Initial Environmental Examination Project Number: 33356 Loan Number: 2780-LAO December 2013

Lao People’s Democratic Republic: Nam Ngum River Basin Development Sector Project Prepared by the Ministry of Agriculture and Forestry for the Asian Development Bank. This initial environmental examination is a document of the borrower. The views expressed herein do not necessarily represent those of ADB’s Board of Directors, Management, or staff, and may be preliminary in nature. Your attention is directed to the ‘term of use’ section of this

website. 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.

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Lao People’s Democratic RepublicPeace Independence Democracy Unity Prosperity

Nam Ngum River Basin Development Sector ProjectAdditional Financing

INITIAL ENVIRONMENTAL EXAMINATION (UPDATED)

Nam Chat-Phae

PhoukoudDistrict

Xiengkhouang Province

Updated by: Office of the National Project ManagementNam Ngum River Basin Development Sector Project-Additional Financing

December, 2013

1

Lao People’s Democratic RepublicPeace Independence Democracy Unity Prosperity

Nam Ngum River Basin Development Sector ProjectAdditional Financing

INITIAL ENVIRONMENTAL EXAMINATION (UPDATED)

Nam Chat-Phae

PhoukoudDistrict

Xiengkhouang Province

Updated by: Office of the National Project ManagementNam Ngum River Basin Development Sector Project-Additional Financing

December, 2013

1

Lao People’s Democratic RepublicPeace Independence Democracy Unity Prosperity

Nam Ngum River Basin Development Sector ProjectAdditional Financing

INITIAL ENVIRONMENTAL EXAMINATION (UPDATED)

Nam Chat-Phae

PhoukoudDistrict

Xiengkhouang Province

Updated by: Office of the National Project ManagementNam Ngum River Basin Development Sector Project-Additional Financing

December, 2013

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Table of ContentsI. Introduction ................................................................................................................... 1

II. Description of the Project .............................................................................................. 1

III. Policy, Legal and Administrative Framework .................................................................2

IV. Description of the Environment...................................................................................... 34.1 Physical Resources ................................................................................................ 34.1.1 Topography ......................................................................................................... 3

4.1.2 Soil .................................................................................................................. 44.1.3 Climate: ...........................................................................................................4

4.2 Ecological Resources ............................................................................................. 44.2.2 Aquatic Biology.................................................................................................... 5

4.2.3 Terrestrial wildlife............................................................................................. 54.3 Economic development........................................................................................... 5

4.3.1 Mineral Resources........................................................................................... 54.3.2 Infrastructure Facilities..................................................................................... 54.3.3 Land use Planning ........................................................................................... 64.3.4 Agriculture .......................................................................................................64.3.5 Irrigation...........................................................................................................74.3.6 Tourisms..........................................................................................................7

4.4 Social Resources.................................................................................................... 74.4.1 Socio-Economic Values ................................................................................... 74.4.2 Poverty Reduction ........................................................................................... 8

V. Potential Environmental Impacts and Mitigation Measures............................................85.5.1 Method of Assessment ........................................................................................ 85.5.2 Overview ............................................................................................................. 85.5.3 Capacity building at district level.......................................................................... 85.5.4 Crop Productivity Improvement ........................................................................... 9

5.5.5 Forest Restoration ........................................................................................... 95.5.6 Forest Restoration ......................................................................................... 11

5.5.7 Crop Production ................................................................................................ 125.5.8 Soil Erosion ...................................................................................................135.5.9 Water Resources ........................................................................................... 135.5.10 Livestock and impacts from Grazing .............................................................. 145.5.12 Poverty reduction........................................................................................... 15

VI. Summary of expected impacts and Mitigation Measures............................................. 15

VII. Institutional Requirements and Environmental Monitoring Plan ...................................187.1 Institutional Arrangement ...................................................................................... 187.2 Environmental Monitoring and Management Plan................................................. 187.3 Environmental Reporting....................................................................................... 18

VIII. Conclusions and Recommendations ........................................................................... 18

IX. Conclusions and Recommendations ........................................................................... 19

References ......................................................................................................................... 20

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LIST OF ABBREVIATIONS

ADB Asian Development BankBOL Bank of LaosCPI Committee for Planning and InvestmentCPC Committee for Planning and CooperationCEI Community Environmental ImprovementsDOF Department of ForestryDAFO District Agriculture and Forestry OfficeDoT Department of TransportationDoU Department of UrbanizationDoA Department of AgricultureDOI Department of IrrigationDOP Department of PersonnelDAFO District Agriculture and Forestry OfficeDOAE Department of Agricultural ExtensionDoE Department of EducationERI Environmental Research InstituteEPL Environmental Protection LawFAO Food and Agricultural Organization, United NationsGTZ German Foundation for Internation Development or

GeschellshaftfuerTechnischeZuzammenArbeitIEE Initial Environment ExaminationIWMU Integrated Water Management UnitIWRM Integrated Water Resources ManagementLDC Least-Developed CountryLUP/LA Land Use Planning and Land AllocationMAF Ministry of ForestryMIH Ministry of HealthMPV Marginal Productivity ValuesMOF Ministry of FinanceMOJ Ministry of JusticeMOE Ministry of EducationNA National AssemblyNAWACOP NamNgum Watershed and Conservation ProjectNNRB NamNgumRiver BasinNTFP Non-TimberForest ProductNNWS NamNgum WatershedNEQMP National Environmental Quality Monitoring ProgramNGPES National Growth and Poverty Eradication StrategyNAFRI National Agriculture and Forestry Research InstituteNAFES National Agriculture and Forestry Extension ServiceNBCA National Biodiversity and Conservation AreaOF Office of ForestryOA Office of AgriculturalPLUMP/LA Participatory Land Use Planning and Land AllocationPM Prime MinisterPNE Potential Negative EffectPAFO Provincial Agriculture and Forestry OfficePSTEO Provincial Science Technology and Environment OfficePPSC Provincial Project Steering CommitteeTA Technical AssistanceWRCC Water Resource Coordination Committee

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I. Introduction

Nam Ngum River Basin Development Sector Additional Financing (Project) is financed byAsian Development Bank (ADB). It covers 10 districts of 3 provinces (Vientiane,LuangPrabang and Xiengkhuoang Provinces). Project activities are implemented throughthree components and one office of the national project management:

Component 1: Integrated Water Resources Management (IWRM) conducted by theDepartment of Water Resources (DWR), Ministry of Natural Resources and Environment(MoNRE). It is intended to build capacity in integrated water resource management,including river basin planning and management at the scale of both smaller sub-basinand larger river basins. Integrated river basin management includes developing a riverbasin plan which coordinates the activities and interests of the various water user sectorsincluding the environment.

