China - Xiaolongdi Resettlement Project

Document of The World Bank Report No: 29174 IMPLEMENTATION COMPLETION REPORT (IDA-26050) ON A CREDIT IN THE AMOUNT OF SDR 79.9 MILLION (US$100 MILLION EQUIVALENT) TO THE PEOPLE'S REPUBLIC OF CHINA FOR THE XIAOLANGDI RESETTLEMENT PROJECT June 29, 2004 Rural Development and Natural Resources Sector Unit East Asia and Pacific Regional Office  CURRENCY EQUIVALENTS (Exchange Rate Effective June 17, 2004) Currency Unit = Yuan (Y) Y 1.00 = US$ 0.121 US$ 1.00 = Y 8.2866 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS CAS - Country Assistance Strategy CRO - County Resettlement Office EIA - Environmental Impact Assessment EMO - Envrionment Management Office EMP - Envrionmental Management Plan EPB - Environment Protection Bureau ERR - Economic Rate of Return ESE - Environmental Supervising Engineer HPRO - Henan Provincial Resettlement Office ICR - Implementation Completion Report IDA - International Development Association MOF - Ministry of Finance MTR - Mid-term Review MWR - Ministry of Water Resources NRCR - National Research Centre For Resettlement POE - Panel of Experts RPDI - Reconnaissance Planning And Design Institute SAR - Staff Appraisal Report VEO - Village Environmental Officer SAR - Staff Appraisal Report SPRO - Shanxi Provincial Resettlement Office YRCC - Yellow River Conservancy Commission YRCH - Yellow River Central Hospital YRCCRO - Yellow River Conservancy Commission Resettlement Office YRWHDC - Yellow River Water Hydropower Development Corporation YRWHDCRO - YRWHDC Resettlement Office Vice President: Jemal-ud-din Kassum Country Director: Yukon Huang Sector Director: Mark D. Wilson Task Team Leader: Chaohua Zhang  CHINA XIAOLANGDI RESETTLEMENT PROJECT 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 4 5. Major Factors Affecting Implementation and Outcome 14 6. Sustainability 16 7. Bank and Borrower Performance 17 8. Lessons Learned 18 9. Partner Comments 20 10. Additional Information 24 Annex 1. Key Performance Indicators/Log Frame Matrix 25 Annex 2. Project Costs and Financing 27 Annex 3. Economic Costs and Benefits 31 Annex 4. Bank Inputs 38 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 40 Annex 6. Ratings of Bank and Borrower Performance 41 Annex 7. List of Supporting Documents 42 Annex 8. Project Scope and Progress 43 Annex 9. Loan Covenant Compliance 45 Annex 10. Living Standard Assessment of the Resettlers 47 Annex 11. Consultation, Participation and Grievance Redress Mechanism 53 Annex 12. Gender and Vulnerable Households in Resettlement And Rehabilitation 56 Annex 13. Project Organization and Management 59 Annex 14. Project Monitoring and Supervision 61 Annex 15. Environment Management 64 Annex 16. Cultural Property Preservation and Protection 70 Annex 17. Post Resettlement Assistance 74  Project ID: P003644 Project Name: CN - XIAOLANGDI RESETTLEMENT Team Leader: Chaohua Zhang TL Unit: EASES ICR Type: Core ICR Report Date: June 29, 2004 1. Project Data Name: CN - XIAOLANGDI RESETTLEMENT L/C/TF Number: IDA-26050 Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: General industry and trade sector (43%); General transportation sector (19%); General information and communications sector (19%); General agriculture, fishing and forestry sector (11%); Central government administration (8%) Theme: Rural services and infrastructure (P); Other social protection and risk management (P); Other social development (S); Other environment and natural resources management (S) KEY DATES Original Revised/Actual PCD: 06/23/1993 Effective: 09/22/1994 09/22/1994 Appraisal: 11/20/1993 MTR: 06/30/1996 03/28/1997 Approval: 04/14/1994 Closing: 12/31/2001 12/31/2003 Borrower/Implementing Agency: The People's Republic of China/The Ministry of Water Resources Other Partners: STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Gautam Kaji Country Director: Yukon Huang Nicholas Hope Sector Manager: Mark D. Wilson Joseph Goldberg Team Leader at ICR: Chaohua Zhang Daniel Gunaratnam ICR Primary Author: Chaohua Zhang 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: S Sustainability: HL Institutional Development Impact: H Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: 3.1.1 The objectives were to assist the Borrower: (a) to resettle and improve the livelihoods of approximately 154,000 people in the reservoir area who need to be resettled as a result of the construction and inundation up to the 265 meter level of the Xiaolangdi Multipurpose Dam; and (b) to minimize the effects of social adjustment of the resettlers and of their host communities following resettlement. 3.1.2 In practice, the project did not limit its livelihood development activities to only the resettled people, but included the host population. The objectives were realistic and important, both for the country as a whole and for the rural sector. The project had moderate to significant risks at appraisal, but most of these risks were ameliorated by effective and flexible management arrangements that allowed changes to the project directions. The major change in project direction was in the livelihood component where, instead of a larger share of incomes being generated from county industry the income was generated from a combination of land based schemes, village based commercial farming and village industries and some off-farm employment. It was a moderately complex project, but not one that placed undue demands on the implementing agency, which made changes to ensure risks were reduced. The project now is completed and throughout was very responsive to the circumstances of the Borrower and its development priorities. 