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Executive Summary of

Social Assessment

Table of contents

SOCIAL ASSESSMENT 1

1 Introduction 4

2 Socio-economic Background 8

2.1 Scope of project impacts 8

2.2 Basic Socio-economic Background of the Project areas 8

2.3 Poverty Condition of Project Areas 10

2.4 Minority Condition in Project Areas 13

3 Analysis on Key Stakeholders 15

3.1 Identify the key stakeholders 15

3.2 Demands of Key Stakeholders 15

3.3 Impacts Analysis on Key Stakeholders 17

4 Analysis on Social Benefits 21

4.1 Functions and Service Scope of Existing Installations 21

4.2 Analysis on Social Benefits 22

5 Analysis on affording ability 25

5.1 Present payment condition 25

5.2 Analysis on Payment Ability 26

6 Identification of social risks 33

7 Social risks Management 35

7.1 Measures of lighten the negative influence 35

7.2 Organization arrangement and monitoring and evaluation 36

8 Conclusions and suggestions 40

8.1 Conclusions 40

8.2 Suggestions 41

List of figures

FIGURE 1 PROVINCIAL POVERTY COUNTY DISTRIBUTION IN SHANDONG 12

Figure 2 Minority Location Map of Shandong Province 14

List of tables

TABLE 1-1PROJECT CONTENT 5

Table 2-1 Project Impacts 8

Table 2-2 Population Distribution in SDEPⅡ Project Areas 9

Table 2-3Economy Indexes in SDEPⅡ Project Areas 9

Table 2-4 Society Indexes in SDEPⅡ Project Areas 10

Table 2-5 Poverty Condition of the Project location 11

Table 2-6 Minority population of SDEPⅡ 13

Table 3-1 Key Stakeholders Of SDEPⅡ 15

Table 4-1 Social Targets of SDEPⅡ 21

Table 4-2 The Functions And Service Scope Of Existing Installations 21

Table 4-3The service scope of the project 22

Table 4-4 Employment Positions Of The Project 24

Table 5-1 Payment desire of the project 26

Table 5-2 Policies for the vulnerable groups 29

Table 5-3 The existing fee and forecasting charges of ST project areas 30

Table 5-4 The existing and forecasting charges of water supply project areas 31

Table 5-5The existing and forecasting charges of SWT project areas 32

Table 7-1 Social risks avoiding measures of of the project 38

Abbreviation & Acronyms

|APs |Affected Persons |

|FSR |Feasibility Study Report |

|M&E |Monitoring and Evaluation |

|NRCR |National Research Centre for Resettlement |

|PMO |Project Management Office |

|RAP |Resettlement Action Plan |

|SA |Social Assessment |

|SDEP II |Second Shandong Urban Environment Project |

|WB |World Bank |

|SWT |Solid Waste Treatment |

|WS |Water Supply |

|WWT |Wastewater Treatment |

| | |

1 Introduction

Shandong is an important coastal province in East of China. It locates in the down stream of Yellow River; Shandong Province is at the crossing point of Yellow River economy zone and Bohai Bay economy regions, which combines North China with East China. It has been one of Chinese political, economical, and cultural centers from ancient time.

With the rapid economical development of Shandong province, infrastructures of the city are comparatively ill-developed, which can't meet the people’s increasingly demand on production and living. This restricts the sustainable development of the city. The collecting and treating capacity of the sewage are poor. The river is becoming narrower due to serious pollution of sewage and solid waste, which cause serious waterlogging and floods in partial areas. The living wastes are increased rapidly and problems caused by waste-treating are increasingly serious due to the shortage of waste-collecting and waste-treating sites, the long distance of waste transportation, the shortage of waste sorting and transporting stations, and the poor techniques and capacity of waste treatment. Some areas lack living and production water and drinking water is dirty, which have been threatening people’s health. Currently, most water supplies in Shandong Province are mainly from groundwater. With the development of business and investment and the improvement of people’s living standard, with the increasing water demand of city landscapes and agriculture irrigation, the serious problem of water supply has become a bottleneck of social and economic development.

The city has continuously been facing ever-increasing environment threat of sewage and solid waste pollution. It is necessary to heighten the protection standards of environment (such as sewage treatment, riverway management, water supply project, waste treatment, ect.), of soil and water conservation and of ecosystem.

In order to improve the environment, to follow the development principle of “people-oriented”, to promote Shandong integrated competitiveness, and to accelerate the sustainable development, Shandong government will loan from World Bank to carry out SDEPⅡ.

SDEPⅡconsists of 10 sub-projects of three major types: Wastewater treatment projects, water supply projects and solid waste treatment projects. See details in Table1-1.

Table 1-1Project content

|Type |Number |Sub-project Name |Content |FSR Preparation Unit |

|Wastewater treatment(WWT) |1 |Yantai Wastewater |1) Establish a new WWTP of 80,000m3/d |North China Municipal Engineering Design & |

|project | | |2)Construct 14.2 km pipe network, construct new and upgrade a |Research Institute |

| | | |pumping station | |

| |2 |Weihai Network |1) Construct the pipelines of the second WWTP; |North China Municipal Engineering Design & |

| | | |2) Build a pumping station in the first wastewater treatment plant |Research Institute |

| | | |and upgrade three pumping stations; | |

| | | |3) Equip the automatic facilities and purchase vehicles to maintain | |

| | | |the pipelines | |

| |3 |Qixia Wastewater and River |1)Construct a new WWTP of short-term scale 2×104m3/d and long-term |Jinan Municipal Engineering Design Institute |

| | |Rehabilitation |scale 4×104m3/d | |

| | | |2)Wastewater collection pipeline totaling in length 26.237km; | |

| | | |3)Riverway improvement project. | |

| |4 |Zaozhuang Wastewater and River |1)Wastewater pipe and water reuse pipe network |Jinan Municipal Engineering Design Institute |

| | |Rehabilitation |2)Xisha River and Dongsha River Improvement, landscaping and greenery| |

| | | |on river banks and bridges construction. | |

| |5 |Weifang Bailang River Rehabilitation |1)Wastewater cutting box culvert, totaling in length of 43.4km; |Shanghai Municipal Engineering Design Institute |

| | | |2) Block and sluice project: construct 2 rubber dams and 4 hydraulic | |

| | | |pressure advancing brakes concrete gated weirs (4-5 m high); | |

| | | |3) 21.7km of riverway slit clearing and erode against project; | |

| | | |4) Blood controlling embankment totaling in length of 43.4km; | |

| | | |5) 34.77 km of blood preventing roads along embankments. | |

|Water supply (WS) project |6 |Huantai Water Supply and Wastewater |1) Construct a new clean water treatment plant and water transmission|Jinan Municipal Engineering Design Institute |

| | | |pipelines | |

| | | |2) Construct WWTP and drainpipes. | |

| |7 |Gaomi Water supply and Wastewater |1) new construction and expansion (construct a new clean water |Tongji University Design Institute |

| | | |treatment plant, expand water plants of Chennan and Chenbei); | |

| | | |2) construct partial water supply pipe and wastewater collection | |

| | | |pipelines. | |

|Solid waste treatment(SWT) |8 |Heze Solid Waste Management |Solid waste treatment plant with a total capacity of 660 metric tons |North China Municipal Engineering Design & |

|project | | |per day |Research Institute |

| |9 |Rizhao Solid Waste Management |Solid waste treatment plant (Phase 2) with a capacity of 500 metric |Jinan Municipal Engineering Design Institute |

| | | |tons per day. | |

| |10 |Zhaozhuang Solid Waste |Seal Landfill on the spot |North China Municipal Engineering Design & |

| | | | |Research Institute |

According to the request of WB, Social Assessment (SA) is carried out by institutes of compiling FSR, under the guidance of SA experts from Groupe Huit Consultation Corp. And each social assessment is put into FSR report as one chapter. Besides, the summary SA report is compiled by SA experts from Groupe Huit Consultation Corp.

