CHINA
Guangdong Pearl River Delta Urban Environment Project
GEF Project Brief
East Asia and Pacific Region
EASUR
Date: January 23, 2004
Team Leader: Thomas L. Zearley
Sector Manager/Director: Keshav Varma
Sector(s): Sewerage (70%), Solid waste management
Country Manager/Director: Yukon Huang
(20%), Sub-national government administration (10%)
Project ID: P075728
Theme(s): Water resource management (P),
Lending Instrument: Specific Investment Loan (SIL)
Environmental policies and institutions (P), Pollution
management and environmental health (P), Infrastructure
services for private sector development (S)
Global Supplemental ID: P084003
Team Leader: Thomas L. Zearley
Sector Manager/Director:
Sector(s): Sewerage (70%), Solid waste management
Lending Instrument: Specific Investment Loan (SIL)
(20%), Sub-national government administration (10%)
Focal Area: I - International waters
Theme(s): Pollution management and environmental health
Supplement Fully Blended? No
(P) , Water resource management (P), Infrastructure
services for private sector development (S)
Project Financing Data
[X] Loan [ ] Credit [X] Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Others:
Loan Currency: United States Dollar
Amount (US$m): 165.00 + 10.0 Global Environment Facility (GEF) Grant
Borrower Rationale for Choice of Loan Terms Available on File:
Yes
Proposed Terms (IBRD): Variable-Spread Loan (VSL)
Grace period (years): 5
Years to maturity: 20
Commitment fee: 0.75%
Front end fee (FEF) on Bank loan: 1.00%
Financing Plan (US$m): Source
Local
Foreign
Total
BORROWER/RECIPIENT
249.00
13.35
262.35
IBRD
55.10
109.90
165.00
GLOBAL ENVIRONMENT FACILITY
0.00
10.00
10.00
Total:
304.10
133.25
437.35
Borrower/Recipient: PEOPLE'S REPUBLIC OF CHINA
Responsible agency:
GUANGDONG PROVINCE, through the Guangdong Provincial Finance Bureau's World Bank Project Management
Office
Address: 26 Cang Bian Road, Guangzhou, China
Contact Person: Mr. GU Dongfang
Tel: (86 20) 833 36405 Fax: (86 20) 833 30007 Email:

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P075728 Estimated Disbursements ( Bank FY/US$m):
FY
2005
2006
2007
2008
2009
2010
Annual
11.00
15.30
38.80
67.10
24.70
8.10
Cumulative
11.00
26.30
65.10
132.20
156.90
165.00
P084003 (GEF) Estimated Disbursements ( Bank FY/US$m):
FY
2005
2006
2007
2008
2009
2010
Annual
0.00
0.90
2.70
3.80
2.10
0.50
Cumulative
0.00
0.90
3.60
7.40
9.50
10.00
Project implementation period: 01/01/2004 - 06/30/2009
Expected effectiveness date: 12/01/2004 Expected closing date: 12/31/2009
OPCS PAD Form: Rev. March, 2000
GEF Project Brief (PAD)
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A. Project Development Objective
1. Project development objective: (see Annex 1)
1. Project Development Objective (see Annex 1)
The project development objective is to promote a regional planning approach to environmental
service delivery, to address the serious environmental problems of the Pearl River Delta (PRD)
and the South China Sea.
2. Global objective: (see Annex 1)
The project's global environment objective is to improve the environmental condition of the South China
Sea large marine ecosystem (LME) by addressing one of the recognized major trans-boundary threats to it -
land-based pollution. The South China Sea is one of the World's key LMEs that the Global Environment
Facility (GEF) has agreed to help the littoral states manage in a sustainable manner, in order to achieve
global environment benefits. GEF-supported analyses of the major threats to it, facilitated by the
GEF/UNDP/IMO Partnerships in Environmental Management for the Seas of East Asia and the
GEF/UNEP Project on Reversing Environmental Degradation Trends in the South China Sea and Gulf of
Thailand, have identified land-based pollution as one of the most serious trans-boundary threats to the
South China Sea and China's Pearl River Delta as one of its land-based pollution "hot-spots", and the
largest source of land-based pollution emanating from China. By reducing land-based pollution from the
Pearl River Delta, the project will help address this specific threat to the South China Sea, help reverse its
degradation, and generate trans-boundary environmental benefits for the millions of people whose
livelihood and health depend on it.
3. Key performance indicators: (see Annex 1)
Key performance indicators relating to the development objective are:
(a)
Increased percentage of domestic wastewater collection and treatment
(b)
Increased pretreatment of industrial wastewater before discharge, and relocation of highly
polluting industries
(c)
Increased collection and treatment of hazardous wastes
(d)
Improved water quality monitoring information, and data sharing for environmental
management
(e)
Increased collaboration between Guangdong and Hong Kong SAR for environmental
management of the PRD and the South China Sea region
B. Strategic Context
1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)
Document number: Under preparation
Date of latest CAS discussion: 12/19/02
CAS Memorandum of January 22, 2003 and Country Program Matrix (FY03-05)
The project will support several important themes and specific goals of the CAS. It will facilitate the urban
transition that is underway in China, by helping to enhance the productivity of cities--where the
overwhelming majority of jobs will be created--and the provision of improved urban living conditions,
which depend crucially on better municipal management and the availability of adequate financial
resources. It will also support an environmentally sustainable development process, by improving the
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management of water resources and hazardous waste management.
The project will also help China meet one of the most important of the Millennium Development Goals
(Goal 7), which is to "improve the environment by implementing national strategies for sustainable
development by 2005."
1a. Global Operational strategy/Program objective addressed by the project:
This project will be one of the first major elements of a planned large-scale, long-term program of GEF
co-financed assistance to the littoral states of Seas of East Asia that will help them accelerate action to
address the major threat to these seas posed by severe and worsening land-based pollution. The strategic
frameworks for this program are the GEF/UNDP/IMO-catalyzed "Sustainable Development Strategy for
the Seas of East Asia", which was endorsed by a Ministerial Forum on the Sustainable Development of the
Seas of East Asia in Putrajaya, Malaysia on December 12, 2003, and the emerging GEF/UNEP Strategic
Action Plan for Reversing Environmental Degradation Trends in the South China Sea and Gulf of
Thailand.
The project is consistent with the GEF's Operational Program 8, because it will help China reduce
land-based pollution of the South China Sea and the Seas of East Asia. Land-based pollution is identified
by the "Sustainable Development Strategy for the Seas of East Asia" as one of the region's most urgent
trans-boundary marine environmental action priorities. The Strategy identified the Pearl River as China's
largest source of land-based pollution of the South China Sea, and Guangdong Province is the most
concentrated source of that pollution.
The project is also consistent with the GEF's Operational Program 10, in that it will demonstrate
innovative options for reducing the contamination of an international water body ­ the South China Sea.
The project's objectives of identifying joint municipal environmental investments and private-public and
private-private investments are both innovative, as also is the proposed use of GEF resources as an
incentive for municipalities to undertake joint investments to demonstrate the cost-effectiveness of this
innovative approach to environmental investment.
The project is also consistent with the GEF's Strategic Priorities 1 and 3 for the International Waters Focal
Area in FY2004-06. With respect to priority 1, the project will support China's efforts to mobilize and
make more effective use of resources for implementing policy, promotion of legal and institutional reforms
and stress-reducing investments that were previously agreed with GEF assistance and/or equivalent
processes. As called for under this strategic priority, the project (a) is fully mainstreamed into the World
Bank's China country assistance and lending program, (b) promotes engagement of the private sector, and
(c) is consistent with the GEF's principle of incremental cost financing. The pollution-reduction actions that
the project will promote will contribute to the GEF's target for FY2004-06 of doubling the number of
trans-boundary water bodies within which it has helped to catalyze policy reforms and stress-reduction
measures.

With respect to priority 3, GEF assistance is focussed on the demonstration, testing and replication of
innovative ways to (a) reduce the barriers to policy reform, (b) achieve more efficient use of public
investment resources by promoting inter-municipal collaboration in larger-scale waste management
investments, (c) increase private sector investment in, and operation of waste management facilities, and (d)
promote international collaboration in reducing land-based pollution of a shared water body. More
specifically, the project will pilot test, and demonstrate two particularly innovative GEF financial incentive
measures, viz: (i) incentives for inter-municipal shared infrastructure development, and for private
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investment and/or management contracting and public/private partnerships in the reduction of land-based
pollution; and (ii) the potential to use "revolving funds", such as reimbursable no-interest loans and
guarantees, to accelerate private sector involvement. It will thus constitute one of the 3-4 pilot
demonstrations of such instruments that the GEF has committed to support in FY2004-06.
2. Main sector issues and Government strategy:
Background. Cities in the Pearl River Delta and the South China Sea region have contributed
significantly to rapid economic growth and prosperity of the region. The region also has a fragile
and deteriorating environment resulting from pollution from emissions, and domestic, industrial
and non-point source wastes and storm run-offs. Guangzhou, the capital city of Guangdong
Province, is the leading municipality in the PRD, which made the highest contribution to GDP of
the Province last year.
Since the opening up of China in 1979, the Pearl River Delta (PRD) region has witnessed
phenomenal economic growth with average GDP rising by an average 14.7 percent annually over
the period 1990-2000. Along with the two Special Administrative regions (SAR) of Hong Kong
and Macau, the Delta region has become a major outlet for manufactured goods to the rest of the
world.
Guangzhou showed the highest contribution to the GDP with Yuan 644 billion/year, and the
highest average annual salary of Yuan 13,059. According to the 2000 census, the population of
Guangdong Province was 86.4 million, of which 39.7 million was in the PRD. Guangzhou had a
migrant population of over 4 million in 2000 (about 47 percent of total population).
Sector Issues. Environmental management has not kept pace with economic development; this is
evidenced
by the severe deterioration in the environment and water quality in local rivers during this period.
A discussion of sector issues follows.
Inadequate Attention to Comprehensive Regional Planning. Provincial plans for the PRD are
limited to the territory, and environmental investments in Guangdong are based on narrow
administrative boundaries rather than drainage catchments. The recently announced `PRD
Clean-up Campaign' calls for the construction of 162 wastewater treatment plants, estimated to
cost over Yuan 45 billion. This reportedly includes over 8 and 50 treatment plants in Guangzhou
and Foshan, respectively. Considerable opportunities exist to reduce capital fund requirements,
operating costs, and derive economies of scale through adoption of a regional planning based on
least-cost strategies.
Total wastewater generation (domestic and industrial) in 2000 has been estimated at around 11.5
million m3/day, and projected to rise to about 12.3 million m3/day by 2010, of which 2.1 million
m3/day is industrial wastewater. In terms of total wastewater generation, Guangzhou contributes
about 25% of the total load; Dongguan, Shenzhen and Foshan follow at 15%; 14% and 13%
respectively. Total treatment capacity in the PRD is about 2.6 million m3/day, treating
approximately 28% of domestic wastewater. Additional capacity to be installed in the PRD by
about 2010 is 8.81 million m3/day. The proposed treatment capacity for the longer term would
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appear excessive in relation to requirements. By optimizing investment in WWTP this could
liberate funds for both the completion of networks, and the operation and maintenance of the
facilities.
Opportunities for megalopolis-wide regional urban planning and strategic planning processes to
address issues of the PRD and the South China Sea, involving a range of stakeholders in
Guangdong and Hong Kong and Macao SARs, have not been adequately explored. Collaborative
efforts between Guangdong and Hong Kong SAR have commenced, but progress has been slow.
Uncoordinated and inadequate monitoring of environmental conditions, and lack of real time data
in the PRD, particularly with regard to drinking water standards, river water quality, pollutant
contributions from industry, municipal and non-point source pollution, seriously hamper planning,
regulation and enforcement of standards by agencies responsible for regulation.
Deteriorating River Water Quality. The Pearl River comprising three major branches: the west
river, the north river, and the east river, discharges to the South China Sea via eight outlets
forming the distributary channels of the Pearl River Delta (PRD). Today, many sections of the
Pearl River, especially in the vicinity of Guangzhou and Foshan, have pollution levels that result
in the water quality being lower than Class V. Main pollution sources entering the river system are
from untreated domestic and industrial wastewater and non-point source pollution. The water is
unsuitable for use as drinking water, for leisure purposes, and for preservation of aquatic life. An
accelerated investment program to collect and treat domestic wastewater has commenced.
Inadequate Sludge and Solid Waste Management. While domestic waste collection is
reasonably well-organized on a neighborhood basis, the capacity to treat and dispose of wastes
varies widely among cities in the PRD. Open dumping of municipal solid waste disposal is
common, though this is now changing. Guangzhou has recently developed a modern sanitary
landfill, operated by a private service provider. The growing volumes of hazardous wastes pose
considerable risks to health, and surface and ground water sources. Though industries are
required to dispose of their wastes to set standards, it is believed that a large proportion of
industrial wastes is illegally dumped.
Sludge disposal will be a growing problem with the proposed expansion of installed treatment
capacity throughout the PRD. The heavy metal content is a concern, although recent data indicate
a reducing trend resulting from the implementation of the Province's industrial pollution control
action program. Wastewater characteristics indicate that untreated industrial wastewater enters
the sewer system and water bodies. Guangdong has started to address this problem through
increased monitoring and enforcement, and has approved a plan to relocate highly polluting
industries to specially designated locations.
Inadequate Water Quality Monitoring. At present, the provincial and municipal Environmental
Protection Bureaus (EPB) are not adequately equipped to carry out effective pollution
monitoring, nor to utilize data collected. Water quality monitoring is carried out through
monitoring stations of local municipalities, and the data is transferred to the State Monitoring and
the Provincial Monitoring Centers. Twelve samples are taken manually each year, and then sent to
a laboratory for analysis. Under this procedure, coverage is inadequate, data is unreliable, and
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collection of real time data is not possible.
Impacts on Vulnerable Population. Some cities in the PRD are facing growing social pressures
from vulnerable populations. One segment of the population ­ the informal migrants ­ is
particularly vulnerable, as they are often without access to basic environmental infrastructure
services, or are provided access at higher prices through intermediaries (e.g., landlords). Ensuring
affordable access to services for all segments of PRD's vulnerable population is becoming a major
challenge for cities.
Pricing of Urban Services. Charges for water supply and wastewater services are a fraction of
the true cost of providing the services. Aside from a small charge for collecting wastes from
households to collection points, and a recently introduced garbage fee in Guangzhou, there is no
cost recovery for transfer and disposal of municipal solid wastes. With the increasing trend to
engage private service providers in environmental infrastructure, availability of adequate funding
to pay for these services becomes important.
Guangdong Provincial Government's Strategy. The Province has recognized that sustaining its
growth performance is linked to maintaining acceptable environmental conditions in the PRD
cities. Although a comprehensive and regional environmental management has not been
formulated, individual policy initiatives and investment programs have been developed, and are
being implemented, to address domestic and industrial wastewater treatment, sludge management,
solid and hazardous wastes management, and management of agriculture and livestock pollution.
Guangdong's strategic plan for wastewater management in the Pearl River Delta is the `Pearl
River Cleanup Campaign', which sets out phased targets for improvements in water quality in
river reaches in the Province and urban areas; proportion of domestic and industrial wastewater to
be treated; and investments for environmental protection. These objectives would be achieved
through:
(i) industrial pollution control: monitoring and control of discharges from 179 key polluting
industries, including relocation of the worst polluting industries;
(ii) domestic wastewater treatment: construction of 162 wastewater treatment plants (WWTPs) to
treat about 12.23 million m3/day;
(iii) agriculture and livestock pollution control: banning and relocation of poultry industries from
water supply catchments of the PRD, and enforcement of provincial and national SEPA
guidelines; and
(iv) river rehabilitation: comprising integrated (a) rehabilitation of key rivers, (b) water pollution
control and management in Guangzhou, Dongguan and Foshan, (c) integrated rehabilitation of
urban creeks, (d) domestic solid waste treatment, and (e) ecosystem development and protection.