Component 2: Integrated Watershed Management Unit (IWMU) under Department ofPlanning and cooperation, Ministry of Agriculture and Forestry. Component’s mainactivities assist in incorporating watershed landscape continuum plans developed underthe previous project in district development programs. The activities are disseminateWLCPs to communities through the village development planning process, train districtstaff in preparing and revising district land use zoning in accordance with the WLCPs topromote environmentally sustainable land use, and update WLCPs based on thedevelopment process of district land use plans and sub-basin management plans.

Component 3: Agriculture Extension Component assigned under the Ministry ofAgriculture and Forestry. Component’s activities assist in enhance KESC operationalcapacity and sustainability, and increasing their beneficiaries intensive support will beprovide to 23 KESCs in 10 district within the NNRB which are relatively poor and remote.The KESCs covers 230 villages, which had supported under previous project, and 50additional villages.

This document provides an updated initial environment examination of the Phai-Kha-Mang sub-watershed under the NNRBDP-AF. The updated IEE is prepared according toADB’s Safeguard Policy Statement of June 2009 and the IEA decree of April 2010.

Potential impacts have been analyzed and mitigation measures identified following avisits and collection and examination of secondary information sources. The visit includedinspection of project activities and discussions with district agriculture and forestry office,chief of villages and was undertaken jointly with infrastructure engineer from theagriculture and forestry extension component.

II. Description of the Project

Nam Ngum River is originating from Paek District, XiengKhuang Province. This is themost important river in the Lao PDR and several prospective hydropower projects havebeen identified in this river basin. Since 1999, the Nam Ngum Watershed Managementand Conservation Project has supported fund for villages within Nam Chat-Phae sub-watershed in order to provide productive livelihood opportunities to poor ethnic groups.And ensure long-term sustainability of the sub-watershed. The objective of this project isto focus on the four significant activities:

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• StrengthenthecapacityoftheIWMUofMAFanditsotherrelevantprovincialanddistrictdepartments.

• Increasecropproductivityandirrigationefficiency.• Improvelivestockandfisherymanagement.• Preserveandrestoreforestresources.

Watershedmanagement istheprocessofformulatingandcarryingoutacourseofactioninvolvingmanipulationofthenaturalsystemofawatershedtoachievespecificobjectives.

• Povertyalleviationandimprovedstandardofliving,throughthemaintenanceandenhancement of existing, and development of new, sustainable livelihoodopportunitiesforthoseindividualhouseholdsandcommunities.

• Improvedconservationandprotectionof forestareasthatareimportantforthepreservationofbiodiversityandforprotectingwaterresources.

• Improvedconservationandmanagementofthenaturalresourceswithinindividualwatershed/riverbasinareastherebyenablingthemto be usedforeconomicallyproductivepurposes(water,forestry,agriculture,tourism,powergenerationetc.).

• Improvedwaterresourcemanagement(rainwaterandgroundwater)managementwithinindividualwatershed/riverbasinareasto:

o providewaterofthequalityandquantityrequired,andatthetimewanted,tomeettheneedsofdifferentwateruserswithin,anddownstream ofthewatershed;

o provide human settlements, lowland farmlands/irrigation systems, powergenerationandtransportinfrastructure, fishpondsdownstreamofthewatershed, with increased protection from damage by floods andsedimentation.

•Increasingthemarginalproductivityvalues(MPV)ofnaturalresources(land,waterandforests)

The Asian Development Bank (ADB) is the international organization agency hassupported fund to the project and forward to continue undertaken an initialenvironmental examination (IEE) for Nam Kho sub-watershed, Pek District,Xiengkhouang Province, Lao PDR. The IEE covers a wide scope of potentialenvironmental impacts associated with these interventions. The IEE follows guidelinesprovided by Environmental Assessment Requirements of the Asian Development Bank(ADB), Environmental Guidelines for Selected Agriculture and Natural ResourcesDevelopment Projects, and Handbook for incorporation of integrated Pest Managementin Agriculture Project.

III. Policy, Legal and Administrative Framework

The law governing the protection of the environment, including the assessment andmanagement of projects, is the Environmental Protection Law (EPL), 1999. An updatewas prepared and released in 2013, reflecting rapid economic growth and socioeconomicdevelopment and the need to address increasing conflict and social impacts as well aspollution issues with some larger projects, increasing foreign investment, and climatechange. Responsibilities and procedures for Environmental Assessment, together withrequirements for environmental monitoring of projects, have been revised and are set outin a new Decree on Environmental Impact Assessment (EIA decree), dated April 2010.

The EIA decree states that all investment projects that may create adverse environmentaland social impacts, are to be designed with the correct and appropriate environmental

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and social impact prevention and mitigation measures or environmental management andmonitoring plans (EMMP) and social management and monitoring plans (SMMP) (Article1). According to the decree, primary responsibility for undertaking environmentalassessment of projects is with the Office of the National Project Management (ONPM),which for this project is the Ministry of Agriculture and Forestry (MAF). The Ministry ofEnvironment and Natural Resources (MoNRE), acting through the provincial Departmentof Environment and Natural Resources (DoNRE) is responsible for review and approvalof environmental assessment reports, co-ordination of monitoring and evaluation, andissuance of compliance certificates. Public participation and discussion with localadministrations is required throughout the environmental assessment process.

Investment projects are categorized according to a schedule to the EIA decree intocategory 1–small scale, requiring an initial environmental examination (IEE) or category 2–large scale, requiring an environmental impact assessment (EIA). The schedule listsirrigation scheme, access road improvement, and water supply (item 2.3, 4.14, 3.52,respectively) as category 1.