SA is carried out during the design process, which can effectively recognize and avoid social risks, encourage active participation of stakeholders, optimize the project design to reduce negative project impacts, and promote the project implementation.

Both literature research and field investigation are adopted in the SA, and the main contents consist of: (i) socio-economical development information of the project areas; (ii) identifying the key stakeholders of the project and analyze their demands and impacts, especially the impacts on vulnerable groups such as poverty population, women and ethic minorities etc; (iii) the service scope of the existing facilities and the social benefits of the project; (iv) the present situation, affordability and willingness to pay , especially those of the poor population; (v) identifying the social risks of the project implementation, (vi) management and control; (viii) and suggestions on design optimization.

2 Socio-economic Background

1 Scope of project impacts

Totally 9 municipal cities are involved in SDEPII, which are downtown area in Yantai City, downtown area in Weihai City, Shizhong District in Zaozhuang City, economy development area in Qixia City, downtown area in Weifang City, Huantai County, Gaomi City, Heze City, downtown area in Rizhao City .ect.. Totally 11,281,900 km2 are covered, with 14 boroughs, 99 towns/streets and 2362 villages/ committees being involved. The impacted population is 3,830,800, among which 62,800 are poor persons. The impacted scope of each sub-project can be seen in Table2-1.

Table 2-1 Project Impacts

|No. |City |Service area |Area (km²) |

|WWT project |1 |Yantai Wastewater |residents in project areas |

| | | |resettled |

| | | |poverty groups |

| | | |enterprises |

| | | |project owners |

| | | |implement organization |

| | | |environment protection bureau |

| | | |other related government |

| | | |institutions |

| |2 |Weihai Network | |

| |3 |Qixia Wastewater and River Rehabilitation | |

| |4 |Zaozhuang Wastewater and River Rehabilitation | |

| |5 |Weifang Bailang River Rehabilitation | |

|WS project |6 |Huantai Water Supply and Wastewater |residents in project areas |

| | | |resettler |

| | | |poverty groups |

| | | |villagers along the branch |

| | | |pipelines |

| | | |project owners |

| | | |implement organization |

| | | |environment protection bureau |

| | | |other related government |

| | | |departments |

| |7 |Gaomi Water supply and Wastewater | |

|SWT project |8 |Heze Solid Waste Management |residents in project areas |

| | | |resettler |

| | | |poverty groups |

| | | |residents or villagers near the SWT|

| | | |plants |

| | | |project owners |

| | | |implement organization |

| | | |environment protection bureau |

| | | |other related government |

| | | |institutions |

| |9 |Rizhao Solid Waste Management | |

| |10 |Zhaozhuang Solid Waste | |

2 Demands of Key Stakeholders

Different stakeholders have different demands on the project. Analyzing the demands of each kind of stakeholders is helpful to identify the social matters and risks of the project , so as to avoid potential social risks and promote the implementation of the project. Social investigation methods such as questionnaire, interview, observing and discussion are all adapted to analyze the demands of stakeholders.

(1) Residents in project areas. With the rapid development of city, the environment has been to some extent destroyed. The investigation showed that about 78.4% of the residents think the natural environment had been exacerbated, especially; narrower riverways and seriously polluted rivers destroy the images of cities and influence people’s daily life. So the urban residents long for living safe and high-quality, when enjoying the increasingly rich material and culture life. 93.7% of the urban residents hope they can live in a safe and clean environment, and drink clean water. And they appeal the related government institutions to scientifically treat and manage sewage and solid wastes. Besides, 91.6% of the residents expect the project negative impacts to be minimized. They hope to live in the condition of lower noise, hygiene, safe transportation, and hope the increment of the expenses caused by the project under their payment ability.

|An interviewee in Dongsha River in Zaozhuang City |

|The water pollution is serious here, now the smell of dirty water is irritative. If it didn’t rain yesterday, the smell |

|would wake person due to its abominable smell. The riverway is much narrower than my childhood time. If it rains heavily, |

|the riverway will be full, and then the rain water can overflow to my house. In the morning it flows the red water, and in|

|the afternoon it becomes black. The riverway needs to be treated rapidly. If we were rich, who would live here? The |

|government must treat the sewage. I would like to move if the compensation is reasonable. |

(2) APs by land acquisition and resettlement(resettler). In order to improve the environment, this project will inevitably acquire land and demolish houses. The resettled people hope that implementation organizations precisely measure the impacts and reasonably compensate and resettle them and their living and production level can be restored or even enhanced.

(3) Residents impacted by water supply and solid waste treatment sub-projects.

①Water supply projects. Among the water supply project areas, Gaomi is impacted by fluorin-water the most seriously, so is Huantai. The villagers in the project areas have to buy costly barreled well water from other places due to short of clean water. So they are eager to improve the quality of drinking water and they hope they can conveniently get a great deal of drinking water with superior quality. Besides, considering the payment ability, the villagers request the expenses to be controlled under their ability.

② SWT projects. 89.1% of the residents support the construction of solid waste treatment projects which can improve their living environment. But the residents near the plant sites hope that the negative impacts on their life, health and environment are the minimum. And they hope the environment protection departments to periodically announce the environment supervision data after its construction.

(4) Enterprises in project areas. The investigation showed that 69.2% of the enterprises in project areas have difficulties in getting production water and the costs are high. They demand to reduce the water cost and hope they can easily obtain a great deal of water at reasonable cost. At the same time, they demand to cut down the sewage treatment cost and get maximal profits.

(5) Project owners and implementation organizations. Project owners and implementation organizations hope that the projects start constructing as soon as possible. They want to reduce the construction cost and running cost to guarantee the project profits.

(6) Related government institutions. The related government institutions, such as development and reform committee, construction bureau, environment protection bureau and sanitation bureau, expect to minimize negative impacts of the projects. They anticipate the projects will do well to the environment, people’s living, development of enterprises and institutions, and, the governments’ images.

3 Impacts Analysis on Key Stakeholders

The implementation of this project will bring different influences on different stakeholders, including positive affects and negative affects. Analyzing positive and negative affects on stakeholders can effectively identify, control and avoid the social risks.

1) Residents in project areas.

Positive affects. The residents will directly benefit from the projects, so their demand on the projects will be satisfied. After projects construction, the environment will be greatly improved and the pressure of lacking production and living water will be alleviated. The solid waste will be rapidly collected and treated; the second pollution caused by the open-air heaping of solid wastes will be decreased. The environment will be improved and advanced. The health of the residents will be protected and improved.

Negative affects. During project construction, the projects will cause such negative impacts as noise, transportation, health and safety. Besides, the running of the project may cause additional pollution treating expenses, and the residents may pay more expenses such as sewage treatment fee, waste treatment fee and flood control fee.

