PROJECT EXECUTIVE SUMMARY
GEF COUNCIL WORK PROGRAM SUBMISSION
WORLD BANK PROJECT ID: GE-P075035
FINANCING PLAN (IN US$):
COUNTRY: People's Republic of China
GEF PROJECT/COMPONENT
PROJECT TITLE: Hai Basin Integrated Water and
Project
17,000,000
Environment Management
PDF-A
n/a
PDF-B
350,000
GEF IMPLEMENTING AGENCY: World Bank
PDF-C
n/a
OTHER EXECUTING AGENCY/AGENCIES:
Sub-total GEF:
17,350, 000
Ministry of Water Resources (MWR); State Environmental
COFINANCING
Government
72,141,800
Protection Administration (SEPA); Municipalities of
World Bank
40,850,000
Beijing and Tianjin; Province of Hebei
Subtotal Cofinancing
112,991,800
DURATION: 5 years
TOTAL PROJECT FINANCING: 130,341,800
GEF F
OCAL AREA: International Waters
FINANCING FOR ASSOCIATED ACTIVITIES
GEF OPERATIONAL PROGRAM:
Water Conservation
185,670,000
OP 10 (Contaminant-Based Program)
2nd Tianjin Urban Env.
21,280,000
GEF STRATEGIC PRIORITY: IW 3 Innovative
TOTAL PARALLEL FINANCING: 206,950,000
demonstration of ways to reduce contamination from
land-based activities and to address water scarcity.
ESTIMATED STARTING DATE: July 2004
IA FEE: US$ 1,629,000
CONTRIBUTION TO KEY TARGETS OF THE BUSINESS PLAN:
Additional priority demonstration project.
RECORD OF ENDORSEMENT ON BEHALF OF THE GOVERNMENT:
Mr. Yang Jinlin, Ministry of Finance, former GEF Operational Focal Point for China, July 16, 2002
Approval on behalf of the World Bank: This proposal has been prepared in accordance with GEF
policies and procedures and meets the standards of the GEF Project Review Criteria for Work Program
inclusion.
for
J. Warren Evans, GEF Executive Coordinator,
Contact person: Robin Broadfield
The World Bank, October 6, 2003
Tel: (USA) 202 473 4355
E-mail: Rbroadfield@worldbank.org
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1.
Project Summary
Rationale
The Hai River discharges into the Bohai Sea which adjoins the Yellow Sea. Both seas contain globally
important ecological resources that provide significant fishery benefits to China, North and South Korea and
Japan. The Hai River is also a major source of irrigation and drinking water for tens of millions of people
who live in its basin. However, the river and its tributaries are severely polluted (most above Class V, the
worst category), and the basin's groundwater resources are in some cases polluted and being rapidly depleted.
Addressing the river basin's twin problems of water pollution and depletion is critical to the health and well-
being of its inhabitants and to the environmental sustainability of the Bohai and Yellow Seas and the
livelihoods of the many people who depend on their natural resources. One of the major barriers to tackling
these problems is the lack of sectorally and institutionally integrated actions to address them.
Objectives
The Project's overall objective is to catalyze an integrated approach to water resource management and
pollution control in the Hai River Basin in order to improve the Bohai Sea and Yellow Sea environments.
Specifically, the Project will (i) improve integrated water and environment planning and management in the
Hai Basin, (ii) promote institutionally-coordinated and effective local, municipal/provincial, and basin-wide
water and environment planning and management, (iii) enhance local capacity in water and environment
knowledge management and implementation, and (iv) reduce wastewater discharges from small cities along
the rim of the Bohai Sea. The Project is intended to demonstrate new technologies and management
approaches and to apply the lessons learned throughout the Hai Basin and in other basins boarding the Bohai
and Yellow Seas. The Project will also complement and strengthen two related and on-going World Bank-
financed water and environmental operations in the Hai Basin: the Second Tianjin Urban Environment and
Development Project (TUDEP2 - FY03) and the Water Conservation Project (WCP - FY01).
Outputs
The Project will support the development of both top-down and bottom-up mechanisms for integrated water
and environment management in the Hai Basin, based, to the extent possible, on existing institutional
mechanisms. The Project will also promote the development of new horizontal coordination mechanisms at
all levels that will adopt practical and pragmatic methods to overcome current institutional barriers to
integrated water and environment management. The key innovative aspect of the Project is its maximization
of both horizontal and vertical integration. Horizontal integration includes cross-sectoral cooperation and
coordination of actions between water resources and environmental protection ministries/bureaus, as well as
other key water-related institutions, including agriculture and construction ministries/bureaus. Vertical
integration includes direct linking and constant interaction between the Central Government and Hai Basin
institutions and the smaller jurisdictions of the ZhangWeiNan sub-basin, Tianjin municipality, and
Beijing/Hebei counties. Parallel demonstration projects will test and demonstrate high priority collaborative
actions between these different levels and the key institutions that are clearly needed throughout the basin to
promote integrated water resource management and more effective control of land-based pollution.
Activities and outputs oriented towards producing direct financial and local benefits are described in the GEF
Project Brief and Annex B, Project logical Framework, at the end of this note. The specific Project outputs,
all interrelated and listed according to Project components, will be:
(i)
Integrated Water and Environment Management (IWEM)
§
Integrated Water and Environmental Management Plans (IWEMPs) for 10 counties in Beijing
municipality and Hebei province and for Tianjin municipality, and follow-up implementation
activities.
§
Strategic Studies of policy, legal and institutional issues; environmental water needs; and of water
quantity and pollution management at the central and Hai Basin levels.
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§
Strategic Action Plans (SAP) for the ZhangWeiNan sub-basin and Hai Basin.
§
Demonstration projects on pollution control, administration of water rights and well permits, and
"real" water savings.
(ii) Knowledge Management (KM)
§
Establishment of a Water Knowledge Management system for the Hai Basin.
§
Establishment of a Evapotranspiration (ET) Management system.
(iii) Tianjin Coastal Wastewater Management
§
Technical support to Tianjin coastal wastewater management.
(iv) Project Management, Monitoring and Evaluation, and Training
§
Established and improved existing water and environmental coordinating mechanisms at the county,
Tianjin and Beijing municipal, and basin levels.
§
Improved operational efficiency of water and environment programs.
Activities
The Project's four components comprise incremental activities proposed for co-financing by the GEF
that would: (i) promote sustainable and Integrated Water and Environment Management; (ii) establish a
comprehensive water knowledge management system; (iii) improve the Tianjin Coastal Wastewater
Management; and (iv) advance general project management, monitoring and evaluation, and training
efforts in the sector. See Annex A for the Incremental Cost Analysis.
Component 1: Integrated Water and Environment Management .
The IWEM component is divided into 3 subcomponents: (a) Strategic Studies at the central and Hai Basin
levels; (b) integrated water and environment management planning; and (c) demonstration projects. All three
of these subcomponents are very closely interrelated. The strategic studies would support and provide
guidance to IWEMP and to the demonstration projects. The demonstration projects would provide important
practical input into the IWEMPs. There would be constant interaction between these subcomponents to
ensure that they are all working together in an integrated manner.
Strategic Studies
The seven strategic studies focus on four primary areas of concern at the Hai Basin level -- policy, legal and
institutional issues; environmental needs for water, including the Bohai-Hai linkages; water quantity
management; and pollution management. These will provide both the substantive framework for the entire
Project as well as guidance for the IWEMPs. The time frame for the strategic studies allows both for
horizontal linkages between the studies and with the IWEMP planning process.
Integrated Water and Environment Management Planning
The IWEMP subcomponent is the core of the Project. It would provide an example of the methods and
benefits of this approach to China and to the receiving environment of the Bohai Sea. The subcomponent will
provide the context within law, policy, institutional arrangements, and operational practices, for the
development of practical approaches to IWEM at the basin, sub-basin, and county levels. The IWEM
planning process for selected counties in Beijing and Hebei, and for Tianjin municipality would utilize the
outputs of the strategic studies as a basis for developing specific IWEMPs for their respective jurisdictions.
The demonstration projects (see below) would provide examples of how, in practice, specific aspects of the
IWEMPs can be implemented. This subcomponent would be carried out in 2 phases, the first phase would
take about 2 years and would involve the preparation of the plans and the second phase would take about 3
years and would include initial implementation of the IWEMPs. The main purpose of the subcomponent
would be to improve the capacity of local governments and water and environment management entities to
carry out IWEM, and to achieve specific and sustainable improvements in water and environmental
outcomes.