IV. Description of the Environment

4.1 Physical Resources

4.1.1 Topography

NamChat-Phaesub-watershedislocatedbetweenLatitude19°34’28’’NandLongitude103°05’04’’NwithinPhoukoudDistrict,XiengKhouangProvince,isatypicaluplands andmountainousregions.Theareaconstitutevalleyandmountainshighbetween1044m.abovesealevel,andthehighestis1539mabovesealevel(seetheTopographicMapat scaleof1/200,000).

Geographymap,scaleoftheSub-WatershedNamChat-Phae,PhoukoutDistrict,XiengKhouangProvince.(Mapscaleof1/200,000)

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4.1.2 Soil

Soilfertilityisfrequentlycitedasaconstrainttocropproductioninthetropicsingeneralandforslashandburninparticular(Sanchez1987, Warner1991).AlmostalluplandricesoilshavelowNsupplycapacityand thatmostaredeficientinP(Guptand O’Toole,1986).Slashandburnsystems,theaccumulation ofsoilorganicmatterduringthefallowperiodandashdepositsfromtheburnedbiomassaremajorfactorscontributing toincreasedsoilfertilityattheendoffallowperiod(IRRI,2001).Mineralizationofsoilorganic matterafterburning isanimportantsourceofNforcultivatedcrops.SoiltypewithinNamChat-Phaesub-watershedaregenerallypoormainlyred-yellow, podzolic,andreddishbrownlateritic,withlowwaterholdingcapacity.

4.1.3 Climate:

NamChat-PhaeSub-Watershed withinPhoukoudDistrict,XiengKhouangProvincehasatropicalmonsoon climate,typicalofthecentralregionarea,withtwoannualseasons, adryseasonfromOctobertoMarchandawetseasonfromApriltoSeptember. Theannualaveragerainfallis1,280 mm,andtemperature21.21C°.

Thereare32villagessituatedwithinNamChat-Phaesub-watershed. ThecommunitiesareconnectedtothedistrictandprovincebytheRoadNo.7.TheDistrictAdministrationOfficeislocatedatBanPhouVieng,wheretheroadconnectsit totheprovinceandotherdistricts.Majordiseaselikemalaria,diarrhea, skindiseasearecommoninthearea.Mostofthe treatmentsaremadethroughthelocaltraditionalandmodernmedicalmethods.Traditionaldoctorbyusingmedicinal plantsandspiritbeliefarecommonintheHmongcommunity.However,modernmedicineandtreatmentarethemostpreferable incaseofseriousillnessidentified.

4.2 Ecological Resources

4.2.1 Forestry

TheUpperNamNgumWatershedManagement istheongoingdeforestation ofthepineforestsbyshiftingcultivation. Theresultoftheongoingshiftingcultivationisadegradation anddeforestationof the mountainforests.The GTZ projectsupportedactivitiescalled“NAWACOP”(UpperNamNgumWatershedandConservationProject)toestablishformsofsustainable forestmanagementandlanduseplanningandlandallocationLUP/LA processintheendangered pineforest.TheNAWACOPusedaerialphotographatscaleof1/20,000(havebeentakenplacein1995)andwhichenlargementof1/5,000scale.

Theselandusecharacteristicsinthetotalareasofthe6outof9villagesareasfollows:Thelargestlandusecategoryisforestedareasincludingconservation forest,protectionforest,productionforest,regeneration forest,degradedforestandforestplantation.Thesecondlargestlandusecategoryisgrazingincludinggrasslandandsavanna.In addition,NAWACOPhasalsobeenpreparedfuturelanduseplanningforthepilotvillagestoidentifyunsustainable useoftheland.Futurelanduseplanninghasbeenimplementedincorporating theexpectations oflocalpeopleinregardtosuchfuturelandusecategoriesincludingforestconservation,forestprotection,productionforest(forthelocaluse), bamboo,grazingland,agricultureland,settlementareasandothersuchaswater,pondsandswamp.

Landuseintensityoftheareanotmuchintensification.Bothlandforpaddyriceandshiftingcultivationandabandonedwhentheharvestingofriceorcropshavefinished.Paddyfieldhasbeenabandoned foralmostsixmonthsbeforethenextcroppingseasoncome.Upland

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ricefieldhasmostlybeenabandonedfortwoorthreeyearsforannualrecoveringandnutrientrestoring.Someuplandfieldshavebeensequentiallycroppedintheyearafteriftheyieldissatisfaction.

4.2.2 Aquatic BiologyDue to declining supply of fish from natural sources (rivers, flood plain, paddy fields, etc),Rice-fish farming is practiced traditionally for many years in the Nam Chat-Phae sub-watershed. Farmers in the areas with rice fields having embankments have beenculturing locally available species in areas where the terrain is suitable for such culture.

Waters are rich of fish, frogs, turtles, snails and other living aquatic biodiversity, butcatches are declining over the years due to increasing fishing pressure as a result ofincreasing population and modification in the hydrology of river due to implementation ofirrigation, flood control and hydro-power development projects, deforestation andpollution. Pond fish culture is the main production system in the areas, at present andproductions obtained are low due to lack of knowledge and resources to farmers

4.2.3 Terrestrial wildlife

Name Chat-Phae sub-watershed was once rich in wildlife with wild pig, deer,barking deer, mouse deer, reptiles and birds. However, no official records areavailable about that. Nowadays the wildlife is rather poor. The main reason for thedecreasing wildlife is increasing human pressure with accompanying deforestationand excessive hunting. Hunting seems to be done without control. The huntersuse locally made guns according to a traditional system.

4.3 Economic development

Village development planning and implementation is to be based on an annual villagedevelopment cycle, which uses a participatory approach to identify, implement, monitorand report on development and extension activities with farmers. Expanded menus ofagricultural technologies are to be introduced to farm families along with improveddecision-making mechanisms to increase the performance of their livelihood systems.This will include establishment of a market information service, commercial incomegenerating activities, and improved village finance mechanisms.

4.3.1 Mineral ResourcesMining potential is at present being explored by PhuBia Mining Ltd in the area ofwatershed. The planned water reservoir level Nam Ngum II and company representativedid not see any negative impact on possible mining operation at this time. Neverthelessthis undertaking and the outcome of the drilling exploration should be followed closelyduring the further project development steps. Should mining become a really, this wouldcreate an additional opportunity for long term employment possibilities.