In addition, GPG plans to adopt a regional approach to planning, and develop appropriate
institutional models to promote the construction of shared environmental facilities between
municipalities. It also plans to launch a pilot program for inter-municipal/town jointly-managed
environmental infrastructure, supported by a GEF grant, as part of the project. Fundamental to
this approach is the review and update of the PRD Cleanup Campaign, which now envisages
about 162 wastewater treatment plants. Opportunities for shared environmental infrastructure
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development between Guangdong and Hong Kong SAR through development of an
environmental management framework for the PRD and the South China Sea are currently
being explored.
The Guangdong regional hazardous waste management program to be completed by 2005,
includes: (a) Guangzhou Hazardous Waste Secured Disposal Center, (b) Guangdong Hazardous
Waste Comprehensive Treatment Demonstration Center (Phase I); (c) Shenzhen Hazardous
Waste Treatment Station and Secured Landfill (Phase II); and (d) Yuexi Hazardous Waste
Treatment Center (Phase I) and Guangdong Toxic Chemical Waste Treatment Center.
Under the Tenth Five-year Plan, the Guangdong EPB is required to install automatic water quality
monitoring, and report water quality of surface waters daily and monthly. Implementation of this
program began in early 2003.
Gaungzhou has an approved industrial pollution control action plan that includes monitoring and
enforcement of industrial wastewater discharges, and
a phased program to relocate the worst polluting industries to special industrial locations. This
program is scheduled to be complete in 2010.
3. Sector issues to be addressed by the project and strategic choices:
The project will support Guangdong Province in addressing environmental service delivery and
associated investment in an integrated manner, where this provides cost-effective solutions
through interventions designed to address the following issues:
(i) comprehensive and regional planning through: (a) the review and updating of the PRD
wastewater treatment plan to reduce the number of wastewater treatment plants currently
planned, and thereby develop least-cost solutions, rationalize planning, reduce capital and
operating funds requirements, and achieve economies of scale, (b) develop institutional models for
jointly-managed inter-municipal environmental infrastructure, and (c) support initiatives between
Guangdong and Hong Kong SAR for development of an environmental management program for
the PRD and the South China Sea;
(ii) jointly-managed environmental infrastructure development through a pilot program to
construct shared environmental infrastructure, with incentives provided through the GEF grant;
(iii) wastewater management through enhancing the treatment and collection capacity in
Guangzhou and other participating municipalities, in accordance with the respective city master
plans, with appropriate revisions to achieve economies of scale;
(iv) hazardous waste management, through construction of a regional treatment and
disposal facility;
(v) improved water quality monitoring, data collection and management, and data sharing
with Hong Kong SAR and neighboring countries;
(vi) industrial pollution control, through an action plan to control pollution discharges
from a number of specified polluting industries and relocation of highly polluting industries,
financed with own funds.
Additionally, non-point source pollution from livestock and agriculture wastes is being addressed
under a parallel GEF-financed project.
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C. Project Description Summary
1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown):
The project would support infrastructure investments, policy and regulatory issues, as well as institutional
strengthening and training (IST) at both provincial and city levels, as follows:
(1) Wastewater Management: Investments to increase wastewater treatment capacity in Guangzhou and
participating cities. Investments in Guangzhou would include capacity enhancement by about 400,000
m3/day in two plants, construction and rehabilitation of sewerage networks and interception of wastewater
entering creeks and rivers;
(2) Hazardous Waste Management in Guangzhou City: Construction of the first phase of the treatment
center and associated landfill of 150,000 cubic meters capacity in Guangzhou.
(3) Incentive-based Lending for Inter-Municipal Environmental Infrastructure in PRD Municipalities and
Towns: Wastewater treatment and solid waste investments for groups of two or more contiguous
municipalities, districts or towns willing to plan, construct and manage shared facilities. Up to now,
Memoranda of Understanding have been drafted for development of shared environmental infrastructure
between: (i) Municipal Gardens Bureaux of Panyu District and Guangzhou, (ii) Longang District
Government of Shenzhen and Shenzhen Greater Industrial Zone Administration Commission, and (iii)
Chancheng District Government and Nanhai District Government (of Foshan); and (iii) Longang District
Government of Shenzhen and Shenzhen Greater Industrial Zone Administration Commission. Sub projects
would be prepared by the above and/or other potential participants, and would be appraised by the Bank up
to about one year after Board approval of the project.
(4) Water Quality Monitoring and Data Sharing: Setting up 18 new provincial monitoring stations,
rehabilitation of 5 existing stations, a range of laboratory and field equipment (including automatic water
quality monitors) and improvement of a management information systems to enhance the capacity of the
Guangdong Provincial Environmental Protection Bureau to improve its efficiency and effectiveness for
pollution control and information sharing with Hong Kong and Macau and with neighboring countries
through the UNEP/GEF South China Sea and Gulf of Thailand Project.
(5) Institutional Strengthening & Training: Technical assistance for (i) financial/institutional support,
water and wastewater utility pricing, equipment and training for project implementing agencies; (ii) project
implementation support for detailed design and construction supervision; (iii) public hygiene promotion;
(iv) preparation of a sludge management plan for Guangzhou; (v) strategic studies for regional planning
and urban development; (vi) public-private partnerships in funding and managing environmental
infrastructure; and (vi) training and study tours.
(6) Industrial Pollution Control Action Plan: The component comprises implementation of the
Guangzhou Municipal Government-approved industrial pollution control program. The program
includes increased pollution monitoring of river stretches, increased on-site treatment of industrial
wastewater, and relocation of highly polluting industries to specific locations. The program
includes a phased relocation of highly polluting industries, (e.g., paper, textiles and food
processing) to industrial parks with dedicated utility services and environmental infrastructure.
The largest polluting industries would be relocated in the second phase of the program, starting in
2006. The investment costs would be borne by individual industries, and no loan funds are
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involved.

Indicative
Bank
GEF
%
Component
Costs
% of
financing
% of
financing
GEF
(US$M)
Total
(US$M)
Total
(US$M)
financing
(1) Wastewater Management
334.00
66.1
118.70
61.6
0.00
0.0
(2) Hazardous Waste Management
24.60
4.9
9.95
5.2
0.00
0.0
(3) Inter-Municipal Environmental Infrastructure
113.20
22.4
49.15
25.5
6.80
68.0
(4) Water Quality Monitoring and Information
11.50
2.3
5.20
2.7
2.25
22.5
Systems
(5) Institutional Strengthening and Training
8.60
1.7
8.00
4.2
0.95
9.5
(6) Industrial Pollution Control Action Plan (financed
0.00
0.0
0.00
0.0
0.00
0.0
with own funds)
Global Components
0.00
0.0
0.0
0.0
0.00
Total Project Costs
491.90
97.4
191.00
99.1
10.00
100.0
Interest during construction
11.70
2.3
0.00
0.0
0.00
0.0
Front-end fee
1.65
0.3
1.65
0.9
0.00
0.0
Total Financing Required
505.25
100.0
192.65
100.0
10.00
100.0
2. Key policy and institutional reforms supported by the project:
The Guangdong Provincial Government (GPG) and municipal governments recognize the need for
progressive policies, development strategies, and reforms to meet the challenges for sustaining economic
growth in the PRD. High on the list of priorities is the need to provide the necessary infrastructure,
including the necessary environmental infrastructure service levels that contribute to quality of life and the
environmental setting. The project would complement the investments through infusion through important
policy and institutional reforms, including utility reform. These initiatives are consistent with the national
water law, and guidelines for commercialization and prudent management of utilities, promulgated by the
central government.
Initiatives would be taken as part of the project to promote policy and institutional reforms under this
framework, as follows:
(a) promotion of a regional planning approach to environmental infrastructure development,
(b) adoption of demand management as a strategy to reduce water consumption and, by extension,
wastewater generation;.
(c) formation of a financially autonomous wastewater company (established in November 2003), as
required under the national law, which would charge tariffs sufficient to recover the cost of services,
gradually increased to reach average incremental costs of future services;
(d) promotion of effective models for inter-municipal cooperation in planning, construction and
management of urban development and environmental infrastructure, for reasons of economies of scale,
least cost and efficiency;
(e)
putting in place more effective water quality monitoring, and enforcement of pollution control
regulations;
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(f) promotion of private sector participation in service provision; and
(g) promotion of public hygiene in the provision of sanitation.
In a parallel activity, supported by GEF there will be regulatory reform to address pollution from
agriculture, livestock breeding, and other non-point sources.
3. Benefits and target population:
The project will generate various important benefits. These include: (a) a cleaner environment due to
improvement in the water quality in the PRD river systems; (b) reduced health risks due to reduction in
water source pollution from wastewater and hazardous wastes; (c) expanded coverage of environmental
infrastructure, contributing to improved quality of life for PRD residents including vulnerable migrant
populations; (d) reduced need for government transfers due to increased cost recovery for services; (e)
institutional reforms creating financially autonomous utility companies; (f) improvements in the quality,
quantity and sustainability of public utility services; and (g) continued economic growth in the PRD
generating increased employment opportunities, especially for migrants.
The target population is the 14 million residents of Guangzhou metropolitan area (including Guangzhou,
Foshan, Shunde and Nanhai) and about 30 million others in the PRD, who would benefit through improved
quality of the environment and river systems. Approximately 6.9 million residents of Hong Kong would
also benefit through protection of the vital drinking water supply from the PRD, and from reduced water
pollution in the South China Sea..
4. Institutional and implementation arrangements:
The Guangdong Provincial Finance Bureau is responsible for the overall coordination of the project. The
Guangdong Provincial Government Office for World Bank Projects (GDPMO), which has been established
within the Provincial Finance Bureau, has already successfully coordinated implementation of several
World Bank-financed projects. Guangzhou city has also set-up its own Project Management Office
(GZPMO) to oversee preparation and implementation of its component. Other cities intending to
participate in the project would be required to establish their own project management offices in accordance
with national practice. Individual components will be implemented by the respective sector agencies. In
Guangzhou city, (a) the wastewater treatment component will be implemented by the Guangzhou Tunnel
Development Company (GTDC), as the agent of the Guangzhou Sewage Treatment Company (GSTC).
The hazardous waste management component will be implemented by the Guangzhou Hazardous Waste
Management Center (GHWMC). The Guangdong Provincial Environmental Protection Bureau (GDEPB)
will be responsible for implementation of the water quality monitoring component, through its Guangdong
Environmental Monitoring Center (GEMC).
GDPMO's responsibilities include: (a) implementation of the institutional strengthening and training
component; (b) overall project coordination, management and monitoring: (c) annual budget preparation;
(d) project-wide quality assurance; (e) progress reporting to GPG and the Bank, including cost
management, project impact and environmental improvement assessment; (f) inter-agency coordination and
procurement support; (g) administration of the GEF grant; and (g) sectional training facilitation. The
personnel skill mix of the GDPMO and GZPMO would be adjusted from time to time to reflect the needs of
the various phases of the project, including completion of preparation and implementation.
The CMC International Tendering Corporation, No. 1 Department, in a joint venture with the GMG
International Tendering Company Limited, has been retained as the procurement agency for all aspects of
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civil and electrical and mechanical works requiring International Competitive Bidding (ICB).
Onlending Arrangements: The proposed loan of $165 million would be made to the People's Republic of
China. The loan would be for 20 years, including 5 years of grace, at the Bank's standard interest rate for
LIBOR-based US dollar single currency loans. The proceeds of the loan would be onlent to Guangzhou
Municipality (any other municipalities to be determined) through GP on the same terms and conditions as
the Bank loan to China. Guangzhou Municipality would onlend the proceeds of the Bank loan to
Guangzhou Wastewater Treatment Company for 15 years including 5 years of grace, at an interest rate and
a commitment charge not less than the rate and charge applicable to the Bank loan to China.
Monitoring and Evaluation Arrangements: The project would be supervised through Bank missions
scheduled for twice a year. Headquarters and World Bank Office, Beijing staff would cooperate in this
activity. During implementation, project performance, including the achievement of project outputs and
progress towards the attainment of development objectives, would be monitored through the use of
semiannual progress reports prepared by the GDPMO. Bank missions would also monitor the progress in
implementing the non-Bank financed Industrial Pollution Control Action Plan (IPCAP). The first such
monitoring report would be submitted by January 31, 2005, and the last by January 31, 2010. In addition,
an implementation completion report, reviewing the planned objectives and the achievements of the project,
including costs and benefits derived, and performance and contribution of all parties associated with project
execution, would be prepared by the GDPMO and submitted to the Bank within six months of the closing
date.
D. Project Rationale
1. Project alternatives considered and reasons for rejection:
(i) A coherent regional development approach has been selected in preference to GPG's narrowly focused
master planning and urban development strategy.
(ii) During project identification, the use of an Adaptable Program Lending (APL) instrument was
considered, following on the model of Shanghai. There was not sufficient support for this from the central
government, as they had not yet gained sufficient confidence on the process. Moreover, in Guangdong,
there was only one city- Guangzhou - seeking urgent financing, and to pursue the approach would have
resulted in delays, and risked Guangzhou losing interest. Therefore the APL option was rejected.
(iii) The task team's earlier view was that it was necessary to have more than one city for the first
investment operation, in order to make an impact. This could still happen during the project implementation
phase, as there is general interest. Guangzhou, however, has made a firm commitment to proceed with the
Bank whether or not other cities participate. Investments in Guangzhou city, plus incentive-based
investments for two or more other towns with shared infrastructure, would be a significant step forward.
(iv) The strategic plan of GPG to construct a multiplicity of small wastewater treatment plants was
considered and rejected because it would not capture economies of scale, is expensive, and would not meet
the Bank's criteria of least cost options.
(v) Project intervention to treat only municipal wastewater considered and rejected. Without complementary
interventions to control pollution from industries, limited benefit would be derived from the Bank
intervention. Therefore, the GPG has been requested to prepare an Industrial Pollution Control Action Plan
(IPCAP) to be implemented in parallel with the project, to address the worst polluting industries. These
investments would be non-Bank financed. This requirement would be incorporated in the legal agreements.
(vi) For hazardous waste management, the use of incinerators was considered during the early stages of
project preparation. Incineration of some types of hazardous wastes may be appropriate including facilities
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such as cement kilns, which have high temperature and long retention period. A hazardous waste
incinerator is located in Shenzhen and is used for specific wastes generated in Guangdong Province.
Therefore the need for a new waste incinerator was not clear. For inorganic hazardous wastes, however,
the most economical treatment solution is disposal in a safe landfill after some degree of
treatment/stabilization. The proposed hazardous waste landfill, with pre-processing facilities, is needed to
minimize transportation distances and maximize regional waste disposal levels.
2. Major related projects financed by the Bank and/or other development agencies (completed,
ongoing and planned).
Latest Supervision
Sector Issue
Project
(PSR) Ratings
(Bank-financed projects only)

Implementation
Development
Bank-financed
Progress (IP)
Objective (DO)
Urban environment including
Yunnan Environment Project
S
S
wastewater and solid waste
Urban environment including waste
Guangxi Urban Environment
S
S
water and solid waste
Project
Urban environment: wastewater and
Second Shanghai Sewerage
S
S
tariff reform policy
Project
Urban environment including
Shandong Environment Project
U
S
wastewater and district heating
Urban environment including
Shanghai Environment Project
S
HS
wastewater and solid waste
Urban environment including
Sichuan Urban Environment
S
S
wastewater and solid waste
Project
Urban Environment including
Chongqing Urban Environment
S
S
wastewater and solid waste
Project
Urban environment including
Hebei Urban Environment
S
S
wastewater
Project
Urban environment including
Liaoning Environment Project
S
S
wastewater and solid waste
River Basin Pollution Control including Huai River Pollution Control
S
S
wastewater and industrial pollution
Project
River Basin Pollution Control including Liao River Basin Project
S
S
wastewater and industrial pollution
Urban Transportation
Guangzhou City Center
S
S
Transport Project
Urban Development, including
Shanghai Urban Environment
S
S
pollution management and
Project (APL1)
environmental policies
Other development agencies
The Asian Development Bank and
ADB has had generally
various bi-lateral donors (Austria,
successful investment
Australia, Denmark, Finland, Germany, operations, and is currently
Japanese, UK) are active in urban
expanding its support to the
environment projects and sector policy urban sector in China. Other
dialogues/capacity building initiatives. donor agencies have reported
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satisfactory results with their
programs, although they are
pressing participating utilities to
give more attention to
institutional and financial
matters.
IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)
3. Lessons learned and reflected in the project design:
Since its first loan in 1985, the Bank has committed US$2.2 billion under 22 projects for water supply and
wastewater operations in China. A 2002 Operations Evaluation Department (OED) Report (China:
Review of the Bank's Assistance to the Urban Water Supply and Wastewater Sector, Report No. 24979)
rates the outcome of the Bank's assistance moderately satisfactory, its sustainability as likely, and its
institutional impact as modest. OED also rates both Bank performance and borrower performance
satisfactory. The key lessons learned and recommendations are:
l
the least-cost analysis of future Bank-financed projects should always include improved incentives
and support for water demand management;
l
tariffs in future Bank-financed projects should be set by the level of average incremental costs,
which signals future costs;
l
the recent policy of conditioning future Bank financing on the establishment of autonomous
wastewater companies be continued;
l
future Bank financing should give priority to cities and provinces that are willing to contribute a
larger share of planned investments from internal cash generation; and
l
the next generation of Bank sector projects should include private sector participation where there
is political support in favor of such participation.
All of these lessons and recommendations have been taken into account in conceptualizing the proposed
project.
4. Indications of borrower and recipient commitment and ownership:
Guangdong provincial and Guangzhou city commitment to the project is demonstrated by the accelerated
project preparation, creation of dedicated project management offices, and the identification of candidate
investment projects within an evolving strategic planning framework. Exceptional efforts have been made
by the GDPMO to promote inter-municipal environmental infrastructure component. The GDPMO has
taken the lead in guiding preparation of the overall strategic framework and the design of the proposed
project, while cities like Guangzhou, through their own PMOs, have spent considerable time and resources
preparing individual investments for funding under the proposed project. The GDPMO has shown
leadership in mobilizing teams of international consultants (with financial support from Canada, France
and Singapore) to assist with project preparation. Moreover, the GDPMO held a high-level conference,
chaired by the Guangdong Governor, in January 2003 to present the overall strategic framework and the
key aspects of the proposed project to key provincial and municipal authorities. The conference's goal was
to gain the Governor's and other participants support for the strategic approach to be followed under the
project. The GDPMO also published a series of articles in the Guangdong Finance periodical in order to
better promote the new project among cities in the PRD.
The Guangdong Provincial Government (GPG) has already commenced collaborative efforts with Hong
Kong to develop a framework for control of air and water pollution. Seven committees have been set up to
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address various related issues, and annual meetings are being held. Greater cooperation is now planned to
develop a comprehensive database of pollution sources in the PRD and South China Sea.
Further, Guangzhou has created a financially autonomous wastewater company to own and operate
existing and future wastewater assets. Guangzhou is also exploring options for Private Sector
Participation (PSP) in environmental service provision. It already has a Build, Operate and Transfer
(BOT) operation in a wastewater treatment facility and a sludge treatment plant, and a private service
provider operating a modern solid waste landfill. A private service provider will be selected to operate the
hazardous waste treatment center and landfill upon its completion.
5. Value added of Bank and Global support in this project:
The Bank brings considerable international experience, in particular in economic and financial analysis and
systematic consideration of alternatives. Bank assistance to Guangdong Province will also draw upon its
growing experience in addressing regional environmental issues, gained from urban environment projects
throughout China (including Hebei, Hubei, Jiangsu, Jilin, Liaoning, Shandong, Sichuan, Yunnan and
Zhejiang Provinces, and in the mega-cities of Beijing, Chongqing, Shanghai and Tianjin). In addition, the
Bank has addressed issues relating to water bodies and river resources and management, including the
clean-up of Dianchi Lake (part of the Yunnan Environment Project), the Huai River Basin in Anhui
Province, and the Liao River Basin in Liaoning Province.
Bank involvement should enhance the design and construction quality control of the physical investments,
and accelerate institutional and financial strengthening and training. The project will build on the past
experience of Guangdong Province and Guangzhou city, which have been sub-borrowers of the Bank for
major infrastructure projects.
E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)
1. Economic (see Annex 4):
Cost benefit
NPV=US$ million; ERR = % (see Annex 4)
Cost effectiveness
Incremental Cost
Other (specify)
Economic Benefits. After many years of neglecting pollution control, the PRD region is suffering from
serious pollution problems, especially from water pollution in key urban sections of the Pearl River. For
instance, the water quality of many urban sections of the river, especially the section in Guangzhou city, is
currently at Category V Standard (according to Chinese national regulations) meaning, amongst other
things, that the river is unfit for use as a drinking water source. Environmental costs are high.
In response to the urgent demand for the Pearl River clean-up, the GPG set up its long term environmental
objectives for the PRD to include achieving Category III Standard for water quality, which would allow the
river system to be used as a source of drinking water supply (with treatment). The investments proposed
under the project would provide environmental improvements and associated economic benefits to the PRD
at Guangzhou by improving river water quality. The benefits of the project have been identified, and cover
a wide range, from public health, amenities, land values, to agriculture and fishery. However, it is difficult
to put a value on incremental improvements in environmental quality and even more challenging to attribute
such improvements to specific interventions using cost-benefit analysis. Therefore, the cost-effectiveness
approach has been adopted in the analysis to enable the project to select the least-cost option towards
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achieving well-stated environmental goals in the Guangzhou city area of the PRD.
Project investment selection has been based on several alternative designs, and the least cost
design has been selected. A cost effectiveness analysis of the overall project and each individual
investment component has been prepared prior to appraisal. The economic viability of each
component is based on least cost towards achieving specific water quality or other environmental
objectives. Estimates were made for each component of the net present values of project costs
(NPV), average incremental cost (AIC), financial internal rate of return (FIRR) and affordability.
The component designs with lowest NPV and AIC have been selected to minimize any economic
subsidy and ensure that tariffs are affordable, especially to the lowest income groups.

2. Financial (see Annex 4 and Annex 5):

NPV=US$ million; FRR = % (see Annex 4)
The base cost estimates of the project reflect preliminary engineering designs and price levels prevailing in
December 2003. The unit prices were derived from the following sources: (a) quotations obtained from
manufacturers and suppliers; (b) prices of goods and works from recent contracts; and (c) construction
costs according to prices published by the Central and Guangdong Governments, all adjusted for inflation.
Experience gained from recent sector operations reveal that bid prices have been consistently around 60
percent of estimated costs, resulting in loan savings and excessive commitment charges. The primary
reason for this disconnect is attributed to the use of proforma unit prices guidelines provided in the
provincial cost schedules. Therefore, adjustments have been made to the proforma unit rates to reduce the
disconnection referred to above.
Physical contingencies have been applied to base costs, as follows: civil works, equipment and materials,
technical assistance and training --10 percent. Project management and engineering overhead costs of 10
percent are also included. Price contingencies have been applied to expenditures at projected global foreign
and local inflation rates, as follows: local: 1.6 percent in 2004; 2.5 percent in 2005; 2.3 percent in 2006;
2.1 percent in 2007 and thereafter; foreign; 0.9 percent in 2004; 2.0 percent in 2005; 1.8 percent in 2006;
1.5 percent in 2007; 1.3 percent in 2008 and thereafter. Base costs have been converted at Y8.00/$1 and
the dollar/yuan exchange rate has been assumed to vary in order to maintain purchasing power parity.
The financial objectives set by GM for Guangzhou Sewage Treatment Company (GSTC) are to achieve
full cost recovery on its operations. GSTC increased its tariffs by 133 percent in January 2003, to
Y0.70/m³ towards meeting the financial objectives for 2003. Financial projections have been completed for
GSTC indicating the levels of tariffs required annually to meet the stated objectives. However, in practice,
wastewater (and water) companies' tariffs are adjusted only every two or three years, taking into account
the tariff requirements of other utilities, e.g., power, gas and telephone. It is possible, therefore, that in the
intervening years between tariff adjustments, the utilities may not be able to meet their annual targets. In
such eventualities, the agencies' operating revenues would need to be supplemented from the general
revenues of the parent municipality in order to remain financially viable. Hazardous waste management
services have traditionally been funded from the general revenues of local governments. However, where
individual users of the services have been identified, local governments have, as a policy matter, charged
such users for the services provided. Local governments expect to rely increasingly on user fees and
charges to finance these services in the future. Under the project however, charges would be introduced
gradually for treating hazardous wastes. This approach is necessary initially, to encourage enterprises
producing hazardous wastes to bring the wastes to the facility rather than dispose them in an
environmentally unsafe manner. Under the Inter-municipal Environmental Infrastructure component,
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participating cities, districts and towns would commence charging tariffs or fees one year after
commissioning of the shared investments. The objective would be to achieve full cost recovery over time
for the services provided. The Guangdong Environmental Protection Bureau (GDEPB) would be
responsible for the water quality monitoring and the information systems component, and would rely on
government subventions to fund their capital and operating budgets.

Fiscal Impact:
Provincial fiscal on-budget receipts and expenditures in 2003 totaled about Y1,322 billion equivalent) and
Y1,673 billion equivalent), respectively. The central government, in keeping with the current fiscal
arrangements between the central and provinces, provides annual transfers to Guangdong. Taken together,
Guangdong enjoys a modest surplus. Receipts and expenditures are both projected to grow at about 10
percent per year in current terms. GPG expects to pass on about 85 percent of the Bank loan to
Guangzhou Municipality (GM) and its sub-borrowers. Should GM and its sub-borrowers be unable to
fulfill their obligations, GPG would have no difficulty in covering debt service through its own resources as
the debt service represented by the project is small compared to total provincial receipts. GPG would
provide all funding not met by (a) the proceeds of the Bank loan, (b) municipal contributions, and (c)
funds, if any, generated internally by the implementing agencies. Guangdong Finance Bureau (GFB) would
independently assess Guangzhou's ability to generate the required counterpart funds from assured sources.
3. Technical:
The following issues would be critically examined during project preparation to develop least-cost
sustainable investments to be financed under the proposed project:
(a)
The far-field impact of wastewater discharges to the PRD River system would be examined
through computer modeling, for the whole river system, and the near field conditions for larger cities such
as Guangzhou. The water modeling would also be used to help determine the appropriate treatment
process and levels in order to optimize the environmental benefits of the proposed treatment plant
investments. Water quality modeling has been done by an International consulting firm (using Danish
trust funds) and a local Design Institute.
(b)
An important planning and technical issue is to develop least-cost solutions for environmental
investments in the PRD. Regional planning approaches would be used to rationalize the current planning
of environmental infrastructure, to avoid the proliferation of environmental infrastructure, specifically,
wastewater treatment plants. The provision of regional, shared and managed infrastructure facilities
would be seriously examined. This will also include a study of institutional models for construction and
management of shared facilities across jurisdictions. The findings from this activity would be used to
influence and revise GPG's plan to construct some 162 wastewater treatment plants in its PRD Clean-up
Program at a cost of over $5 billion.
(c)
Use of tunneling as an option for large conveyors to transport wastewater flows designed on the
basis of shared management, or for conveying downstream of cities, with lower levels of treatment.
(d)
Under the hazardous waste component, three issues would be addressed: the design of a treatment
plant for hazardous wastes, physio-chemical treatment and landfill; planning for sufficient disposal
capacity within Guangzhou municipality; the siting of the treatment plant, and a secure landfill site from
an environmental perspective.
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4. Institutional:
4.1 Executing agencies:
The proposed wastewater company of Guangzhou ­ Guangzhou Sewage Treatment Company (GSTC) ­
would be a self-funding, self-accounting state-owned enterprise. Its formation, prior to appraisal,
represents a major step in utility reform, consistent with stated national policy, and a model for the rest of
Guangdong Province. The staff of GSTC would be transferred from Guangzhou's existing municipal
engineering administration department responsible for sewerage and drainage services. Therefore, while
GSTC would start with operations experience, it would as yet lack a "corporate" culture. It would own
and operate all existing and proposed investments in the wastewater sector in Guangzhou City. The
Guangzhou Tunnel Development Company (GTDC) would implement the wastewater component on
GSTC's behalf. GTDC has extensive experience in implementing large works in Guangzhou and has
strong management and supervision capabilities. However, all procurement contracts would be signed by
GSTC, as well as the borrowing, and repayment of World Bank loan proceeds. The Guangzhou
Hazardous Waste Management Center (GHWMC) would implement the hazardous waste management
component. The Inter-municipal Environmental Infrastructure component would be implemented by
existing sanitation departments of the respective municipal governments and/or towns. It may not be
appropriate for a participating district or town to establish a separate wastewater company such as the
Guangzhou Sewage Treatment Company. In such cases, the Bank would accept wastewater operations
being retained in the existing drainage department provided that the accounts for the wastewater operations
are separated from the other activities of that department and maintained on a commercial (i.e. accrual)
accounting basis. This would enable the district or town to establish the true cost of the service and bill
accordingly to achieve full cost recovery. The Guangdong Environmental Protection Bureau (GDEPB)
would implement the environmental water quality monitoring and management information systems
component, through its Guangdong Environmental Monitoring Center. GDEPB is also the executing
agency for GEF-supported activities to design and implement an animal waste reduction program, under a
parallel project supported by the GEF). The water quality testing program will also observe this program's
effectiveness and be integrated with GDEPB's institutional development program and the regionally
cooperative data collection and sharing approach. All implementing agencies would benefit from technical
assistance to be provided under the project to help them improve, as necessary, their accounting and
management information systems, again stressing the positive steps taken and planned in utility reform and
underpinning tangible moves to market pricing.
4.2 Project management:
The GDPMO, working closely with the Planning, Construction, Environment, Finance commissions and
bureaus, and other concerned agencies, has arranged for the project preparation work to be completed to
the satisfaction of GPG and the Bank. The GDPMO would be strengthened and the personnel mix adjusted
to reflect the needs of the implementation and construction phases of the project. Guangzhou has formed,
budgeted and staffed its own project management office (GZPMO), which has been involved throughout
project formulation and preparation; it is expected these offices would significantly enhance project launch
and subsequent implementation.
4.3 Procurement issues:
The GDPMO, which has considerable experience in preparing and executing World Bank-financed
projects, would coordinate and supervise project procurement to be carried out by the three principal
project implementing Agencies - the Guangzhou Tunnel Development Company (GTDC) on behalf of
GSTC, the Guangzhou Hazardous Waste Management Center (GZHWMC) and Guangdong
Environmental Monitoring Center (GEMC). All three agencies have experience of procurement using local
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procedures. A specific department in each agency has been established to be responsible for project
implementation, including procurement. There is a filing system in each agency for procurement records.
As required by national regulations, GDPMO will select a procurement agent for ICB procurement, in
accordance with the procedures specified by the Ministry of Finance (MOF), National Development and
Reform Commission (NDRC) and the People's Bank of China.
The GDPMO will prepare a procurement manual to specify the responsibilities of all the units involved in
project procurement and working procedures.
Each implementing agency will prepare an action plan to strengthen its procurement capacities. GDPMO
will prepare an action plan, consolidating individual action plans from each agency. Activities to be carried
out would include training, visits to similar projects, and learning from the experience from other World
Bank-financed projects managed by GDPMO.
4.4 Financial management issues:
No major issues were identified during preparation of the Financial Management assessment. (See Annex
14)
5. Environmental:
Environmental Category: A (Full Assessment)
5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including
consultation and disclosure) and the significant issues and their treatment emerging from this analysis.
An extensive environmental assessment (EA) has been carried out for the project. During its
preparation and evaluation Chinese national procedures and those required by the Bank Group
were diligently followed. Comprehensive environmental assessment (EA) documents comprising
an Environmental Assessment Report and Executive Summary have been prepared, incorporating
Bank comments, reviewed and found satisfactory. An Environmental Management plan (EMP) is
an integral part of the EA process. A detailed Annex covering environmental assessment and
impact, together with mitigation measures, has been prepared (Annex 13). The EA documentation
well reflects the findings of the Chinese EAs on the various components as well as the preparation
and appraisal mission findings.
Potential Impacts: The environmental impact of the project is on balance substantially positive and
the benefits greatly outweigh the negative impacts. The Guangzhou wastewater component will
greatly increase wastewater collection and treatment rates within the municipality area and will
improve considerably water quality both in the main Pearl River reaches in the Guangzhou urban
area and in the urban tributaries. The hazardous waste component will substantially increase the
regional availability of facilities for hazardous waste management and provide a new
environmentally secure disposal route for the categories of waste treated.
