China - Guangdong Pearl River Delta Urban Environment Project

Updated Project Information Document (PID) Report No: 30281 Project Name CHINA - Guangdong Pearl River Delta Urban Environment Project Region East Asia and Pacific Region Sector Sewerage (70%); Solid waste management (20%); Sub-national government administration (10%) Theme Water resource management (P); Environmental policies and institutions (P); Pollution management and environmental health (P); Infrastructure services for private sector development (S) Project P075728 Supplemental Project P084003 Borrower(s) PEOPLE'S REPUBLIC OF CHINA Implementing Agency(ies) GUANGDONG PROVINCE, through the Guangdong Provincial Finance Bureau's World Bank Project Management Office Address: 26 Cang Bian Road, Guangzhou, China Contact Person: Mr. Yuchang Zeng, Executive Director General Tel: (86 20) 8333 6405 Fax: (86 20) 833 30007 Email: Environment Category A (Full Assessment) Date PID Prepared June 1, 2004 Auth Appr/Negs Date December 9, 2003 Bank Approval Date June 8, 2004 1. Country and Sector Background Background. The Pearl River Delta (PRD) region has witnessed phenomenal economic growth, with the GDP rising by an average 14.7 percent annually over the period 1990-2000. The Delta region has become a major outlet for manufactured goods to the rest of the world. In 2002, Guangzhou made the highest contribution to the GDP of the Province, with Yuan 644 billion/year (US$80.5 billion). The population of Guangdong Province was 86.4 million (2000 Census), of which 39.7 million was in the PRD. Guangzhou City had a migrant population of over 4 million in 2000 (about 47 percent of total population). The PRD's rapid economic growth has come at a heavy environmental cost. Water quality in many stretches of the Pearl River, especially around Guangzhou, Foshan and Dongguan, is worse than Class V standard, which makes the river system unsuitable for irrigation, aquaculture, and potential recreational uses. It also contributes to serious pollution of the South China Sea. Related sector issues are discussed in the following paragraphs. Regional Planning. Planning for environmental infrastructure in the PRD, and Guangzhou is based on narrow administrative boundaries rather than drainage catchments or rational planning. The recently announced PRD Clean-up Campaign (PRDCC) calls for the construction of 162 wastewater treatment plants, estimated to cost over Yuan 40 billion (US$5 billion). The result would be a proliferation of uneconomic small capacity plants that will require high capital and recurrent costs. Current planning does not lay adequate emphasis on regional planning considerations, economies of scale and least-cost strategies. Opportunities for regional environmental planning and management for the PRD and the South China Sea, involving a range of stakeholders in Guangdong, Hong Kong and Macao, have not been adequately explored.  2 PID Wastewater Management and River Water Quality. Many sections of the Pearl River, especially in the vicinity of Guangzhou, Foshan, Dongguan and Shenzhen, 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 sources. An accelerated investment program to collect and treat domestic wastewater has begun. In 2000, total wastewater generation (domestic and industrial) was estimated to be about 11.5 million m3/day. By 2010, it is projected to rise to about 12.3 million m3/day, of which 2.1 million m3/day is industrial wastewater. In terms of total wastewater generation, Guangzhou contributes about 25% of the total load; other PRD cities of Dongguan, Shenzhen and Foshan follow at 15%; 14% and 13%, respectively. The current total treatment capacity in the PRD is about 2.6 million m3/day, treating approximately 28% of domestic wastewater. By 2010, the PRD expects to add about 8.81 million m3/day of treatment capacity. Hazardous Waste and Sludge Management. The growing volumes of hazardous wastes, and the reported illegal dumping, pose considerable risks to health, and surface and ground water sources. There is one hazardous waste treatment plant is in Shenzhen, and construction of incinerators is being considered by PRD towns. Furthermore, disposal of large volumes of sludge, of over 1,500 tons/d, will be a problem as the PRD increases its wastewater treatment capacity. The first sludge treatment facility, of 800 tons/d capacity, is currently under construction in Guangzhou. The heavy metal content in sludge is a concern; however, recent data indicate a reducing trend, due largely to the Province's industrial pollution control action program. Guangdong has started to address this problem through increased monitoring and enforcement. Water Quality Monitoring and Data Management. Uncoordinated and inadequate monitoring of environmental conditions, and lack of real time data in the PRD, hamper planning, regulation and enforcement of standards by agencies responsible for regulation, particularly with regard to drinking water standards, river water quality, pollutant contribution from industry, and municipal and non-point sources. Guangdong has begun a pollution monitoring and enforcement drive, and publishing some environmental data. Vulnerable Population. Some PRD cities are facing growing social pressures from vulnerable populations. Informal migrants are particularly vulnerable; often they lack 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 has become a major challenge for these cities. Pricing of Urban Services. Charges for water supply and wastewater services recover only a portion of the true cost of providing the services. There is no cost recovery for transfer and disposal of municipal solid wastes