4.3.2 Infrastructure FacilitiesThereare32villagessituatedwithinNamChat-Phaesub-watershed. ThecommunitiesareconnectedtothedistrictandprovincebytheRoadNo.7.TheDistrictAdministrationOfficeislocatedatBanPhouVieng,wheretheroadconnectsit totheprovinceandotherdistricts.

Road No. 7 which is an asphalt road is the main and permanent route of communicationin the area. Conjunction from this road, there are many roads but these road not yetimprove in , therefore transportation during rainy season found difficulties.

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Major disease like malaria, diarrhea, and skin disease are common in the area. Most ofthe treatments are made through the local traditional and modern medical methods.Traditional doctor by using medicinal plants and spirit belief are common in the Hmongcommunity. However, modern medicine and treatment are the most preferable in case ofserious illness identified.

4.3.3 Land use PlanningLand resources as other natural resources, plays a significant role in the livelihood andwelfare of Lao people. Meanwhile, the country’s topographic pattern is subject to a fragileenvironment and susceptibility to soil erosion due to its shallow infertile soil condition andthe steep slopes. Shifting cultivation is considered as a major land use practice in uplandand high land areas where the minority ethnic groups scattering settle.

Most villages have well-established access and use the rights to forest and agriculturalland within areas under their traditional control. Villages enjoy traditional and customaryrights to land, heritable by the family and transferable to third parties, and access to alarge variety of non-timber forest products for domestic consumption and sale, and woodconsumption.

Since the land use is varied so that to reduce the conflict of the use of land and to use theland in sustainable way, it needed to have land use planning that a means of helpingdecision-makers to decide how to use land.

The Upper Nam Ngum Watershed Management is the ongoing deforestation of the pineforests by shifting cultivation. The result of the ongoing shifting cultivation is a degradationand deforestation of the mountain forests. The GTZ project supported activities called“NAWACOP” (Upper Nam Ngum Watershed and Conservation Project) to establish formsof sustainable forest management and land use planning and land allocation LUP/LAprocess in the endangered pine forest. The NAWACOP used aerial photograph at scaleof 1/20,000 (have been taken place in 1995) and which enlargement of 1/5,000 scale.

In addition, NAWACOP has also been prepared future land use planning for the pilotvillages to identify unsustainable use of the land. Future land use planning has beenimplemented incorporating the expectations of local people in regard to such future landuse categories including forest conservation, forest protection, production forest (for thelocal use), bamboo, grazing land, agriculture land, settlement areas and other such aswater, ponds and swamp.

Land use intensity of the area not much intensification. Both land for paddy rice andshifting cultivation and abandoned when the harvesting of rice or crops have finished.Paddy field has been abandoned for almost six months before the next cropping seasoncome. Upland rice field has mostly been abandoned for two or three years for annualrecovering and nutrient restoring. Some upland fields have been sequentially cropped inthe year after if the yield is satisfaction.

4.3.4 AgricultureThe agricultural activities, the Ministry of Agriculture and Forestry aims to increase ruralincomes and stabilize optimal rice production, and availability to enlarge the irrigatedareas for wet and dry season production. Integrated farming systems practices build onan optimum use of lands for agricultural activities and on a long term planning for the bestuse of local human resources. To develop vegetable gardens and tree cropsmanagement and fencing for protection against animals, use of vegetal and animalmanure as fertilizers etc.

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Currently permanent paddy field is the best preferable by the communities. At the sametime, physical structure of the Nam Chat-Phaesub-watershed areas, high slope lands andwater availability, have some constraints to develop the high terrace with slopping patternto be permanent agriculture land.

Livestock rising are the major income earning for the communities, while grazing land isavailable just for rainy season and simultaneously vaccination campaign twice a year withsupport of the District Livestock Center.

4.3.5 Irrigation

The Government policies encouraging accelerated turnover of irrigation schemes are nowin place and are receiving additional support (Strategic Vision for the Agricultural Sector,1999). The ADB supported community Managed irrigation systems Project, as well asADB technical assistance under TA 1764-LAO (Strengthening and restructuring ofIrrigation Development Project) are working with the Department of Irrigation to improvescheme efficiency, cost recovery and sustainability.

4.3.6 TourismsThere are many places for the tourist attractions that are not discovery inPhoukoudDistict. The tourist attraction places include pain of Jar in B. Nasaithong and thePhoukoudChomLek. Currently, tourists come to district of ofPhoukoud increasingly. Thenumber of guesthouses hotels has been paid attention to construct.

Villages located within this area have traditionally produced handicrafts such as weaving;sericulture, knitting, and bamboo weaving, which have provided additional income fortheir families.

Government policy targets the sustainable development of cultural tourism as one way toimprove the socio-economic development of the country. Since the natural and culturallandscape of the country are two intricately entwined entities, the Ministry of Informationand Culture has an important role in guiding national ecotourism development.

4.4 Social Resources

4.4.1 Socio-Economic ValuesTheGovernment haspolicyofintroducingamarketeconomybasedonagriculturalactivities,fertilelandandsoilareneededby localfarmersin orderto increasetheirproduce.Theinsufficientextensionnetworkandincentiveslikenewtechnology,education,credit,andmarket,are possibly the cause of some problems in land use planning and farm productionimprovement.Atpresent,newandfertileareasareneededinordertoincreasetheproductsandatthesametime,thoseneedsaresubjecttoforestlandswhicharebelievedtoprovidefertilesoilsandhigheryield.Mostofthehouseholdareengagedinuplandricecultivation.Theproportionofpeopleinthetwocommunitiesarepracticingpaddyandshiftingcultivation.LaoSoungorHmongpeoplearemostlyengagedinshiftingcultivation,meanwhileLaoLummostlypracticepaddycultivation.Fishingisconsideredasansupplementaryoccupationthatplayakeyroleinthelivelihoodofthetwocommunities. Rainyseasonistheseasonthatfishpopulationisplenty(midrainyseason).Fisharecaughtmostly forhouseholdconsumption,butifthereissomesurplusestheywillbesoldtomerchantsorneighbors. Secondaryoccupationlikeweaving,handicraftandsewingareinthefewpracticed.

