project Executing Agency (EA), has the oversight responsibility for RP preparation and implementation. The DENR will coordinate with the Implementing Agency (LGU, Local Water District) to prepare the RP starting with the consultations with the PAHs up to the issuance of a council resolution by the Local City/Municipal Council that approves and endorses the RP. Once LGU approval of the RP is obtained the RP will be endorsed to DENR for submission to ADB.

84. Upon ADB’s approval of the sub-project, DENR will establish the Program Management Office (PMO) at the regional DENR to assume the overall management of ARBIWRMP. The DENR - PMO shall be responsible for providing technical support and assistance to the LGU in setting up the PIO. The PIO shall be responsible for the implementation of the sub-project.

85. At the local level, the PIO will set up a Resettlement Office (RO) to ensure adequate staffing for the proper implementation of the RP. The PIO, through the RO, will be responsible for most of the critical activities in implementing the RP and will work closely with the LGU throughout RP implementation. The PIO, as well as the RO, will only be created after the ADB has approved the sub-project loans and the LGU is given the notice to proceed

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with project implementation. The PIO at the LGU level will be responsible for ensuring the implementation of agreements between and among the institutions involved in the resettlement. The RO, assisted by resettlement consultants, will prepare and implement the RP.

86. NGOs will assist the PIO-RO in the conduct of consultations and in providing skills, livelihood and community development training. The RO shall encourage the PAHs, particularly women, to form organizations to help in identifying community and resettlement-related needs and ways of responding to them.

87. The roles of the different stakeholders in the various activities involved in RP preparation and implementation are summarized in Table 12.6.

Table 12.6: Project Stages, Activities and Responsible Agencies Project Stages and Activities Role of Responsible Agencies

Activities prior to RP Preparation - Census and Socio-Economic Survey - Disaggregated Database by gender, income group, etc - Listing of PAHs; preparation of masterlist - Detailed measurement survey of asset losses. - Due diligence on proposed relocation sites and land acquisition requirements

DENR (as Executing Agency) Role and Responsibilities -Oversight responsibility for RP preparation and implementation. -Establishment of a Project Management Office (PMO) to assume overall management of ARBIWRMP; PMO to be responsible for providing technical support and assistance to LGUs in preparation of RP for all subprojects. - Formulation of program management policies and procedures and assistance to LGUs in operationalizing their Project Implementation Offices (PIOs). - Explore and discuss options for resettlement site with LGUs

RP preparation -Project disclosure and consultations with stakeholders (PAHs, barangay, NGOs). - Identification of PAHs, Conduct of census, IOL, preparation of Masterlist - Consultation with PAHs on the design of sub-projects. - Consultation with PAHs on compensation and resettlement options. - Writing of RP (LGU-PIO and Consultants). - Consultation with PAHs on RP - Finalization of RP for submission to DENR and ADB for concurrence. - Public announcement (LGU communication facilities, billboards, website). - Publication of RP on ADB Website. -Establishment of Grievance Redress Committees (GRC) to receive and resolve complaints regarding compensation and other entitlements

LGU- PIO Role and Responsibilities -Responsibility for RP preparation and implementation - Conduct of project disclosures and consultation with stakeholders. - Identification of PAHs, preparation of Masterlist. - Consultation with PAHs on design of sub-projects. - Consultation with beneficiaries on compensation and resettlement site preferences - Formulation of compensation and entitlement package. -Preparation of RP with assistance from consultants - Consultation with PAHs on final RP -Finalization of RP for submission to DENR and ADB - Establishment of Grievance Redress Committee to receive and resolve complaints regarding compensation and other entitlements. DENR-PMO Role and Responsibilities -Setting up of GRC Central Desk -Assist LGU-PIO in preparation of RP PAHs and PAPs’ Participation Facilitated by barangay officials and community-based organizations, if any : - Participation in consultations.

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Project Stages and Activities Role of Responsible Agencies - Nomination of PAHs’ representatives in Grievance Redress Committee. - Approval of compensation and entitlement packages through written resolutions with the names and signatures of PAHs.

RP Implementation -Approval and release of budget for RP. -Acquisition of resettlement site - Designing internal systems for management and monitoring of RP implementation. -Submission of documents for Certificate of Compliance (COC) to the concerned LGU office and securing COC - Registration of PAHs with LGU-PIO - Conduct of capacity-building seminar(s) - Consultation with men and women concerning livelihood training. - Livelihood training of PAPs, women - Payment of compensation to PAHs. - Dismantling of structures and relocation to resettlement site or staging area. - Provision of trucking or storage arrangements for personal belongings, and house construction assistance for female-headed households and vulnerable groups. - Site development and house construction. - Resettlement of PAHs - Engagement in livelihood activities by PAPs - Operationalization of grievance and redress mechanism - Internal monitoring of RP activities by the LGU-PIO - External Monitoring of RP implementation by Project Management Office(PMO)

DENR-PMO Role and Responsibilities -Approval and release of budget for RP. -Designing internal systems for management and monitoring of RP implementation. - External Monitoring of RP implementation - Setting up of inter-agency action committees for off-municipality relocation (if applicable) - External Monitoring of RP implementation LGU- PIO Role and Responsibilities -Acquisition of resettlement site -Submission of documents for Certificate of Compliance (COC) to the concerned LGU office and securing COC -Issuance of COC by authorized LGU office - Registration of PAHs -Conduct of capacity-building seminar(s) - Consultation with men and women concerning livelihood training. - Livelihood training of PAPs, women - Payment of compensation to PAHs. - Dismantling of structures and relocation of PAHs to resettlement site or staging area. - Site development and construction. - Resettlement of PAHs. - Provision of trucking or storage arrangements for personal belongings, and house construction assistance for female headed households and vulnerable groups. - Construction of staging area(s) while families are constructing new housing units. (if applicable) - Operationalization of grievance and redress mechanism - Internal monitoring of RP activities PAHs’ and PAPs’ Participation - Organizing themselves for relocation, community development and livelihood activities -Engagement in livelihood activities -Participation in capacity building activities, livelihood training and consultations

RP Monitoring and Evaluation/ Post Relocation Stage - Hiring of services of External Monitoring Agency (EMA). -Setting of EMA’s workplan - Half-yearly external monitoring by EMA

DENR-PMO Role and Responsibilities •Hiring of services of External Monitoring Agency (EMA). • PMO/ EMA assessment of improvements and problems encountered during RP implementation. • PMO / EMA assessment of income restoration activities on livelihood and living standards of PAHs.

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Project Stages and Activities Role of Responsible Agencies - Assessment of achievement of resettlement objectives

• PMO /EMA assessment of income restoration activities on women and living standards of poor and vulnerable PAPs

88. Implementation activities. Consistent with the assigned roles of the different responsible agencies described in the foregoing section, the following activities will be undertaken by the appropriate agencies at various stages of RP implementation.

a. Preparation Stage The DENR-PMO will:

i) assist the LGU in organizing the PIO; ii) assist the LGU in the information dissemination on the ARBIWRMP iii) through the Social Development and Resettlement Specialist, assist the RO in

preparing, updating and implementing the RP and on any request for assistance and resolution of issues related to sub-projects;

iv) finalize the RP after consultation with PAHs and submit the same to ADB’s appropriate department for review and approval;

v) facilitate inter-government agency meetings on RP implementation. Assisted by the PMO, the PIO, through the RO, will:

i) conduct project information dissemination, focus group discussions and consultations with stakeholders;

ii) record and keep minutes of consultations conducted with the PAHs iii) conduct the census, inventory of lost assets and socio-economic survey iv) screen the PAHs’ eligibility based on the criteria; v) consult the PAHs on the design of housing units and facilities to be provided

in the resettlement site; vi) formulate the compensation and entitlements and consult the PAHs;

The LGU will:

i) give its concurrence to the RP, through the appropriate endorsement by the city/municipal council;

ii) identify potential resettlement sites, assess their feasibility and select the most suitable site

iii) acquire the resettlement site through negotiated purchase or any other appropriate mode of acquisition with the end in view of providing secure tenure to the PAHs to be resettled there;

iv) secure the budget for the implementation of the RP.

The PAHs will: i) participate in meetings and consultations called by the LGU and PIO

regarding ARBIWRMP ii) read and study the PIBs and other information materials provided to them

regarding the project, their entitlements and the grievance redress mechanism iii) provide the requested information during the census, inventory of lost assets

and socio-economic surveys iv) provide representatives to sit as members of the GRC

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b. Implementation Stage Working in tandem the PMO and PIO will:

i) recruit the services of an external monitoring agency (EMA) for the external monitoring and evaluation of RP implementation;

ii) inform the ADB of the LGUs’ compliance with the RP and request for a “No Objection” on the release of the loan for the ARBIWRMP sub-project;

iii) hire the services of resource persons for the capacity building seminars; iv) coordinate with DSWD, government agencies and NGOs that conduct

livelihood training for PAHs, with priority to be given to women beneficiaries; v) tap MFIs to provide orientation and training on micro-credit and provide loans; vi) conduct internal monitoring of RP implementation. vii) coordinate with the EMA on monitoring and evaluating the RP implementation

and facilitate the actions on its recommendations.

The LGU will: i) approve and release the budget for implementing the RP; ii) provide the compensation and other entitlements of PAHs; iii) provide basic social services to PAHs in the resettlement sites, i.e., sanitary

latrines, water and electricity connections, internal and access roads; iv) resettle the AHs in accordance with the provisions in the CARP, including

providing basic social services; v) coordinate with DENR and PMO for the release of the sub-project loan from

ADB. vi) conduct the appropriate procedure for checking compliance with resettlement

requirements in accordance with EO 708 devolving the function of issuing the Certificate of Compliance from the PCUP to the LGU, through its local housing board;

vii) issue the Certificate of Compliance to the PIO. The PIO, through the RO, will:

i) prepare the master list of PAHs and the required documents, including the RP, in applying for the issuance of COC from the LGU in accordance with E.O. 708;

ii) facilitate coordination between the LGU and DENR, through the PMO; iii) design and implement the management system and operating procedures for

RP implementation consistent with the accounting system prescribed by the Commission on Audit for LGUs;

iv) keep a copy of the RPF and RP and make them available to PAHs and other stakeholders that may want to read them;

v) prepare the documents required for the issuance of COC from the LGU; vi) coordinate with the PAHs regarding their transfer requirements and inform

them of the schedule of transfer to the resettlement site; vii) coordinate with the PAHs and prepare the necessary documents (e.g. entry

passes) for the orderly assignment of plots in the resettlement site viii) manage the disbursement of compensation and other entitlements for all

PAHs; ix) organize and supervise the actual transfer of the PAHs to the resettlement site x) prepare the individual ledgers of PAHs that indicate the names of the

household head and the spouse, the respective assets lost, compensation and other entitlements received.

xi) consult with the PAHs, conduct livelihood training needs assessment and facilitate the holding of livelihood and skills training as a means for enhancing the incomes of the PAHs;

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xii) prepare the minutes of consultations (MOCs) in every meeting and consultation with PAHs;

xiii) coordinate with PMO for any request for assistance and issues requiring immediate action;

xiv) set up the Grievance Redress Committee (GRC), with representatives from the PAHs

xv) assist the GRC and ensure speedy resolution of grievances brought to the GRC

xvi) assist the PMO in the internal monitoring of RP implementation xvii) coordinate with the EMA on monitoring and evaluating the RP implementation

and act on its recommendations The PAHs will:

i) participate in meetings and consultations that will be scheduled by PIO/RO and the LGU regarding ARBIWRMP;

ii) inform the PIO on the types of livelihood they prefer and the members of households that will attend the livelihood training;

iii) participate in skills training and capacity building seminars iv) organize themselves for the transfer to the resettlement site with appropriate

assistance from UPHOs and PIOs; v) attend the livelihood training and capacity development activities vi) utilize the grievance redress mechanism if and when they need to.

The EMA will:

i) undertake data collection through focus group discussions, key informant interviews and consultations for monitoring and evaluating RP implementation in accordance with the monitoring and evaluation framework and indicators in the RPF;

ii) coordinate with the PMO and PIO regarding the conduct of the monitoring and evaluation

iii) present the findings of its monitoring and evaluation and give feedback to the PMO, PIO and LGU for appropriate action

c. During the Construction of Subproject The civil works contractors will:

i) provide employment to qualified members of PAHs.

d. Post-Construction of sub-project and Post-Implementation of RP The PMO will:

i) submit internal monitoring report to ADB on the progress of transfer of PAHs to the resettlement site;

The LGU will:

i) prepare the legal documents necessary for providing secure tenure to the PAHs;

ii) distribute Certificates of Lot Awards to the PAHs.

The PAHs will: i) continuously pay their monthly housing amortization, if applicable; ii) make payments on their livelihood loans; iii) help barangay officials, through their elected officers, in formulating policies

and guidelines to maintain cleanliness, peace and order, etc, within their community.

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89. Implementation schedule. Figure 12.1 shows an indicative implementation schedule showing the critical activities at each stage of RP implementation. The RP will present a more detailed implementation plan.

Figure 12.1: Indicative Resettlement Plan Implementation Schedule

RefNo.

Critical Activities Year 0 Year 1 Year 2 Years

3-6

1 2 3 4 1 2 3 4 1 2 4 4 1 2 3 4

Preparation Stage

1 Information Dissemination and Consultation with stakeholders

2 Hire social development and resettlement specialist to assist PIO with RP preparation

3 Conduct socio-economic survey, census of PAHs, Qualifying of PAHs and preparation of master list

4 Conduct inventory of lost assets/detailed measurement of lost assets and socio-economic survey

5 Set up Resettlement Office (RO) in the Project Implementation Office (PIO)

6 Update the compensation and entitlement package

7 Prepare the RP and conduct consultations with stakeholders

8 Adoption of RP by the City Council

9 Review and concurrence of RP by ADB and issuance of ‘no objection’ note

10 Identify potential resettlement sites and select resettlement site

11 Secure budget for RP implementation

Implementation Stage

12 Procure services of EMA

13 Approval and release of budget for implementing the RP

14 Design and set up internal systems and control for CARP implementation

15 Secure Certificate of Compliance from LGU

16 Consultation with HHs/AHs on their transfer to relocation site

17 Consultation with PAHs and women on livelihood development

18 Livelihood training and capacity development of PAHs and women

19 Set up Grievance redress mechanism

20 Acquire the resettlement site

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RefNo.

Critical Activities Year 0 Year 1 Year 2 Years

3-6

1 2 3 4 1 2 3 4 1 2 4 4 1 2 3 4

21 Develop resettlement site and install basic services

22 Payment of compensation and provision of entitlement to PAHs

23 Resettlement of PAHs

24 PAHs engage in livelihood restoration activities

25 Operation of Grievance Redress Mechanism

26 Internal monitoring

27 External monitoring

Construction Stage of Sub-project

28 Recruitment of PAHs for employment in civil works, sub-project interventions

Post-implementation Stage

29 Prepare/distribute Certificates of Lot Award to PAHs

30 External monitoring

XII. Monitoring and Reporting

90. Internal monitoring. The PIOs will be responsible for the internal monitoring of the actual implementation of the RP against the planned activities, time frame, budget and entitlement. Internal monitoring will be done on an on-going basis throughout subproject construction phase and the resettlement and rehabilitation period of PAHs. Shown in Table 12.7 are the indicators for the internal monitoring by the PIO for regular feedback to PMO. Monitoring reports will be uploaded on ADB’s website.

91. All the information gathered, together with the issues and problems encountered, for internal monitoring in a certain period will be included in the project progress report (PPR) prepared by the PIO for PMO’s submission to ADB.

Table 12.7: Resettlement Activities Subject to Internal Monitoring, Indicators and Sources of Information

Focus of Monitoring Indicators Sources of Information

Setting up of resettlement implementation arrangements and systems

• Have the personnel of PIOs and counterpart staff from the LGU been organized, deputized and provided their office as scheduled? • Have capacity building and training of PIOs and relevant staff of LGU been conducted on time? • Has the LGU provided the needed budget for the compensation of PAHs? • Has the LGU released and disbursed the

- LGU, PIO - LGU, PIO - LGU, PAHs - LGU, PIO

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equity funding for implementing the RP on time? • Has the social preparation phase been undertaken according to schedule? • Have all lands been acquired in time for implementation of the RP? • Has the RP been agreed with HHs and PAHs and concurred by the local government councils? • Was the Certificate of Compliance from the LGU released on time or as expected?

- LGU, PAHs - LGU, PIO

- LGU, PAHs

- LGU

Delivery of Entitlements

• Did the PAHs receive their respective compensation and entitlements? • Did the PAHs receive their payments on time? • Have all PAHs received the agreed transportation and food allowances? • Have all PAHs that lost their livelihoods or small business received their compensation? • Were the staging areas provided with sanitary latrines, temporary water and electricity connections? Are these accessible to major roads, schools and basic social services? • Were all the entitled PAHs awarded with allocated plots? • Have the women been trained according to their desired livelihood? • Were the women trained on desired livelihood? • Are the PAHs engaged in micro enterprises assisted by micro financing institutions? • Are the new housing units of PAHs better than their previous dwellings? • Were the actual amounts of amortization of housing units the same as the amount disclosed to HH? • Were the Certificates of Occupancy named to both husband and wife?

- PAHs, PIO - PAHs, PIO - PAHs, PIO - PAHs, PIO

- PAHs, PIO

- PAHs, PIO - - PAHs, PIO, NGOs - PAHs, PIO, NGOs,

MFIs - PAHs, PIO - PAHs, PIO - PAHs, PIO - PAHs, PIO

- PAHs, PIO

Project Disclosure and Consultations

• Were PIBs prepared and distributed to stakeholders during consultations? • Were consultations, focus group discussions and/or public meetings undertaken as scheduled? • Were the HHs and AHs facilitated to actively participate in planning and implementation according to what were prescribed in the RPs? • How many PAHs attended the consultations? -Were minutes of consultations taken and kept? Where? -Were copies of the RP made available to the PAHs? Where?