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The subcomponent would support the formulation of an IWEM Strategic Action Plan (SAP) for the selected
subbasin (ZhangWeiNan). The primary focus of the ZhangWeiNan SAP would be on water pollution, but
water quantity aspects will also play an important role insofar as quality and quantity management intersect
in virtually all aspects of pollution management. The subcomponent would also support the preparation of
IWEMPs in 5 counties in Beijing, 5 counties in Hebei and in all of Tianjin. These plans would: (a) evaluate
present surface and groundwater conditions in terms of both quantity and quality; (b) establish target
objectives for improvements in water quantity and quality management including the definition of monitoring
indicators and monitoring and evaluation requirements for tracking improvements; (c) prepare detailed plans
for reaching targets using a 10 and 15 year horizon; and (d) define a set of initial actions to be implemented
during the second phase of the Project. In the second phase of the Project, the subcomponent would support
implementation of actions defined in the first phase which would include activities such as preparation of
feasibility studies and designs, training an capacity building, and implementation of small civil works in
activities which could include installation of measuring devices and monitoring stations, onfarm
irrigation system improvements, land leveling, changes in agriculture practices, groundwater
recharge, wells, wastewater collection and treatment, and environmental restoration. The
subcomponent would facilitate the establishment of institutional coordinating mechanisms for IWEM in the
Beijing and Hebei pilot counties and in Tianjin. The intention is to help to improve, develop, and implement a
set of policies, and legal, administrative and institutional instruments at the county and municipal level. A
basin-wide IWEM SAP would be prepared for the entire Hai Basin during the second phase of Project
implementation after the strategic studies and the county and municipal IWEMPs have been prepared, and
based on lessons learned from them, with focus on capacity building and basin integrated management, on
the basis of the natural characteristics of the basin, the existing Bohai Action Plan, and the 10th Five Year
Plan of Water Resources Protection and Water Pollution Prevention in Hai River Basin.
Demonstration Projects
This component would finance demonstration projects that will serve as experimental units to carry out the
IWEMPs. The demonstration projects will be carried out in selected counties would address: (i) effective
control of wastewater discharge, (ii) pollution control, combined with environmental improvements, (iii)
"real" water saving; and (iv) effective management of water rights and well permits. These are all critical
areas common to all Hai Basin counties and they will provide powerful examples on how to address these
complicated issues in an effective manner at the county level. As these demonstration projects progress, they
will provide guidance to the counties and municipality for how to address these issues in the IWEMPs.
Component 2: Knowledge Management.
The KM component will have 2 subcomponents: (a) KM Development; and (b) Remote Sensing and
Evapotranspiration (ET) management systems. These subcomponents are very interrelated and need to be
prepared and implemented in a coordinated manner. KM is the technical basis through which the Project will
be implemented, and all KM activities at all levels are grouped together in this component. Further, to ensure
that this remains a needs-driven and not technology-driven component, significant attention will be given to
the management of the component.
Knowledge Management Systems.
This sub-component would provide a service function for all users and clients within the Project and would
provide hardware and software tools to help Project participants to address their specific issues. The sub-
component would improve data management, common information system platforms, standardized data
transfer and security protocols, decision-support requirements, data acquisition including remote sensing, and
purpose-specific systems such as water use and pollution discharge permitting and tracking. KM activities
will strongly support the KM needs of Project pilot counties in Beijing and Hebei, Tianjin municipality and
ZhangWeiNan sub-basin. This will include hardware, software and training aspects concentrating on GIS
systems, data sharing and management, monitoring, modeling, remote sensing and water and environment
planning.
Establishment of Remote Sensing (RS) Evapotranspiration (ET) Management System.
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To improve the conservation of water resources and the water environment, and in order to achieve a rational
water balance and its sustainable management, will require a focus on ET management. ET management is
the principal innovative international cutting edge approach being introduced under the Project. The key to
sustainable water quantity management in the Hai Basin is to reduce present amounts of ET to sustainable
levels (i.e. reducing ET throughout the basin in order to eliminate groundwater overdraft and provide more
surface water for ecological purposes including enhancing outflow to the Bo Hai Sea), and then, in the future,
to manage ET within the basin to remain at these sustainable amounts. Many of the Project activities need to
be solidly based on the ET management concepts including: (i) high-efficiency water utilization and "real"
water savings, (ii) administration of water rights and well permits, and (iii) water quantity management
within the IWEMPs in Tianjin and in the Beijing and Hebei counties.
Component 3: Tianjin Coastal Wastewater Management.
The component would assist Tianjin address a set of critical water pollution control issues in the coastal area,
particularly for activities closely related to the TUDEP2, which directly provides an additional US$98.25
through associated parallel financing to this component. A Coastal Wastewater Management Study will cover
institutional, financial, and technical studies for wastewater management programs. The Dagu Technical
Assistance activity would assist the TUDEP2 on technical aspects related to the renovation and remediation
of the 83 km-long Dagu Canal system which has served as the main wastewater canal for Tianjin City for
four decades and which discharges directly into the Bohai Sea. The total cost for the Dagu Canal renovation
is estimated at US$55.15 million, which will be financed under the TUDEP2. The Dagu Catchment
Industrial Pollution Control program will support an industrial pollution control and pre-treatment study, and
improve monitoring and enforcement of discharges into Dagu canal. Control of industrial pollution is
essential for the successful renovation of Dagu canal, and the proper operation of municipal collection and
treatment systems. A Small Cities Financial Incentives program will be established to assist cities in meeting
their financial obligations. Instead of providing construction subsidies, the basic concept is to provide output
based aide to small cities during the early years of their service agreements with wastewater treatment
companies. In order to receive these subsidies, however, the small cities must demonstrate they have: i) a
functional wastewater treatment plant, ii) plans to develop a comprehensive collection system network; and
iii) a comprehensive industrial pollution pre-treatment program within the network collection area. TUDEP2
will provide an estimated US$43.10 million to finance small city wastewater treatment facilities associated
with the incentive program.
Component 4: Project Management, Monitoring and Evaluation, and Training.
The Project management component would support coordinated and integrated actions by the
Ministries/Bureaus of environmental protection and water resources at the various levels. All Project
Management Offices (PMOs) would have Joint Expert Groups to assist the PMOs in coordination, review,
supervision and in some cases execution of technical activities under the Project. The Central PMOs would
be supported by an international expert panel with broad experience in water quality and quantity
management, water and environment planning and knowledge management. The PMOs will also arrange
international and domestic study tours and international and domestic training on a variety of topics related to
IWEM, river basin management, knowledge management, "real" water savings and ET management,
pollution control, water rights and well permits, wastewater treatment, wastewater canal clean up, wastewater
reuse, ecological restoration, etc. The Project will also support PMO operations, monitoring and evaluation
(for more detail see section `Monitoring and Evaluation') and other Project management aspects mainly
through counterpart funding.
Key Performance Indicators, assumptions, and risks
Key performance indicators are:
i.
Decreased water pollution in pilot counties (tons of reduction);
ii.
Reduced Groundwater overdraft in pilot counties (rate of water table lowering reduced);
iii.
Reduced pollution loading to the Bohai Sea from coastal counties;
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iv.
Formulated Integrated Water and Environmental Management Plans (IWEMPs) for 10 selected
counties in the Hai Basin and for Tianjin Municipality;
v.
Produced seven Strategic Studies at central and Hai Basin levels and integrated findings into
IWEMPs;
vi.
Carried out four Demonstration Projects and integrated findings into IWEMPs;
vii.
Formulated Strategic Action Plans (SAP) for the ZhangWeiNan subbasin and Hai River Basin;
viii.
Established river reach data management system for the Hai Basin;
ix.
Established a functional Evapotranspiration (ET) Management system for the Hai Basin;
x.
Provided technical support to Tianjin coastal wastewater management.
Assumptions and Risks:
Bottom-up water resources management at the county and municipal level will not be replicable and will not
contribute to IWEM at the basin level. (Mitigation: The Chinese Government is committed to strongly
support replication of successful IWEMP).
An improved policy environment at the central level will not contribute to improved IWEM and planning
(Mitigation: The Project is designed to plan and implement Project activities at grass roots level in
accordance with policies and improved policies).
Improvements in KM and ET management will not contribute to better IWEM (Mitigation: The KM and ET
management subcomponents have been designed to provide direct service to IWEM at the county, municipal
and sub-basin levels).
Wastewater Treatment Plants will not operate as planned (Mitigation: Project will include technical
assistance to ensure that adequate financial and operational aspects are addressed during the planning phase).
Counterpart funding will not be adequate and not available on time (Mitigation: Assurance will be sought
prior to grant agreement negotiation, so that counterpart funding is adequate and available on time).
County and municipal governments don't support IWEMPs and their implementation, as well as new
institutional coordinating mechanisms (Mitigation: Assurance will be sought prior to grant agreement
negotiations, so that support for the Project and new coordinating mechanisms, from all levels of local
Governments, is obtained).
Hai Basin Commission does not exercise strong ownership in KM design and improvements and does not
provide necessary support to other components (Mitigation: Assurance will be sought prior to grant
agreement negotiations, so that the Hai Basin Commission would provide strong support to Project activities
and exercises strong ownership in KM design).
