China - Second Tarim Basin Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 32359-CHA IMPLEMENTATION COMPLETION REPORT (IDA-30930 SCL-43410 TF-27129) ON A LOAN/CREDIT IN THE AMOUNT OF US$ 150 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR THE TARIM BASIN II PROJECT June 27, 2005 Rural Development and Natural Resources Sector Unit East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective June 2005) Currency Unit = Yuan Y 1.00 = US$ 0.12 US$ 1.00 = Y 8.3 FISCAL YEAR ABBREVIATIONS AND ACRONYMS AusAID The Australian Agency for International Development BCM Billion cubic meters CAS Country Assistance Strategy CC Coordination Committee cum Cubic meter CUM/MU Cubic meters per mu DEP Domestic Expert Panel DFID Department for International Development EC Executive Committee EO Executive Office ERR Economic Rate of Return ET Evapo-transpiration FRR Financial Rate of Return GIS Global Information System GOC Government of China Ha Hectare (1 ha = 2.48 acres) HHWS Household Water Supply System IC Irrigation Committee ICB International Competitive Bidding ICR Implementation Completion Report IDC Irrigation District Committee IPM Integrated Pest Management IWRM Integrated Water Resources Management LWMP Land and Water Management Plan LYLI Low Yield Land Improvement MCM Million cubic meters M&E Monitoring and Evaluation M&I Municipal and Industrial MIS Management Information System MTR Mid-term Review Mu Chinese unit of area (15Mu = 1 ha) NBET Non-beneficial Evapo-transpiration NPV Net Present Value OED Operations Evaluation Department PDO Project Development Objective PPMO Prefecture Project Management Office  PAD Project Appraisal Document QAG Quality Assurance Group QC Quality Control RAR Resettlement Assessment Report RCR Resettlement Completion Report R&D Research and Development RPMO Regional Project Management Office SC Standing Committee SIDD Self-Financing Irrigation and Drainage District TA Technical Assistance TBMB Tarim Basin Management Bureau TBWRC Tarim Basin Water Resources Commission WASB Water and Salt Balance WRM Water Resources Management WSC Water Supply Corporation WTO World Trade Organization WUA Water User Association XUAR Xinjiang Uygur Autonomous Region Vice President: Jemal-ud-din Kassum, EAPVP Country Director David R. Dollar, EACCF Sector Director Mark D. Wilson, EASRD Task Team Leader/Task Manager: Geoffrey Spencer/Liping Jiang, EASRD  CHINA CN - TARIM BASIN II CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 3 5. Major Factors Affecting Implementation and Outcome 12 6. Sustainability 14 7. Bank and Borrower Performance 15 8. Lessons Learned 16 9. Partner Comments 17 10. Additional Information 17 Annex 1. Key Performance Indicators/Log Frame Matrix 18 Annex 2. Project Costs and Financing 20 Annex 3. Economic Costs and Benefits 22 Annex 4. Bank Inputs 26 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 29 Annex 6. Ratings of Bank and Borrower Performance 30 Annex 7. List of Supporting Documents 31 Annex 8. TBWRC Organization, Responsibility and Consultation Arrangement 32 Annex 9. Implementation Management of Safeguard Issues 34 Annex 10. Borrower's Comments in Detail 37 Annex 11. Research Topics by Project Areas 39 Annex 12. Pictorial Overview of the Tarim Basin and Project Achievements 43 Map IBRD 29489  Project ID: P046563 Project Name: TARIM BASIN II PROJECT Team Leader: Geoffrey Spencer TL Unit: EASRD ICR Type: Core ICR Report Date: June 28, 2005 1. Project Data Name: TARIM BASIN II PROJECT L/C/TF Number: IDA-30930; SCL-43410; TF-27129 Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: Irrigation and drainage (78%); Agricultural extension and research (20%); Sub-national government administration (2%) Theme: Water resource management (P); Land administration and management (P); Other rural development (S); Environmental policies and institutions (S) KEY DATES Original Revised/Actual PCD: 03/19/1997 Effective: 10/31/1998 12/18/1998 Appraisal: 02/09/1998 MTR: 11/30/2001 Approval: 06/09/1998 Closing: 12/05/0331 12/31/2005 Borrower/Implementing Agency: PRC/XINJIANG UYGUR AUTONOMOUS REGION Other Partners: AusAID through Bank executed Technical Assistance Grant STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Jean-Michele Severino Country Director: David R. Dollar Yukon Huang Sector Director: Mark D. Wilson Geoffrey B. Fox Team Leader at ICR: Geoff Spencer and Jiang Liping Douglas C. Olson ICR Primary Author: Geoff Spencer 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: HS Sustainability: HL Institutional Development Impact: H Bank Performance: HS Borrower Performance: HS QAG (if available) ICR Quality at Entry: HS Project at Risk at Any Time: Yes  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: 3.1.1 The main project development objectives (PDOs) were: (i) to increase the incomes of poor farmers through irrigated agriculture development; (ii) to establish mechanisms for the sustainable development, management and use of the water resources and land in the Tarim Basin; and (iii) to partially restore and preserve the "green corridor" in the lower reaches of the Tarim River. 3.1.2. The project was demanding, complex and risky because of the depth of institutional reform required for setting up an intra-provincial river basin management arrangement, including the establishment of a water quota system, with an allocation of a water to the environment. Both had no precedent in China. It was further complicated because by design, it needed a well coordinated and integral approach across a number of government departments and political and administrative boundaries. To be successful it needed strong political support to create the establishing policy and institutional frameworks. Prior to the project, uncontrolled and increasing upstream water diversions for irrigation, municipal and industrial use were causing a steady deterioration of the downstream environment. The project was designed to bring about sustainable water resources management in the Tarim River Basin and to a create conditions of controlled development, allocation and use of water resources in the upper basin in order to increase water availability and quality for the lower river basin environment. 