- PAHs, PIO, NGOs - PAHs, PIO, NGOs - PAHs, PIO, NGOs - PAHs, PIO - PIO - PAHs, PIO

Grievance Mechanism • Were the PAHs properly informed of the grievance procedure and mechanism? -Have any HHs and/or AHs used the grievance and redress procedures? What were the outcomes? • How many grievances were filed? What were the types of grievances? What were the outcomes? -How long did it take for a grievance to be

- PAHs, PIO - PAHs, PIO - PAHs, PIO - PAHs, PIO

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resolved? Vulnerable Groups • Were poor and vulnerable households and

persons identified? -Has special assistance been provided to vulnerable PAPs and PAHs? - What assistance has been provided to women-headed households?

- PAHs, PIO - PAHs, PIO - PAHs, women headed

HHs, PIO Outcomes and Benefits • What changes occurred in the livelihood and

occupations of the PAHs compared to their pre-project situation? • What changes have occurred in income and expenditure patterns compared to PAHs’ pre-project situation? -What have been the changes in cost of living compared to PAHs’ pre-project situation? -Have the incomes of the PAHs kept pace with these changes? • What changes have taken place in the standard of living and lifestyle of the PAHs? -What changes have occurred in the occupation of women? -What changes have occurred in the standard of living of women-headed households

- PIO, PAHs, NGOs - PIO, PAHs, NGOs - PIO, PAHs, NGOs - PAHs, PIO, NGOs - PIO, PAHs, NGOs - PAHs, PIO, NGOs - PAHs, PIO, NGOs

92. External monitoring. The PMO will hire the services of an External Monitoring Agency (EMA) to assess the implementation of the RP and will be reporting directly to ADB. External monitoring and evaluation shall be conducted twice a year, covering the implementation of the RP throughout the rehabilitation period, to identify any issues that might need immediate response from PMO, PIO and the implementing LGUs.

93. With regards operational procedures, the EMA will identify the associated issues and problems encountered in the staffing of the PIO for undertaking resettlement activities, consultations and grievance resolution as well as the critical activities like the provision of adequate budgetary support. To assess efficiency and effectiveness, it will identify the issues and problems encountered in the provision for staging areas, plot allocation, housing, payment of compensation and training on livelihood as well as special assistance and gender-related issues. Concerning impact and sustainability which covers the post-evaluation of all resettlement and livelihood activities, the EMA will assess whether livelihoods and living standards of PAHs have been restored, more women have engaged in new livelihood and micro enterprises, whether the subprojects triggered any health and environmental issues, and if there have been any shifts in settlement and population. Monitoring reports will be uploaded on ADB’s website.

94. Table 12.8 presents the essential indicators to be used in the external monitoring of RP implementation.

95. Monitoring reports will be provided to the implementing and executing agencies and the ADB. Copies of these reports shall be made available to the PAPs and PAHs.

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Table 12.8: External Monitoring Indicators Type of Indicator Focus of Monitoring Indicators

Process Indicators Staffing and Budget -Number of PMO and PIO-RO staff assigned for RP implementation; - Are there assigned staff to carry out all activities in the RP; is the workload reasonable - Presence of Social Development and Resettlement Specialist assigned by PMO. - Amount of budget provided for RP activities - Were the funds provided on time

Consultation, participation, grievances

-Number of consultations and participation programs held with PAHs and various stakeholders; - Were PIBs distributed to PAHs; Were they available in the local language? -Number and types of grievances received from PAHs and the number of days it took to resolve them by the GRC; - Were the PAHs represented in the GRC? Were women represented in the GRC? - Number and names of representatives who participated in the consultations; -Number of women who participated in the consultations - Number and contents of minutes of consultations

Operational Procedures -Types of forms used in recording the activities undertaken in RP implementation; - Efficiency of coordination with PMO, PIOs, PAHS and other institutions; - Type of database being maintained; completeness of data; ease of retrieving data - Were compensation and entitlement provided according to the RP to all PAHs? Were they provided on time? -Were the resettlement sites acquired on time? - Was the transfer of the PAHs to the resettlement site accomplished according to schedule? -Adequacy of logistical support for implementing the RP; - Were project policies in RPs adequately been complied with?

Issues and problems encountered

-Difficulties and problems cited by the PIO staff, PAHs - How were the problems dealt with?

Output Indicators Housing -the actual size, the amenities and utilities provided to the PAHs; - location and accessibility of the resettlement site - the amount of monthly amortization payments that shall be paid by beneficiaries; -Number of Certificates of Occupancy distributed; -What form of tenure is provided? Is the tenure secure?

Compensation and entitlement

-Number of PAHs awarded with housing units; - Manner, frequency, timeliness and completeness of the provision of compensation; -Number of PAHs engaged in micro business who were compensated for their loss of business incomes; - Was lost land replaced by land or at replacement cost?

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Type of Indicator Focus of Monitoring Indicators -Number of PAHs provided with transportation assistance; - Number of entitled PAHs given food assistance? - Were PAHs given dismantling and reconstruction assistance allowance?

Socio-economic rehabilitation

-Number of PAHs, especially women, who were provided livelihood and micro-credit assistance -Number of PAHs and women that have set up their micro enterprises after the training on livelihood development; - Do PAHs have adequate access to safe drinking water? What is the ratio of pumps to families? - Do PAHs have access to schools and health centers? Location of nearest schools and health centers

Issues and problems encountered

- Issues and problems encountered in the provision for housing, payment of compensation and entitlement and social rehabilitation of PAHs as cited by the PIO and PAHs. - Were these addressed satisfactorily and promptly?

Impact Indicators Household earning capacity

-Post-relocation income as compared to pre-project income -Employment of PAHs members in subproject construction; -Change in income of micro entrepreneurs - Number of PAHs engaged in new occupations or livelihood - Number of women and women heads of households engaged in new occupations or livelihood

Health and environment -Is there a solid waste management system in place and are the residents practising good solid waste management? - Do PAHs have access to safe drinking water? -Changes in the health conditions of women and children; changes in morbidity rates - State of physical cleanliness of the community

Socio-cultural changes and empowerment

-More women employed or participating in micro enterprises; - Access to new technology brought about by having electricity connections; -Increase in self-confidence due to security and comfort in the new housing units. -PAHs are able to save and pay their monthly amortization on their housing units -PAHs have active organizations and participate in them -PAHs relate with their barangay government and know how to seek assistance for community needs

Settlement patterns and mobility

- Opening of new transportation routes due to the resettlement; - New businesses, commercial services induced by the resettlement; - Evidence of in-migration (new entrants) or out-migration (PAHs abandoning their units) - Increased vehicle traffic in the vicinity of the resettlement site

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XIII. Resettlement Plan Budget and Financing Plan

96. The RP shall provide an itemized budget for all resettlement activities, including the operation of the resettlement office (administrative cost), staff training, monitoring and evaluation, and resettlement plan preparation. It also describes the flow of funds (in the form of budget-scheduled expenditures) as well as the sources of funds. It presents the assumptions made in calculating compensation and other cost estimates, such as replacement costs.

97. For the replacement cost of residential land and housing, prevailing market values in the locality will be used. Site development costs will be estimated according to DPWH standard costs, following standard specifications as established by BP 220 for social housing projects. Costs for transportation and food allowances will be in accordance with the entitlements provided in Section IV above.

98. Essential to financial planning, the funding for implementing the RP shall be presented according to their sources, i.e., LGU’s Equity, loan from ADB and private sector financing (if any). Such presentation will provide the LGU, executing agency and the ADB as to the amount of funds that would be required from their end to finance the RP activities.

99. The template for estimating and presenting the resettlement budget and financial plan is shown in Table 12.9.

Table 12.9: Cost Estimates and Financing Plan for RP Implementation

Cost Item In Thousand Pesos (‘000) LGU Equity Loan Private

Sector Financing

Total

Land Site Development Housing Construction Compensation for land and lost assets

Resettlement Assistance - Transportation - Food Allowance

Livelihood restoration and other training

External Monitoring Agency Resettlement plan preparation

Sub-total % Administration Cost (including staff and training)

% Contingency Total Cost

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13. Indigenous Peoples Assessment and Measures

INDIGENOUS PEOPLES PLANNING FRAMEWORK

1. Introduction

1. ADB recognizes the rights of Indigenous Peoples (IP) to development and aims to achieve the greatest possible reduction of poverty among them. In practice, however, Indigenous Peoples may not automatically benefit from development. Thus, this is a prescribed safeguard instrument of the ADB to ensure that indigenous peoples meet their specific needs and aspirations through the proposed project.

2. PPTA (TA 7258-PHI) on the Agusan River Basin Integrated Water Resources Management Project (ARBIWRMP) aims to reduce poverty through integrated natural resource management of the river basin. It is developing plans to strengthen the institutional basis for coordinated development and management of the basin’s resources and advance the management capacities of the relevant institutions. A key component of the investment project is watershed rehabilitation, biodiversity conservation and indigenous peoples development. The component will focus on investments to improve the well-being of resource-dependent communities and IPs through the provision of income/livelihood opportunities and enhancing the groups’ capacity to develop and manage their ancestral domains.

3. An infrastructure development output includes investments to improve the municipal water systems in 17 municipalities that are located in the upper and middle portions of the basin as well as improve the drainage system in Butuan City. All proposed interventions require significant strengthening and capacity building of existing institutions/implementing agencies.

4. Within this context, this Indigenous Peoples Framework (IPF) is a guide in preparing Indigenous Peoples Plans (IPP) to promote development of IPs in subprojects. This will be used when designing projects such as for major infrastructure projects like the Mabatas Mine Tailings Dam or additional water supply projects which were not appraised during the PPTA. Due to the large scope and the long-term program duration with future subproject identification in succeeding tranches, the IP Framework is prepared to guide further planning and project implementation where significant impacts on IPs are identified.

2. Objectives and Policy Framework

5. The requirements for Indigenous Peoples safeguards apply to all projects that may be funded by ADB. The Policy on Indigenous Peoples is triggered if a project impacts directly or indirectly the human rights, livelihood systems or natural or cultural resources of Indigenous Peoples.

6. Indigenous peoples are accorded protection based on ADB’s Policy on Indigenous Peoples (1998) and its 2009 Safeguard Statement. These are consistent with the principles in the country’s Indigenous People’s Rights Act of 1997 (IPRA) protecting indigenous peoples rights.

7. Both ADB and the IPRA (Indigenous Peoples Rights Act) recognize the right of Free, Prior and Informed Consent (FPIC) of indigenous peoples for all activities affecting their lands—including the entry of development projects.

8. The IP Framework also embodies the IP mandate on ancestral domain governance and resource management as recognized in other laws such as the National Integrated

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Protected Areas System (NIPAS) Act of 1992 and the Department of Environment and Natural Resources Executive Order 263 on Community-Based Forest Management.

3. Identification of Affected Indigenous Peoples

9. In the application of this IP Framework, indigenous peoples are defined by ADB as referring to a distinct, vulnerable, social and cultural group possessing, in varying degrees, the following characteristics:

(i) self-identification as members of a distinct indigenous cultural group; (ii) collective attachment to ancestral territories and to the natural resources in

these habitats and territories; and, (iii) distinct language and customary cultural, economic, social, or political

institutions that are separate from those of the dominant society. 10. Screening was done for ARBIWRMP to identify where IPs are and how the subprojects may affect them. ADB’s IPs Impact Screening Checklist was used as seen in Annex 13.1 with a list of identified potential impacts, both negative and positive, for each subproject. Proposed enhancement and mitigating measures are also noted in the preparation of appropriate measures during the detailed design phase.

11. In the context of the project and this framework, the summary table (Table 13.1) distinguishes vulnerable IPs from the others and where action is needed or may not be needed. For the purposes of this analysis, IPs are identified based on the above definition and classified under different categories based on socio-economic variables that include literacy, housing, occupation, area of residence and population size. Table 1 indicates the condition of all tribes in the target municipalities vis-à-vis subprojects.

12. Advantaged IPs have economic clout and/or are integrated into the local economy or the power structures in the area. No special assessments or measures are required for this category.

13. Disadvantaged IPs may be disadvantaged due to lack of representation in decision making and benefit sharing. Some may have raised their economic standing through education or participation in economic activities like small-scale mining but may be disadvantage within the context of the dominant migrant society. The project will address barriers to participation through a Consultation and Participation Plan.

14. Marginalized and highly marginalized IPs have literacy and other socioeconomic indicators that are lower than for other people and IPs in their community. They depend on forests and natural resources for their livelihood and on available farm and off-farm labor. Their economy may be based on subsistence farming and hunting and gathering. Highly marginalized have similar characteristics but live far from town and lack access to services. They may be numerically smaller and may be less integrated with the larger society through education and other services. The subproject selection criteria screens subprojects in areas with highly marginalized IPs. Participation barriers will also be addressed though a Community and Participation plan.

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Table 13.1: Indigenous People in the Agusan River Basin Subprojects and their Level of Marginalization

Subproject Vulnerable Highly Marginalized

Marginalized Disadvantaged Advantaged

Compostela Watershed Management

From all tribes - IP upland farmers and those dependent on timber cutting/small scale mining

Tagakaolo in Laak Tagakaolo in Mabini

Kalagan in Laak, Mabini Maco and Pantukan

Majority IP populations indicated below: Dibabawon in Laak Mandaya in Compostela Mansaka – largest group throughout ComVal municipalities Dibabawon, Manguangan in Montevista 4 tribes in Monkayo – Dibabawon, Manguangan, Mansaka and Mandaya

Agusan Marsh Biodiversity Conservation

Manobo hunters, farmers and fishermen in protected zone

Manobos in floating houses also lack social services and facilities

Manobos in protected area buffer zone in all municipalities

Water Tanks/ Sanitation Solid Waste Management Agusan Marsh

Manobos in floating houses are vulnerable to water-borne disease houses

Manobos in protected area buffer zone

Water Supply -Nabunturan/ Montevista -Esperanza -Prosperidad

Women-headed households 27 – 35% Willing but unable to afford connection

Atis in Montevista – are outside of service area

Prosperidad -Manobo/Kamayo Higaonon, Banwaon, Manobo settlements in Esperanza are outside of service area

IPs in urbanizing barangays in water service areas are not in distinct settlements; sector of poor population similar to poor of other ethnic groups

Butuan Drainage

Poor living along critical areas which may require relocation

Urban IP population is acculturated; no distinct IP settlements along the drainage system

Mine Tailings Dam

4 tribes in Monkayo – Dibabawon, Manguangan, Mansaka and Mandaya due to proposed mine tailing dam in Mabatas


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15. Vulnerable groups are those who are already so marginalized that without support they may not even get themselves to benefit from the development project. The project identifies them to ensure that their needs are also prioritized during project planning and implementation. Moreover, the project also identifies potential negative impacts of any of its proposed activities on the people. It finds ways to enhance positive impacts especially on vulnerable groups. They may also belong to any of the major or marginalized groups but which may be negatively affected by actions under the project. Vulnerability indicates potential vulnerability to project action. These groups will also be screened and the Free Prior Inform Consent Process for the subproject is triggered.

4. Key Positive and Negative Project Impacts

16. Inclusion of IPs in the subprojects is expected to be highest around the Agusan Marsh (biodiversity conservation, water and sanitation, solid waste management) and in the watershed management subcomponent in Compostela Valley, where subprojects target uplands and the critical Agusan Marsh with about 45% IP population living in ancestral lands.

17. The Project aims to provide long-term opportunities for sustainable development for Indigenous Peoples and other local communities in a manner that recognizes ancestral domain structures and indigenous systems. IPs will benefit directly and indirectly from project interventions—the latter through components such as capacity building and institutional strengthening for river basin management.

18. However, a number of risks are relevant for the type of projects supported by ARIWRMP which spans a wide-range of policy and infrastructure development interventions as well as natural resources management strategies which may affect indigenous peoples.

19. Indigenous peoples are not expected to be adversely affected under certain subprojects, particularly water supply, solid waste management and for the Butuan Drainage improvement, since these are in urban or urbanizing areas—whereas concentrations of IP populations are in rural areas. Indigenous peoples in Butuan City do not live in a distinct settlement and are acculturated. Screening shows that impacts on IPs, whether positive or negative, are generally not different from those with the same socio-economic status. There is no land acquisition for water supply facilities. There may be relocation of those living in critical waterways under the Butuan Drainage Improvement. Vulnerable groups are the poor who are prone to flooding and have established settlements in the marsh and in other high risk areas by the sea.

20. The watershed and biodiversity conservation subprojects aim to enhance access to marsh/forest protection, improve food security, incomes and livelihoods, as well as capacity for management of ancestral domains by IPs. The biodiversity hotspots in Compostela Valley and Agusan Marsh where ARBIWRMP will invest are in ancestral lands. These will benefit marsh/upland dwellers in rehabilitation areas but may result in temporary economic dislocation for IP swiddeners and those who cut timber for sale or who otherwise depend on forest-based livelihoods.

21. This is similar for Agusan Marsh. Specific groups of Manobo fishermen/farmers/hunters in floating villages and buffer zones of the protected area in the Agusan Marsh may be curtailed in their use of certain zones for fishing, hunting and land conversion but where livelihood opportunities and fishing zones and other economic zones will be designated with recognition of IP structures and practices. Ecotourism to promote alternative livelihood and conservation may affect certain sacred areas, which underscores the role of indigenous knowledge in biodiversity conservation.