Political will does not exists to support program of Integrated Wastewater Management Measures
(Mitigation: Initial steps in the Tianjin small cities and the Dagu Canal rehabilitation support that are
undertaken under the 2nd Tianjin Urban Environment Project will demonstrate commitment).
Project management is not adequate and there is no cooperation between the various agencies (Mitigation:
Assurance will be sought prior to grant agreement negotiations, so that the cooperation between agencies is
optimal; Project preparation has been carried out with various agencies and joint management, working, and
implementation groups have been established and worked well together).
2.
Country Ownership
Country Eligibility
The Project has been designed to have maximum country ownership. Firstly, integrated water and
environment management in the Hai Basin is a priority goal for the Chinese Government. Secondly, the
activities will be carried out directly by MWR, SEPA, and lower level water resources and environmental
protection bureau personnel, supported through consultancy contracts on specific tasks, as well as training,
equipment, software, etc. This is a capacity building Project in integrated water and environment
management. During preparation, major progress has been made in cooperation between the line agencies
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and lower levels, and they are all very eager to have their capacity developed so that they can carry out these
tasks in the future. Large consultancy contracts to carry out complete studies will be avoided in order to
support ownership and capacity building of the line agencies to the maximum extent possible.
Country Driven-ness
The Chinese Government has placed very high priority on dealing with water quantity and quality
management problems in northern China and particularly the Hai Basin. There is a strong desire on the part
of the Chinese Government to break through barriers and achieve good integrated water and environment
management in the Hai Basin if possible prior to the 2008 Olympics and completion of the planned South to
North Water Transfer Project. The Chinese Government has recognized that to achieve IWEM in the Hai
Basin will be difficult and that there is a need for international expertise and knowledge. To this end, MWR,
SEPA and MOF have strongly requested World Bank assistance in solving their major water quantity and
water quality management problems in recognition of the Bank's broad international knowledge and
convening power in these areas. MWR, SEPA and MOF proposed that the Bank seek GEF assistance and that
the Bank be the Implementing Agency for the grant.
3.
GEF Program & Policy Conformity
Project Design
The proposed Project falls under the GEF International Waters Focal Area, and specifically under
Operational Program Number 10: Contaminant-Based Program. The Project will contribute to the Global
Programme of Action (GPA) for the Protection of the Marine Environment from Land-based Activities. One
of the Chinese leaders in the national response to the GPA is actively involved in the preparation of this
Project. The Project directly responds to the needs of the GPA by seeking to reduce pollutant loadings to the
Bohai Sea through integrated water and environment management. The Bohai Sea is a semi-enclosed sea
with globally important ecological resources that provide significant fishery benefits to China, North and
South Korea, and Japan. The GEF Operational Program objective of the Project is to improve water
resources management and reduce land-based sources of pollution to the coastal and marine environment of
the Bohai Sea. Furthermore the Project would also consider the need for environmental flows in rivers, flood
plains, wetlands, and into coastal and estuary waters.
The integrated water resource management framework that will be developed by the Project will promote
better understanding of important surface-subsurface and water quantity-quality interactions, and facilitate
important new management approaches. Consistent with paragraph 10.5 of OP 10, the Project will "play a
catalytic role in demonstrating ways to overcome barriers to the adoption of best practices limiting
contamination of international waters." OP 10 is also the only International Waters program which does not
require the Project to be tied to a multi-country collaborative effort. The global benefits are the improvements
of the Bohai Sea coastal and marine environment, and the demonstration-dissemination-replication nation-
wide and region-wide of compliance with the GPA. Close cooperation with on-going GEF-financed efforts,
such as the Yellow Sea Large Marine Ecosystem (YSLME) Project and the Partnerships for the
Environmental Protection and Management of Asian Seas (PEMSEA) / Bohai Sea Project, would be
maintained during implementation. During Project preparation, linkages have already been established
between the different project management offices, and periodic interactions will take place during
implementation. The long-term objective of the former Project is ecosystem-based, by supporting
environmentally-sustainable management and use of the Yellow Sea. The proposed Project will contribute to
YSLME Project's long-term objective and to PEMSEA's objective to control land-based sources of pollution
of the Bo Hai Sea and to establish inter-jurisdiction coordinating mechanisms to address environmental issues
in the Bo Hai Sea.
Sustainability (including Financial Sustainability)
Counties and municipalities participating in the Project will establish institutional mechanisms to coordinate
across sectors to prepare and implement IWEMPs. Implementation of the IWEMPs will continue after Project
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completion and the IWEMPs will include financing plans for their implementation. Successful preparation
and initial implementation of IWEMPs under the Project with sound institutional mechanisms will be a
powerful incentive for sustainability and also for replicability in other counties and municipalities in the basin
and throughout China. Successful implementation of KM systems including data sharing mechanisms and
particularly the coding and river reach file systems under the Project will be adopted by MWR and SEPA and
utilized throughout the basin and elsewhere in China. Having Government budgeting for Project activities
including KM and ET management through counterpart funding will help to ensure their sustainable funding
after Project completion.
Investments in wastewater treatment for secondary towns under the Project will be financed through a
combination of self-financing, IBRD loans, and GEF grants (the terms and conditions of the GEF grant will
be determined). Financial management and operational development plans are a condition for financing and
will be monitored during Project implementation.
The Chinese government has provided assurances about the priority nature of this Project and their
commitment to ensure adequate government support including financial resources for sustainability after the
Project is completed of the successful Project actions.
Replicability
The Project is designed to be highly replicable. The development of demonstration projects and IWEMPs at
the county level provides an excellent opportunity for replicability because first, the water and environment
issues in most of the Hai Basin counties are very similar to the Project pilot counties and second, the
governmental set up in all Chinese counties is highly uniform. Successful demonstration projects and
IWEMPs will therefore be very replicable. The Chinese government has provided assurances that they will
take full advantage of successful results of the Project and promote broad replication. The Project will include
a good deal of interaction between the Project pilot counties in the form of study tours and workshops to the
different Project counties so that they can learn from each other. Once successful experiences have been
achieved other counties form the Hai Basin and from elsewhere in China will be invited to visit and to learn.
Adequate financial resources have been including in domestic training and study tours to cover these costs.
At the Basin level, the experiences learned will be highly replicable to other China basins (such as the Liao)
with similar water scarcity and water pollution issues. In addition the practical integrated water and
environment approaches implemented in the Project address problems of water scarcity and pollution that are
common in many parts of the world. Therefore the potential for replicability is very large.
Stakeholder Involvement
During the initial phase of Project implementation, IWEMPs for about 10 counties, the Tianjin Municipality,
and a key subbasin (ZhangWeiNan) will be prepared, which will include consultation with these stakeholders
through surveys and working sessions to ensure their adequate involvement and input. The IWEMPs will be
designed to take into account all the different water uses and the entire range of threats to water quality
including point and diffuse pollution sources, which will be determined through data collection and extensive
stakeholder participation. The IWEMPs will also include stakeholder participation to ensure that alternative
solutions are evaluated in terms of economic, environmental and social considerations, taking maximum
advantage of stakeholder knowledge ideas, as well as building in stakeholder ownership. IWEMPs will have
involvement by existing political/administrative entities (townships, counties, prefectures, municipalities,
provinces, ministries) including their respective technical/administrative bureaus (water, environmental
protection, agriculture, construction, etc.) because these are the entities with direct line responsibility for
management. Participation of water users and polluters in water resources management will also be
emphasized. Water User associations will play an important role.
The IWEMPs and demonstration projects will include a significant amount of capacity building for farmers.
The ET management, "real" water savings and groundwater management aspects will include comparisons of
irrigation/agriculture/onfarm management practices by different farmers, and those with better practices will
be held up as examples to those with poor practices. There will also be a considerable amount of awareness
raising of farmers and other water users in regard to the sharing of limited water resources and the need to use
them in a sustainable manner in terms of both quantity and quality.
9
During Project preparation, a detailed consultation process was undertaken in two of the Project pilot
counties that are representative of typical plain area and mountain area counties. This consultation involved
identification of water resources, water environment, agriculture and income aspects. A specific problems
analysis of water and environment conditions was undertaken in these counties and potential solutions were
discussed with stakeholders. This consultation and problems analysis is illustrative of what will be done in
each IWEMP county during the initial stages of IWEMP preparation.
The Chinese Government has provided assurances that wide stakeholder involvement will be promoted under
particularly the IWEMP and Demonstration Projects sub-components. The TORs being prepared for these
activities specifically address detailed needs for stakeholder involvement and adequate resources have been
included in the IWEMP and Demonstration Projects budgets to cover these costs.