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4.4.2 Poverty ReductionTheGovernmenthasputemphasisontheconstructionofexistingbasicinfrastructures inordertoincreasecommodityproduction;mobilization ofdevelopment fundsforvillagesbyprovidingasupporting budgetof25billionkipsfor47ofthepoorestdistrictsnationwide(NationalSocioEconomicDevelopmentPlan,2004-2005).

Under the strategy articulated in the new National Poverty Eradication Programme,provinces will formulate their own 5-year strategic plans and corresponding budgets.Districtswillberesponsible forformulating andevaluatingtheirownplanningandbudgetingprocessinaccordancewiththeir5-yeardistrictsocio-economicdevelopmentplans.Villagesareresponsibleforpreparingdevelopment plansandplansforrevenuecollectionbasedonproduction, as well as for collecting data on socio-economic conditions, classifyingpopulationsinto3relativewealthcategories, andmonitoringimpactofdevelopment onhouseholdincomeimprovementandpovertyreduction.

The NGPESisdesignedtoacceleratethepositivetrendinreducingpovertyintheLao PDR.TheNGPESisthestrategicframeworkunderwhichalloftheGovernment’sfuturegrowthandpovertyeradicationprogrammeswill be developedand implemented.TheNGPESistheresultofaprocessthatstartedin1996whenthe6thPartyCongress definedthelong-termdevelopmentobjectiveasfreeingthecountryfromthestatusofleast-developed country(LDC)by2020.

PopulationinPhoukoudDistrict

DistrictName Totalpopulation

Female No.ofVillage

No.ofHousehold

No.ofPoor House hold

Phoukoud 24,733 12,223 4,205 111

Source: District office of Planning and Investment, 2012

V. Potential Environmental Impacts and Mitigation Measures

5.5.1 Method of Assessment

Potential impacts have been assessed by means of the site visits, discussion with localauthorities, and local people. Mitigation measures have been identified to, wherepossible, avoid potential negative impacts, or otherwise to ameliorate negative impacts.

5.5.2 Overview

The most significant impacts expected to arise from the project are major improvementsagricultural sector, watershed management. Specific positive impacts expectationsinclude (i) institutional and human resources capacity development (ii) disseminatingdeveloped watershed land continuum plans and improving land use planning at thedistrict level, (iii) consolidating and expanding sustainable agricultural extension servicesincluding Khet (Village cluster) extension center (KESC) and village developmentrevolving fund (VDRF) operations in ongoing and additional villages.

5.5.3 Capacity building at district levelNumber of staffs at District Agriculture and Forestry Office (DAFO) are considerablyinsufficient compare to the task force of the office. There are many staffs includes head of

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DAFO working both in the office and in the field which their task covers in agriculture,forestry, irrigation, livestock, rural development and coordination with other developmentin the district.

Budget to the DAFO is also small. Plans are prepared for their task force but budget notavailable, so that the field work survey and other relevant activities are not carried out asplan prepared. As a result, the problems occurred in the villages may not be known andsolve as they should be.

5.5.4 Crop Productivity ImprovementYield per unit area at this project sites are considerably low, meanwhile the demand forstaple food grain is increasing, to meet this demand the production has been increasedthrough the expansion of agricultural areas which the additional area comes fromencroachment on natural forest resources. Population increased due to the limitation ofarable land for permanent agriculture is a major cause of forest encroachment. Uplandfarmers who are mostly engaged in traditional slash and burn cultivation is leaded acause of forest destruction and land degradation.

Villagers on most areas have practiced forms of shifting cultivation using a rotationalsystem of field cultivation to maintain productivity levels. To do this each family has usedabout six or more plots of land and some have used more than 10 plots in the past. Someethnic groups are lessconscious about conserving natural resources than others andhave caused depletion of forest and soil fertility by cultivating land two and three times insuccession to produce food crops and high value crops.

These pilot areas (agricultural development) are surely facing with many difficulties inaccordance with present technology and farming practices. It was not clearly definedbetween agriculture land and forest land which somehow create some problems for thevillagers to classify land use and land resources at the local levels. It is seem that thelimitation a lesson how to manage their farming system especially livestock husbandry, incase of pest and diseases management.

Rice production is still a major farming practice of villagers. Both paddy field and uplandfield are subject to nutrient loss, because of the lack of soil improvement by any means.Natural improvement will not able to maintain the production in the long run. In tradition,growing rice seems to make farmers feel more secure than growing other crop species,as rice is not only a staple food grain but it can be sold any time.

5.5.5 Forest RestorationTheGovernment oftheLaoPDRdevelopedthenationalprotectedareasystemforseveralyears;Governmentisresponsibleforadministration andallocationofnaturalforestsandforestlands.Approvalfromauthorizedagencyisrequiredforindividualsandorganizationstopossess andusenaturalforestsIndividualsand organizationshave obligationto preserveforest resourcesincludingwatersources,aquaticanimalsandwildlife.ForestRestoration, restoringpreviouslyforestedareashasonlypositiveimpacts.Certainconcerns, however, include the selection of species to be introduced (e.g., fruit trees,eucalyptus, teak)andhowtheactivitywillaffecttheoverallfarmingsystem.Thegovernmentpolicyistoavoidgrowingeucalyptus inupperbasinasitdamagessoilstructure.Teakisapositivecommercial species,butitsplantationshavetobeaccessibletotransportandotherinfrastructure. Orchardsaregoodinprinciple,buttheirimpactonthegeneralenvironmentrequiresaviewandpreparationofpossiblemitigationmeasureastheprojectprogresses.

According to MAF regulation on forest management issued in June 2001 consolidatesprovisionsrelatedtovillageforests,andrecognizescollection ofNTFPsforsaleifmanagement

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plansareformulated andimproved.Ahigh-leveldecreeprovidingfordelineation ofproductionforestalsomandatesparticipationofvillagesinallaspectsofproductionforestmanagement,

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includingplanningand benefitsharinginaccordancewithcontractsbetweenvillagesanddistrictauthorities(NAFRI,2003.UplandAgriculturalDevelopment).ForestandLandAllocation.LandUsePlanningandLandAllocationprocessis asystematicanditerativeprocedurecarriedoutin orderto createan enablingenvironmentfor sustainabledevelopment oflandresourceswhichmeetspeople'sneedsanddemands.Itassessesthephysical,socio-economic, institutionalandlegalpotentialsandconstraintswithrespecttoanoptimalandsustainable useoflandresources,andempowerspeopletomakedecisionabouthowtoallocatethoseresources. Theultimatetargetoflanduseplanningandlandallocationprocessistoimproveofthecapabilitiesintheparticipatorymanagementofnaturalresourcesatvillage,districtandprovinciallevel.