3.2 Revised Objective: 3.2.1 The objectives of the project remained unchanged during the implementation phase, although the target populations of resettlers increased from 154,000 to 172,487. Although ten years have passed since its appraisal, the objectives of the project remain consistent with the current Country Assistance Strategy (CAS) for China and with current international understanding, policy and standards in reservoir resettlement that have seen significantly raised expectations and requirements. 3.3 Original Components: 3.3.1 The components of the project were: Component A Residential and Infrastructure Reconstruction for Villages and Towns Component B Transfer of Resettlers Component C Planning, Design and Institutional Support Component D Livelihood Development 3.3.2 In addition, the project included the following five important activities; they are described in different levels of detail in the SAR but are not stated as project components. Only Activity 4 had separate financing identified, and the other activities appear to be "embedded" in the main components: Activity 1 Social Adjustment Activity 2 Consultation, Participation and Grievance Redress Activity 3 Gender and Vulnerable Groups Activity 4 Environment Management Activity 5 Cultural Relics Protection 3.3.3 The project was prepared and designed on the basis of a detailed analysis and an understanding of experiences and lessons learned in the past 40 years in this sector in China. The components were closely related to the achievement of the objectives, and were well within the capacity of the implementing agency. One of the key lessons learned was the need for a "development" approach for reservoir resettlement. The - 2 -  development approach consisted of, apart from pure compensation payments for replacement of housing, village and all infrastructure including industries, there was additional large economic project infrastructure provided for the resettlers like the Wenmengtan Land reclamation and associated irrigation and drainage (80,000 mu) and Houhe Dam and irrigation (75.000 mu). The value of the new infrastructure was about $100 million to help develop and restore livelihoods of resettlers and boost incomes of host families. Most of the industries were essentially compensated, so that resettlers could start with modern and environmentally friendly facilities, producing new and more marketable products. This was established as a fundamental principle in the Chinese policy framework for reservoir resettlement developed in the late 1980s and was built into the project design through several decades of planning and efforts by local design institutes and enhanced by international expertise and experience brought in with the preparation of the project. This was reflected in the project design through: (a) a clear objective that resettlers should not only restore, but also improve their living standard; (b) basic principles to be followed in planning, design and implementation in line with this objective; (c) an elaborate institutional establishment; (d) a participatory and consultative approach for planning and implementation; and (e) a commitment to carry out post-resettlement support activities for the sustainable development of the resettlers. 3.3.4 With the benefit of hindsight, it is now clear that the project design could have been strengthened to reflect more accurately the detailed design process, to appreciate better the complexities of reservoir resettlement, and subsequently to gauge better the risks and challenges involved. 3.3.5 First, the project followed a phased approach for detailed planning and technical designs for resettlement. This approach was inherently understood, but not presented adequately in the SAR. This caused misunderstandings in terms of the dynamics and details of the project implementation designs. 3.3.6 Second, the Bank realized the risks during preparation concerning the feasibility and sustainability of the industrial resettlement component, but accepted it as a method of improving living standards, because of the strength of the rural industrial sector (which was growing at 15 percent per year during the period 1980-1993). The Bank's initial position proved to be correct and this component was replaced with the land-and-agriculture based program because macro-economic changes worldwide had caused the industrial sector to be become unstable and, therefore, unsuitable and risky as a basis for resettlement. The appraisal mission did accurately forecast the parametric risks, but it was impossible to forecast the systemic risks of worldwide macro-economic behavior for rural industries in the rural sector in China. It was also assessed during the appraisal that these systemic risks would to be settled during implementation by being flexible with the approach to resettlement. 3.3.7 Third, the core and strength of the Chinese approach for reservoir resettlement is its reliance on land and agriculture, and the Bank's policy preference and emphasis on a "land for land" approach. The appraised project followed an approach of land for land and in addition provided for large off-farm income from county level industries, which proved to be unsuccessful. Though the project design anticipated the general trend of moving into the non-farm sector, it was not anticipate the drastic macro-economic change in the county industries and the impact this would have. As a result, the government, in consultation with the Bank changed the approach from a focus on county based industries to one focused on village industries, commercial farming (sideline activities: cash crops, commercial livestock, fishery, agro-processing, village industries), off-farm employment and land based agriculture. This approach was successful. 