2) APs by land acquisition and resettlement

Positive affects. The investigation showed that RAP of each sub-project is reasonably compiled with the participation of the resettled. The resettled will be reasonably compensated and relocated. The living conditions of those who live in the poor housing will be greatly improved and they will benefit from projects.

Negative affects. The APs is a big group heavily suffering negative affects. Their land, houses or job and other various resources may be impacted during the project construction. It is necessary to recover or improve their previous income or livelihood.

(3) Related townships and villagers.

Positive affects. With the construction of the projects, especially Gaomi water supply project and Huantai WS and WWT project, the rural residents will obtain clean drinking water and water shortage problem will be resolved. The incidence of diseases and deformities caused by drinking high fluorine containing water will be completely changed.

Negative affects. In Gaomi water supply project, if the cost of laying the water pipes and its management and the cost of laying tap water pipes it to households are beyond the payment ability of the rural residents, the phenomenon that the rich enjoy the clean water while the poor have no tap water will be accessed. It will cause social inequality and a further gap between the rich group and the poor group. And if SW projects are unreasonably designed and ill-managed, it will bring such risks as underwater polluting caused by waste infiltrating and surrounding soil and living environment polluting caused by not well closing waste field. Then the urban residents and villagers will be badly affected.

(4) Poor population.

Wastewater treatment and water supply sub-projects. In the sewage treatment and water supply projects areas, the poor residents are seriously impacted by pollution. Due to the social investigation, the SA group found that there were a number of shed-dwellers living by the riverway with dirty and mess housing condition. Most of them are poor with low income. So they are more vulnerable to the illnesses caused by water pollution. The medical treatment expenses are heavy burdens to them; so many poor people don’t see doctors even when they are ill, causing their health worse. Among the water supply project areas, Gaomi suffers the most serious pollution. Gaomi lies at Shandong Peninsula, underwater containing a lot of fluorine is widely distributed. People there have been suffering from fluorine poisoning for more than 700 years. There are 994 villages of Gaomi, 801 of which are fluorine disease villages with 624,000 people. Among them, 408 villages with 363,000 people suffers from light diseases, 185 villages with 124,000 people from diseases of medium degree, 208 villages with 137,000 from serious diseases. The groundwater of 9 villages at the north of Gaomi contains more than 10 times of fluorine compared with the national fluorine safety standard. The residents suffered the disaster of fluorine for generations. The light sufferers suffer from the yellow or black teeth, while the heavy sufferers suffer from the rickets, abnormality and osteoporosis. In some villages, where have been national endemic heavy disaster areas, married men and women have no procreating ability. Because of the diseases, health condition becomes worse and worse. With the result the poor can’t work normally, which seriously effects their health and development.

Positive impacts. With the construction of this project, some of the shed-dwellers will obtain relocated houses with improved environment. And the drinking water quality will be enhanced after sewage treatment; health conditions of the poor will be improved. After tap water running in the villages, the rural residents will change their fate of drinking high fluorine containing water or buying costly clean groundwater from other places. They can conveniently get clean drinking water.

Negative impacts. The sewage treatment fee, increasing the expenditures of families, will influence families with lower income in a larger degree.

The SWT projects. Poverty condition: It is investigated in SWT project areas that the sanitation condition in some downtown corners are very serious due to open-air rubbish, especially in Heze and Zaozhuang, two provincial poverty areas. The poor has less income and their living conditions are bad. In the old city zones of Zaozhuang, Heze and Rizhao, there are still a few residents living in the bad houses which are low and short, most of who are low incomers and make a living on small business or house rent. The smell around the houses is bad and the rubbish around may be potential threats to their health.

Positive impacts. The solid waste treatment plants and transfer stations will be set up with reasonable design and scientific management, which may improve sanitation conditions of the poor population to some extent.

Negative impacts. The SWT fee will be increased, which may increase living burdens of the poor.

(5) Enterprises in project areas.

Positive impacts. With the implementation of this project, the enterprises in project areas can obtain higher quality production water more conveniently. And the enterprises can cut down production costs and enlarge sizes. They can directly benefit from the project. Currently, the government has already announced that new or enlargement projects such as electric power stations and paper making factories using groundwater will not be examined and approved. Most of the projects in the cities and counties are of those kinds. If the capacity of water supply and sewage treatment aren’t be enhanced, their upgrades will be heavily and negatively affected. At the same time, the establishment of sewage treatment plants has scale effects, and the cost is lower than the construction of sewage treatment plant within a single plant.

Negative impacts. Expenditures on water supply, sewage treatment, and solid waste treatment in some enterprises will be likely to increase.

(6) Project owners and implementation organizations.

Positive impacts. Project owners and implementation organizations are main beneficiaries. During projects construction and running period, they will directly benefit from them.

Negative impacts. If related fees such as water supply fees, sewage treatment fees, solid waste treatment fees could not be collected or not charged on time, it will cause economical loss. Moreover, unreasonable resettlement will cause conflicts between the resettled and implement organizations; the impacts on residents living and transportation during the construction may also cause conflicts between them. All these conflicts will cause risks of projects shutdown and delay.

(7) Related government institutions.

Positive impacts. The projects will improve local environment condition and investment environment. Related government institutions, such as development and reform committee, construction bureau, sanitation bureau, environment protection bureau, can increase their achievement in their posts and directly benefit from the projects through enhancing the competitiveness of the nine municipal cities and counties of Shandong Province.

Negative impacts. If the potential social crises, such as the rationality of resettlement, the safety management of the SWT plants, the waste licit disposal management of enterprises, ect., are not efficiently controlled and managed by the related government during the construction and operation periods, it will cause the dissatisfactions of the society, and increase their workload and financial expenses, and destroy the government’s images.

3 Analysis on Social Benefits

The implementation of this project will improve the abilities of flood control, sewage and solid waste treatment and extend the overlay of the infrastructures of 9 cities in Shandong. It will meet the demand of people , which may promote the stable, sustainable and harmonious development of socio-economy in Shandong.

Table 4-1 Social Targets of SDEPⅡ

|Type |Social targets |

|Water supply |Improve the water quality; solve the serious problem of water shortage; reduce the cost of production|

|project |water for enterprises; increase the opportunities of employment and investment. |

|WWT project |Enhance the abilities of flood control; quicken the restoration of the landscape and ecosystem along |

| |the rivers; improve the quality of drinking water and living environment; reduce the production cost |

| |of enterprises; increase the opportunities of employment and investment. |

|SWT project |Improve the environment sanitation; enhance the SWT treatment ability and its technology; increase |

| |the opportunities of employment and investment. |

1 Functions and Service Scope of Existing Installations

The existing installations of water supply, sewage treatment and solid waste treatment can’t satisfy the need of all target residents and communities. The service area is totally 726.03 km2 with totally 3,078,600 populations and the average service guarantee rate is 66.46%. There is no sewage treatment plant and relevant service in Qixia economy development area. The rain and waste interflow there. The functions and service scope of existing installations are as follows in Table 4-2.

