China - Third Guangdong Province's Pearl River Delta Project

Page 1 PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB1879 Project Name CN-PRD3 Region EAST ASIA AND PACIFIC Sector Sewerage (70%);Flood protection (30%) Project ID P081776 Borrower(s) PEOPLE'S REBULIC OF CHINA Implementing Agency Environment Category [X] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared October 7, 2005 Estimated Date of Appraisal Authorization March/April, 2006 Estimated Date of Board Approval August, 2006 1. Key development issues and rationale for Bank involvement Guangdong Province's Pearl River Delta (PRD) region has achieved economic growth rates among the highest in China over the past decade. But, this growth has come at a heavy environmental cost, especially in terms of water pollution. The PRD region is one of the most complex urban systems in Asia. It has a total population of over 30 million in 25 municipalities, 3 counties and 450 towns in Guangdong province and the two special administrative regions of Hong Kong and Macau. The Pearl River system is China's second largest in terms of flow, and is a major source for drinking water supply and irrigation. But, water quality has deteriorated in most stretches of the PRD Rivers to worse than the lowest national standard (Class V) due to the direct discharge of domestic and industrial waste, and the run-offs from urban and agricultural areas. In 2003, Guangdong provincial government announced a major plan to clean-up the PRD Rivers. This is an eight-year campaign which will invest more than US$5 billion in the construction of about 160 wastewater treatment plants in cities and towns in the PRD region. The World Bank is providing support for this plan by financing wastewater treatment facilities and other investments in the provincial capital of Guangzhou, which is the biggest single source of pollution (34% of organic pollution load), through the first PRD urban environment project, approved in 2004. Under this project, the Bank is also funding an updating of the PRD clean-up campaign to help optimize the number and size of wastewater treatment facilities to be built. This is urgently needed, as the original plan was prepared without benefits of inter-municipal coordination or focus on options and least cost solutions. This updating work, now underway, is scheduled for completion by mid-2006. In addition, the Bank is preparing a second PRD urban environment project with Shenzhen municipality, the second largest source of pollution in the PRD region (24% of the total). Expert studies estimate that the municipalities of Foshan and Jiangmen are contributing 9% and 6%, respectively, of the pollution flowing into the PRD river network. Page 2 Foshan municipality is located in south-central Guangdong province, adjacent to Guangzhou city. It has a population of 5.6 million, and has a long history as a cultural and industrial center in south China. Its economic growth has been particularly impressive recently, with GDP expanding 16.3% in 2004. Foshan