Monitoring and Evaluation
Monitoring and evaluation of Project implementation will be a responsibility of the PMOs at the various
levels. Annual information relative to Project implementation will be collected and evaluated by the PMOs
and consolidated into an annual report. The project management information system will be used for
managing and interchanging data on monitoring and evaluation. The international Expert Panel and semi-
annual Bank supervision missions will also play an important role in monitoring evaluating Project
implementation, as well as making recommendations for improvements.
Each IWEMP and demonstration project will include a monitoring and evaluation component that will
specifically address the implementation and effectiveness of the IWEMPs and demonstration projects. The
monitoring and evaluation plans for these activities will be prepared during the first phase of Project
implementation and will identify monitoring sites, parameters and targets. IWEMPs and demonstration
projects will include baseline surveys/inventories of surface and groundwater quantity and quality conditions,
uses and trends and establish specific objectives, timelines and indicators for IWEMP and demonstration
Project implementation both during the life of the Hai Basin Project and beyond.
4.
Financing Modality and Cost Effectiveness
The total cost of the Project is approximately US$ 129.99 million. The total Project costs include: (i) US$
98.25 million attributable to the Dagu Canal Rehabilitation and Suburban Sewerage components of TUDEP2
(US$40.85 million IBRD loan and US$57.4 million from the Chinese government); and (ii) US$32.74
million of direct Project financing (GEF co-financing of US$17.00 million and US$14.74 million from the
Chinese government).
Co-financing Sources
Name of Co-
Classification
Type
Amount (US$)
Status*
financier (source)
Government of
Local
Cash and In-Kind
14.74 million To be committed at
China
Support
Negotiations (?)
Government of
Local
Cash and In-Kind
57.40 million Already committed
China
Support
under TUDEP2
IBRD
Multilateral
Cash
40.85 million Already committed
under TUDEP2
Sub-Total Co-financing
112.99 million
* Reflect the status of discussion with co-financiers. If there are any letters with expressions of interest or
commitment, please attach them.
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5.
Institutional Coordination & Support
Core Commitments & Linkages
The proposed Project is consistent with the World Bank's Country Assistance Strategy (CAS) for China. The
sector-related goal is the sustainable development and management of water and other natural resources. The
Project is consistent with several aspects of the Strategy, including environmental protection, strengthening of
institutions and tools for improved environmental management, and financing of environment-related
investments that will produce rapid benefits.
The executing agencies will be MOF, MWR, and SEPA at the central level, and Beijing and Tianjin
Municipalities and Hebei Province at the provincial level.
A Project Coordinating Committee led by MOF and with participation from MWR, SEPA, Beijing, Hebei
and Tianjin will be responsible for coordinating the overall implementation of the Project. High-level
Steering Committees headed by Vice Ministers, and Project Management Offices in MWR and SEPA will be
responsible for implementing their parts of the Project in coordination with each other, and with the Project
provinces/municipalities, counties and sub-basin. Leading groups and Project Management Offices will be
responsible for their parts of the Project in Tianjin, Beijing, Hebei, Hai Basin Commission, ZhangWeiNan
and in each of the Beijing and Hebei pilot counties, all in coordination with each other, and with the central
level PMOs. All of these entities have already been formally or informally established and where informal,
will be formalized before grant agreement negotiations.
During Project implementation, quarterly workshops will be held in the different IWEMP and demonstration
project counties on a rotating basis. These will include participation from all the PMOs and Joint Expert
Groups from the central level, the Hai Basin Commission, Tianjin, ZhangWeiNan and the Beijing and Hebei
pilot counties. The purpose of these workshops will be to exchange ideas, learn from each other and listen to
and discuss presentations and training on various Project aspects. In addition to other coordination and
reporting requirements, these workshops will ensure good coordination and collaboration between the
various Project entities.
The establishment of a Project web site according to the International Waters LEARN standards will be
launched before WB Board Approval.
During Project preparation, linkages have been established with the Project management offices of the related
UNDP/GEF Yellow Sea Large Marine Ecosystem (YSLME) Project and the IMO/UNDP/GEF Partnerships
for the Environmental Protection and Management of Asian Seas (PEMSEA) Project. These relations will be
maintained and deepened during Project implementation.
11
Annex A: Incremental Cost Analysis
Overview
The overall objective of the GEF alternative is to catalyze a more integrated approach to water resource
management and pollution control in the Hai River Basin in order to improve the Bohai Sea environment.
Specifically, the Project would: Improve integrated water and environment planning and management in the
Hai Basin; Support institutional aspects related to effective local, municipal/provincial, and basin-wide water
and environment planning and management; and support reduction of wastewater discharges from small
cities along the rim of the Bohai Sea. Specific Project components, all interrelated include: (i) Integrated
Water and Environment Management (IWEM); (ii) Knowledge Management (KM); (iii) Tianjin Coastal
Wastewater Management; and (iv) Project Management, Monitoring and Evaluation, and Training. The GEF
Alternative intends to achieve these outputs at a total incremental cost of US$ 129.99 million and focuses on
high-priority issues for the Chinese government and international environment protection.
Broad Development Goals
The Hai Basin, home to over 117 million people and accounting for 15 percent of China's GDP, is spread
over four provinces and the municipalities of Beijing and Tianjin. The area that would be covered by the
Project is one of the country's most important river basins and one of the most important industrial and
agricultural regions of China. Water has played a pivotal role in the development of the Basin, and
sustainable development is heavily dependent on water resource management. Like many other areas in
China, the Hai River Basin is facing serious water-related problems, including water pollution, water scarcity,
and flooding. Over-exploitation of groundwater, estimated by some to be 9 Billion cubic meters annually, and
overuse of surface water resulting in inadequate environmental flows, along with increasing groundwater and
surface water pollution, are contributing to the decline and deterioration of water resources and damage to
freshwater and in coastal environments in the Hai Basin. Present water use patterns in the Hai Basin are not
sustainable and continued rapid economic growth is jeopardized.
The Basin discharges into the Bo Hai Sea and is a major contributor to pollutant loadings. The sea is an
important eco-system and fishery resource, reflecting its role as a seasonal spawning and nursery ground for
the larger and more productive Yellow Sea. However, heavy land-based pollution from urban, industrial,
agricultural, and other sources in the Hai River Basin, combined with over-fishing, reduction of freshwater
inflows, and habitat loss, threatens the fishery and has steadily diminished many of the Bo Hai Sea's eco-
system functions.
The Chinese Government is committed to corrective action. China's 9th Five Year Plan (1995-2000) included
provisions for improving water resource management in the Hai River Basin and restoring the Bo Hai Sea
notably pollution control measures. Other measures include greater efficiency in water use, water diversions
from the Yellow River to the Hai Basin, and improved flood control measures. While these initiatives are
vital, they address problems of immediate concern and insufficiently provide for longer-term challenges. The
south north transfer of water from the Yangtze River to northern China including the Hai Basin is a more
long-term solution, but would still be inadequate to meet demands without major improvements in water
resources management.
Baseline Scenario
This scenario comprises previously agreed plans and initiatives of the Chinese Government to address water
related problems at national and local levels. It reflects the likely situation concerning the Hai Basin and Bo
Hai Sea in the absence of GEF support. There are various national programs and more detailed investment
programs, generally formulated by sector management agencies and local governments, to implement the
national plans. It has to be taken into account that these national plans are highly ambitious and are
sometimes not fully realized. The related activities are often carried through to the next planning period and
tend to be large scale investments, leaving out the medium to small scale investment level. Another important
issue is the institutional fragmentation of water resource management as it involves amongst others, the
following agencies: the Ministry of Water Resources (MWR), the State Environment Protection
12
Administration (SEPA), the Ministry of Construction (MOC) and the Ministry of Agriculture (MOA). Each
agency has its own planning process, frequently leading to overlapping and/or inconsistent plans and
programs.
National Plans
· 9th National Five Year Plan (1995-2000): China's environmental improvement priorities were defined
as: three rivers (Huai, Hai, and Liao), three lakes (Tai, Cao, and Dianchi Lake), two air quality issues
(SO2 and acid rain), one municipality (Beijing), and one marine area (Bo Hai Sea). (Planned
Investment: US$ 22.2 billion)
· 10th National Five Year Plan (2000-2005): Emphasizes the need for sustainable management and use
of water resources, especially intensifying agricultural water-saving and wastewater reuse efforts.
(Planned Investment: US$ 30.5 billion)
· China Trans-Century Green Program: Emphasizes construction of urban environmental infrastructure.