22. In the Agusan Marsh, the most vulnerable population is the Manobo that live in

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floating houses due to the annual flooding of the Marsh. These houses have 100% Manobo population. They earn their livelihood through fishing in the rivers and lakes. Indices for access to health, education, water and sanitation services are lower than for those who live in buffer zone communities of the Agusan Marsh. They are key beneficiaries of ecotourism, livelihood development and capacity building support. They were specifically targeted for provision of water tanks and for sanitation improvement.

23. The proposed Mabatas mine tailings dam in Monkayo is in the ancestral domain of the Four Tribes composed of the Dibabawon, Manguangan, Mansaka and Mandaya. The dam benefits all, including IPs, by abating pollution and siltation. No land acquisition is needed since the area has already been designated for this purpose and acquired consent from the indigenous peoples through FPIC by Philippine Mining and Development Corporation. However, in this connection, an entire mining community in Diwalwal (population 16,000), which now sits in a hazardous zone atop an over-mined area may be relocated. Other social and environmental impacts have yet to be determined as plans are prepared that may indicate the need for relocation and land acquisition. If this happens in subsequent tranches, it will be pertinent to look into the potential impact on any IPs that may be relocated and those that are in host relocation sites.

24. Some risks relevant to the type of subprojects under the ARBIWRMP that were assessed are noted:

1. Loss of access to common resources. IP-specific impacts pertain to traditional rights to land, water and forest resources and their uses resulting in potential loss of livelihood in reforestation and conservation areas in both the Compostela Watershed and the Agusan Biodiversity site. Other actions supported by the project relate to policy development such as forest land use planning and small-scale mining reform where appropriate plans will involve ancestral domain structures in decision making and in the search for appropriate alternatives that recognize Indigenous Knowledge Systems and Practices. Appropriate beliefs and practices (e.g. sacred ground and the role of Balyan spiritual leader) are reinforced.

2. Benefit Gap. The Agusan River Basin has a heterogeneous population. There is dominance of non-IP migrants in the economic and political spheres in all subprojects. In many sites, IPs are poorer, less educated and live in marginalized areas where there is less access to services and opportunities. IPs may benefit less from any development intervention than the economically and politically dominant migrant ethnic groups. There are also minority indigenous groups in each town that may not be adequately represented if IPs are seen as homogeneous. This may be true for the Tagakaolos and Kalagans in Compostela watershed. There are also vulnerable groups such as the very poor that for one reason or another could not access project benefits—e.g. those who could not afford water connection, or women-headed households, etc. The differential between women’s roles in domestic and economic life vis-a-vis participation opportunities in the project is recognized. Some of these are dealt with through targeting and IP-focused interventions and are addressed in the Gender, Resettlement Framework and Communication and Participation Plans.

3. Dependency on External Support. Interventions supporting livelihoods and structures may lead to dependency on continued support—or be environmentally or culturally unsustainable. This may also apply to lack of affordability in the maintenance of facilities. Alternatives shall be developed with due consideration to indigenous knowledge and institutional arrangements. For sustainability, plans and processes for project implementation shall be harmonized with ADSDPPs and ancestral domain management structures.

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4. Inequitable Participation. There are costs (e.g. in time and resources) that may

outweigh benefits. Such may be the case with participating in law enforcement activities in protected areas, meetings and monitoring in co-management, and the like. In Compostela Valley, forestry law enforcement has posed dangers to life. Participation design may also not include adequate preparation or take into consideration indigenous structures and processes in project implementation and decision making. Appropriate Indigenous Knowledge Systems and Practices can be strengthened along with indigenous decision making processes. Solutions on identified issues such as on law enforcement shall be addressed in this light.

5. Loss of Culture and Cohesion. Interventions may run the risk of imposing changes

that may cause unintended effects or that may cause disruption or conflict among stakeholders and communities. This may be relevant to livelihood and natural resource use practices. Ecotourism may also bring unintended adverse impacts to indigenous peoples with little previous contacts with outsiders. New institutions may displace existing structures which post both positive and negative impacts. Monitoring and evaluation systems shall track unintended negative effects of sub-project interventions on IPs.

5. Indigenous Peoples Plan Preparation1

25. The IPF seeks to ensure that IPs are informed, consulted, and actively participate in the subprojects. Their participation can enhance benefits in project interventions, protect them from any potential negative impacts of the subproject while empowering them through recognition of their Indigenous Knowledge Systems and Practices and their institutions for ancestral domain management.

26. In project sites that are firmed up at a later time, the main features of the IPP will be a preliminary screening process, social impact assessment (SIA) to determine the degree and nature of impact of each sub-project, and an action plan to be developed, if needed. Consultations with IP communities, their leaders, organizations and local government representatives will be an integral part of the process.

27. Preliminary Screening. A full Indigenous Peoples Plan (IPP) is required if there exists:

(i) Impacts on customary rights of use and access to land and natural resources; (ii) Effects on socioeconomic and cultural integrity; (iii) Effects on livelihood, and social security status; and/or (iv) Other impacts that may alter or undermine indigenous knowledge and customary

institutions. 28. The Project Management Unit (PMU), the NCIP, along with the Social Development and/or Resettlement Specialist under the proposed Social Development Unit, will visit all IP communities and villages near the impact areas of subprojects. The identification of indigenous people will be based on population data and initial social assessment.

29. The NCIP and the ancestral domain management office will be tasked to ensure participation in public meetings that will be held in these communities to provide information on ARBIWRMP and the subproject.

1 IPPs components are: preliminary screening, social impact assessment, mitigation measures, development assistance, and project monitoring.

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30. During the visits, community leaders and other participants will present their views on the Investment Program and subproject. At this visit, the team undertakes a screening for IP populations with the help of IP community leaders and local leaders. The screening will check for the following:

(i) Name(s) of IP community group(s) in the area; (ii) Total number of IP community groups in the area; (iii) Percentage of IP community population to that of area population; and (iv) Number and percentage of IP households to be affected by the subproject.

31. The project will also accomplish the IP assessment checklist in Annex 1. The result of the preliminary screening will be provided to the PMU for review as part of the pre-feasibility assessment of the subproject. If the results show that there are IP households in the zone of influence of the proposed subproject, a Social Impact Assessment (SIA) will be planned for those areas.

32. Where there is land acquisition in IP communities, the subproject will ensure their rights will not be violated and that they be compensated for the use of any part of their land in a manner that is culturally acceptable to the affected IPs. This will be covered under a Resettlement Plan.

33. If significant,2 IPP is established based on free, prior and informed consultations with indigenous communities, to enhance benefits and establish measures to minimize, mitigate, and compensate for affected persons.

34. If the SIA determines that the sub-project will likely have only limited impacts on tribal populations, then only a “Specific Action” (SA), and not an IPP, is required to address the limited impacts. The Specific Action needs to be a detailed section of the Resettlement Plan which sets out how such limited impacts will be addressed to ensure appropriate mitigation of impact measures and provision of benefits for IPs. This decision will depend on the severity of impacts on tribal communities affected by the subproject.

35. If Indigenous Peoples are the sole or the overwhelming majority of direct project beneficiaries and when only positive impacts are identified, the elements of an IPP will be included in the overall project design, and a separate IPP will not be required. In such cases, the project document will include a summary of how the project complies with the Policy on Indigenous Peoples Safeguards, in particular, will explain how the requirements for free, prior and informed consultations were fulfilled and how accrual of benefits has been integrated into the project. The project design will explicitly specify how benefits accrue to Indigenous Peoples in the project area and how free, prior and informed consultations will be done during implementation.

36. Social Impact Assessment (SIA). The Project will undertake SIA as part of the detailed technical feasibility report and resettlement planning. The SIA will gather relevant information on demographic data; social, cultural, and economic situation that can provide an overview of the ethnic population characteristics in the project area. A detailed profile of the economic activities of each of the groups includes data on land tenure, identification of the existing problems in performing economic activities, access to water and sanitation, vulnerable groups, women’s and community organizations, indigenous structures, description of local capacity dealing with indigenous groups, and any differential effect due to the subproject. Social analysis will also include data concerning indigenous knowledge systems and practices and possible issues and roles in natural resource management.

37. These will be the basis for determining both positive and negative social, cultural and 2 Impacts are insignificant when fewer than 100 indigenous people are affected.

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economic impacts of the subproject. Information will be gathered through separate group meetings within the IP communities of the project influence zone; there may be separate groups for IP men and women, to better obtain women’s needs and perspectives. Special attention is placed on identifying vulnerable groups. Discussions will focus on impacts of the subproject as well as recommendations on the design of the subproject. Gender-specific benefits and impacts shall be noted, including those of vulnerable groups.

38. Responsibility Center. The Social Development Unit will be responsible for analyzing the SIA and for leading the development of an action plan and impact mitigation measures with the IP community leaders. If the SIA indicates that the potential impact of the proposed sub-project will be significantly adverse—threatening the cultural practices and IP sources of livelihood, or that the IP community rejects sub-project works—the PMU will consider other design options to minimize such adverse impacts. If IP communities support the subproject, an IPP will be developed.

39. The SDU will prepare IPPs if required and will submit this to the PMU executing agency for review and finalization. Approved IPPs will be provided to ADB for final review and approval prior to implementation. The IPP policy and measures must comply with ADB’s Policy on Indigenous Peoples (1998).

40. Outline of Indigenous Peoples Plan.3 The IPP is time-bound, with adequate budget for its implementation. The Plan addresses: aspirations, needs, and preferred options of the affected IPs; local social organization, cultural beliefs, ancestral territory, and resource use patterns among the affected IPs; potential impacts on IPs; measures to address IPs issues or to avoid, mitigate, or compensate for the adverse effects of sub-project; measures to ensure sub-project benefits will accrue to IPs; measures to strengthen social, legal, and technical capabilities of ancestral domain structures and indigenous peoples organizations; the possibility of involving local organizations and non-governmental organizations with expertise in IPs issues; and budget allocation; and monitoring.

6. Consultation and Participation

41. Free, prior and informed consultation is an ongoing process. The project will continue to seek broad community support through culturally appropriate and collective decision-making processes in detailed design and in implementing and monitoring measures to avoid adverse impact on indigenous peoples; when avoidance is not feasible, effects shall be minimized, mitigated, and IPs compensated for such effects. Consultations are also critical in tailoring project benefits that accrue to them in a culturally appropriate manner.

42. The IPP will be prepared in consultation with affected IP groups. Inputs from the IPs will be considered in subproject design and the final IPP. In turn, proposed mitigation measures and strategies will be presented to them by project staff; copies of IPPs will also be available at the NCIP and municipal ancestral domain offices.

7. Disclosure

43. Before finalizing the IPP, a draft shall be disclosed with the social assessment report or key findings in a culturally appropriate manner. Meaningful participation will be secured by providing adequate lead time for preparation. Consultation and presentation will be in a language that is understandable to the participants. Care will be taken to ensure adequate representation and participation of the affected, especially of vulnerable groups such as women, youth, underrepresented minority groups or sectors, depending on subproject.

44. Project disclosure will be initiated by the SDU in coordination with the NCIP and 3 Outline of IP Plan as part of Safeguard Requirements 3 is in Annex 2.2.

118 Appendix 2


ancestral domain structures. A Resolution of Consent (ROC) by the affected communities or their representatives, consistent with 2009 FPIC guidelines, will be required for a subproject with significant negative impacts.

45. Updated IPP and documentation on issues and agreements shall be provided to the PMU, NCIP and municipal ancestral domain management offices. The PMU in turn submits the following documents for disclosure on ADB’s website:

i) a draft IPP and/or Indigenous Peoples Planning Framework (IPPF) including social impact assessment, endorsed by the borrower/client, before appraisal;

ii) the final IPP upon completion of such documents; iii) a new or updated IPPs or addendums to IPPs, and corrective action plan

prepared during implementation, if any; iv) monitoring reports.

8. Grievance Redress Mechanism

46. Project implementers shall inform indigenous peoples and local communities and stakeholders that they may raise a grievance about issues on project implementation and on the application of this IP framework. Affected communities shall be informed about this measure during disclosure. Procedure and contact information of established Grievance Redress Committees (GRC) at relevant levels and sub-projects shall be made available.

47. Established GRCs at appropriate levels shall have representation from the NCIP and will be harmonized with those of ancestral domain structures that are in place to handle grievance pertaining to development projects in ancestral domains.

48. As a first stage, grievance or claim, as the case may be, may be filed with the grievance mechanisms where these have been established in the ancestral domains. If needed, these shall assist in filing grievance in writing within 15 days of receipt.

49. Grievance and claims that are filed are included in project monitoring. If the complainant is not satisfied with the response of the GRC, the grievance may be elevated to the ARB Chief Executive, whose contact information shall likewise be provided.

9. Institutional Framework

50. The Proposed Social Development Unit in the PMU is responsible for the preparatory work needed to identify any environmental and social issues in IPP preparation. Formulation will be in partnership with the National Commission on Indigenous Peoples (NCIP). A specific role will also be specified for ancestral domain management structures in IPP implementation. Assistance will be provided by the Social Development Specialist/Resettlement Specialist in implementing field activities and in training implementers for IPP formulation.

51. Administrative support shall be provided to the NCIP to be able to perform its functions in IPP formulation and implementation.

52. If unanticipated impacts on Indigenous Peoples become apparent during project implementation, such as change in alignment, the SDU will carry out a social impact assessment, and as relevant, prepare an IPP or an addendum to the IPP.

10. Monitoring and Reporting Arrangements

53. IPF or IPP implementation will be monitored regularly. The implementation of the IPP will be supervised by DENR in close coordination with the NCIP provincial offices. The role

119 Appendix 2


and responsibilities of structures of governance in ancestral domains specifically concerned municipal ancestral domain management offices and the IP Provincial Coordinating Bodies, in monitoring IPPs shall be specified.

54. The delivery of benefits and success of mitigation and sustainability measures will be reviewed to ensure that affected persons are not worse off, that target beneficiaries are reached, that households have the necessary capability to sustain projects and facilities, livelihood options and resource management initiatives. The results of the review will be incorporated into annual planning for each subcomponent of the project.

55. Benefit monitoring and evaluation (BME) will also be conducted at mid-term to take into account the IPs’ requirements, as well as constraints, and address these aspects when examining the extent to which their lives were improved by project interventions.

56. Some parameters for review are.

Delivery of outputs. Representation of IPs among community beneficiaries. Gender and vulnerable groups. Social equity and access to benefits. Establishment and implementation of sustainability measures. Improvements in/role of IPs in community resource management. Budget allocation – effectiveness, efficiency of use. Level and quality of participation.

57. The M&E specialist will design the M&E tools and system in order to capture project impacts on all categories of stakeholders including indigenous peoples. The results of monitoring reviews will be captured in quarterly reports as well as in specialized M&E reports.

11. Budget and Financing

58. The PMU will provide sufficient resources to formulate IPDPs in sub-projects which have impacts on IPs. A detailed budget will be prepared by the PMU to take into account all activities associated with the formulation and implementation of IPDPs. Each IPDP will have its own budget which will be part of the sub-project cost. It will be made available during project implementation. The PMU will be responsible for making the budget available for implementation of IPDP. A tentative budget per year may be prepared to avoid delay in the release of funds.

120 Appendix 2


ANNEX 13.1: INDIGENOUS PEOPLES IMPACT SCREENING CHECKLIST

KEY CONCERNS (Please provide elaborations on the Remarks

column) YES NO NOT

KNOWN REMARKS

A. Indigenous Peoples Identification 1. Are there socio-cultural groups present in or use the project area who may be considered as "tribes" (hill tribes, schedules tribes, tribal peoples), "minorities" (ethnic or national minorities), or "indigenous communities" in the project area?

X Except in Butuan where indigenous peoples in the target barangays do not live in clusters but are integrated into mainstream society.

2. Are there national or local laws or policies as well as anthropological researches/studies that consider these groups present in or using the project area as belonging to "Indigenous Peoples", scheduled tribes, tribal peoples, national minorities, or cultural communities?

X

3. Do such groups self-identify as being part of a distinct social and cultural group?

X

X

X

X

4. Do such groups maintain collective attachments to distinct habitats or ancestral territories and/or to the natural resources in these habitats and territories? 5. Do such groups maintain cultural, economic, social, and political institutions distinct from the dominant society and culture? 6. Do such groups speak a distinct language or dialect? 7. Has such groups been historically, socially and economically marginalized, disempowered, excluded, and/or discriminated against?

X

8. Are such groups represented as "Indigenous Peoples" or as "Indigenous Peoples" or "scheduled tribes" or "tribal populations" in any formal decision-making bodies at the national or local levels?

X Municipal and provincial tribal representatives appointed to legislative bodies.

B. Identification of Potential Impacts 9. Will the project directly or indirectly benefit or target Indigenous Peoples?

X Especially in Agusan Marsh and watershed management projects; ARB-wide for capacity building of IPOs and IP structures including NCIP.

121 Appendix 2



column) YES NO NOT

KNOWN REMARKS

10. Will the project directly or indirectly affect Indigenous Peoples' traditional socio-cultural and belief practices? (e.g. child-rearing, health, education, arts, and governance)

X Biodiversity conservation, Resource management, Water, hygiene and sanitation, Forest land use planning, small scale mining reform, capacity building for IPs

11. Will the project affect the livelihood systems of Indigenous Peoples? (e.g., food production system, natural resource management, crafts and trade, employment status)

X In biodiversity conservation and watershed management projects where access to traditional livelihood areas may be curtailed. Alternative livelihood development Ecotourism tourism in the Marsh and in Compostela Valley

12. Will the project be in an area (land or territory) occupied, owned, or used by Indigenous Peoples, and/or claimed as ancestral domain?