Table 4-2 The Functions And Service Scope Of Existing Installations

|Sub-project |Service scope and service population of existing installations |

| |Functions |Area |Population |Service guarantee |

| | |（km²） | |rate（%） |

| | | |Urban(10000) |Rural(10000) | |

|Weihai Network |sewage collection and treatment|23.30 |17.04 |7.36 |74.50 |

|Qixia Wastewater and River|rain and sewage interflow; a |0 |0 |0 |0 |

|Rehabilitation |spot of rain& wastewater | | | | |

| |interflowing pipes laid in the | | | | |

| |old city area. | | | | |

|Zaozhuang Wastewater and |Sewage drainage and flood |42.33 |31.65 |17.85 |78.30 |

|River Rehabilitation |discharge | | | | |

|Weifang Bailang River |Sewage treatment |40.00 |24.00 |8.90 |62.50 |

|Rehabilitation | | | | | |

|Huantai Water Supply and |Water supply and sewage |21.60 |18.60 |4.62 |52.00 |

|Wastewater |treatment | | | | |

|Gaomi Water supply and |Water supply and drainage |409.20 |24.70 |11.40 |99.00 |

|Wastewater | | | | | |

|Heze Solid Waste |Setting on fire and simple |41.00 |29.00 |1.00 |50.00 |

|Management |cover | | | | |

|Rizhao Solid Waste |SW collection and |38.00 |29.10 |10.90 |100.00 |

|Management |transportation of the city zone| | | | |

|Zhaozhuang Solid Waste |SW simple cover |42.33 |31.65 |17.85 |78.30 |

|SDEPⅡ |/ |726.03 |184.31 |74.05 |/ |

2 Analysis on Social Benefits

The design of this project is based on the existing installations’ service abilities and on the residents’ demands. The main target beneficiaries of the project are residents, especially including the residents excluded out of the existing services and villagers and the rural residents lacking clean drinking water in those fluorine containing areas. The project will enlarge the scope of the existing services, enhance service abilities, improve the cities’ environment, and provide employment opportunities for the affected, especial for the vulnerable group.

（1）Enlarge service areas and enhance service ability.

Along with the development of cities and the increase of population, and with the continuous increases of industrial sewage, living wastes and solid wastes, the existing water supply, waste treatment installations can't satisfy the need of the fast growth of the city society and economy. This project will increase the service items, enhance the abilities, advance the techniques of the waste treatment, and at the same time, enlarge the existing installations’ service scope. The service area will be enlarged from 726.03 km2 to 813.22 km², increasing by 12.00%. The service population will be increased from 3,078,600 persons to 3,840,800, increasing by 24.76%, among them the beneficial poor population will be increased to 62,800 persons. The service guarantee rate will be enlarged from 66.46% to 92.77%. The service scopes after project construction are as follows in Table 4-3.

Table 4-3The service scope of the project

|Sub-project |Service scope and population after project construction |

| |Functions |Area（km²） |Population |Service |

| | | | |guarantee |

| | | | |rate（%） |

| | | |Urban |

| | | |(10000) |

|1 |Yantai Wastewater |40 |300 |

|2 |Weihai Network |46 |550 |

|3 |Qixia Wastewater and River Rehabilitation |41 |300 |

|4 |Zaozhuang Wastewater and River Rehabilitation |41 |300 |

|5 |Weifang Bailang River Rehabilitation |150 |500 |

|6 |Huantai Water Supply and Wastewater |42 |500 |

|7 |Gaomi Water supply and Wastewater |40 |500 |

|8 |Heze Solid Waste Management |130 |300 |

|9 |Rizhao Solid Waste Management |61 |80 |

|10 |Zhaozhuang Solid Waste |30 |160 |

|Total |SDEPⅡ |621 |3490 |

4 Analysis on affording ability

1 Present payment condition

The related expenses of this project are sewage treatment fee, water supply fee and solid waste treatment fee, etc..

(1) Sewage treatment project. There are totally 7 sewage treatment projects, including Yantai Xin’an River ST Project (Phase II), Weihai ST Project, Zaozhuang ST Project (Phase II), Qixia ST Project and Baiyanghe River treatment project, Gaomi WSD Project, Huantai Water Supply and ST Project, Weifang Bailang River Environment Treatment Project. Six sub-project areas except Weifang will increase sewage treatment fees. Currently, in Zaozhuang, people having a city’s lowest living guarantee certificate and a life relieving certificate can get support based on the break-even principle of “pay first, return later”. The monthly subsidy standard, which starts paying at the first quarter of 2005, is 1.5 Yuan per household with less than 3 members; 2.5 Yuan per household with more than 4 members. The rest 6 sub-projects have no special favorable policies on sewage fee for vulnerable groups.

The average sewage drainage fee in the 7 sub-projects is 0.77 Yuan/m3 and the average annual payment is 21.14 Yuan per capita, accounting for 0.17% of the annual urban average salary per capita, and 0.89% of the annual urban minimum living guarantee standards. The payment proportion of urban poor people is 5.24 times than that of urban residents. Among these sub-projects, the highest sewage drainage fee is 0.9 Yuan/m3 in Qixia, and the highest annual payment is 30.66 Yuan per capital in Gaomi. The highest payment proportion of the annual urban average salary is 0.34% in Gaomi per capita. The highest payment proportion of the annual urban minimum living guarantee standards is 1.70 % of Gaomi. Moreover, only villages in Qixia levies upon water treatment fee, averagely 0.7 Yuan/m3 and the annual average payment is 23.0 Yuan per capita, accounting for 2.3% of the rural poverty line. The present ST fee in project areas is as following Table 5-3.

(2) Water supply project. Three project areas of Weihai ST Project, Huantai Water Supply and ST Project, Gaomi WSD Project will increase water supply fees. The three areas have no favorable policies for vulnerable groups.

The average water supply fee in these 3 areas is 1.26 Yuan/m3 and the average annual payment is 57.01Yuan per capita, accounting for 0.51% of the local annual urban average salary per capita, and 2.38% of the annual urban minimum living guarantee standards. The payment proportion of urban poor people is 4.67 times than that of ordinary residents. The water supply fee of the project is as following Table 5-4.

(3) Solid waste treatment project. 3 project areas of Rizhao Living Waste Treatment Project, Heze SWT Plant Project and Zaozhuang SWT Project involves collection of waste treatment fee. Currently only Heze has favorable policies on vulnerable groups. The primary and middle schools, infant schools, nurseries, nursing home for the old, social welfare home and the ones who enjoy the minimum living guarantee etc. needn’t pay the SWT fees. The other 2 areas have no favorable policies for vulnerable groups.

The monthly SWT fee per household of Rizhao and Zaozhuang are respectively 3 Yuan and 5Yuan, while in Heze it is 1Yuan. The average family size in Rizhao and Zaozhuang is respectively 3.01 and 3.39 persons, so the monthly SWT fee per capita is respectively 1 Yuan and 1.5 Yuan. The average annual SWT fee p is 14 Yuan er capita of these three sub-projects, accounting for 0.13% of the annual urban average salary per capita, and 0.78% of the annual urban minimum living guarantee standards. The payment proportion of urban poor people is 6 times than that of ordinary residents. The SWT fee of the project is as follows in Table 5-5.

2 Analysis on Payment Ability

To understand the affordability and willingness of payment of the residents, project designers carry out sampling researches on the urban and rural residents with different income levels. There are totally 1600 samples and the valid sample rate is 89.7%. The research contents mainly include: whether want to pay, whether related expenses will become the family burden or not, whether support to increase related expenses, the upper limit of the payment. The research showed that 82.60% of the residents would like to pay the related fees. They would like to pay for the improvement of the environment and water. Few of the residents don’t like to pay, mainly because they are poor and cannot afford it.