The Program has three phases, spanning 15 years. Formulated through joint efforts of SEPA, The State
Development Reform Commission (SDRC), and the State Economic and Trade Commission, it is an
umbrella program for all pollution control initiatives in China, including water pollution control of the
Hai River Basin. (Planned Investment: component of National Five Year Plan)
· The South-North Water Transfer Project (SNWT Project): This proposed Project would address the
serious water scarcity problems in North China, including the Hai Basin. The intention is to transfer 20
bcm water from the Yangtze River system to North China. (Planned Investment: US$ 10-15 billion)
· Bo Hai Blue Sea Action Plan: The plan seeks to influence urban development, the economic structure,
and the adoption of clean production technologies. High priority is given to the control and prevention
of land-based pollution. The intention is to invest in new and improve existing sewage treatment plants,
recycling and reuse of waste, and the adoption of various "clean" technologies. (Planned Investment:
US$ 7.2 billion)
· Water Pollution Prevention Program of Hai River Basin: The Program endeavors to ensure that all
industries abide by national discharge standards and improve water quality. (Planned Investment: US$
5.3 billion for water pollution control)
· Hai Basin Comprehensive Management Plan: The Plan incorporates flood control, water resource
management, and soil and water conservation. (Planned Investment: US$ 1.5 billion)
· National Irrigated Agriculture Water-Saving Program: The Program endeavors to rehabilitate
irrigation systems and improve irrigation technologies in 300 counties, identified as demonstration
sites. (Planned Investment: US$5.2 billion)
Beijing Municipality
· Plan for Sustainable Use of Water Resources in the Capital in the 21st Century (2001-2005): It focuses
on the development and protection of water resources. By 2005, Beijing Municipality plans to achieve
water savings of 790 million cbm, reuse of 645 million cbm of treated wastewater, supply of 150 cbm
of water from rain and flood sources, achieve groundwater balance in the city, and ensure that the water
quality of the city suburbs reaches national standards. (Planned Investment: US$ 3 billion)
Tianjin Municipality
· Hai Basin Tianjin Municipality Wastewater Treatment Project: The Project will complete the
Municipality's 1958 Sewerage and Drainage Master Plan, which designates six drainage zones, a
WWTP in each zone, and separate sanitary and storm sewers. (Planned Investment: US$274 million)
13
Hebei Province
· The Hebei Provincial Government has outlined an ambitious environment protection plan for the
province up to the year 2010 to be implemented in three phases. The plan is consistent with national
environmental plans including the Trans-century Green Engineering Plan and the Hai River Pollution
Control and Prevention Plan, which are mentioned above. (Planned Investment: TBD)
Related Projects financed by the World Bank and the Asian Development Bank
·
Water Conservation Project
·
2nd Tianjin Urban Environment Project
·
2nd Beijing Urban Environment Project
·
FY01 Hebei Urban Environment Project
·
Agenda for Water Sector Strategy for North China
·
Tianjin Wastewater Treatment and Water Resources Protection Project
·
Coastal Resource Conservation and Environment Management Project for the Bo Hai Sea
The cumulative effect of the Government's initiatives outlined above will be considerable, particularly with
regards to reduction of pollution of water resources in the Hai Basin. COD loadings from major sources in the
Hai Basin are estimated to be reduced by 17 and 25 percent in 2010 and 2020, respectively, compared with
the 2000 levels. However, reductions in loads will not be sufficient to improve water quality to the extent
needed for public health, environmental needs, and restoration of the marine environment of the Bo Hai Sea.
Table 1: Hai Basin COD Loads from Major Pollution Sources
1997
2000
2010
2020
Urban Industry
2,289
2,213
1,435
1,225
Urban municipal
401
488
656
713
Rural industry
1,623
1,607
1,266
858
Livestock
643
663
730
848
Rural municipal
239
254
276
292
Total COD
5,195
5,225
4,361
3,935
Baseline Scenario: 1000 tons/year (Agenda Water Sector Strategy for North
China, April 2, 2001)
Global Environmental Objectives
Success in managing the Hai River Basin and restoring and protecting the environment of the Bo Hai Sea is
of global importance, because the trans-boundary effects of water pollution are severe. The Bo Hai Sea and
the Yellow Sea are a single large marine ecosystem and interdependent fishery. Approximately 600 million
people live in the basins that drain into the Yellow Sea. Many depend on it as a source of livelihood. Damage
to the Bo Hai Sea's function as a nursery area for fish and shellfish stocks damages the resource wealth of the
Yellow Sea. The implications are even more widespread, for pollution of the Bo Hai Sea ultimately affects
the East China Sea. The Bo Hai Sea, the Yellow Sea, and the East China Sea are connected, forming a
continuous circulation system.
The deterioration of the water resources in the Hai Basin is severely impacting the quality of life of millions
of people in a river basin with major population, industrial production and agriculture production. Water
pollution and water scarcity impact on agricultural production and human and environmental health.
14
Deterioration of the environment is also hampering poverty reduction, the most seriously impacted are often
the most vulnerable.
The GEF Alternative Project will assist China to significantly improve its water resource management
practices. From a global perspective, this improvement would result in the following benefits:
· It would help improving the Bo Hai Sea environment, contributing thereby to maintaining fishery
stocks and biodiversity of the Yellow Sea and the East China Sea more generally;
· Poverty reduction enhances social stability which, if not addressed, has national and potential
international implications.
· An integrated approach to water resources management in the Hai Basin would provide a model for
wider application in China;
· Success in China would encourage other developing countries to draw upon the lessons learned.
GEF Alternative
The proposed GEF Program for the Hai Basin and Bo Hai Sea will encourage a more comprehensive
integrated water resource management approach than outlined under the baseline scenario. This will help give
direction to and ensure that various plans of the agencies involved in the Hai Basin are coordinated and
properly integrated. The central focus of the GEF alternative would be the support of the formulation of
Integrated Water Resource Management Plans (IWEMPs) in pilot counties and at the sub-basin and basin
levels. Attempts to improve water resources management in China have been very top down, with strong
laws, policies, regulations and large investments, but with insufficient bottom up implementation at the grass
roots level. The purpose of the IWEMPs is to address integrated planning and to implement practical bottom
up actions that translate top down initiatives into bottom up results. The IWEMPs will include water user
participation and local government ownership in the development of plans that address: (i) water quality
management aspects, concentrating on point and non-point sources of pollution through the implementation
of discharge controls, industrial restructuring to clean industries, wastewater treatment in small cities,
industrial wastewater treatment, and agricultural and livestock production related pollution controls, (ii) reuse
of treated wastewater, (iii) improvements in water use efficiencies that result in "real" water savings by
reducing non-recoverable losses particularly evapo-transpiration (ET), (iv) implementation of effective water
rights and well permits systems, (v) increasing water pricing combined with volumetric measurement, (vi)
conjunctive use of surface run-off and groundwater, and (vii) ecological restoration.
The IWEMPs would also, where appropriate, provide revisions to laws, regulations, standards, and other
factors related to water quality and water quantity management at basin and local levels. In addition,
Demonstration Projects would be implemented in selected counties to deepen experience in key complicated
areas including: (i) "real" water savings, (ii) administration of water rights and well permits, (iii) pollution
control, and (iv) ecological restoration. Strategic Studies at the basin level would address important basin
policies, programs and approaches in order to ensure adequate governmental support to the lower levels to
implement to plan and implement the IWEMPs and demonstration projects. Lessons learned from the pilot
counties and demonstration areas would be shared with other counties throughout the Hai Basin and
elsewhere in China. An integrated approach would furthermore lead to a better understanding of important
surface/subsurface and water quality interactions, and facilitate new management techniques.
Without GEF support, integrated water resource management at the county level is unlikely to be achieved
because of the already mentioned difficulties in inter-jurisdictional and inter-administrative cooperation and
inadequate programs to implement government policies at the grass roots level. Each agency has its own
programs with generally ineffective bottom up implementation and inadequate coordination because of lack
of adequate vertical and horizontal integration of activities. Water resource management involves many
agencies. While the MWR has the primary responsibility for overall management of the nation's water
resources, and SEPA has overall responsibility for pollution control. There are considerable overlapping
jurisdiction problems between these agencies and with other ministries and agencies concerning urban water
supply, water pollution control, groundwater management, and irrigated agriculture. MWR's and SEPA's
management role is further limited by the increasing powers of provinces following the decentralization
15
process. The GEF Program would provide a powerful demonstration effect and an incentive to break through
institutional barriers.
The GEF alternative has already resulted in a breakthrough during Project preparation whereby Project
related cooperative mechanisms have been established between MWR and SEPA. The Project would include
an integrated program to improve basin-wide measurement, monitoring, modeling, and data sharing that will
greatly enhance water resources management. River reach files with a common coding system will be
developed and implemented that will allow for the sharing of information that will satisfy both SEPA and
MWR needs, as well as the lower-level needs at the county level. Applications will also be developed that
support the needs of integrated water resources management for the different entities. These activities under
the Project are referred to as Knowledge Management (KM). KM improvements are needed because an
adequate system of data collection and analysis is critical to integrated water resources management.
Monitoring is another serious problem in the Hai Basin. Without effective monitoring and enforcement, it is
impossible to have an adequate system of water rights administration or volumetric pricing.