X 5 ancestral domains in Compostela Valley and 7 in Agusan Marsh

C. Identification of Special Requirements Will the project activities include: 13. Commercial development of the cultural resources and knowledge of Indigenous Peoples?

X Except for ecotourism but will be low environment impact; to be owned and managed by IPs and respectful of cultural and spiritual practices

14. Physical displacement from traditional or customary lands?

X Except for economic loss due to incompatible activities in protection areas

122 Appendix 2



column) YES NO NOT

KNOWN REMARKS

15. Commercial development of natural resources (such as minerals, hydrocarbons, forests, water, hunting or fishing grounds) within customary lands under use that would impact the livelihoods or the cultural, ceremonial, spiritual uses that define the identity and community of Indigenous Peoples?

X Forest protection of identified areas in the Compostela subwatersheds

16. Establishing legal recognition of rights to lands and territories that are traditionally owned or customarily used, occupied or claimed by Indigenous Peoples?

X

X

Project supports mainstreaming of Ancestral Domain (AD) Plans and AD plan delineation will be upon request No land acquisition of indigenous land

17. Acquisition of lands that are traditionally owned or customarily used, occupied or claimed by Indigenous Peoples?


123 Appendix 2


Annex 13.1.A: Anticipated Impacts on Indigenous Peoples and Mitigating Strategies

Subproject Strategies and Activities

Anticipated Impacts

Strategy to Address Impacts

Watershed Management and biodiversity conservation

Reforestation, Assisted Natural Regeneration, Agroforestry

Positive: Forestry and agroforestry interventions benefit IPs as upland farmers

The project will harmonize with priorities identified in Ancestral Domain Sustainability Development and Protection Plans; implementation will be in coordination with established ancestral domain structures; reforestation interventions targets IPOs and CBFMs as key implementers; land tenure issues addressed.

Capacity Building for IPs

Positive: Capability building assistance targets role of IPs in governance and resource management of ancestral domain.

The project will incorporate training and capability building priority needs in ADSDPPs; IP Development Plan is updated with NCIP and ancestral domain structures

Reforestation Negative: Loss of livelihood for those that are dependent on illegal cutting of timber, wildlife poaching in reforestation areas; loss of biodiversity in choice of reforestation species

The project will do an inventory of forest occupants. It will characterize those that will be negatively impacted to prioritize them for livelihood interventions by the project subject to willingness to participate in “treepreneur” reforestation and livelihood efforts; mitigation measures are governed by resettlement planning processes and conditions; indigenous trees and plant species are also protected and propagated

Reforestation Negative: Loss of kaingin areas planted to corn and other crops/loss of biodiversity and traditional sources of food, medicine, etc.

-Do -

Forest Protection Negative: Ancestral domain guards/Bantay Lansang/checkpoints - opportunity costs of performing protection functions; danger faced by IP law enforcers

Training of IP Bantay Lasang volunteers; allowance for Bantay Lasang is included in budget with provision that LGUs shall ensure continuity of incentive by charging environmental fees; insurance of Bantay Lasang members is proposed as continuing LGU counterpart, as now practiced in ComVal; livelihood alternatives for resource users

Forest Protection Negative: Wildlife that is a source of food and income will be conserved

Alternative income sources and NTFP, crop diversification, ecotourism and related jobs promoted; Traditional means of hunting to be allowed in specified areas for family use;; education and livelihood options to be

124 Appendix 2



Anticipated Impacts


developed in partnership with other programs; institutionalize mechanism for joint planning and action by KBA, DENR, IPs and LGUs.

Forest Protection and reforestation

Negative: Key Biodiversity area (KBA) is maintained for conservation

Sustainable agriculture and jobs for KBA residents; alternative zones and rules allowed for traditional hunting consistent with KBA and ancestral domain plans; AD protection rules are reinforced; women in resource management encouraged

Mining Reform Positive: Small scale mining reform to improve management, technology and benefit sharing

IPs are participants in the formulation of Code for Small Scale Miners that harmonizes ancestral domain rules and IP rights and responsibilities, e.g. recognition of sacred sites, designation of non-mining zones, benefit sharing arrangements, etc; prepare IPs and communities on positive and negative impacts of large scale mining

Livelihood Development

Positive: Additional sustainable livelihood options are available to IP households

Planning of environment and natural resource (ENR) management livelihood options is done in conjunction with ancestral domain plans and with IPs and their organizations; women, vulnerable groups and users of resources are determined for appropriate interventions

Agusan Marsh (Manobo)

Biodiversity Conservation and Ecotourism in the Agusan Marsh

Positive/ENR- compatible livelihood options are developed Negative: Economic displacement due to lack of access to off-limit zones; Wildlife that is a source of food and income (fruit bats) will be conserved; cultural disturbance; potential risk of HIV and other social problems associated with tourism; sacred sites not respected

Resettlement Framework applied Resolution of consent of affected indigenous communities is obtained in the establishment of specific facilities or ecotourism components or for any commercial development of natural resources within customary lands; ceremonial, or spiritual uses of the land are respected including any spiritual practices associated with access to sacred areas; livelihood alternatives for loss of access to protected zones; zoning with IPs; monitoring and elimination of unintended social effects

Butuan Drainage

Improvement of drainage system

Positive: Decrease incidence of/losses from flooding Negative: Resettlement of people in high risk zones; costly

No distinct IP settlements in the proposed drainage area Specific Action to address IP concerns in resettlement plan

Water Supply Improvement of Water Supply in 3

Positive: Improved access to safe

125 Appendix 2



Anticipated Impacts


areas piped water Negative: Low income IPs may not be able to afford water connection

Sanitation (Manobo)

Water-sealed toilets in Agusan Marsh

Positive/Negative: Improvement of hygiene and sanitation; breaks away from tradition and requiring water fetching and maintenance

IEC on hygiene, water conservation, sanitation through appropriate means and language

Solid Waste Management (Manobo)

MRF near Agusan Marsh

Positive: Clean up, recycling and livelihood development from recycling

IEC

Mabatas Dam (Four Tribes)

Tailings dam construction

Positive: Reduced pollution and siltation; potential IP royalties Negative: Internal conflict among tribes

Negotiation


126 Appendix 2


14. Risk Assessment and Risk Management Plan

Risks Assessment without Mitigation

Mitigating Measures Assessment with Mitigation

Uncertainty over roles between DENR agencies over institutional ‘home’ of watershed management

Medium At the outset of the project whichever agency will be determined by DENR to fulfill its institutional mandate on watershed management must be made an integral part in the project management structure.

Low


Medium Implementation of stakeholder consultation programs and public awareness campaigns

Low

Lack of common agreement amongst local stakeholders on development policies, plans and strategies for of the Agusan River Basin

Medium Formation of an inter-LGU management body (ARBGB) for the whole river basin to collectively review natural resources policies, development plans and strategies and coordinate follow-up actions

Low

Waning LGU interest or lack of adequate staffing/ funding for a river basin coordination body (AERBGB)

Medium Institutional strengthening and capacity building, establishment of effective funding mechanism, frequent project workshops to refine goals and mandate

Low

Weak regulation and enforcement of forestry, mining, and environmental laws

High Revision and updating of relevant regulations and laws, and enforcement, if necessary with the assistance of PNP.

Medium

Encroachment and expansion of mining areas in critical watersheds and to Agusan Marsh

Medium Review of policies and strategies, and stricter licencing of mining concessions

Low


Medium Construction of mine tailings dams and ponds

Low

Tailings dams fail Medium Selection of competent contractors and good site supervision

Low

Septage desluging is not carried out on proposed sanitation units in Agusan Marsh

Medium Capacity builing of sanitation units of LGUs, and public awareness campaigns

Low

Ecotourism marketing is not effective

Medium Continued improvements to advertising and promotions

Low

Overall Medium Low Source: Table 4.


Project Number: {XXXXX} Loan and/or Grant Number(s): {LXXXX; GXXXX; TAXXXX} October 2010

Republic of the Philippines: Agusan River Basin Integrated Water Resources Management Project

Project Administration Manual

ii


Contents Abbreviations ....................................................................................................................iv I. Project Description ..................................................................................................... 1 II. Implementation Plans ................................................................................................. 2

A. Project Readiness Activities ............................................................................... 2 B. Overall Project Implementation Plan .................................................................. 3

III. Project Management Arrangements ........................................................................... 5

A. Project Implementation Organizations – Roles and Responsibilities................... 5 B. Key Persons Involved in Implementation ............................................................ 6 C. Project Organization Structure ........................................................................... 7

IV. Costs and Financing ................................................................................................... 8

A. Detailed Cost Estimates by Expenditure Category ............................................. 9 B. Allocation and Withdrawal of Loan/Grant Proceeds.......................................... 10 C. Detailed Cost Estimates by Financier ............................................................... 11 D. Detailed Cost Estimates by Outputs ................................................................. 12 E. Detailed Cost Estimates by Year ...................................................................... 13 F. Contract and Disbursement S-curve................................................................. 14 G. Fund Flow Diagram .......................................................................................... 14

V. Financial Management ............................................................................................. 15

A. Financial Management Assessment ................................................................. 17 B. Disbursement ................................................................................................... 18 C. Accounting ....................................................................................................... 19 D. Auditing ............................................................................................................ 19

VI. Procurement and Consulting Services ...................................................................... 20

A. Advance Contracting and Retroactive Financing .............................................. 20 B. Procurement of Goods, Works and Consulting Services .................................. 20 C. Procurement Plan ............................................................................................ 22 D. Consultant's Terms of Reference ..................................................................... 24

VII. Safeguards ............................................................................................................... 24 VIII. Gender and Social Dimensions ................................................................................ 26 IX. Performance Monitoring, Evaluation, Reporting and Communication ....................... 26

A. Project Design and Monitoring Framework ....................................................... 26 B. Monitoring ........................................................................................................ 29 C. Evaluation ........................................................................................................ 31 D. Reporting ......................................................................................................... 31 E. Stakeholder Communication Strategy .............................................................. 31

X. Anticorruption Policy ................................................................................................. 32 XI. Accountability Mechanism ........................................................................................ 33 XII. Record of PAM Changes .......................................................................................... 33

iii


Project Administration Manual Purpose and Process

The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with Government and Asian Development Bank (ADB) policies and procedures. The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM.

The Department of Environment and Natural Resources Foreign-Assisted and Special Projects Office (DENR-FASPO), DENR Regions XI and XIII, and local government units (LGU) are wholly responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB’s policies and procedures. ADB staff is responsible to support implementation including compliance by DENR-FASPO, DENR Regions XI and XIII, LGUs of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures.

At Loan Negotiations the borrower and ADB shall agree to the PAM and ensure consistency with the {Loan/Grant20} agreement. Such agreement shall be reflected in the minutes of the Loan Negotiations. In the event of any discrepancy or contradiction between the PAM and the {Loan/Grant} Agreement, the provisions of the {Loan/Grant} Agreement shall prevail.

After ADB Board approval of the project's report and recommendations of the President (RRP) changes in implementation arrangements are subject to agreement and approval pursuant to relevant Government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM.

20 The name of the operational financing document may vary on a project to project basis; this reference shall be deemed to encompass such variations, e.g., a Framework Financing Agreement, as applicable.

iv


Abbreviations

ADB = Asian Development Bank ADF = Asian Development Fund AFS = audited financial statements CQS = consultant qualification selection DMF = design and monitoring framework EARF = environmental assessment and review framework EIA = environmental impact assessment EMP = environmental management plan ESMS = environmental and social management system GACAP = governance and anticorruption action plan GDP = gross domestic product ICB = international competitive bidding IEE = initial environmental examination IPP = indigenous people plan IPPF = indigenous people planning framework LAR = land acquisition and resettlement LIBOR = London interbank offered rate NCB = national competitive bidding NGOs = nongovernment organizations PAI = project administration instructions PAM = project administration manual PIU = project implementation unit QBS = quality based selection QCBS = quality- and cost based selection RRP = report and recommendation of the President to the Board SBD = standard bidding documents SGIA = second generation imprest accounts SOE = statement of expenditure SPS = Safeguard Policy Statement SPRSS = summary poverty reduction and social strategy TOR = terms of reference

1


I. PROJECT DESCRIPTION

1. Project's rationale, location and beneficiaries. The project is located in the Agusan River Basin (ARB) in eastern Mindanao which is blessed with abundant varied natural resources. However, the basin’s ability to deliver on a sustainable basis the benefits derived from its natural resources is being threatened by a host of activities that degrade its land, forest, water, and biodiversity resources. These activities cause soil erosion that leads to sedimentation of waterways, flooding, pollution of rivers, degradation of the environment, and reduction in the overall capacity of the basin to provide vital ecological benefits. Weak enforcement of laws and the lack of an institutional mechanism to coordinate, plan, manage, implement consistent policies and programs, and police the whole basin, contribute to the worsening of the environmental situation in the area.

2. The direct beneficiaries will include IPs and other settlers in the priority catchments and Agusan Marsh who will benefit from increased biodiversity, fisheries and forest resources due to reduced pollution, reduced sedimentation, and improved vegetative covers. Downstream domestic and non-domestic users of water will benefit from the reduced danger of toxic chemical contamination from mining activities upstream. In urban areas households will gain access to improved water supply systems, and Butuan City residents will experience reduced incidence of flooding.

3. Impact and outcome. The main impact of the project will be that all of the Agusan basin will have sustained availability and more equitable distribution of adequate water of suitable quality for use for agreed domestic, economic and environmental uses, and poverty will have been reduced.

4. The main outcome will be that water and land resources management and water infrastructure in the Agusan Basin will be developed.

5. Outputs. The proposed project investments are grouped into the following outputs: (i) effective coordination of river basin development and utilization; (ii) improvement of river water quality and watershed conditions; (iii) integrated ecosystem management of the Agusan Marsh; (iv) implementation of local social development and indigenous peoples development plans; (v) improvement of water resources, flood management, and water supply infrastructure; and (vi) strengthening of project management capacity.

2


II. IMPLEMENTATION PLANS

A. PROJECT READINESS ACTIVITIES

Months Indicative Activities 1 2 3 4 5 6 Who responsible

Advance contracting actions

Retroactive financing actions

Establish project implementation arrangements

ADB Board approval

Loan signing

Government legal opinion provided

Government budget inclusion Loan effectiveness

3


B. OVERALL PROJECT IMPLEMENTATION PLAN

Activities Year 0 (Mth/Qtr)

Year 1 (Mth/Qtr)

Year 2 (Mth/Qtr)

Year 3 (Mth/Qtr)

Year 4 (Mth/Qtr)

Year 5 (Mth/Qtr)

Year 6 (Mth/Qtr)

DMF 1. Improvement of water resources, flood management, and water supply infrastructure

1.1 Process of land acquisition and finalization of resettlement plans for Butuan City drainage

1.2 Resettlement plan for Butuan City drainage 1.3 Improvement of Butuan City drainage (Phase 1) 1.4 Improvement and expansion of three case study municipal water supply systems 1.5 Improvement and expansion of 14 other municipal water supply systems 1.6 Upgrading of hydrological monitoring network and database 1.7 Early flood warning system 1.8 Upgrading of regional laboratories 2. Improvement of river water quality and watershed conditions 2.1 Formulation of FLUP and physical framework planning in priority watersheds 2.2 Forest protection in Compostela Valley (CV) priority watersheds 2.3 Streambank stabilization in CV priority sub-catchments 2.4 Slope stabilization measures in CV priority watersheds 2.5 Agro-forestry / livelihood generation in CV priority sub-catchments 2.6 Rehabilitation interventions designed in priority Agusan del Sur/ Norte watersheds 2.7 Implementation of rehabilitation interventions in priority Agusan del Sur/ Norte watersheds

2.8 Mabatas mine tailings dam in Naboc sub-catchment 2.9 Dredging of Naboc and Manat rivers 2.10 Formulation and adoption of Code of Practice for Small-scale Mining 2.11 Planning and consensus building on mining reform (EITI) 3. Establishment of integrated ecosystem management of Agusan Marsh 3.1 Marsh management plan updated and communicated with stakeholders 3.2 Establishment of Strict Protection Zones in Agusan Marsh 3.3 Development of eco-tourism in Agusan Marsh 3.4 Wetland education center established 3.5 Installation of floating water supply/ sanitation units in Agusan Marsh 3.6 Implementation of community-based solid waste management in the Marsh 3.7 Development and installation of low cost flood warning system for Agusan Marsh 4. Implementation of local social development and IP development 4.1 Implementation of pilot ADSDPP 4.2 Local social development and IP plans prepared and implemented for priority

4


Activities Year 0 (Mth/Qtr)

Year 1 (Mth/Qtr)

Year 2 (Mth/Qtr)

Year 3 (Mth/Qtr)

Year 4 (Mth/Qtr)

Year 5 (Mth/Qtr)

Year 6 (Mth/Qtr)

watersheds 4.3 Community/watershed coordination structures 4.4 Capacity building of IP organizations for ancestral domain and resource management

4.5 Social marketing of Agusan River rehabilitation planning 4.6 ENR enterprise development and marketing plans prepared and implemented for target sites 4.7 Organizational strengthening of ancestral domains structures, IPOs, community organizations for livelihood/ resource management 4.8 Implementation of reforestation component as sustainable livelihood enterprise under “Treepreneur” or similar concept

4.9 Indigenous People’s Plan for Agusan Marsh prepared and implemented 5. ARB Governing Board in coordinating basin development and utilization 5.1 Drafting and signing of MOA for ARBGB 5.2 Formulation of common strategic management framework for ARBGB 5.3 Operation of ARBGB and implementation of mandate 5.4 Data collection, management and analysis systems established 5.5 State of the basin reporting established 5.6 Long-term financing mechanisms established. 5.7 Communication and participation processes established 6. Stengthening of project management capacity 6.1 Short-listing for consultancy packages 6.2 Recruitment of consultant teams 6.3 Establishment, staffing and equipping of PMU, sub-PMUs and PIUs 6.4 Procurement of vehicles and other facilities 6.5 Organizational change of DENR FASPO to streamline business processes 6.6 Installation of database management systems and GIS in LGU and PMU offices 6.7 Integrated monitoring and information system 6.8 Capacity building consensus building and planning stage 6.9 Capacity building application stage 6.10 Capacity building institutionalization stage

Management Activities Procurement plan key activities to procure contract packages Consultant selection procedures Environment management plan key activities Gender action plan key activities Communication strategy key activities Annual/Mid-term review Project completion report

5


III. PROJECT MANAGEMENT ARRANGEMENTS

A. PROJECT IMPLEMENTATION ORGANIZATIONS – ROLES AND RESPONSIBILITIES

Project implementation

organizations Management Roles and Responsibilities

Executing agency (DENR-FASPO)

Coordinating the various implementing agencies and act as the focal unit for coordination with ADB, as well as external government offices whose endorsement or approval and monitoring activities are mandated by existing policies or laws, e.g. NEDA, DOF, NWRB, DOH

Administration of loan disbursements as grants through PMU, sub-PMUs to DENR regional/local entities

Preparation of project completion report Project specific

management body (either stand-alone or within the executing agency)

Day-to-day management of project implementation Liaison/coordination with sub-PMUs (based in

project area) and PIUs Budgeting and financincial planning/management Recruitment of TA/consultant teams Procurement of goods and works

Operation of PPMS Review and approval of proposed activities of the

project implementation units (PIU) submitted through the sub-PMUs at the regional level

Process payments and disbursements to the designated conduits such as the Municipal Development Fund Office and the sub-PMUs through the designated local banks in the regions.