The principal potential adverse impacts during construction of all components include excavation,
spoil disposal, noise and disruption of urban services. Operational phase impacts of wastewater
treatment include the need to dispose safely of the increasing quantities of wastewater treatment
plant sludge and possible poor water quality in the mixing zones of treated wastewater outfalls.
The principal adverse impacts of the operational phase of the hazardous waste component are the
road transport of hazardous materials and possible generation of leachate at the landfill.
Mitigation Measures: The EA specified the appropriate mitigation measures, environmental
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monitoring plans, institutional arrangements and training and equipment requirements together
with cost estimates for the implementation of the mitigation measures and monitoring plans.
Major mitigation measures for the hazardous waste management component include provisions of
a drainage control system to prevent the rain water from entering into the landfill, a rainproof
shed during operation and canvas on waste during rain time to prevent rain water from contacting
the waste, an impermeable site liner to prevent leachate from infiltrate into the ground and the
facility to treat any leachate generated and collected from the landfill. In addition, extensive
training will be provide to operators of the hazardous waste disposal facilities to ensure the
operators are fully skilled with modern leachate control and treatment technologies and facilities
adopted by the landfill. A comprehensive monitoring program will be implemented during the
operational phase for groundwater, as well as surface, ambient air quality and noise to detect
timely any adverse impacts from landfill operation to allow remedial and corrective actions.
The long-term proposals for sludge disposal for Guangzhou are based on centralized treatment of
dewatered sludge with possible uses of treated sludge product in agricultural/horticultural and/or
for brick manufacture. Although domestic wastewater treatment plant sludge are understood to be
non-hazardous due to the low heavy metal contents as a result of the industry relocation away
from the serviced areas, there are uncertainties on related to the sustained market access and/or
technologies for brick making and other sludge re-use products. Until such time as the markets to
support these uses are sufficiently developed, disposal will be primarily by environmentally secure
landfill. Water quality impacts of treated wastewater discharges are minimized by the location of
treatment plants in relation to critical river water uses. Construction phase impacts will be
minimized through controls of working practices and operational impacts through careful siting of
facilities with appropriate buffer zones and controls on noise.
Public Consultation and Feedback: Local people were consulted twice during the EA process,
once at the EA TOR stage and the other time during the draft EA report preparation, in
accordance with the requirements of OP 4.01. The approaches used for public consultation were:
consultation meetings with local government representatives and questionnaire analysis of public
opinions supplemented by interviews, focused on the public to be directly impacted by the various
project components. Details of these activities with dates, participants, public notifications and
locations are provided in tabular form in Annex 13. Feedback from the public consultation
program has been collected by the EA team, which in conjunction with design engineers as may
be necessary has addressed the concerns and issues raised by the public in the final EA report and
EMP.
Information Disclosure: The EA Report and Executive Summary were submitted to the Bank in
November 2003, as were draft Resettlement Action plans (RAPs). Both reports were reviewed
and found to be satisfactory. Copies were submitted to the Bank group information center in
December 5, 2003 and in Project files (Annex 8). Notice of availability of these reports was
publicized in local newspapers of the project city in early January, 2004, prior to the appraisal
completion date. Details of documents, disclosure dates and locations are provided in tabular form
in Annex 13.
5.2 What are the main features of the EMP and are they adequate?
The EMP includes plans for mitigation of the above impacts of the project components, the
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implementation of which will be the responsibility of the implementing agencies, principally
GSTC, GTDC and GZHWMC. The EMP includes detailed and comprehensive environmental
monitoring plans of the impacts of the project and the effectiveness of mitigation measures during
both the construction and early operation phases. These overall monitoring will be the
responsibility of the GDPMO and the GZPMO. The EMP also contains training programs for
environmental management staff and key component facility operators. The training programs are
also to be responsible by GDPMO and GZHWMC. An organizational chart is included in the
EMP to identify the agencies/organizations to be involved in environmental management in this
project and their specific responsibilities.
During the construction phase, the contractor will be requested contractually to prepare a detailed
Management Plan for Spoil Transportation and Disposal for PMO-ESD review and approval prior
to the start of construction. During the operational phase, the EMP recommends the city to
prepare an Environmental Management System Pan for the sludge management center to ensure
the operation of center and the eventual reuse or disposal of treated sludge be performed in
accordance with the objective of the project and local regulations.
Details in Annex 13. Specific action plan prepared for Guangzhou Sludge Management.
5.3 For Category A and B projects, timeline and status of EA:
Date of receipt of final draft: January 2004. See Annex 13


The Guangzhou Research Institute of Environmental Protection (GRIEP), which holds a Class A
credential for EA, was engaged to prepare the EA for the proposed Guangzhou wastewater
treatment and the hazardous waste disposal facility components, as well as the EMP and EA
Summary. Its work was supported by international consultants for design review and advisory
services, who have substantial experience in preparing EAs for similar Bank-funded projects in
China. GDPMO has already submitted a draft EA summary and an Environmental Management
Plan for the project construction for distribution to the Banks' Executive Directors.
5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA
report on the environmental impacts and proposed environment management plan? Describe mechanisms
of consultation that were used and which groups were consulted?

Consultations were undertaken in three ways: bulletins to the press, public opinion questionnaires
surveys and stakeholder meetings. The questionnaires surveys covered residents and community
committees and the meetings with the public and public officials of relevant agencies which have a
stake in this project. The public consultation results show that the project is well received and
supported by the public.
Details in Annex 13.
5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the
environment? Do the indicators reflect the objectives and results of the EMP?
Project environmental impact monitoring indicators (given in Annex 1) have specifically been identified
within the project and investments (in equipment and training) included in project financing to ensure
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attention to environmental issues. The project includes strengthening of a number of institutions in the
water and environmental services sectors in Guangzhou.
See also Annex 13.
6. Social:
6.1 Summarize key social issues relevant to the project objectives, and specify the project's social
development outcomes.
The key adverse social impacts of the project are largely related to land acquisition and demolition of
structures for different components of the project. In accordance with local laws, regulations and the
World Bank OP 4.12 on Involuntary Resettlement Action Plans (RAP) have been prepared for the different
components, including wastewater treatment plants and landfills, and a resettlement policy framework has
been prepared for all project components. The RAPs are based on detailed census of the affected people,
inventory of affected assets, socioeconomic surveys and extensive consultations with the project-affected
people.
The different components of the project would require 1940 mu (1 mu=0.667 ha or 0.1648 ac.) of land,
demolition of 1,095,895 m2 of houses, relocation of 1095 enterprises, and 972 shops. These would affect
3,361 people due to land acquisition and 37,034 people in 10,557 households due to house demolition.
Both cash compensation and replacement housing would be offered to those who lose their residence as
well as affected enterprises. They could choose either one of them. For the employees whose employment
would be affected temporarily, cash compensation would be paid for their income losses. The RAPs detail
the census, inventory, project resettlement policy, compensation rates and budget, compensation and
rehabilitation programs, institutional and monitoring arrangements.
A retroactive review was done for the related resettlement activities which have already been completed
(e.g., Liede Wastewater Treatment Plant). That review provided detailed information of the number of
affected people and the livelihood rehabilitation status.
The Resettlement Policy Framework, which is a key part of the RAP, has been prepared in
accordance with local laws, regulations and World Bank OP 4.12 on Involuntary Resettlement for
all project components.
Another key social issue of the project is the affordability of improved wastewater services,
especially among glower income households. A willingness-to-pay and affordability survey has
been conducted by Zhongshan University. The findings of the survey would be integrated into the
new tariffs for wastewater services for Guangzhou to ensure they are affordable.
6.2 Participatory Approach: How are key stakeholders participating in the project?
The project was prepared in a participatory manner. The GDPMO, with its team of international
and national consultants, have organized various consultative meetings with representatives of the
provincial and municipal governments to apprise them of the environmental and development
issues. These have facilitated participatory consultations, garnering stakeholder support for the
project concept, and educating these stakeholders beforehand on their roles and responsibilities in
project execution.
Local consultants have been hired for carrying out social surveys of project affected people,
potential beneficiaries and user of project services. The participatory approach for the
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resettlement aspects of the project has been dealt with in the RAP, following Chinese and Bank
procedures and guidelines closely.
Consultation will continue with communities in the areas directly affected by the project works.
All affected households and communities in the project areas have been identified through
socio-economic surveys. Project information, including resettlement policies, has been provided to
the affected populations through different channels. They are extensively consulted and
participated in the preparation of the resettlement and rehabilitation programs.
6.3 How does the project involve consultations or collaboration with NGOs or other civil society
organizations?
Local government officials, non-government community organizations and business associations
in the areas affected have been consulted and participated in the resettlement program
preparation. Households directly impacted by works have been surveyed. Neighborhood meetings
have been organized to solicit views and concerns as well finalizing the resettlement program. The
RAPs contain provisions for continued public and stakeholder consultation, including
communities and people to be affected by the project directly, particularly as some of the project
components are further and more specifically defined.
6.4 What institutional arrangements have been provided to ensure the project achieves its social
development outcomes?
A financially autonomous consumer/beneficiary-oriented entity has been formed that would, in
line with current China policy, be responsible for project implementation and urban service
delivery. This would enable a strong consumer orientation, since consumers would be in direct
contact with the service provider due to regular payment of tariffs.
6.5 How will the project monitor performance in terms of social development outcomes?
Internal and external monitoring would be undertaken continuously throughout the
implementation period. An independent monitoring organization has been identified in the RAP to
monitor implementation and performance of the RAP. Detailed institutional arrangements are
included in the RAPs.
7. Safeguard Policies:
7.1 Are any of the following safeguard policies triggered by the project?
Policy
Triggered
Environmental Assessment (OP 4.01, BP 4.01, GP 4.01)
Yes
No
Natural Habitats (OP 4.04, BP 4.04, GP 4.04)
Yes
No
Forestry (OP 4.36, GP 4.36)
Yes
No
Pest Management (OP 4.09)
Yes
No
Cultural Property (OPN 11.03)
Yes
No
Indigenous Peoples (OD 4.20)
Yes
No
Involuntary Resettlement (OP/BP 4.12)
Yes
No
Safety of Dams (OP 4.37, BP 4.37)
Yes
No
Projects in International Waters (OP 7.50, BP 7.50, GP 7.50)
Yes
No
Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)*
Yes
No
7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.
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An EA, including an Environmental Management Plan (EMP), and RAPs have been prepared by GDPMO
in conjunction with Guangzhou Municipality and these would been appraised for their compliance with
Bank policies and guidelines, and found satisfactory.
F. Sustainability and Risks
1. Sustainability:
The project is expected to be sustainable in three respects: (a) financially; (b) institutionally; and (c) in
achieving its development objectives. Tariff reforms would enhance the financial viability of municipal
service providers. Institutionally, the creation of a financially autonomous wastewater company and
continued technical assistance for the participating institutions would strengthen utility management and
water quality monitoring capacity. The hazardous waste facility is not expected to be financially viable at
the beginning of its operation because of initial lowload factors; the culture has to be developed for
hazardous waste producers to bring their wastes to the facility. Therefore charges would be kept low
initially, and will be increased in time when the practice is well established. Finally, the project addresses
an issue of high priority to both the local and the national governments: vital self-interest in achieving
environmental conditions necessary for sustained economic growth, which would be a strong motivation to
continue implementing the long-term environmental improvement program, and water resources
management.
1a. Replicability:
The project has considerable local, national, regional and perhaps even global replication potential.
Locally, the fact that it is the first phase of a long-term environmental program means that there is already
a plan and a commitment to replicate its successes in the PRD through its participating institutions.
Nationally, there is enormous scope in China's many other large metropolitan areas for replicating its
policy and institutional reforms, its pioneering concept of joint municipal wastewater and solid waste
treatment facilities, and its initiative to expand the role of private-public and private-private partnerships in
waste management investment and service provision. National replication will be facilitated by the Chinese
Government and by the World Bank's East Asia Infrastructure Operations Unit. The latter will also apply
the lessons learned to its regional portfolio of environmental management projects and disseminate them
globally through the World Bank's Infrastructure Operations Network.
The World Bank is fully committed to helping design and deliver a comprehensive and long term assistance
strategy for environmental management of the Pearl River Delta and this is the first project in an expected
series of investments in water quality improvement. Assistance would be both broadened to neighboring
regions and deepened to provide follow on investments such as tertiary waste water treatment and industrial
waste water minimization. Project funds, supplemented by GEF funds will assist in the development of a
long term aggressive water quality improvement program which could be a model for other countries that
share the South China Sea. In order to help ensure the likelihood of this replicability, project preparation is
being coordinated with the UNDP/GEF/IMO PEMSEA and the UNEP/GEF South China Seas regional
program.
The projects' replicability is already evident, as other Chinese regions, e.g., Tai Basin Urban Project, are
coming forward with projects that include inter-municipal cooperation. Although GEF funds are limited
vis-a-vis the enormous environmental infrastructure requirements, they will provide a catalytic and
illustrative role. The replication strategy includes regional and international workshops to discuss plans and
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progress. The Bank will also play an active role by sharing project experience with senior government
officials, and through publication of project experience in readily available 'public information documents'.
2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1):
Risk
Risk Rating
Risk Mitigation Measure
From Outputs to Objective
Lax enforcement of pollution control
M
Preparation, and implementation of a
policies and regulations will diminish
satisfactory Industrial Pollution Control Action
impact of project investments on river
Plan to address the worst polluters will be a
water quality.
legal requirement of the project (even though not
funded under the project).
Individual project designs are
N
Bank's preparation team will closely review
inappropriate or over/under dimensioned.
project designs and estimated costs proposed by
participating cities and the international
consultants to ensure that over design of
facilities will be avoided. Also, future service
demands of unregistered population will be
taken into account.
Provincial and city-level governments will
M
Bank preparation team and international
not support proposed shared
consultants will inform the GDPMO and
infrastructure management, least cost
municipalities of the advantages of shared
solutions or location of wastewater
jointly-managed infrastructure. Project may not
facilities.
include components for other smaller cities, if
the criteria are not met. During project
preparation, least cost and environmentally safe
solutions will be developed.
Provincial and city-level authorities do not
N
Creation of financially autonomous companies,
continue to support sector reforms related
and implementation of tariffs to meet the
to creation of autonomous utilities and full
projects' financial objectives will be a condition
cost recovery.
of project appraisal.
From Components to Outputs
M
Financial and management performance of the
Autonomy of wastewater and hazardous
new companies will be monitored during project
waste companies is not realized.
implementation, to ensure compliance with loan
conditions. Changes will take place gradually,
and Bank's continued association with GPG in
this sector could assure this outcome.
Risk of damage to liner in hazardous
M
Extra precautions in the design and construction
waste landfill during operation.
of the liner, safe operation through an
experienced operator procured through a
management contract, and setting up a
monitoring system with a system of boreholes.
Jointly managed utility services will not be
M
At least one example of jointly-managed
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realized in a cost effective fashion because
infrastructure will be demonstrated under the
of political or other resistance.
project, along with adequate technical
assistance.
Insufficient interest by provincial and
M
Realistic reforms will be agreed with GPG, and
local governments to carry out capacity
covenanted. Even with some initial resistance,
building and strategic studies, and then to
changes will come, as GPG and China are
implement appropriate reforms.
taking a number of measures to address
institutional problems that are remnants of the
past central planning system, in order to remain
competitive.
Overall Risk Rating
M
Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)
3. Possible Controversial Aspects:
Public reaction to (a) wastewater tariff increases to maintain the financial viability of the wastewater
company, and (b) introduction of fees and charges for hazardous waste disposal.
G. Main Conditions
1. Effectiveness Condition
·
Execution of subsidiary loan agreement between Guangzhou Municipality and Guangzhou Sewage
Treatment Company, satisfactory to the Bank.