This is the first GEF initiative of this kind. A further global benefit, therefore, is the important demonstration
effect of solving problems related to water resources through adopting a comprehensive integrated
management approach for a globally important river basin. The Project would help to provide the
management framework for integrated water resources management, which is indispensable for a long-term
sustainable approach to water use in the Hai Basin and to reducing pollution into the Bohai Sea. Although
government policy calls for an integrated framework, experience has shown that inter-jurisdictional, and
inter-administrative cooperation often proves difficult. The GEF grant would provide an incentive to break
through institutional barriers and intends to provide a powerful demonstration effect. The Project would help
to provide international expertise to provide Chinese counterparts with a broad range of management
experiences and instruments to draw upon.
The rationale for GEF involvement is that, without support, the Government tends to focus on measures that
are visible and with immediate effect, thus geared towards investment in infrastructure rather than
management activities and research (see baseline scenario). The Government and research institutes have
limited practical experience in designing integrated water resources management instruments resulting in
sustainable use of water resources and environmental protection/restoration. The international expertise that
accompanies GEF Projects would provide Chinese authorities with a broad range of management experiences
and instruments to draw from.
In addition to the global benefits described above, the Project would also generate significant supplementary
benefits for China. The IWEMPs formulated under the Program will enable government agencies at various
levels to better manage and use water resources in the Hai Basin. The improved knowledge management
system, including ET management, for the Hai River Basin will help government agencies to formulate
efficient and sustainable water resources policies and ensure effective enforcement of water pollution
regulations and laws. These benefits are not in the baseline scenario because of inadequacy of financing and
institutional capacity limitations. ET management using remote sensing is a principal innovative international
cutting edge approach being introduced under the Hai Basin Project. The key to sustainable water quantity
management in the Hai Basin is to reduce present amounts of ET to sustainable levels, and the Project
provides a practical feasible approach for achieving this objective. Eventually reducing ET to sustainable
levels will result in stabilization of groundwater systems and the long-term provision of water for
environmental purposes including delivery of fresh water to the Bo Hai Sea.
The wastewater management for small cities and industries along the coastal area (component 3) will directly
address GEF's Operational Program #10 by demonstrating ways to reduce land based-sources of marine
pollution, in this case to the Bohai Sea. China presently pays very little attention to small cities and suburban
industrial pollution, concentrating almost exclusively on pollution control in large urban areas. The Project
would attempt to leverage GEF funds by supporting infrastructure investments in small cities and suburban
areas financed under the World Bank-financed Tianjin Urban Environment and Development Project
(TUDEP2). In addition this component will support cleanup of the Dagu Canal system which has served as
the main wastewater canal for Tianjin City for four decades and which discharges directly into the Bohai Sea.
China has many of these large sewerage discharge canals that need to be renovated and the Project will
16
provide a demonstration on technically and environmentally sound approaches for this. Success of this
component will provide powerful demonstrations of how to begin to address these huge and presently largely
un-addressed pollution problems.
Although the scope of the proposed GEF Program is small compared to the enormity of reducing pollution of
the Bo Hai Sea, it will provide important demonstration effects. It will support technical assistance to control
pollution from secondary cities, and suburban and rural areas, which account for more than half the pollution
loadings entering the Bo Hai Sea. The global benefit, therefore, will be laying the groundwork for substantial
reduction of pollution of the Bo Hai Sea and an improved marine environment. This, in turn, will contribute
to sustainable management of the Bo Hai Sea and maintaining fish stocks and the biodiversity of the Yellow
Sea and East China Sea.
Related GEF Projects
The proposed GEF Project builds upon, fills in gaps, and complements other related initiatives in the region
that are supported by GEF. By contributing to improvement of the Bo Hai Sea environment, the Program
addresses an important missing link in the China/GEF relationship. China is a participating state in two
GEF/UNDP Projects for improvement of the Bo Hai Sea environment: "Building Partnerships for the
Environmental Protection and Management of Asian Seas" (PEMSEA); and "Reducing Environmental Stress
in the Yellow Sea Large Marine Ecosystem" (YSLME). The proposed GEF alternative also complements
initiatives supported by other international agencies. Some of these projects are listed above.
The PEMSEA Project is designed to assist the East Asia Sea Region to collectively protect and manage the
coastal and marine environment through intergovernmental and inter-sectoral partnerships. It involves ten
countries in Asia, including China. A key element is to facilitate development of institutional capacity,
management strategies and action plans to deal with land-based pollution. The Bo Hai Sea is identified as a
sub-regional sea under stress and a pollution "hot spot". A demonstration site has been established to reduce
waste discharges and to address environmental problems common to adjacent provinces and municipalities.
The proposed GEF Program for the Hai Basin and Bo Hai Sea complements the PEMSEA Project in two
important ways:
· It will contribute to PEMSEA's objective to control land-based sources of pollution of the Bo Hai Sea;
· It will complement PEMSEA's efforts to establish inter-jurisdiction coordinating mechanisms to
address environmental issues in the Bo Hai Sea by promoting integrated water resource management in
the Hai Basin.
The YSLME Project is a regional effort involving China and the Republic of Korea to formulate and
implement a regional Strategic Action Program (SAP). The Democratic People's Republic of Korea has also
been invited to participate in the Project, although it has so far declined formal involvement. The long-term
objective of the Project is ecosystem-based, by supporting environmentally-sustainable management and use
of the Yellow Sea. As mentioned earlier, the Bo Hai Sea is critical to maintaining the fish stocks and
biodiversity of the Yellow Sea. The Hai, Liao, and Yellow Rivers have important effects on salinity in the
western Yellow Sea. Therefore, the SAP must involve the Bo Hai Sea and the Hai River Basin. The proposed
GEF alternative will contribute to YSLME Project's long-term objective and support the formulation and
implementation of the SAP.
Incremental Costs
As discussed in the Baseline Scenario section above, the Government of China has plans or is in the
process of implementing billions of dollars in investments that will result in improvements in water quantity
and water quality conditions in the Hai Basin with consequent improvements to the Bo Hai Sea. These
investments will not appreciably contribute to the Project objectives of moving towards integrated water
resources management in the Hai Basin and small city and suburban wastewater treatment. For the purpose of
this incremental cost analysis it was decided to only include in the Baseline Scenario those investments
related to the closely-linked TUDEP2 and Water Conservation Project (WCP), that would contribute to the
Project objective of integrated water and environment management. In this regard, using data from TUDEP2
and WCP, the total cost of the Baseline Scenario is US$ 206.95 million, including Government of China
17
expenditures of US$ 118.72 million and IBRD financing of US$ 88.23 million. (Note: The Baseline Scenario
included all of WCP and only the Water Reuse and Institutional Development components of TUDEP2). For
the GEF Alternative, the total cost is US$129.99 million, including US$ 72.14 million from the Chinese
government (US$ 57.40 million under TUDEP2 and US$14.74 million direct), US$ 40.85 million of IBRD
loans under TUDEP2, and the GEF grant of US$ 17 million. (Note: The Dagu Canal Rehabilitation and
Suburban Sewerage components of TUDEP2 were included in the GEF Alternative because their successful
implementation is dependent upon the GEF Project.) All of these funds would be incremental to the baseline
scenario. Table 2 shows the incremental cost distribution according to Project component.
Table 2: Incremental Cost Matrix
Component
Cost
US$
Domestic Environmental Benefit
Global Environmental
Category
Million
Benefit
1. Integrated
(i) Water conservation in irrigation
Some improvement of Bo Hai
Water and
agriculture and reduction in surface
Sea marine and coastal
Environment
Baseline
and groundwater overuse.
environment and protection
Management
of fish stocks and
(IWEM)
187.85
biodiversity.
(i) Demonstration effect of adopting
Demonstration effect of
integrated water management
adopting integrated water
measures to control water pollution
and environment
and deal with water shortage and
management measures to
other related problems; (ii)
control water pollution and
Reduction of marine pollution
deal with water shortages.
caused by land-based sources,
Further improvement of Bo
especially pollution from secondary
Hai Sea marine and coastal
With GEF
towns and their associated
environment and greater
Alternative
industries (iii) Improvement of
protection of fish stocks and
public health because of better
biodiversity.
water quality and pollution
reduction; (iv) Improvement of the
environment of the Hai River Basin;
(v) Protection of fish stocks and
biodiversity; (vi) Enhanced habitat &
202.15
species protection.
Increment
14.30
2. Knowledge
Improved Knowledge Management
Management
Baseline
in Water Conservation and Pollution
3.82
Control.
Improved Integrated Knowledge
Demonstration effect of
Management System for the Hai
adopting integrated water
With GEF
Basin and improvements in the
management measures to
Alternative
conservation of water resources
control water pollution and
and the water environment.
deal with water shortage and
10.33
other related problems.
