China - Sustainable Coastal Resources Development Project

Page 1 AB1990 Report No. PIC4882 Project Name China-Sustainable Coastal Resource Development Project Region East Asia and Pacific Sector Agriculture/Fisheries & Aquaculture Project ID CN-PE-3539 Implementing Agencies Provincial governments and prefecture governments in Fujian, Jiangsu, Shandong, Liaoning, Hebei, and Zhejiang Provinces and Guangxi Autonomous Region Date PID Updated January 6, 1997 Board Date March 18, 1998 Projected Restructuring Date April 15, 2004 Project Reallocation Date November 17, 2005 Background 1 China has a continental coastline of 18,000 km and an island coastline of 14,000 km. Territorial waters cover 4.87 million sq km of which 1.48 million sq km is continental shelf within the 200-meter isobath. The shallow water area below the 10- meter isobath covers 73,400 sq km of which 19,700 sq km are tidal flats. This vast area is one of the world's largest sources of aquatic products and one of the most productive. 2. In recent years, the output from China's coastal resources has shown dramatic growth. Primary production of aquatic products in 1995 exceeded 25 million tons, and this has been a major factor in the economic growth of the coastal provinces. Varied outputs from mariculture, aquaculture and offshore capture fishing have spurred the growth of processing industries and led to substantial foreign exchange earnings. Of equal importance have been rapid gains in jobs and earnings especially for lower income groups. China's growth in seafood production has surpassed the country's rapid gains in agriculture production. High population pressures on the declining areas of farmland argue for more emphasis on the use of coastal resources. There is still considerable potential for further expansion but this will have to be accompanied by stronger efforts to ensure that it is sustainable and consistent with environmental protection. 3. In the 1990s, new techniques for production of aquatic products were developed and applied on a large scale. But rapid growth in production has led to new challenges that require urgent attention. These include: -- measures to combat outbreaks of disease such as the viruses that decimated shrimp production in recent years; -- a need to conserve capture fishery resources and arrest the decline in the stocks of some valued species; -- a need to protect natural sources of breeding stocks, of which some species are unique to China; Page 2 -- preservation of biodiversity in tidal flats and shallow waters through identification and protection of nature reserves; -- measures to preserve, or improve, water quality in coastal areas that are often close to large cities and industries; -- control of over exploitation of marine resources that in some areas has exceeded carrying capacity. 4. The Government recognizes these challenges and has recently strengthened fishery regulations and called on the provinces to design, implement and monitor plans for Integrated Coastal Zone Management (ICZM). 5. Sustainable development of China's coastal and marine resources through the practice of Integrated Coastal Zone Management (ICZM) has, therefore, a central place in the policy of the central government. This has strong support in the provinces from the provincial leaders down through the prefectures, counties, townships, fishermen and fish farmers. There is also a strong interest in the coastal provinces in improving aquatic product quality and safety. The National Center for Quality Supervision and Testing of Aquatic Products in Qingdao has recently issued standards for the safe handling of seafood products that conform to the international Hazard Analysis at Critical Control Points (HACCP) approach. Project Objectives 6. The project's objectives are to (i) support the Government's commitment to sustainable development of China's coastal resources, (ii) reduce pressure on coastal fishery resources and (iii) help improve aquatic product quality. These objectives will be achieved through (a) the design and implementation of ICZM plans in selected areas of four coastal provinces (b) investment in advanced hatchery technology, (c) production and processing of aquatic products that promote and reinforce sound ICZM policies, (d) a program of field trials of new shrimp culture methods that aim to combat the current disease problems, and (e) training of public and private sector staff in quality control procedures for aquatic products, consistent with the HACCP approach and the application of HACCP standards to processing plants and markets financed by the project. Project Description 7. The approved project covered parts of four coastal provinces -- Fujian, Shandong, Jiangsu, and Liaoning. Some project savings were generated and the Government requested that those savings be reallocated to Yantai, Shandong Province; Tangshan, Hebei Province; Ningbo, Zhejiang Province; and Guangxi Autonomous Region. The proposed components are consistent with a policy of sustainable coastal zone management. They fall into four broad categories as briefly described below. A. Coastal Zone Management Page 3 8. The project would support the formulation and implementation of ICZM plans in the four provinces. This would include: a) assessment of the present status of resource use b) detailed preparation of ICZM plans including provision of hardware and software for data management and analysis; c) establishment and protection of nature reserves on land and in coastal waters; c) equipment and training for environmental data collection and analysis; d) review and, if necessary, strengthening of laws and regulations governing coastal zone management; e) establishment of fishery and environmental monitoring centers; f) upgrading of fishery surveillance vessels with equipment for environmental monitoring and stock assessment; g) support to a marine protected area; f) construction of two coastal small-scale wastewater treatment facilities; and g) restoration of mangroves. B. Sustainable Aquaculture and Mariculture 9. The project would support environmentally sustainable development of shallow waters and tidal flats for mariculture. This would include oysters, scallops, and cage culture of fish in shallow and deep waters and clams and laver on tidal flats. Tidal flats and shallow waters are highly productive and renewable resources that are not used for any other purpose. They offer not only an additional source of income for the local people, but more importantly a significant potential for food production in a country where land based resources for food production are already intensively used. This component also includes modification of shrimp ponds for polyculture. Many of these are being used for low intensity polyculture of shrimp, fish and shellfish. The aim will be to develop more productive polyculture systems in existing ponds. New pond construction is not a part of the project. Construction of new hatcheries as part of this component will increase the supply of high-quality breeding stock and take the pressure off natural sources. Local credit is currently not available for these activities. C. Shrimp Pond Rehabilitation 10. In recent years, high-yield shrimp culture in the project areas has been virtually eliminated by virus outbreaks. New methods of shrimp culture