1、Payment ability of the common residents.

Payment desire investigation is done to full understand the payment desire of the residents and validate the reasonability of the project anticipated income. The annual upper limit of ST, water supply and SWT projects are respectively 36 Yuan, 72 Yuan and 24 Yuan per capita. The detailed payment desire can be seen in Table 5-1.

Table 5-1 Payment desire of the project

|Type |Average |Lower limit |Higher limit |

| |（Yuan/person·year） |（Yuan/person·year） |（Yuan/person·year） |

|WWT project |60 |0 |240 |

|WS project |120 |0 |480 |

|SWT project |24 |0 |200 |

To full consider the residents’ desire and reasonably determine the increasing degree is the foundation of the projects development. The expected rises of related expenses are analyzed as follows.

Wastewater treatment project. 6 sub-projects areas except Weifang will increase the urban waste treatment expenses, and Qixia will increase the rural waste treatment expenses. As for urban, Yantai will increase by 8% yearly and Weihai 5% yearly; Zaozhuang and Huantai will increase the price twice (increase by 0.14 Yuan/m3 in 2010 and 0.14 Yuan/m3 in 2020); Qixia and Gaomi will respectively increase by 0.9 Yuan/m3 and 0.8 Yuan/m3 in the coming 10 years. As for rural, Qixia will increase by 0.9 Yuan/m3 in 10 years. According to the forecast, the annual average payment for ST of Yantai and Weihai will respectively increase by 0.9 Yuan and 0.5 Yuan per capita. And in the future 10 years the highest average annual payment will be respectively 22 Yuan and 17 Yuan per capita, accounting for 0.70% and 0.54% of the annual minimum living guarantee standards; that of Zaozhuang and Huantai will be respectively 25.81 Yuan and 34.15 Yuan, accounting for 1.50% and 1.49% of the annual minimum living guarantee standards; and that of Qixia and Gaomi will be respectively 59 Yuan and 55.70 Yuan, accounting for 2.46% and 3.09% of the annual minimum living guarantee standards.

The expenses after increasing in the 6 sub-projects are lower than the residents’ payment desire based on the existing income level, not considering the increase of incomes and supplemental payments of the environment protection. So residents can afford the rises of the expenses. The existing expenses and forecasted increases are as following Table 5-3.

Water supply project. Weihai, Huantai and Gaomi will increase urban water supply fee; while Gaomi will increase both urban and rural water supply fee. Weihai will increase by 5% every year and the average annual payment for water supply will be 96.15 Yuan per capita, accounting for 3.08% of the annual minimum living guarantee standard. Huantai will increase the price twice (increase by 0.24 Yuan/m3 in 2010 and 0.3 Yuan/m3 in 2015) and the average annual payment will be 71.56 Yuan per capita, accounting for 3.14% of the annual minimum living guarantee standard. Gaomi will increase by 2.97 Yuan/m3 for the urban residents and the average annual payment will be 120.5 Yuan per capita, accounting for 6.6% of the annual minimum living guarantee standard. Gaomi will increase by 2.61 Yuan/m3 for the rural residents and the average annual payment will be 32.85 Yuan per capita, accounting for 3.29% of rural poverty line. The expenses after increasing in the above 3 sub-projects are lower than the residents’ payment desire based on the existing income level, not considering the increase of incomes and supplemental payments of environment protection. So residents can afford the rises of the expenses.

Solid waste treatment project. The solid waste treatment fee in Rizhao will be increased by 5% every year and the average annual payment for solid waste treatment will be 18 Yuan per capita, accounting for 0.88% of the annual minimum living guarantee standard. In Heze it will be increased by 7.2 Yuan per capita every year and be increased to the 18.8 Yuan per capita, accounting for 1.2% of the annual minimum living guarantee standard. And after the construction, Heze will levy on the rural waste treatment for 14.4 Yuan per capita every year, accounting for 0.84% of the rural poverty line. The expenses after increasing in the above 3 sub-projects are lower than the residents’ payment desire based on the existing income level, not considering the increase of incomes and supplemental payments of environment protection. So residents can afford the rises of the expenses.

2、payment ability of the poor residents.

Wastewater treatment project. The highest average annual payment in Yantai and Weihai in following 10 years will respectively account for 0.70% and 0.54% of the annual minimum living guarantee standards. In Zaozhuang and Huantai it will respectively account for 1.50% and 1.49%. And in Qixia and Gaomi it will respectively account for 2.46% and 3.09%.

Water supply project. The average annual payment per capita in Weihai will be 96.15 Yuan in following 10 years, accounting for 3.08% of the annual minimum living guarantee standard. In Huantai it will account for 3.14%. And in Gaomi it will account for 6.6% while the payment of rural residents will accounting for 3.29% of the annual rural poverty line.

Solid waste treatment project. The highest average annual payment per capita in Rizhao will account for 0.88% of the annual minimum living guarantee standard. in Heze it will accounting for 1.2% while the payment of rural residents will account for 0.84% of the annual rural poverty line.

The negative impacts of the expenses increases on vulnerable groups are much heavier than the ordinary residents. Except Heze and Zaozhuang, the other 8 sub-projects have no special policies for vulnerable groups. The social assessment group suggests that these places should set relevant policies down as soon as possible to reduce or not charge the related fees for vulnerable groups. The detailed policies for vulnerable groups are as following Table 5-2.

|No. |Location |Related fees |Policy for vulnerable group |Organization |

| |urban |rural | |

|WWT project |1 |Yantai Wastewater |selection of project site |

| | | |increases of sewage treatment fee |

| | | |impacts caused by engineer |

| | | |resettlement |

| | | |public health |

| | | |social responsibility of sewage producers |

| | | |payment ability of vulnerable groups |

| |2 |Weihai Network | |

| |3 |Qixia Wastewater and River Rehabilitation | |

| |4 |Zaozhuang Wastewater and River | |

| | |Rehabilitation | |

| |5 |Weifang Bailang River Rehabilitation | |

|WSDproject |6 |Huantai Water Supply and Wastewater |selection of project sites |

| | | |increases of water supply fee |

| | | |impacts caused by engineer |

| | | |resettlement |

| | | |maintenance ability of branch pipes |

| | | |payment ability of vulnerable groups |

| |7 |Gaomi Water supply and Wastewater | |

|SWT project |8 |Heze Solid Waste Management |selection of project sites |

| | | |increases of solid waste fee |

| | | |impacts caused by construction and running |

| | | |groundwater pollution |

| | | |income restoration of the resettled |

| | | |payment ability of vulnerable groups |

| |9 |Rizhao Solid Waste Management | |

| |10 |Zhaozhuang Solid Waste | |

The projects characters and social factors are different, so are the social risks. Identifying the social risks will help to find out the measures to avoid them. According to the above key social factors, the potential social risks are as following, (1) social exclusion, (2) no payment ability of vulnerable groups, (3) conflict between residents and implementation organizations, (4) conflict between the resettled people and implementation organizations, (5) social responsibility default of waste producers.

