Announcement of a World Bank Credit to China for an Environment Project and a Credit to Mongolia for the Overhaul and Upgrade of their Transportation System

FOR IMMI-DIA II RIl AS[ World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. * Telephone: (202) 477-1234 News Release No. 94/9 1EAP Contact: Peter Stephens (202) 458-0344 External Affairs - East Asia & Pacific Region Fax (202) 522-3405 Environment is key to liftin! 1.2 million from poverty in China Washington, D.C., May 26, 1994 -- The World Bank's Board of Executive Directors' today approved a $150 million credit to China as part of an innovative project to restore the heavily eroded Loess Plateau and lift 1.2 million rural people from absolute poverty2. The project involves extensive planting of trees and grasses, construction of small dams and barricades, and terracing hillsides to stop the fertile topsoil of the plateau being washed away. The erosion has continued largely uninterrupted for thousands of years, turning the plateau into "something like the surface of the moon," according to the World Bank task manager for the project, Mr. Juergen Voegele. The destruction of farming land, coupled with irregular water supplies, has made the area's population among the poorest in China, with annual per capita incomes of only about $35-$50. Turning Moonscape to Farmland The project illustrates the link between poverty and the environment, and it seeks to tackle both issues simultaneously. Based on extensive trials of the same techniques elsewhere in the Loess Plateau, the project is expected to increase grain production by about 50 percent and fruit production by 400 percent. This will greatly reduce the threat of famine and enable farming communities to subsist without the need for regular shipments of grain from the government. Project Costs US$M "The little rainfall the people get will be kept for crops and trees, where now it just runs off," Central Government 17.2 Mr. Voegele said. "They will also be able to Prefectures and Counties 18.5 convert highly eroded areas to production, utilize river beds and move away from it Of. . .Total 248.7 unproductive -- and unsustainable planting on IThe 24 Executive Directors represent, and are appointed by, the World Bank's 177 member governments. 2Absolute poverty is defined as having insufficient money to provide 2150 calories a day. sloping hillsides. More than 270,000 hectares of slopeland will be planted with a variety of suitable shrubs and trees." Mr. Voegele said that the project had been prepared after close consultation -- from the early planning stages -- with the people living in the area. As a result, the local people "truly own the project. It's theirs completely. They've had more than 1000 staff working on it. It involves more than 2000 villages and 1.2 million people, and when you go and talk to farmers, they know all about it. We have picked up their idea and pushed the standards in some areas a little, but the concept and basic idea and implementation are theirs." Ambitious as it is, the project's methods already have succeeded in lengthy trials elsewhere on the Loess Plateau, he said. "When you go to a valley and you see what looks like a moonscape, you don't believe it's possible to do anything with it. But then you go to the next valley, where the people have been working on it for five years, terracing and planting, and you can't believe the difference. They move mountains." The project has two main components: * the construction of land development and erosion control works on 15,600 square kilometers in Inner Mongolia, Shanxi, Shaanxi and Gansu. This involves complementary planting of trees, shrubs and grasses, constructing dams and terraces, irrigation, and reduced cattle grazing, to reduce erosion, reclaim land and increase food production. * institutional development programs, to support training, technology transfer and research. This will ensure that local conservation agencies are equipped to monitor and control the anti-erosion campaign in the years ahead. The total cost of the project is about $248.7 million.3 The International Development Association credit is extended for 35 years on standard IDA terms of 10 years grace period, no interest, and a service charge of 0.75 percent a year on the disbursed balance. .wv ........... 3Note that money figures are expressed in US dollar equivalents. FOR IMMUDIA11 REHASt World Bank .818 H Street, N.W., Washington, D.C. 20433, U.S.A. * Telephone: (202) 477-1234 News Release No. 94/9 1EAP Contact: Peter Stephens (202) 458-0344 Fax (202) 522-3405 External Affairs - East Asia & Pacific Region Mongolia's transport system to be overhauled and upgraded Washington, D.C., May 25, 1994 -- Mongolia's transport sector -- a vital feature in the country's economic revitalization -- is to be overhauled and upgraded as part of a $36.7 million project. The project will seek to improve the efficiency of the rail, urban transport and truck systems through a combination of repairs, improvements and technical assistance. The World Bank is supporting the project with a $30 million credit through its concessionary lending arm, the International Development Association (IDA). Mongolia's transport infrastructure is inadequate to meet the country's present needs, and is posing as a major obstacle to the continued economic development. Mongolia is heavily dependent on transport of coal for energy production, as well as on freight transport to supply the growing domestic and external markets. But, because of the lack of foreign exchange, almost no new transport equipment has been bought in recent years, and there is a lack of spare parts for basic maintenance of the existing stock. Mongolia's Urban Transport 2500 2418 2472 2135 2041 2000 1820 1687 1626 1625 - 1509 - 1500 -- - U Buses and trolleybuses in service (daily average) E Passengers per vehicle (daily 1000- average) 500 33 4 33 34 28 28 28!9 0 -k -; - - - - -. - S 0) N0 M M 9? R S .-1 .- - 2 As a result, the use of the transport system and the quality of service have deteriorated sharply. The down-time of essential equipment such as locomotives, buses, trolleybuses, and trucks, is 30-60 percent, compared to a normal 15-25 percent range with normal maintenance. Bus loads in the capital, Ulaanbaatar exceed 2500 passengers per bus each day, compared to a normal level of 1200 passengers. World Bank task manager, Mr. Hernan Levy, said that the project would help the emerging private sector to increase trade through new cross-border routes. In an unusual component, the project would also encourage a shift from centralized control of the truck fleet and support the creation of small private companies and owner-operators. Money also will be allocated for repairing the country's major roads, some of which have "potholes so big and deep you just have to go around." Even More of a Problem in Winter "It is a complex project, but we thought that was necessary to help in all the critical areas of Mongolia's transport system at once," Mr. Levy said. He 101 N said that the urban transport system, which will take the biggest single slice of Mongolian Railways 1.1 funds, was in urgent need of attention. The R. buses were crowded in fine weather, but in Total 36.7 winter the problem became even more severe. "For 50-80 days, it is 300C below zero, and people put on their big, thick winter coats. That means they take up almost twice as much space, which means that people waiting for buses have to stand for long periods out in the cold." The total cost of the project is $36.7 million'. The IDA credit is extended for 40 years on standard IDA terms of 10 years grace period, no interest and a service charge of 0.75 percent a year on the disbursed balance. INote that money figures are expressed in US dollar equivalents.