Review and monitor implementation of the project and prepare/submit summary reports to the government and ADB.

Project Steering

Committee Provide policy guidance and overall coordination in

the implementation of the project Implementing agency 1

(DENR Regions XI and XIII)

Implementation of watershed rehabilitation, IP development and biodiversity/ Agusan Marsh subprojects in coordination with relevant LGUs and community groups

Coordinate directly either with the designated sub-PMU at the regional level for approval of activities and request for payments, or with MDFO for the release of their payments

Implementing agency 2

(LGUs) Implementation of watershed rehabilitation, IP

development and biodiversity/ Agusan Marsh subprojects in coordination with DENR regional offices and community groups

Coordinate directly either with the designated sub-

6


PMUs at the regional level for approval of activities and request for payments, or with MDFO for the release of their payments

Butuan City LGU: implementation of Butuan City drainage improvement subproject (Phase 1 of master plan)

LGUs that manage water supply systems: implementation of water supply system improvement/ network expansion

ADB Disbursement of loan and grant funds to EA for on-

granting Disbursement of loan funds to MDFO and LWUA

for on-lending Supervsion and review missions B. KEY PERSONS INVOLVED IN IMPLEMENTATION

Executing Agency DENR-FASPO Officer's Name

Position Telephone Email address

Office Address ADB

Agriculture, Environment, and Natural Resources Division

Staff Name Position Telephone No. Email address

Mission Leader Staff Name Position Telephone No. Email address

7


C. PROJECT ORGANIZATION STRUCTURE

Direction, reporting, supervisionCoordinationCapacity building

Field offices

National Level

Steering Committee

Central Project Management Unit (PMU) at

FASPO

Consultant Teams

Watershed rehabilitation and biodiversity enhancement,

and indigenous people development

Department of Environment and Natural Resources

(Executing Agency)

Asian Development Bank (ADB)

Sub PMUs at DENR Regions

National

Regional

ImplementingAgencies

Subprojects

Local Government Units (LGU)

LWUA, WDs

NCIP

Infrastructural development for municipal water supply, and Butuan City drainage

Improvement of water resources monitoring

DPWH

DENR/ Forest Management Bureau; Environment Monitoring Bureau; Protected Area Management Board

Institutional development for river basin management

Institutional strengthening and capacity building

National Commission on Indigenous People (NCIP)

Department of Public Works and Highways (DPWH)

Municipal Development Fund Office (MDFO)

Department of Interior and Local Government (DILG)

Local Water Utilities Administration (LWUA)

PAGASAPMDC

Global Environment Facility (GEF)

8


IV. COSTS AND FINANCING

1. The total cost of the project is estimated at $125 million equivalent, including taxes, duties, interest charges on the ADB loan, and physical and price contingencies. About $28.02 million equivalent (28%) of the base cost is allocated for improvement of water resources, flood management, and water supply infrastructure; $39.77 million equivalent (40%) for improvement of river water quality and watershed conditions; $6.71 million equivalent (7%) for Agusan Marsh biodiversity; $10.23 million equivalent for local social development and indigenous people development; $4.53 million equivalent for institutional development; and $9.92 million equivalent (10%) for strengthening of project management capacities. A summary of the cost estimates by output is given in Table IV.1.

Table IV.1: Cost Estimates by Outputs ($ million)

Item Amounts a A. Base Cost b 1. Improvement of water resources, flood management and water supply

infrastructure 28.023

2. Improvement of river water quality and watershed conditions 39.772 3. Agusan marsh biodiversity 6.711 4. Local social development and indigenous people development 10.234 5. Institutional development 4.530 6 Strengthening of project management capacity 9.916 Subtotal (A) 99.186

B. Contingencies c 1. Physical contingencies 9.911 2. Price contingencies 11.126 Subtotal (B) 21.037

C. Financing Charges during Implementation d 5.245 Total (A+B+C) 125.468 a Includes taxes and duties of $14.159 million.

b In October 2010 prices. c Physical contingencies computed at 10.0% of civil works and equipment base costs. Price contingencies computed on the

basis of domestic and international price escalation factors, which include a provision for potential exchange rate fluctuation assuming purchasing power parity exchange rates.

d Includes interest and commitment charges. Financing charges are estimated, assuming 1.8% interest rate on OCR loan and 0.15% commitment fee,

Source: PPTA Consultant. 2. The ADB loan will finance 79.7% of the project cost, and co-financing through the Global Environmental Facility will finance 2.4%. About $22.5 million equivalent (17.9% of the total project cost) will be provided by the Government of the Philippines through DENR, the local government units and water districts. The financing plan is summarized in Table IV.2.

Table IV.2: Financing Plan ($ million)

Source Foreign Exchange

Local Currency Total Cost % Total

Asian Development Bank 29.773 70.196 99.968 79.7 Government of the Philippines 13.974 8.525 22.498 17.9 Global Environmental Facility 0.803 2.198 3.002 2.4

Total 44.549 80.919 125.468 100.0 Source: PPTA Consultant.

9


A. DETAILED COST ESTIMATES BY EXPENDITURE CATEGORY

% % TotalForeign Base

Local Foreign Total Local Foreign Total Exchange Costs

I. Investment Costs A. Land Acquisition 7,290 - 7,290 166 - 166 - -B. Resettlement 13,617 - 13,617 309 - 309 - -C. Civil Works 625,770 906,013 1,531,783 14,222 20,591 34,813 59 35D. Equipment 60,860 176,537 237,397 1,383 4,012 5,395 74 5E. Training 480,107 63,473 543,580 10,912 1,443 12,354 12 12F. Capital Goods 20,437 7,070 27,507 464 161 625 26 1G. Research and Development 262,861 26,090 288,951 5,974 593 6,567 9 7H. Consulting Services 259,076 127,394 386,470 5,888 2,895 8,783 33 9I. Revolving Credit Fund 48,038 - 48,038 1,092 - 1,092 - 1J. Project Management 187,637 45,181 232,818 4,264 1,027 5,291 19 5K. Vehicle 2,891 8,688 11,579 66 197 263 75 -L. Materials 740,362 178,271 918,634 16,826 4,052 20,878 19 21M. Detailed Engineering Design 35,359 8,514 43,873 804 194 997 19 1N. Construction Supervision 58,564 14,102 72,666 1,331 320 1,651 19 2

Total BASELINE COSTS 2,802,870 1,561,333 4,364,203 63,702 35,485 99,186 36 100Physical Contingencies 279,959 156,133 436,093 6,363 3,548 9,911 36 10Price Contingencies 558,522 51,232 609,754 10,855 271 11,126 2 11

Total PROJECT COSTS 3,641,351 1,768,698 5,410,049 80,919 39,304 120,223 33 121Interest During Implementation - 224,725 224,725 - 4,994 4,994 100 5Commitment Charges - 11,301 11,301 - 251 251 100 -

Total Costs to be Financed 3,641,351 2,004,724 5,646,075 80,919 44,549 125,468 36 126

(PhP '000) (US$ '000)

10


B. ALLOCATION AND WITHDRAWAL OF LOAN/GRANT PROCEEDS

{In Loan/Grant Agreement, the Schedule entitled 'Allocation and Withdrawal of Loan/Grant Proceeds' normally contains both narrative paragraphs and the 'Table of Allocation and Withdrawal of Loan Proceeds'. In this case copy only the table into this section. If a table is not provided then copy the narrative description to this section.}

11


C. DETAILED COST ESTIMATES BY FINANCIER

GlobalAsian Development Government of the Environmental Local

Bank Philippines Facility Total For. (Excl. Duties &Amount % Amount % Amount % Amount % Exch. Taxes) Taxes

I. Investment Costs A. Land Acquisition - - 195 100.0 - - 195 0.2 - 172 23B. Resettlement - - 365 100.0 - - 365 0.3 - 321 44C. Civil Works 32,380 80.3 7,218 17.9 738 1.8 40,336 32.1 22,804 12,692 4,840D. Equipment 5,794 95.7 258 4.3 - - 6,051 4.8 4,428 897 726E. Training 9,762 61.9 5,397 34.2 622 3.9 15,781 12.6 1,605 12,283 1,894F. Capital Goods 733 100.0 - - - - 733 0.6 177 468 88G. Research and Development 4,196 51.9 2,609 32.3 1,275 15.8 8,080 6.4 656 6,454 970H. Consulting Services 10,311 98.5 160 1.5 - - 10,471 8.3 3,200 6,282 989I. Revolving Credit Fund 1,253 89.2 152 10.8 - - 1,405 1.1 - 1,236 169J. Project Management 6,320 94.6 124 1.8 237 3.6 6,681 5.3 1,141 4,738 802K. Vehicle 165 56.1 - - 129 43.9 294 0.2 218 41 35L. Materials 21,323 80.0 5,331 20.0 - - 26,654 21.2 4,508 18,947 3,198M. Detailed Engineering Design 888 77.7 254 22.3 - - 1,143 0.9 213 793 137N. Construction Supervision 1,599 78.6 436 21.4 - - 2,035 1.6 355 1,436 244

Total PROJECT COSTS 94,723 78.8 22,498 18.7 3,002 2.5 120,223 95.8 39,304 66,760 14,159Interest During Implementation 4,994 100.0 - - - - 4,994 4.0 - - -Commitment Charges 251 100.0 - - - - 251 0.2 - - -

Total Disbursement 99,968 79.7 22,498 17.9 3,002 2.4 125,468 100.0 39,304 66,760 14,159

12


D. DETAILED COST ESTIMATES BY OUTPUTS

% % TotalForeign Base

Local Foreign Total Local Foreign Total Exchange Costs

Butuan Dainage 136,045 143,043 279,088 3,092 3,251 6,343 51 6Nabunturan Water Supply 34,130 43,029 77,159 776 978 1,754 56 2Prosperidad Water Supply 33,128 44,284 77,411 753 1,006 1,759 57 2Esperanza Water Supply 27,929 35,822 63,751 635 814 1,449 56 1Other Water Supply Subprojects 279,760 380,598 660,359 6,358 8,650 15,008 58 15Hydrological Monitoring Network and Database 29,571 32,512 62,083 672 739 1,411 52 1Upgrading of Laboratory Facilities 2,462 10,706 13,168 56 243 299 81 -

Subtotal 543,025 689,994 1,233,019 12,341 15,682 28,023 56 28B. Improvement of River Water Quality and Watershed Conditions

Formulation of Forest Land Use Plan 45,546 10,967 56,513 1,035 249 1,284 19 1Protection 189,364 45,597 234,961 4,304 1,036 5,340 19 5Agroforestry 41,813 10,068 51,881 950 229 1,179 19 1Streambank Stabilization 8,002 1,927 9,929 182 44 226 19 -Vegetative Approach 144,116 34,702 178,818 3,275 789 4,064 19 4Vegetative cum Engineering Approach 190,052 122,298 312,350 4,319 2,780 7,099 39 7Watershed Monitoring System 8,203 21,339 29,542 186 485 671 72 1Mine Tailings Dam 75,969 95,026 170,995 1,727 2,160 3,886 56 4River Dredging 65,623 118,916 184,540 1,491 2,703 4,194 64 4Improvement of Watershed in CARAGA 419,455 101,000 520,455 9,533 2,295 11,829 19 12

Subtotal 1,188,144 561,840 1,749,983 27,003 12,769 39,772 32 40C. Agusan Marsh Biodiversity

Species and Habitat Protection 40,997 9,872 50,869 932 224 1,156 19 1Nature, Tourism, and Community Livelihood 47,704 45,961 93,665 1,084 1,045 2,129 49 2Communication, Education, Participation, and Awareness 34,914 14,126 49,041 794 321 1,115 29 1Capacity Building 7,705 2,273 9,978 175 52 227 23 -Health, Water, and Sanitation 29,371 20,431 49,802 668 464 1,132 41 1Ecological Waste Management 17,016 10,863 27,879 387 247 634 39 1Climate Change Mitigation 1,311 253 1,564 30 6 36 16 -Project Management 10,067 2,424 12,491 229 55 284 19 -

Subtotal 189,087 106,202 295,288 4,297 2,414 6,711 36 7D. Local Social Development and Indigenous People Development

Local Social Development for Priority Watersheds in Compostela Valley 306,968 - 306,968 6,977 - 6,977 - 7Local Social Development for Agusan Marsh 82,646 17,008 99,654 1,878 387 2,265 17 2IP Development Plan for Agusan River Basin 43,680 - 43,680 993 - 993 - 1

Subtotal 433,294 17,008 450,302 9,848 387 10,234 4 10E. Institutional Development

Establishment of River Basin Management Body 423 102 525 10 2 12 19 -Capacity Building and Strategic Management 160,213 38,578 198,791 3,641 877 4,518 19 5

Subtotal 160,636 38,679 199,315 3,651 879 4,530 19 5F. Strengthening of Project Management Capacity

Consulting Services and Implementation Support 187,730 95,515 283,245 4,267 2,171 6,437 34 6General Capacity Building Program 50,661 30,554 81,215 1,151 694 1,846 38 2Information Communication Technology Management 16,778 13,471 30,249 381 306 687 45 1Agusan Marsh GEF 33,516 8,070 41,586 762 183 945 19 1

Subtotal 288,685 147,610 436,295 6,561 3,355 9,916 34 10Total BASELINE COSTS 2,802,870 1,561,333 4,364,203 63,702 35,485 99,186 36 100

Physical Contingencies 279,959 156,133 436,093 6,363 3,548 9,911 36 10Price Contingencies 558,522 51,232 609,754 10,855 271 11,126 2 11

Total PROJECT COSTS 3,641,351 1,768,698 5,410,049 80,919 39,304 120,223 33 121Interest During Implementation - 224,725 224,725 - 4,994 4,994 100 5Commitment Charges - 11,301 11,301 - 251 251 100 -

Total Costs to be Financed 3,641,351 2,004,724 5,646,075 80,919 44,549 125,468 36 126

A. Improvement of Water Resources, Flood Management, and Water Supply Infrastructure

(PhP '000) (US$ '000)

Outputs Project Cost Summary

13


E. DETAILED COST ESTIMATES BY YEAR

Totals Including Contingencies (PhP '000) Totals Including Contingencies (US$ '000)2012 2013 2014 2015 2016 2017 Total 2012 2013 2014 2015 2016 2017 Total

Butuan Dainage 28,389 90,750 102,771 108,817 442 461 331,630 631 2,017 2,284 2,418 10 10 7,370Nabunturan Water Supply 6,359 83,091 27 28 29 - 89,534 141 1,846 1 1 1 - 1,990Prosperidad Water Supply 6,424 83,229 27 28 29 - 89,738 143 1,850 1 1 1 - 1,994Esperanza Water Supply 4,800 69,102 27 28 29 - 73,987 107 1,536 1 1 1 - 1,644Other Water Supply Subprojects - 6,016 274,517 276,018 239,095 - 795,646 - 134 6,100 6,134 5,313 - 17,681Hydrological Monitoring Network and Database 42,513 14,683 15,100 - - - 72,296 945 326 336 - - - 1,607Upgrading of Laboratory Facilities 3,502 11,380 - - - - 14,882 78 253 - - - - 331

Subtotal 91,988 358,251 392,469 384,920 239,625 461 1,467,713 2,044 7,961 8,722 8,554 5,325 10 32,616B. Improvement of River Water Quality and Watershed Conditions

Formulation of Forest Land Use Plan 65,796 - - - - - 65,796 1,462 - - - - - 1,462Protection - 38,074 47,359 58,934 73,355 91,329 309,051 - 846 1,052 1,310 1,630 2,030 6,868Agroforestry - 8,407 10,457 13,013 16,198 20,165 68,240 - 187 232 289 360 448 1,516Streambank Stabilization - 1,609 2,001 2,491 3,100 3,859 13,060 - 36 44 55 69 86 290Vegetative Approach - 28,976 36,042 44,852 55,828 69,505 235,204 - 644 801 997 1,241 1,545 5,227Vegetative cum Engineering Approach - 49,658 61,234 75,572 93,300 115,228 394,992 - 1,104 1,361 1,679 2,073 2,561 8,778Watershed Monitoring System - 33,822 - - - - 33,822 - 752 - - - - 752Mine Tailings Dam 11,034 102,871 86,362 - - - 200,268 245 2,286 1,919 - - - 4,450River Dredging 88,496 61,622 62,589 - - - 212,707 1,967 1,369 1,391 - - - 4,727Improvement of Watershed in CARAGA - 125,519 130,107 134,923 139,951 145,199 675,698 - 2,789 2,891 2,998 3,110 3,227 15,016