(1)Social exclusion. Villagers in Gaomi are relatively poorer. There are many poor people affected by high fluorine containing groundwater; they are most eager to improve the water quality. During the design, villagers’ payment abilities of installing water pipes into their houses have not been well considered. And some of the villagers, especially the poor, can't afford it and cannot enjoy the water supply services.

(2) No payment ability of vulnerable groups. Because vulnerable groups have no or lower income, the rises of related expenses will have greatly negative influence on them. Currently 7 sub-project areas have no favorable policies to reduce or not charge related expenses for vulnerable groups. And they cannot afford such expenses and cannot enjoy the related services.

(3)Conflicts between residents and implementation organizations. The investigation showed that each sub-project will cause negative influences such as noise, traffic pressure and dangerous hidden trouble, and bring inconveniences to the residents. If such negative impacts cannot be avoided or lessened during the construction, it will easily result in conflicts between residents and implementation organizations, thus affecting the progress of the construction.

(4) Conflicts between the resettled and implementation organizations. The project will negatively impact a great deal of people and their business and living will be influenced. If the resettled people cannot have the compensation in time, it will cause conflicts between the resettled people and implementation organizations.

(5) Social responsibility default of waste producers. Although environment beautification is the demand of the residents and enterprises, which are the main motives of the construction of the project, their behaviors are a great threat to the environment. On one hand, the residents place the waste in disorder, pour waste water to occupy the riverway at random, and build illegal buildings. On the other hand, enterprises discharge the dirty water without treating. And the solid wastes are dumped at will. The social sample research showed that 18.7% of enterprises discharge waste without reasonable treatment. These seriously affect the environment of the city; and also bring difficulties to the waste treatment. If such bad behaviors of the residents and enterprises cannot be corrected, it may result in vicious circle of “treat while polluting” and influence the operation of the project and its benefits.

5 Social risks Management

In order to help the vulnerable group to enjoy the social benefits of the projects, avoid the conflicts between the residents and the implementation organizations, and increase the social responsibility of pollutant producer, the SA group actively conducted investigation and full understood the related laws and regulations, policies. The SA group also full discussed with such stakeholders as related government institutions, project owners, implementation organizations and the residents. On this foundation, the SA group puts forward the following measures and M&E mechanism to reduce the social risks to a minimal degree.

1 Measures of lighten the negative influence

The construction of this project may bring negative impacts on stakeholders to different extents. And based on the principle of “people oriented”, the SA suggests actively taking various measures to avoid social risks and promote the smooth progress of the project. See details in Table 7-1.

(1) Optimize the design. We suggest sub-project designers optimize the design and take the requirements of local development and the need of the residents (especially the vulnerable groups who cannot drink safety water at present) into consideration. For Gaomi water supply project, we suggest that Gaomi Water Supply Company laid the pipeline into the rural households in advance free of charge and take the responsible of pipeline maintenance, management and water charges collection.

(2) Reduce the related expenses of vulnerable groups. The related fees will be increased after the setup of the project. Although most of the residents can afford the rises, it will bring pressures to vulnerable groups. In order to lighten their life burden and guarantee they can fairly enjoy the social benefit of the project, we suggest that some of the sub-project areas, which originally have favorable policies for vulnerable groups, continue to carry out the relevant policies. Those currently having no related support policies should constitute relevant policies as soon as possible. For Gaomi project, it is suggested that government related institutions consult with the villagers to establish reasonable fund-collecting schemes and guarantee water being piped to each houses.

(3) Provide employment opportunity . 4111 posts will be provided during the construction and running period of the project, among which 2467 are unskilled. The average construction time of each sub-project is 2 years. The implementation organizations estimate the average work hours of each unskilled post is 10 months per year and the average daily wage is 25 Yuan per capita. The estimated total wages of such posts are 37million Yuan. It is suggested that each sub-project owner and implementation organizations cooperate with local social safeguard bureaus and nationality affair committees to first offer these posts to the poor population, women, and minorities. 30% of the posts should be offered to the poor, 30% to the greatly influenced poverty people, 30% to other poverty people, and 10% to the poor minority population.

(4) Safety maintenance during construction. Each sub-project will cause negative influences such as noise, powder, traffic inconvenience, etc. If the construction place is close to the residents living area, it is suggested that implementation organizations should establish soundproof wall, protection wall and set up visible caution marks in places with dangerous hidden trouble, and they should avoid working at the nighttime. If the construction brings traffic problems, we suggest that implementation organizations should establish protection wall and placard on the main roads, and set up visible caution marks in places with dangerous hidden trouble. If the construction place is close to schools or enterprises, it is suggested that they should establish soundproof wall, and not work at the busy time, but work at night. During the construction and running period of Heze SW project, the vehicles transportation will add pressure to Huanggang Road of 8m width. And especially it will threaten the safety of the residents and businessmen living or working by both sides of part of the road with a length of 1.5km. We suggest that Huanggang Road should be widened to satisfy the safety demand of people.

(5) Resettlement Action Plan. Firstly, in order to avoid or minimize land acquisition and resettlement, PMOs and DI shall close consultation with the local officials and village committees/street committees during the preliminary and final feasibility study stages, to minimize the resettlement , secondly , a scientific and reasonable RAP has to be prepared on the basis of both WB and Chinese resettlement policies . The priority target of the resettlement program is to ensure that APs’ income and living standard after resettlement will be rehabilitated as quick as possible or at least maintained at the level of “without-project” status. In the resettlement implementation period, project owners and implementation organizations should strictly implement in the light of the plans and pay the expenses on schedule. At the same time they should engage experts to monitor and evaluate the resettlement.

(6) Public environment and hygiene education plan. In order to realize the expected target of the project, it is necessary to carry out environmental protection and hygiene education. We suggest that the related government institutions such as Education Bureau, Environment Protection Bureau, Broadcasting Station, TV Station, newspaper offices and street offices cooperate to conduct the environment protection education. The related institutions carry out such environment protection education as water saving, waste treatment, disease prevention and waste recycling through placards, brochures, TV, broadcasting and public assembly .

(7) Design of reasonable scale. Currently the proportions of pollution caused by waste producers lacking social responsibility are 19.1%. The pollution will be reduced after environment protection education and law enforcement on the waste producers. The designers should consider this possibility and determine the designing scale in the light of reasonable waste discharging quantity, and determine the reasonable cost of projects construction and technology requirements.

2 Organization arrangement and monitoring and evaluation

To ensure the smooth implementation of the above measures, Shandong PMO is responsible for organizing related organizations to carry out the above measures. Each sub-project owner and local government should carry out above measures.

(1) Designer of each sub-project. Be responsible for choosing the reasonable site, route, optimizing techniques, and determining the reasonable waste treatment scale.

Based on the full investigation of the natural and human cultural environment and discussing with project owners and the residents, designers adopt their suggestions on project sites selection. In the route designing period, designers try their best to avoid impacting tall buildings, schools, residents committees and enterprises. In the pipeline designing period, they fully consider the benefits of vulnerable groups, especially the benefits of the rural residents lacking drinking water or suffering from fluorine. After fully consulting the owners and the residents about the selection of solid waste filling field, the designers selects plans such as constructing in suburban areas with fewer people, or on the abandoned land, or reconstructing in order to reduce the impacts. The pollution will be reduced through educating environment protection to and strengthening law enforcement on the waste producers. The designers should consider the possibility and determine the design scale in the light of reasonable waste discharging quantity, and determine the reasonable cost of projects construction and technology requirements.