3.3.8 The positive government policy framework, strong government commitment and success of a few early reservoir resettlement programs led to some optimism about the timing of reaching objectives and in hind sight, an underestimation of the complexities of reservoir resettlement, particularly on the social and political side. While the overall project objectives have been achieved within the project time-frame, and - 3 -  full livelihood restoration achieved for 70% of the resettlers, the remaining 30% the resettlers has reach about 80% of their targeted incomes. Some of the lag can be accounted for due to the slowness of changes in shifting from county to village based industries, sideline activities and also villagers desire to take a large portion of the livelihood restoration compensation and invested it on high quality schools, clinics, village center and on infrastructure rather than on larger irrigation or commercial agriculture or viable village industry. However, some more analysis could have helped to understand better the evolving social and political reforms in rural China and the challenges to be encountered in the reconstruction of livelihoods for the affected rural villages and resettlers. However, no amount of analysis could have predicted the villagers desire to invest more on higher quality service infrastructure, rather than productive economic facilities. 3.4 Revised Components: 3.4.1 The project components remained unchanged throughout the implementation of the project. However, there were four changes in the project's circumstances that affected the scope of all components. First, the proposed new industrial investment to create non-farm jobs for resettlers was cancelled because of the changed macro-economic situation and the high risks it carried in resettlement. The planned industrial resettlement program was replaced with a land-and-agriculture based alternative program. Second, as a result of the above change and the necessity for more resettlement sites, the host population increased from an estimated 300,000 to 545,000. Third, because of the up-dated project impact inventory survey in 1995 and the need that emerged in detailed technical design to move together those administrative villages located on the inundation line, the affected population under the project was increased from 154,000 to 172,487. Fourth, the Reservoir Phase III Resettlement Program planned for implementation during 2010-2011 was advanced to start in 2002. 3.5 Quality at Entry: 3.5.1 The Quality at Entry of the project is considered to have been satisfactory. The project was one of the first large-scale resettlement projects in which the Bank had been involved throughout the whole design stage. The project was consistent with the government's priorities and reflected the government's commitment to meet international standards concerning resettlement, to take a long-term approach in remaining engaged after the physical resettlement activities were completed, and to restore and improve the living standards of affected people. The Bank's Operational Directive 4.30 on Involuntary Resettlement was used as the basis for the establishment of a set of seventeen specific resettlement criteria to be observed in the design and implementation of the project. The quality of the project design is considered to have been good. Most of the assumptions about external factors and project risks were reasonable; however, in a rapidly changing economic environment, those aspects of livelihood improvement that were based on county industrial job-creation were largely abandoned and income was generated from land based activities, commercial agriculture, village and household industries. The project was able to adapt to this changed set of circumstances. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: 4.1.1 The achievement of the objectives under the project was generally satisfactory. The project has essentially completed the resettlement program. All resettlers, with the exception of a small number, have moved into new houses in their new villages, with complete infrastructure and public facilities. The living conditions and the environment have substantially improved. Replacement land has been allocated to the resettlers and various livelihood activities are under implementation. Independent assessment indicates that the majority of the resettlers have improved or restored their living standard. - 4 -  4.1.2 Resettlement of 172,487 people. The project has completed its resettlement program with the exception of 1,500 people, less than 1 percent of the total, who have chosen to resettle themselves on their own. A total of 227 villages and 12 towns have been established, and 170,987 people in 51,969 households have moved into new houses. This exceeds the appraisal target 154,000 people. The new settlements are complete with infrastructure and public facilities, with improved access to markets, services, information and various non-farm job opportunities. The majority of the resettler villages moved as whole communities, so that social networks and kinship were maintained. The host population has also benefited from the improved infrastructure. There are 1,500 people who have not moved with their fellow villagers to the agreed and developed resettlement sites. They have changed their minds for various reasons, including changed preference, village internal conflicts and desire to stay close to the reservoir. While the project offices have been working with them to finalize the optimum alternatives many of these resettlers have chosen to take their compensation and moved out on their own to other sites. The government will continue to manage and track this group to ensure that they are properly resettled to the location of their choosing. The government is being requested to report annually for the next three years, ending in 2007 on the status of this management program. 4.1.3 Restoration and improvement of livelihoods. The project resettler population consists of four groups (rural farmers, urban residents, employees of enterprises and institutions, and the host population). The project objective was to reestablish the livelihoods of the affected population through designed investment measures, so that they will not only restore their pre-relocation living standard, but also share in the project benefits. Monitoring data indicate that the project has generally achieved its objective. 