Subtotal 165,326 450,559 436,150 329,786 381,732 445,286 2,208,838 3,674 10,012 9,692 7,329 8,483 9,895 49,085C. Agusan Marsh Biodiversity

Species and Habitat Protection 9,871 10,224 10,597 10,989 11,399 11,826 64,906 219 227 235 244 253 263 1,442Nature, Tourism, and Community Livelihood 27,500 37,330 28,657 5,846 6,064 6,291 111,689 611 830 637 130 135 140 2,482Communication, Education, Participation, and Awareness 34,618 7,738 8,086 8,450 - - 58,892 769 172 180 188 - - 1,309Capacity Building 1,358 4,900 1,482 1,549 1,619 1,692 12,600 30 109 33 34 36 38 280Health, Water, and Sanitation 25,247 24,174 5,033 4,372 - - 58,825 561 537 112 97 - - 1,307Ecological Waste Management 7,211 20,233 1,381 1,444 1,509 1,576 33,353 160 450 31 32 34 35 741Climate Change Mitigation 836 258 270 282 294 - 1,940 19 6 6 6 7 - 43Project Management 2,424 2,510 2,602 2,698 2,799 2,904 15,938 54 56 58 60 62 65 354

Subtotal 109,065 107,366 58,109 35,630 23,684 24,290 358,143 2,424 2,386 1,291 792 526 540 7,959D. Local Social Development and Indigenous People Development

Local Social Development for Priority Watersheds in Compostela Valley 60,133 62,839 65,667 68,622 71,710 74,937 403,907 1,336 1,396 1,459 1,525 1,594 1,665 8,976Local Social Development for Agusan Marsh 19,738 19,997 20,751 21,542 22,368 23,231 127,628 439 444 461 479 497 516 2,836IP Development Plan for Agusan River Basin 16,537 17,282 18,059 986 1,030 - 53,894 367 384 401 22 23 - 1,198

Subtotal 96,409 100,118 104,477 91,150 95,108 98,168 585,430 2,142 2,225 2,322 2,026 2,114 2,182 13,010E. Institutional Development

Establishment of River Basin Management Body 611 - - - - - 611 14 - - - - - 14Capacity Building and Strategic Management - 51,696 48,722 50,526 52,409 54,374 257,727 - 1,149 1,083 1,123 1,165 1,208 5,727

Subtotal 611 51,696 48,722 50,526 52,409 54,374 258,338 14 1,149 1,083 1,123 1,165 1,208 5,741F. Strengthening of Project Management Capacity

Consulting Services and Implementation Support 72,334 94,757 70,686 49,669 33,237 27,315 347,997 1,607 2,106 1,571 1,104 739 607 7,733General Capacity Building Program 33,691 26,047 24,464 9,146 1,916 1,619 96,882 749 579 544 203 43 36 2,153Information Communication Technology Management 20,790 14,273 - - - - 35,064 462 317 - - - - 779Agusan Marsh GEF 12,371 13,034 9,160 7,361 6,650 3,067 51,643 275 290 204 164 148 68 1,148

Subtotal 139,187 148,111 104,309 66,176 41,803 32,000 531,586 3,093 3,291 2,318 1,471 929 711 11,813Total PROJECT COSTS 602,584 1,216,101 1,144,236 958,188 834,360 654,580 5,410,049 13,391 27,024 25,427 21,293 18,541 14,546 120,223

A. Improvement of Water Resources, Flood Management, and Water Supply Infrastructure

Project Outputs by Year -- Totals Including Contingencies

14


F. CONTRACT AND DISBURSEMENT S-CURVE

3. {Graph(s) show contract awards and disbursement over the life of the project, and annually based on the contract awards and disbursement projections.} G. FUND FLOW DIAGRAM

ADB Loan Funds GoP Grant Funds

ADB Grant Funds through GAAGEF Grant Funds

Loan funds to be relent Loan funds provided as grant

PIUs

PMU - Project Management Unit ReportingPIUs - Project Implementation units Flow of Funds FASPO - Foreign Assisted and Special Projects OfficeARBGB - Agusan River Basin Governing Board

GAA - Government Appropriations Act


N A T I O N A L

R E G I O N A L

L O C A L

ADB

MDFO and LWUA

DENRExecuting Agency

Central PMUDENR/FASPO

GoP

Sub - PMUDENR Regional

Office

DENR Provincial/City

Office

LGU/ WD Equity

ContributionLocal Bank

LGUsNGAs/ Regional

OfficesWater Districts

ARBGB

ARB-Upper

ARB-Middle

ARB-Lower

Local Bank

15


V. FINANCIAL MANAGEMENT

1. Funds for each subproject will either be provided as loans or as part of regular government appropriations. Funds will be relent to LGUs and/or water districts for the implementation of the infrastructure development, particularly for the improvement of municipal water supply systems and the implementation of the Butuan City drainage subproject. For the remaining subprojects, funds will be provided to the proposed project holder as part of the regular government allocation through the Government Appropriations Act (GAA) fund disbursements. These projects are not revenue generating and as such there is no mechanism to recover costs. The debt service on the ADB loan for these remaining subprojects will be paid from national government funds.

A. FINANCIAL MANAGEMENT ASSESSMENT

1. Sources of Funds

2. There are six sources of funds, namely: (i) ADB loan, (ii) GEF grant, (iii) equity from the Government of the Philippines through the DENR, (iv) equity from local government units, (v) water district (WD) equity, and (vi) private equity.

3. Loan funds from ADB. ADB will provide a loan to the Government of the Philippines through the DENR. Most of the loan proceeds will fund investment costs for the subprojects/outputs and will be passed on as grants to the project beneficiaries. The debt service for these subprojects will be paid for by the national government. For infrastructure development (and Mabatas mine tailings dam if PMDC confirm they want to avail of a loan from ADB), the ADB loan will be relent to the project implementing agencies as follows:

the Water Districts through the LGUs for municipal water supply (including pilot WDs Nabunturan and Prosperidad);

the LGUs for municipal water supply (including pilot Esperanza LGU); Butuan City LGU for the drainage system; and Philippine Mining Development Corporation (PMDC) for the Mabatas mine tailings

dam (if PMDC confirm that they want to awail of a loan from ADB).

4. Grant funds from GEF. GEF grant funds will finance the Agusan March biodiversity subproject.

5. Grant funds from the Government. The Government of the Philippines (GOP) through DENR, LGUs, WDs and private parties will provide counterpart funds for the investment costs of all components. GOP funds through DENR will be provided through the annual Government Appropriations Act (GAA).

2. Fund Conduits

6. The primary conduit of funds shall be MDFO and the LWUA for the relending scheme, and the DENR regional office (which is the sub-PMU at the regional level) for the grant scheme. Both agencies will review and process requests for payments and enable the release of the funds through the designated local banks.

7. Loan conduit for relending scheme. The water supply and drainage subprojects are under the relending scheme. There will be separate conduits for non-LGUs and LGUs. For non-LGUs, which in this case are the water districts, the conduit will be through LWUA.

8. Fund conduit for grant scheme. The DENR Regional Offices which are the sub-PMUs at the regional level are the proposed fund conduit for the grant scheme. This office

16


will coordinate with the Agusan River Basin Governing Body (ARBGB) which will be set up under the project for long-term management of the river basin based on inter-provincial LGU cooperation/coordination. The DENR Regional Office will work through its DENR Provincial and City Offices at the local levels. These offices will coordinate with (i) the units of ARBGB for Upper ARB, Middle ARB and Lower ARB, as well as with the (ii) PIUs. Funds from MDFO as well as from government allocations will eventually be deposited in local banks for disbursement to the PIUs.

9. Proposed funds flow. The roles of the key offices involved in the flow of funds are discussed below.

i. Central Project Management Unit (PMU). The central PMU will be responsible for the overall management of the proposed project and will liaise directly with ADB. The central PMU shall review and approve the proposed activities of the project implementation units (PIU) submitted through the sub-PMUs at the regional level. It shall process payments and make disbursements to the designated conduits such as the Municipal Development Fund Office and the sub-PMUs through the designated local banks in the regions. It shall review and monitor implementation of the project and prepare/submit summary reports to the government and ADB.

ii. Conduit for Grant Funds

o Sub-Project Management Units. The DENR Regional Offices will be established

as the sub-PMUs at the regional level and will also act as the proposed fund conduit for the grant scheme. The sub-PMUs shall report to the central PMU on the status of implementation and financial operations of the PIUs. This office will be responsible for the management of the activities of the PIUs through the sub-region PMUs.

o Sub-region PMU. The DENR Provincial and City Offices will be designated as

the sub-PMU at the local level which shall process payments and disburse through a local bank to the various PIUs. It shall oversee the implementation of sub-projects in the various PIUs and undertake primary activities such as processing of payments from all PIUs and releasing of funds to PIUs other than those covered by MDFO. Disbursements to the PIUs will be made either from the Second Generation Imprest Account in the sub-PMU or through Direct Payment upon endorsement of payment by the central PMU.

iii. Conduit for funds for relending. The Municipal Development Fund Office (MDFO) will be the fund conduit for sub-projects that are to be implemented by LGUs such as the proposed Butuan City Drainage Subproject and LGU water supply projects. For the water supply projects to be implemented by the water districts, the Local Water Utilities Administration (LWUA) is the proposed loan conduit which shall relend these funds to the WDs.

iv. Local Banks. MDFO, LWUA and the sub-region PMU shall designate a local bank

from which fund releases from the project funds will be made. MDFO’s designated local bank is the Land Bank of the Philippines.

v. Project Implementation Units. The PIUs are the designated units or offices that will

undertake the implementation of the subprojects and eventually be the borrower of the funds as in the case of the LGUs and the water districts. They will coordinate directly either with the designated sub-PMUs at the regional level for approval of activities and request for payments, or with MDFO for the release of their payments.

17


Local Government Units. LGUs include water districts (WDs) which are by themselves classified as local government owned and controlled corporations. For simplicity in implementation, it is proposed that WDs be grouped along with the LGUs.

Non–LGUs. This includes regional offices of DENR, potentially PMDC and

other government agencies or units that are not under the jurisdiction of the LGUs.

3. Financial Management Assessment

10. Financial management assessments were conducted on the potential borrower/beneficiary government agencies and organizations of the proposed sub-projects. Two levels of assessments were made: (i) a general assessment of the potential beneficiary government agencies and organizations of the proposed sub-projects, and (ii) an assessment on the potential loan sub-borrowers.

11. For the general assessment of the potential beneficiary government agencies and organizations of the proposed sub-projects, the objective was to assess the financial management performance of concerned government agency/units to undertake and implement the project in terms of adequacy and capability of personnel to handle financial management of the project. It also covered the evaluation of existing financial systems to establish whether there are adequate systems to facilitate the efficient disbursement and accounting on the use of project funds and whether the systems in place provide sufficient internal controls to undertake and implement the project in terms of adequacy and capability of personnel to handle financial management of the project. It also covered the evaluation of existing financial systems to establish whether there are adequate systems to facilitate the efficient disbursement and accounting on the use of project funds and whether the systems in place provide sufficient internal controls.

12. The second level assessment focused on the potential loan sub-borrowers and this involved an assessment of their financial performance and condition to determine among others the maximum borrowing capacity of the proposed borrower; its capacity to repay back the loan and to determine the impact of the proposed borrowing on the financial condition of the proposed borrower. The assessment was also aimed at determining the potential for cost recovery (whenever applicable) and to provide guidance on how this can be incorporated in the project design. Details of the financial assessment are shown in Volume 5, Chapter 4.

13. The results of the first level assessment show that :

i. There is relatively sufficient financial management capacity at both the regional and national levels of DENR to implement and manage the proposed project, as well as the local government units that may be potential borrowers.

ii. Much of the improvement that is needed though in the financial systems is to find ways on how to expedite the approval and disbursements process, as is common in most government projects.

14. The second level assessment on the potential sub-borrowers reveal that:

i. All of the LGUs that were assessed are highly dependent on IRA (internal revenue allocation). There is very little internal revenue generation from economic enterprises and/or recovery from the provision of basic enterprises.

ii. There is a potential for cost recovery for the water supply subprojects, but not for the drainage subproject in Butuan City.

18


iii. The LGU and WD borrowers have adequate borrowing capacity to loan finance their particular subprojects, as shown in Table V.1.

Table V.1: Summary of Borrowing Capacity of Potential LGU and WC Borrowers Sub-

project No.

LGU/WD Subproject Revenue-Generating

Borrowing Capacity

(P million)

Loan Amount

(P Million)

1 Butuan City LGU Drainage No 140 140

2 Esperanza LGU Water Supply

Yes 210 69

3 Nabunturan WD Water Supply

Yes WD net cash flow shows capacity

78

4 Prosperidad WD Water Supply

Yes WD net cash flow shows capacity

82


B. DISBURSEMENT

15. The Loan proceeds (includeing GEF grant funds) will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time),21 and detailed arrangements agreed upon between the Government and ADB.

Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),22 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. All financial institutions will ensure that their investments are in compliance with applicable national laws and regulations and will apply the prohibited investment activities list (Appendix 5) to subprojects financed by ADB. 16. {Describe the different financing and disbursement arrangements,23 i.e. direct payment by ADB, reimbursement, imprest fund procedures, liquidation and replenishment, statement of expenditures (SOEs), special procedures regarding ADB administered co-financier funds, special documentation requirements, if any, that will be necessary for disbursement to be made. Describe who will be responsible for (i) preparing disbursement projections, (ii) requesting budgetary allocations for counterpart funds, (iii) collecting supporting documents, and (iv) preparing and sending withdrawal applications to ADB.} 17. {If imprest and second generation imprest accounts (SGIA) are proposed describe the number, who will establish and administer them, the maximum ceiling(s), liquidation and replenishment procedures, and include the following text as appropriate.} Separate imprest accounts should be established and maintained by funding source. {For regular project loans} The maximum ceiling of the imprest account(s) {"in aggregate", if more than one imprest account} will not at any time exceed the estimated ADB financed {or ADB administered co-financier financed, as applicable} expenditures to be paid from the imprest account for the next 6 months or 10% of the respective loan amount, whichever will be lower. The maximum ceiling of each SGIA {if applicable} will be equivalent to 6 months estimated expenditures to be funded from each SGIA or {$ specific amount}, whichever is lower. The request for initial advance to the imprest account should be accompanied by an Estimate of Expenditure Sheet24 setting out the estimated expenditures for the first six (6) months of project implementation, and submission of evidence satisfactory to ADB that the imprest 21 Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf 22 Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf 23 Available at: http://www.adb.org/documents/handbooks/loan_disbursement/chap-06.pdf 24 Available in Appendix 29 of the Loan Disbursement Handbook.

19


account has been duly opened. For every liquidation and replenishment request of the imprest account, the borrower will furnish to ADB (a) Statement of Account (Bank Statement) where the imprest account is maintained, and (b) the Imprest Account Reconciliation Statement (IARS) reconciling the above mentioned bank statement against the EA’s records.25 18. {If ADB's SOE procedures are proposed for reimbursement and liquidation and replenishment of the imprest account(s), state the specific SOE ceiling that will apply, and include the following text.} SOE records should be maintained and made readily available for review by ADB's disbursement and review mission or upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit.26 19. Before the submission of the first withdrawal application, GOP should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is US$100,000, unless otherwise approved by ADB. GOP is to consolidate claims to meet this limit for reimbursement and imprest account claims. Withdrawal applications and supporting documents will demonstrate, among other things that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing.

20. {Describe the relevant disbursement and liquidation procedures for Government funds.}

C. ACCOUNTING

21. The DENR-FASPO will maintain separate project accounts and records by funding source for all expenditures incurred on the Project. Project accounts will follow international accounting principles and practices {or those prescribed by the Government's accounting laws and regulations.27}

D. AUDITING

22. The DENR-FASPO will cause the detailed consolidated project accounts to be audited in accordance with International Standards on Auditing {and/or in accordance with the Government's audit regulations} by an auditor acceptable to ADB. The audited accounts will be submitted in the English language to ADB within 6 {or in special circumstances 9} months of the end of the fiscal year by the executing agency. The annual audit report will include a separate audit opinion on the use of the imprest accounts, SGIA, and the SOE procedures {as applicable}. The Government and DENR-FASPO have been made aware of ADB’s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. For revenue generating projects only, ADB requires audited financial statements (AFS) for each executing and/or implementation agency associated with the project.