(2) Project owners and the implementation organizations. Be mainly responsible for implementation of resettlement plans and payment of related funds; providing jobs for the vulnerable and pay wages for them during the construction and running periods; negotiating with the residents about the impacts, getting support from them, and taking measures to reduce negative impacts, such as establishing the soundproof wall, protection wall and widening the road.

(3) Sanitation bureau and environmental protection bureau. Be responsible for the education of the public environment protecting and hygiene and the publicity of environment monitoring information, and periodically issuing environment gazettes for the quality of the groundwater during the construction and running phase.

(4) The labor and social safeguard bureau. Be mainly responsible for labor training and employment.

(5) Poverty reduction office. Be responsible for identifying the rural poverty people, instructing their employment and providing with consultations on related policies.

(6) Minority Administration Committee. Be responsible for identifying the minorities , supporting their living and production, and providing with consultations on related policies.

.(7) Civil Administration Bureau. Be responsible for identifying vulnerable groups with lowest living safeguard and supervising the implementation of supporting policies for the vulnerable.

(8) Price Bureau and Finance Bureau. Constituting support policies for the vulnerable groups and supervising the implementation of support policies.

Table 7-1 Social risks avoiding measures of of the project

|No. |Key social |Target |Implementation |Monitoring |Suggested measures |

| |risks |group |organization |organization | |

| | | |Gaomi Water Supply |Gaomi PMO、WB | Program Ⅰ of Gaomi project : related government institutions consults with the villagers to establish reasonable |

| | | |Company, local | |fund-collecting scheme to guarantee the water being piped into each household. Gaomi Water Supply Company, provides |

| | | |governments of all | |the technology support and maintenance of pipes. |

| | | |levels in Gaomi | | |

| | | | | | Program Ⅱof Gaomi project: Gaomi Water Supply Company laid the pipeline into the rural households in advance free of|

| | | | | |charge and take the responsible of pipeline maintenance, management and water charges collection. Then the company can|

| | | | | |compensate the cost from increasing the water price. |

|2 |No payment |Vulnerable group|Zaozhuang WWT Plant ; |Zaozhuang and Heze PMO,WB| the two areas such as Zaozhuang(sewage) and Heze originally having policies to reduce or not charge the related |

| |ability of | |Heze WWT Company | |expenses for the vulnerable groups continue to carry out the related policies. |

| |vulnerable | | | | |

| |groups | | | | |

| | | |The implementation |PMO,WB | The sub-project areas such as Yantai, Weihai, Xixia, Weifang, Gaomi, Rizhao, Huantai and Zaozhuang(solid waste) which|

| | | |organizations ;WS | |have no policies for vulnerable groups should carry out the relevant policies as soon as possible to reduce or not |

| | | |companies, SWTPs, waste| |charge related expenses.. |

| | | |treatment companies | | |

| | | |project owners and the |Labor and social | The estimated total wage of unskilled workers brought by the project is 37,000,000 Yuan. We suggest that each |

| | | |implementation |safeguard bureau, Civil |sub-project owner and implementation organizations cooperate with local social safeguard bureaus and nationality |

| | | |organization |administration bureau, |affair committees to first offer these posts to the poor population, women, and minorities. 30% of the posts should be|

| | | | |Minority affair |offered to the poor, 30% to the poverty people heavily negatively influenced, 30% to other poverty people, 10% to the |

| | | | |administration bureau, |poor minority population. |

| | | | |Women committee PMO,WB | |

|3 |Conflicts |Residents |implementation |PMO,WB | If the construction spot is close to the residents living area, we suggest that implementation organizations should |

| |between | |organizations | |establish soundproof wall, protection wall and set up visible caution marks in places with dangerous hidden trouble, |

| |residents and | | | |and avoid working at the nighttime. |

| |implementation | | | | |

| |organizations | | | | |

| | | |implement organizations|PMO,WB |if the construction brings traffic problems, implementation organizations should establish protection wall and placard|

| | | | | |on the main roads, and set up visible caution signs in places with dangerous hidden trouble. If the construction |

| | | | | |place is close to schools or enterprises, they should establish soundproof wall, and not work at the busy time, but |

| | | | | |work at night. |

| | | |local governments and |PMO,WB | During the construction and running period of Heze SW project, the vehicles transportation will add pressure to |

| | | |implementation | |Huanggang Road of 8 m width. And especially it will threaten the safety of the residents and businessmen living or |

| | | |organizations | |working by both sides of part of the road with a length of 1.5km. We suggest that Huanggang Road should be widened to |

| | | | | |satisfy the safety demand of people. |

| | | |local government |PMO,WB | Heze, Zaozhuang and Rizao subprojects: local environment protection bureaus periodically issue environment gazettes |

| | | | | |for the quality of the groundwater near waste filling fields.. |

|4 |Conflicts |The Resettled |Design Institute |project owners and WB |Optimize the project design and reduce the impacts to the minimal degree. |

| |between the | | | | |

| |resettled and | | | | |

| |implementation | | | | |

| |organizations | | | | |

| | | |implementation |PMO,WB | Engaging experts to compile reasonable resettlement plans, and help the affected to restore their production and |

| | | |organizations and | |living.. |

| | | |resettlement plan | | |

| | | |compilers | | |

| | | |implementation |PMO,WB |Be responsible for implementation of resettlement plans and payment of related funds. |

| | | |organizations And | | |

| | | |resettlement plan | | |

| | | |writing unit | | |

|5 |Social |Residents |local governments |PMO,WB | The related institutions carry on such environment protection education as water saving, waste treatment, disease |

| |responsibility |And | | |prevention and waste recycling through placards, brochures, TV, broadcasting and public assembly . |

| |default of waste|enterprises | | | |

| |producers | | | | |

| | | |Designers |project owners and WB | Currently the proportion of pollution caused by waste producers lacking social responsibility is 19.1%. The pollution|

| | | | | |will be reduced after educating environment protection to and strengthening law enforcement on the waste producers. |

| | | | | |The designers should consider this possibility and determine the design scale in the light of reasonable waste |

| | | | | |discharging quantity, and determine the reasonable cost of projects construction and technology requirements. |

6 Conclusions and suggestions

1 Conclusions

1. Social benefits

The implementation of this project will positively improve infrastructures, ecological environment and investment environment in ten counties/cities of Shandong.

（1）Improve service scope and ability.

With the development of this project, the service contents will be increased and abilities improved. And the technique in sewage treatment will also be improved. The service area will be increased from 726.03 km2 to 813.22 km², increasing by 12.00%; while the service population will be increased from 3,078,600 persons to 3,840,800, increasing by 24.76%, among them the beneficial poor population will be increased to 62,800 persons. The service guarantee rate increases from 66.46% to 92.77%.

（2）Improve the environment.

The project can enhance the abilities of the cities’ water supply, sewage treatment, solid waste treatment and flood control. It can beautify the cities’ ecological environment; reduce the spread of pollution, nature disaster and diseases. And it can provide clean, comfortable, natural and safe environment for the production and living of the residents. It will optimize the general development program of such areas, enhance the sustainable competitiveness. And it will do good to the development of real estates, business areas and traveling, and increase the public finance income.