4.1.4 The project area includes twelve towns with a population of 9,519 people. They are mostly employees in township government and institutions or business people. The project impact on these people was limited only to their residences. All towns were relocated within their own jurisdiction, with improved infrastructure and public facilities. The urban households have completed and moved into new houses, generally larger in space and better in quality than their previous homes. Their living standards have improved. 4.1.5 The project affected 789 enterprises, most of them village or private workshops, which hired workers on a daily basis. These small operations have been compensated. There were a few medium-sized state owned enterprises with a total employment of 3,846. They have either restarted their operations or switched to new operations at new sites. All 3,846 long-term or regular employees have been reemployed in the same enterprises. Additionally, there are 2,332 resettler labors employed in the new enterprises as long-term workers. 4.1.6 The host population, which provided land for the resettlement program is of 545,024 people in 397 villages spread out over 13 counties in Henan and Shanxi Provinces. They were indirectly affected by losing part of their farm land for the project resettlement programs. Monitoring and supervision confirm that land compensation funds have been delivered to all host villages, village lands have all been redistributed to the affected households and the completed livelihood programs have enabled them to improve their livelihoods through on-farm investment, cropping pattern adjustment and non-farm ventures. The host population also benefited from the infrastructure and public facilities put in place under the project. In general, the living standard of the host population has improved. 4.1.7 The majority of the project-affected resettler population are farmers, accounting for 91 percent of the total. Their restoration of livelihood was considered in four parts: (i) housing conditions, (ii) infrastructure, (iii) access to public services, and (iv) income. The resettlers now enjoy significantly - 5 -  improved livelihoods in terms of housing conditions, infrastructure and access to public services. The resettlers are quite happy with housing conditions, which in most cases are spectacular for the rural areas and far superior to the cave dwellings in the pre-resettlement villages. Though the average housing area is very slightly smaller, the housing has improved in terms of structures, lighting, ventilation, water supply and sanitary conditions. 4.1.8 Monitoring and surveys also indicate a high level of satisfaction with infrastructure and access to public services. All 227 new villages are complete and functional with basic infrastructure such as water supply, power supply, drainage systems and village road, schools, medical services, township centers, telephone and broadcasting lines. Most of these basic facilities are constructed to a much higher standard than the pre-resettlement conditions. For example, a reticulated safe water supply is provided for each household; the electrical power network supplies each household; each household has a two-tank dry latrine or a flush toilet and excreta is composted and disposed of safely; and drainage out of the village is connected to a main drain or river system. Environmental conditions have improved significantly and the incidence of disease has been reduced to 5 percent compared to the pre-resettlement conditions. Significant investments have been made in school buildings and teaching facilities, and child care has improved. Vulnerable groups, especially the old and single women or widows, have been provided with old-age homes and other living facilities. The new resettlement sites have also provided them with better and convenient access to markets and non-farm employment opportunities. In conclusion, the project is highly successful in restoring and improving housing, infrastructure and public services for the resettlers. 4.1.9 The project implemented its land-and-agriculture based strategy for livelihood development, supplemented by non-farm employment. Land compensation has been delivered to all resettlers. Replacement land has been purchased and provided to all resettler villages as planned. Some 169 villages, about 75 percent of the total, have reached the designed standard per resettler for replacement land. In the villages where the area of replacement land has not reached the design standard, the villages have started alternative livelihood programs with their remaining land compensation funds. Monitoring and supervision reports indicate that the resettler villages have started extensive farm and off-farm livelihood programs and that around 70 percent of the affected population have improved or restored their income level; the remaining 30 percent have reached up to 80 percent of their previous income levels; full income restoration will take a few more years to achieve. 4.1.10 Several factors contributed to their slow recovery of incomes for this 30 percent of the population. First, the unfavorable macro-economic development in the rural sector in China since the mid-1990s caused farming income growth to slow down and even to fall. The designed land-based package was not able to produce the expected income. Instead, farmers have turned to side-line activities and non-farm sectors for employment opportunities. The project tried to adapt to this macro-economic change, but the gradual shift prolonged the income restoration period. Second, the project areas suffered successive droughts in the last decade and this has had a severe impact on farming and the restoration of the incomes of resettlers. Third, project-induced factors caused the base-line income as measured, to be unusually high and this made restoration even more difficult. 