2. Other [classify according to covenant types used in the Legal Agreements.]
Disbursement Condition
·
The signing of contracts by the Guangzhou Sewage Treatment Company with consultancy firms
for (i) institutional and financial technical assistance; (ii) construction supervision and quality control; and
(iii) design review and certification, as a condition of disbursement of the civil works category;
·
The signing of contracts on behalf of the Guangzhou Hazardous Waste Management Center with
consultancy firms for (i) design review and certification, and construction supervision services; and (ii)
regulatory and institutional framework, and bid document selection of operator for the facility, once
completed, as a condition of disbursement of the civil works category;
·
The signing of contracts on behalf of the Guangdong Environmental Protection Bureau with
consultancy firms for (i) database development and management; (ii) automatic monitoring stations' (AMS)
data collection; (iii) pollution source investigation, research and data mining; (i) geographic information
systems' (GIS) development; (v) database software; (vi) shared air and water quality database on
PRD-South China Sea pollution (Guangdong - Hong Kong) including data sharing costs; and (vii) pollution
monitoring information sharing in Pearl River stretches near Guangzhou, as a condition of the goods
category; and
·
Execution of subsidiary loan agreements between municipalities/districts/towns and prospective
implementing agencies (to be determined), for the inter-municipal infrastructure component), satisfactory to
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the Bank.
Implementation Covenants
At negotiations, assurances would be obtained from GP that it would:
·
implement or cause to be implemented the Institutional Strengthening and Training (IST)
component in accordance with a schedule acceptable to the Bank and discuss and agree any
revisions with the Bank ;
·
carry out or cause to be carried out the resettlement of persons affected by the project in a manner
and according to the Resettlement Action Plan satisfactory to the Bank;
·
cause the project agencies to carry out, in a manner satisfactory to the Bank, the findings of the
Environmental Assessment and related implementation program;
·
maintain the Guangdong Project Management Office (GDPMO) and the Guangzhou Project
Management Office (GZPMO) throughout implementation, with functions and responsibilities
satisfactory to the Bank, and with competent staff in adequate numbers for the duration of the
project; and
·
make available a GEF grant of Yuan10 million for each sub-project for implementation of the
inter-municipal environmental infrastructure component, as agreed with the Bank;
·
carry out or cause to be carried out the time-bound Industrial Pollution Control Action Plan
(IPCAP) in accordance with a schedule acceptable to the Bank and discuss and agree any revisions
with the Bank.
·
by March 31, 2005, arrange for the signing of a contract with a consultancy firm for updating of
the PRD Wastewater Master Plan (i.e., PRD Clean-up Campaign), with a detailed study of the
Foshan Wastewater Master Plan.
Financial Covenants
At negotiations, assurances would be obtained from Guangdong Province (GP) that it would:
·
cause Guangzhou Municipality to onlend part of the loan proceeds to the Guangzhou Sewage
Treatment Company, on terms and conditions satisfactory to the Bank;
·
arrange to pass on the proceeds of the GEF grant to (i) the Guangzhou Hazardous Waste
Management Center for the Hazardous Waste Component for preparation of the regulatory
framework and bid document to select a private operator for the treatment center and landfill; (ii)
selected cities, districts or towns for inter-municipal environmental infrastructure development for
the grant incentive; and (iii) the Guangdong Environmental Protection Bureau for water quality
monitoring, preparation of a management information system, software, website development,
pollution monitoring in the Guangzhou river section, and updating of the PRD Wastewater Master
Plan, and development of a database for air and water pollution in the PRD and South China Sea,
in collaboration with Hong Kong SAR;
·
operate financial matters in accordance with the guidelines set out in the FMS Manual, and arrange
for the following annual audits to be submitted to the Bank within six months after the end of the
financial year, commencing with fiscal year 2004: (a) audit of the project accounts maintained by
(i) the Guangdong Project Management Office (GDPMO), (ii) the Guangzhou Tunnel
Development Company (GTDC); (iii) the Guangzhou Hazardous Waste Treatment Center
(GHWTC); (iv) the Guangdong Environmental Protection Bureau (GDEPB); (v) audit of the
Special Account; (vi) audit of statements of expenditures (SOE); and (vii) audit of the financial
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statements of the Guangzhou Sewage Treatment Company (GWTC);
·
commencing with fiscal year 2005, cause (GSTC) to (a) produce revenues sufficient to cover
operations and maintenance costs (including depreciation), and the amount by which debt service
requirements exceed the provision for depreciation; and (b) incur no additional debt without the
Bank's agreement, unless a reasonable forecast shows that the entity would have a debt service
coverage of at least 1.3 times;
·
cause GSTC to prepare, before September 30, 2005, and in each of the following fiscal years,
forecasts satisfactory to the Bank, (a) to review whether it would meet the covenanted requirements
set forth above in such year and the following fiscal year, and (b) to furnish the results of such
review to the Bank; if any such review would show that the entity would not meet the requirements
set out above, the entity would take all necessary measures, including adjustments to the structure
of its tariffs and charges, in order to meet the requirements; and
·
cause Guangzhou Hazardous Waste Treatment Center (GHWTC) to complete, not later than July
1, 2006, a study of the fees and charges needed for full cost recovery of hazardous waste disposal
services to industrial and commercial users, the report of that study shall include a detailed
time-bound action plan acceptable to the Bank, enabling such recovery commencing January 1,
2007, and thereafter implement such action plan taking into account the Bank's comments; and
·
cause cities, districts or towns participating in the Inter-municipal Environmental Infrastructure
component to commence collecting tariffs, fees or charges one year after commissioning of the
shared investments with the objective of achieving full cost recovery over time for the services
provided.
Reporting and Monitoring
At negotiations, assurances would be obtained from GP that it would:
·
cause each implementing agency to prepare semiannual project progress reports; the GDPMO
would then send a consolidated report to the Bank by the thirtieth of the following month,
commencing January 2005; and
·
carry out with the Bank a mid-term review of the project by June 30, 2007, and implement, or
cause to be implemented, agreed recommendations.
H. Readiness for Implementation
1. a) The engineering design documents for the first year's activities are complete and ready for the start
of project implementation.
1. b) Not applicable.
2. The procurement documents for the first year's activities are complete and ready for the start of
project implementation.
3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory
quality.
4. The following items are lacking and are discussed under loan conditions (Section G):
I. Compliance with Bank Policies
1. This project complies with all applicable Bank policies.
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2. The following exceptions to Bank policies are recommended for approval. The project complies with
all other applicable Bank policies.
Thomas L. Zearley
Keshav Varma
Yukon Huang
Team Leader
Sector Manager/Director
Country Manager/Director
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Annex 1: Project Design Summary
CHINA: Guangdong Pearl River Delta Urban Environment Project
\
Key Performance
Data Collection Strategy
Hierarchy of Objectives
Indicators
Critical Assumptions
Sector-related CAS Goal:
Sector Indicators:
Sector/ country reports:
(from Goal to Bank Mission)
Facilitate rural-urban
Growth in employment and
Occasional Bank urban and
Future urban development,
transition underway in China incomes in urban areas.
environmental reports.
service delivery and
by helping to enhance the
environmental conditions
productivity of cities, where
Quality and service coverage Bank urban sector supervision encourage investment and job
the overwhelming majority of levels of environmental
missions.
creation in Chinese cities.
jobs will be created, and the
infrastructure in urban areas.
quality of urban environment
Expanded investments in
and living conditions.
environmental infrastructure
and ongoing policy and
institutional reforms will lead
to sustainable improvements
in environmental quality.
GEF Operational Program:
Outcome / Impact
Indicators:
Reduce pollution loading to
Increased volume of
Operational reports
Local governments have
the Pearl River Delta and
wastewater treated
political will to share common
South China Sea through
(190,000,000 m3) and solid
facilities.
increased inter and
waste disposed (10,000,000
intra-municipal
tonnes).
environmental services
delivery.
Improve water quality data for Regional agencies collecting EPB management reports,
Commitment and sufficient
PRD and South China Sea.
and sharing relevant water
international conference.
financial allocations by
quality data.
Guangdong EPB and
neighboring jurisdictions.
Reduce pollution loading to
Increased volume of
Local governments have
the Pearl River Delta and
wastewater treated
Operational reports
political will to involve the
South China Sea through
(60,000,000 m3) and solid
private sector in
increased private sector
waste disposed (5,000,000
environmental infrastructure.
participation in environmental tonnes).
services delivery.
Output from each Global
Output Indicators:
Component:
Larger volume of least cost
Two or more contiguous
Municipal cooperation in
municipal wastewater and
municipalities/cities using
Operating and financial
constructing and providing
waste management
shared facilities.
reports
environmental service
investments constructed and
delivery of reduced capital
operated through increased
and operating cost.
inter and intra-municipal
cooperation.
Strengthening South China
Reliable and relevant water
EPB management reports,
Relevant data will be
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Sea regional water quality
quality data readily available website operations, public
generated on a timely basis
data monitoring system.
and shared.
documentation.
and readily shared with the
public and other interested
Catalyzing regional, e.g.
Rate and scale of pollution
Through regional conferences jurisdictions and agencies.
Hong Kong and Macau SAR, reduction progress in
and international water
pollution reduction measures. neighboring jurisdictions.
quality reporting.
Political will to reduce
pollution will be maintained
and expanded across
neighboring jurisdictions.
Larger volume of least cost
At least one additional facility Operating and financial
Inter-municipal cooperation
municipal wastewater and
funded or operated in part
reports.
in constructing and providing
waste management
with private sector partners
environmental service
investments constructed and
delivery of reduced capital
operated through increased
and operating cost.
private sector involvement.
Project Development
Outcome / Impact
Project reports:
(from Objective to Goal)
Objective:
Indicators:
Improve the quality of the
Percentage of samples from
Annual project reports with
Provincial and local
environment in key cities in
key PRD rivers meeting
performance indicators.
authorities have political will
the PRD, by following an
Chinese surface water quality
and regulatory tools to ensure
integrated regional planning standard (of Class III)
that all major sources of
approach, in order to facilitate increased gradually.
pollution are effectively
continued economic and
controlled, and that lax
social development.
Annual Review.
enforcement does not
diminish impact of proposed
investments on river water
Enforcement of
Annual Review.
quality.
environmentally safe
manifesting, transporting and
Effective management and
treatment of hazardous waste.
financing continue beyond
project implementation into
Increased volume of
Mid-term Review.
operational phase.
hazardous waste handled and
disposed of in an
Implementation Completion
environmentally safe manner. Report.
Strengthened management
OED Sector Assessment
capacity of provincial and
Reports
municipal agencies
responsible for water pollution
control and hazardous waste
management.
Output from each
Output Indicators:
Project reports:
(from Outputs to Objective)
Component:
Improved and expanded
Increased percentage of
PMOs to monitor project Executing agency will have
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wastewater treatment
municipal and industrial
progress and submit
financial and technical
infrastructure in Guangzhou
wastewater intercepted and
periodic reports.
capacity to successfully
City.
treated to relevant Chinese
implement project
treated effluent discharge
Bank to conduct regular investments.
standard.
supervision missions.
A 90% increase in treatment
Joint review of project
of collected wastewater.
progress to take place
City authorities will support
least-cost technical solution or
Collection sewer networks
annually and at the
location of treatment plants
expanded to collect most of
project mid-term.
and discharge infrastructure.
the wastewater generated.
Individual project designs are
appropriate and not over
Increased percentage of total
designed.
generated wastewater load is
captured by the sewer system.
Increased percentage of load
captured receives appropriate
treatment.
Increased effectiveness of
treatment system in removing
pollutants.
Piloting of improved and
Establishment of shared
Provincial and city-level
expanded environmental
infrastructure facilities that
governments will support
infrastructure facilities
are planned, constructed, and
proposed shared infrastructure
constructed and operated on a operated in an integrated and
management, least cost
shared basis by more than one cost effective manner.
technical solutions or location
municipality in PRD region.
of treatment plants and
Increased percentage of
discharge infrastructure.
environmental infrastructure
services provided in a cost
effective and sustainable
fashion.
Improved and expanded
Increased proportion of
Local government support
hazardous waste treatment
hazardous waste generated in
sustained for proposed
facility for Guangzhou
the PRD collected, treated
technical solution or location
metropolitan area.
and safely disposed.
of hazardous waste treatment
facility, and for shared use of
A minimum 50% increases in
facilities.
hazardous waste safely
collected and treated in the
Local authorities are able to
Guangzhou Region.
create sufficient incentives,
and enforce regulations to
ensure that special waste is
safely transported to proposed
project facilities for disposal.
Enhanced water quality
Timely availability of reliable
Provincial authorities (EPB)
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monitoring systems and
water quality information for
will have adequate resources
capabilities in PRD.
decision-making purposes on
for staffing and operating the
investment priorities and
enhanced water quality
regulatory actions.
monitoring system.
Water quality information and
new systems used by
decision-makers
Strengthened institutional
Guangzhou wastewater utility
Provincial and city-level
arrangements for planning,
corporatized, number of
authorities continue to support
financing and managing of
regional/inter-municipal
sector reforms related to
wastewater treatment in PRD wastewater companies formed
creation of autonomous
region.
and financial situation of
utilities, full cost recovery for
municipal wastewater utilities
services, and piloting of new
participating in project
initiatives for inter-municipal
improved.
cooperation in provision of
municipal services.
Staff knowledge gained is
incorporated into professional
practice at Provincial and
municipal levels.
Project Components /
Inputs: (budget for each
Project reports:
(from Components to
Sub-components:
component)
Outputs)
Wastewater management
Construction of 1 wastewater Provincial and Guangzhou
Wastewater company in
in Guangzhou City
treatment plant and extension PMOs to prepare regular
Guangzhou City established,
of an existing one in
progress reports.
and facilities operated in a
Guangzhou City to increase
sustainable manner.
the total capacity by 400,000 PMO provides Bank with
m3/day --- $334.0 million.
periodic progress reports
which compare planned and
actual progress for each
project component in terms of
cost and physical works.
Monthly (or quarterly)
disbursement reports which
compare planned with actual
disbursements for each
component.
Hazardous Waste
Construction of landfill for
A company to manage special
Management in Guangzhou
treatment of about 10,000
waste treatment established in
metropolitan area.
tons/year of hazardous waste
Guangzhou City, and
in Guangzhou City and
operated in a sustainable

environs --- $24.6 million.
manner. Possibility for the

plant to accept such wastes
from nearby towns.
Environmental infrastructure Incentive-based lending for
Jointly managed water supply,
in other PRD towns. MOUs
groups of contiguous towns
or wastewater treatment
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have been signed for three
willing to construct shared
plants, or landfills or
subprojects between: Panyu
infrastructure (e.g., water
incinerators constructed, and
District Gardens Bureau and supply, wastewater collection
operated in a sustainable
Guangzhou Gardens Bureau; and treatment, solid waste
manner, under joint
Longgang District
landfills, etc.) --- $113.2
management by two or more
Government and Shenzhen
million.
towns.
Great Industrial Zone
Administration Commission;
and Foshan Chanchen District
Government and Nanhai
District Government.
Water Quality Monitoring and Installation of water quality
Provincial Environmental
Information System.
monitoring equipment, data
Protection Bureau has
collection and decision
comprehensive database of
support systems for the
water quality in PRD rivers,
Guangdong Province --- $11.5
and capability to effectively
million.
enforce pollution control.
Institution Strengthening and Consultant services for project
Sufficient interest by
Training.
implementation support,
Provincial and local
institutional strengthening,
governments to carry out
strategic studies and training
capacity building and
--- $8.6 million.
strategic studies, and to
implement appropriate
reforms.
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Project Performance Monitoring Indicators
The baseline and targets would be reviewed and updated during the Project Launch Workshop.
Indicators (Physical)
2004
2007
2009
Base
1. Wastewater Volume Treated (%)
2. Compliance with discharge standard (%)
3. Compliance with water quality objectives (%) in
Guangzhou PRD Area (%)
4. Quantity of hazardous waste treated and disposed of
(tons/year)
0
2004
2007
2009
Indicators (Financial)
Base
Wastewater tariffs implemented to meet financial
projections (Yuan per m³)
0.70
2.0
2.4
Hazardous waste fees and charges implemented to
cover costs of collection and disposal
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Annex 2: Detailed Project Description
CHINA: Guangdong Pearl River Delta Urban Environment Project
Project Objectives: Promoting a regional planning approach to environmental service delivery
to address the serious environmental problems of the Pearl River Delta* and the South China Sea,
is the primary development objective of the project. This would be achieved through support for:
(a) industrial and domestic wastewater management, and improved regional planning to develop
cost-effective strategies for wastewater treatment; (b) hazardous waste management; (c)
development of institutional models to cross traditional administrative boundaries for provision of
jointly-managed environmental infrastructure; (d) improved water quality monitoring, data
management, and data sharing; and (e) Guangdong-Hong Kong SAR initiatives to develop an
environmental management framework to control air and water pollution in the PRD and the
South China Sea.