（3）Increase employment opportunities .

The project will increase employment opportunities. It is estimated that the whole project will provide 4111 employment positions, in which 2467 are unskilled jobs. And the total wages of the unskilled jobs will amount to 37 million yuan. The employment structure will be changed. The social assessment group suggests that these positions especially unskilled ones should be offered to the unemployed persons, especially the poverty. It will help them to improve their living standard.

(4) Improve the living condition of the resettled. 8 sub-projects will affect people. The living and business condition of some affected people will be improved through resettlement.

2. Social risks

(1)Social exclusion. Villagers in Gaomi are relatively poorer. There are much poor people affected by high fluorine containing groundwater; they are most eager to improve the water quality. During the design, villagers’ payment abilities of installing water pipes into their houses have not been well considered. And some of the villagers, especially the poor, can't afford it and cannot enjoy the water supply services.

(2) No payment ability of vulnerable groups. Because vulnerable groups have no or lower income, the rises of related expenses will have greatly negative influence on them. Currently 7 sub-project areas have no favorable policies to reduce or not charge related expenses for vulnerable groups. And they cannot afford such expenses and cannot enjoy the related services.

(3)Conflicts between residents and implementation organizations. The investigation showed that each sub-project will cause negative influences such as noise, traffic pressure and dangerous hidden trouble, and bring inconveniences to the residents. If such negative impacts cannot be avoided or lessened during the construction, it will easily result in conflicts between residents and implementation organizations, thus affecting the progress of the construction.

(4) Conflicts between the resettled and implementation organizations. The project will negatively impact a great deal of people and their business and living will be influenced. If the resettled people cannot have the compensation in time, it will cause conflicts between the resettled people and implementation organizations.

(5) Social responsibility default of waste producers. Although environment beautification is the demand of the residents and enterprises, which are the main motives of the construction of the project, their behaviors are a great threat to the environment. On one hand, the residents place the waste in disorder, pour waste water to occupy the riverway at random, and build illegal buildings. On the other hand, enterprises discharge the dirty water without treating. And the solid wastes are dumped at will. The social sample research showed that 18.7% of enterprises discharge waste without reasonable treatment. These seriously affect the environment of the city; and also bring difficulties to the waste treatment. If such bad behaviors of the residents and enterprises cannot be corrected, it may result in vicious circle of “treat while polluting” and influence the operation of the project and its benefits.

2 Suggestions

(1) Optimize the design. We suggest sub-project designers optimize the design and take the requirements of local development and the need of the residents (especially the vulnerable groups who cannot drink safety water at present) into consideration. For Gaomi water supply project, we suggest that Gaomi Water Supply Company laid the pipeline into the rural households in advance free of charge and take the responsible of pipeline maintenance, management and water charges collection.

(2) Reduce the related expenses of vulnerable groups. The related fees will be increased after the setup of the project. Although most of the residents can afford the rises, it will bring pressures to vulnerable groups. In order to lighten their life burden and guarantee they can fairly enjoy the social benefit of the project, we suggest that some of the sub-project areas, which originally have favorable policies for vulnerable groups, continue to carry out the relevant policies. Those currently having no related support policies should constitute relevant policies as soon as possible. For Gaomi project, we suggest government related institutions consult with the villagers to establish reasonable fund-collecting schemes and guarantee water being piped to each houses.

(3) Provide employment posts. 4111 posts will be provided during the construction and running period of the project, among which 2467 are unskilled. The average construction time of each sub-project is 2 years. The implementation organizations estimate the average work hours of each unskilled post is 10 months per year and the average daily wage is 25 Yuan per capita. The estimated total wages of such posts are 37million Yuan. We suggest that each sub-project owner and implementation organizations cooperate with local social safeguard bureaus and nationality affair committees to first offer these posts to the poor population, women, and minorities. 30% of the posts should be offered to the poor, 30% to the greatly influenced poverty people, 30% to other poverty people, and 10% to the poor minority population.

(4) Safety maintenance during construction. Each sub-project will cause negative influences such as noise, powder, traffic inconvenience, etc. If the construction place is close to the residents living area, we suggest that implementation organizations should establish soundproof wall, protection wall and set up visible caution marks in places with dangerous hidden trouble, and they should avoid working at the nighttime. If the construction brings traffic problems, we suggest that implementation organizations should establish protection wall and placard on the main roads, and set up visible caution marks in places with dangerous hidden trouble. If the construction place is close to schools or enterprises, we suggest that they should establish soundproof wall, and not work at the busy time, but work at night. During the construction and running period of Heze SW project, the vehicles transportation will add pressure to Huanggang Road of 8m width. And especially it will threaten the safety of the residents and businessmen living or working by both sides of part of the road with a length of 1.5km. We suggest that Huanggang Road should be widened to satisfy the safety demand of people.

(5) Resettlement Action Plan. Firstly, we suggest when designed, the project construction should keep away from residential areas, tall dwelling houses, road and farmland and reduce impacts to a minimal degree. At the same time we suggest the sub-project owners engage experts to compile scientific and reasonable resettlement plans. According to relevant policies, the plans should guarantee the living standard of the affected will at least not be lower than the existing level. In the resettlement period, project owners and implementation organizations should strictly implement in the light of the plans and pay the expenses on schedule. At the same time they should engage experts to monitor and evaluate the resettlement.

(6) Public environment and hygiene education plan. In order to realize the expected target of the project, it is necessary to carry out environmental protection and hygiene education. We suggest that the related government institutions such as Education Bureau, Environment Protection Bureau, Broadcasting Station, TV Station, newspaper offices and street offices cooperate to conduct the environment protection education. The related institutions carry out such environment protection education as water saving, waste treatment, disease prevention and waste recycling through placards, brochures, TV, broadcasting and public assembly .

(7) Design of reasonable scale. Currently the proportions of pollution caused by waste producers lacking social responsibility are 19.1%. The pollution will be reduced after environment protection education and law enforcement on the waste producers. The designers should consider this possibility and determine the designing scale in the light of reasonable waste discharging quantity, and determine the reasonable cost of projects construction and technology requirements.

-----------------------

Shandong Guihe Paper Group is a medium-sized enterprise with a combination of paper making, thermoelectricity, waste water treatment and paper box making. It has a total asset of RMB6300 million with a total employee of 1500. At present, it has a waste water treatment plant, treating waste water of the enterprise and the county; the daily treatment capacity is 50000m3.85% of the treated waste water is used in the enterprise, which saves RMB 15000 daily. The enterprise plans to construct the paper making scale of 500000 tons and thermoelectricity set scale of 400mw at the end of 2007. Because of the strict requirement of using groundwater, it must use more water of Yellow River and recycling water. And the implementation of waste water treatment project is absolutely good news to the enterprise, because paper making has no special requirement to water using.

Shandong Chenlong Group is a large-sized enterprise with a combination of paper making, paper machine, carpentry process and thermoelectricity. It has a total employee of 1600. The president of the enterprise told us that using groundwater is cheapest. After running of the enterprises, the costs would be certainly increased. However, the key problem is that the water level becomes lower and lower because of elevated position of Huantai county and large amount of groundwater pumping. The cost to pump groundwater becomes ever-increased and it is likely not to pump the water. Therefore, he said that the problem was not the ability to afford, but the difficulty to use groundwater.

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