25 Follow the format provided in Appendix 30 of the Loan Disbursement Handbook. 26 Checklist for SOE procedures and formats are available at: http://www.adb.org/documents/handbooks/loan_disbursement/chap-09.pdf http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-100-Below.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-Over-100.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Operating-Costs.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Free-Format.xls 27 {Reference to Government laws/regulations to be added during loan processing.}

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VI. PROCUREMENT AND CONSULTING SERVICES

A. ADVANCE CONTRACTING AND RETROACTIVE FINANCING

1. All advance contracting and retroactive financing will be undertaken in conformity with ADB’s Procurement Guidelines (February 2007, as amended from time to time) (ADB’s Procurement Guidelines)28 and ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time) (ADB’s Guidelines on the Use of Consultants).29 The issuance of invitations to bid under advance contracting and retroactive financing will be subject to ADB approval. The borrower, {executing and implementing agencies} have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the Project. 2. Advance contracting. {Describe the types of advance contracts to be entered into re goods, works, and consulting services; and the steps to be concluded in advance – e.g. (i) prequalification of contractors, tendering, and bid evaluation for civil works packages; (ii) preparation of tender documents to procure materials and equipment; (iii) evaluation of bids; and (iv) recruitment of consultants.} 3. Retroactive financing. {Describe the maximum amount of eligible expenditures up to {insert the maximum amount in US Dollars, the equivalent of XX% of the total ADB loan or grant), incurred before loan effectiveness, but not more than 12 months before the signing of the loan agreement.}

B. PROCUREMENT OF GOODS, WORKS AND CONSULTING SERVICES

4. All procurement of goods and works will be undertaken in accordance with ADB’s Procurement Guidelines.

5. Philippines government procurement rules and the ADB procurement guidelines will apply to the procurement of civil works and goods financed from the proceeds of the proposed ADB loan. In cases of conflict, the ADB rules shall govern. Construction will be done by civil works contractors responsible for both labor and materials.

6. The procurement of works, goods and consulting services will be conducted in accordance with the ADB Guidelines for Procurement, the guidelines of the Government Procurement Policy Board (GPPB), and R.A. 9184, or the Government Procurement Reform Act. For national competitive bididng, the harmonized Philippine Bidding Documents shall be adopted in the bidding for Goods, Works and Consulting Services. However, in case of discrepancies, the ADB Procurement Guidelines shall govern.

7. Table VI.1 shows the procurement or selection method based on the values of the goods, works or consulting services to be procured.

28 Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf 29 Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf

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Table VI.1: Procurement Package, Method and Procedures Procurement

Package Procurement/ Selection

Method Value to be Procured Procurement Method

Goods

Shopping US $ 50,000 or less

The procuring entity should request for price quotations from at least 3 qualified suppliers

National Competitive Bidding (NCB)

> US $ 50,000 but US $ 500,000

Government guidelines on procurement of goods as harmonized with ADB Procurement Guidelines shall be adopted

International Competitive Bidding (ICB) or > US $ 500,000 ADB Procurement Guidelines shall be

adopted. Limited International Bidding (LIB)

Works

Shopping US $ 100,000 or less

The procuring entity should request for price quotations from at least 3 qualified contractors

National Competitive Bidding (NCB)

> US $ 100,000 but US $ 5 M

Government guidelines on procurement of works as harmonized with ADB Procurement Guidelines shall be adopted.

International Competitive Bidding (ICB) or > US $ 5 M ADB Procurement Guidelines shall be

adopted. Limited International Bidding (LIB)

Consulting Services

Consultants' Qualifications Selection (CQS)

US $ 200,000 or less

Government guidelines on procurement of consulting services as harmonized with ADB Guidelines on the Use of Consultants.

Quality-and Cost- Based Selection ( QCBS) or > US $ 200,000

ADB Guidelines on the Use of Consultants.

Quality-Based Selection ( QBS)

Source: ADB.

8. Before the start of any procurement ADB and the Government will review the public procurement laws of the central and state governments to ensure consistency with ADB’s Procurement Guidelines. 9. An 18-month procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages and national competitive bidding guidelines is in Section C. 10. All consultants {and nongovernment organizations (NGOs) if appropriate} will be recruited according to ADB’s Guidelines on the Use of Consultants.30 The terms of reference for all consulting services are detailed in Section D.

11. An estimated 986 person-months (121 international, 865 national) of consulting 30 Checklists for actions required to contract consultants by method available in e-Handbook on Project Implementation at: http://www.adb.org/documents/handbooks/project-implementation/

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services are required to (i) facilitate project management and implementation, and (ii) strengthen the institutional and operational capacity of the executing agency, implementing agencies and civil society groups, (iii) assist with the setting up and running of a project performance management system, and (iv) assist with the implementation of the biodivesity enhancement and protection subprject for the Agusan Marsh. Consulting firms will be engaged using the quality- and cost-based selection (QCBS) method with a standard quality:cost ratio of 80:20.

C. PROCUREMENT PLAN

12. Proposed contract packaging for the the procurement of goods is shown in Table VI.2.

13. Proposed contract packaging for the procurement of works is shown in Table VI.3.

14. Estimated consultant inputs and cost estimates are summarized in Table VI.4

Table VI.2: Contract Packaging for Procurement of Goods Contract Package

No.

Contract Item

Contract Description Year of bid

Contract Type

Contract Item

Amounta/

Total Contract Package

Cost (P million) (P million)

1 1a Database management system and GIS for LGUs

Year 1

NCB 17.49 29.41

1b Database management system and GIS for PMUs

11.92

2 Hydrological network stations, monitoring equipment and supplies

Year 1 NCB 20.00

3 Management systems for hydrological and groundwater databases

20.00

4 Laboratory equipment and supplies Year 1 NCB 10.00 5 PMU office equipment and supplies Year 1 NCB 5.46 6 PMU vehicles Year 1 Shopping 0.25

Total 85.12 NCB=national competitive bidding. Source: PPTA Consultant.

Table VI.3: Contract Packaging for Procurement of Works Contract Package

No.

Contract Item


Contract Type

Contract Item

Amounta/



1 Upper Agusan mine tailings dams Year 1 NCB 12.50 2 Mabatas mine tailings dam Year 2 NCB 114.25 3 3a Manat River dredging and bank protection Year 1 NCB 23.84 180.86 3b Naboc River dredging 157.02

4 4a Gravelling of access road to wetland center (Agusan Marsh)

Year 1 NCB 6.00 29.32

4b Building of wetland center (Agusan Marsh) 23.32 5 Floating water supply/sanitation units Year 1 NCB 30.61 6 6a Barangay materials recovery facilities Year 1 NCB 5.63 6.73 6b Waste plastic melter facilities 1.10

7 7a Trapezoidal Channels on Waterways (Butuan City drainage)

Year 1 NCB 24.25 97.05

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Contract Package

No.

Contract Item


Contract Type

Contract Item

Amounta/



7b Rectangular Channel on Waterway Phase 1 24.30 7c Rectangular Channel on Waterway Phase 2 48.50

8 8a Dredging and Rehabilitation works (Butuan City drainage)

Year1

NCB 15.00 123.65

8b Rectangular Drains on Road Network 82.25 8c Pumping Stations and Flood Gates 26.40

9 9a Improvement of Esperanza water supply system

Year 1

NCB 61.33 209.10

9b Improvement of Prosperidad water supply system

74.03

9c Improvement of Nabunturan water supply system

73.74

10 10a Improvement of Las Nieves water supply system

Year 2

NCB 29.34 164.31

10b Improvement of Magallanes water supply system

20.04

10c Improvement of San Francisco water supply system

86.04

10d Improvement of La Paz water supply system 28.89 11 11a Improvement of Loreto water supply system Year 3 NCB 53.89 239.15 11a Improvement of Santa Josefa water supply

system 23.56

11b Improvement of Talacogan water supply system

31.91

11c Improvement of Trento water supply system 46.55 11d Improvement of Veruala water supply system 40.15 11e Improvement of Bunawan water supply system 43.09

12 12a Improvement of San Luis water supply system Year 4 NCB 34.65 286.15 12b Improvement of Bayugan City water supply

system 109.43

12c Improvement of Compostela water supply system

71.36

12d Improvement of Laak water supply system 70.71 13 Drilling observation wells Year 1 NCB 10.00 14 Laboratory civil works Year 1 Shopping 3.00 Total 1,506.68

Note: a/ Base engineering cost + 10% physical contingency. NCB=national competitive bidding. Source: PPTA Consultant.

Table VI.4: Summary of Consulting Services Package International

Inputs (pers-mth)

National Inputs

(pers-mth)

Total Inputs

(pers-mth)

Estimated Cost

($ million)

1. Project implementation management and technical advisory services:

74 609 683 6.21

project management 58 130 188 technical advisory 16 479 495

2. Capacity building services 36 113 149 1.71 3. Project Performance

Management System (PPMS)

0 10 10 0.06

4. Conserving Biodiversity in Agusan Marsh Wildlie

11 133 146 0.91

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Sanctuary

Total 121 865 986 8.89 Source: PPTA Consultant.

D. CONSULTANT'S TERMS OF REFERENCE

15. {Include at least the outline terms of reference for all consultant contracts.31}

VII. SAFEGUARDS

A. Environmental Safeguards 1. As the executing agency, the Department of Environment and Natural Resources (DENR) will establish a Project Management Unit/Office to coordinate the implementation of the subprojects at the national level, including procurement of goods, works, and services. At the subproject level, the implementing agencies will be responsible for the construction and operation of their respective subprojects. The implementing agencies will submit the implementation plan for the next 12 months and the project completion report within 3 months of the physical completion of the subprojects to DENR, including the details for implementation of the environmental management plan (EMP) of the subprojects. Moreover, monthly reports on the status of the implementation of the EMP during the pre-construction, construction and operation phases will be submitted by the implementing agencies to DENR. DENR in turn will prepare environmental monitoring reports to ADB in accordance with the form and frequency required by ADB.

Environmental Assessment and Review Framework (EARF) 2. Responsibilities. Both the upgrading of the Butuan City drainage and the expansion of the water supply systems belong to Group III projects under the Procedural Manual of DAO No. 03-30. This means that the subprojects are not covered by the Philippine EIS system and only a Certificate of Non-Coverage (CNC) will be secured from the EMB by filing an application for CNC online at http://www.emb.gov.ph. The City Planning and Development Coordinator (CPDC) shall undertake the filing of application for the Butuan City drainage subproject, and the general managers of the water service providers for the expansion of water supply systems. Issuance of CNC by the EMB will take one to two working days.

3. For the ecotourism subproject, the proponent, the Provincial Government of Agusan del Sur through its Provincial Environment and Natural Resources Office (PENRO), will screen it using the EIA Coverage & Requirements Screening Checklist (ECRSC) in the Procedural Manual (DAO 03-30 pages 47-51) to decide on the category of the subproject. After screening the ecotourism subproject using the ECRSC and upon confirming that the subproject is a Group II, the PENRO shall lead in the conduct of an EIA with the assistance from the respective municipal LGUs where the components are located. The IEER prepared by the PPTA consultant will be an excellent material for the preparation of the IEER, which may need only minor updating. The IEER shall then be submitted to the EMB-Caraga Region for processing leading to the issuance of ECC.

4. During construction of the subprojects, the City Engineer’s Office with the assistance

31 Terms of reference guidelines available at: http://www.adb.org/Documents/Manuals/Consulting-Services-Operations-Manual/CSOM.pdf?bcsi_scan_D4A612CF62FE9576=AORY9a8Nho2ezS9Xss/ligEAAAANNiAA&bcsi_scan_filename=CSOM.pdf (paras 65–72).

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of the City Environment and Natural Resources Office (for the Butuan City Drainage subproject), the office of the WSP general managers with the assistance from their pollution control officers (for the municipal water supply subprojects), and the PENRO (for the ecotourism subproject) shall be responsible for meeting environmental aspects of subprojects. While the contractor will be directly responsible for the implementation of the environmental management and monitoring plan, the Engineer’s Office/ENRO/PCO/PENRO shall monitor the implementation of the subprojects and submit Self-Monitoring Report (SMR) to the DENR to be forwarded to ADB.

5. Environmental Criteria for Selection of Subproject. The following criteria will be used for subproject selection:

a. NIPAS and/or Protected area status should be checked with the Community Environment and Natural Resources Office (CENRO) or PENRO and should normally be avoided. If cannot be avoided, then approval of Protected Area Management Board (PAMB) in the project area should be secured before implementation.

b. The LGU comprehensive land use plan should be consulted to ensure compatibility with the plan.

c. Subprojects that may cause significant negative environmental impacts (e.g., ground or surface water impacts) are to be avoided, whenever possible, otherwise adequate and appropriate mitigating measures should be provided.

d. Subprojects on high gradient and critical slope (>50%) areas are be avoided. e. Subprojects to be located in environmentally critical areas (e.g., coral reefs, sea

grasses, mangroves, strictly protected forests, buffer zones, etc) are to be avoided.

f. Subprojects in extremely environmental hazardous areas (e.g., flooding, landslide, earthquake prone areas) are to be avoided, whenever possible, otherwise adequate and appropriate mitigating measures should be provided.

g. Subprojects that violate existing spatial plans and zoning regulations are to be avoided.

h. The water supply and sanitation facilities should be at least 100 feet away from each other.

6. Staffing requirements and budget. The CPDC and the offices of the WSP general managers will file the CNC applications for the Butuan City drainage and water supply subprojects respectively. Such actions do not entail large expenditure requiring additional budget. Cost of monitoring of the construction and operation/maintenance of the subprojects shall be integrated in the regular budgets of the two LGUs.

7. The PENRO of Agusan del Sur will lead in the preparation of the IEER with the assistance from the Municipal Environment and Natural Resources Offices of the municipal LGUs where the subproject is located. The municipal/provincial LGUs shall allocate at least One Hundred Thousand Pesos (PhP100,000) for the updating of the IEER for the subproject prepared by the PPTA consultant. The environmental management and monitoring plans during construction will be implemented by the respective municipal LGUs (through their contractors) and consolidated by the PENRO in the form of SMR for submission to DENR. During operation, the same responsibilities shall apply. Budget for the monitoring shall be shared among the municipal and provincial LGUs.

B. Resettlement Plan

8. RP preparation and implementation entails the participation of a host of agencies as well as that of the affected families. At the national level, DENR as the Project Executing Agency (EA) has the oversight responsibility for RP preparation and implementation. DENR

26


will coordinate with the implementing agencies (e.g. LGU, PAMB, FMB, LWUA) to prepare the RP starting with the consultations with the PAHs up to the issuance of a council resolution by the Local City/Municipal Council that approves and endorses the RP. Once LGU approval of the RP is obtained the RP will be endorsed to DENR for submission to ADB.

9. At the local level, the implementing agency will set up a Resettlement Office (RO) to ensure adequate staffing for the proper implementation of the RP. The implementing agency, through the RO, will be responsible for most of the critical activities in implementing the RP and will work closely with the LGU throughout RP implementation. The implementing agency at the local level will be responsible for ensuring the implementation of agreements between and among the institutions involved in the resettlement. The RO, assisted by resettlement consultants, will prepare and implement the RP.

10. NGOs will assist the implementing agency/RO in the conduct of consultations and in providing skills, livelihood and community development training. The RO shall encourage the PAHs, particularly women, to form organizations to help in identifying community and resettlement-related needs and ways of responding to them.

VIII. GENDER AND SOCIAL DIMENSIONS

11. A social and gender specialist or gender focal point will be designated by the EA and project implementer or LGU to coordinate and monitor the conduct of the interventions and ensure that the GAD issues are systematically attended to. The specialist will assist in the formulation of gender-specific indicators for the gender baseline as well as for monitoring purposes. He/she will oversee the capability building programs and activities to ensure the maximum participation of women. He/she will also assist in the training of women on project monitoring and oversee the actual conduct of monitoring and evaluation on gender issues.