Increment
6.51
3. Small
Baseline
0.00
Cities
Improvement of the water quality of
Reduction of marine and
Wastewater
the Hai River Basin and
coastal pollution caused by
Treatment
With GEF
improvement of public health
land-based sources,
Support
Alternative
because of better water quality and
especially pollution from
pollution reduction.
secondary towns and their
103.00
associated industries.
Increment
103.00
18
4. Project
Improved Public Sector capacity for
Management
Baseline
water conservation and pollution
and Training
15.28
control.
Increased public sector capacity for
Integrated Water and
With GEF
Environmental Management and
Alternative
improved institutional arrangement
for integrated water resource
21.46
planning and management.
Increment
6.18
TOTAL
Baseline
206.95
With GEF Alternative
336.94
Increment
129.99
19
Annex B: Project Logical Framework
Hierarchy of Objectives
Key Performance
Data Collection Strategy
Critical
Indicators
Assumptions
Sector-related CAS Goal:
Sector Indicators:
Sector/ country reports:
(from Goal to
Bank Mission)
Sustainable development and
Sustainable
management of water and
management will
other natural resources
reduce poverty
GEF Operational Program:
Outcome / Impact
Indicators:
Improve integrated water and · Decrease water pollution in · Annual monitoring and
Improvements in
environmental management in
pilot counties
evaluation reports
water and
terms of water quantity and
· Reduce Groundwater
environmental
water quality in the Hai Basin
overdraft in pilot counties
planning and
and reduce land-based
· Reduced pollution loading
management will
sources of pollution to the
to the Bohai Sea from
result in
coastal and marine
coastal counties
sustainable
environment of the Bohai Sea
management of
water resources
Global Objective:
Outcome / Impact
Project reports:
(from Objective to
Indicators:
Goal)
Catalyze a more integrated
· Improved cooperation and · Annual monitoring and
Improvements in
approach to water resources
integration of WRM and
evaluation reports
water and
management and pollution
pollution control activities
environmental
control in the Hai Basin in
at the county level with
planning and
order to improve the Bohai
support from upper levels
management will
Sea environment
(prefectures, provinces,
result in
HRBC, ZhangWeiNan,
sustainable
MWR and SEPA)
management of
· Adoption of improved
water resources
WRM and pollution control
approaches at the county
level with support from
upper levels (prefectures,
provinces, HRBC,
ZhangWeiNan, MWR and
SEPA) including ET
management, river reach
data sharing, KM
applications, water rights
and discharge control
administrative systems, real
water savings, pollution
reduction
· Improved small city
wastewater management
and discharge canal
cleanup activities
20
Output from each
Output Indicators:
Project reports:
(from Outputs to
Component:
Objective)
1. Integrated Water and
Environment Management
(IWEM)
· IWEMPs for 10 counties
· Prepared and initial
· Semi-annual reports on
· Bottom-up water
and the Tianjin
implementation has started
physical and financial
resources
Municipality
progress
management at the
· Improved institutional
· Established and functional · Annual monitoring and
county, subbasin
coordinating mechanisms
evaluation reports
and municipal
for IWEM created
· Bank/GEF supervision
level will be
· Strategic studies conducted: · Prepared and findings
mission reports
replicable and
1. Policy and legal
integrated into IWEMPs
contribute to
framework and institutional
IWEM at the basin
arrangements;
level
2. Bohai Sea Linkage;
· An improved
3. Countermeasures for the
policy
Protection and
environment at the
Measurement of the Water
central level will
Ecological System
contribute to
4. Water Savings
improved IWEM
5. Water Rights and Well
and planning
Permits, and Sustainable
Groundwater exploitation;
6. Wastewater Reuse
7. Water Pollution and
planning.
· SAP for Hai Basin and for
· Prepared, distributed and
ZhangWeiNan subbasin
initial implementation has
started
· Demonstration Projects
· Prepared and findings
carried out:
integrated into IWEMPs
1. Real Water Savings
2. Management of Water
Rights and Well Permits
3. Control of Wastewater
Discharge
4. Pollution Control and
Water Environmental
Improvements
· Policies, mechanisms and
· Defined and implemented
instruments
2. Knowledge Management
· Development Integrated
· Created and implemented
· Semi-annual reports on
· Improvements in
Water Resource Water
physical and financial
KM and ET
Quality Information
progress
management will
Management System
· Annual monitoring and
contribute to
· Development Application
· Established and functional
evaluation reports
improved IWEM
Systems for the former
· Bank/GEF supervision
· Develop a functional ET
· Established, tested and
mission reports
Management System
functional
· Create Mechanisms for the · Working Groups in
Continuation of Systems
existing agencies have been
after the Projects
trained and use technology
21
finalization
3. Tianjin Coastal Wastewater
Management
· Provide TA for the
· Provided and carried out
· Semi-annual reports on
· Wastewater
Renovation and
physical and financial
Treatment Plants
Remediation of the Dagu
progress
will operate as
Canal
· Annual monitoring and
planned
· Dagu Catchment Industrial · Carried out and integrated
evaluation reports
Pollution Control
into IWEMP
· Bank/GEF supervision
· Binhai Wastewater
· Carried out and integrated
mission reports
Management Study
into IWEMP
· Small Cities Financial
· Incentive mechanism tested
Incentives
4. Project Management,
Monitoring and Evaluation,
and Training
· Joint Expert Groups
· Set up and functional
· Semi-annual reports on
· An improved
· Conduct Training,
· Carried out
physical and financial
policy
Workshops and Study
progress
environment at the
Tours
· Annual monitoring and
central level will
· Monitoring and Evaluation, · Adequate System in Place
evaluation reports
contribute to
specifically of IWEMPs
· Bank/GEF supervision
improved IWEM
and Demonstration Projects
mission reports
· Project
management setup
can guide water
and environmental
planning and
management in the
Basin
Hierarchy of Objectives
Key Performance
Data Collection Strategy
Critical
Indicators
Assumptions
Project Components / Sub-
Inputs: (budget for each
Project reports:
(from
components:
component)
Components to
Outputs)
1. Integrated Water and
· Support formulation of
· Semi-annual reports on
· Counterpart
Environment Management
County Integrated Water
physical and financial
funding will be
(IWEM)
and Environmental Plans
progress
adequate and on
(IWEMPs)
· Annual monitoring and
time
· Support preparation of pre-
evaluation reports
· County and
investment studies and
municipal
implementation of some
governments
planned actions
strongly support
· Support establishment of
IWEMPs and their
institutional coordinating
implementation as
mechanisms for IWEM
well as new
· Support formulation of
institutional
SAP for ZhangWeiNan
coordinating
subbasin
mechanisms
· Support formulation of
SAP for Tianjin
Municipality
(Total budget: US$ 14.30
million)
22
2. Knowledge Management
· Support strategic planning · Semi-annual reports on
· Hai Basin
and technical investigations
physical and financial
Commission will
at the basin level through
progress
exercise strong
improved data collections,
· Annual monitoring and
ownership in
GIS, river reach data
evaluation reports
knowledge
systems, river basin
management
models, ET management
design and
and other KM applications
improvements and
· Support formulation of
provide necessary
County IWEMPs through
support to other
improved data collections,
components
GIS, river reach data
systems, models, ET
management, and other
KM applications
(Total budget: US$ 6.51
million)
3. Tianjin Coastal Wastewater · Support establishment of
· Semi-annual reports on
· Political will
Management
institutional coordinating
physical and financial
exists to support
mechanisms for IWEM
progress
program of
(Construction Commission, · Annual monitoring and
Integrated
Environmental Protection
evaluation reports
Wastewater
Bureau, Water Bureau)
Management
· Support formulation of a
Measures
Municipal IWEMP
· Support preparation of pre-
investment studies and
implementation of some
planned actions
· Support the rehabilitation
of the Dagu Canal
· Support small city
wastewater management
(Total budget: US$ 103.00
million)
4. Project Management,
· Support the development of · Semi-annual reports on
· Project
Monitoring and Evaluation,
policy, legal and
physical and financial
management at all
and Training
administrative mechanisms
progress
levels will be
and instruments for
· Annual monitoring and
adequate and
improving IWEM
evaluation reports
involve good
· Support Project
cooperation
Management, Monitoring
between the
and Evaluation
various agencies
· Provide training
(Total budget: US$ 6.18
million)
23
Annex C
(a1) Bank Task Team's Responses to GEF Secretariat Comments at Concept
Agreement Review.
The full proposal should present a detailed program, including what sustainability mechanisms will be
promoted, how, where and how long will they be experimented and demonstrated.
The key to sustainability is ownership. The Project has been designed so that the coastal wastewater
systems, KM/ET systems, IWEMPs and demonstration projects will be seen and adopted as integral parts
of the government programs at the different levels. See "sustainability" section above and in Project
Brief.
The Project Brief will include specific activities and resources aimed at facilitating wide replication.