Assistance todistrictandprovincelevellanduseplanningauthoritiesconcerning participatoryandsustainablenaturalresourcesmanagement. Reducedtheconflictoftheuseoflandandtousethelandinsustainable wayitneededtohavelanduseplanningthatameansofhelpingdecisionmakerstodecidehowtouseland.IntegratedWatershed,Management(NAFRI,2003.UplandagriculturalDevelopment). Allprovinces are to develop overall strategies and priorities for sub-watersheds covered byprovince,andalldistrictsaretodevelopwatershedplanseitherbythemselves ortogetherwithneighboringdistricts,dependingonthebiophysicalboundariesofthewatershed.The7-stepIWMplanningprocessdistinguishes betweentheprovinciallevel,whererangingofsub-watershedsandstrategicoptionsforalargewatershedshouldbeidentified,andthedistrictlevelwherewatershedzonation,morespecificinterventionsindevelopment, bufferzoneandconservationareasshouldbediscussedandagreeduponbydistrictsub-sectors.

5.5.6 Forest RestorationThe Government of the Lao PDR developed the national protected area system for severalyears; Government is responsible for administration and allocation of natural forests andforest lands. Approval from authorized agency is required for individuals and organizations topossess and use natural forests

Individuals and organizations have obligation to preserve forest resources including watersources, aquatic animals and wildlife.

Forest Restoration, restoring previously forested areas has only positive impacts. Certainconcerns, however, include the selection of species to be introduced (e.g., fruit trees,eucalyptus, teak) and how the activity will affect the overall farming system. The governmentpolicy is to avoid growing eucalyptus in upper basin as it damages soil structure. Teak is apositive commercial species, but its plantations have to be accessible to transport and otherinfrastructure. Orchards are good in principle, but their impact on the general environmentrequires a view and preparation of possible mitigation measure as the project progresses.

According to MAF regulation on forest management issued in June 2001 consolidatesprovisions related to village forests, and recognizes collection of NTFPs for sale ifmanagement plans are formulated and improved. A high-level decree providing fordelineation of production forest also mandates participation of villages in all aspects ofproduction forest management, including planning and benefit sharing in accordance withcontracts between villages and district authorities (NAFRI, 2003 Upland AgriculturalDevelopment)

Forest and Land Allocation, Land Use Planning and Land Allocation process is a systematicand iterative procedure carried out in order to create an enabling environment forsustainable development of land resources which meets people's needs and demands. Itassesses the physical, socio-economic, institutional and legal potentials and constraints withrespect to an optimal and sustainable use of land resources, and empowers people to make

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decision about how to allocate those resources. The ultimate target of land use planning andland allocation process is to improve of the capabilities in the participatory management ofnatural resources at village, district and provincial level.

Assistance to district and province level land use planning authorities concerningparticipatory and sustainable natural resources management. Reduced the conflict of theuse of land and to use the land in sustainable way it needed to have land use planning that ameans of helping decision makers to decide how to use land.

Integrated Watershed Management (NAFRI, 2003 upland agricultural Development). Allprovinces are to develop overall strategies and priorities for sub-watersheds covered byprovince, and all districts are to develop watershed plans either by themselves or togetherwith neighboring districts, depending on the biophysical boundaries of the watershed. The 7-step IWM planning process distinguishes between the provincial level, where ranging of sub-watersheds and strategic options for a large watershed should be identified, and the districtlevel where watershed zonation, more specific interventions in development, buffer zone andconservation areas should be discussed and agreed upon by district sub-sectors.

Mitigationmeasure:Theapplicationofappropriatetechnologythroughtheagricultureextensionagencies(PAFS andDAFOs)canmitigateagainstexcessivefertilizeruse. Giventhehistoryoflowuseratesandextensionadvice,LaoPDRfarmersarenotlikelytoexcessivelyapplyfertilizer. Streamsarenotsusceptibleto eutrophicationexceptduringthelowflowseasonwhenfertilizerlosscouldoccuronirrigatedfieldssupportingdryseasonricecrops. Thetechnologytransfercomponentoftheloanshouldsupport accuratedeterminationofnecessaryfertilizerapplicationratesbasedonfieldteststhatcanbeadministered throughtheextensionagency.Farmersupportbytheextension agenciesinvolvesroutineanalysesofsoilsamplesforsoilpH,nitrate,phosphorous,andpotassium.Theextensionagenciesshouldprovidetrainingin productionanduseoforganicfertilizerandsoilnaturalconditioning agentstosupplement chemicalfertilizeruse,suchascompostfromurban,peri-urbanandagriculturalwastes.

Refer1 tostatisticsurveyofagriculturelandallocationdivision1996indicatedthatpaddyfieldwithlowsoil’s fertilizerwere cover inVientianeplan70%,Xebangheiang98%andChapassackplan85%,MinistryofAgriculture andForestproclaimed decreeofpromotionnaturalfertilizerutility.

5.5.7 Crop Production

Fertilizer and Pesticide Use

The pest management strategies on minimizing crop loss were thought to have had the mostbenefit to farmers. Presently, herbicides and pesticides are used only in moderate levels inLao PDR, mostly as a result of the low per-capita income and traditional practices in ruralareas. However, there is evidence of banned pesticides and herbicides still being importedinto Laos from neighboring countries. Many of these chemicals are still being applied in ruralareas, and dumping of empty barrels in landfills has been recorded in Vientiane Capital Cityand other major cities. There is lack of baseline information on the extent of the potentialproblem in the country as well as in this sub-watershed, and its potential effects on humanhealth1.