3.2 Revised Objective: The original project objectives remained unchanged throughout the project's implementation. 3.3 Original Components: 3.3.1 The project comprised eight components: (1) Water Conservancy; (2) Land Reclamation; (3) Low Yield Land Improvement (LYLI); (4) Agricultural Support Services; (5) Environmental Protection and Monitoring; (6) Institutional Development; (7) Tarim Basin Water Resources Commission (TBWRC); and (8) Regional Management. 3.3.2 The components were well designed as an integrated set of actions and activities that supported the full achievement of the PDOs. The components were effectively integrated using an implementation strategy directed at sustainable water resources development, allocation and management and employed both a "top-down" and a "bottom-up" approach. The project management arrangements adopted at Regional, Prefecture and County levels ensured effective management and coordination. 3.4 Revised Components: The original components remained largely unchanged throughout the implementation period. However, activities under component 2 -Land Reclamation- involving the expansion of the irrigated area were stopped at the time of the mid-term review in order to be consistent with a change in Regional government policy supported by the Bank. The funds intended for this component were reallocated to the Low Yield Land Improvement Component and to Water Conservancy activities. 3.5 Quality at Entry: While the project was not subject to a review by the Quality Assurance Group, the quality at entry is rated as having been highly satisfactory. The PDOs were consistent with the Bank's Country Assistance - 2 -  Strategy for China, which called for: (i) sustainable agricultural development and diversified agricultural production in poor and environmentally vulnerable areas; (ii) promotion of continued sustainable development and upgrading of marginal lands; and (iii) the incorporation of major water storage, transfer, irrigation, drainage and flood control infrastructure. It was also in step with the government of China's (GOC) long-term polices and strategies supporting increased food production by improving irrigated agriculture, increasing incomes and rural employment opportunities and furthering western regional development. The project design incorporated lessons learnt from the 13 previous Bank-funded water and irrigation projects in China and from the Operations Evaluation Department (OED) evaluation reviews of major water resources projects Bank-wide. The design also incorporated fully the Bank's safeguard policies which included Environmental Assessment, Integrated Pest Management, Indigenous People, Dam Safety, and Involuntary Resettlement. An exception to the International Waters safeguard (O.P7.50) was sought and granted in August 1997. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: 4.1.1 The outcome of the project is rated as highly satisfactory. 4.1.2 The project effectively brought about: (i) institutional reforms at the river basin management level; (ii) restrictions on agricultural water use by the introduction of a water quota system; (iii) increased productivity of water usage in irrigated agriculture; and (iv) the establishment of a water quota allocation specifically for the downstream riverside environment which resulted in significant environmental water releases. The physical outputs achieved under each component of the project are clear and measurable. What is not so easily measurable, but which is a striking achievement in such a short time, is the complete change of mentality and genuine understanding and commitment by stakeholder water-users and government officials within the basin that water use must be controlled within allocated quotas and that water must be allocated both for productive and environmental purposes. 4.1.3 The project was completed on schedule, with all the main physical targets met and with full disbursement of the loan/credit and all civil works were completed to high quality standards. The first objective (of increasing farmer incomes) was met by increasing agricultural productivity, improving and modernizing cropping systems, reducing input costs and diversifying agriculture to higher-value products. The second objective (of establishing mechanisms for sustainable allocation, use and management of the land and water resources) was achieved through the full implementation of institutional reforms in the entire basin. The achievements and outcomes under this component provide a "best practice" example of truly participatory and inclusive river basin institutional management arrangements. The third objective (of partially restoring the "green corridor" in the lower reaches of the river by providing water for the riverside environment) far exceeded the expectations established at appraisal. This was achieved by effectively reducing the quantity of water used in irrigation and allocating a water quota to the environment. The successful achievement towards this objective resulted in the Xinjiang Uygur Autonomous Region (XUAR) obtaining funding for a new nationally-funded regional project that began in 2001 to further leverage the project successes. 4.1.4 Over 200,000 farmer households in the project area have benefited directly from the project through raised annual cropping outputs as well as diversification into higher-value crops, particularly melons and other fruit crops. Compared to the estimates at appraisal, annual production exceeded these as follows: wheat by 5132 tons; corn by 14827 tons, rice by 19571 tons; cotton by 24459 tons; and sugar beet by 60844 tons. Compared to appraisal projections, the actual yields at project end for the widely - 3 -  planted crops of wheat and corn were better by 41% (4400kg /ha compared to 6210kg/ha) and 25% (1260kg/ha compared to 1580 kg/ha), respectively. Because of the LYLI component and the increase in livestock production, a huge increase in alfalfa production occurred