Background: The economic importance of the PRD region is underscored by its capacity to
supply 70 percent of the gross provincial output. For the past few years, the growth in GDP
averaged over 14 percent per annum, with a contribution to GDP of Yuan 644 billion in 1999. Of
the municipalities in the PRD, Guangzhou showed the highest contribution to the GDP with Yuan
644 billion/year, and the highest average annual salary of Yuan 13,059. The PRD region is one of
the most populated areas in China. The permanent population in the area grew quickly over the
last decades not because of natural increases, but because of the massive in-migration.
Measures are now planned to address this problem in the larger municipalities. A hazardous waste
treatment facility exists in Shenzhen. A hazardous waste treatment facility exists in Shenzhen.
Project Goals: Although concentrating predominantly, in terms of infrastructure investment in the
Municipality of Guangzhou, the project aims primarily at developing cost-effective strategies and
institutional models which can serve as a "blue print" for the whole PRD region. A major
challenge of the project is to develop institutional models enabling environmental service delivery
to cross the traditional administrative boundaries between counties and districts within
municipalities, and between municipalities themselves, and with Hong Kong and Macau SARs,
thus allowing the cost savings associated with economies of scale to be achieved.
Water Resources of Guangzhou: Water resources of Guangzhou, particularly those on the
western side of the town are particularly influenced, and are at risk from wastewater discharges.
The major intakes supplying nearly 60 percent of Guangzhou's water supply are heavily
influenced by urban and industrial pollution.
Integrated water quality data indicate that many sections of the Pearl River in and around
Guangzhou have pollution levels worse than Class V. Dissolved oxygen levels are often extremely
low, unsuitable for preservation of aquatic life, and gives off foul odors.
Water quality modeling studies (one- and two-dimensional modeling, and near-field and far-field
impacts) of current and 2010 scenarios, carried out as part of project preparation, indicate
dramatic improvement in overall water quality of the Guangzhou section of the PRD with the
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proposed investments. Both average DO and BOD values are generally sufficient to attain Class II
(or Class II in the case of BOD) standards, and ammonia levels in general remain at about Class
IV. Poor water quality would continue to exists downstream of the junction with Dongiang, and
close to Donglang, where there is a marked deficit in oxygen, due to pollution loads from the
Beijiang section, principally from Foshan.
Wastewater Management-Existing Situation
Guangzhou Municipality (i.e., old areas, Panyu, Huadu and the counties) alone represented almost
2.8 million m3/day of wastewater in 2000 (approximately 25%) of which 0.7 million m3/day is
industrial wastewater. Guangzhou wastewater generation is projected to rise to about 3 million
m3/day by 2010. Wastewater characteristics in Guangzhou and Foshan are typically today as
follows: SS - 166 mg/l; BOD - 140 mg/l; COD - 300 mg/l; N - 22 mg/l; P - 4 mg/l.
The Guangzhou wastewater master plan provided for development or extension of four major
plants at Datansha, Xilang, Liede and Lijiao, and 8 treatment plants, to serve the eastern portions
of Guangzhou (and reportedly, over 50 WWTPs for Foshan ­ the next biggest polluter after
Guangzhou).
The current total treatment capacity in Guangzhou is 0.67 million m3/day (i.e., 32% treatment
rate), and which expected to rise to about 1.1 million by about 2007. The total capacity of the six
treatment plants, to be completed between 2005 and 2010, would be about 1,100,000 m3/day.
Currently, wastewater collection is concentrated primarily in 3 central urban districts of
Guangzhou. Wastewater from the remaining districts, with high migrant populations, is
discharged directly to urban creeks and rivers. A small minority of the population in these
peripheral districts use surface water for their water supply. Without a major increase in both the
collection and treatment of wastewater, the situation will at best remain stable, or at worst
deteriorate over the next ten years.
Wet sludge from existing and proposed treatment plants (Datansha, Liede I and II, Xilang and
Lijiao, and Liede III and Dashadi) will raise the total production of wet sludge to about 1,086
tons/day. Wet sludge production in the Guangzhou Municipality is projected at about 1,500 tons
per day. At present, sludge is disposed of in 4 dump sites close to Hong Kong and Macau, at the
new solid waste landfill at Xin Feng, and for landfill at Panyu. The Municipality is also
constructing a Sludge Treatment Center with a capacity of 900 tons/day. Odor removal and heavy
metal stabilization techniques will be adopted for treatment of the sludge. After treatment, the
sludge will be combined with clay to manufacture construction materials such as pavement bricks.
Leachate tests indicate a reducing presence of heavy metals due to pretreatment by industries and
relocation of highly polluting industries, as part of the industrial pollution control plan. While the
projected capacity would be adequate for the near-term, capacity increases and/or increased
disposal at Xin Feng solid waste landfill would need to be examined.
Hazardous Waste Management
Existing situation: The total solid wastes generated in the Province in 2000 was estimated at
40.34 million tons, comprising 27.66 million tons of domestic wastes (27.2 m. tons);
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non-hazardous industrial wastes (16.4 m. tons); 930,000 tons of hazardous solid wastes (0.9 m.
tons); medical wastes (0.04 m. tons); abandoned electronic appliances (0.35 m. tons); and plastic
materials and agricultural film (0.94 m. tons).
The total solid waste treatment capacity in Guangdong is about 20 million tons, but most facilities
are in poor condition. There is one hazardous solid waste secured landfill in Shenzhen with a
capacity of 20,000 tons/year. The Guangdong Domestic Waste Treatment Center is one of three
treatment units that treat medical waste in a unified way, but with a treatment rate of 16 percent.
Large amounts of hazardous waste are currently being co-disposed with domestic solid waste in
open dump sites without any liner systems. Some are discharged directly, posing significant
pollution and health risks.
It is estimated that about 260,000 tons/year of hazardous waste is produced in Guangzhou. It is
also estimated that half as much hazardous waste is produced in the municipality of Foshan. Thus
about 40 percent of the hazardous waster produced in the Province would appear to originate
form the Guangzhou- Foshan region. Of this, approximately a little under half was being reused
and recycled; the remainder was largely treated and disposed, although it is clear that the ultimate
disposal routes are generally not to standard. It is suspected that large quantities are currently
being dumped illegally.
Treatment options: It is proposed to provide a comprehensive treatment facility for all types of
hazardous waste at one site, being the most cost effective solution. The final proposal is to divide
the hazardous waste remaining after recycling and reuse would be subjected to three broad
treatment and disposal streams:
(a)
organic/chemical wastes to be treated by Guangzhou Panyu Luyou at a new specialized
incineration unit.
(b)
Incineration at Guangzhou Cement Plant
(c)
Treatment and disposal (landfilling) at the Guangzhou Hazardous Waste Treatment Center
Water Quality Monitoring and Data Sharing
Importance of effective monitoring and measures to control pollution has become a priority as
considerable pressure is brought upon the ecosystem of the South China Sea from pollutants such
as organic pollutants, nitrogen, phosphate, Pb, Hg, COD and oil entering from the estuaries. The
National Maritime Bureau started data collection in the South China Sea area in 2002, but
difficulties exist in data sharing and effective collaboration with Hong Kong SAR. Guangdong and
Hong Kong SAR have commenced discussions to develop an environmental management
framework for the PRD and the South China Sea region, Development of such a comprehensive
database of air and water pollution sources, which can be shared with other regional stakeholders
(such as Hong Kong and Macau SARs) is fundamental to regional collaboration in environmental
management.
Monitoring stations with various characteristics are spread throughout the reaches of the PRD
river system. They have been installed at different times in as ad hoc manner, and have different
equipment, which are not fully compatible. Data collection is done manually, by the EPBs of local
municipalities and analyzed at local laboratories, and the results are transferred to the Provincial
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EPB. The Provincial EPB submits the monitoring date to the state environmental organization
(SEPA). The GD EPB has commenced publishing environmental data, and efforts are being made
to provide more complete information to the public, on more parameters. Enforcement is done by
the local EPBs, but this is not very effective, as the monitoring capacity in terms of data collection
is not fully installed, real time data is not collected, data analysis and management is not done in
an effective manner.
In conformity with a national plan formulated by SEPA, Guangdong has launched a program to
create a seamless link to the existing monitoring equipment and integrate all current monitoring
systems into a browser-structured system. The new system features would include: advanced and
effective information management for the regional water environment; a convenient and useful
analysis system for comprehensive analysis of regional water environment information; and a
reliable decision support system.
Seven automatic monitoring stations (AMS) have been installed, in a program to install 74 AMSs.
The GD EPB plans to improve its comprehensive database, develop an management information
system, create a website for information dissemination. This would enable up to date
environmental data management and sharing with various stakeholders, enable effective
decision-making and enforcement.
Global Environment Facility (GEF) Co-financing.
A project-specific GEF grant of $10 million will provide co-financing to: review and update the
PRD Wastewater Treatment Master Plan; provide incentives to encourage jointly-managed
inter-municipal environmental infrastructure; to enhance water quality monitoring, data collection
and management, MIS development, and data sharing with Hong Kong SAR; and public private
participation in environmental services provision.
The GEF grant will be allocated to three main components, municipal cooperation, water quality
data collection and dissemination, and increased private sector involvement in environmental
management. Table 3 outlines the proposed allocation of the GEF grant. For the municipal
cooperation component three broad activities would be supported: support to joint district-district
wastewater and waste management facilities, support to joint municipal-municipal wastewater and
waste management facilities and a review (rationalization) of the PRD Wastewater Treatment
Master Plan. The public-private partnership component would support activities to select private
sector service provides, and preparation of a regulatory framework for environmental
infrastructure (e.g., contracting mechanisms could act as a model for other municipal activities)..
two key activities: support to the private sector operation of the Guangzhou hazardous waste
treatment facility (the contracting mechanisms could act as a model for other municipal activities)
and future support of private sector selection and contract management for environmental
infrastructure. The water quality monitoring component would support website development and
information management systems and sharing data with Guangzhou and Hong Kong.
Details of the GEF Grant allocation summary and detail, conforming broadly to agreed categories
are indicated below (amounts vary with the five components, above, due to assignments of key
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agency responsibilities):
Activity
US$
Environmental Monitoring and Information Sharing
Environmental Monitoring and Data Sharing
(i) MIS, software, and applications
1,200,000
(ii) Website development and information dissemination
200,000
(ii) Shared air & water quality database on PRD-South China Sea
pollution (Guangdong-Hong Kong), including data sharing costs
200,000
(iii) Conference on PRD-South China Sea environmental management
framework (Guangdong-Guangzhou-Hong Kong)
50,000
(iv) Pollution monitoring information sharing, in Pearl River stretches near
Guangzhou (by Guangzhou EPB)
200,000
Subtotal
1,850,000
Public- Private Partnership
(i) Preparation of regulatory framework, and bid document to select a
private service provider for pretreatment facility and landfill
400,000
(ii) Hazardous waste survey and market assessment
50,000
(iii) Preparation of a bid document to select operator or BOT for
wastewater management
400,000
Subtotal
850,000
Inter-municipal Jointly-managed environmental infrastructure
(i) Study and workshops on overcoming constrains to inter-municipal
cooperation among PRD cities
100,000
(ii) Subprojects that support inter- or intra municipal cooperation in
provision of shared environmental infrastructure
6,800,000
(iii) Updating of PRD Wastewater treatment master plan, with detailed
study of Foshan wastewater master plan (to support joint inter-municipal
infrastructure)
400,000
Subtotal
7,300,000
Total
10,000,000
By Component:
Project Component 1 - US$334.00 million
Wastewater Management (Total Cost $334.0 million)
The component would comprise primarily wastewater collection and treatment in Guangzhou
(and other municipalities). In Guangzhou wastewater investments would include: (a) first stage of
the new treatment plant at Dashadi with capacity of 200,000m3/d, (the first stage of 500,000m3/d
ultimate capacity), (b) Liede III, comprising expansion of the existing plant by 200,000m3/d, to
bring installed capacity to 640,000m3/d, and (c) about 500 km of trunk sewers to convey
wastewater from the drainage catchments of Dashadi and Liede III, and four other drainage
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catchments (i.e., Xilang, Lijiao, Datansha and Liede II).
The entire 39 hectare area of land reserved for the Dashadi WWTP will be released by the
Government. The site will be planned in such a manner to accommodate the total ultimate
capacity of 500,000 m3/day treatment capacity, with a provision for primary sedimentation,
should be needed in the future. The drainage ditch traversing the site will be diverted to the
northern edge of the site, to facilitate the optimal use of the available land. Liede III will be
constructed on land already reserved for this complex.
Leachate tests conducted thus far indicate a low and decreasing level of heavy metals. Leachate
tests will be conducted to assess the quality of sludge, particularly to determine the existence of
heavy metals, in order to determine the appropriate treatment prior to disposal. Sludge from the
treatment plants will be treated initially at the new Sludge Disposal Center to be completed next
year. Should the levels of metals in the sludge prove to be low and decreasing, sludge would be
disposed in the Xin Feng solid waste landfill.
Project Component 23 - US$24.70 million
Hazardous Waste Management (Total Cost $ 24.7 million) (No GEF Co-financing -
complementary activity)
The Guangzhou Hazardous Waste Treatment Center (GHWTC), would have a pre-processing
treatment center comprising a collection and transferring area, a physical/chemical treatment
workshop, stabilization/solidification workshop, and a secure landfill to treat hazardous wastes
and incinerator ash. The facility would have a final capacity of 850,000 m3, adequate for 25 years
operation, and would be developed in three phases with capacities of 150,000 m3, 310,000 m3
and 400,000 m3. The first phase of 150,000 m3 will be constructed under the project.
The landfill will also serve as the ultimate disposal site for the two treatment streams (i.e., both
the organic/chemical wastes treated at Panyu, and the incineration at the Guangzhou Cement
Company). Hazardous wastes will be transported to the treatment facility by those industries that
produce these wastes or a newly created or licensed collection company. It will also function as a
regional center accepting hazardous waste from neighboring municipalities. In addition to
improved treatment and disposal, improved systems will be set up to register industrial waste
producers, and to manage and control hazardous waste service providers involved in transport,
recycling and treatment of hazardous waste.
Under current regulations, industries producing hazardous wastes are legally obliged to take
measures to treat the wastes in an environmentally safe manner. Guangdong Provincial EPB also
will also enact and enforce regulations requiring industries in Foshan, and surrounding
municipalities to use the facility. A tariff will be levied per tone or m3 of hazardous wastes
delivered to the treatment center. The Guangzhou EPB will set up a monitoring and inspection
system to enforce the mandated requirement, and adopt a structure of fines to be levied on
offenders.
Upon completion of construction, operation of the facility will be contracted out to a private
service provider, who will be selected under a competitive bidding process. The project will
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finance the preparation of a regulatory framework, the bidding document to invite bids from
prospective contractors, and the transaction cost.
The facility will be located at Liangtian, on a 22 hectare site close to the Xin Feng solid waste
landfill. In view of the prevailing topography, particular attention will be paid to engineer the
design to prevent rainwater runoff mixing with the leachate, to avoid any adverse impacts to
ground water and water course downstream. Continuous monitoring will be incorporated to
measure leakage of any leachate.
Project Component 3 - US$ 45.20 million
Inter-Municipal Environmental Infrastructure (Total Cost $ 113.2 million)
This component would finance jointly-owned and managed environmental
infrastructure on as pilot operation. Through the implementation of the pilot
subprojects, potential benefits would be demonstrated, and institutional models
would be developed, facilitating replication. In order to assure replication, a
revolving credit facility will be created by the GPG with seed funds provided from
the proceeds of the loan, and additional matching funds to finance future
subprojects. The Facility will onlend these funds at terms that would enable
revolving, and encourage continued construction of jointly-managed environmental
infrastructure.