Mitigation Measure

1 Lao Environment Monitor 2005

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The application of appropriate technology through the agriculture extension agencies PAFSand DAFOs) can mitigate against excessive fertilizer use. Given the history of low use ratesand extension advice, Lao PDR farmers are not likely to excessively apply fertilizer. Streamsare not susceptible to eutrophication except during the low flow season when fertilizer losscould occur on irrigated fields supporting dry season crops. The technology transfercomponent of the load should support accurate determination of necessary fertilizerapplication rates based on field tests that can be administered through the extensionagency. Farm support by the extension agencies involves routine analyses of soil samplesfor soil pH, nitrate, phosphorous, and potassium. The extension agencies should providetraining in production and use of organic fertilizer and soil natural conditioning agents tosupplement chemical fertilizer use, such as compost from urban, peri-urban and agriculturalwastes

5.5.8 Soil Erosion

Soil erosion in the Nam Chat-Phae sub-watershed is common found along the steep landespecially in July to August due to the heavy and frequent rain. Soil stability cannot absorbmore water in high proportion of sloping land occurring soil erosion. When soil erosion ishappening, soil and sediment transport to the river causing degrade water quality andShallow River and increase sediment in reservoir.

Mitigation measure: Prepare land slide and risk map and investigate more detail about soiltexture and classification based on the factors provided by government within the watershedwhere is possible land slide and soil erosion zone.

Classify land productivity referent to physical which appropriate to soil condition andslope area especially land classification of MAF.

Participation in classify land use and land allocation.

Community involvement in natural resource management

Develop productivity in present to farm system, integrate developing agricultural andforestry and field researching;

Improve and manage small irrigation scheme system to get high benefit include qualityseeding.

Sustainable management land use to defend soil erosion. Reforestation, plantationforest and bio diversity management.

Concentrate on credit for rural and remote areas to get benefit.

Environment awareness;

Enforce the environment regulation to business man and producer who excess inagriculture and forest land;

Development soft credit in rural area like the bank indicates it can support local people tobring new technology in their proclivity practice.

Conduct local market to supply farmer product, improve Infrastructure (Road network) totransfer the product to other places.

5.5.9 Water Resources

Various development projects can generate wastes to the environment and water resources.Domestic waste, agricultural waste, industrial waste, as well as storm water are degradableto the rivers. Pesticides in use for rice cultivation, horticulture and the establishment and

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maintenance of industrial plantations in watershed area can potentially enter the watersource.

Deforestation is causing downstream environmental effects such as water shortage foragriculture during dry season in many locations, increasing water runoff, soil erosion,siltation in rivers, wetlands and dams, increasing rates of occurrence and severity of floods,landslides and droughts, water pollution, loss of biodiversity, depletion of aquatic resources,reduced life-span of dams and damage to agricultural and irrigation system.

Mitigation measure:

Education programs, rules and penalties

Community-based on water use and management

Reforestation and offshore station

5.5.10Livestock and impacts from Grazing

Livestock can have a wide range of effects on rangeland ecosystems that can be bothpositive and negative and grazing has impacts can be seen at the species, community andlandscape levels. Livestock grazing has impacts on individual plants or species, plantcommunities, soild and watersheds, and wildlife. Overgrazing by livestock frequently causesimportant changes in the composition of the plant and animals population. Some effects arethe direct result of heavy grazing by livestock and occur quite rapidly, others are moreindirect and may decades to occur.

Heavy livestock concentrations can lead to overgrazing severs trampling, accumulation andconcentration of organic matter and chemical from fecal matter and urine, increasedsediment production, loss of infiltration, and other associated consequences. The problembecomes one of determining how much change can be accepted before rangelanddeterioration is judge to have occurred.

Mitigation measures:

Develop baseline assessment and monitoring protocols of the natural and culturalresources affected by livestock use. This assessment serves as a baseline againstwhich all grazing-induced changes should be measured and the overall effectivenessof a grazing management plan assessed. Data should be complied at a centrallocation.

Determine the health of rangelands currently under management that have affectedby grazing management practices. This should be an interdisciplinary approach,which should include range science and related disciplines such as soil andwatershed science.

Develop restoration/revegetation techniques that will return lands removed fromgrazing or no logger subject to trespass grazing to a desired plant community ofnative vegetation where natural processes will donate. Restoration techniques shouldals be developed for lands damaged by grazing activities but are still subject tograzing.

Develop a methodology for monitoring grazing activities for the preservation ofcultural and natural resources. Provide recommendations for the protection ofsources to be incorporated into allotment management plans. This methodology

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should consider soils, hydrology, water quality, as well as the desired plantcommunity.

Develop grazing management practices, which would promote and be a party toecosystem management. Transition from grazing management to an ecosystemmanagement approach by broadening perspective and considering the totalenvironment, not just one aspect of it.

5.5.11 Socio-economic valuesThe Government has policy of introducing a market economy based on agricultural activities,fertile land and soil are needed by local farmers in order to increase their produce. Theinsufficient extension network and incentives like new technology, education, credit, andmarket, are possibly the cause of some problems in land use planning and farm productionimprovement. At present, new and fertile areas are needed in order to increase the productsand at the same time, those needs are subject to forest lands which are believed to providefertile soils and higher yield.

.

Most of the household are engaged in upland rice cultivation. The proportion of people in thetwo communities are practicing paddy and shifting cultivation. Lao Soung or Hmong peopleare mostly engaged in shifting cultivation, meanwhile Lao Lum mostly practice paddycultivation.

Fishing is considered as an supplementary occupation that play a key role in the livelihood ofthe two communities. Rainy season is the season that fish population is plenty (mid rainyseason). Fish are caught mostly for household consumption, but if there is some surplusesthey will be sold to merchants or neighbors. Secondary occupation like weaving, handicraftand sewing are in the few practiced.

5.5.12 Poverty reductionThe Government has put emphasis on the construction of existing basic infrastructures inorder to increase commodity production; mobilization of development funds for villages byproviding a supporting budget of 25 billion kips for 47 of the poorest districtsnationwide(National Socio Economic Development Plan, 2004-2005).

Under the strategy articulated in the new National Poverty Eradication Programme,provinces will formulate their own 5-year strategic plans and corresponding budgets.Districts will be responsible for formulating and evaluating their own planning and budgetingprocess in accordance with their 5-year district socio-economic development plans. Villagesare responsible for preparing development plans and plans for revenue collection based onproduction, as well as for collecting data on socio-economic conditions, classifyingpopulations into 3 relative wealth categories, and monitoring impact of development onhousehold income improvement and poverty reduction.