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND

COMMUNICATION

A. PROJECT DESIGN AND MONITORING FRAMEWORK




Impact (Goal) by 2025 All of Agusan basin will have

sustained availability and more equitable distribution of adequate water of suitable quality for use for agreed domestic, economic and environmental uses, and poverty will have been reduced

Municipal water supply demands and

irrigation demands are fully met Mercury level in river sediments at key

control points is less than 0.001 mg/l Close and open forest cover increases

from 28% of ARB area (2003) to 40% Annual soil erosion is reduced from 15-

26 tons/ha (2008) to 10-12 tons/ha Rural poverty incidence is reduced from

47-72% to 30-50%

WSP records NIA records Communal irrigation scheme

records EMB reports FMB reports MGB reports LGU P/MPDO records

Assumptions: Macroeconomic and political stability

WSPs and irrigation associations implement effective O&M programs

Risks: Weak regulation and

enforcement of forestry, mining, and environmental laws

Outcome (by 2018) Water and land resources

management, and water infrastructure, in the Agusan Basin will be developed

Effective watershed/ARB institutional

arrangements and public-private partnerships are established

IWRM principles are adopted Dialogue mechanism with civil society is

established

DENR regional offices ARBIWRMP PMU records NEDA Regional Offices XI

and XIII reports LGU P/MPDO records WSP records

Assumptions: Inter-agency cooperation

established Broad-based participation

of stakeholders Risks: Lack of common

27





At least 30% of the staff in ARBGB and component units are women

Infrastructure is completed as designed and to specified quality

Project completion report M&E benchmarks/reports NCIP and ADSDPP

monitoring

agreement amongst local stakeholders on development policies, plans and strategies for the entire ARB

Outputs (2018) 1. Water resources, flood management, and water supply infrastructure improved

92km of new drains are constructed in Butuan City

Water supply served population increased from 80,000 (2010) to 209,000

Tariffs for municipal water supply systems adequately cover O&M

Operational river flow gauging stations increased from 8 to 20

EMB regional water quality laboratories upgraded and operational

LGU MPDO records MPDO records Contract supervision reports Contractors’ reports Philippine Atmospheric,

Geophysical and Astronomical Administration records

DPWH-BRS Regions records EMB records

Assumptions: Consumers’ willingness to connect and to pay for water services

Risks: Customers don’t pay

water connections charges

High turnover rate of trained laboratory staff

2. River water quality and watershed conditions improved

FLUPs are prepared for 4 priority watersheds in CV

Forest protection implemented for 10,100ha in in CV priority watersheds

Streambank stabilization implemented for 640ha in CV priority watersheds

Slope stabilization implemented for 10,000ha in CV priority watersheds

Agro-forestry implemented for 1,300ha in CV priority watersheds

Rehabilitation interventions identified and implemented for priority watersheds in Agusan del Sur and Agusan del Norte

Mine tailings dams completed Small-scale mining code prepared and

implemented with multisectoral support

PENRO and CENRO records/reports

LGU P/MPDO records Philippine Mining

Development Corporation reports

EMB Regions XI and XIII reports

Project completion report

Assumptions: Adequate enforcement of

laws and regulations Risks: Encroachment and

expansion of mining areas


Tailings dams fail

3. Integrated ecosystem management of Agusan Marsh established

Marsh management plan updated and harmonized with ancestral domain plans

8 strict protection zones are established Wetland Center established 146 floating rainwater collection/ sanitation units are installed

16 materials recovery facilities and 1 plactic wastes melting facility are established

Annual visitor numbers increase from insignificant (2010) to 14,500 by 2017

DENR Region XIII reports NCIP Region XIII reports Protected Area

Superintendant reports Protected Area Management

Board records Wetland Center and

accommodation registers Surveys by NGOs

Assumptions: Marsh management plan

is updated Risks:

Septage desludging is not carried out

Eco-tourism marketing is not effective

Encroaching cultivation and mining wastes

4. Local social and indigenous peoples development plans implemented

At least 15 municipalities benefit from ADSDPP/biodiversity and watershed management implementation

Land tenure improvement leads to increased productivity

Indigenous Peoples Organizations, Community Forestry Organizations strengthened and implementing livelihood projects and forest protection measures

Number of women participating in community action planning has increased

Enterprise development and marketing plan established for priority watersheds

Gender action plan implemented

NCIP Regions XI and XIII reports

LGU P/MPDO records Ancestral domain plans Surveys M&E reports

Assumptions: Active participation and

involvement of IPs Adequate institutional

capacities of agencies and IPs to implement ADSDPP

Risks: Uncoordinated

development policies affect other sectors

Unregulated mining opens more protection areas

5. ARB Governing Board effective in coordinating basin development and utilization

Memorandum of Agreement/ participation signed

ARBGB, secretariat and sub-management units established and operational

Local enabling policies, ordinances, standard operating procedures and

LGU records, resolutions ARBGB Secretariat records DENR Regions XI and XIII

reports

Assumptions: National and local

legislative support in place

Risks: Waning LGU interest or

28





implementation guidelines adopted Local partnership building and co-management arrangements in use

Stakeholders effectively participate and contribute in ARB management

Roles and responsibilities, and coordination procedure determined and agreed

State of the basin reporting established. Long-term financing mechanisms established

lack of adequate staffing/ funding for ARBGB

6. Project management capacity strengthened

986 person-months of consultant specialists provided

Organizational change of DENR FASPO to streamline business processes

M&E procedures and reporting improved Institutional capacity building and human resource development programs completed

All participating LGUs are linked to GIS and data management system

Project website actively accessed by stakeholders

Consultants’ reports DENR Foreign Assisted

Special Projects Office reports

Project monitoring reports Project audit reports Training participants’ reports Website hits Active remote node pinging Online reporting of connected

systems

Assumptions: DENR has adequate project management capacity, and will establish good working relations with LGUs

Risks: Uncertainty over roles between DENR agencies


Activities: 1. Water resources, flood management, and water supply and sanitation infrastructure improved 1.1 Process of land acquisition and finalization of resettlement plans for Butuan City drainage initiated (year 0) 1.2 Resettlement plan for Butuan City drainage implemented by end year 1 1.3 Improvement of Butuan City drainage completed by year 4 (Phase 1) 1.4 Improvement and expansion of 3 case study municipal water supply systems completed by year 3 1.5 Improvement and expansion of 14 other municipal water supply systems completed by year 5 1.6 Upgrading of hydrological monitoring network and database by year 4 1.7 Early flood warning system operational by end or year 2 1.8 Improvement of regional laboratories completed by year 3 2. River water quality and watershed conditions improved 2.1 Formulation of FLUP and physical framework planning in CV priority sub-catchments during year 1 2.2 Forest protection in all CV priority sub-catchments started in Year 2 and completed in year 6 2.3 Streambank stabilization in CV priority watersheds started in Year and completed in year 6 2.4 Slope stabilization measures in CV priority watersheds started in Year 2 and completed in year 6 2.5 Agro-forestry in all CV priority sub-catchments started in Year 2 and completed in year 6 2.6 Rehabilitation interventions designed in priority Agusan del Sur/ Norte watersheds by year 2 2.7 Implementation of rehabilitation interventions in priority Agusan del Sur/ Norte watersheds starts in year 3 2.8 Construction of mine tailings dams by year 4 2.9 Formulation and adoption of Code of Practice for Small-scale Mining by year 2 2.10 Planning and consensus building on mining reform (EITI) underway by year 2 3. Integrated ecosystem management of Agusan Marsh established 3.1 Marsh management plan updated and communicated with stakeholders in year 1 3.2 Strict protection zones identified, agreed with the communities, established by end year 2 3.3 Eco-tourism products and full-scale marketing developed by end of year 3 3.4 Wetland education center established by end of year 3 3.5 Floating water supply/ sanitation units for Agusan Marsh installed by end of year 4 3.6 Agusan Marsh community-based solid waste management program completed by end of year 2 4. Local social development and IP development implemented 4.1 Implementation of pilot ADSDPP, completion by year 5 4.2 Local social development and IP plans prepared and implemented for priority watersheds by year 5 4.3 Community/watershed coordination structures in place by year 3 4.4 Capacity building of IP organizations for ancestral domain and resource management started in year 2 4.5 Social marketing of Agusan River rehabilitation planning by year 1 4.6 ENR enterprise development and marketing plans prepared and implemented for target sites by year 5 4.7 Organizational strengthening of ancestral domains structures, IPOs, community organizations for livelihood/ resource management by year 5 4.8 Implementation of reforestation component as sustainable livelihood enterprise under “Treepreneur” or similar concept underway by year 2 4.9 Indigenous People’s Plan for Agusan Marsh prepared and implemented by year 5 4.10 Local Social Development Plan for Agusan Marsh prepared and implemented by year 5

Inputs: ADB Loan: $100.0 million GEF Grant: $3.0 million GOP: $22.5 million

29





4.11 Gender action plan and implemented by year 2 5. ARB Governing Board effective in coordinating basin development and utilization 5.1 Drafting and signing of MOA for ARBGB (year 0) 5.2 Pre-operation consolidation, formulation of common strategic management framework completed in year 1 5.3 Operation of ARBGB and implementation of mandate, underway by year 2 5.4 Data collection, management and analysis systems established by end year 2 5.5 State of the basin reporting established by end year 2 5.6 Long-term financing mechanisms established by end year 2. 5.7 Communication and participation processes established by end year 2 6. Project management capacity strengthened 6.1 Short-listing for consultancy packages completed (year 0) 6.2 Recruitment of consultant teams by mid-year 1 6.3 Establishment, staffing and equipping of PMU, sub-PMUs and PIUs by mid-year 1 6.4 Procurement of vehicles and other facilities by mid-year 1 6.5 Organizational change of DENR FASPO to streamline business processes completed by end year 1 6.6 Installation of database management systems and GIS in LGU and PMU offices by end year 1 6.7 Integrated monitoring and information system started in year 2 6.8 Capacity building consensus building and planning stage completed by end Year 1 6.9 Capacity building application stage completed by year 3 6.10 Capacity building institutionalization stage underway by year 4

ADB=Asian Development Bank, ADSDPP= ancestral domain sustainable development protection plan, ARB= Agusan River Basin, ARBGB=Agusan River Basin Governing Board, CENRO=community environmental and natural resources office, CV=Compostela Valley, DA=Department of Agriculture, DENR= Department of Environment and Natural Resources, DPWH-BRS= Department of Public Works and Highways - Bureau of Reasearch and Standards, EMB= Environmental Monitoring Bureau, FLUP=forest land use plan, FMB=Forest Management Bureau, GEF= Global Environment Facility, GOP= Government of the Republic of The Philippines, IA= implementing agency, IP= indigenous peoples, IWRM= integrated water resources management, LGU=local government unit, MDG= Millennium Development Goals, M&E=monitoring and evaluation, MGB= Mining and Geo-science Bureau, NCIP= National Commission on Indigenous Peoples, NEDA=National Economic Development Authority, NGO=non-government organization, NIA=National Irrigation Administration, O&M=operation and maintenance, PENRO=provincial environment and natural resources office, P/MPDO=provincial/municipal planning and development office, PO=people’s organization, WSP=water service provider.

B. MONITORING

1. Project Performance Monitoring

1. Institutional arrangements for monitoring and evaluation. The M&E program will employ both internal and external monitoring and evaluation processes.

2. Internal monitoring will be conducted as part of the overall project’s management processes. During year 1 of the project, the PMU will develop and implement the project performance management system (PPMS) with the assistance of Monitoring and Evaluation Consultants (recruited by the Executing Agency under a local consultancy arrangement) for monitoring project performance in the DENR regional offices and participating LGUs.

3. Internal monitoring will generally involve assessment and reporting of the physical progress of the target activities and outputs against the planned schedule. It will also involve the assessment of risks factors contributing or hindering the progress of the project.

4. External monitoring, on the other hand, will involve the participation of various stakeholders in the monitoring and evaluation of the project’s effects and contribution to the ARB. Mainly involving the evaluation of higher level effects and impact indicators, external monitoring will utilize the existing monitoring and evaluation systems available in the participating agencies such those used by LGUs and the national agencies.

5. An example monitoring system which can be utilized, especially for evaluating socio-economic benefits of the target communities, is the Community-Based Monitoring System (CBMS). The system currently used by LGUs can also be maximized. The same applies for the DENR’s forest information management system which can be used in tracking the development of the reforestation initiatives.

30


6. External monitoring will also include independent monitoring and evaluation. Based on agreed schedules and timetables and evaluation designs, independent monitoring and evaluation will be conducted to validate the project.

7. Project monitoring and evaluation process. The M&E program will be building on the core principles of participatory processes and transparency, and ensure that consultation and participation are undertaken specially in monitoring processes, mechanisms, social cohesion, and indigenous people’s self-determination.

8. Participatory process is particularly important in the ARB considering that a major part of the target clients are the indigenous peoples of the area. Gender sensitive information will also be taken with utmost caution by the M&E system. The monitoring and evaluation process will be undertaken as part of social mobilization activities.

9. Transparency of information will also be a hallmark of the M&E program. The project’s management information system and database program will ensure that correct information is delivered to target stakeholders at the appropriate time for immediate action.

10. The monitoring program will also incorporate (i) bottom-up, community-driven participatory approaches; (ii) self-assessment techniques at the local level, which will be used as a complement to secondary data sources and formal surveys to stimulate from the outset a sense of process ownership among the implementing stakeholders; (iii) the organization structure of the project; (iv) the availability, quality and timeliness of secondary data; (v) the need to establish indicators, data sources, data processing and report production responsibilities for each of the components in the project; (vi) the establishment of linkages between inputs and outputs for each of the subprojects component and the project as a whole; (vii) appropriate methodology for data collection, processing, analysis and reporting (information dissemination) at national, LGU and community levels; (viii) resource requirements (staff, equipment, costs); and (ix) simplicity.

11. At each level, consideration will need to be given to what level of managerial, technical and PPMS support will be required to provide sufficient backing to the project teams that will work directly with LGUs, government agencies and participating communities (and their respective committees) to develop improved environmental conditions.

12. The indicators and methodology for capacity building of LGUs, government agencies and communities are incorporated in the design of the system to facilitate the M&E of project benefits. Data collection for the PPMS will be undertaken by participating LGUs.

1. Compliance monitoring: {Describe how covenants—policy, legal, financial, economic, environmental, and others—will be monitored.} 2. Safeguards monitoring: {Describe how the activities identified in the environment, resettlement, and indigenous people action plans will be monitored and reported.} 3. Gender and social dimensions monitoring: {Describe how the activities in the action plans described in Section VIII will be monitored and reported.32}

32ADB's Handbook on Social Analysis: A Working Document, is available at: http://www.adb.org/Documents/Handbooks/social-analysis/default.asp, Staff Guide to Consultation and Participation: http://www.adb.org/participation/toolkit-staff-guide.asp, and, CSO Sourcebook: A Staff Guide to Cooperation with Civil Society Organizations: http://www.adb.org/Documents/Books/CSO-Staff-Guide/default.asp

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C. EVALUATION

4. {Describe the purpose and timing of proposed reviews, including mid-term reviews.} There will be a midterm review at the end of Year 3 (2014). Within 6 months of physical completion of the Project DENR-FASPO will submit a project completion report to ADB.33

D. REPORTING

5. The DENR-FASPO will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions; (c) updated procurement plan and (d) updated implementation plan for next 12 months; and (iii) a project completion report within 6 months of physical completion of the Project. To ensure projects continue to be both viable and sustainable, project accounts and the executing agency AFSs, together with the associated auditor's report, should be adequately reviewed.

E. STAKEHOLDER COMMUNICATION STRATEGY

1. ADB’s public communications policy (the Policy) provides a framework to enable the project management team to formulate communication education strategies for the ARIWRMP subprojects/outputs. The communication strategy aims to enhance stakeholders’ trust in and ability to engage with the EA and the IAs in critical decision making aspects of the subprojects. The ARB communication strategy seeks to provide information in a timely, clear, and relevant manner and to share information with project-affected people early enough to allow them to provide meaningful inputs into project design.To ensure that the subprojects will have greater development impact, communication components will be in place and will seek to promote:

• awareness and understanding of ARBIWRM subprojects/outputs, objectives, activities, and strategies in achieving results;

• venue to exchange of information and knowledge management so as to provide innovative perspectives on issues confronting the basin; and

• greater information exchange between EA, IAs and ADB including stakeholders, project-affected people for enhanced participation, transparency and accountability .

2. To these ends, the executing agency will proactively share information with the various stakeholders and civil society. To ensure success of information sharing, key issues and subproject components will be available that will allow the stakeholders to actively participate in and give feedback on project implementation, and the monitoring and implementation process.

What is to be communicated? 3. The key messages will be anchored on the overall goal of the project—that is, the improvement of the environmental conditions concerning land and water resources of the Agusan River Basin including the adoption of integrated water resources management principles. Additionally, information on the subprojects requiring investments such as (i) water and biodiversity enhancement and indigenous people development; (ii) institutional development and capacity building are the sources of information. Site and subproject specific communication plans will be prepared for on the following activities:

33 Project completion report format is available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-Sector-Landscape.rar

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Watershed rehabilitation in priority sub-catchments which include streambank and slope stabilization measures, the establishment and protection of protected forest, agro-forestry farms, and ecosystem services to control floods and landslides.

Mitigation measures to contain mining wastes and reduction of mercury in river sediments.

Enhancement and better protection of Biodiversity in Agusan Marsh including livelihood of the community.

Preparation of indigenous peoples development plans for selected watersheds and the Agusan Marsh, including women equally benefitting in the resources.

Improvement of Biodiversity in Agusan Marsh is enhanced and better protected, and livelihoods for Marsh inhabitants.

Improvement and expansion of water systems in selected municipalities. Improvement of Butuan City drainage. Establishment of Agusan River Basin Governing Board to coordinate and manage the

resources of the basin, including project management support. Improvement of water quality monitoring through the rehabilitation of regional

laboratories. Improvement and operation of hydrological monitoring networks and database.

Approaches to Reaching Target Audiences and Key Communicators 4. Building strong and lasting relationships with target audiences will include the holding of regular meetings and forums in the exchange of substantive information about the subprojects with key stakeholders. The executing agency and the IAs such as the local government units that host the subprojects will call for regular meetings to update the stakeholders on the status of the subprojects, and the sharing of information, issues and the provide a mechanism for participation in the resolution of any issues.

5. Under the PPTA a website was designed for project information to be accessible to stakeholders and project staff during the design stage up to the implementation of the subprojects. Project profile, description and other information can likewise be accessed in this website and in the ADB and EA websites.

6. It is suggested that the EA and the IAs intensify their relations with the media (local and national) to keep them informed on the general aspect and progress of the project. This is a proactive approach of making the public aware of the project and promotes transparency of project goals and activities. Key communicators include the management and staff of the project who will provide the venue for continued information on the benefits of the project at seminars, workshops and other events needing focused messages about the project.

X. ANTICORRUPTION POLICY

1. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the Project.34 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all Project contractors, suppliers, consultants and other service providers. Individuals/entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the Project.35

34 Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 35 ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp

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2. To support these efforts, relevant provisions are included in the {loan agreement/regulations or grant agreement/regulations} and the bidding documents for the Project. {Further detail on how the borrower and ADB discussed and addressed anticorruption policy issues may be provided here including a description of key anticorruption risks and the specific mitigation measures the project will implement as identified in a governance risk assessment was conducted as part of program preparation as per the Second Governance and Anticorruption Action Plan.36}

XI. ACCOUNTABILITY MECHANISM

1. People who are, or may in the future be, adversely affected by the project may address complaints to ADB, or request the review of ADB's compliance under the Accountability Mechanism.37

XII. RECORD OF PAM CHANGES

1. {All revisions/updates during course of implementation should retained in this Section to provide a chronological history of changes to implemented arrangements recorded in the PAM.}

36 GACAP II Guidelines available at: http://www.adb.org/Documents/Guidelines/GACAP-II-Guidelines.pdf. See also Sourcebook: Diagnostics to Assist Preparation of Governance Risk Assessments: http://www.adb.org/documents/books/Diagnostics-to-Assist-Preparation-of-GRAs/default.asp. 37 For further information see: http://compliance.adb.org/.

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