Proposed infrastructure must meet safeguards requirements, and be: (a) designed
to improve water quality of the rivers and water bodies, (b) owned and managed
by two or more cities, districts or towns, (b) revenue earning investments, and (c)
environmental infrastructure (i.e., wastewater treatment plant, wastewater
interceptors, water supply source augmentation including transmission for bulk
supply of raw or treated water; water supply treatment plant; municipal solid waste
landfill).
In view of the innovative nature of this initiative, incentives are proposed, with
support from a GEF grant and loan funds, to encourage municipalities, districts
and towns to collaborate to construct jointly-owned environmental infrastructure.
Incentives would be in the form of capital grants, increased disbursement for civil
works, and support for incremental operating costs for these subprojects. In
addition to being financed under the project, the first 3 to 4 projects approved for
funding would receive a capital cost grant of Yuan 10 million, disbursed from the
GEF allocation of $6.8 million for this component, an enhanced disbursement of
65 percent for civil works, finance for incremental operating costs, amounting $6.5
million, on a declining basis of 50 percent, 30 percent and 20 percent, in the first,
second and third year, respectively. Provision is made to finance other subprojects
that would be identified in the future. Subprojects to be identified in the future that
meet the criteria would be eligible for financing from the budget provision made in
the project, higher disbursement for civil works, and incremental operating costs.
There would be no GEF grant support for subprojects to be identified in the
future.
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Three subprojects were identified at appraisal, and MOU have been prepared,
outlining indicative capital costs, arrangements for capital cost sharing,
implementation, management and operational arrangements. Feasibility studies for
these three subprojects are currently being completed. They include: (a) Panyu
District Gardens Bureaus and the Guangzhou Gardens Bureau, for sharing
wastewater treatment facilities at Lijiao, (b) between the Longgang District
Government and Shenzhen Great Industrial Zone Administration Commission, and
is intended to improve water quality of the Pingshang River in Shenzhen, and (c)
Foshan Chancheng District Government and Nanhai District Government, for joint
construction of a wastewater treatment plant. Further details are provided below:
Luoxi Island Wastewater Discharged into Lijiao Wastewater Treatment System.
The subproject is to be developed under cooperation between the Guangzhou
Municipal Gardening Bureau and Panyu District Municipal Gardening Bureau.
Wastewater from Luoxi Island, which has developed rapidly in recent years.
Wastewater which is currently discharged untreated to Pearl River, will be
intercepted and conveyed to the Lijiao Wastewater treatment plant in Guangzhou.
The conveyor will be designed for a planned wastewater flow of 60,000 m3/d for
the service area of about 9.38 km2. The project includes about 17.5 km of sewers
of diameters 400 mm -1100 mm, a siphon, and three pumping stations with total
capacity of 1300 liters/sec. Total base cost is estimated at Yuan 121.5 million.
Shenzhen Pingshang River Wetland Treatment Works. The subproject is to be
developed under cooperation between the Longgang District Government and
Shenzhen Great Industrial Zone Administration Commission, and is intended to
improve water quality of the Pingshang River in Shenzhen.Shenzhen already has
good experience operating two smaller wetlands to improve river water quality.
Wetland works of total area of 47.9 ha are to be constructed at Pingshang river in
Longgang District from the entrance of Chi'au river to the entrance of Dunzi river
in Great Industrial Zone, comprising 25.3 ha of rehabilitation of riverside natural
wetlands and 22.6 ha of artificial wetlands. It is proposed to treat about 230,000
m3/day average river flow period (and 60000 m3/d in dry river flow period), with
preliminary treatment and traverse through wetlands. The design is based on the
high efficiency vertical flow wetland treatment technology, and is expected to
achieve the following improvements in water quality parameters at a loading on
wetland treatment of 0.33-1.0 m2/m3/d. The parameters at the inlet to wetland and
at the outlet (in parentheses) are: COD 30-50 (15-25); BOD 15-25 (3-6); NH3-N
1-14 (0.8-1.2); and TP 1.5-2.0 (0.18-0.22). Shenzhen agencies have indicated that
they plan to use own funds to finance the subproject; hence this subproject would
be eligible for the GEF grant only. Total base cost is estimated at Yuan 123.4
million.
Foshan Zhen'an WWTP Third Phase Extension Works. The subproject is to be
developed under cooperation between the Chancheng District Government and
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Nanhai District Government. The subproject is the third phase extension of the
Foshan Zheng'an wastewater treatment plant, to meet the planned capacity
requirement of 150,000 m3/d of the two districts This subproject includes a sewer
system to collect urban wastewater from an area of about 40 km2, comprising the
southern part of Chancheng District and the Shikeng area of Nanhai District. Total
base cost is estimated at Yuan 225.0
million.
Provision for Subprojects to be Identified. An amount of Yuan 120 million will be
provided in the project costs for subprojects that would be identified and prepared
in the future.
Project Component 4 - US$11.50 million
Water Quality Monitoring and Data Sharing (Total Cost $ 11.5 million)
The component would comprise the following: (a) renovation and updating of 5 existing
monitoring stations; (b) construction of 18 new automatic monitoring stations (7 regional, 7
municipal level, and 4 in the estuary); (c) a provincial control center including hardware and
software and applications; (d) a website with information and data; and (e) a decision support
system including management information system, databases, pollution control monitoring
applications, and GIS.
Project Component 5 - US$8.60 million
Institutional Strengthening and Training (Total Cost $ 8.6 million)
The project would support a range of institutional strengthening and training activities including,
some activities supported by the GEF grant: (a) financial/institutional support, training &
equipment for the Guangzhou Wastewater Treatment Co; (b) financial/institutional support,
training & equipment for institutions (to be identified) in connection with the inter-municipal
environmental infrastructure program; (c) metropolitan and regional planning; (d) metropolitan
Guang-Fo development and management strategies (e) construction supervision and project
management services and (f) training for management and operational staff and study tours.
Other institutional strengthening and capacity building under the project (but included in each
component), include: (a) preparation of a regional air and water pollution database; (b) review
and updating of the PRD wastewater treatment master plan (Pearl River Clean-up Campaign); (c)
development of a regulatory framework for private sector participation (PSP) for operation of the
hazardous waste facility; and (d) preparation of bidding documents for private sector service
provision for other utilities.
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Annex 3: GEF Incremental Cost Analysis
CHINA: Guangdong Pearl River Delta Urban Environment Project
The Program and Project Area
China's Pearl River Delta (PRD) is one of the largest and most complex urban systems in Asia. It
is home to over 40 million people who live in 25 administratively-defined cities in Guangdong
Province and in two Special Administrative Regions (Hong Kong and Macau). The PRD has
ranked at or near the top nationwide in economic growth over the past decade (averaging 14.7%
per annum during 1990-2000), mostly due to large inflows of direct foreign investment, initially in
low value-added manufacturing and more recently in higher value-added manufacturing and
services. The program encompasses all of this area and is mainly overseen by Guangdong
Province with cooperative agreements between other jurisdictions such as Hong Kong and
Macau.
The Delta is also complex geographically. Three major branches of the Pearl River (Zhu Jiang)
join at the city of Guangzhou, the river's political, economic and cultural hub. The Pearl is
China's third longest river, and second only to the Yangtze in annual average flow. It discharges
into the South China Sea through eight principal tributaries across flat terrain, which is
criss-crossed by numerous canals and streams.
The project area for the Guangdong Pearl River Delta Urban Environment Project which is the
first phase of a larger scale and longer term program, is mainly within Guangzhou and consists of
civil works (wastewater treatment and hazardous waste) for the city and capacity building and
institutional strengthening activities for the program area such as environmental data collection
(provincial scale), industrial pollution abatement programs (provincial and city level). The
program area is all of the Pearl River Delta, including the city of Guangzhou.
The GEF Guangdong Pearl River Delta Urban Environment Project would support activities in
the entire program area with a key focus of reducing, as fast as possible, total pollution loading to
the South China Sea. Efforts would focus mostly within Guangdong province but they would be
structured in a manner to encourage replicability in the rest of China and similar activities in other
countries discharging wastes into the South China Sea.
The Pearl River Delta's Environmental Condition and Causes
Environmental protection policies and investments have not kept pace with economic growth, and
the PRD's rapid economic growth has come at a heavy environmental cost. Many of the lower
reaches of the Pearl River, especially around Guangzhou, the water quality standards are Class V
or worse, and therefore unfit for drinking water source and unsuitable for irrigation, aquaculture
or recreational use.
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Domestic and industrial wastewater discharges, urban storm-water runoff and agricultural and
livestock farm run-off are the main pollution sources. Most municipal wastewater is collected,
but discharged into the river systems without treatment. Environmentally safe sludge disposal is
just beginning, with the first plant under construction in Guangzhou. Growing volumes of
hazardous wastes also present considerable risks to health, surface and ground water sources.
Regional treatment facilities are needed, plus complementary activities such as waste minimization
and safe transportation of dangerous goods.
Charges for water supply and wastewater are a fraction of the true cost of providing these
services, which is draining municipal resources and reducing operational performance. Charges
for hazardous waste disposal are low or non-existent in Guangzhou. Only a small fraction of the
waste is properly disposed.
At present, every town builds and manages its own urban utility system and potential economies
of scale and operation are not realized. The recently announced Provincial waste water
management program of constructing more than 162 wastewater treatment plants to clean up the
PRD river system perpetuates this fragmented approach to planning, investment and operation.
While the Guangdong Provincial Government (GPG) and municipalities recognize that regional
planning approaches present opportunities for inter-municipal cooperation, jointly managed
facilities, reduced costs, and economies of scale for provision of environmental infrastructure,
they have not addressed the institutional challenges inherent in this approach. The problem is
compounded by the lack of a strategic framework at the provincial, metropolitan and city levels
for planning and implementing least-cost priority investments and policy/institutional reforms.
Little private sector participation in environmental investments and service provision has been
mobilized. In all of Guangdong Province there is just one private water supply concession (in
Tanzhou), one private wastewater treatment plant (in Guangzhou), one privately-operated
municipal solid waste landfill (for Guangzhou), and a proposed Build-Operate-Transfer sludge
treatment plant, also for Guangzhou. No initiatives have been taken to facilitate entry of private
service providers for the distribution of drinking and wastewater collection, where the greatest
gains in efficiency and service levels are possible.
Guangdong Provincial Government Strategy.
Guangdong Province (GP), through its provincial Environmental Protection Bureau (GDEPB),
has recently announced a plan to clean-up the PRD, the main feature of which is a proposed
eight-year, US$5 billion program of investment in wastewater treatment facilities. However the
program perpetuates the fragmented approach to infrastructure planning, contains too many
treatment plants, is too ambitious and costly, and fails to realize potential economies of scale.
Preliminary reviews of the plan suggest that better rationalization of treatment plants could yield a
35% decrease in overall costs.
Guangdong Province is also preparing master plans for municipal and industrial solid waste
management. These plans are also likely to suggest a fragmented and non least-cost approach.
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Nevertheless, the GPG is committed to achieving increased sustainable development of the PRD
and expanding provision of urban environmental services, including the use of innovative forms of
private involvement. It realizes that environmental infrastructure investment should be guided by
a regional development strategy that better reflects the goals of sound environmental management
and fiscal sustainability across PRD as a whole. However this is difficult and capacity-building
assistance and incentives are needed to help achieve those outcomes.
The Project's Global Environment Objective
The South China Sea, into which the Pearl River flows, is one of World's Large Marine
Ecosystems (LMEs). The GEF, especially concerned with such a critical international water body
is helping the littoral states to better manage this shared resource. Analyses of the major threats to
the Sea, facilitated by the GEF/UNDP/IMO Partnerships in Environmental Management for the
Seas of East Asia and the GEF/UNEP Project on Reversing Environmental Degradation Trends in
the South China Sea and Gulf of Thailand, have identified land-based pollution as one of the most
serious threats and the Pearl River Delta as a critical land-based pollution "hot-spot". This
project's global environment objective is to improve the environmental condition of the South
China Sea LME by helping Guangdong province reduce land-based pollution of the Sea from the
Pearl River Delta area.
Baseline Scenario
This scenario comprises of 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 Pearl River Delta and its key cities in the absence of GEF support.
Under the baseline scenario, the GPG and its many cities and towns will make substantial
investments in wastewater treatment and in improving solid and hazardous waste management in
the next fifteen years that will reduce the volume of pollution entering the South China Sea. Some
of these facilities will however be delayed by jurisdictional squabbles; neighboring municipalities
will each build their own, inadequately sized facilities that will waste investment resources, raise
operating costs and threaten their sustainability. Also, little effort will be made to involve the
private sector in service provision, even though this is often the least-cost and most efficient
option. The project in the absence of the GEF project would co-finance Phase one of the Program
and would consist of the following components:
-
The Dashadi and Liede III wastewater treatment and network expansion
-
The regional hazardous waste facility
-
An industrial pollution control program
-
Related capacity building activities
The longer term program described in the baseline would suffer from the following strategic
shortcomings:
- minimal action to accelerate private sector involvement
- absence of collaborative sharing of environmental data with other municipalities and other
countries
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- an ad-hoc system of water-quality monitoring
- inefficiencies resulting from municipalities desire to build their own facilities
- insufficient management and technical operator capacity
GEF Alternative
The proposed GEF Program for the Guangdong/Pearl River Delta Urban Environment Project
will encourage a more comprehensive integrated approach than outlined under the baseline
scenario by addressing its strategic shortcomings. This will help give direction and ensure that
various plans of the agencies involved in the Pearl River Delta are coordinated and properly
integrated.
Under the GEF Alternative Scenario, the proposed project would constitute the first-phase of a
cost-effective, long-term and very large-scale environmental management program that will
address the key weaknesses of the Baseline Scenario and thereby achieve significantly larger and
more cost-effective environmental improvements in the PRD and in the South China Sea, into
which it flows. The GEF Alternative project would support a larger volume of collaborative,
least-cost municipal waste management investments; be funded from a wider variety of sources,
including the private sector; and would promote greater financial sustainability of these
investments than the Baseline Scenario. To achieve these outcomes, the project would support the
implementation of physical investments, policy and institutional reforms, and financial
management improvements. Its over-arching goal would be to achieve the maximum sustainable
environment benefits for the PRD area and the South China Sea by identifying and funding the
most environmentally efficient, least-cost investment program that can be afforded and sustained
with sound financial management. The project and program will commence with the highest
priority investments in the city of Guangzhou, which is the largest contributor to pollution in the
PRD, with smaller cities also implementing jointly-managed environmental infrastructure
investments on a pilot basis. It would also demonstrate innovative service delivery and financing
approaches, including private sector provision of environmental infrastructure and services. The
Guangdong component of the parallel World Bank/GEF Livestock Waste Management Project
would address this specific issue as an integral part of the provincial environmental management
program.
GEF support would catalyze three key, innovative aspects of the GEF Alternative strategy. First
the GEF would promote the planning and construction of shared municipal wastewater treatment
and waste management facilities. This collaborative approach to wastewater and waste
management would achieve significant capital and operational cost savings, which in turn would
accelerate investment in wastewater treatment and landfill development, and expand the volume
of investment and enhance its financial sustainability. These actions would achieve faster and
larger reductions in pollution loads. Second, the GEF would stimulate greater private sector
involvement in waste management and wastewater treatment investment and operation by (i)
encouraging the municipalities to actively seek private sector partners, and (ii) assisting potential
private sector investor/operators to prepare facility management investment and operational
service proposals for consideration by the municipalities and ensuring that such proposals are
evaluated solely on their technical and financial merits and implemented when they are both
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least-cost and financially sustainable options. Third, the GEF would provide additional funding
for water quality testing that would improve the collection and dissemination of water quality data
that would enable a collaborative sharing of data with other municipalities and other countries.
The GEF's support for Phase One of the PRD Environment Program through this project would
also promote greater inter-municipal cooperation and private sector involvement in the
subsequent phases of the Program by piloting and demonstrating innovative ways to achieve these
two objectives and by promoting their replication in subsequent phases of the Program.
The global environment objective of the GEF Alternative would be faster improvement of water
quality in the Pearl River Delta and reduced pollution of the South China Sea. This objective will
be achieved by (a) allocating public pollution reduction investment resources more efficiently and
by operating public waste management facilities more efficiently and sustainably; and (b)
accelerating private sector investment in waste management and participation in waste
management operations. In combination, these advances will allow Guangzhou City to treat an
additional 250 million m3 of waste water over the next 15 years than under the Baseline Scenario.