4.1.11 The government is committed to achieving the full restoration of livelihoods for this 30 percent of rural resettlers. The project has designed a post-resettlement support fund to address the outstanding issues. This fund has been established and funds were derived from hydropower revenues and a program developed. However, its operation was affected by insufficient funding because hydropower revenues were low because of a drought in the Yellow River. The Ministry of Water Resources (MWR) and the National Development and Reform Commission (NDRC) have resolved the funding issue, providing an amount of between 600-1,000 million yuan. The arrangement is being processed according to government - 6 -  administrative procedures and the government has been requested to notify the Bank when the funds have been transferred to the Fund account. The government has also agreed to maintain the project institutional arrangement to operate this fund. With this fund in full operation, full restoration of incomes is expected to be achieved in a few years. 4.2 Outputs by components: 4.2.1 Component A: Residential and infrastructure reconstruction for villages and towns (Cost: US$292.9 million estimate at appraisal; US$483.2 million actual) This component was planned to include: (a) the construction of new villages and replacement housing for rural resettlers; (b) the residential reconstruction for new towns; (c) the relocation of special institutions; and (d) the reconstruction of affected infrastructure. The outcome of this component is rated as highly satisfactory. 4.2.2 Residential reconstruction for villages. The project established 227 administrative villages with a total population of 155,139. All resettlers (except the remaining 1500) have moved into new houses. Monitoring data indicate that the housing conditions and physical living environment of the resettlers have substantially improved as a result of the project. All new villages are complete with basic infrastructure and public facilities, such as power, water supply, drainage and road, schools, clinics, telephone and broadcasting lines. They have improved access to public services, such as health and education, and better access to markets, services, information and non-farm job opportunities. 4.2.3 Residential reconstruction for towns. The project required the relocation of twelve towns with a total population of 17,212, of which 7,693 have agricultural status and 9,519 were urban residents. All of the affected towns were relocated to new sites nearby with the same administrative jurisdictions and functions. These new towns were complete with basic infrastructure and public facilities. All the old towns' populations moved to the new towns. 4.2.4 Relocation of special institutions. The project successfully completed its relocation programs for the affected special institutions. These included nursery and seed farms, management offices and stations, and a jail. They were provided with replacement sites and reestablished with compensation funds payment at reconstruction costs before actual inundation. 4.2.5 Infrastructure reconstruction. All replacement infrastructure sujected ot inundation was redesigned and reconstructed including roads, transmission lines, communication lines, broadcasting facilities and water supply works. All new residential areas are serviced with roads, electricity lines, telephones lines, broadcasting receiving facilities, water supply and drainage facilities. 4.2.6 Component B: Transfer of resettlers (Cost: US$7.3 million estimate at appraisal; US$9.5 million actual) With assistance and guidance from the Yellow River Reconnaissance Planning and Design Institute and the resettlement offices, the resettlers decided on the layouts of villages and the design and location within the resettlement areas. Residential plots were allocated in a transparent fashion in the villages. While village committees were responsible for village infrastructure construction, the resettler households were responsible for their own house construction. All transfer arrangements were made by county resettlement offices and information regarding transfer was provided to the resettlers before relocation. Physical relocation was organized by county resettlement offices with transport. Various allowances were provided for transport, including medical costs and compensation for missed working hours. The host governments, as well as farmers made various welcome arrangements for the resettlers. The transfer process was smooth and the output of the component is rated as satisfactory. - 7 -  Table 1: Movement of Rural Resettlers Phase 1992- 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2010- Total 1994 2011 Dam-site SAR 9944 9944 Actual 11652 11652 180m SAR 7230 7230 7230 21690 Actual 11549 22776 8100 42425 265m SAR 26122 26122 26122 26122 26124 130612 Actual 16347 45771 30658 18262 0 0 1676 112714 275m SAR 17924 17924 Actual 7650 7850 1700 17200 Total SAR 9944 7230 7230 7230 26122 26122 26122 26122 26124 17924 180170 Actual 11652 11549 22776 8100 16347 45771 30658 18262 7650 7939 3376 184080 4.2.7 Component C: Planning, design and institutional support (Cost: US$11.7 million estimate at appraisal; US$44.1 million actual) This component was designed to establish the project organizations and to provide training and institutional support. This component has played a critical role in the planning, design and implementation of the project. The output of the component is rated as having been highly satisfactory. 