The Project has been designed to ensure maximum replicability. The problems being addressed are
typical of most areas in northern China. The practical feasible approaches being promoted in the Project
along with the strong government commitment to solve these problems and replicate successes provide a
strong basis for replicability. See "replicability" section above and in Project Brief.
Full project proposal will detail how stakeholder involvement will be achieved and in particular confirm the
cross-sectoral nature of water management units to be established under the Project.
Cross-sectoral management units at the different levels along with the joint expert groups are designed to
promote integrated participation of the various sectors. Stakeholder and particularly water user
participation as well as a large amount of training of both Project staff and water users will be a very
important part of the success of the IWEMPs and demonstration projects. Much attention has been given
to these issues during Project preparation. See "stakeholder" involvement section above and in Project
Brief.
For major demonstrations the Project should include the definition of the background environmental status
(water quality, depth of groundwater, etc.) and the application of processes learned in other on-going GEF
Projects in the region and from other GPA related initiatives should be discussed and if necessary
incorporated.
See "monitoring and evaluation" section above and in Project Brief. Linkages have been established with
the Bohai Sea Project of the Partnerships for the Environmental Protection and Management of Asian
Seas (PEMSEA), which will be producing a study on overall requirements for reduction of land based
pollution to the Bohai Sea based on environment function zones in the sea. Once this study is completed,
it will be used and cross-referenced in the Bohai Sea strategic study that will be produced under the
Project to specifically address Hai Basin pollution contributions to the Bohai Sea and interrelationships
with Project activities. The Project will directly contribute to the objectives of PEMSEA's Bohai Sea
initiative by addressing land based sources of pollution from the Hai Basin to the Bohai Sea. The other
GPA Project similar to the Hai Basin Project is the Rio Sao Francisco Project in Brazil. Both projects
deal with interjurisdictional coordination between provincial government units and include coordinating
mechanisms. IWLearn will provide a good means for cross referencing activities on the two projects as
they progress.
(a2) Bank Task Team's Responses to GEF Secretariat Comments at Work Program
Submission.
Provide a more articulate conceptual explanation of the incrementality of the GEF funding to the Project.
The incremental analysis and matrix have been revised.
24
Revisit and more clearly present co-financing.
Project co-financing presentation has been revised .
Mention should be made to the establishment of a Project web site designed according to IW-Learn standards.
The establishment of a Project web site according to IW-LEARN standards will be launched before WB
Board Approval.
(b)
Bank Task Team's Responses to GEF STAP Reviewer Comments.
If measures to address pollution in the region, such as wastewater treatment, are only applied in the most
downstream parts, the resulting consequences for the environment in upstream areas might still be less
advantage then anticipated. Such issues need to be addressed in the Integrated Water and Environment
Management framework as need the necessity of not exceed the ecological carrying capacity for the region.
Pollution control measures will be addressed not only in the 3 Tianjin coastal counties but also in: (a) the
IWEMPs in 10 pilot counties in Beijing and Hebei and in all of Tianjin municipality; (b) in the
ZhangWeiNan Strategic Action Plan and demonstration projects in 3 ZhangWeiNan counties; and (c) in
the overall Hai Basin Strategic Action Plan.
The demonstration sites have been chosen to address issues of effective control of wastewater discharge,
pollution control combined with environmental improvements, "real" water savings (application of ET
management), and effective management of water rights and well permits. As these issues are crucial for
Project implementation the choice of demonstration sites to be able to demonstrate such techniques are
essential.
The demonstration sites have been selected in areas where pollution control, "real" water savings, and
administration of water rights and well permits are critically important issues in their respective counties.
Another important criteria was strong interest and support from the county governments.
There are some references to Monitoring and Evaluation, M&E, of the Project and the project documentation
is including a presentation of Key Performance Indicators that might be used in such a process. There is,
however, no plan for the Monitoring and Evaluation process. Such a process needs to be initiated early on in
the project process and an M&E plan needs to be incorporated in the Project documentation, including in the
Project Brief.
The monitoring and evaluation write up in the executive summary and Project Brief have been improved
and additional attention will be given to this issue during appraisal, grant agreement negotiations and
Project implementation.
In cooperating with local stakeholders, including with farmers on the ET management and with municipal
stakeholders on wastewater treatment and reuse, awareness, training and capacity building should be
important issues. The documentation does not clearly describe how this critical aspect will be addressed
although it clearly demonstrates the need to involve all groups. Detailed plans for such participation will need
to be worked out and spelled out in the IWEM plans.
The documentation does not provide information about capacity building of different stakeholders such as
water users and farmers. Such capacity is essential and would need to be ensured to secure Project
sustainability.
The Project documentation does not, however, specify how such training should be organized and how the
different PMOs themselves should be trained in order to ensure compatibility not only in data and
methodology but also in the approach to problem-solving.
Stakeholder and particularly water user participation as well as a large amount of training of both
Project staff and water users will be a very important part of the success of the IWEMPs and
demonstration projects. Much attention has been given to these issues during project preparation. The
25
write-up in the executive summary and Project Brief has been enhanced and additional attention will be
given to this issue during appraisal, grant agreement negotiations and Project implementation.
(c1) Bank Task Team's Responses to UNDP Comments at Concept Agreement
Review.
Linkages should be made with the GEF-UNDP-IMO PEMSEA Programme; the proposal should more
specifically refer to and coordinate with PEMSEA's Bohai Sea Pollution Hot Spot/Demonstration Site, with
its obvious linkages to strengthening the environmental management of the Hai River Basin. Consultation
should be done with the PEMSEA/Bohai site to identify specific strategies and mechanisms for coordination
and cooperation. It should be noted that the GEF Yellow Sea LME Project does not include the Bohai Sea in
its geographic coverage. Nevertheless UNDP appreciates the Bank's intentions to establish linkages between
the Hai River Project and the GEF-UNDP-YSLME Project.
Close cooperation with the PEMSEA - Bohai Sea Programme will be maintained during Project
implementation. Of particular relevance are the targets for pollution load reduction from land-based
sources that will emerge from the plan for wastewater reduction that will be produced in the near future
under the PEMSEA - Bohai Sea Programme. This information will be a key input to the Bohai Sea
Strategic Study that will be prepared under the Project. The Bohai Sea Strategic Study will summarize
the current status of the Bohai Sea in general, and the coastal zone contiguous to the Hai Basin, with the
specific objective of determining the long-term and short-term reductions in pollutants and water fluxes
from the Hai Basin to the Bohai Sea that will have meaningful environmental results. The preparation of
these two specific studies will be coordinated very closely to ensure complimentarity. During Project
preparation, linkages have already been established between the Project management offices and
periodic interactions will take place during implementation. The Project will contribute directly to
PEMSEA's objectives of (i) controlling land-based sources of pollution of the Bohai Sea and (ii)
establishing coordinating mechanisms to address environmental issues in the Bohai Sea.
Interactions and exchange of information with YSLME will also be sustained during Project
implementation. The long-term objective of the later project is ecosystem-based, by supporting
environmentally-sustainable management and use of the Yellow Sea. The proposed Project will contribute
to YSLME Project's long-term objective.
The Project can further be strengthened if it can stress that this initiative is in line with the "Sustainable
Development Strategy for the Seas of East Asia", with which the World Bank is a collaborative partner.
PEMSEA has also offered to assist the World Bank in promoting multi-stakeholder involvement in the
Project.
The Project objectives are fully in line with PEMSEAS goals/visions of (i) protecting the life support
systems of the Seas of East Asia, (ii) contributing towards the sustainable use of their renewable
resources through interagency and intersectoral partnerships, and (iii) implementing strategies and
action plans that ensure that the seas of East Asia can continue contributing to the well being of the
people of the region. As mentioned above, cooperation will be continued during implementation.
The preliminary Project cost figures in Table 1 are confusing; the GEF total is provided as US$17 million but
one can sum the figures and arrive at US$21 million or 14.5 million.
Project costs have been updated and refined. The total cost for the GEF grant remains at US$ 17 million,
whereas the total Project costs are US$ 129.99 million.
(c2) Bank Task Team's Responses to UNDP Comments at Work Program
Submission.
UNDP notes that there is no mention of economic instruments or financing arrangements that would entice
investment in the proposed IWEM Plan. This may not have been specified in the Project summary, but it
26
seems to us that it is essential. Obviously, if water were priced at an appropriate level, there would be less
waste/misuse of the resource. Technology aside, it is human behaviour that must change.
Finally, where can the private sector play a role? Are the systems being proposed limited to public sector
investment, or is there an opportunity for a business venture. When designing the demonstration projects, it
may be helpful to test the feasibility of public-private partnerships and or private sector investment.
The IWEMPs that will be prepared under the Project will include economic and financial analyses and
year-by year financing plans with sources of financing including private sector participation where
applicable. These IWEM plans will also evaluate water and discharge pricing and penalty instruments.