This outcome will be monitored through a comprehensive and replicable water quality testing
regime. Key outputs of the GEF assisted project components would be the number of facilitated
agreements to share waste treatment facilities among the municipalities and the expanded service
levels achieved through private sector involvement.
Incremental Costs
In order to achieve these additional global environment benefits, GEF support is requested for the
following project components: 1) encouragement of inter-municipal environmental infrastructure
(urban wastewater and waste management) in Guangdong; 2) Water Quality Monitoring and
Information Systems, and; 3) facilitation of private sector involvement in environmental
infrastructure and operations (see Table 2 below).
In the case of component (1) GEF resources totalling $6.8 million are requested to finance the
incremental costs of promoting innovative, collaborative, more cost-effective and more
sustainable joint municipal environmental infrastructure investments by helping to identify the
first of these options and by providing modest incentives to the concerned municipalities to
collaborate on jointly designing, constructing and operating several joint facilities. This GEF
component will have measurable efficiency outcomes by increasing the total amount of
wastewater treated over fifteen years from 1 Billion m3 to 1.15 Billion m3, i.e. supporting an
incremental global benefit of 150 million m3 extra of waste water treated. This represents about a
15% decrease in the total amount of waste entering the South China Sea from the Program area
by 2019. This GEF component will also support increases in daily municipal solid waste disposal
capacity by a similar 10% improvement. The GEF investment incentive funds would only be
committed if and when viable joint municipal projects were identified by the GEF-supported
identification efforts. This GEF support would catalyze both a greater volume of environmental
investment and a greater number of financially sustainable investments than the municipalities
would make or could sustain under the Baseline (business-as-usual) Scenario.
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GEF co-financing for component (2) of $2.25 million would enhance water quality monitoring
facilities and staff capacity and strengthen both the project's impact assessment and the PRD's
contribution to the UNEP/GEF South China Sea Project's M & E program. This would result in
greater international environment quality data and allow for better targeted pollution reduction
interventions. Regional and international pollution reduction conferences would be organized to
bring together the parties impacting the South China Sea. These workshops would provide a
forum to discuss pollution reduction plans and report on achievements, and help to speed-up the
reduction of pollution loading to the South China Sea. The first of these ongoing meetings is
proposed to be in Guangzhou in early 2005.
In the case of component (3), GEF resources are requested to finance the incremental costs of
identifying and preparing viable proposals for private sector involvement to finance and operate
additional environmental infrastructure facilities, which total $0.95 million. Without GEF support
for this component (business as usual), the PRD's constituent municipalities will be reluctant to
explore and develop such innovative options and will not fully tap the potential for joint municipal
and/or private sector environmental investment and service provision. GEF support would thus
supplement scarce public sector environmental investment resources with private sector
investments and thereby accelerate pollution reduction in the PRD and from the PRD area into the
South China Sea. This component is estimated to result in an extra 60 million m3 of waste-water
treated over the next 15 years, a 5% decrease in total pollution loading to the South China Sea by
2019.
Through this combination of incremental activities, GEF support would catalyze an innovative
regional (PRD-wide) and more comprehensive approach to water quality improvement. No single
municipal investment program is capable of providing all of the treatment facilities and behavioral
modifications needed to have a marked improvement to the South China Sea water quality. For
example, complementary action on industrial livestock waste and other directed interventions to
increase water treatment capabilities and reduce industrial waste discharges is also needed. The
GEF Alternative will thus be the first of what is planned to be a series of such integrated yet
independently delivered water quality improvement interventions.
The following incremental cost matrix summarizes the positive impacts that GEF support have on
the pace and scale of pollution abatement programs within the Pearl River Delta. The Baseline
Scenario is based on the Guangdong PRD Environmental Strategy Plan. This plan outlines an
investment program of about 162 wastewater treatment plants estimated to cost about $5 billion.
For wastewater and landfill development, total expenditures under the GEF scenario are estimated
to be the same as the baseline scenario. However, through more efficient use of capital and faster
development, the GEF Alternative Scenario results in a 20% decrease in the total pollution
loading from the region to the South China Sea by the 2019. This is a staggering amount of
avoided pollution. These improvements are brought about through component 1, inter-municipal
cooperation, and component 3, increased private sector involvement.
The second component, water quality monitoring, has a baseline scenario cost of $9.25 million
and a $11.5 million cost for the GEF Alternative Scenario, of which $2.25 million would be
co-financed by the GEF. Provincial and municipal governments have committed to this increased
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investment level and to support the international aspects of data collection and dissemination if the
GEF support is forthcoming.
Table 2 presents both 'program' (i.e. some 162 wastewater treatment plants over 15 years within
the PRD) and 'project' (Phase 1 of the program - this specific investment activity involving at least
one wastewater treatment plant). The GEF assistance is not expected to change the overall costs
of the program, but rather enhance the efficiency and treat an additional 250,000,000 m3 of
wastewater.
Table 2: Incremental Cost Matrix
Cost Category
US$ Million
Domestic
Global
Environment
Environment
Benefit
Benefit
1. Urban
Baseline
WWT 5,000 1.25 Billion m3 of 1.25 billion m3 of
Wastewater and
(program cost) wastewater treated WW treated and
Solid Waste
resulting pollution
Management in
reduced
Guangzhou City
and
MSW 300 100 million tonnes
Reduced water
Inter-Municipal
(program cost) of MSW disposed
pollution from
Environment
waste properly
Infrastructure
managed
With GEF
WWT 5,000 1.44 Billion m3 of
1.44 Billion m3 of
Alternative - a
(Program cost) wastewater treated
Waste Water
15% increase in
treated
WW treated and a
MSW 300 110 million tonnes Reduced water
10% increase in
(program cost) of MSW disposed;
pollution from
solid waste treated
reduced pollution
waste properly
managed
6.8 190,000,000 m3
Reduced water
Increment
(project cost) extra WW treated
contamination from
an extra 190,000,000
m3 WW treated and
10,000,000 tonnes of
waste landfilled
2. Water Quality
Baseline
9.25 Modest expansion
Greater
Monitoring and
(project cost) of existing data
international
Information
collection system
environment
Systems
quality data
Better targeted
interventions
With GEF
11.50
Alternative
(project cost)
Increment
2.25
3. Private Sector
Baseline
WWT 5,000 1.25 Billion m3 of 1.25 Billion m3 of
Involvement in
(program cost) wastewater treated
WW Treated and
Environment and
resulting pollution
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Infrastructure
MSW
100 million tonnes Reduced water
300
of MSW disposed
pollution from
(program
waste properly
cost)
managed
With GEF
WWT 5,000 1.31 Billion m3
1.31 Billion m3 of
Alternative - a 5%
(program cost) wastewater treated WW Treated
increase in WW
treated and a 5%
increase in solid
MSW 300 105 million tonnes Reduced water
waste treated
(program cost) of MSW disposed;
pollution from
reduced pollution
waste properly
managed
Increment
0.95 60,000,000 m3
Reduced water
(project cost) extra WW treated
contamination
from an extra
60,000,000 m3
WW treated and
5,000,000 tonnes
of waste landfilled
Total
Baseline
5,305,000,000
With GEF

Alternative
5,315,000,000
Increment
10,000,000
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Annex 4: STAP Review
CHINA: Guangdong Pearl River Delta Urban Environment Project
STAP Review Comments on the brief of the GEF project by:
SU Jilan
Second Institute of Oceanography
State Oceanic Administration
36 Bao-Chu-Bei-Lu
Hangzhou, Zhejiang, 310012
China
(Tel: 86-571-8884 0332 Email: sujil@zgb.com.cn)
The Pearl River Delta (PRD) is one of the most populated and industrialized areas in China.
The water quality in many parts of the PRD has rated Class V or worse, particularly near large
cities like Guangzhou, although in the upper reaches of the Pearl River in the main branches
the water quality is generally good.
In recent years there has been a major emphasis on building wastewater treatment plants in
the PRD. However, there is still a long way to go before water pollution in the PRD will be
abated. One important reason for this slow progress is because of China's general lack of
experience to address environmental problems with modern management skills and to involve
private sectors in public works. In this sense, the integrated regional planning approach as
evidenced by Project Components 2-4 is most noteworthy. The willingness of the Guangzhou
municipality to support/participate in this undertaking is also most encouraging. Thus, I fully
recommend approval of this proposed GEF project.
In the following, I have four technical comments for the authors to consider when finalizing the
proposal:
1. As it presently stated the Project development objective is "to improve the quality of
the urban environment in key cities in the Pearl River Delta (PRD), by following an
integrated regional planning approach, in order to facilitate continued economic and
social development". However, it is not clear that the 8 points stated in the next
paragraph of the proposal are all direct progress-measures to the objective shown in
bold face above. I would suggest rewording the objective to bring up the importance of
demonstrating to the public and local officials the effectiveness of the 'integrated
regional planning approach'.
2. If the global objective of the Project is to be related to the South China Sea, the
important land-based pollutants are principally POPs and nutrients. However,
river-borne dissolved/particulate pollutants have significant impacts on the marine
environment and ecosystems only in shallow coastal water with depths less than, say,
50 m. For the South China Sea Proper, it is the atmosphere-borne pollutants, i.e., in
the form of aerosols, which exert influences. Thus, rationales given here, as well as
related arguments stated elsewhere in the brief, need to be re-worded to reflect this
fact.
3. The brief sounded apologetic, in my view unnecessary, when it stated under Section B.3
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that "....the project would be processed even with this one city....". The city referred to
here is Guangzhou. As an administrative unit, the word "city" in China encompasses a
large region with many district level and small-city level administrations. Although they
are all under the jurisdiction of Guangzhou City, implementation of integrated regional
planning approach advocated by the proposed GEF Project does not come by any
easier. I would suggest the proposal simply sets its minimum goal to implement the
approach in Guangzhou City.
4. Lastly, usage of English needs to be checked. For example, it is better to say
"low-wage", not "low-cost", migrant workers. The word "distributaries", rather than
"tributaries", should be used when referring to river branches through which the Pearl
River discharges its water to the sea.
Response to Review comments by SU Jilan, Second Institute of Oceanography
State Oceanic Administration, Hangzhou, Zhejiang, China. STAP Review.
Dr. SU Jilan's support of the project is very welcome. His agreement with the project's
integrated approach, and practicalities of starting with Guangzhou are encouraging. Also, the
need to focus on modern management skills and involvement of the private sector is supported.
With regards to the four specific technical comments, they will be reflected in the project's final
design and documentation.
1.
The project's broad objective "to improve the quality of the urban environment in key
cities in the Pearl River Delta' will be broadened to also include "and highlight the need for an
integrated approach to environmental management".
2.
The point that a keen focus is needed on POPs and nutrient loading for attainment of
measurable water quality improvement in the South China Sea is very valid. Programs are
underway to address these issues through other means, e.g. the regional livestock waste
management project being supported by GEF. This project is intended to start with improved
wastewater treatment and hazardous waste management as part of an overall comprehensive,
multi-level effort. As suggested the rationale will be revised to reflect these facts.
3.
The suggestion to be more positive on the exemplary role of the city of Guangzhou is
appreciated. As related to point two, efforts will be made during project implementation to
maximize the municipal governments and public learning that derives from the project.
Guangzhou is certainly the best place to start within the Pearl River Delta region.
4.
As recommended the project team will change "low-cost" to "low-wage" and
"tributaries" to "distributaries" where warranted.
Again, the project team expresses its appreciation of Dr. SU Jilan's comments and his depth of
understanding in the water quality of the South China Sea and its current impacts.
a)
Response to comments from Secretariat and other Agencies
The project design should include a replication strategy, stakeholder participation plan, M&E
indicators.
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The project has a detailed replication strategy. First, the collected and collated water quality
data will be made available broadly and consistently. The data will be presented in a
user-friendly manner both on a readily accessible web-site and in annual environmental status
reports. Data collection and distribution will endeavor to use common, and readily available,
equipment and software to help other neighboring jurisdictions and countries set up similar and
compatible systems.
The project is starting with the city of Guangzhou. Guangzhou (the capital of Guangdong) is an important city for
piloting any activities within the region since results are quickly and easily seen by neighboring cities. Water
quality data will be presented by cities which will enable quick comparisons. Guangzhou is also able to discuss
regional approaches with Hong Kong SAR.
On specific project aspects such as private sector involvement in facility operations and joint
municipal development of environmental infrastructure this project has clear terms of reference
for any contract development to be carried out in a manner that includes a common structure
which can be easily replicated by other cities. There are also specific funds identified for
ongoing training programs where the lessons from Guangzhou's efforts will be discussed among
other neighboring municipalities.
Stakeholder participation programs have been developed in at least four broad areas; siting and
operation of wastewater treatment facilities, siting and operation of the hazardous waste facility,
design and progress of the industrial pollution control program (IPCP), and collection and
dissemination of Pearl River water quality. In the wastewater and hazardous waste facilities
stakeholder participation has been built into the ongoing environmental management system
EMS. This EMS forms part of the reviewed and legally binding environmental impact
assessment. Although the public will be presented with the progress of industrial activities to
reduce pollution on the web-site and annual environmental reports, the key stakeholder will be
neighboring industries who the project intends to work with to reduce their overall pollution
loadings. This will be done through technical workshops, in-house waste audits, and other
technical and policy fora. Public stakeholder participation will occur mainly through existing
and strengthened municipal (and higher levels of government) programs. This includes easy
access to the web-site (with a question and answer section), schools educational program,
annual municipal `state of the environment' reporting.
The project has a comprehensive monitoring and evaluation program. Specific items to be
monitored include; quantity of wastewater treated; efficiency of wastewater treatment, amount
and efficiency of hazardous waste treated, number of operating contracts for environmental
infrastructure that include private sector involvement, and number of intra and inter-municipally
developed environmental infrastructure programs. These items will be monitored through
various means such as regular project supervision, monthly/annual reports, real-time water
quality data.
The Bank agreed to develop a strategic framework for other GEF supported interventions in the
Region. The Bank also agreed to explore closer links between livestock waste reduction programs.
During project preparation discussions were held with Ministry of Agriculture representatives to design a
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complimentary agricultural waste program (livestock and run-off). A plan is now in place to monitor
agricultural waste reduction programs (integrating them with the water quality objectives outlined in this
project) and report the results to the general public and the agricultural community. The GEF is supporting
a regional livestock waste management project which can also be monitored through the water quality
monitoring program being supported through this project.
Guangdong Province also agreed to hold at least one (and likely an annual event) regional (i.e.
international) workshop or conference for all jurisdictions bordering the Pearl River Delta (including
municipalities and countries). This forum will be used to develop regional pollution reduction
strategies and disseminate best practices.
The implementation of a revolving fund to support environmental infrastructure was also
discussed. The first pilot activities in the project are designed to be initial project suitable for
support from a revolving capital fund. Discussions are still underway with GEF to broaden the
fund (outside of the Pearl River Delta) and increase its size.
The Province of Guangdong (EPB) agreed to prepare a livestock management action plan. This
plan, where appropriate, would be integrated into activities supported by this project. Capacity
building activities for relevant agencies would be supported by this project where staff capacities
overlap in EPB ­ this would help maximize any synergies between the two GEF supported
activities. The Guangdong EPB also agreed to carryout pilot activities in the livestock waste
area, e.g. emissions trading.
The Bank would investigate institutional coordination and support.
The Bank has an extensive investment program in the Pearl River Delta area. Already a second
PRD is under preparation and discussion has started on a third. The lessons learned from the
GEF supported activities are already being incorporated in follow-on project designs. There is
keen interest within the PRD and within all urban areas of China, especially those along the
eastern sea-board, to see how inter-municipal cooperation can be made to work and how best to
involve the private sector in the development and operation of environmental infrastructure.
The Bank will actively participate in the international conferences being proposed by Guangdong Province. The
Bank has also facilitated discussions with Hong Kong SAR, PEMSEA and UNDP. Information on the program
(the overall objective of improving the water quality in the PRD in general ­ and specifically the mechanics and
objectives of this project) is being widely distributed.
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