4.2.8 Project staffing and training. All planned resettlement offices were established at provincial, municipality, county and township level. These offices were provided with all necessary working facilities, equipment and vehicles. Training was provided to all resettlement officers in various forms including on-site training, overseas training, local and international study tours, training class and diploma study in universities. The training covered resettlement planning, financial management, procurement, livelihood development, and agricultural extension. Project staffing was as follows: Table 2: Resettlement Staff SAR ICR (Actual) Staff Henan Shanxi Total Henan Shanxi Others Total Province Province Province Province * In 1992 101 25 126 101 25 69 195 Initial phase 1993-94 339 65 404 339 65 138 542 Middle phase, 1995-2000 939 99 1038 1042 256 207 1505 Last phase, 2001 32 79 111 554 136 104 794 *MWRRO, YRCCRO, Design Institute, Monitoring and Evaluation Organization, etc. 4.2.9 Project management system. The Yellow River Water and Hydro Development Corporation Resettlement Office (YRWHDCRO) established a management system for the project's implementation. This system extends down to the provincial, municipal and county resettlement offices. It covers financial management, annual planning management, progress monitoring, reservoir clearance, procurement, disbursement, completion inspection and auditing. The YRWHDCRO also developed a set of management regulations and procedures covering annual planning and design, planning and design review procedures, progress reporting, disbursement, procurement, reservoir clearance, completion inspection, grievance redress, independent monitoring, resettlement supervision, environment and public health monitoring. Project staff at the YRWHDCRO, provincial, prefecture and county levels have all been assigned to follow through the implementation of these rules and regulations. 4.2.10 Planning and design. The Reconnaissance Planning and Design Institute (RPDI) is the design institute for the whole of the Xiaolangdi Multipurpose Project. The RPDI carried out the detailed designs jointly with the provincial, prefecture and county resettlement offices, including inventory updating, - 8 -  compensation rate evaluation, assessment of carrying capacity of different resettlement sites, feasibility of different resettlement alternatives, as well as the cost estimates. The RPDI has been in charge of the technical review and approval of all resettlement designs and their revisions. Its role continued through the implementation process. The effective functioning of the RPDI has ensured the quality and efficiency of the detailed planning and design process, and helped significantly with consensus building and coordination in the implementation process. 4.2.11 Independent monitoring. Independent monitoring of the resettlement implementation process is an important part of the project management system. As defined in the Credit Agreement, the North China Water Conservancy and Hydropower Institute was appointed in 1994 as the Independent Monitor to carry out socio- economic monitoring of the resettlement program. The independent monitoring was carried out in line with the "Social Economic Monitoring Guideline for Xiaolangdi Resettlement Project" and the "Implementation Plan of the Social Economic Monitoring of Xiaolangdi Resettlement Project" developed and agreed with the YRWHDCRO and the International Development Association (IDA). It covered various aspects of the resettlement program for both the resettlers and the host population, and provided both timely feed-back for resettlement management and a sound basis for final evaluation of the resettlement implementation. 4.2.12 Resettlement Supervision. Replicating the practice of a supervising engineer in civil works construction, the YRWHDCRO appointed the Resettlement Bureau of Yellow River Conservancy Commission as the Resettlement Supervisor for the project. The supervisor started working in June 1996 with the establishment of a supervising team and six supervising stations in the field. The supervision covered all aspects of the resettlement implementation including resettlement physical progress, fund allocation and use, construction quality and specifications, contract management and coordination. The supervision was carried out from the field stations through regular site visits, interviews and meetings as well as the review of progress reports. 4.2.13 International Environment and Resettlement Panel of Experts. The YRWHDCRO established this panel in 1994 to assist in the implementation of the resettlement and environmental aspects of the project. The panel consists of domestic and international experts and the panel's composition changed during different phases of the project when the perceived needs and advice had also changed. The panel has convened twelve times and produced twelve reports. In general, the panel played a useful role in the project management and provided good advice in its implementation and management. 4.2.14 Component D: Livelihood Development (Cost: US$257.1 million estimate at appraisal; US$295.7 million actual). This was the core component of the project. It was to re-establish the resettlers in their livelihoods (i.e., 50 percent in farming, 29 percent in industrial jobs, 11 percent state farm enterprise workers and 10 percent government employees). However, the expected shift in rural China to non-farming activities actually happened faster and consequently design changes in this component were made at the time of the Mid-Term Review (MTR). This component has been completed as designed. The output of this component is considered generally satisfactory. 