The NGPES is designed to accelerate the positive trend in reducing poverty in the Lao PDR.The NGPES is the strategic framework under which all of the Government’s future growthand poverty eradication programme will be developed and implemented. The NGPES is theresult of a process that started in 1996 when the 6th Party Congress defined the long-termdevelopment objective as freeing the country from the status of least-developed country(LDC) by 2020.

VI. Summary of expected impacts and Mitigation MeasuresThe Impact assessment from field investigations showed that the Impacts will not causesignificant environmental problems and the minor impacts are manageable through theimplementation of EMP. Therefore, the project judged to under category B of the ADB

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environmental safeguard 2009 and category 1 of the Decree on Environmentalimpactassessment (2010) of the Lao government

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Table . Summary of Environmental Impacts, Mitigation Measures & Monitoring Plan

Project Activity & Potential Impacts Proposed Mitigation Measures Monitoring ResponsibleInstitutions

Crop productivity Increasing demand for land Fertilizer

1. Land allocation policy2. Farmers training in fertilizer use and management3. encourage to use natural fertilizers (e.g)

Every 3 Months Department of Agriculture

Pesticide 1. Farmers training in Pesticide use and protection2. support the farmer to use local knowledge and utilize insects itself

Department of Agriculture

Irrigation

high costs in system operation, particularly forthe pumping station

high risk in the loss of water from canalswhich could not meet the technical standard

the association of water users lack skillsineffective management, causing delays

1. Preparation of community based catchments management plans for prioritycatchments;

2. Farmers training in irrigation management; scheduling, operation andmaintenance (O&M) with regard to Water Resource Master Plan, SRIDP,FIAT etc

3. Farmer involving in irrigation scheme design and management,.

4. Community training in management and preservation of water resources

Every 3 month Department of Irrigation

Access Road Transportation during rainy season may

find difficulty Dust generation will occur during dry

season

1. Advice road users to be careful while travel to the village

2. Limit vehicle speed while pass through village

Every 3 month DAFO and EnvironmentalCoordinator

Livestock Grazing Soil Erosion Soil compaction

Develop grazing management practices, which would promote and be a party toecosystem management.

Every 6 month Department of Livestockand Fishery

Forest restoration1. selection of species

1. Improve villagers’ living standards in pilot areas through village forestry andvillage development projects.

2. consult and develop land use and development plans to guide forestconcessionaires in logging operations

3. improve villagers’ ability to manage forest through extensive training4. involve local participation in ongoing reforestation programmes

Every 3 Months NAFES andDepartment of Forest

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VII. Institutional Requirements and Environmental Monitoring Plan

7.1 Institutional ArrangementThe Project implementation will be over seen of the office of National ProjectManagement (ONPM) office base in Department of Planning and Cooperation of theMinistry of Agriculture and Forestry (MAF), with coordinates to project components andprovinces. An integrated Project Implementation Unit, comprising representatives of theDepartment of Agriculture and Forestry (Office Forestry, Office Agriculture ofXiengKhouang Province and Pek District), and other relevant provincial and districtagencies, will be established to implement the sub-projects and carry out the overallenvironmental responsibilities. DONRE has the overall environmental review andapproval responsibilities.

7.2 Environmental Monitoring and Management Plan

The Environmental Monitoring and Management Plan of the proposed Project consist ofthe following four components. As presented in the attached Summary of EnvironmentalImpacts, Mitigation Measures & Monitoring Plan, the environmental monitoring plan hasbeen developed to determine if mitigation measures are being implemented effectivelyduring the implementation periods. Plus assisted by environmental consultants areresponsible for conducting periodic monitoring. During the implementation stage, periodicmonitoring and inspection will be conducted to minimize the negative impact ofencroachment of forest land, wildlife hunting and trade, slush and burn, shiftingcultivation, soil erosion, waste generation, and surface and groundwater contamination.

7.3 Environmental ReportingEnvironmental monitoring results will be recorded in accordance with the developedenvironmental monitoring and management plan to ensure that any indications of adverseimpacts are detected at the earliest possible time. A quarterly environmental monitoringreport format will be developed during implementation to capture the overall monitoringfindings and any lessons learned and recommendations to improve the environmentalmonitoring and management practices.ONPM will be responsible for preparing andsubmitting the reports to DoNRE and ADB.

VIII. Conclusions and RecommendationsThe Initial Environmental Examination process has found that the project will not causesignificant negative environmental impacts. The project is therefore be classified asCategory B according to ADB’s classification system. This refers to projects that are tohave some adverse environmental impacts, but of lesser degree or significance thanthose for Category B projects.

It is recommended that the environmental management plan for each component will bemonitored by project staff with the assistance from ONPM, DAFOs is responsible formonitoring and reporting.

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IX. Conclusions and RecommendationsThe Initial Environmental Examination process has found that the project will not causesignificant negative environmental impacts. The project is therefore be classified asCategory B according to ADB’s classification system. This refers to projects that are tohave some adverse environmental impacts, but of lesser degree or significance thanthose for Category B projects.

It is recommended that the environmental management plan for each component will bemonitored by project staff with the assistance from ONPM, DAFOs is responsible formonitoring and reporting.

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References CPI, 2004-2005. National Socio Economic Development Plan

Lao PDR, 2001. State of the Environment

MAF, 2003. Forestry Strategy to the year 2020 (Preliminary Draft presented atconsultation meeting, 17-18 July 2003)

MAF, 2001. Promotion’s decree of natural fertilizer utility

MAF, 1999. The Government’s Strategic Vision for the Agriculture Sector. DonorRound Table Discussion Paper, Lao PDR, Ministry of Agriculture and Forestry.

NAFRI, 2003. Upland Agricultural Development in the context of Livelihoods,Watersheds and Governance for area-based development project in the LaoPDR.

NAFRI, 2000. Integrated Upland Agriculture Research Project. Lao PDR, Ministryof Agriculture and Forestry.

XiengKhouang Planning Division 2003. Socio-economic Development