involve treatment of water in storage ponds, cleaning of the grow-out ponds, aeration, and changes in pond geometry. In several areas these new techniques have produced promising results, but caution in the pace of development is desirable. Therefore, shrimp pond rehabilitation was phased during implementation until it is clear that reliable solutions to the disease problems have been found. The result has been that in the project areas financially justified solutions were not realized and the component has been dropped with total investments reduced to only about 5% of its original scale. Page 4 D. Product Quality and Safety 11. Some of China's major customers in North America and Europe have plans to raise standards of quality and safety for aquatic products in the near future. It is also expected that domestic processors and consumers will also demand higher standards. To meet these demands, improvements will be needed in product handling at all steps in production, marketing and processing. Items to be supported by the project include the following; -- expansion and improvement of selected wholesale markets for aquatic products; -- expansion and improvement of selected cold storage and packaging facilities; -- construction and/or expansion of processing facilities; -- training of fishery officials, processors, market operators, etc. in HACCP concepts. All of these facilities would be designed, built, and operated in accordance with Chinese standards based on the HACCP concept. This component has proven to be successful under the project and is being expanded under the restructured project. Financing 12. The estimated cost of the project is US$ 200 million. The Bank Loan of US$ 100 million would be onlent to the participating provinces/prefectures. About US$ 80 million of the proceeds of the Bank Loan would be passed on as loans to the households, farmer groups, and enterprises participating in the project. These loans would cover about 50 percent of the production components and the other 50 percent would be obtained by the beneficiaries from other sources. The remaining US$ 20 million would cover 50 percent of the cost of supporting services for ICZM with the remainder to be financed by the provinces/prefectures. Implementation 13. Overall direction of the project at the central government level rests with the Ministry of Agriculture and Fisheries (MOA). The MOA will closely coordinate with the State Oceanic Administration. In each of the project areas, high-level Steering Committees to guide and coordinate coastal zone management are soon to be established. These committees will have representatives from all relevant government departments, the public and business leaders. These committees will be headed by a senior government official; for example in the case of Fujian the Vice-Governor will head the Steering Committee. In each province there is a Fishery Department at the provincial, prefecture (or municipality) and county levels. These departments are staffed by personnel with wide experience in fishery technology, the provision of support services, and the review and approval of plans for aquaculture/agriculture development. The Fishery Departments in line with recent government policy are becoming more involved in environmental monitoring and coastal zone management. A Central Project Management Office (CPMO) has been set up in each project area: in Fujian at the provincial level and in Page 5 Nantong, Weihai, Yingkou, Tangshan, Ningbo/Xiangshan, and Fangchenggang at the prefectural levels. In all project areas, PMOs have been set up in the counties. These PMOs have been closely involved in the planning and design of the project in consultation with the potential beneficiaries at the township and village levels. The PMOs will have the primary responsibility for planning the production components of the project, and have a leading role in the formulation and implementation of coastal zone management plans. Environmental Aspects 14. Two of the project's components would have the primary purpose of environmental enhancement and be entirely free of adverse impacts. The component for Coastal Zone Management aims to ensure sustainable development of coastal resources in ways that avoid or eliminate adverse environmental impacts. This component also includes protection of wildlife habitat in several locations. The project has no physical impact on any of these habitats; their protection is included as part of the ICZM plans. 15. The Product Quality component seeks to introduce safe practices in the production, processing and marketing of aquatic products and thereby to reduce or eliminate health and environmental risks. 16. The Shrimp Rehabilitation Component would try out new techniques for disease control in shrimp culture. A common feature of the new techniques is chlorination of the water in a holding pond before filling the grow-out pond. Concentrations of chlorine are low (about 5 parts per million). On a large scale this might be seen as an environmental hazard, but the project does not involve large-scale production. Moreover, an aim of this component would be to find other ways of treating the pond water that might be more environmentally friendly than chlorine. 17. The Mariculture/Aquaculture component involves rehabilitation of existing ponds and there is no conversion of land to ponds. Cage culture of fish can produce waste matter and, if it is on a large scale, this can create water quality problems. Site selection will be based on optimum carrying capacity considerations. The cages would be in maximum units of 100 to 200 cages (4x4x4 meters or 5x5x5 meter) and they would be widely scattered. All cages would be below the low-tide line. Considerable tidal action and winds would disperse and dilute the effluent from the cages. In most places, it will be possible to site oyster and/or kelp culture close to the cages to provide a natural source of filtration of waste products. The polyculture ponds produce waste products that collect in the beds of the ponds. These are cleaned out each year and placed on the sides of the embankments forming the ponds. Periodically this material is removed and used as compost in the farmers' fields. The adverse environmental impact of the mariculture/aquaculture component is limited to cage culture and is small and widely scattered. Contact Point: Public Information Center Page 6 The World Bank 1818 H Street N.W. Washington, D.C. 20433 Telephone No.: (202) 458-5454 Fax No.: (202) 522-1500 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by the Public Information Center week ending March 28, 1997 Annex China: Sustainable Coastal Development Project The project is rated as EA Category B. The project is not expected to have any major negative environmental impacts. It's design would in effect improve coastal resource use, establish carrying capacity limits, and identify areas for various sustainable coastal activities. For coastal and marine aquaculture and other components with a possible environmental impact such as quality upgrading of processing plants, environmental analysis would be conducted as needed. For this category B project, a general environmental analysis would be included as part of the Coastal Zone Development plan which would be formulated during project preparation.