4.2.15 Re-establishment of Livelihoods in Agriculture. This component comprised irrigation and dryland development and the re-establishment of side-line activities to achieve a 5-10 percent increase in per capita income for both the resettlers and host farming communities. The land replacement and development programs have been completed with the land compensation fund, including land developed in the Wenmengtan and Houhe Irrigation area. The project has purchased 197,468 mu (1 ha = 15 mu) of farm land for the resettlers with part of the compensation funds for their lost land. This includes 112,995 mu of irrigated land. On average, the project has achieved the target of average land holding per relocatee - 9 -  at 1.2 mu. 4.2.16 It should be noted that resettler household land-holding varies between relocating villages. Data also reveals that only 169 villages have reached the designed target of per capita farm land holding, about 75 percent of the total. Monitoring reports indicate that those villages which have not purchased sufficient land have invested the land compensation funds in on-farm irrigation facilities or alternative non-farm income-generation activities. These activities are extensive, including side-line activities, cash crops, small livestock, fishery, agro-processing, aquatic poultry and small industrial ventures. These activities helped farmers generate more share of the resettler income than expected. Table 3: Farmland Allocation For Resettlers Province/County Actual Land Per Capita (mu) Total Land allocation (mu) Total Of which irrigated land Total Of which irrigated land Reservoir Total 1.39 0.80 197468 112995 Henan Province 1.37 0.93 158995 108059 Jiyuan City 1.01 0.87 29281 25111 Menjing County 1.29 0.17 12056 1635 Xinan County 1.31 0.18 19437 2653 Yima City 339 339 Wenxian County 1.43 1.43 17715 17685 Menzhou City 1.47 1.45 45873 45301 Zhongmou County 1.36 1.29 2653 2513 Yuanyang County 1.1 1.07 4506 4395 Kaifeng County 2.63 2.63 7884 7884 Mianchi County 1.95 17911 Shanxian County 1.22 0.49 1340 543 Shanxi Province 1.48 0.19 38473 4936 Yuanqu County 1.44 0.20 34964 4936 Pinglu County 2.08 0 2724 0 Xiaxian County 1.8 0 785 0 4.2.17 Wenmengtan Scheme. This scheme was designed to create farm land for 42,000 resettlers through the construction of dykes and a land reclamation and improvement program. To reclaim the area on the flood plain of the Yellow River, 118 spur dikes and 52.98 km of flood control embankment were completed. The warping and reclamation yielded about 200,000 mu of land of which 62,000 mu was farm land. The reclaimed land is protected from floods through the embankments. The reclaimed area had a system of tube-wells for irrigation and drainage. The developed land was allocated to the resettlers. This scheme was successfully completed and its outputs are rated as satisfactory. 4.2.18 Houhe Reservoir Scheme. The scheme included completion of the Houhe Dam and irrigation system to irrigate an area of 75,000 mu of land. The dam is a 75 m high concrete gravity-type dam with a central spillway and a lateral outflow tunnel which connects to the main canal of the irrigation scheme. The irrigation scheme consists of a 58 km main canal, twelve branch canals (191 km) and irrigation of 75,000 mu of farmland, of which 12,300 mu is allocated to the resettlers, 50,000 mu is allocated to the impacted host villages and 12,700 mu is for host people out of the project area. The entire component took eight years to complete, longer than planned, but the final completed works are excellent. As a result of an inter-agency coordination and financing dispute, the completion of the irrigation system was significantly delayed and this has affected the farmers' livelihood development activities. - 10 -  4.2.19 Although this component is completed as designed, income restoration will take longer than expected for the 30 percent of rural resettlers. The project implemented its land-and-agriculture based strategy for income generation, supplemented by non-farm employment. This included payment of a compensation fund and the provision of replacement land. The other factor that affected income growth was the desire for villagers to invest a significant portion of their livelihood compensation to high quality sound infrastructure like schools, clinics, and public facilities. Monitoring and supervision reports indicate that the resettler villages have started extensive farm and off-farm livelihood development programs. Monitoring data also reveal that around 75 percent of the affected population have improved or restored their income level and the rest have reached up to 80 percent of their previous income level. Because of the government commitment through the post-resettlement support fund, it is expected that these people will recover their previous levels of income in the next few years. 4.2.20 Industrial and Side-line Development. It was planned to move about 21,070 farmers into the non-farm sector and 20,528 of them were expected to be provided with new jobs through the establishment of 84 county and township enterprises. During implementation the government reassessed the feasibility and risks of this resettlement component and decided to scale down the county industrial resettlement program. Adjustment was made during the MTR to replace the industrial component with a land-and-agriculture based program and sideline and village industry development. Some of the planned investments were implemented and some villages also made village non-farm investment with the land compensation fund. These enterprises are estimated to have provided 2,332 jobs for the resettlers. 4.2.21 Re-establishment of Factories, Mines and Other Enterprises. This included the moving and reconstruction of existing manufacturing and mining operations. The inundation affected 789 enterprises including thirteen county enterprises, 105 township enterprises, 446 village enterprises and 225 private enterprises, of which 547 were engaged in mining and the rest were in brick-making, agro-processing and small manufacturing. All village and private enterprises were small work-shops with only temporary employees. The project completed compensation payments for all. Most of the small village and private operations have taken up their re-establishment on their own with the cash compensation. The project offices successfully implemented the relocation and reconstruction of the few big manufacturing and mining enterprises which have either restarted their operations or have switched to new operations. All 3,846 long-term or regular employees have been re-employed in the same enterprises. Additionally, there are 2,332 resettler laborers employed in the new enterprises as long-term contract workers. 4.2.22 Activity 1: Social Adjustment. This activity was to integrate all social adjustment issues into the planning and design of the different phases of the resettlement program. These relate to farming support services, training and assistance in non-farm employment, consideration of host concerns, transfer arrangements, interaction with the host villages, essential services in the resettlement areas, and consultation with and assistance to women. These considerations and programs were not only incorporated into the plan and design of different phases of the resettlement but were also implemented with care during the actual resettlement and rehabilitation process. Tremendous efforts have been devoted to ensuring that the resettled groups and the host population are smoothly and well integrated socially, economically and culturally. This output of this activity is rated as satisfactory. 4.2.23 Activity 2: Consultation, Participation and Grievance Redress. The project followed a highly consultative and participatory process in its planning, design and implementation. The project implemented its information disclosure strategy. All media channels were mobilized to disseminate project information for consultation and participation purpose. Information disseminated related to the project, resettlement policies, compensation rates and measures, household inventory, resettlement alternatives and site designs, - 11 -  and the grievance channel. While the government and the design institutes played the leading role, the resettler communities were the actual driving force in the project. Resettlers participated in the inventory and census, planning and design as well as the implementation of their respective resettlement sites and livelihood development programs. The planned grievance redress mechanism was established with assigned staff and an operational regulation. The project followed the grievance procedures. The project management also maintained a continuous presence in the field to facilitate early identification and fast resolution of grievances. In general, this system functioned effectively to facilitate smooth implementation. The project practices in this regard are exemplary in reservoir resettlement. 4.2.24 Activity 3: Gender and Vulnerable Groups. Women, children and vulnerable groups account for the majority of the resettlers. Women participated in the entire process of project planning and implementation. Women also play an important and active role in income-generation activities. It is estimated that about 34,600 women participated in various activities of skill training. The project had 466 women staff at various levels of the project offices and they participated actively in the project management. There were 29,239 children (ages 7-16) relocated, about 17 percent of the total. All resettlement villages have improved access to education and health facilities, with much improved study environments and medical treatment. School attendance has reached 100 percent with a few exceptions. Vulnerable groups refer to the old, disabled, households with people suffering from chronic diseases, households without labor, the widowed and the extreme poor. The project identified 1,568 such households, containing about 3 percent of the total resettler population. The project made special budget provisions to help with their resettlement. All of them have received their resettlement entitlements and have all moved into new houses with assistance under the project. Particular care was taken of the old and widowed people. Sixty-two nursing homes have been established in the resettlement areas for the old and widowed people. . 4.2.25 Activity 4: Environmental Management (Cost: US$3.5 million estimate at appraisal, US$8.4 million actual) This activity was designed to address the environmental impacts associated with the resettlement program through the implementation of the agreed Environment Management Plan (EMP). The government established an environment management system which has been effective in the EMP implementation. Under the EMP, the project completed: (a) the provision and operation of the environmental and public health facilities in all new resettlement villages; (b) the management of the environmental impacts of established enterprises; (c) the management of the environmental impacts of resettlement activities in the host areas; (d) the monitoring of the EMP implementation, water quality in resettlement villages and public health of both resettlers and host population; and (e) the management of reservoir clearance. In 2001, a Bank environmental thematic supervision mission rated the project as being very satisfactory. 4.2.26 Activity 5: Cultural Relics Protection. This activity was to complete the phased planning of cultural relics protection measures and to implement the approved action plans. The government mobilized national experts and established a multi-level institutional structure to implement this activity. The project completed: (a) the planning and design of protection measures for different phases of resettlement; (b) field surveys that identified 180 sites of cultural significance; (c) drill-exploration of 3.26 million m